Victoria’s Secret has been sold — and Les Wexner is stepping aside.Parent company L Brands sold 55 percent of the intimates giant to Sycamore Partners for $525 million. The deal includes the Pink brand. Victoria's Secret will become a private company, while L Brands' remaining operation, Bath
Parent company L Brands sold 55 percent of the intimates giant to Sycamore Partners for $525 million. The deal includes the Pink brand. Victoria’s Secret will become a private company, while L Brands’ remaining operation, Bath & Body Works, will become a standalone public firm.
“Today is the beginning of an important new chapter in the evolution of the enterprise,” Wexner wrote in a letter sent out to L Brands associates Thursday morning. “We believe the separation of Victoria’s Secret Lingerie, Victoria’s Secret Beauty and Pink into a privately held company provides the best path to restoring these businesses to their historic levels of profitability and growth.
L Brands stock tumbled by nearly six percent at the start of Thursday’s trading session on the news, which included L Brands estimated fourth quarter results, only to turn positive within the hour. For the fourth quarter, the company is expecting a 10 percent comparable sales decline in the Victoria’s Secret business, while the Bath & Body Works business will likely have gains of 10 percent. The company officially reports earnings on Feb. 26.
In addition, L Brands has also agreed to a Board refresh. Three Board members — Allan Tessler, Gordon Gee and Raymond Zimmerman — will retire from the Board at the annual shareholders meeting this April. Andrew Meslow will join the Board at the close of the transaction. “I’ve seen and watched the evolution of the stores at Victoria’s Secret,” said Helena Kaylin, who worked in research and development, product innovation at Victoria’s Secret back in 2004.
But Leslie H. Wexner, founder and chairman of L Brands, was not going to relinquish control of the company he built and presided over for more than five decades without a fight. “Victoria’s Secret is still a valuable brand,” said Howard Meitiner, managing director at Carl Marks Advisors. “One should not write off a brand like this. When you own 24 percent of a market, you’ve got the base there to rebuild. They have the opportunity to re-introduce themselves to this whole sector of the market because they’re known. And they have the revenue to invest.”
Those changes include reexamining the cost structure, reevaluating the store fleet, updating the merchandise assortment and fixing the marketing and branding of the company’s image. Victoria’s Secret could also work with celebrities or well-known influencers to gain new followers. “It’s too late to have one with Beyonce or Rihanna,” Meitiner said.
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