Please ensure Javascript is enabled for purposes of website accessibility

L Brands Sells Controlling Stake in Victoria's Secret

By Jennifer Saibil – Feb 20, 2020 at 11:00AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Longtime CEO Leslie Wexner will also step down.

L Brands (BBWI 2.65%) is selling a 55% stake in Victoria's Secret to private equity firm Sycamore Partners at a valuation of $1.1 billion, and its CEO and founder, Leslie Wexner, has announced he'll be stepping down. 

After the transaction, the troubled retailer will be left with a 45% stake in the chain, and its Bath and Body Works. At times in its almost six-decade history, the company also owned a variety of other mall-based retail chains, including The Limited, Express, and Abercrombie & Fitch, but it spun off or sold nearly all of them. It closed upscale department store chain Henri Bendel just over a year ago.

The Ohio-based company had about $7 billion in revenue for fiscal 2019 and is currently valued at about $7 billion. Sycamore Partners has bought up other distresses retailers, among them The Limited, Nine West, and Staples.

Victoria's Secret store.

Image source: L Brands.

Facing a new era  

Victoria's Secret has experienced declining sales as its marketing and image have increasingly fallen out of step with consumer tastes. Women instead have flocked to more body-positive and inclusive brands such as lululemon athletica and American Eagle Outfitters' Aerie.

The company has suffered further from bad press related to Wexner's close relationship with disgraced financier Jeffrey Epstein, who committed suicide earlier this year after being indicted on federal charges.

What does it mean for investors?

L Brands said in a statement that the sale will unlock Bath and Body Works' profitability and deliver more value for L Brands shareholders, and asserts that by operating Victoria's Secret as a privately held company, Sycamore Partners will better be able to breathe new life into what used to be a profitable entity. L Brands said it will use the proceeds from the sale to reduce debt.

Wexner will retire and take on the title of chairman emeritus of the board; his replacement as CEO will be Andrew Meslow, currently the COO of Bath and Body Works. Bath and Body Works CEO Nick Coe will become vice chairman of Bath & Body Works Brand Strategy and New Ventures.

Jennifer Saibil has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Lululemon Athletica. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Bath & Body Works, Inc. Stock Quote
Bath & Body Works, Inc.
BBWI
$35.31 (2.65%) $0.91

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
327%
 
S&P 500 Returns
105%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 09/28/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.