Sycamore Partners To Take Victoria’s Secret Private In $525 Million Deal

L Brands and Sycamore Partners have announced a strategic transaction in which Sycamore Partners will acquire a 55% stake in Victoria’s Secret for $525 million, taking the retailer private, while L Brands will position Bath & Body Works as a standalone public company. Additionally, L Brands will make changes to its senior leadership structure.

“We believe this structure will allow Bath & Body Works — which represents the vast majority of 2019 consolidated operating income — to continue to achieve strong growth and receive its appropriate market valuation,” said Leslie Wexner, Chairman and CEO of L Brands in a statement. “The transaction also will allow the company to reduce debt.”

The separation is expected to drive benefits for both companies. Taking Victoria’s Secret private will let shareholders focus on reducing the retailer’s debt and engineering a turnaround with less of an emphasis on short-term performance, while Bath & Body Works will be able to maintain its growth trajectory without being weighed down by its sister company’s challenges.

“The separation of Victoria’s Secret into a private entity 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,” said Christina Boni, VP at Moody’s in commentary sent to Retail TouchPoints. “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.”


The dichotomy between the two companies is apparent in L Brands’ projected Q4 2019 earnings: Victoria’s Secret is expected to post a 10% same-store sales decline, while comparable sales at Bath & Body Works are expected to rise 10%. Victoria’s Secret also shuttered 53 of its more than 1,140 stores in 2019, and store traffic fell 19% from nearly 10.5 million shoppers in Q4 2018 to 8.5 million shoppers in Q4 2019, according to data from Quebiq.

Sycamore Partners’ controlling stake in Victoria’s Secret will include the Victoria’s Secret Lingerie, Victoria’s Secret Beauty and PINK brands.

New Leadership For A New Structure

Upon the closing of the transaction, Wexner will step down as CEO and Chairman of the Board of L Brands, though he will remain a member of the Board as Chairman Emeritus. Andrew Meslow, currently Chief Operating Officer of Bath & Body Works, will become CEO of L Brands and join its board.

Additionally, Bath & Body Works CEO Nick Coe has been named Vice Chairman of Bath & Body Works Brand Strategy and New Ventures. In this new role, he will focus on the strategic position of the business, the evolution of the brand, product development and new ventures/acquisitions.

“Andrew’s deep company knowledge, his retail and financial acumen and his unwavering commitment to doing the right thing for the customer, our business and our associates make him the ideal leader for the next chapter of Bath & Body Works,” said Coe in a statement. “Andrew and I have walked side by side on this journey, and I look forward to our continued collaboration in our new roles as the entire team remains committed to keeping this exceptional brand on a growth trajectory well into the future.”

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