Transsexual, not transvestite.
She's clearly undergone procedures to transition from male, to female. Currently still "pre-op" as far as her penis goes.
Haven't looked for confirmation, but I remember seeing that that's part of a foundation for the opportunity to complete her transition.
While it might seem puzzling to some I think it's a nice addition, since our character can undergo full biological transitions without surgery, purely down to "magical" mutagenic compound that they're exposed to by accident, and what we're able to do with John by turning him into Chanel, showing that there's a potentially more ideal and less invasive way for people with gender dysphoria to become the gender they believe they should be, beyond "living like" it.
Kind of a redeeming feature in my eyes, for the company itself.
Not enough when compared to all the downright evil things they do, but then again, "them's the breaks" in that world.