Victoria's Secret headquarters to stay in Columbus: What we know about L Brands spin-off
L Brands expects to complete the spinoff of Victoria's Secret by August, and both it and the other remaining brand of Columbus retail behemoth L Brands — Bath & Body Works — will keep their headquarters in Columbus as separate, publicly traded companies.
The retailer announced Tuesday the long-awaited decision on what to do with the lingerie brand, a decision that has been put on hold for nearly a year.
The two companies will divide up the company's Columbus office and operations spaces, and a small number of additional home office workers likely will be needed for some tasks that both brands now share, L Brands said.
The company has 7,000 workers in Columbus.
Shares of Victoria's Secret will be distributed to L Brands shareholders. How much each L Brands shareholder will receive has not been determined.
Company says Victoria's Secret changing to be more relevant, modern
About a year ago, a deal to sell a 55% stake of the lingerie brand for $525 million to private-equity firm Sycamore Partners was called off because of COVID-19.
It turned out that bid vastly undervalued Victoria's Secret.
The company received several offers topping $3 billion, according to The New York Times.
Several Wall Street analysts say it was worth up to $5 billion, and the Times reported that the company expects the spinoff to be worth $5 billion to $7 billion for shareholders.
In recent years, Victoria's Secret has struggled under the weight of the #MeToo era, and sales were falling. Customers who found the retailer’s hypersexual emphasis and rail-thin depictions of women's bodies offensive had moved to other lingerie brands that offered more realistic, more inclusive styles for women.
“In the last 10 months, we have made significant progress in the turnaround of the Victoria’s Secret business, implementing merchandise and marketing initiatives to drive top-line growth as well as executing on a series of cost reduction actions, which together have dramatically increased profitability,” Sarah Nash, L Brands' board chairwoman, said in a statement. “As a result of these efforts, Victoria’s Secret is now well-positioned to operate as a standalone public company."
New Victoria's Secret CEO Martin Waters told analysts on a conference call in February that Victoria's Secret is changing up its offerings.
"I couldn't be more delighted to be leading the work to refresh the brand positioning to make it more relevant, to make it more inclusive, to make it more consistent with the attitude and lifestyle of the modern woman," he said. "And so we've listened to her and we've carefully decided to make some change. And that change is summarized by her asking us to move away from telling her what we think is sexy and what we think she should wear and how we think she should look."
L Brands results strong after Wexner depatures
The announcement comes a eight days ahead of the L Brands annual meeting that will mark the departure of company founder Leslie H. Wexner and his wife, Abigail, from the company's board.
The move comes a year after Wexner retired as chairman and CEO after reports of his connections to convicted sex predator Jeffrey Epstein and a toxic culture of misogyny at Victoria's Secret.
The couple will control more than 10% of the company's shares after selling 3 million shares in March.
L Brands shares have soared the past year and hit a 52-week high of $71.34 last week, though they traded lower Tuesday.
L Brands on Tuesday reported preliminary first-quarter financial results that show sales nearly doubled to $3 billion for the three months that ended May 1 compared with the same period of 2020. Stores were closed for about half of the 2020 first quarter because of the coronavirus.
Sales were split about equally between Bath & Body Works and Victoria's Secret.
The company said it expects to report profit of $1.25 per share for the quarter, not counting a 28-cent charge for the early extinguishment of debt. The prior guidance was 85 cents to $1.
Split will allow Bath & Body Works, Victoria's Secret to focus on own brands
L Brands said the results reflect strong sales at both brands, which have benefited from consumers receiving stimulus payments and the relaxation of COVID-19 restrictions.
Victoria Secret's sales decreased 7% compared with the first quarter of 2019 and reflect the net closure of 233 company-operated stores the past two years.
"Bath & Body Works and Victoria’s Secret are leaders in their respective markets, and, as separate businesses, 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," Nash said. "With this in mind, the board believes that this path forward will return the highest value to shareholders and that the separation will allow each business to achieve its best opportunities for growth.”
Andrew Meslow, CEO of L Brands, will continue to hold that position and will lead Bath & Body Works following the spinoff.