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November 12, 2012

Runway show the key to Victoria's Secret success

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NEW YORK —

"As soon as this one finishes they start working on the next," said supermodel Miranda Kerr. "There's so much attention to detail in the underwear; everything is hand- stitched."

The chain does use Facebook, Twitter and e-mail to draw Web traffic and build excitement around new collections and events such as the fashion show. Web and catalog sales rose 4 percent to $1.56 billion in the latest year, a quarter of the business, while revenue at Victoria's Secret's 1,000-plus stores rose 14 percent to $4.56 billion.

Still, the Internet doesn't drive a lot of "emotional content," Chief Financial Officer Stuart Burgdoerfer, said in a presentation to investors on Oct. 17. Victoria's Secret and Bath and Body Works emphasize the product and in-store experience above all and aren't aiming to be leaders in technology, he said.

Victoria's Secret spends about $220 million annually on the catalogs sent to customers' homes each year, including postage, creative, printing, paper and circulation, the biggest expense of its direct business, according to a job posting on its website.

The company's 15 percent stock gain this year trails the rallies at specialty retailers Urban Outfitters, which has added 28 percent and Gap, with an 81 percent rise. It has beaten both in the past five years, as well as the Standard & Poor's 500 Retailing Index by more than doubling to $46.48 as of Nov. 9.

Limited Chief Executive Officer Les Wexner, the longest- tenured CEO in the S&P 500, according to data compiled by Bloomberg, has spun off apparel brands including the Limited stores, Abercrombie & Fitch Co., Express, while keeping Victoria's Secret and Bath & Body Works.

"He truly views intimate apparel and personal care as more attractive categories," Maschmeyer said. Victoria's Secret, the biggest specialty retailer for intimate apparel, has created demand for items like push-up bras and colorful underwear in the way Lululemon Athletica has helped create a market for trendy yoga wear, she said.

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