Lingerie brand Victoria’s Secret, known for its leggy supermodels and mostly unattainable aesthetic, is being sold to a private equity firm in a $US525 million ($AU793m) deal.
Owner of Victoria’s Secret, L Brands, is selling 55 per cent of the company to Sycamore Partners, with L Brands taking control of the remaining 45 per cent. However, Victoria’s Secret will be spun off into a fully private company.
CEO and chairman of Victoria’s Secret Leslie Wexner has run the billionaire dollar L Brands for several decades but will be leaving his position as part of the chairman. He will remain on L Brand’s board.
In a statement, Wexner said taking Victoria’s Secret private will provide “the best path to restoring these businesses to their historic levels of profitability and growth.”
He said: “We believe that, as a private company, Victoria’s Secret will be better able to focus on longer-term results.
“We are pleased that, by retaining a significant ownership stake, our shareholders will have the ability to meaningfully participate in the upside potential of these iconic brands.”
With Victoria’s Secret going private, L Brands’ main business will be Bath and Body Works.
Wexner has also been scrutinised for his ties to Jeffrey Epstein, though he said he cut ties with the now-deceased Epstein in 2007. A month following Epstein’s death in August last year, Wexner said he was “embarrassed” by the relationship.
The lingerie brand has come under fire in recent times for being out-of-touch with the modern consumer.
In November 2019, Victoria’s Secret annual fashion was been axed amid falling sales and the struggle to generate any interest in the catwalk spectacle.
On Thursday, L Brands said sales at Victoria’s Secret’s stores that were open at least a year fell 10 per cent in the fourth quarter.
American financial services company Moody VP Christina Boni said in a note to investors that the separation will “enable L Brands to reduce debt and focus on its strong core business of Bath & Body Works, which represents over 80% of its operating income.
“The transaction combined with cash on its balance will result in estimated debt reduction approximately $1 billion and mitigates the risk associated with the turnaround of the Victoria’s Secret business,” she added.