Victoria’s Other Secret: The Low-Key Billionaire Behind The Lingerie Giant

October 1, 2014 Posted by admin

The billionaire who single-handedly changed how America shops has an inner sanctum as enigmatic as he is: the corner of a nondescript office building in Columbus, Ohio, across the road from a garbage dump, behind a security gate festooned with “Do Not Enter” signs. While the communal spaces are properly blinged-out with pink walls, lacy bits of lingerie and a big screen rolling endless tape of nearly naked supermodels, the chamber itself is a confused mess of binders and papers straight out of The Absent-Minded Professor. Nearly every surface is devoted to knickknacks–a 3-foot-long pencil here, an Ohio State Monopoly board there–or stacks of books.

The irony seems lost on Leslie “Les” Wexner, who built Victoria’s Secret, Pink, Express and The Limited into one of America’s alltime great retail fortunes. “When I was a kid, before my first store, they talked about stores as theater and retail as theater. It still is,” says the 77-year-old, attired casually in gray slacks and a blue oxford. “Retailing is a free form of entertainment.”

Yet this impresario shuns the spotlight. He’s the CEO of a large publicly traded company, yet he rarely speaks on earnings calls. One of the legends of his industry, yet he almost never speaks to the press. Wexner is so elusive that most assume the brains of Victoria’s Secret is surely some female visionary in the mold of a Sara Blakely or Tory Burch, or else a Hugh Hefner lothario type.

In reality Wexner–net worth: $6.2 billion, good enough to make No. 80 on The Forbes 400–is an introspective guy who has been questioning his every move for decades. His professional success results from a compulsive restlessness and dissatisfaction that steer him away from the herd. His first great insight was focusing on a few products (The Limited) at the apex of the department store age. He expanded nationally when the biggest retail stores were regional concerns. When most competitors rushed overseas, he held back. And in his biggest score of all, he reimagined the lingerie business as a wholesome enterprise that could thrive next to the food court and the multiplex, rather than the boudoir and the peep show.

Being a chronic contrarian is not easy. About to open his first store at age 26, Wexner woke up screaming every night. In his 30s he was a distraught millionaire, searching for a purpose greater than adding more zeroes to his net worth. The money came easier than the fulfillment, and by his 50s he was running more than a dozen businesses, five of them doing sales of $1 billion or more. Then, characteristically, he decided he had it all wrong and from 1998 to 2007 spun off or sold The Limited, Limited Too, Abercrombie Fitch, Express, Lane Bryant and Lerner New York. He kept Victoria’s Secret, betting that the brand’s emotional resonance would support higher margins in an increasingly commoditized apparel space.

“What I worry about is a fear that you won’t have the idea or that you have figured it out wrong,” he says.

Wexner now owns the only three bra labels that matter: Victoria’s Secret, Pink and La Senza. Together they make up 41% of America’s $13.2 billion lingerie market. Their next closest competitor, if you can call it that, has a 1% market share. Bath Body Works, the world’s largest beauty retailer, is his, too. He holds all of them under his thriving parent company, L Brands.

L Brands’ 2,949 wholly owned stores sell over $11 billion worth of bras, panties, soaps and other such products a year. Same-store sales have increased in each of the last 19 quarters. Brilliant marketing, especially the annual Victoria’s Secret Fashion Show , accounts for some of this success. But in the disembodied era of e-commerce, hands-on customer service matters, too. Shoppers can buy quality T-shirts and pants from a multitude of different retailers, both online and off, but bras are different. Eighty percent of women in America wear the wrong-size bra. Computers can’t measure them for a proper fit, and employees at, say, Target won’t. But Victoria’s Secret workers do, and women pay the company back with loyalty. Ninety-nine percent of L Brands stores turned a profit in 2013, and Victoria’s Secret’s operating margins are 17%, triple the industry average. In defiance of e-commerce evangelists, he opened 50 new locations in the last year. His online business is not the focus, but it’s doing just fine, accounting for $1.5 billion of his annual sales.

Those numbers have translated into huge gains on the stock market, where L Brands shares have shot up 11% in the last year, twice as much as the SP retail index. Over the last five years L Brands shares have returned nearly 500%, more than almost any other retailer in North America (the two exceptions: Under Armour and G-III Apparel). “They’ve done such an unbelievable job dominating the market,” says Wells Fargo retail analyst Paul Lejuez. “I can’t think of anyone who has been more successful.”

And there are billions more waiting for Wexner outside of America’s borders. Victoria’s Secret is already famous around the world, not because of its stores but because of its scantily clad models, who hail from every continent except Antarctica. Viewers tune in from 192 countries around the world to watch the Victoria’s Secret Fashion Show on TV each year.

Yet Wexner has barely begun expanding Victoria’s Secret stores worldwide. “Our priority is our domestic business, but we could see that our international business could be as big or even bigger,” Wexner says. In 2012 Victoria’s Secret expanded its wholly owned stores beyond North America, opening two

locations in London. Five more stores have since popped up in the U.K., and together they’re already grossing over $100 million.

Wexner is also taking the brand into Asia and the Middle East through a new
franchise model, with virtually no risk for L Brands. Wexner has more than 600 franchised stores around the world. L Brands invests no capital in the stores and is virtually guaranteed to turn a profit from day one, charging an outsized royalty of between 10% and 15%. The opportunity is big enough that, for the first time ever, Wexner is moving the Victoria’s Secret Fashion Show outside of the United States, taking it to London this December. “They’re only scratching the surface of international expansion,” says Matthew McClintock, retail analyst at Barclays, who envisions a $10 billion business overseas within a decade. “It’s a gold mine.”


WEXNER’S REFLEXIVE questioning drew him into retail in the first place. After getting his undergrad degree at Ohio State in 1959, he dropped out of its law school and returned home to help around the small family store, Leslie’s, named after him. When his father left on vacation, Wexner tried to solve the riddle of why his dad had always worked so hard but never made any money. He found a stack of invoices, and on a piece of scrap paper began tallying the cost and profit from each item in the store.

The numbers added up to a counter-intuitive conclusion. Although big-ticket items like dresses and coats looked like they had huge margins, they actually made no money because they sat on racks forever. All of the store’s profit came from less glamorous items like shirts and pants. Wexner’s parents returned home to find that their son, with nearly no professional experience, thought he could run their store better than they could. Wexner told his dad to take out the coats and replace them with more blouses and pants. His dad told him to get a job.

He did, founding a rival store to his father’s with a $5,000 loan from his aunt in 1963. He put a limited selection of clothing in the store–only the shirts and pants that flew off shelves–and named the place The Limited. Wexner signed a lease for a second store before even opening his first, convinced that if the idea worked in one store it would work in another. Before selling a single shirt, he already owed his landlords $1 million. He had nightmares every night and eventually started getting belly pains. The doctor told him he was too young to have a stomach ulcer, but the X-ray clearly showed the hole that fear had eaten through his stomach.

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Is this the cradle of 2016 contenders?

September 30, 2014 Posted by admin

The Tristate has four – yes, four – potential 2016 Republican presidential candidates: Rob Portman, Rand Paul, John Kasich and Mike Pence. Maybe it’s something in the water that makes our local politicians more apt to have an eye on the White House. Whatever the reason, here’s what you need to know about the region’s possible contenders – who they are, whether they will run and whether they’ve got what it takes to win.

Name: Rob Portman

Current job: U.S. senator from Ohio

Age: 59

Family: Married to Jane Portman; three children

Resume: U.S. House, 1995-2003; U.S. Trade Representative under President George W. Bush, 2005-06; Office of Management and Budget director under Bush, 2006-07; U.S. Senate, since 2010.

Three reasons he could win the GOP nomination:

• Portman has “a billion-dollar Rolodex,” as GOP consultant and Portman political confidant Barry Bennett recently told the Washington Times. That means the Ohio Republican can probably raise the millions he would need for a White House bid; he also has extensive political and business connections he could tap for a national campaign.

• Ohio played a key role in the 2012 GOP primary race, and it’s always been pivotal in the general election. No Republican candidate has ever won the White House without winning Ohio, so Portman could use his Buckeye State roots as a major selling point in any campaign.

• He has a gold-plated resume, with experience serving in Congress and the executive branch. And because he is not an ideologue or partisan lightning rod, he could appeal to Democrats and independents.

Three reasons he could lose the GOP nomination:

• His support for same-sex marriage will make him untenable to social conservatives, a voting bloc that will play a huge role in determining which Republican candidate wins the nomination. Social conservatives play key roles in two early states in the Republican nominating calendar: the Iowa caucuses and the South Carolina primary.

• One of the biggest knocks on Portman is that he’s boring – or “vanilla” as some pundits put it – lacking the charisma of other possible GOP contenders, such as New Jersey Gov. Chris Christie. Portman’s allies say that’s a misperception, but there’s no question he’s a button-down, straight-laced policy wonk.

• If there’s any tarnish on Portman’s political resume, it’s from the time he spent working in the Bush administration. In particular, his stint at the helm of Bush’s budget office could hurt Portman’s efforts to portray himself as a crusader for fiscal discipline, since Bush ended his presidency amid mounting national debt and an economy in full meltdown.

How he’s polling: Portman is not even a blip at this point. He’s not on most pollsters’ lists of possible GOP nominees whom they ask voters about right now, and when they do ask about him, he doesn’t move the needle. In an October 2013 New Hampshire survey, for example, Portman’s support didn’teven reach 1 percent.

How he’s maneuvering: Portman traveled to New Hampshire last month, and he’s heading to Iowa next month. He says his visits to those crucial presidential primary states are focused on efforts to help Senate Republicans win a majority in 2014, but they serve a secondary purpose. He’s also beefing up his foreign policy bona fides, with a recent trip to Ukraine and calls for strong action against the militant Islamic group known as ISIS.

What he’s said about 2016:Portman has said that if hedoesn’t see another strong GOP candidate who he thinks could win a general election, then “I will take a look” at running for president. “But right now, I’m planning just to run for Senate in Ohio.”

Our translation:If former Florida Gov. Jeb Bush doesn’t get in the race, Portman will.

Name: Rand Paul

Current job:U.S. senator from Kentucky


Family: Married to Kelley Ashby; three children

Resume:Ophthalmologist; member of U.S. Senate since 2011.

Three reasons he could win the GOP nomination:

He is working it, big time. Paul has made multiple trips to Iowa and New Hampshire, and he has paid advisers on the ground in both of those critical presidential states. He’s already considered the early front-runner, albeit in a very unsettled Republican field.

He already has an enthusiastic following. Here’s an assessment from the Washington Post’s politics blog: “He starts with the activist and donor base his father, Ron, built during two presidential campaigns. Onto that he adds his own political skills and a Republican agenda that, of all the potential candidates this side of Jeb Bush, might have a real chance at expanding the party’s coalition in 2016.”

He’s a tea party darling, but he’s also made a concerted appeal to minority voters to broaden the GOP’s appeal. He has espoused expanded voting rights and drug sentencing reform, and he has grabbed headlines by speaking to civil-rights group that usually align with Democrats.

Three reasons he could lose the GOP nomination:

The GOP establishment doesn’t want Paul to be the party’s nominee. Top GOP strategists and deep-pocketed donors think he’s too far-right fringy to win a general election, and they can exercise a lot of muscle in the political process.

Paul has shifted positions on a bevy of issues, attracting accusations that he’s a finger-to-the-wind politician. Just read the first three paragraphs of this Sept. 14 Washington Post story:

Sen. Rand Paul wanted to eliminate aid to Israel. Now he doesn’t. He wanted to scrap the Medicare system. Now he’s not sure.

He didn’t like the idea of a border fence – it was expensive, and it reminded him of the Berlin Wall. Now he wants two fences, one behind the other.

And what about same-sex marriage? Paul’s position – such marriages are morally wrong, but Republicans should stop obsessing about them – seems so muddled that an Iowa pastor recently confronted him in frustration.

He’s got skeletons: Paul has been accused of plagiarizing parts of his speeches and elements of his book, “Government Bullies.” And one of his a former Senate aides is a one-time advocate of secession who wore a Confederate mask and expressed support for the assassination of President Abraham Lincoln.

How he’s polling: According to a RealClearPolitcs analysis of 2016 polls, Paul is near the top of the still-forming GOP field. RCP’s average of 2016 surveys shows Christie leading the pack with 11.5 percent support, followed by Jeb Bush at 10.8 percent and Paul with 10.3 percent.

How he’s maneuvering: Every which way.

What he’s said about 2016: “We really haven’t finally decided,” Paul said in a recent interview with RealClearPolitics. “My wife is not completely convinced of it. And some of it is that things can change. Within six months, will we still be in a position, through national surveys, that people think we can compete? Will there be a reason why we couldn’t? So I think you have to wait a little while until you get closer to the season of campaigning for that office.”

Our translation: Wild horses couldn’t keep him out of the 2016 race.

Name: John Kasich

Current job:Ohio governor


Family: Married to Karen Waldbillig Kasich; two children

Resume:Ohio Legislature, 1979-1982; U.S. House, 1983-2000; unsuccessful run for president, 2000; a managing director with Lehman Bros., 2001-08; Fox News commentator, 2001-09; governor of Ohio, since 2011.

Three reasons he could win the GOP nomination:

He’s the governor of a major battleground state headed for an easy re-election in 2014. That’s a big selling point.

He can say he presided over an economic comeback in a state hard hit by the recession – delivering tax cuts and budget surpluses, Medicaid expansion and prison reform. Some pundits say Kasich has crafted a new brand of “compassionate” conservatism.

The son of a mailman who grew up in the Pittsburgh area, Kasich has “blue-collar roots” and can connect with “average folks,” former Rep. Tom Davis, R-Va., told the National Journal in January. In other words, he’s not GOP presidential candidate Mitt Romney and he probably wouldn’t get caught dissing nearly half the electorate as people “who are dependent on government” and “believe that they are victims.” (The infamous “47 percent” remark.)

Three reasons he could lose the GOP nomination:

Kasich embraced one of the most controversial elements of President Barack Obama’s health care reform law: Medicaid expansion. The Affordable Care Act is still toxic among Republicans, and any politician supporting Medicaid expansion can expect to face sharp attacks linking them to what’s become known as “Obamacare.”

Kasich took a beating in 2011 when voters resoundingly rejected the centerpiece of his first-term agenda – a law he signed in March of that year to restrict collective bargaining rights for public-sector union workers. Less than eight months later, Ohio voters approved a state referendum repealing that measure, known as Senate Bill 5. The defeat left Kasich reeling, with Politico, a Washington news outlet, writing that the vote had left “serious tread marks” on Kasich and he had “fast become his party’s poster boy for conservative overreach.”

There’s plenty of other fodder that Kasich critics could dig up for attack ads, including his support in 1994 for a ban on assault weapons and his stint as a managing director of Lehman Bros. before the economic meltdown.

How he’s polling: Like Portman, Kasich isn’t included in most national 2016 surveys at this point. In the October 2013 New Hampshire poll, Kasich got the same asterisk as Portman. * = Less than 1 percent. In Ohio, he fares better, but he would still lose a hypothetical match-up against possible Democratic candidate Hillary Clinton. In a July survey by Quinnipiac University, for example, Ohio respondents choose Clinton over Kasich by 47 percent to 40 percent.

How he’s maneuvering:Kasich went to Las Vegas in March to meet with GOP mega-donor Sheldon Adelson. Adelson invited the Ohio Republican and three other possible 2016 GOP candidates to speak to the Republican Jewish Coalition and meet with him privately. In what some have called the “Sheldon primary,” the casino executive is actively looking for a mainstream Republican to back financially in the 2016 race.

What he’s said about 2016: “All I’m considering now is winning and keeping Ohio going,” Kasich recently told The Enquirer. “When I was very young … I’d see the governors walking around, and I’m like, ‘Gosh, that’s the governor there.’ Now I’m the governor. … This is the job I want. Period.”

Our translation: Ask that question again after the governor’s race is over. Kasich might open the door a little wider.

Name: Mike Pence

Current job:Indiana governor


Family:Married to Karen Pence; three children

Resume:U.S. House, 2001-12; Indiana governor, since 2013.

Three reasons he could win the GOP nomination:

Pence has stellar conservative credentials on fiscal and social issues alike. In Congress, he was an early member of the Tea Party Caucus and crusaded to defund Planned Parenthood. In Indiana, he has pushed to cut taxes and increase school vouchers, although he’s recently taken some flak from conservatives over his push for an alternative version of the Medicaid expansion under the Affordable Care Act, among other decisions.

He could benefit from deep ties to influential conservative groups, such as the Club for Growth and the Heritage Foundation. He’s also allied with David and Charles Koch, the wealthy GOP brothers who have a powerful national political network.

He’s a governor from America’s heartland who also knows his way around Washington.

Three reasons he could lose the GOP nomination:

He’s an unknown without a big federal campaign account. “He’d have to go from zero to 50 pretty fast,” Robert Dion, chair of the political science department at the University of Evansville, told the Indianapolis Star this year.

Some see him as too conservative to be able win a general election. Like Paul, he could face resistance from major GOP donors who don’t want to see him as the party’s nominee.

Despite a long career in public office, Pence doesn’t have a long list of accomplishments. He’s been Indiana’s governor for two years, for example, but he won’t submit his first budget until next year because the state is on a two-year budget cycle.

How he’s polling: Like Portman and Kasich, Pence hasn’t yet made it onto the list of possible presidential candidates pollsters are asking about.

How he’s maneuvering:He’s been beefing up his foreign policy portfolio, with a trip to Germany, where he touted Indiana businesses, visited U.S. troops, and blasted the Obama administration as too soft on Russia.

What he’s said about 2016: “I can tell you that, for a small-town guy from southern Indiana who grew up with a cornfield in his backyard, it’s a very humbling thing to be mentioned for the highest office in the land,” he recently told the Wall Street Journal. “But my focus is on Indiana.”

Our translation: Just cut a few lines from that answer (like the last six words), and you’ve got the makings of a nice little presidential stump speech.

Gannett Washington Bureau reporter Maureen Groppe contributed.

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RPT-Canadian miners scrap over gold discovery after mega deal

September 29, 2014 Posted by admin

(Repeats with no changes to text)

By Allison Martell

TORONTO, Sept 5 (Reuters) – On one side, the founder of top
miner Goldcorp Inc, his young apprentice, an aggressive
securities lawyer, and a tiny company based in a Quebec mining
town. On the other, the chief executives of two leading Canadian
gold miners, fresh off one of the biggest deals of their

Some of Canada’s best-known mining executives are sparring
over the early-stage but promising Odyssey gold discovery in
Quebec, near Canadian Malartic, the country’s biggest gold mine.

The legal fight has its roots in the C$3.9 billion ($3.6
billion) takeover of Osisko Mining Corp, the mine’s builder,
this year. Yamana Gold Inc and Agnico Eagle Mines Ltd
teamed up to beat a hostile bid by Goldcorp,
taking control of Canadian Malartic.

At the heart of the dispute is who, if anyone, will profit
from Odyssey, one of Osisko’s assets. If early drilling results
at the exploration site pan out, it could be a choice addition
to the Canadian Malartic mine, extending its life.

Abitibi Royalties Inc, listed on Venture, the
Toronto Stock Exchange’s market for small, growth companies says
it was Osisko’s minority partner, and the deal has triggered its
right to take control of part of Odyssey. Yamana and Agnico
dispute that claim.

Tiny Abitibi was little known before it challenged the two
mining heavyweights, but it has a big backer in Rob McEwen, who
ran Goldcorp until 2005, and it has doubled down even as Yamana
and Agnico dismiss its challenge as opportunistic.

In June, McEwen’s protege Ian Ball joined Abitibi’s board,
along with Joe Groia, a lawyer and former head of enforcement at
Canada’s top securities regulator. In July, McEwen invested C$2
million in Abitibi. In August, Ball became president.

Canada’s tightly-knit gold industry, home to three of the
world’s top five gold producers, has been split by conflict in
the wake of major deals before. Barrick Gold Corp
tussled with Goldcorp for two years over the El Morro project in
Chile until 2012.

“The point here is a point of principle,” Yamana Chief
Executive Peter Marrone said, discussing Abitibi’s challenge on
a July 31 conference call. “You cannot make actions like this,
certainly with a company of the stature of Agnico and Yamana,
without consequences.”

He did not say what the consequences would be, and Abitibi’s
Ball is undeterred.

“You don’t work for Rob McEwen for ten and a half years
without learning that sometimes good things come with a battle,”
Ball told Reuters.

McEwen showed his combative side shortly after he left
Goldcorp, criticizing his successor’s plan to buy a rival miner
and later trying to block the deal in court as a shareholder.

Abitibi, which is based in the Quebec town of Val-d’Or,
French for valley of gold, could become a top gold miner, said
Ball, emulating legendary growth stories such as Barrick
predecessor American Barrick and Goldcorp.

Shares of Abitibi have more than tripled since April 14. The
shares traded at C$3.40 on Thursday.


Abitibi says it has a 30-percent interest in the property
that contains the northern section of Odyssey, and that the
interest is “free carried,” meaning it would not have to fund
development to enjoy its proceeds.

It took Osisko to court over that interest before the
conclusion of the takeover, which Abitibi says has triggered its
right of first refusal to acquire the 70 percent it does not
own. Yamana and Agnico reject that claim.

“It seemed to me that there was a large rush to buy Osisko
and sometimes, well, when you buy something, I’ve found there’s
always something hiding in the closet that you didn’t expect,”
McEwen said in an interview at his Toronto office.

“Abitibi Royalties is on pretty solid ground. They had
contracts, and those were just swept aside when these larger
companies came in and said ‘let’s get this deal done’.”

Agnico and Yamana declined to comment for this story.

Yamana and Agnico closed the Osisko deal in June, taking
over Canadian Malartic and several other properties and hiving
off other prospects into a new company.

The deal focused on Malartic, but on a call shortly after
its announcement Yamana noted that early drilling results
indicated “a significant underground deposit” at Odyssey.

Exploratory drilling at Odyssey was halted by Yamana and
Agnico in July, “pending determination of the project’s
financial viability and the resolution of ongoing disputes.”

Abitibi has appealed a Quebec court decision that would send
it into arbitration with Yamana and Agnico. It will have a
chance to make its case either way, and it is not yet clear how
long it might take to get a ruling.

($1 US = $1.09 Canadian)

(Additional reporting by Euan Rocha; Editing by Amran Abocar
and Tomasz Janowski)

(c) Copyright Thomson Reuters 2014. Click For Restrictions –

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