L Brands has announced that Victoria’s Secret, with a total enterprise value of 1.1 billion dollars, will be separated from L Brands into a privately-held company majority-owned by Sycamore with Sycamore acquiring 55 percent interest for approximately 525 million dollars and L Brands retaining a 45 percent stake. The company expects to report a fourth quarter comparable sales decline of 2 percent, consisting of a positive 10 percent comp at Bath & Body Works and a decline of 10 percent at Victoria’s Secret.

“We believe this structure will allow Bath & Body Works – which represents the vast majority of 2019 consolidated operating income – to continue to achieve strong growth and receive its appropriate market valuation. The transaction will also allow the company to reduce debt,” said Leslie Wexner, Chairman and Chief Executive Officer of L Brand, adding, “We believe the separation of Victoria’s Secret Lingerie, Victoria’s Secret Beauty and Pink into a privately held company provides the best path to restoring these businesses to their historic levels of profitability and growth.”

L Brands separates Victoria’s Secret into privately-held entity

The company said in a statement that the group will position Bath & Body Works as a highly profitable, standalone public company, separating Victoria’s Secret Lingerie, Victoria’s Secret Beauty and Pink collectively, Victoria’s Secret into a privately-held entity focused on reinvigorating its market-leading businesses and returning them to historic levels of profitability and growth. L Brands intends to use the proceeds from the transaction, along with approximately 500 million dollars in excess balance sheet cash, to reduce debt.

“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. 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,” added Stefan Kaluzny, Managing Director of Sycamore Partners.

Nick Coe named Vice Chairman and Andrew Meslow CEO of Bath & Body Works

Upon the closing of the transaction, the company added, Wexner will step down as chief executive officer and chairman of the Board of L Brands. He will remain a member of the board as Chairman Emeritus. Nick Coe, the current Chief Executive Officer of Bath & Body Works, has been named Vice Chairman of Bath & Body Works Brand Strategy and New Ventures. In his new role, Coe will focus on the strategic position of the business, the evolution of the brand, product development and new ventures/acquisitions.

L Brands said, Andrew Meslow, currently chief operating officer of Bath & Body Works, has been promoted to Chief Executive Officer of Bath & Body Works. At the close of the transaction, Meslow will become Chief Executive Officer of L Brands and will join its board. Meslow, who joined L Brands in 2003, has 29 years of experience in the retail industry, the last 15 at Bath & Body Works.

The company also announced today that it has extended its agreement with Barington Capital Group for an additional twelve months. Under the agreement, Barington will continue to serve as special advisor to L Brands.

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