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Frederick's looks for action
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April 22, 1998: 8:42 p.m. ET
Company shedding bad girl image to get in on surging lingerie sales
From Correspondent Lauren Thierry
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NEW YORK (CNNfn) - More than 50 years ago, Frederick's of Hollywood was the finest name in women's lingerie. Then it got a reputation.
Now after a decade of flat sales, Frederick's is trying to shed its bad girl image and hoping to lure customers away from the competition in a booming market.
The lingerie business has matured into a $10.8 billion fashion industry. But Frederick's -- once a pioneer and leader in the U.S. market -- has been experiencing slim sales of $148 million a year for the past decade.
"Frederick's was a success," said Scott Drummond, brand consultant of Landor Associates. "But then the years went by and they didn't change the product to keep up with the way America changed."
New Chief Executive Officer Terry Patterson, the first woman to head Frederick's, was hired four months ago to give the company a makeover. Gone now from its catalogues are the brassy hairdos, vampish eye liner, bordello bustiers and sky-high heels. In their place, Frederick's is touting a softer, girl-next-door sexuality.
With 40 percent of its sales done through catalogues, the pictorial revamping is an important one. Frederick's sends out 60 million catalogues annually.
The new catalogue, with its cotton pastels, feels more trendy than trashy, and it's already pulling in new customers. But that may not be enough to seduce sales away from industry leader Victoria's Secret, with $2.4 billion in annual revenues.
"I think that Frederick's of Hollywood is in a position where they can move beyond Victoria's Secret," said Drummond. (245K WAV) or (245K AIFF)
Frederick's brand strength comes in part from Hollywood's bold glamour. Founder Fred Mellinger launched the company in 1946, quickly capitalizing on local star power.
Frederick's supplied Marilyn Monroe with her bra in "Let's Make Love" and Tony Curtis his bra in 1959's "Some Like It Hot."
When Mellinger died, the public company floundered and was finally sold to the private Knightsbridge Group last year for $67 million.
Knightsbridge brought in Patterson for an aggressive shakeup. A veteran of the cutthroat auto parts industry and former chief executive officer of the Strauss auto parts chain, she seemed an unlikely fit for the lacey lingerie crowd. But Patterson boosted sales to women at her previous job and says she sees similarities between selling mufflers and panties. (223K WAV) or (223K AIFF)
At Frederick's, she has cut costs by millions of dollars. But her biggest hurdle is actually a $50 million expansion to double the company's 205 U.S. retail outlets. With a pending department store deal, she hopes to triple sales to $500 million within three years.
With so much industry growth, opportunity is abundant.
Intimate apparel is a hot business
"The intimate apparel business itself has grown dramatically over the past several years. It's grown from a $9.2 billion business in 1995 to over $10.8 billion in 1997, over 8 percent a year growth, which is much better than the overall apparel industry," said Charlie Komar, chairman of the Intimate Apparel Council.
It's too soon to tell whether Frederick's can draw new customers while hanging on to the old. But the lingerie pioneer is not abandoning all of its old bad girl image.
"We're working a lot with our current customers on how they feel about themselves, how they want to look. Then we're also working with people who would never consider themselves Frederick's customers, who absolutely love the product but cannot get past the doorway because of the Frederick's name. That's my biggest challenge," said Patterson. 
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