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La Senza

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La Senza

  1. 1. Closing down Gina Workers are calling on La Senza to help keep the Gina Form Bra Factory open. Gina is one of the few apparel factories in Asia with an independent union and decent working conditions. La Senza officials have failed to respond to repeated calls from the Maquila Solidarity Network. The owners of the Gina Form Bra Company Ltd. factory in Thailand plan to shut down the factory on October 31 and shift orders to China. Workers at the factory see this as yet another attempt to bust the union and reverse a major victory for the anti-sweatshop movement. 1,600 workers will lose their jobs. In 2003 a concentrated international effort by unions, NGOs and major US brands won the reinstatement of union members who had been unjustly dismissed and convinced management to negotiate a new collective agreement with the union. quot;At the time, La Senza abandoned Gina workers by moving their production to another factory owned by the same company,quot; says Kevin Thomas of the Maquila Solidarity Network. quot;Now it's time for La Senza to make good by demanding that their supplier keeps the Gina factory open and by supporting it with orders.quot; Gina has since been seen as an example of a quot;goodquot; factory for international brands looking to source from Asian factories with better labour rights practices. Anti-sweatshop groups are calling on major brands including Victoria's Secret, Warnaco (owner of the Calvin Klein, Chaps, and Speedo brands), Gap and La Senza to ensure that the Gina factory stays open and the workers right to freedom of association is respected. La Senza reveals firm suppport for developers While selling lingerie may seem glamorous, the IT challenges that come with supporting La Senza’s global network of retail locations are anything but. Based in Montreal, La Senza has over 300 stores across Canada and another 250 stores in 28 different countries around the world. To support that operation, La Senza works with a number of different external application vendors to supply different operational systems, from financials and sourcing to retail management and distribution. Johanne Langelier, director of La Senza’s projects and management office, said to integrate those different systems and make sure they’re able to do what the retailer needs them to do, the company has an internal quality assurance (QA) team that tests new application versions and modules for production defects. La Senza’s challenge, Langelier said, was managing that QA process. It had tried using an ad hoc system by creating defect files in Microsoft Word, filling out the information and saving it in a central directory, and e-mailing those files back and forth with the vendors as each defect moved through the resolution process.
  2. 2. “We would lose visibility on vendor resolutions (because) it wasn’t centralized,” said Langelier. “It was not well done. It was each person working with the vendor on each defect.” To create a better system, La Senza turned to InCycle Software, a Laval, Que.-based Microsoft partner. InCycle president Claude Remillard said La Senza’s biggest challenge was that each time one piece of its application infrastructure was modified or upgraded there was a great deal of testing and integration work that had to happen on all the other systems as well. “Since all the systems have been customized and they’re all different, there’s not a standard data dictionary, so there’s a lot of knowledge and tests and know-how that need to happen,” said Remillard. With an eye to making that testing process more efficient, Remillard said InCycle was brought in to introduce more structure and best practices to the process. It began with a pilot project around one major upgrade and has been live since February. Remillard said InCycle recommended a customized solution using Microsoft’s Visual Studio Team System, since the developers were already using Microsoft tools such as Visual Studio and SQL. The system InCycle created for La Senza is essentially a workflow between La Senza’s internal QA team and its external vendors. Using Visual Studio Team System, Remillard said they have an instant list of defects, can see if the defects are accepted and their status, and if they’re considered to be added scope to the original contract or something that is required to be fixed by the vendor. At La Senza, two desktop PCs have the application installed, and the vendors connect to the PCs via a remote VPN connection to update defect issues with a resolution note and let the QA team know when new code is ready to be installed and tested. The application sends e-mail alerts to the responsible parties when defects are logged, when additional information is added or when the vendor requires more information. “They were spending a lot of time creating lists between the parties, and there were a lot of cycles lost coordinating the work, as opposed to actually testing,” said Remillard. “With the Team System solution, that became fairly easy to do.” La Senza’s Langelier said the biggest time savings has probably come on the management side. The company has a weekly management meeting to track and prioritize defects and resolutions, and Langelier said, thanks to the new defect tracking system, the QA team members no longer have to join the meeting to provide reports. “It was hard to get the data centralized,” said Langelier. “We saved a lot of time just in reviewing the defects, having good information and being able to make good decisions on each of them.” La Senza sold to Victoria Secret
  3. 3. Limited Brands Inc., the owner of Victoria's Secret, which sued La Senza Corp. earlier this year over a patented bra, has agreed to buy the Canadian lingerie retailer for $710-million. The move could see La Senza make another foray into the U.S. market or see Victoria's Secret bring its higher-end lingerie boutiques into Canada, La Senza chief executive Irv Teitelbaum said in an interview after yesterday's announcement. Limited Brands is a U.S. retail conglomerate that owns 3,534 specialty stores under banners including Bath & Body Works, Express, Limited Stores and Henri Bendel. quot;It's a very exciting business combination and as time goes on we will make decisions jointly regarding such moves,quot; Mr. Teitelbaum said. quot;We could go back in the U.S., they could come up here, and there are exciting licensing opportunities.quot; After Victoria's Secret accused La Senza of copying a popular bra design last spring, the two companies began talking, Mr. Teitelbaum said, joking that the quot;bra-suit,quot; which was stalled after La Senza won a preliminary judgment in Ontario court, was a prelude to getting to know each other better. quot;We found them to be kindred spirits ... we entered into cordial discussions with them.quot; Limited will pay $48.25 a share for Canada's biggest specialty retailer of lingerie, a 47.8% premium to yesterday's closing price of $32.65. La Senza, which has 318 stores across Canada and 327 licensed stores in 34 other countries, is expected to close the transaction early next year. La Senza is expected to have revenue of $465-million this year, according to analyst projections. quot;This is one way to eliminate the competition,quot; said David Howell, apparel industry consultant and president of Associate Marketing International. quot;I'm not terribly surprised. Victoria's Secret was going to come to Canada -- it was a question of when.quot; In court filings earlier this year, Victoria's Secret said it had sold US$90-million worth of lingerie to Canadians through its Internet site and catalogue business in the past five years. More than three million households in Canada received the Victoria's Secret catalogue by mail in 2005. Mr. Teitelbaum and company co-founders Stephen Gross and Laurence Lewin, president of La Senza, have entered into a hard lock-up agreement with all of the other holders of multiple voting shares to deposit all of their subordinate voting shares to the offer, representing 48% of the fully diluted shares post-conversion. The La Senza executives will stay in their roles and work out of Montreal. La Senza would have a better chance of succeeding under the Limited's wing in the United States, said analyst Bob Gibson of Octagon Capital Corp. The Canadian retailer shut five test stores in the northeastern United States in early 2005 after they failed to turn a profit. quot;Victoria's Secret is a higher price point, so they won't compete directly, and they will have
  4. 4. much better access to real estate.quot; He speculated that La Senza might phase out its La Senza Girl banner, with 78 stores across Canada, a retailer for pre-teen girls, to make room for Victoria's Secret or another Limited banner. Mr. Teitelbaum said La Senza Girl had become profitable in the last 2 1/2 years and the company intends to keep running it. La Senza is Canada's biggest specialty retailer of lingerie, with 13% of the market, according to market researcher Trendex North America, up from 10.7% in 2003. It has continued to grow at the expense of department stores such as The Bay, whose share of the market slid to 9.3% from 13.7% over the same period. La Senza's Mission La Senza Lingerie is the ultimate shopping destination for a vast array of exclusive high quality branded lingerie at affordable prices. Our mission is to provide an outstanding lingerie presentation in a world class environment. La Senza provides customers with outstanding personal service, while combining quality, fit and value. The merchandise continues to satisfy two areas of consumer needs: firstly, La Senza strives to become the destination specialty lingerie store for all consumers and secondly, to provide a constant range of merchandise relevant to the gift purchaser. Since the first store opening in 1990, La Senza has maintained a focused vision of excellence. The La Senza brand name has become synonymous with high quality, affordability and elegance, and La Senza takes pride in dedicating itself to its customers and merchandise. As Canada’s premier lingerie retailer, La Senza owns and operates over 300 stores throughout Canada, and a further 300 stores in 30 more countries around the world. See store Locator for details. La Senza offers women a unique shopping experience with outstanding lingerie presentation in a beautiful and intimate environment, featuring everything from bras & panties, to sleepwear, loungewear, bodycare, and accessories. La Senza gets known through merchandising, e-commerce and licensing Ask most ad agencies how to build a successful brand, and they are likely to tell you that the most effective way is through advertising, and preferably on television. But this is not the only route. Some companies are doing quite well, thank you, with minimal ad spending. quot;We don't do any advertising,quot; said Lawrence Lewin, president of lingerie retailer La Senza Inc. quot;Our brand was built through effective merchandizing, in-store promotion, signage and staff training.quot; The results are encouraging. Starting from scratch, when he began La Senza as a division of Suzy Shier Inc. in the mid eighties, Lewin now heads a chain of 211 Canadian stores, and claims quot;about 20 per centquot; of the Canadian lingerie market which he estimates at $1.1 billion in annual sales. Getting specific statistics from Lewin is like pulling out his teeth. He would only say that
  5. 5. same stores sales in the last quarter were up quot;about 10 per cent,quot; from the same period the previous year, and that the outlets are some of the most productive -- on a sales per square- foot basis -- in Canadian retail. quot;We add value, by providing the customer with a specialty product -- lingerie -- and unlike other companies, we offer very few ancillary items such as swimsuits,quot; said Lewin. quot;We invest heavily in training store personnel, to provide customers with knowledgeable clerks who can help them in their purchases,quot; said Lewin. quot;We also have very low turnover. Many sales people who joined us as temporary workers in their late teens are still with us.quot; La Senza also cross-promotes its retail outlets through the Net. Lingerie Web-sites, like all sites featuring scantily-clad women, attract attention far out of proportion to their economic value. Thus by the time La Senza announced its E-commerce initiative last October, the company already had 40,000 members signed on at its existing site. Like most Canadian retailers, La Senza was late in getting into E-Commerce, launching in October of last year, almost one full year after Victoria's Secret, -- itself a late arrival to the medium. Like most Canadian E-tailers, La Senza's total E-commerce sales -- Lewin will only confirm that one per cent of total sales quot;is a good guessquot; -- are disappointing so far. But revenue growth is rapid, and the case is typical of our country's online vendors. Canadian consumers are behind their American counterparts in their openness to purchasing online, but are catching up quickly. quot;The medium has good potential for us, because men visit our Web-site in greater percentages than our stores, which they are sometimes reluctant to enter,quot; said Lewin. quot;We are also better positioned than our competition, because we have a network of stores to support the site. If you don't like a product bought on our Web-site, you can just return it to the store nearest you.quot; La Senza is also seeing a certain amount of success in its licensing division, which has 75 stores operating via various license and cooperation agreements in several countries, among them Great Britain, and of all places Saudi Arabia. quot;I never imagined we would be doing business in the Middle East,quot; said Lewin, who expanded, after being approached by some Arabs -- that would eventually become his associates -- who had visited one of his London stores. Through the licensing arrangement La Senza provided licensees with store design, logistics and on-site training, the brand name as well as the merchandise to be sold. The partner provides the capital and the operational personnel. In practice what this means is that once the franchise stores are up and running, La Senza has a customer for its products, without the headache of running the individual stores. And since the merchandize is often shipped from a third party country -- usually in the
  6. 6. Orient -- to the franchisee directly, without passing through Canada, La Senza is, in this respect, a model for the information economy. quot;The Middle East has been a very successful region for us,quot; said Lewin. quot;We originally planned nine stores in Saudi Arabia, and there are now 20 operating. In fact, the operation has been so successful that La Senza last week announced an agreement with Lima Trading Co., that will see at least 15 new licensed stores open up during the next three years in the United Arab Emirates, Oman, Qatar, Bahrain and Kuwait. Not bad, for a company that is relatively unknown outside Canada. The intimate apparel industry is one of the best exemplars of the power of effective marketing. Consumers are persuaded to spend big dollars, for what is essentially a rag, that almost no one gets to see. In this environment -- where competitors such as Victoria's Secret routinely list items costing more than $100 -- La Senza has positioned itself as every-women's store. quot;We provide mass-market, moderately-priced merchandize,quot; said Lewin. And La Senza is not alone in pursuing a successful no advertising branding policy. Loblaws, whose stores are popping up all over the city, also has a small ad budget. As one official said: quot;Our store is the advertising.quot; History La Senza Corporation is a major Canadian retailer of women's lingerie and apparel, avoiding the sexy niche carved out by Victoria's Secret and Fredericks of Hollywood in favor of focusing on high quality merchandise sold at affordable prices. Based near Montreal, the company owns and operates more than 200 La Senza Lingerie stores in Canada, and another 140 stores located in 18 countries, which includes licensed operations in the United Kingdom, the Middle East, and elsewhere. In addition, the company owns and operates more than 80 La Senza Girl stores, which target girls between 8 and 14 years of age. Through subsidiary Wet Seal, the company has operated in the United States since 1984, but only since 2003 has it attempt to crack the U.S. market with La Senza Lingerie. Although a public company, La Senza is 90 percent owned by chairman and CEO Irving Teitelbaum. Teitelbaum, La Senza's cofounder, was born to Polish immigrants who came to Canada after World War I. He went to college at McGill University, then transferred to Sir George Williams College, where in June 1960 he graduated with a bachelor of commerce degree. Shortly thereafter he married and began his retail career, going to work for his father-in- law, Irwin Shier, who owned a junior department store in the Quebec area. Over the next several years he gained a practical education in the importance of catering to customers. He told Canadian Business in 2002 that working for a small town department store was an excellent training ground because quot;You're not making new customers every day, so you have to treat each person who comes into your store like a king or queen.quot; In 1966, Shier was looking to open another department store when he came upon a mall in a desirable location, Sherbrooke, Quebec, but it only had a woman's wear shop available to lease. Aware that junior fashion was becoming very popular, he decided to lease the space and
  7. 7. open a store, which would be named Suzy Shier, and offer trendy, yet moderately priced, apparel to the junior market. By this time, he had another son-in-law, Stephen Gross, who teamed with Teitelbaum to open the first Suzy Shier store in 1966. After Shier died in 1968, Teitelbaum and Gross began to aggressively expand the Suzy Shier concept. Over the course of the next decade Suzy Shier grew into a 22-store chain with units spread across Canada, generating sales of $7 million Canadian in 1975. At this point, the brothers- in-law needed more capital for expansion and in September 1975 they sold a 50.1 percent interest in Suzy Shier to Dylex Ltd., a Toronto-based holding company with a number of retail chains in its portfolio. Teitelbaum and Gross remained in charge of Suzy Shier, with Teitelbaum assuming the lead management role. Over the next ten years, with Dylex's backing, the chain was able to add another 50 units, with shops located in every major Canadian city as well as other smaller locales, such as Timmins, Sudbury, Sault Saint Marie, and Thunder Bay. During this period, Teitelbaum and Gross became interested in the U.S. market and took notice of a 16-store, Irvine, California-based chain, The Wet Seal Inc., which sold contemporary fashion apparel and accessories to juniors. Convinced that Wet Seal, despite losing money, was a good complement to Suzy Shier, they acquired an 80 percent interest in 1984 (half of which was owned by Dylex), made it profitable, and steadily expanded the chain in the United States. A key executive credited with the growth of Wet Seal was Kathy Bronstein, who in 1985 joined the subsidiary as the head of the merchandise group. She brought with her a good deal of experience in the junior market place. After earning an advertising degree from the University of Florida, she became an assistant buyer for a Philadelphia, Pennsylvania, chain called Deb Shops, then became the buyer for junior sportswear at Jordan Marsh. She relocated to southern California in 1979 to become a buyer for Fashion Conspiracy, followed by a stint with the Wild West chain before coming to Wet Seal. By 1992, she became the company's chief executive officer. In the meantime, in 1990, Wet Seal was spun off as a public company, raising $41 million. Of that amount, $20 million was used to repay loans from Dylex, which now needed the money because of recent losses as well as a heavy debt load. The remaining $21 million would be used by Wet Seal to fuel further expansion. Over the next dozen years, Wet Seal grew to include some 600 stores divided among three chains. While Wet Seal continued to serve the youth market, Arden B stores catered to women and Zutopia targeted quot;tweens,quot; girls between the ages of 8 and 14. In the early 1980s, Teitelbaum and Gross launched another chain of apparel shops to cater to the junior market called L.A. Express, but by the end of the decade they sensed that both Suzy Shier and L.A. Express had peaked in Canada, and they looked for a new growth vehicle. At the time, lingerie retailer Victoria's Secret was making a splash in the United States, and the partners decided to try something similar in Canada, while avoiding the overtly sexual nature of Victoria's Secret. Suzy Shier was already carrying a modest line of undergarments and sleepwear, but because shelf space was limited and fearing that the traditional Suzy Shier customer might be confused by the sudden influx of lingerie, Teitelbaum and Gross elected to form a separate chain of lingerie shops under a new subsidiary. After toying with the Suzy's Secret as a name for the business, Teiltelbaum drew on the Italian word for quot;without,quot; Senza. He added the article quot;laquot; to feminize the
  8. 8. name, creating quot;La Senza,quot; which he felt quot;had a nice, luxurious ring to it.quot; The basic business plan was to sell private-label lingerie--designed by the company with manufacturing outsourced--in a boutique format. The first La Senza shop opened in 1990 in Ottawa's Place D'Orleans Shopping Centre. Placed in charge of the brand as president was British-born Laurence Lewin, who did not start out in the apparel industry. Rather he was an accountant by training who was working for Honeywell Information systems when he was sent to Montreal in the early 1970s to work on a project for Air Canada. In the mid-1970s, he accepted a chance to run a clothing chain, found that he loved the industry, and elected to make a career in apparel. Teitelbaum recruited him in 1987, initially hiring Lewin to serve as vice-president in charge of merchandising at Suzy Shier, but with the intention of eventually offering greater responsibility. With Lewin as president, La Senza grew quickly, so that by the end of 1992 the chain had grown to about 35 units. As had been the case with Wet Seal, Suszy Shier's La Senza division needed more financial backing to support its growth than its corporate parent could provide. Because it was still strapped for cash, Dylex once again opted to make a public offering, spinning off Suzy Shier, which was one of its few consistent successes. In 1993, Dylex sold its entire 50.1 percent stake to underwriters, realizing approximately CAD $60 million, while Suzy Shier also made shares available, raising about CAD $18 million, which was used to double the size of the La Senza chain by the end of the year. Over the next few years, Suzy Shier attempted to grow on a number of fronts. Looking to becoming international, the company targeted England, a large and fragmented market. It formed a company, La Senza plc, and in the final weeks of 1994 opened six La Senza stores in the United Kingdom. By early 1996, another 16 shops had opened and La Senza plc floated an offering on the Alternative Investment Market, garnering a great deal of attention by bringing pictures of lingerie-clad models to London's financial newspapers. In the United States, Wet Seal posted back-to-back unprofitable years, but because of aggressive cost-cutting measures, the unit was much better positioned than rivals who were not as quick to react to a downturn in the economy and lapsed into bankruptcy. In April 1995, Wet Seal was able to acquire the 237-store Contempo Casuals chain from Neiman Marcus, nearly tripling the size of Wet Seal, which operated 130 stores. A few weeks later, Suzy Shier, which had remained profitable despite difficult economic conditions, paid $12 million to acquire a controlling interest in Wet Seal from Dylex, which had just emerged from bankruptcy. A year later, in October 1996, Suzy Shier paid nearly CAD $5.2 million to acquire the 42-store Silk & Satin lingerie chain from Woolworth Canada Inc. By this stage, Suzy Shier was operating 257 stores under the Suzy Shier and L.A. Express names and 145 La Senza stores. Even while La Senza was making plans to open stores in additional countries, such as Saudi Arabia, the U.K. venture was beset with mounting losses, primarily because it attempted to grow too quickly and property rentals spiraled out of control. In September 1997, the company announced that the projections used in its listing prospectus quot;should be disregarded.quot; By early 1998, however, the subsidiary was on the ropes and with no help forthcoming from the parent company, bankers were reluctant to step in to help out. As a result, the U.K. operation was sold for a token pound to a company owned by businessman
  9. 9. Theo Paphitis, who owned Contessa Ladieswear among other assets. Going forward, Suzy Shier's La Senza shops in the U.K. would be run on a licensing basis. Another venture that did not succeed for Suzy Shier was an attempt to open stores to serve women five-feet, four-inches and under in height. In general, it was the La Senza brand that was generating growth for the company. A new concept, La Senza Girl, aimed at 7- to 14- year-old girls, was quick to succeed and establish itself. The parent company, as a result, began to convert a significant number of L.A. Express and Suzy Shier stores to La Senza Girl outlets. In July 2001, Suzy Shier Limited became La Senza Corporation, a name which management believed was more in keeping with the direction the company was taking. Not only was the Suzy Shier chain not doing as well as it had in the past, Wet Seal also endured a difficult stretch in 2002, which led to the dismissal of Bronstein as CEO. Teitelbaum replaced her on an interim basis. Effective June 30, 2003, a permanent CEO was hired, Peter D. Whitford, the former worldwide president of Disney Stores. In the meantime, the 178-unit Suzy Shier chain was put on the block. A buyer was found in YM Inc., which operated similar junior clothing stores, such as Stitches, Sirens, and Urban Planet. Hindering the transaction, however, was a probe launched by Canada's federal competition bureau, which charged that Suzy Shier had used misleading quot;regularquot; prices in order to convince consumers they were getting a better bargain. La Senza's management agreed to a CAD $1 million fine but did not admit guilt. Teitelbaum told the Toronto Star that the company felt the matter was holding up the sale of the chain, adding, quot;It was obvious there was no way YM or anyone else was going to buy a Canadian retailer that had an ongoing investigation with the bureau hanging over its head.quot; Just hours after the settlement was announced, the sale to YM was finalized. The terms of the agreement were not made public, but press accounts estimate the purchase price at CAD $8 million. In the same month that Suzy Shier was sold, La Senza opened its first outlet in the United States in a Rockaway, New Jersey, shopping center. Establishing a presence was imperative in achieving the goal of building La Senza into a true international brand. Within the year, a store opened in Garden City, New York, as well as three more units in Massachusetts. Management was confident that it would achieve success in the United States. It had some 20 years of operational experience in the country through Wet Seal, an advantage not enjoyed by many Canadian retailers who failed to crack the market. La Senza was also debt free and held cash investments. With 2,400 regional malls in the United States, half of which management considered suitable for housing a La Senza outlets, the lingerie chain appeared well positioned to realize a goal of one day operating 500 stores in the U.S. market.

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