L Brands, Inc. has announced that its board of directors has unanimously approved a plan to separate the company into two independent, public companies: Bath & Body Works and Victoria’s Secret, including Victoria’s Secret Lingerie, Pink and Victoria’s Secret Beauty.
“In the last ten 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,” said Sarah Nash, chair of the board.
“As a result of these efforts, Victoria’s Secret is now well-positioned to operate as a standalone, public company. Further, both Bath & Body Works and Victoria’s Secret are leaders in their respective markets, and, as separate businesses,” Nash added.
Victoria’s Secret and Bath & Body Works to trade as separate ventures The company said, Andrew Meslow, chief executive officer of L Brands, will continue to hold this position and lead Bath & Body Works following the spin-off. Martin Waters, chief executive officer of Victoria’s Secret, will continue to lead the new standalone Victoria’s Secret business following the separation.
The company expects to create these companies through a tax-free spin-off of Victoria’s Secret to L Brands’ shareholders. The spin-off will enable each company to maximize management focus and financial flexibility to thrive in an evolving retail environment and deliver profitable growth.
L Brands raises Q1 earnings forecast L Brands expects to report first quarter earnings per share of approximately 97 cents, which includes a charge related to the early extinguishment of debt of 28 cents per share. Excluding this charge, the company expects to report adjusted earnings per share of approximately 1.25 dollars versus its previous guidance of 85 cents to 1 dollar.
The increase, L Brands added, reflects continuing strong sales and margin results at both Bath & Body Works and Victoria’s Secret, which benefitted from stimulus payments and the relaxation of Covid-19 restrictions.
For the first quarter, the company expects to report total operating income of approximately 570 million dollars, including approximately 380 million dollars at Bath & Body Works and approximately 245 million dollars at Victoria’s Secret.
The company will report its first quarter earnings results after the close of the market on May 19.