Victoria's Secret owner sells controlling stake to private equity group
Victoria's Secret, beset by falling sales and uncomfortable questions about its billionaire founder who has run the company for five decades, is being sold.
The company's owner, L Brands, said that the private-equity firm Sycamore Brands will buy 55 per cent of Victoria's Secret for about $525 million. The Columbus, Ohio company will keep the remaining 45 per cent stake.
Shares of L Brands, slid 12 per cent in premarket trading Thursday.
The selling price signifies a marked decline for a brand with hundreds of stores that booked about $7 billion in revenue last year.
Sales at its stores are in decline because competition is increasing and tastes are changing. Victoria's Secret suffered a 12 per cent drop in same-store sales during the most recent holiday season. L Brands said Thursday that same-store sales declined 10 per cent at Victoria's Secret during the fourth quarter.
At its peak, the underwear and lingerie brand was known for its catalogue filled with supermodels and a glitzy annual television special that mixed fashion, models and music. Amidst its struggles, Victoria's Secret sales have continued to erode, the show has been pulled from network television and its stock — which traded at close to $100 in 2015 — now trades at around $24.
L Brands has also come under scrutiny because its CEO, Les Wexner, has ties to the late financier Jeffrey Epstein, who was indicted on sex-trafficking charges.
Epstein started managing Wexner's money in the late 1980s and helped straighten out the finances for a real estate development backed by Wexner in a wealthy suburb of Columbus. Wexner has said he completely severed ties with Epstein nearly 12 years ago and accused him of misappropriating "vast sums" of his fortune.
Wexner offered an apology at the opening address of L Brands' annual investor day in Columbus last fall, saying he was "embarrassed" by his former ties with Epstein.
Wexner will step down after the transaction is completed and become chairman emeritus.
Wexner is the longest-serving CEO of an S&P 500 company. He founded what would eventually become L Brands in 1963 with The Limited retail store, according to the company's website. Wexner owns approximately 16.71% of L Brands, according to FactSet.
Sycamore has about $10 billion in assets under management. The firm's investment portfolio includes retailers such as Belk, Coldwater Creek, Hot Topic and Talbots.