Stayin’ Hollywood

Take a stroll down Hollywood Boulevard today and you’ll find it’s not as sleazy or creepy as it once was. Urban renewal has been in full force with the rise of the Kodak Theatre (home of the Academy Awards) and the Hollywood & Highland Center shopping complex adjacent to the reinvigorated and timeless tourist attraction, Grauman’s Chinese Theatre.
Like the boulevard it resides on, Frederick’s of Hollywood has been undergoing a makeover of sorts.
But for the 61-year-old cataloger/retailer of racy women’s lingerie, the past decade has been a rough ride. It began in 2000, with a two-and-a-half-year reorganization under Chapter 11 bankruptcy protection caused by heavy, lingering debt incurred when it switched from a public to a private company in 1997. But after emerging from Chapter 11, business remained fairly flat, and capital eventually dried up.
This past January, however, the company inked a deal with Movie Star Inc., one of its top apparel/lingerie vendors. In a merger that included a $20 million rights offering and a one-for-two reverse stock split, the renamed Frederick’s of Hollywood Group gained $20 million in seed money from Movie Star, giving it a new lease on life.
“This deal took two companies that were smaller in size and enabled us to synergistically launch a growth plan that emphasized the positives of both companies,” says Linda LoRe, the nine-year president/CEO who saw the company through its bankruptcy protection period. “It allows us a platform for an accelerated growth strategy, which happens to be the best strategy for us.”
Specifically, the Movie Star deal gave Frederick’s access to the following:
• an increased capacity to raise money;
• the public market; and
• immediate funding upon the close of the deal on Jan. 29.
The company is primed for topline growth in the form of an expanded catalog circulation strategy, additional stores, a more fortified Web business and additional customer contact overall. “It gives us the ability to define our brand and announce it to our customers through different levels of our contact strategy,” LoRe says.
