What does private equity ownership hold for Victoria’s Secret?
L Brands and Sycamore Partners announced yesterday a deal for the private equity firm to take a 55 percent stake in Victoria’s Secret and its Pink brand. The question many are asking is whether the deal, when completed, will represent a new start for the struggling retail chain or mark the beginning of the end for the business?
The deal between Sycamore, which specializes in retail and consumer brand investments, and L Brands has been reportedly valued at $525 million. Leslie Wexner, founder, CEO and chairman of L Brands, will vacate those positions to become chairman emeritus of L Brands when the deal between the parties is complete.
The lingerie chain has struggled in recent years as consumers shifted their purchases to brands that offered a wider range of size options and more inclusive marketing messages. Victoria’s Secret posted a 12 percent decline in same-store sales including online during the recent Christmas selling season. While it remains the largest player in the lingerie category with annual sales of around $7 billion, Victoria’s Secret has experienced declines for three consecutive years.
“We have long had great respect and admiration for L Brands and its success in building a world-class portfolio of lingerie and beauty brands,” said Stefan Kaluzny, managing director of Sycamore Partners, in a statement. “With unmatched global brand awareness and customer loyalty, we believe there is a significant opportunity to reinvigorate growth and improve the profitability of Victoria’s Secret.”
Sycamore’s other investments include Aeropostale, Belk, Coldwater Creek, Dollar Express, The Limited, Staples, Talbot and Torrid. The firm’s methods have not always worked to the advantage of the companies it has acquired. Sycamore has faced criticism, as have many of its private equity brethren, for loading up companies it acquires with unsustainable debt levels while it sells off assets to maximize the return on its investments.
- L Brands Announces Transformative Transaction With Sycamore Partners to Drive Shareholder Value – L Brands, Inc.
- L Brands Reports Holiday 2019 Sales and Updates Fourth Quarter Earnings Guidance – L Brands, Inc.
- Victoria’s Secret’s New Owner Has a History With Troubled Brands – Business of Fashion
- New Victoria’s Secret Owner, Sycamore Partners, Has a Storied History in Footwear: 4 Things to Know – Footwear News/Yahoo Finance
- Victoria’s Secret to go private in a deal that values the once-powerful lingerie brand at $1.1 billion – CNBC
- Les Wexner Gives Up Control of Victoria’s Secret – The Wall Street Journal
- Investments – Sycamore Partners
- Sexy isn’t selling anymore for Victoria’s Secret – RetailWire
- Can Victoria’s Secret recover from its founder’s past relationship with Jeffrey Epstein? – RetailWire
- Has Victoria’s Secret become a casualty of the #MeToo movement? – RetailWire
DISCUSSION QUESTIONS: What do you think Sycamore Partners will do with its controlling interest in the Victoria’s Secret and Pink brands acquired from L Brands? What role do you expect L Brands to play with its remaining 45 percent stake in the business?