L Brands to Spin Off Victoria’s Secret By August
L Brands said Tuesday it will spin off its Victoria’s Secret brand rather than sell it, reports CNBC. The company said it received interest from multiple potential buyers, but its board concluded that separating Victoria’s Secret and Bath & Body Works into two separate publicly traded companies would be a better option. In recent weeks, L Brands rejected bids of more than $3 billion because it expects Victoria's Secret to be valued at as much as $7 billion and at least $5 billion, The New York Times DealBook team reported Tuesday.
L Brands CEO Andrew Meslow will continue to hold his position and will also lead Bath & Body Works following the spinoff, the company said. Victoria’s Secret CEO Martin Waters will remain as the leader of the stand-alone business, which includes the namesake brand and Pink, following the separation. The spinoffs are expected to be completed by August.
Total Retail's Take: Victoria's Secret has faltered in recent years as it failed to respond to consumers' rejection of its sexualized marketing and designs, and new rivals — particularly online — took market share from the category leader. After struggling to recapture its once brand-loyal customer base, L Brands has been unsuccessful in its attempts to sell off the iconic lingerie brand in recent years. In May 2020, Victoria's Secret's parent company called off its $525 million deal with private equity firm Sycamore Partners following the closure of its retail stores during the COVID-19 pandemic. As the effects of the coronavirus continued to impact retail, finding a new buyer for Victoria's Secret proved to be a challenge.
According to a company press release, L Brands believes the spin-off will enable each company to maximize management focus and financial flexibility to thrive in an evolving retail environment and deliver profitable growth. “In the last 10 months, we've made significant progress in the turnaround of the Victoria’s Secret business, implementing merchandise and marketing initiatives to drive top-line growth, as well as executing on a series of cost reduction actions, which together have dramatically increased profitability,” said Sarah Nash, chair of the board. Time will tell if these efforts will position Victoria's Secret to operate as a profitable standalone, public company.
Kristina Stidham is the digital content director at Total Retail and sister brands Women in Retail Leadership Circle and Women Leading Travel & Hospitality at NAPCO Media. She is passionate about digital media and handles video, podcast and virtual event production for all brands. You can often find her at WIRLC, TR, WLT&H or industry events with her camera and podcasting equipment—or at home on Zoom—recording interviews with thought leaders and business executives.
Kristina holds a B.A. in Media Studies and Production from the Temple University Klein College of Media and Communication in Philadelphia. Go Owls! When she's not in the office, she loves to go on long walks, sing around the house, hangout with her family and two pet guinea pigs, and travel to new places.