Please ensure Javascript is enabled for purposes of website accessibility

L Brands to Split Off Victoria's Secret in August

By Rhian Hunt - Feb 4, 2021 at 1:19PM

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

In addition to providing a fairly firm spinoff date, the company also gives some positive fourth-quarter guidance.

L Brands (BBWI -5.10%), the parent company of both the highly successful Bath & Body Works brand and the faltering, scandal-ridden Victoria's Secret, announced multiple upcoming changes today, including a relatively firm timetable for spinning off Victoria's Secret.

L Brands says the divestiture could involve either "a spin-off of the Victoria's Secret business into a public company or a private sale of the business." L Brands nearly sold off the ailing brand in early 2020, but the COVID-19 pandemic wrecked the deal.

A hand emerging from a business suit sleeve clicking on a flipboard spelling out "Divestment."

Image source: Getty Images.

The company made several other announcements, including preliminary fiscal fourth-quarter figures. The metrics it quotes underline why it wants to separate Bath & Body Works, which saw a 22% positive surge in comparable sales or comps, from Victoria's Secret, which registered a 3% drop in comps year over year despite favorable conditions.

L Brands boosted its fiscal Q4 earnings per share (EPS) guidance to between $2.95 and $3. This is an increase of 5.4% to 11.1% over the previous guidance of $2.70 to $2.80. An executive reshuffle is also under way, with Martin Waters stepping in as CEO of Victoria's Secret, replacing Stuart Burgdoerfer. Burgdoerfer, who also serves as CFO for L Brands, will retire from the company in August, the same month Victoria's Secret will be spun off.

L Brands appears to be successfully updating its operations after years of decline, with its turnaround drawing bullish ratings from major analysts like Bank of America. Bank of America recently said in reference to the spinoff and basing L Brands' future on a stand-alone Bath & Body Works, "the action allows investors to own one of the most consistent growth concepts in retail," and assigned a $65 price target, an approximate 35% upside from today's share value.

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
$48.41 (-5.10%) $-2.60

*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 service.

Stock Advisor Returns
345%
 
S&P 500 Returns
119%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/17/2022.

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.