Keeping the fun alive: Frederick's of Hollywood's chief works to get aging lingerie retailer out of bankruptcy as it readies for fight with intimate apparel queen Victoria's Secret. (People).

LESS than a year after Linda LoRe took over as chief executive and president of Frederick's of Hollywood in 1999, the purveyor of sexy lingerie was sold to an investment firm and placed into Chapter 11 by its new owners, Wilshire Partners.

LoRe, who had been the chief executive and president of Giorgio Beverly Hills for nine years before coming to the 55-year-old lingerie company, knew it wouldn't be easy stepping into the top spot, but she didn't expect such a mess. The company had a crumbling infrastructure with cash registers using 30-year-old systems. There also was the dilemma of whether it should stick with its tawdry appeal of the 1970s or imitate the feminine look of its main rival, Victoria's Secret.

LoRe has aimed for the middle ground. But she's stayed true to the fun and sexy image set forth by the company's founder Frederick Mellenger. In 1946 he introduced "scandalous" black lingerie to consumers and is said to have invented the push-up bra in 1948. Since July 2000, the company has been slowly climbing out of Chapter 11. Revenues for fiscal 2001 ended July 31 hit $150 million, a $10 million increase over the previous year. Comparative store sales are up 2 percent over last year and LoRe hopes the company will emerge from bankruptcy early next year.

Question: How do people react when you tell them you're the CEO of Frederick's of Hollywood?

Answer: In various ways. Some people say, "God that's so cool." Some people say, "Man, do you have an opportunity." And some people go, "Huh?" It is kind of age-related. And almost all men react the same way. "Can I help you pick out the models?"

Q: Who is your core customer?

A: Our customer is a young woman, basically the age range is 25 to 49. Generally speaking she is single or newly married or newly divorced or really wants to spice up her marriage. Most of our customers are female, with the exception of the purchases that men make to give to females at holiday time.

Q: What are some of your best-selling items?

A: Our best-selling item is the smooth sensation bra, both full figure and the regular bra. One of our top five items is the water bra. Also the coquette bra. This bra is an embroidered bra that is lacy and pretty and has a figure-enhancing appeal. We do very well with specialty bras, specialty hosiery and corsets. The halter-top dream teddy is beautiful and can make almost any body look great. And of course we still have the fantasy outfits like the harem costume or the maid costume.

Q: What challenges were you faced with when you got to Frederick's?

A: There were tons. It was clear the company had some constraints that were very difficult. Those constraints had to do with a highly leveraged company that had too much debt on the books. It was an organization that did not have a strategic focus. There were a lot of people who wanted to make things happen but for some reason they were stuck.

Q: What were some of the first things you did when you came on?

A: I had to look to the senior management team and see if we have the right people. Who can we get to grow the business? We had a lot of turnover. Currently we have stopped the turnover. The senior management team that is here right now is relatively new. No one has been here longer than three years.

Q: Why did they leave?

A: It was a very difficult time for everyone. There had been a lot of shakeups that were going on. And there were several people in the senior management team that came to grow the business or take it public and it was pretty apparent it wasn't going to happen. I was looking for people who really understood the entrepreneurial spirit that it was going to take to really turn this thing around and make it explode.

Q: What other problems were there?

A: When I came here the catalog was in severe trouble. And along with the catalog so goes the Internet. That business works hand in hand.

Q: What was wrong with the catalog?

A: The catalog was different for the right reasons, but probably done in the wrong way. The catalog direction had changed without much research being done. It was more mainstream, which I think alienated the core customers. But we weren't grabbing new customers. It was one of the worst performances for the catalog in the last 17 years. The book that I came into was 70 percent down.

Q: How did you change the direction of the catalog?

A: I had to hire some really good people who understood what they were doing. We made some changes in the team. The catalog had been outsourced. We brought it back in house. We decided that sexy was in.

Q: How is the company doing?

A: Even though we are in Chapter 11, we are seeing some incredible things happening. For fiscal 2001, we turned in our best performance in the past five years. We have seen the fourth-largest gain in profits in the last 15 years. Revenues were right around $150 million. And that is from really three distinct channels of distribution. We have retail stores, we have catalog and the Internet. And the Internet had a triple digit increase.

Q: What have you done to get out of Chapter 11?

A: We did a complete new accounting system. It had been started before I got here, then tabled and then we resurrected it. We were able to take a look at how our processes were done to cut costs by $6.5 million this year. We closed 26 stores this past year. And we opened four new stores this past fiscal year. We now have 175 stores. When I got here it was 204 stores.

Q: Which stores have had problems?

A: One (in Las Vegas) was not doing the business we knew we could do. We moved it to the Boulevard Mall and have enjoyed a 30 percent increase in that business. It's sort of a natural for us in that town. And we relocated our store in the Del Amo Fashion Mall here in Los Angeles and saw sales jump up 20 percent. It was located near Montgomery Ward, it was like going to no man's land. We moved into the main part of the mall.

Q: How has your strategy changed with Victoria's Secret in the market?

A: We don't ignore them. However we are not them. We know who we are. We put the word sexy into intimate apparel. What we have to do is stay true to ourselves as innovators. Victoria's Secret is soft, pretty and feminine and we are fun, playful sexy. They have a $30 million advertising budget. We are just starting to advertise.

Q: What did you think of the special Victoria's Secret fashion show on ABC?

A: It was fun to see what they were showing and how it fares with what we are doing. I think they went to extraordinary efforts to put on a quality show. It draws a lot of attention to the lingerie category, making it more fun and more mysterious.

Q: You've been in retailing for more than 20 years, starting as a fragrance buyer at Robinson's department store. What helped you rise up through executive ranks?

RELATED ARTICLE: Linda LoRe

A: When I was a new fragrance buyer at Robinson's, I wanted to do something different. I looked for different fragrances that could make a name for us. I found a fragrance that was unknown. It was called Giorgio Beverly Hills, I thought we were taking a big risk. We brought Giorgio in to Robinson's exclusively. It was launched at the store on my 30th birthday. That began a whole new career for me. RELATED ARTICLE: Linda LoRe

Title: Chief executive and president

Organization: Frederick's of Hollywood

Born: 1954, Long Beach

Education: Attended California State University, Long Beach.

Carrer Turning Point: Working for Giorgio Beverly Hills

Most Admired Person: Jacqueline Kennedy Onassis

Hobbies: Tennis, volunteer work

Personal: Married, no children