L Brands spins off Victoria's Secret into a separate company
A year after an agreement to sell Victoria’s Secret fell apart as the pandemic emptied shopping centres across the US, the chain will be spun off by its owner to become a separate company.
L Brands, based in Columbus, Ohio, has been shopping the struggling chain elsewhere since the collapse of that deal and said it had held talks with a number of potential buyers, but it appears it could not come to an agreement on price.
Victoria’s Secret was to be sold to Sycamore Partners last year for about $525 million (£371 million), but the private equity firm took legal action to enable it to pull out of the deal citing the coronavirus pandemic.
At that point, Victoria’s Secret was forced to close its retail stores due to lockdown and sales, which had already been in decline as the brand had fallen out of favour with its young consumer base, plummeted.
The UK division entered adminstration but high street giant Next struck a joint venture deal with L Brands to run its stores here, as well as its UK e-commerce business.
Victoria’s Secret has been trying to turn its business around, with an eye on changing the corporate culture, reinventing its product and redesigning stores.
While the brand had been known for its sexy style, women have increasingly shifted towards more comfortable lingerie options, particularly during the pandemic when many have spent most of their time at home.
But, prior to falling out of favour, Victoria’s Secret had a long unparalleled run of success. The brand was founded by the late Roy Larson Raymond in the late 1970s after he felt embarrassed about purchasing lingerie for his wife.
Les Wexner, founder of the then Limited Stores, purchased Victoria’s Secret in 1982 and turned it into a powerful retail force.
By the mid-1990s, Victoria’s Secret lit up runways and later filled the internet with its supermodels and an annual television special that mixed fashion, beauty and music.
Failing to adapt to changing tastes saw sales tumble, and its annual show was cancelled in 2019.
There has also been increased competition. Rivals such as Adore Me and ThirdLove, which have sprouted up online and marketed themselves heavily on social media platforms like Instagram, have focused on fit and comfort while offering more options for different body types.
Meanwhile, American Eagle’s Aerie lingerie chain, which partners with women activists such as Manuela Baron, has also lured customers away from Victoria’s Secret.
With the decision announced on Tuesday, L Brands created two independent, publicly traded companies, the other being Bath & Body Works.
The split becomes official in August if approved by the board at L Brands. Shares of the company fell 3.3% before the market opening on Tuesday.