London finance chief: Don’t be mislead by Brexit jobs trickle

City workers fear a disorderly Brexit, which policy chiefs anticipate will damage regulatory alignment and access to the EU. (Reuters)
Updated 15 October 2019

London finance chief: Don’t be mislead by Brexit jobs trickle

  • The city’s policy leader warned that heavy job losses to Europe are expected

LONDON: Britain’s vast financial services industry will lose more jobs to Europe over the coming years because of Brexit, the City of London’s policy chief told Reuters, warning people not to be duped by the low number of job moves to the continent so far.

The City of London, home to global foreign exchange, bonds and fund management operations and to more banks than any other financial center, faces upheaval as firms decide whether to shift jobs to continental Europe to keep serving customers there after Britain is scheduled to leave the EU in two weeks.

Catherine McGuinness, the political leader of the financial district’s municipal body, warned that the country’s biggest export sector and biggest source of corporate tax has no “God given right” to global pre-eminence in finance.

“The announced job moves at the moment are fairly low. We would expect those to go up,” McGuinness said in an interview in a room off the local government’s seat of power in the medieval Guildhall. “It’s not the end of the story. This is a moment of high risk for the City.”

Since Britain voted to leave the EU three years ago, London’s financial services industry has been jolted by the prospect of ending four decades of regulatory integration and losing access to the bloc in one fell swoop later this year.

McGuinness said business leaders have been frustrated by more three years of uncertainty and worries about some of the political momentum behind leaving with no deal.

“We need the government to stop messing about and get on with sorting out our long-term future on the basis that will allow us to strike up a harmonious relationship with our EU partners going forward,” she said.

Britain and the EU meet at a summit in Brussels on Thursday in a bid to agree a divorce settlement, otherwise Britain faces asking for an extension, or a disorderly no-deal departure.

“A disorderly Brexit would be a bad thing, and I don’t think anyone views an extension with enthusiasm. We don’t want to see cans kicked down the road,” McGuinness said.

But given that global banks have no loyalty to anyone, she urged the government to help the City continue recruiting from international talent, build adequate housing and transport, and keep banks competitive after the US cut taxes.

When asked whether she would rather Britain to leave the EU without a deal or a socialist government led by the opposition leader Jeremy Corbyn, McGuinness said it was a hard question to answer.

“A destructive exit would be a very bad thing,” she said. “A government of whatever complexion that did just look at the whole needs of the whole economy would be the better solution.”


Struggling Victoria’s Secret sold as women demand comfort

Updated 22 February 2020

Struggling Victoria’s Secret sold as women demand comfort

  • Chairman calls time following difficult year of Epstein links and controversy over chief marketing officer comments

NEW YORK: Victoria’s Secret has a new owner. Now, the big question is whether the once sought after but now struggling brand can be reinvented for a new generation of women demanding more comfortable styles.

The company’s owner, L Brands, said that the private-equity firm Sycamore Partners would buy 55 percent of Victoria’s Secret for about $525 million. The company, based in Columbus, Ohio, will keep the remaining 45 percent stake. After the sale, L Brands will be left with its Bath & Body Works chain and Victoria’s Secret will become a private company.

Les Wexner, 82, who founded the parent company in 1963, will step down as chairman and CEO after the transaction is completed, and become chairman emeritus. Wexner has faced seperate troubles, including questions over his ties to late financier Jeffrey Epstein, who was indicted on sex-trafficking charges.

The selling price for Victoria’s Secret signifies a marked decline for a brand with hundreds of stores that booked about $7 billion in revenue last year.

In a statement, Wexner said the deal would provide the best path to restoring Victoria’s Secret’s businesses to their “historical levels of profitability and growth.” The deal will also allow the company to reduce debt and Sycamore will bring a “fresh perspective and greater focus to the business,” he said.

To successfully turn around Victoria’s Secret, Sycamore will need to change up the corporate culture, reinvent fashions and redesign the stores to make them more contemporary, experts say. Sycamore manages a $10 billion portfolio including retailers as Belk, Hot Topic and Talbots.

The management team at Victoria’s Secret essentially was designing what men wanted, and not catering to women’s tastes, said Neil Saunders, managing director of GlobalData Retail.

“The brand is very embedded in the past,” said Saunders. “It was always about men feeling good. It should be about making women feel good about themselves.”

Victoria’s Secret has an unparalleled history of success. The brand was founded by the late Roy Larson Raymond in the 1970s after he felt embarrassed about purchasing lingerie for his wife. Wexner, the founder of the then Limited Stores Inc., purchased Victoria’s Secret in 1982 and turned it into a powerful retail force. By the mid-1990s, Victoria’s Secret lit up runways and later filled the internet with its supermodels and an annual television special that mixed fashion, beauty and music.

That glamor has faded and so have sales in the last few years. The show was canceled last year, and shares of Victoria Secret’s parent have gone from triple digits less than five years ago to a quarter of that today.

Victoria’s Secret struggled to keep up with competition and failed to respond to changing tastes among women who want more comfortable styles. Rivals like Adore Me and ThirdLove, which have sprouted up online and marketed themselves heavily on social media platforms like Instagram, have focused on fit and comfort while offering more options for different body types. Meanwhile, American Eagle’s Aerie lingerie chain, which partners with women activists like Manuela Baron, has also lured customers away from Victoria’s Secret.

And in the era of the “Me Too” movement, women are looking for brands that focus on positive reinforcement of their bodies.

“Victoria’s Secret will need to empower women, not make them spectacles,” said Jon Reily, senior vice president and global head of commerce strategy at digital consultancy Isobar.

Stacey Widlitz, president of SW Retail Advisers, a retail consultancy, said that Victoria’s Secret designs in the last few years had gone in the opposite direction to what women wanted, ever sexier and poorer in quality.

And while last year Victoria’s Secret started featuring more diverse models, including its first openly transgender model, the moves fell short.

Victoria’s Secret suffered a 12 percent drop in same-store sales during the most recent holiday season. L Brands said on Thursday that same-store sales declined 10 percent at Victoria’s Secret during the fourth quarter. Bath & Body Works, which has been a bright spot, enjoyed a 10 percent increase. The skincare chain represents more than 80 percent of L Brands’ operating profit.

“The (Victoria’s Secret) brand has lost its way, while the lingerie market is not large or high growth, and has become commoditized,” Randal Konik, an analyst at Jefferies, wrote Thursday. “Furthermore, with athleisure taking over, the need for regular bras continues to wane.”

The company has also been beset by allegations of a toxic work environment and its founder recently apologized for his ties to Epstein, who was found hanged in his cell after federal indictment for sex trafficking of minors. L Brands’ Chief Marketing Officer Ed Razek resigned last August after making controversial comments about why transgender models shouldn’t partake in its annual fashion event.

Epstein started managing Wexner’s money in the late 1980s and helped straighten out the finances for a real estate development backed by Wexner in a wealthy suburb of Columbus. Wexner has said he completely severed ties with Epstein nearly 12 years ago and accused him of misappropriating “vast sums” of his fortune.

Wexner offered an apology at the opening address of L Brands’ annual investor day last fall, saying he was “embarrassed” by his former ties with Epstein.

Wexner is the longest-serving CEO of an S&P 500 company. He founded what would eventually become L Brands in 1963 with The Limited retail chain, according to the company’s website. Wexner owns approximately 16.71 percent of L Brands, according to FactSet.

Mike Robbins, a San Francisco-based corporate culture expert who has advised chains including Gap and Sephora, said the team at Victoria’s Secret would have to retrain workers and hire more people with diverse voices.

“They have a lot of work to do — within the company and also outside with the customers,” Robbins said. “The companies that are able to have (a) great culture attract the best employees.”