L Brands moves ahead with Victoria's Secret split; Burgdoerfer to retire
L Brands said Thursday it is moving ahead with its plans to split its struggling Victoria's Secret brand into a separate company as it raised its profit outlook for the fourth quarter.
The retailer also announced that Stuart Burgdoerfer, the company's chief financial officer and the interim CEO of Victoria's Secret, will retire. L Brands promoted Martin Waters, CEO of Victoria's Secret Lingerie, to take his place leading Victoria's Secret.
The news sent L Brands shares jumping to a 52-week high.
Burgdoerfer will remain CFO through August 2021. The company has initiated a search for his successor in that role.
L Brands, also the operator of Bath & Body Works, is targeting August to complete the separation of Victoria's Secret, including a potential sale or spinoff into a public company.
Burgdoerfer took over as interim CEO of the lingerie brand last May after L Brands called off the sale of a 55% stake of Victoria's Secret to Sycamore Partners for $525 million.
His appointment came at the time when the company was going through a number of executive changes, including the departure of founder Les Wexner as CEO and chairman.
L Brands raised its fourth-quarter earnings guidance from $2.70 to $2.80 per share to $2.95 to $3 per share. It will report its fourth-quarter financial results Feb. 24.
The company said it expects sales at stores open at least a year, a key metric of a retailer's success, to increase 10% in the quarter, led by Bath & Body Works.
Same-store sales at the soap and hand sanitizer chain jumped 22% in the quarter, while Victoria's Secret saw a 3% decrease. The lingerie brand, while still dominant in its category, has been losing customers to other brands in recent years as consumer tastes have shifted away from the retailer's hypersexual emphasis.
Still, the 3% decrease is better than the results of recent quarters, and Victoria's Secret continues to be a powerful, global brand.
Sales at Bath & Body Works have soared during the pandemic as consumers continue to stock up on soap and hand sanitizer.
News of the spinoff and the increase in profit for the quarter provided another boost to L Brands' surging stock.
Shares were up 9% in trading Thursday to nearly $48 a share. Shares bottomed at $9.17 last spring when the coronavirus pandemic took hold and sent the stock market plunging.
"The board and I are extremely grateful to Stuart for his leadership during his 20-year career at L Brands,” Sarah Nash, chair of L Brands’ board of directors, said in a statement. “In the last nine months, he has led the turnaround of the Victoria’s Secret business in addition to continuing to lead L Brands’ finance organization as CFO. He will be missed, and we appreciate that he will remain with the business to see us through the planned separation process.”
“I am grateful to have had the opportunity to work with extraordinary people in every part of the business. The time is right for me to move on to my next chapter," Burgdoerfer said in a statement. "Bath & Body Works and Victoria’s Secret are in very capable hands with a bright future. I am excited to continue to lead the planned separation of the two businesses over the next six months.”