- L Brands Board of Directors has officially approved the spin-off of its Victoria’s Secret banner into an independent, publicly-traded company housing the Victoria’s Secret Lingerie, Pink and Victoria’s Secret Beauty brands.
- With the separation of the new company, christened Victoria’s Secret & Co., L Brands plans to change its name to Bath & Body Works Inc., reflecting the banner that will carry the remaining company.
- L Brands expects the name change and split – via a distribution of Victoria’s Secret shares to L Brands shareholders – to take effect on August 2.
Had it not been for a pandemic last year, Victoria’s Secret and L Brands would most likely have been on a different path by now. The lingerie giant is said to be co-owned today by L Brands and private equity firm Sycamore Partners, the latter of which is at the helm. It was the future envisioned in a deal made by L Brands and Sycamore in early 2020 and torn apart following the chaos of the first weeks of the pandemic.
Instead, the banner severed its ties with L Brands entirely after a series of transformations both at the banner and at its parent company level. Not the least is the departure of Les Wexner, who for generations founded and managed the company that has become L Brands. Acquired in 1982, Victoria’s Secret came to define the lingerie category – until it no longer was – and was perhaps the most visible of L Brands’ brands.
The evolution of the company has lasted for years. Long before L Brands parted ways with Victoria’s Secret, it abandoned its Abercrombie & Fitch, Express, The Limited, Henri Bendel (which closed in 2018), Lane Bryant and other banners. Seen in this light, the separation of Victoria’s Secret is the last step in a long process of disassembling L Brands. In the coming months, L Brands will cease to be “L Brands” in terms of size, structure and name.
The two independent companies that the split will create probably have a different future ahead of them. Victoria’s Secret is the older and larger of the two brands, and has been the most vulnerable to changing shopping habits, as well as cultural and consumer sensitivities.
Victoria’s Secret is currently working to revitalize itself after years of closely watched decline. Earlier this summer, Victoria’s Secret announced the “VS Collective”, a group of influential women, including sports stars and activists, who the company believes will shape merchandising and brand messages going forward. Victoria’s Secret will move towards independence with a new board of directors almost entirely made up of women.
Victoria’s Secret will also be heading towards independence with more than $ 1 billion in debt in its books, which will fund a cash payment to L Brands upon release.
As for Bath & Body Works, it has been the fastest growing brand for years, with a loyal fan base and an assortment and marketing strategy well suited to the age of social media. Bath & Body Works even increased sales during the pandemic while many of its mall peers absorbed significant sales.
The separation will take place once certain customary conditions are met, including approval by the Securities and Exchange Commission of the tax-exempt status of the spin-off.