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L Brands Might Be Shopping Victoria's Secret to Buyout Firms Again

By Rich Duprey - Feb 23, 2021 at 11:57AM

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A spinoff of the lingerie brand is still in the cards, though.

Victoria's Secret might be back on the market. The New York Times reports owner L Brands (BBWI 8.71%) is sounding out private equity firms to test their willingness to have another go at bidding for the lingerie brand.

It was nine months ago the pandemic scuttled L Brands' attempt to sell Victoria's Secret to the Sycamore Partners hedge fund, which got cold feet as stores were closed due to the COVID-19 outbreak.

Victoria's Secret store

Image source: L Brands.

Although some observers believe the retailer had a good case to force the private equity firm to the terms of the sale, L Brands allowed Sycamore to back out of the deal. It then said it would focus on its Bath & Body Works chain while prepping Victoria's Secret for a spinoff as an independent company.

While L Brands reiterated earlier this month all options remain on the table, the retailer may be trying the sale route first before pursuing a spinoff. With special purpose acquisition companies (SPACs) all the rage, it may be an easier route to get the lingerie company into the public markets.

A tough sell

L Brands raised its fourth-quarter guidance three weeks ago on the strength of the Bath & Body Works chain. Where its comparable sales jumped 22% in the fourth quarter, Victoria's Secret's comps were down 3%.

Last month it said the lingerie brand's sales fell during the important two-month holiday period. Where store comps were down 23%, e-commerce sales jumped 24% year over year.

Finding a buyer still might be difficult, though, as there are ongoing investigations into L Brands chairman Les Wexner's relationship with Jeffrey Epstein and allegations of harassment. Wexner has stepped down as CEO and chairman of the retailer.

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