Frederick’s of Hollywood has filed for bankruptcy protection after years of struggles.
The company will close all of its stores and switch to an online-only business, The Associated Press reports.
The business hasn’t had a profitable quarter since 2007. It has $US36.5 million in assets and around $US106 million in liabilities, according tot he filing.
Frederick’s used to be a viable competitor for lingerie mega-chain Victoria’s Secret.
But Victoria’s Secret has dominated the marketplace, posting record sales for the past several years. Meanwhile, Frederick’s has struggled for more than a decade.
Frederick’s was founded by the inventor of the push-up bra. At one point, pin-up icon Bettie Page modelled its intimate apparel. The company filed for bankruptcy in 2001.
Attempts to save the brand through a luxury fashion line flopped and resulted in excess inventory, according to WSJ.
Last year, Brian Sozzi at Belus Capital Advisors offered us his insight on why the brand has floundered in comparison with multi-billion dollar Victoria’s Secret.
The biggest difference?
Women feel their Victoria’s Secret purchases are versatile. They can wear the bras and underwear every day.
Frederick’s made a business off one thing: sex.
“Frederick’s is asking customers to invest in sex,” during an economic downturn, Sozzi told us. “The customer perceives Victoria’s Secret’s core offerings as more versatile, adding all sorts of benefits to how they appear in public and not just in the bedroom.”
Here are some other problems:
- Frederick’s relied on catalogues and hasn’t made its website a top priority. Victoria’s Secret has done a great job of transitioning into e-commerce.
- Victoria’s Secret is designed so mothers and daughters can visit together and find something they like. Frederick’s is only aimed at younger women, and mums are unlikely to take their teenage daughters there, Sozzi said.
- Frederick’s avoids promotions, while Victoria’s Secret smartly uses them to draw customers in.
- Victoria’s Secret captured the aspirational customer that Frederick’s is only now marketing to, Sozzi said.
Business Insider Emails & Alerts
Site highlights each day to your inbox.