The Secret Of Epstein, The Secret Sex Scandal, The Secret Of The Boss.

On August 10th, at 7:30 a.m. New York time, the body of Jeffrey Epstein, the financier, was found in Manhattan prison. He died of suicide by hanging himself. Epstein had been prosecuted last month with his own identity as a spy for the spy and many models. He was refused bail a week ago. As a close friend and partner of Leslie Wexner, CEO of L Brands, the Epstein incident is also closely related to the company.

Retailer L Brands is located in the Midwest of the United States. It owns Vitoria Victoria's Secret, Bath&Body Works and Pink, and also has a department specializing in product development, store design and logistics. But there is a little known organization called Strategic Patterning in the company that really has an unparalleled power.

The organization is composed of several employees led by Jamie McFate. He is the company's chairman and chief executive officer Leslie H.Wexner, and his "strategic mode" organization is his eyes and ears. The team usually consists of five to six people, including McFate and his old friend Anton Auerbach. They signed contracts with dozens of freelancers from around the world and submitted reports, which were submitted directly to Wexner after analysis.

But for Wexner, this is also a way to closely monitor all the top executives of L Brands without being perceived as interfering in their decisions. "Strategic models" usually develop new concepts with managers. Some have become popular, such as home furnishing clothes, bathing and body products. A healthier, more adolescent oriented Pink is also working within the team. But the group rejected other proposals, such as increasing the size of the proposal, although these proposals have convincing commercial reasons.

McFate, who lives in Columbo, has worked in the company for more than 26 years. Besides working, he often travels with Wexner and his family. 15 years ago, McFate's agent in New York joined Auerbach L Brands. In theory, McFate reports to Ed Razek, the creative director of the Victoria fashion show and other marketing projects. At least in this Monday's internal memorandum, it is clear that before Razek left office.

But in fact, McFate has been directly related to Wexner. Some employees classify Razek as a puppet and spokesperson, while McFate is Wexner's "right-hand man". Although Razek's role is for the public, he seldom participates in the work of "strategic mode".

The complex and intimate personal relationship between Wexner, McFate and Auerbach has created a working environment called "toxic" by several former employees. In addition, despite the fact that many executives have been in and out of L Brands for many years, the composition of the "strategic model" has remained unchanged. Many people think that this is the harm Wexner brings to him, and it is also bad for him.

"He became very eccentric and surrounded by erroneous people," said a former employee. Like other people, the employee was asked to remain anonymous in the interview with BoF for fear of potential legal risks. Another former employee added: "in the end, it always returns to what Les wants."

In Victoria, this means that the brand conveys a character created by Wexner and his creative deputy. The executive likes to mention the Autobiography of the late director Sidney Lumet (Making Movies), who often compares brand building to movie production. A former employee described "Vitoria" as a girl of 1.5 French origin and half British ancestry. She studied in a boarding school in England and spent the summer in southern France. The company insiders confirmed this description, but called "Vitoria" about 35 years old.

"They live in fantasy," the employee commented on Wexner and his core circles.

This illusion has been going on for decades, and has earned billions of dollars for the company. Over the years, Wexner's success in brand building has won him the right to do whatever he wants. In 1982, the executive bought Victoria's brand at a low price of $1 million, transforming the struggling local chain store into the world's most famous underwear manufacturer. At its peak in 2016, its annual sales amounted to only 7 billion 800 million dollars in North America, accounting for 62% of L Brands's total revenue.

In the past three years, however, Wexner has faced a grim reality of declining sales and shrinking profit margins. Despite being one of the world's leading underwear brands, the company has found itself increasingly out of touch with cultural change and market orientation.

In 2018, the prestigious fashion show reached its lowest rating ever seen: the number of viewers dropped from 6 million 700 thousand a year ago to 3 million 300 thousand. This is a special TV show. A group of skinny girls in underwear display feathered "angel" wings, and occasionally insert some music suitable for broadcast channels. During the campaign, Razek published some unpleasant remarks about transsexuals and large numbers of people in the US version of Vogue, and was strongly criticized in social media. He later had to make an apology.

Now, the long-term relationship between Wexner and Jeffery Epstein has been closely watched by the media. Epstein, a financier in the upper east side of New York, was charged with sexual transactions with minors. She was accused of using her relationship with Wei to attract young women with the gold occupation of the modeling industry, the secret contract. Wexner is very close to him. Epstein even once had the agency power to allow him to deal with personal and legal matters on behalf of Wexner.

The New York Times surveyed the relationship between the two people in its front page report in July 25th, and wrote: "this brings a potentially serious problem to L Brands... Wexner is the longest serving CEO in the S & P 500 index company, and also the largest shareholder of L Brands. He once praised Epstein as "the most loyal friend" and has "excellent judgement and exceptional high standards".

Before the story happened in July 15th, in a statement, the 81 year old Wexner denied knowing anything about the alleged illegal activities in the indictment. He said he cut off his contacts with Epstein about 12 years ago, much longer than the police started investigating the financier for over a year. The spokesman for L Brands did not comment further on the relationship between Wexner and Epstein.

This week, Wexner also told partners of the Wexner foundation that Epstein misappropriated a lot of money from me and my family, but he did not specify the amount. In 2007, when Wexner discovered this, he said he immediately broke up with Epstein. In 2008, Wexner said Epstein did pay a share, of which $46 million was donated to charity. But Wexner insisted that the money was originally taken away from the family rather than from the foundation.

The board of directors of L Brands recently hired an outside law firm to examine their relationship. Wexner once said that Epstein was only a personal consultant, not a consultant for L Brands. But Wexner's strict control of the company led observers to question whether he could separate his personal affairs from L Brands.

Wexner's control of the company was once seen as an asset. In addition to dedication and dedication, the power wanted to help his brands dominate the suburban shopping centers all over the United States.

"During that time, he did all the right things," said Jane Hali, a retail analyst. "His price is right, and the shopping center is also very good. It was very hot then." Hali also commended the promotion and marketing methods of Wexner, namely the famous Victoria shopping catalogue and TV advertisement. "But this is no longer applicable to the present era," she said.

L Brands faces new challenges arising from broader changes in the retail sector. Under the pressure of electronic commerce and social media, Wexner has helped the economy and culture of shopping centers to break down. Seeing the decline in the mid-range clothing market, Wexner sold a The Limited 75% stake in 2007 and sold the rest in three years. The clothing chain store is a bit like Zara, founded in 1963 by Wexner, which has closed all 250 stores.

But it has been growing until 2016. In February of that year, the resignation of Sharen Jester Turney, the chief executive, surprised analysts, because in spite of a decline in the volume of shopping centres in the previous year, Victoria's revenue still hit a record high. At that time, the brand accounted for more than 60% of the underwear market in the United States.

Wexner did not immediately seek the successor of Turney, but assumed responsibility for himself. Two months after she left, the company decided to close its swimwear business and print catalogue, lay off 200 people, and reorganize the brand into three departments -- beauty makeup, underwear and Pink sub brand -- each department has its own leader. By the end of the year, Wei MI has begun to drag the profitability of L Brands. Its share price reached $100 per share at the end of 2015, and then began to fall. By the end of 2016, the company's share price had dropped to $66 per share.

Around this time, Victoria's replacement and challengers poured into the underwear market. They provide more sizes and more comfortable styles, including no steel ring brassiere, which is a trend that Wei MI has missed in a large sense. They also work harder to solve the problem of dress, focus on online sales, and at the same time, by celebrating racial diversity and wider body shape in advertising, avoiding the increasingly outdated sexy image of Victoria.

This strategy has resonated with young consumers and has put pressure on Pink. In 2017, sales of underwear brand Aerie in the United States reached about $493 million, up 27% over the same period last year. In 2014, the company began marketing. Startups, including Savage x Fenty, Third Love and Lively, have begun to take away customers by advocating self love and inclusiveness. The latter has recently been bought by Wacoal group (Wacoal) for $85 million.

However, Victoria's Secret insists on its traditional mode. The brand held a big show in Shanghai at the end of 2017 to publicize its entry into the Chinese market. The company hopes to make up for its losses in the US. However, confusion about the operation, especially the confusion of visa, has cast a shadow over this great show. The lace of China's supermodel Xi Mengyao show off has also attracted widespread criticism from Chinese netizens. After that, Xi Mengyao announced that it had become a brand ambassador, which allowed public opinion to question the professional ignorance of the company. The TV ratings of the big show are also dropping sharply. The sales of Victoria in North America have dropped by 5%, while operating income has dropped by 21%. Same store sales fell by 5%. In 2017, the international sales of Victoria and Bath&Body Works accounted for only 4% of the total L Brands revenue. In China, Wei is considered a late player, underestimating the potential and growth speed of consumers.

In 2018, things got worse, though L Brands sold some other assets to reduce costs. In addition to shutting down multi brand retailer Henri Bendel, the company also sold the Canadian underwear brand La Senza. Then, an interview with Razek in the US Edition of Vogue magazine, he said in an interview: he will not allow big or transgender models to appear in the big show, because they do not meet the "illusion" of Victoria.

Six months after the fashion show was attacked last year, the company announced plans to cancel the annual T TV show on television. It used to be the most important variety show in the fashion industry. Kanye West (Kanye West), Rihanna (Rihanna) and Tyler Swift (Taylor Swift) all served as guests. Today, it is considered a wrong example of a mass market fashion campaign. Before it was broadcast, it had been targeted by internet activists for cultural appropriation, materialization of women and pretend to be deaf and dumb.

L Brands's future plan for fashion shows has been vague. At present, no model has been booked, which usually takes place at this time of year. KCD, a public relations and event agency, has not signed yet. The company has helped create several years of fashion show. In this regard, KCD declined to comment. It is reported that after Razek runs, the company will hold some marketing activities, but the specific content may be totally different.

The profits of the company declined sharply, and the decline of the big show happened at the same time. At the end of fiscal year 2018, the brand's revenues in North America dropped by 50%, while sales remained flat. Thanks to the continuous growth of Bath&Body Works, the total income of L Brands has increased, but the image problem of Wei Mi looks serious.

When Epstein was arrested in New Jersey in July 6, 2019, a large number of reports about his tortuous course showed that most of his wealth came from nearly 30 years of consulting service for Wexner. L Brands has become the target of radical investors, including Barington Capital's James Mitarotinda.

But Wexner is not a good listener. That's because he didn't have to do that for many years. According to the Wall Street journal, when Mitarotinda began to do things in March 2019, Wexner owned L Brands 17.3% shares, which actually controlled the board of directors, including members of the board of directors who had close personal relations with Mitarotinda, including his wife, his financial adviser, a former principal who promised to donate $100 million to a university, and a head of a charitable organization co operating with an organization led by his wife.

L Brands needs an absolute majority vote of 75% to approve the offer, divestiture or remove the director for some reason. However, even if the rights investors can persuade the board of directors, Wexner is no longer suitable for the business. The market value of the company is still large, up to $6 billion 700 million in August 2019, and the number of potential acquirers is still very limited.

However, Mitarotinda later succeeded in forcing Wexner to relax control over power. He publicized the close relationship between the chairman and the independent board members and the company's poor financial performance, called for the stripping of Victoria's secret or the listing of Bath&Body Works. He also promoted the appointment of new board members and split the chairman and CEO positions of Wexner.

Finally, Wexner agreed to compromise on some key issues. Two new independent board members voted and Mitarotinda was appointed as a special adviser. He may continue to advocate change through this role. Perhaps most importantly, the L Brands board may no longer be under the control of the "super majority". The 2020 annual meeting will vote on a proposal to be changed to a simple majority vote. In exchange for Mitarotinda's filing, Mitarotinda agreed not to conspire with others to buy L Brands and other restrictions. Mitarotinda did not reply to BoF's request for comment.

Whether these actions will lead to a significant change in the operation of Victoria's secret remains to be seen. This week, it was reported that Valentina Sampaio, a transsexual model, will take part in the publicity of Pink. The departure of Razek is another indication that changes are taking place. In November 2018, John Mehas, who was appointed chief executive of Victoria underwear, will now be responsible for brand creativity. The successor of Razek now reports to Mehas. The executive will continue to report to Wexner.

L Brands chief financial officer Stuart Burgdoerfer, speaking to investors by the end of 2018, said: "we are committed to a comprehensive assessment of the business. Everything is on the table, including our brand positioning, marketing, talent, real estate, cost structure, and most importantly, our commodity classification. "

Although more and more investors are eager to see Wexner go down, he may get strong support from other shareholders.

Hali said: "these retail companies who have made outstanding achievements in the past have won so many honors that they can not see who the consumers are today". "CEO" They believe that the old methods are effective, but they can not change because of past successes. "

Perhaps the absolute rule of the king of shopping mall no longer exists.