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Frederick's of Hollywood Goes All Nostalgic -- and Not in a Good Way

In the department of old school initiatives, Frederick's of Hollywood (FOH), 65-year old purveyor of racy lingerie, is launching a magalog -- yes, one of those awkward magazine/catalog hybrids -- and planning to mail it to a million shoppers. The company says it's a print marketing tool that gives customers an editorial view of new trends in underpinnings without the pesky distraction of ads.

Sounds like Frederick's president Linda LoRe might be a little too nostalgic for the mail-order days of yore.

That's strange because LoRe told WWD that Frederick's e-commerce sales are up in the "midteens" over last year -- and she asserted that eighty percent of the retailer's customers now order online. Yet the company plans to pump a cool couple of million into catalogs (according to its most recent SEC filing) including this mailer loaded with all manner of "White Hot, Daring Duos," sky high stilettos, seductive slips and sexy panties.

When you're trailing JCPenney, you're in trouble
For perspective, JCPenney (JCP) one of retail's better known examples of direct mail commerce recently made the decision to dump its legacy catalog business in favor of focusing on its fully-integrated shopping site on Facebook. JCP also pushed resources towards its collaboration with People StyleWatch (a real magazine) to point shoppers towards top trends from celebrities and fashion editors.

JCP's efforts are beginning to pay off. Those merchandising initiatives drove comps up 4.5 percent in the fourth quarter. And though total sales for the quarter increased only 2.8 percent (still impacted by the loss of the catalog) delivered 6.7 percent growth which can only get better if the discount department store really gets its e-commerce act together.

That's a tough thing for a retailer that carries so many different product lines catering to an array of shoppers. For Frederick's, a specialty merchant focusing on a few types of apparel, it should be cake. Frederick's has done some smart things to capture market share (think naughty nurse and other costumes, also available in plus sizes!), but the move to a quasi-editorial paper presentation seems misguided.

The company even made a strategic decision to sell off its wholesale division due to continuing losses and in order to focus on its core retail operations. And to make up for the loss of sales from that division, Frederick's just inked an exclusive, multi-year licensing agreement with Emirates Associated Business Group (EABG) to build and operate Frederick's of Hollywood retail stores in the Middle East.

A bad time for a trip down memory lane
The immediate future doesn't look terribly bright. Total store sales continue to slump, decreasing by $4,497,000 for a total of 19.8 percent in the quarter that ended in January. Comps were just as bad, falling by $3,575,000, or 16.5 percent.

Hope Brick, Frederick's SVP of merchandising, is betting that the editorial presentation of biker chic bras and metallic maillots (complete with plenty of cleavage) will spur gals to glam up their underwear drawer. Or she can leave it strategically placed for her partner to peruse and shop.

If the lure of a leather lace-up bodysuit doesn't set customers clicking (or calling the company's 800 number) maybe the promise of sales tax free purchase will. After all, the only upside of mail order is that the merchant is typically not required by law to add sales tax to the price of the goods, unless they have a physical presence in the customer's state.


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