Victoria's Secret is going private. It's only worth $1.1 billion

As Victoria's Secret struggles to lure new customers, online bra sellers like ThirdLove are using tech and data to build a fanbase.

Posted: Feb 21, 2020 4:50 AM
Updated: Feb 21, 2020 4:50 AM

Victoria's Secret, the troubled lingerie brand owned by L Brands, is being sold to a private equity firm in a $525 million deal.

Sycamore Partners and L Brands will split control of the brand: The private equity firm is buying a 55% stake, while L Brands is taking control of the remaining 45%, but Victoria's will be spun off into a fully private company. The two companies announced the deal Thursday.

Leslie Wexner, the 82-year-old billionaire that has run L Brands for several decades, is leaving his position as CEO and chairman as part of the transaction. He will remain on L Brands' board as chairman emeritus.

In a press release, Wexner said that separating Victoria's Secret into a privately held company "provides the best path to restoring these businesses to their historic levels of profitability and growth." He praised Sycamore for its "deep experience" in the retail industry and said it will bring a "fresh perspective and greater focus to the business."

"We believe that, as a private company, Victoria's Secret will be better able to focus on longer-term results. We are pleased that, by retaining a significant ownership stake, our shareholders will have the ability to meaningfully participate in the upside potential of these iconic brands," Wexner said in the release.

Once Victoria's Secret is spun off, L Brands primary business will be Bath and Body Works, a sharp reversal for the company that used to own several well-known mall brands including Abercrombie & Fitch, Lane Bryant and The Limited. Spinning off Victoria's Secret was proposed last March by Barington Capital, a hedge fund that owns a small stake in the company.

Wexner has been under heavy scrutiny recently for his close ties to Jeffrey Epstein. The disgraced financier, whose death in jail last August has been ruled a suicide, was Wexner's former personal money manager and a trustee of the Wexner Foundation, Wexner's charitable group based Ohio. Wexner said he cut ties with Epstein in 2007. Wexner said in September 2019 he was "embarrassed" by the relationship.

News of Wexner of potentially giving up control of the brand first broke in January.

Victoria's Secret has been struggling over the years because it failed to adapt to consumer demand for more custom-fitted bras and inclusive messaging in its advertisements. Although marketing trends in lingerie have changed, Victoria's Secret has mostly stuck to the same playbook that helped it dominate the industry: push-up bras and celebrity models.

The brand was also the focus of a New York Times exposé earlier this month that alleged mistreatment against its models.

Sales at Victoria's Secret's stores that were open at least a year fell 10% in the fourth quarter, L Brands said Thursday.

The separation 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 Moody's Vice President Christina Boni, in a note to investors.

"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," she added.

Despite the optimistic tone from Sycamore and L Brands, Victoria's Secret future is hazy given the dismal track record private equity firms have after assuming control of major retailers. Charlotte Russe, Toys R Us, RadioShack, Payless Shoe Source, The Limited, and, most recently, Barney's all have closed thousands of stores.

L Brands stock fell 1% in early trading. Shares had been down as much as 15% in premarket trading.

-- CNN Business' Chris Isidore and Nathaniel Meyersohn contributed to this report.

Mississippi Coronavirus Cases

Data is updated nightly.

Cases: 515504

Reported Deaths: 10296
CountyCasesDeaths
Harrison34999558
DeSoto33360432
Hinds32743643
Jackson24906392
Rankin22565405
Lee16455245
Madison14954283
Jones14158248
Forrest13834260
Lauderdale12311323
Lowndes11357193
Lamar10693140
Pearl River9748244
Lafayette8868143
Hancock7849132
Washington7559169
Oktibbeha7229138
Monroe7068179
Pontotoc7033110
Warren6885178
Panola6791135
Neshoba6744210
Marshall6707142
Bolivar6468151
Union643598
Pike5942157
Alcorn5921107
Lincoln5540136
George510680
Prentiss508285
Tippah495683
Itawamba4884107
Scott478999
Tate4777117
Adams4776125
Leflore4749144
Copiah458195
Yazoo458092
Simpson4566117
Wayne443472
Covington434895
Sunflower4319106
Marion4295112
Coahoma4244110
Leake414191
Newton396182
Tishomingo386894
Grenada3789109
Stone366166
Jasper341266
Attala340490
Chickasaw318367
Winston318392
Clay312978
Clarke301695
Calhoun286850
Holmes272889
Smith270552
Yalobusha244947
Tallahatchie232353
Greene225149
Walthall222166
Lawrence220242
Perry214556
Amite210357
Webster206548
Noxubee188843
Montgomery182157
Carroll175441
Jefferson Davis174343
Tunica163539
Benton153139
Kemper145441
Choctaw137027
Claiborne134839
Humphreys132239
Franklin126530
Quitman107828
Wilkinson106139
Jefferson97134
Sharkey65321
Issaquena1957
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Alabama Coronavirus Cases

Cases: 847659

Reported Deaths: 16172
CountyCasesDeaths
Jefferson1163752005
Mobile743371381
Madison53434738
Shelby38413371
Baldwin38171589
Tuscaloosa36131643
Montgomery34571782
Lee25664264
Calhoun22622519
Morgan22527408
Etowah20059520
Marshall18821318
Houston17769426
St. Clair16946359
Limestone16192220
Cullman16140305
Elmore15948295
Lauderdale15055307
Talladega14244302
DeKalb13061271
Walker12138380
Blount10765193
Autauga10545157
Jackson10204195
Coffee9435192
Colbert9363210
Dale9038192
Tallapoosa7283202
Russell710165
Chilton7078170
Covington6967197
Escambia6962144
Franklin6364108
Chambers5795142
Marion5435130
Dallas5302210
Pike5128109
Clarke485686
Lawrence4845130
Winston4785110
Geneva4650136
Bibb435495
Barbour370180
Butler3444101
Marengo342793
Monroe338366
Randolph337767
Pickens334790
Fayette331485
Henry321066
Cherokee319964
Hale318889
Crenshaw261678
Washington256852
Cleburne255460
Lamar253555
Clay252069
Macon245767
Conecuh193562
Coosa185847
Wilcox178338
Lowndes178268
Bullock152745
Perry141840
Sumter139741
Greene130345
Choctaw94328
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