Martin Waters
Martin Waters, CEO of Victoria’s Secret & Co, Discusses Their Changing Business

As the Money Maze Podcast seeks to understand both the business and investment worlds, especially against the backdrop of a tougher economic environment, we are delighted to speak to Martin Waters, CEO of Victoria’s Secret & Co (VS&Co).


Simon Brewer  02:29

If my question to Money Maze Podcast listeners was which Fortune 500 companys’ board has the highest percentage of women, with 7 out of 8 female directors, you'd probably know it wasn't a financial institution, at least not yet. You might deduce the sector we're discussing is clothing or luxury goods or cosmetics. And if you are really tuned in, you may answer the world's leading fashion retailer of intimate apparel. And you'd be right, Victoria's Secret, known as VS&Co today, which was spun off by its former parent L Brands in 2021. And today with a market cap of nearly $3 billion, 30,000 employees and a global footprint of nearly 1300 stores in 70 countries, it's a business adapting to all sorts of challenges, from physical retailing to digital to global economic weakness, inflation and rising labour costs, and very specific to them, a change in the way much of the world is thinking about the female form. It's a great pleasure to welcome its highly regarded retailing Chief Executive, Martin Waters. Martin, welcome to the Money Maze Podcast.

Martin Waters  03:36

Thank you so much, Simon. What a fabulous introduction! I'm so happy to spend time with you this morning.

Simon Brewer  03:41

Thank you very much. I hoped that because on the Money Maze Podcast, we talk with investment institutions and we always wanted to talk with businesses as well, and now we're going to be introducing quite a few business conversations because the environment is so interesting, challenging, whichever is the right adjective depending on your business. Let's just jog back. I've read a little bit about your journey. But let's just start with your childhood. What do you remember most? What was most valuable?

Martin Waters  04:06

Oh, gosh. It's a long time since I've thought about my childhood. I grew up in the North of England in a very happy and loving family. Mum and dad were both workers. Mum was a head teacher and my dad was a salesman and I was one of four boys. We had a rough and tumble upbringing that was all about hard work and lots of sport and good fun and family dinners. I remember my childhood with great fondness.

Simon Brewer  04:30

You are the second person to have gone to Manchester University. One was Nick Finegold, who in fact is the connection here because through his Fat Gladiator Investment Club, I listened to you and was so intrigued with the story. Nick kindly put us in touch. But where did this passion for retailing begin?

Martin Waters  04:45

I wanted to be a football player. That's all I wanted to do. I was pretty convinced up until the age of 19 that that's exactly what I was going to be but my mum had other ideas and she figured out that I would need to get some kind of an education, but I just wasn't terribly keen on the idea of going to university. So one day, mum was reading the Times Educational Supplement and she came across this advert for the first degree in retailing in the world. The interesting thing about this degree at Manchester was that all of the successful candidates would be sponsored to go to university and would be guaranteed a job at the end. So it was like wow, that sounds like a pretty interesting gig. Mom showed me this advert and said, 'What do you think?' So I said, 'Let me get this right. I get to go to university. I'm guaranteed a job. I get paid to go. It sounds like a great idea!' So I applied. I was one of 33 successful candidates to get a job and ultimately, to get the first degree in retailing in the world. I can't say that I particularly had a passion for retail, but I had a passion for earning money and I thought the idea of being sponsored to go to college was a pretty cool idea.

Simon Brewer  05:48

Your journey had as a large part of it working at Boots where I think you ended up running Boots Retail International, which obviously is an enormous retailer. Just tell me a little bit about how you got retailing experience.

Martin Waters  06:01

As part of this degree in retailing, the company that sponsored me was actually Halfords, you may or may not know is the UK's leading retailer of bicycles and car accessories. Halfords was my chosen parent, if you like. They were my sponsor. So during the summer holidays, I would go off to work at Halfords. During the course of getting my education, I was learning how to be a buyer. At the end of that four-year degree, I'd done probably about 18 months’ worth of work experience at Halfords. True to their word, they offered me a job. So my first job in retail at the age of 22 was the Assistant Bicycle Buyer. I was put on an aeroplane and sent off to Hong Kong and came back with a container load of bicycles. That was my course and I was very, very happy at Halfords, doing very well. I progressed through the ranks, through the buying ranks, learning my trade. And then Halfords was acquired by Boots. This was back in the days of Ward White. As part of the integration of Halfords into the Boots family, they were looking for some candidates to take from Halfords into Boots. I was tapped on the shoulder and said, 'Hey, how about moving to Nottingham and going and working for Boots?' So I said, 'Yeah, that sounds like a great idea.' It was kind of a change of job, a change of company, but not really and it was all within the same family. Actually, Simon, I've only changed my job once. I've worked for the Boots company for 20 years. And that brought me to America and then I've worked for my current employer for 15 years. So I only changed my job once.

Simon Brewer  07:22

That's rare and admirable and increasingly unfashionable. If there was one skill above all else that you acquired when you were at Boots, what would it be?

Martin Waters  07:34

What Boots had, and I think probably still does, is just an excellent training scheme. A bit like joining Marks and Spencer back in the day. If you went to work for Boots as a young executive, you were guaranteed a really good all-round training in retail because they were just about the best retailers in the UK and probably one of the best retailers in the world. I got a really broad education in retail from that experience. I learnt what being commercial really looked like from a pretty early age. But I think probably more important than that, the values of that company were very close to the values that I hold dear. Communication skills, very, very important. Treating people with respect, the art of teamwork, leadership, real strength and depth of leadership, character building stuff, you know, all of those kinds of skills were part of my early education in retail, and I'm massively grateful to Boots for giving me that opportunity.

Simon Brewer  08:26

Let's talk about VS&Co, Victoria's Secret. I read the quip, 'If love is blind, why is lingerie so popular?' And for those of us of a certain generation, our mothers bought underwear from Marks and Spencer because it was utilitarian, as they say. It covered all the bits it needed to without any fuss. But just tell me, what was the inspiration for Victoria's Secret?

Martin Waters  08:49

The founder of Victoria's Secret was in fact a man, and his idea was to create an environment where men would feel comfortable shopping for lingerie. His name was Roy Raymond and he started the business on the West Coast of the United States. And I think he got it to about five stores and a catalogue business. It wasn't doing terribly well and he ended up selling it to my old boss, Les Wexner, who had a completely different idea for the business than the founder's idea but he just really liked the name. Les completely change the origin of the business. And his idea was that most women wear underwear all the time. Most women would like to wear lingerie all the time, let's make lingerie accessible to a completely different premise than the original founder. And that became the secret sauce of Victoria's Secret through the '80s, the '90s and into the noughties.

Simon Brewer  09:39

This is a household name, so how would you summarise what went right and then what went wrong?

Martin Waters  09:45

I joined the company in 2008, just about the time of the global financial crisis. At that time from 2008 to 2016, the business was on a tear. I was leading the international business and we would be opening stores around the world with thousands of people lined up outside. It was incredible seeing that popularity of the brand sustained all the way through that period, 2008 to 2016. And it was really defining popular culture. The Victoria's Secret fashion shows broke the internet. It was the most watched program on TV. And so everything was working incredibly well until a period of about three years that I politely refer to as the period of execution missteps, when a lot went wrong. Some of what went wrong was circumstance and the market was changing and we were not listening to it. But much of it was due to mistakes that were made within the business. A combination, almost like a perfect storm, of a market changing and a brand struggling and failing to connect with its customers. And that period ran on for about three years and ended with a change in management, a new management team coming in 2020, coincident with COVID, of course. And that led to an opportunity to completely change the course of the company. And so when I took over the leadership of the business, the first thing I did was start by getting the team together and saying, 'Look, let's have a reality check. Let's define reality. We are out of touch with our customers. We've become irrelevant. We've become a caricature of ourselves. It's time to change and to redefine the mission and the purpose of what this company is about.' Here we are now in 2022, we're two years into what is probably a five-year journey. And so far, so good. Customers are responding incredibly well. The new vision for the company is wildly popular inside the business, which is always a good start. When we decided to announce how we would lead the company, I stood in front of the whole company, virtually obviously, 25,000 people, mostly female. And the response to the new vision was just incredible, Simon, absolutely incredible. And I knew at that point that we were doing the right thing and that we were on the right track and so it's continued.

Simon Brewer  11:57

Please share the vision.

Martin Waters  11:59

The old version of Victoria's had a single lens for articulating what the business should do, how it would speak, what it would say, what the photography would look like, everything, how we would name products, and that single lens was sexy. And so in order for the company to do something, the something had to pass through the lens of being sexy as defined by management. And so now, our positioning is absolutely not about telling people what sexy is; they have decided what sexy is for themselves. Our job is simply to advocate for women. Our job is to champion women on their journey through life, whatever phase of life that that should be. So as an example, I think as the world's leading retailer of intimate apparel, we should probably sell maternity bras, we should have nursing bras in our armoury. In the old way of looking at the brand, we didn't have that. Why? Because it didn't pass through the lens of being sexy. A much less happy event, if you think about mastectomy. Should we be there for women through the most difficult period of their life if they're struggling with breast cancer? Of course, we should. That's how the business fundamentally is changing, that our job is not to define what women should look like, how they should be. They are in fact undefinable. Our job is to support women and champion them on their journey through life.

Simon Brewer  13:13

And as I said, interestingly, I was in the US last week and visited three of your stores. But as I was just below Times Square, I think it was Broadway, one of those huge video screens appears with adverts for Victoria's Secret, and it's got a very different proposition. This is what I want to come to. I'll talk about economic challenges in a minute but one of the great joys I think we have on the podcast is that Will Campion and I have been able to connect with people ahead of interviews to ask people much better qualified than us the sort of questions that are appropriate. And a great fan of the show is a gentleman called Rick Saunders who knows Sir Simon Wolfson very well. So he contacted Simon Wolfson, who everybody probably will know runs Next. And I'm just going to quote you what Sir Simon said. His question is, 'How are you shaking off the tarnish of the #MeToo scandals without losing the magic of the brand? Because the risk,' he says, 'is that in escaping your sexy past, you become a plain old lingerie company, not an easy path to tread.' And then he adds, 'But they look as if they're making a good job of it for me.'

Martin Waters  14:13

Well, that's praise indeed. I'm a big fan of Simon. I had breakfast with him probably a couple of years ago. Now, actually, Next is our partner in the UK and we're delighted to work in partnership with them. I appreciate that sentiment. It's a difficult path to walk because in getting on the wrong side of history and being so far out of popular culture, from having led popular culture to them being on the complete opposite end of it, I feel, Simon, that we have to swing the pendulum and demonstrate very publicly and very loudly that we've changed, we get it, we're in a different place now. Probably the extent to which we have to swing that pendulum is greater and we need to make it more obvious than we would have done if we'd have just been moving in step with the customer through that difficult period, 2016 to 2020. Yeah, we probably need to exaggerate to make the point. And in the end in the end,  I don't know when that is, but in the end in the end, balance will prevail and we will, of course, be consistently talking to women about all aspects of their journey through life. And at some points, that's absolutely about being very provocative and very sexy, just we won't define what sexy is, the customer can define that for themselves. At other points, it might be about comfort. In other parts, it might be about sport or it might be about maternity or whatever it might be. I think it's possible for us. I know it's possible for us as the market leader with a dominant market share, as we have 21% market share in North America, to be able to do all of those things at the same time, to offer a broad enough assortment and speak with a broad enough tone of voice to appeal to a very, very, very large market.

Simon Brewer  15:50

I have a wife and two daughters and they're all huge fans of what you do. I have not been in store yet. I mean, outside the stores, we were taking some photographs as I said earlier on for some of our social media around the release of the show. Let's talk about the world of distribution. It was when the internet came along this expression 'clicks versus bricks' first appeared. How is your business split and how is it changing?

Martin Waters  16:13

We were very early in the journey into e-commerce. So we've had at least a $2 billion e-commerce business for a long time. We were an early adopter in that regard. So prior to COVID, let's say 2018, 2019, we would have had about 25% of our business coming from digital then 75% from stores. Clearly during COVID, that switched to be 100% digital, and that has now moved back to a more normalised position of about 38 to 40% digital. And I think that's probably where it remains for the foreseeable future. How do I feel about having a fleet of 850 points of physical distribution in America? I feel great about it. For our category, it's very helpful to be able to see and feel and touch the merchandise. It's very helpful to be able to try it on. You know, women notice a difference in sizing in a bra to within a 16th of an inch. It's pretty precise science. It's not like Small, Medium, Large. This is a very precise sense. We offer 66 different sizes in our most popular bra. So being able to demonstrate that in physical retail is incredibly helpful. I think the art form for us is to have a balanced portfolio of digital and real-world stores and to actually develop an omni-experience where the customer gets the joy of Victoria's whether she's shopping on her phone or whether she's shopping in real life or some combination of the two. In our store of the future, which we have a handful of store of the future prototypes in play at the moment, we're experimenting with how to blend those two worlds together. So for example, when you go into the fitting room with a physical item, technology in the fitting room will recognise what merchandise you've taken in and will show on a screen and say, 'Oh, I see you've got a bra 34B, we also offer that in these colors.' If the size isn't right, you click a button and somebody will bring you a different size. If we don't have the size or the style that's available in the store, you can order it and it will come directly to your home. So that merging of digital technology and real-world technology I think is where the future will take us.

Simon Brewer  18:16

We're navigating this fascinating transition but here we are on the edge of recession, but you've got high inflation that is coming through the labour market. We've got shortages, as we know, in supply chains, we've got higher costs, crimped consumers. I did read your most recent results and you said, I quote, 'We anticipate inflationary headwinds and pressure on the consumer will persist.' From a practical standpoint, you're running a big retailing operation. How are you adapting to these pressures, some of which we haven't seen for a long time?

Martin Waters  18:48

Yeah. It's a tough road. There is no question that our consumer is feeling the pinch, that our consumer has less disposable income than she had previously. A very significant portion of our consumer base earns less than $100,000 a year. When you're struggling with higher gas prices and higher food prices, by definition, there's less money to go around. In the fourth quarter of this year, it will be a more difficult fight than we would like it to be. We're going to have to shout for share of wallet not just in our category, but making sure it comes to our category rather than to other categories like beauty or other discretionary spends. When a customer goes to her screen and says notionally, 'I've got about 100 bucks in mind. I wonder what I should spend it on,' she's got a limited amount of time and a lot of different choices. We've got to make sure that our merchandise is one of the choices that she makes and puts it in her basket. How do we do that? It's by offering newness, it's by offering compelling merchandise with high emotional content. The last thing we want to do is to just offer low prices or to offer a discount, but inevitably, in a very noisy competitive environment, that is what a lot of retailers will go to and we have to make sure that we're batting aggressively in those times.

Simon Brewer  20:03

That leads me nicely into brand extension. Now, on my flight to the US last week, I watched the film called 'Mrs. Harris Goes to Paris' which was absolutely charming. And I'm not sure if it's true or not, but it talks about how Christian Dior went from a mono-line into product extension. My late mother was a fashion model and would have loved it. And as I watched this, I think absolutely fantastic film! It brought me back to listening to you on the Fat Gladiator Investment call and you talked about Bombshell and you have this unbelievably successful perfume. Tell me about the perfume but tell me about how the brand may extend in the future.

Martin Waters  20:42

There's a very good synergy between fragrance and lingerie. Those two categories go together well, and we have the number one fragrance in America. That's proof positive that that is so, and I continue to think that we will expand in the beauty category. There are other areas of beauty we're not currently in that we could be in, for example, skincare would be an obvious adjacency. Colour cosmetics is another obvious adjacency so I think within the scope of beauty, there's room for expansion. I'm less fascinated with other categories and more fascinated with us being really, really expert and dominant in the category that we're in. One of the many aspects of that period of execution missteps was that we lost sight of the core. We were busy doing stuff that was around the periphery and around the edges and were less focused on the core. What's the core for our company? Bras. So we have to make better bras than anybody else in the world. We have to be leading-edge technology in bras. If we do that, the other categories will just be a nice add-on. The most important thing is the bra category. That's where we need to win. That's where we're regaining share. We lost share consistently during that period of 2016, 2020 and we're gaining share again, and it's a $16 billion market just in North America. We don't need to get too fascinated with other categories. We just need to be the best that we are and the one that matters most to us.

Simon Brewer  22:01

You talked about competitors, who are they? Calvin Klein? Nordstrom?

Martin Waters  22:05

Well, the competitive landscape has changed significantly A, because of technology changes, B because during the period that Victoria's wasn't at its most healthy, lots of other brands came into the market to do things that Victoria's wasn't doing. So I think about our competition in three broad chunks. The first chunk is specialists in the lingerie market. And there are a number of digitally native competitors who’ve popped up, who don't have physical retail but just digital. And together, they make up about $1.8 billion worth of the market. So most of them are less than 10 years old. They're a significant source of competition. So that's one chunk. Second chunk is what we used to refer to as the department stores. Department stores are less relevant now, but their business has been taken by the mass merchants. And so those mass merchants, I'm thinking about Walmart and Target and Amazon, very, very big shares of our category. And while they are in multiple, multiple categories, they happen to be in ours as well and they're an important part of the market. The third are brands that have been around for a while like Calvin Klein, that just do a really good job of consistently delivering. And there's no one competitor that I'd go to and say, gosh, we really better watch out for them. It's a very crowded marketplace. We just need to focus on being the best that we can be in order to win.

Simon Brewer  25:15

I know you are an important owner of the stock so you've definitely got skin in the game. You have to deal with Wall Street who are looking at your company and rating it. How well do you think Wall Street understand what you're trying to do?

Martin Waters  25:30

That would be a reflection of how well we're telling our story. I think our story is pretty well understood. We did an investor meeting two weeks ago in Chicago and I talked at that meeting about our goal of being the world's leading fashion retailer of intimate apparel. And I talked about three pillars of the strategy being number one, strengthening the core. That's all about what we just talked about, being best at bras. Number two, igniting growth. So after years of being in decline, starting to actually do things that make us a growth stock. And the third is about transforming the foundation of the company. So moving from an analogue type organization that does things in about the same way today as we have done in the last 20 years to being a digital company where we do things in a very different way, where we embrace artificial intelligence, where we're using technology as our friend. Those are the three pillars of the strategy and I think that was well received by the markets. And certainly what we saw in terms of the analyst reports played back our story just perfectly, exactly as we would want it to be told. I think Wall Street gets it. But at the same time, Wall Street is concerned about the softness in the consumer markets. I think Wall Street is rightly looking at the outlook and saying, gosh, it's going to be a tough fourth quarter. They're more inclined to be cautious, I think, at this stage.

Simon Brewer  26:48

Can we just talk a little bit about your balance sheet and how you view that. Does it stop you looking at opportunities? Does it give you the flexibility you want?

Martin Waters  26:57

We're in a pretty healthy position, from a balance sheet point of view. We generate a lot of cash during the fourth quarter. So over the last year since we've been separated from L Brands, we've been in a position to buy back our stock, which has been well received by the market. We'll revisit that again in the fourth quarter when our cash is at its peak. We have $1 billion dollars’ worth of debt, which is a relatively light amount of leverage relative to our peer group so we feel good about that. I don't think there's any obstacle to us becoming a growth company. Our balance sheet is in a healthy condition.

Simon Brewer  27:28

One of the big investment themes which one has discussed on the show is whether the ESG discussion has been taken excessively in one direction and has misguided some of the investment community as well. That's not my question. My question is the G I keep on coming back to is really important. In looking at your board structure, I alluded to seven-eighths of it are females and governance is going to be key. Tell me a little bit about how you think about, and by all means, ES and G, but governance and then what the board does for you.

Martin Waters  28:04

The construct of our board is very different from the construct of our previous parent. So in separating out from the company, we handpicked a team of women to be the guardians of our company and to hold us accountable as management to managing the company in a way that is very transparent, is very open, that leads in a modern way. And so in selecting the board, our Chair, who's just fabulous, specifically looked for skill sets that would be complementary to us and that would enable us to have a balanced perspective. And so we've gathered together a group of individuals who have a very broad perspective and who lean forward at our meetings. We have five meetings a year, typically two days, and they are all in. They are actively helping and volunteering and suggesting. It's more than just governance. It's significantly more than governance. I think about my board as my partners. I think about them as a source of advice. I talk to them individually on matters of the business on a regular basis because I value their perspective. And when we get together in person, we have very robust dialogue. So ahead of our strategy day that I just referenced, we had a board meeting two weeks prior. We went in with a very good plan. We came out with an even better plan because we've got rigorous debate and rigorous challenge. I feel really, really good about the construct of our board. We'll probably add more directors to our board over time and continue to round out that skill set. What do I mean by skill set? We have representation in legal, we have representation in marketing, we have digital experts, we have people who are entrepreneurs. We have a broad range of skill set and that's helping us very much.

Simon Brewer  29:45

Martin, you talked earlier and I want to just return to it, core values that you won't compromise on in developing this business. What are they?

Martin Waters  29:53

We inherited an incredible set of values from our parent, L Brands. Over the last few years, we've been working with people inside the company to say from the ground up, how do we rebuild and refresh those values and modernise them in a way that resonates with everybody in the company? And rather than being rules, they should just be principles that we live by, and we've come up with four. And these are love for the customer. Customer is at the heart of everything we do. So that's number one. Second, passion with purpose. Third, DEI is everything. And the fourth is better together. I'm often asked, do you have a favourite out of those four? Not really. I like them all together because it brings a balance and it brings a breath, it brings a perspective. And I like to think that when we're in any meeting, any communication, any negotiation that we're just carrying around as badges of honor, love the customer, have passion with purpose, DEI is everything, and we're better together. And if we can live with those words, it's a small number of words, if we can live with those words and show them on a daily basis, we will be better for it. Our associates have responded incredibly well. I believe that values like that should not come from management down. I believe they should be built from the organisation up and that's the way that we've approached it. I'm glad you asked. Thank you.

Simon Brewer  31:14

I'm going to go to some general questions now so I've put you right on the spot. And that's a question that is generally at retail. We talked about the big transition in the last 20 years since the internet, but has retail had its revolution?

Martin Waters  31:28

Retail is always changing. And one of the great things about this industry that I've spent my life in is that it's incredibly dynamic. It's always shifting and the winners are those that are moving with the customer and anticipating what's next for the customer. In the old days, if a new competitor emerged, it might take a decade or more for them to gain a proper foothold. Not now. I look at our best competitors in the marketplace. They weren't invented five years ago. Brands are moving at lightning speed. The best companies are getting quicker and quicker. Is retail changing? Oh boy, it's changing. It's changing in a really, really compelling way. And the winners are those that are closest to consumers. The barriers to entry are just lower than they've ever been before. People can start up new companies and spin them up and get noticed very, very quickly in this day and age in a way that just wasn't possible when I first started out in my career.

Simon Brewer  32:19

And which other brand do you particularly admire?

Martin Waters  32:23

I think Lululemon. Looking at what they have done over the last decade is absolutely remarkable. You know, they're a tremendous company and the market values them appropriately. I'm a big, big fan of what they have done. I think Sephora have done an amazing job also. I noticed that they're just about to launch in the UK, which against my old stomping ground the boots will be interesting. But they're an amazing organisation, really customer-led, you know, focusing on the customer. Starbucks is an incredible company. They've been through their ups and downs. Talk about leading transformation in a scale company, incredible. Any review of retail right now, you've got to talk about Apple because they just continue to post unbelievable numbers and they transformed the way of doing retail. When they opened the physical footprint, people said, 'Wow, that's a really different way to market products to consumers.' I'm a student of retail. I'm always out. Yesterday I did five miles in New York City walking from one end to the next. I finished up at our flagship store on Fifth Avenue. I'm delighted to say the crowds are back in New York. Fifth Avenue was busier than I've seen it in three years. And you get energy from that. You can see how new brands appearing are really gaining traction and that's exciting. That's what gives me lift.

Simon Brewer  32:38

So some closing questions. What advice would you give to a 20-year-old Martin Waters?

Martin Waters  33:44

Gosh, I had some incredible advice. When I started working at Halfords, I was tapped on the shoulder and spotted as being somebody who I guess they thought had some time. The Managing Director at the time asked me to go and present to the board. He said, 'You're going to present to the board.' No problem. I felt absolutely fine about it. I had my OHPs in my hand to go and put on the projector to talk about my presentation. I'm waiting outside the boardroom. I'd never been in the boardroom. And these great big double doors, enormous, big wooden doors. I'm standing there waiting, I feel absolutely fine. And then the doors open. And inside was this walnut table, big giant table with about 15 men all in gray suits and all about 60 or 70 years of age. And it was terrifying, absolutely terrifying. I just completely froze. I looked at this room and thought, 'I can't do this. I can't do that. I can't go and talk to these people.' And luckily for me at that moment, the Managing Director said, 'Why don't we just take a five-minute break.' So they all filed out and he, the Managing Director Brian, saw that I was completely frozen and was just about to go to pieces. And he put his hand on my shoulder and he said, 'It's okay. I got you. You just do your thing and look at me and if in any doubt whatsoever, I have got your back. I'm here for you.' And he never left eye contact with me. And I did my presentation. It went really, really well. And the whole time he was looking at me and willing me to win and cheering me on. In that moment, which I remember for the rest of my life, in that moment, I decided I'm going to be that kind of leader. I'm going to do that for other people. I'm going to sponsor young people to be the best that they can possibly be. I remember that story always. I tell it often to people in the business. I hope I carry around some of that wisdom that I received at about age 20.

Simon Brewer  35:33

That's superb. Now, you are a Brit living in the US. I had to ask you the question, what do you miss most and like most of your lifestyle?

Martin Waters  35:41

What I like about being here, we live in Connecticut, and we have the most fabulous four seasons. The four seasons of the year are distinctly different and so you're constantly in touch with the great outdoors, fabulous summers and fabulous winters with deep snow. I love that. We live on the coast, which is terrific. We're close to the mountains so we can ski as well. It's a fabulous place to live. My kids are all here and they've grown up American. We're very much part of American life. What do we miss? Family and friends, going to the pub, English chocolate, Cadbury's is not the same over here as it is in the UK. Tea, we have our Earl Grey tea sent over especially. But we still keep our house in the UK and we go back on a regular basis.

Simon Brewer  36:22

And if you could wake up tomorrow having acquired a new skill or talent, what would it be?

Martin Waters  36:30

A new skill or talent? What I would love to be able to do is to be more proficient in the world of social media. This is not meant to be ageist but I just missed it a little bit. And there are young people who are significantly more knowledgeable and more capable in that space than I am, and I need to catch up. I need to learn those skills and those insights really quickly. I think that kind of superpower is going to be necessary for the best companies in order to succeed going forward. That's what I'm working on. I do believe that everybody should have a coach. Best tennis players in the world have a coach, best golfers in the world have a coach. We as leaders of businesses should have coaches. We should be receiving improvement to our skills in order to deliver value for shareholders. So I'm a big believer in that. I constantly am coaching myself. I say within the company, the person that needs the most coaching around here is me. And I believe that.

Simon Brewer  37:27

I think that Will and myself, a fan of this business, are of a certain vintage, which puts us all three together with you. We have Oliver Bodmer and my daughter actually, Anna Brewer, Anna Bea is her singer name. And they're the ones who allow us to look really with it. Because I can tell you that if it was left to us, I probably wouldn't have hit start on the recording today.

Martin Waters  37:46

My kids are the biggest source of inspiration for me. My daughter will constantly be texting me and saying, 'Dad, you need check this out. Look at this, Dad. This is what's trending now. Look at that. Look at that. Have you noticed this?' So she keeps me very energised and very young. My boys are less interested in the business, but they're certainly students of popular culture.

Simon Brewer  38:06

My final question after that book, which is well worth reading called 'If You Could Tell Us Just One Thing', what would that one thing be?

Martin Waters  38:14

If there was one thing? Well, of course it would have to be Victoria's Secret is a growth company. Victoria's Secret is the stock to invest in. It's an incredible brand with global awareness that resonates with women all over the world. And yes, it's had a difficult few years, but we are back. We're putting this company back together and building it in a way that's better than it's ever been before.

Simon Brewer  38:37

That's been very different, but an absolutely thrilling conversation for me today to have with you. I'm going to take two things out of it particularly which is we don't talk perhaps enough about boards and board composition. And what I take from what you've said today is those board members need to be partners, they need to be helping you on the journey with specific advice and guidance and not be as one has seen with some boards, just a group of folks who are signing off on things. That was number one. The retail industry, as you have rightly said, is always on the move and perhaps in a slightly different way right now and you in enunciating the case for Victoria's Secret have been very clear about how you have assessed the challenges and are responding to build the company for the future. So Martin, thank you so much for coming on the Money Maze Podcast today.

Martin Waters  39:26

Brilliant. Thank you so much for having me. I appreciate it very much.

All content on the Money Maze Podcast is for your general information and use only and is not intended to address your particular requirements. In particular, the content does not constitute any form of advice, recommendation, representation, endorsement or arrangement and is not intended to be relied upon by users in making any specific investment or other decisions. Guests and presenters may have positions in any of the investments discussed.

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As the Money Maze Podcast seeks to understand both the business and investment worlds, especially against the backdrop of a tougher economic environment, we are delighted to speak to Martin Waters, CEO of Victoria’s Secret & Co (VS&Co).

Martin begins by explaining his retailing journey, Victoria’s Secret’s history and evolution, as well as the challenges and opportunities that lie ahead. Spun off from L Brands in 2021, the Fortune 500 lingerie and beauty retailer is known for its high visibility marketing and annual fashion shows. They have over 1,350 stores globally and more than 30,000 employees.

Martin explains how it is adapting both to the economic climate as well as the issues specific to managing a world leading fashion and beauty retailer.

He discusses the vision for the company, its values, their multichannel distribution strategy, and the risks and rewards of brand extension. He then analyses this competitive market, the changes taking across retail, and how their board is composed. With 7/8 of their board being female, Martin explains how valuable women are in helping him think about strategy, and why he is so excited about the future.

Martin Waters

Mr. Waters is a career retail executive who is respected for leading businesses with strong financial performance and equally strong and healthy corporate cultures. He is currently Chief Executive Officer for VS&Co. Prior to his role leading VS&Co, Mr. Waters led the international division for L Brands from 2008 to 2020. During this tenure, the international business expanded from the early phases of incubation to more than 1,000 stores globally. Through a combination of wholly-owned and franchise operations, Mr. Waters led international retail for Victoria’s Secret, PINK, and Bath & Body Works. Before joining L Brands, Mr. Waters was Managing Director for Boots Retail International, a leading health and beauty retailer. Mr. Waters has lived and worked in five countries leveraging his experience in strategic planning, merchandising, brand management, marketing and supply chain operations to establish new business models in over 80 countries around the world. Mr. Waters received a Bachelor of Arts in Retail Marketing from Manchester University in U.K. As part of his commitment to the community, Mr. Waters is a Governor on the National Board of the Boys and Girls Clubs of America and has served as Chairman of the Midwest region.

Themes & Collaborations

Victoria’s Secret & Co (VS&Co) is a leading lingerie and beauty retailer, known for its impactful marketing and fashion shows. They have over 1,350 retail stores worldwide and more than 30,000 employees. They are headquartered in Ohio and are listed on the NYSE. 

We also covered the world of consumer brands in our recent episode with Tara Alhadeff, Partner at Permira. With over €60 billion in assets under management, they’ve backed firms such as Hugo Boss, Valentino, Golden Goose and Dr. Martens.

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