One of the most successful coups d’etat of 1999 was a bloodless, peaceful affair absent the usual cast of military zealots and power-hungry despots. In fact, the perpetrators, clad only in lace underwear, were welcomed with open arms, wide grins, and possibly a few marriage proposals. And though the stakes were somewhat less lofty than freedom or democracy, the end result was simply extraordinary. On Wednesday, February 3, one company owned Wall Street.
The company in question is Intimate Brands and the event was the Victoria’s Secret fashion show, which was simulcast over the internet. But this was much more than a fashion show. It was the climax of a week long media blitz that enthralled millions. When the Masters of the Universe meet the Mistresses of Lingerie, who do you think wins?
Make no mistake, Intimate Brands is serious business. The company has grown from a mere infant – IBI went public in 1995 – to a powerful brand marketer, increasing sales in 1998 by 7 percent to $3.9 bn, and EPS by 22 percent. First quarter net sales for 1999 increased 14 percent from the previous year’s period. Much of the success is evident in the company’s stock price, which has climbed well over 50 percent in the last six months. But the impressive price performance correlates to a massive public relations-cum-investor relations effort.
Building identity
‘One of the major tasks facing IBI communications has been the issue of corporate identity,’ says Debbie Mitchell, vice president investor relations and communications for IBI. ‘We’re always looking for opportunities to link the name Intimate Brands with our brands Victoria’s Secret and Bath & Body Works. The institutional investment community is well aware of who we are. But it is important the broad investing public knows, especially given the fact that we’re a consumer products company,’ she says.
The origins of the company’s bid to build a strong corporate identity can be traced back to September 1998, when IBI held its annual investor/analyst update meeting to show off new products and disclose its strategy for the upcoming holiday season. The season, so critical for retailers, would prove a resounding success, aided by the December 4 launch of the Victoria’s Secret web site. Within six hours, the company received orders from 37 countries.
‘We came out of 1998 having had a very strong December. We also reported earnings above expectations and, in January, announced a share buy-back,’ says Mitchell.
Other events included the formation of Intimate Beauty Corp in early January, with former Estée Lauder CEO Robin Burns arriving to head up the fragrance and cosmetics unit. But if the rapid pace of initiatives was raising eyebrows, the week beginning January 31, 1999 was to literally stop traffic.
100 mn hits
The first ad promoting the Victoria’s Secret fashion show was a 30-second spot that ran in the midst of the Super Bowl and prompted a million viewers – 1 mn football viewers in the midst of their championship, mind you – to log on to the Victoria’s Secret web site. Between Sunday and Tuesday, the web site recorded 40 mn hits. By Wednesday, it had received 100 mn.
In addition to the Super Bowl commercial, the company produced full-page ads with a subtle but clear reference to the corporate parent, Intimate Brands. The ads ran in both consumer and financial publications, from the Wall Street Journal and Investors Business Daily to USA Today and Women’s Wear Daily, as well as the global edition of the Financial Times. On the internet, there was a banner ad on most major financial web sites, including the Motley Fool, TheStreet.com, Fortune, and BigCharts, as well as the Bloomberg terminals.
Having captivated the public, the company set out to take Wall Street by storm, leveraging as much as possible off the fashion show. On Wednesday, February 3, the day of the event, Intimate Brands lit the exterior of the NYSE with pink lights and draped a giant Victoria’s Secret banner across the front of the building. To be sure of everyone’s undivided attention, model Stephanie Seymour rang the closing bell. This was followed by a pre-show reception and presentation for investors and analysts hosted by Intimate Brands and Victoria’s Secret executives. And of course, there was the show itself, parts of which, according to some accounts, were viewed by 1 bn people.
Collaborative process
The success of both the fashion show and the overall IR program is due in large part to the collaboration between the different brands, each of which has its own CEO and its own PR department. One of the most important partnerships in the collaboration has been between brand and creative services, the division responsible for marketing and advertising throughout the organization, and Mitchell’s IBI communications group.
‘I think that from the beginning we’ve had a very good partnership with the IR team,’ says Edward Razek, president and chief marketing officer for brand and creative. ‘We have a responsibility to the investment community and we honor it with things like the annual report and the fashion show, which is a successful show in itself, but also an enormously productive message-carrying vehicle.’
‘We put together an integrated PR and IR strategy at the IBI level,’ adds Mitchell. ‘Earnings releases, CEO roadshows, investor targeting, and other such media and investor outreach programs – that’s essentially what IBI controls. We then go to the brands to see what they’re planning in terms of new product launches and other events that reinforce IBI’s message of growth and innovation.’
This high level of integration extends to the internet. While each brand maintains – or will soon – a separate web site from IBI, visitors can click from one site to another. The brand sites showcase their unique products, while IBI’s portrays the company from a financial standpoint. With the broad investing public in mind, the site offers links to the National Association of Investors Corp (NAIC), and will soon offer internet surfers the option of clicking through to First Chicago’s web site, where they can buy IBI stock through a direct stock purchase plan.
Analyst’s perspective
Maura Byrne, senior retail analyst at Salomon Smith Barney, describes the company’s IR program as consistent and complete. Byrne, who has a price target of $55 for IBI, cites the factors which influence her favorable impression, beginning with the company’s annual investor/analyst update meeting, held at the World Trade Center for the last two years. ‘In addition to chairman Leslie Wexner’s overview for IBI, the presidents of each business review their respective marketplaces and their forward strategies to create shareholder value. Breakout sessions are held, and you can ask any questions you like, so you feel like you really get to spend a lot of time with them,’ says Byrne.
Byrne singles out IRO Mitchell for her marketing effort, and the time she spends taking her message around the country. While little things, such as hand-outs, may seem trivial, they can make a strong impression. ‘In my mind, she has the best marketing hand-out. That is her tool, and she brings copies with her wherever she goes, updating it before every trip.’
‘Those stocks that are the best brand with the healthiest outlook for growth are the ones that are generally getting premium valuations,’ Byrne says. ‘Debbie Mitchell has been working incredibly hard to get that message across, and the company has used every single vehicle to emphasize that they have two very powerful brands.’
To CFO Philip Mallott, who watched in frustration as IBI’s stock price languished relative to outstanding performance and growth, the combined marketing, PR, and IR effort has been well worthwhile. ‘You like to see your financial performance reflected in your stock price, and I think the integrated effort tying the IBI name and story to our brands has played an integral part of the rise in stock price,’ he says.
He believes his company has found a successful formula. ‘When you see the payback, it gives you cause to continue. It’s worth the investment. We’re going to continue to try to create opportunities to tie what’s going on with our brands in a PR/IR initiative format to the intimate brands investment opportunity.’
Are shareholders happy? Definitely, says Mallott. ‘I know that I, as a shareholder, am very happy.’
