Yandy Uses Frederick’s Bankruptcy To Crow

Chad Horstman, the founder and CEO of Yandy.com, a leading retailer of intimate apparel, has taken the unusual step of distributing a statement citing the bankruptcy of Frederick’s of Hollywood to promote his own company.

In a press release Horstman had distributed by PR Newswire on April 20, he said the news that Frederick’s had closed all of its stores and that its web business will continue under different owners, “further validates the premise” on which the Yandy online business was founded in 2006. He used the rest of the press release to boast about the success of his own website.

“Consumers are more comfortable shopping for lingerie and intimate apparel online,” declared the Yandy founder, adding that “a fundamental shift in retailing was well under way. Over the past decade, a number of traditional mall retailers have struggled to remain relevant as consumers have changed how they shop at malls and consumers found new ways to engage and identify with brands online.”

The press release claimed that Yandy is now “the country’s largest online retailer of sexy lingerie behind only Victoria’s Secret” as well as having “become known as the leading U.S. e-commerce retailer of adult Halloween costumes.” While choosing not to provide his own financial statements (or any indication of profit or loss) to back up its claims, the Yandy release “did confirm that it had long ago surpassed the $28 million of annual online revenue that Frederick’s is reported to have generated in 2014.”

In 2014 Victoria’s Secret’s “direct” sales (which are composed of the business it does outside of its stores, from its websites and catalogs), totaled $1,507,000,000 according to parent company L Brands’ annual report. Or over 53 times the figure cited by the Yandy CEO.

Horstman continued his personal statement noting, “Unlike the brick-and-mortar approach that Frederick’s was built on many years ago, e-commerce affords us numerous advantages over traditional retailers ranging from sophisticated consumer engagement and customization to superior speed and pricing, which form the pillars of exceptional customer service that our clientele expect and rely upon. Combined with the intimate nature of a product like lingerie, it is no surprise that Yandy and the online channel generally have continued to take significant market share from brick-&-mortar retailers, a trend that has only accelerated in recent years and shows no signs of slowing down.”

Of course, the recent bankruptcy certainly does confirm one portion of Horstman’s postulate: the only portion of Frederick’s of Hollywood, founded in 1947, that is now guaranteed to survive is the online business. Authentic Brands Group has already bid $22.5 million to run the Frederick’s website (as well as for inventory and licensing rights).

But at Victoria’s Secret, the retail shops are still going strong. Net sales at its brick and mortar stores in the U.S. and Canada rose by $332 million from 2013 to 2014, to total $5.7 billion last year. And instead of closing stores, Victoria’s Secret has said it will open 26 new locations in the U.S. and Canada in 2015. And many more of its stores will open overseas this year.