Following declining sales and the closure of a number of its global outlets, luxury women's lingerie and beauty products brand Victoria's Secret has been sold to a new owner. The company's owner, L Brands, announced this week that it has sold a major stake of Victoria's Secret to private-equity firm Sycamore Brands for $525 million.
According to L Brands, it has agreed to sell Sycamore Brands 55 percent of Victoria's Secret. The Ohio-based firm will keep the remaining 45 percent, a decision that was made to enable its shareholders to "meaningfully participate" in the potential growth of the business. Following the announcement, L Brands' stock prices dropped by 12 percent in premarket trading on Thursday.
The amount paid by Sycamore Brands is significantly less than the company's expected value. Last year, Victoria's Secret and its hundreds of stores worldwide managed to rake in a total of around $7 billion in revenues. However, the company had experienced a dramatic drop in sales over the past months, mostly due to increasing competition and the shift in consumer tastes.
The brand itself was heavily marketed and features catalogs filled with supermodels. Victoria's Secret also had its own annual television special that included live musical performance and its own fashion show. The Victoria's Secret fashion show was pulled from network television last year amid low ratings and controversies surrounding its CEO's connection with disgraced financier Jeffrey Epstein.
Over the fourth quarter, the company reported a 10 percent drop in same-store sales. The drop was somewhat unexpected given that the company typically records substantial numbers during the holiday season.
L Brands CEO, Les Wexner, mentioned in a statement that separating its Victoria's Secret Lingerie, Beauty, and PINK units and handing it over to a privately held company was the best course of action to get the businesses back to their "historic levels" of profitability. The executive added that Sycamore does have deep experience in retail and a stellar track record of success. He believes that the company has a fresh perspective and the ability to take the brands back to growth and profitability.
Apart from the stock sale, L Brands announced that Wexner will be stepping down as its CEO after the transaction is completed. Wexner will still remain with the company as its chairman emeritus. According to its website, Wexner currently holds a 16.71 percent stake in the company. L Brands added that Wexner was pivotal in the success of its brands such as Bath & Body Works and Victoria's Secret, which have now become household names around the world.
