L Brands (NYSE:LB) 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.
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.