Victoria's Secret Sells For $525 Million To Sycamore Partners

Daniel Fowler
February 26, 2020

Now, the big question is whether the once sought after but now struggling brand can be reinvented for a new generation of women demanding more comfortable styles.

L Brands, Inc. and Sycamore Partners, a private equity firm announced a strategic transaction, positioning Bath & Body Works as a highly profitable, standalone public company and separating Victoria's Secret Lingerie, Victoria's Secret Beauty and PINK (collectively, Victoria's Secret) into a privately-held entity focused on reinvigorating its market-leading businesses and returning them to historic levels of profitability and growth. L Brands will retain a 45 percent stake in the brand, which means the company is valuated at $1.1 billion.

Leslie Wexner, the 82-year-old billionaire who has run L Brands for several decades, is leaving his position as CEO and Chairman as part of the transaction. Earlier, Victoria's Secret's total enterprise was valued at $1.1 billion. "Sycamore, which has deep experience in the retail industry and a superior track record of success, will bring a fresh perspective and greater focus to the business".

It said same-store sales declined 10% at Victoria's Secret during the fourth quarter.

Sycamore has about $10 billion in assets under management.

This Aug. 11, 2019, photo shows a Victoria's Secret card in New Orleans. The model was started by the late Roy Larson Raymond in the late 1970s following he felt humiliated about purchasing lingerie for his spouse.

At its peak, the underwear and lingerie brand was known for its catalogue filled with supermodels and a glitzy annual television special that mixed fashion, models and music.

That glamor has faded and so have sales in the last few years.

Sales at its stores are in decline because competition is increasing and tastes are changing.

Sycamore Partners now owns a 55 percent stake in Victoria's Secret Lingerie, Victoria's Secret Beauty, and Pink.

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And in the era of the "Me Too" movement, women are looking for brands that focus on positive reinforcement of their bodies.

"Victoria's Solution will want to empower gals, not make them spectacles", said Jon Reily, senior vice president and world-wide head of commerce tactic at electronic consultancy Isobar.

And while past year Victoria's Secret started featuring more diverse models, including its first openly transgender model, the moves fell short.

But sales faltered from 2015 onwards as more body-positive brands like Aerie and Lively and athleisure brands like Lululemon attracted shoppers exhausted of Victoria's Secret's padded, push-up aesthetic.

Shares of L Brands slid 14.6% in pre-market trading on Thursday. Bath & Body Works, which had been a bright spot, is now mostly a candle business, says Randal J. Konik, an analyst at Jefferies. The skincare chain represents more than 80% of L Brands' running revenue. "Also, with athleisure having around, the require for common bras continues to wane".

The quintet also requested that General Randall Meyer, the Ohio Inspector, probe accusations that Abigail Wexner, who sits on OSU's board of trustees, allowed Epstein to sexually assault a younger girl at an Ohio property in the ownership of the Wexners.

Ed Razek, the brand's former chief marketing officer, came under fire following a 2018 interview with Vogue in which he said that "no one had any interest" in plus-size models and that the brand's annual fashion show would not include transgender models because "the show is a fantasy".

Epstein commenced taking care of Wexner's money in the late 1980s and aided straighten out the funds for a true estate enhancement backed by Wexner in a wealthy suburb of Columbus.

Wexner has said he is now "embarrassed" by his ties to the "depraved" Epstein and that he severed ties to him in 2007 after previous allegations against Epstein emerged. He launched what would inevitably develop into L Brand names in 1963 with The Restricted retail chain, in accordance to the company's site. Wexner owns about 17% of L Brands, according to FactSet.

Mike Robbins, a San Francisco-based corporate culture expert who has advised chains including Gap and Sephora, said the team at Victoria's Secret would have to retrain workers and hire more people with diverse voices.

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