It’s no longer a secret that Leslie Wexner will step down as chairman and chief executive officer of L Brands, the parent company of Victoria’s Secret.
However, the Wall Street Journal, citing unidentified sources, yesterday disclosed that with the billionaire founder’s resignation, the company has decided to sell a majority stake in the lingerie brand to Sycamore Partners.
“L Brands Inc is near a deal to sell control of Victoria’s Secret to a private-equity firm in a transaction that values the lingerie brand at about [US]$1.1 billion, according to people familiar with the matter,” a report from the WSJ stated.
It continued: “Sycamore Partners is expected to buy 55 per cent of Victoria’s Secret and take the struggling business private, the people said. L Brands is expected to keep a 45 per cent stake in the separate company, which will include the Pink chain.”
Despite resigning, Wexner, who ran the S&P 500-listed company for the last 50 years, will remain on L Brand’s board and will also oversee the running the Bath & Body Works skincare chain.
“I think about the endless possibilities ahead for this company. And I’ve thought about where I fit in the picture,” Bloomberg News quotes Wexner, from a memo he reportedly sent to L Brands employees.
“In keeping with this same thoughtful examination, I have decided that now is the right time to pass the reins to new leadership.”
According to Bloomberg, the transaction comes after years of scandal and slumping sales at the lingerie chain.
“The Columbus, Ohio-based firm has struggled to mend an image tarnished by allegations of misogynistic culture under Ed Razek, its controversial former chief marketing officer, as well as lingering questions about Wexner’s relationship with late convicted sex offender Jeffrey Epstein. Wexner says Epstein defrauded him,” Lisa Wolfson writes.
Further, the publication reports that Victoria’s Secret has lost market share to its competitors who market their products as comfortable and body-positive. Added to that, the retail shift from shopping malls to e-commerce has also delivered a blow to the brand’s popularity.
Even worse, the company’s shares have lost value year-on-year for the last four financial cycles, though appreciating by 36 per cent since the beginning of 2020. Notwithstanding, Victoria’s Secret last year brought in nearly 56 per cent of L Brands revenue.
It was for these reasons the L Brands announced in September plans for a turnaround of the lingerie line. “At the time, executives said they would improve the in-store experience and update the marketing to be more inclusive while making sure core customers don’t feel alienated,” the Bloomberg report stated.
Subsequent to Sycamore Partners’ takeover of Victoria’s Secret, the glare company will become a privately held entity. However, the faster-growing Bath & Body Works will remain a publicly traded company.
Andrew Meslow, who was chief operating officer of Bath & Body Works, is assuming the CEO role effective immediately, according to Wexner’s memo. Current CEO Nick Coe will become vice chairman of Bath & Body Works brand strategy and new ventures.
Mast Global, which handles L Brands’ international operations, will be reorganised to support the separate companies.