L Brands to sell 55% stake in Victoria’s Secret to Sycamore Partners for $525m

US fashion retailer L Brands has agreed to sell 55% stake in Victoria’s Secret Lingerie to private equity firm Sycamore Partners for about $525 million.

As per the terms of the deal, Victoria’s Secret, which has been valued at $1.1 billion, will be separated from the fashion retailer into a privately-held company under the majority ownership of the private equity firm.

Victoria’s Secret, which includes the brands Victoria’s Secret Lingerie, Victoria’s Secret Beauty and PINK, which is a specialty retailer of women’s lingerie, accessories, prestige fragrance, body care, and athletic and lounge wear.

The products of Victoria’s Secret are sold in 1,600 plus stores across the world and online.

Stefan Kaluzny – Managing Director of Sycamore Partners said: “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.”

Sycamore Partners to acquire 55% stake in Victoria’s Secret from L Brands. Photo courtesy of WestportWiki/Wikipedia.org.

The transaction is said to enable L Brands to generate long-term value to its shareholders by transforming Bath & Body Works as a highly profitable, independent public company.

Bath & Body Works is a specialty retailer which sells collections for body lotion and body cream, hand soap, body wash, and fragrances. L Brands maintains 1,900 Bath & Body Works and White Barn retail locations across the world.

The proceeds from the sale of stake in Victoria’s Secret, along with nearly $500 million in excess balance sheet cash, will help L Brands in cutting down its debt.

Leslie Wexner – Chairman and CEO of L Brands, stated, “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.

“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. Sycamore, which has deep experience in the retail industry and a superior track record of success, will bring a fresh perspective and greater focus to the business.