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Frederick's to dress up
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July 11, 2000: 4:27 p.m. ET
Racy lingerie icon files for bankruptcy, and plans a makeover of its image
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NEW YORK (CNNfn) - Frederick's of Hollywood, the lingerie maker that claims to be the first to introduce thong underwear, on Tuesday said it filed for bankruptcy protection and plans to tone down its racy image in an effort to stave off fiscal failure.
Frederick's, which also lays claim to being the first to introduce black lingerie and push-up bras, filed for Chapter 11 bankruptcy reorganization late Monday, saying it will continue to operate its 200 stores while it tries to restructure its outstanding debt.
According to a company representatives, Frederick's, which will celebrate its 55th anniversary this year, has between $67 million and $70 million of debt, compared to assets of $65 million and 1999 revenue of about $150 million.
 "We will continue to operate our stores, famous catalog and successful Internet businesses, selling the world's sexiest lingerie," Linda LoRe, chief executive officer and president, said in a statement. "We will do everything we can to preserve this incredible brand that was built by Frederick Mellinger and to reclaim a large share of the intimate apparel market."
Frederick's spokeswoman Penny Mullins said the lingerie maker anticipates receiving a $12 million to $15 million loan later this week from Ableco Finance LLC, a Cerberus Capital Management affiliate and Gabriel Capital Group.
The reorganization -- and additional financing - will help the fuel the clothier's ongoing image makeover, Mullins said.
"In the last year, we've been undergoing a rebranding process, taking Frederick's a little more mainstream," Mullins told CNNfn.com. "We're cutting down on 'racy' and staying with fun and sexy."
If recent changes are any indication, that may mean stocking its shelves and catalogues with more dresses and jumpsuits and fewer wigs and pairs of edible panties. What's more, the garish decoration that once helped define the Hollywood flagship store will likely be left behind when the company opens its new flagship location in spring 2002.
Frederick's also plans to introduce new products and revamp its Web site this summer. The site will be spun off into an initial public offering, possibly by the end of this year, Mullins said.
Bruised by competition
Frederick's has suffered in recent years from growing competition, especially less-risqué Victoria's Secret, a unit of Intimate Brands Inc. (IBI: Research, Estimates). Frederick's said it is the No. 2 lingerie maker after Victoria's Secret.
 Still, Frederick's, private since its 1997 leveraged buyout, continues to offer more than 25 styles of thong, and sells tens of thousands weekly of the popular "Rio" style, which it calls "the fastest and largest selling thong around the world."
The company said it had hired Crossroads LLC, a firm that provides consulting services to companies filing for bankruptcy or in financial problems, to help manage the restructuring process.
Newport Beach, Calif.-based Wilshire Partners, a privately held investment firm, purchased the 55-year-old company last week from Chicago-based investment firm Knightsbridge Capital Corp. 
-- from staff and wire reports
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