Victoria’s Secret to be spun off by L Brands following collapsed Sycamore Partners sale

L Brands, the parent company of Victoria’s Secret, has announced that it will spin off the lingerie company, a year after a proposed majority stake sale to private equity outfit Sycamore Partners collapsed.

The parent company says it will split Victoria’s Secret and Bath & Body Works into two separate, public companies by August 2021. L Brands has been keen to capitalise on Bath & Body Works’ success, which has coincided with plummeting popularity for Victoria’s Secret.

In February 2020, L Brands agreed a deal to sell a 55 per cent stake in Victoria’s Secret to Sycamore Partners, valuing the company at $1.1 billion (£778.3 million). However, after Victoria’s Secret shut its stores in response to the COVID-19 pandemic, Sycamore Partners pulled out of the deal.

Since then, despite improving sales in Q1 2021, L Brands has been in discussions with potential buyers for the brand, but has now said that a spin-off (expected to be tax-free) would represent the best option for shareholders.

Victoria’s Secret and Bath & Body Works have both seen improving sales in 2021. Victoria’s Secret recorded net sales of around £1.1 billion in the first quarter of this year, compared to around £632 million for the same quarter last year. Bath & Body Works, meanwhile, has seen sales rise from £537.7 million in Q1 2020, to over £1 billion in the first quarter of 2021.

Despite the considerable improvement, Victoria’s Secret’s sales are still well below the figures it generated at its peak, with the brand widely viewed as being out of step with modern consumer tastes and dogged by accusations of sexism.

These pre-existing issues, combined with the impact of the pandemic, resulted in the brand’s 2020 revenue falling by 28 per cent to around £3.8 billion. By contrast, Bath & Body Works saw its revenue soar 20 per cent to around £4.5 billion last year.

Victoria’s Secret underwent a considerable restructuring in 2020 as a result of the pandemic. In June 2020, the UK business of the US-based brand was placed into administration, before a majority stake was sold to Next Plc in September 2020 to form a joint venture with the major fashion retailer.

The spin-off to the company’s existing shareholders includes Victoria’s Secret Lingerie, PINK Brand and Victoria’s Secret Beauty. Following the spin-off, the newly-formed business will hold Victoria’s Secret’s current assets and liabilities.

Chair of L Brands board Sarah Nash said in a statement: “In the last ten months, we have made significant progress in the turnaround of the Victoria’s Secret business, driving top-line growth, and a series of cost reductions which together have dramatically increased profitability.”

“As separate businesses, Bath & Body Works and Victoria’s Secret each will be ideally positioned to benefit from a sharpened focus on pursuing growth strategies best suited to each company’s customer base and strategic objectives.”


Read more about the impact of the COVID-19 pandemic on the fashion industry.

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