L Brands is spinning off Victoria's Secret to its shareholders instead of selling the brand. The parent company previously evaluated the possibility of either option and also received interest from and held discussions with multiple potential buyers. However, L Brands concluded that separating Victoria's Secret and Bath & Body Works into two separate public companies would provide shareholders with more value than a sale.
L Brands explained that the benefits of separating these two businesses include distinct strategic and management focus on specific operational and growth priorities and tailored capital deployment strategies based on each company’s operating and financial model, and the ability for the investment community to value each business independently and create significant value and certainty for our customers, employees and shareholders.
Andrew Meslow, CEO of L Brands, will continue in his role but also lead Bath & Body Works following the spin-off. Martin Waters, CEO of Victoria's Secret, will continue to lead the new standalone business following the separation, which is expected to complete by August. Additions to the management teams and the composition of the boards of directors for both companies will be named in due course.
Sarah Nash, chair of the board, said that in the last 10 months, the company has made significant progress in the turnaround of 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. As a result, Nash said 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, 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 added.
Victoria's Secret posted net sales of US$1.554 billion for the first quarter ended 1 May 2021, compared to US$893.6 million during the same period last year. Its Q1 2021 sales decreased 7% compared to Q1 of 2019 and reflect the net closure of 233 company-operated stores since Q1 2019. In 2019, L Brands axed the Victoria's Secret Fashion Show to evolve the brand's marketing.
Meanwhile, Bath & Body Works posted net sales of US$1.469 billion for Q1 2021, compared to US$760.6 million in Q1 2020. Its sales for the recent quarter jumped 60% compared to Q1 2019. Overall, L Brands amassed net sales of US$3.024 billion for the recent quarter, compared to US$1.654 billion during the same period last year.
Victoria's Secret Fashion Show gets axed to 'evolve marketing' of the brand
Victoria's Secret signature fashion show on TV comes to a halt, aims to evolve
Victoria's Secret appoints new CEO to lead a turnaround
Victoria's Secret CMO apologises for comments about transgender models