L Brands & Equity Firm Call off Victoria’s Secret Privatization Deal; Wexner to Step Down

By:  Don Driggers

The plan to sell Victoria’s Secret to a private equity firm was mutually terminated on Monday, The NY Times reported.

Victoria’s Secret owner L Brands said Monday that it had called off a deal with private equity firm Sycamore Partners to take the retailer private, just three months after the two companies reached a $525 million agreement.

The NY Times reported: L Brands, which also owns Bath & Body Works, had agreed in February to sell a majority of Victoria’s Secret to Sycamore Partners for about $525 million. The transaction was expected to close in the second quarter. But as the pandemic forced Victoria’s Secret and many other retailers to temporarily close stores and furlough employees, Sycamore had second thoughts. The firm first tried to renegotiate the purchase, and then filed suit in Delaware to terminate the agreement, claiming L Brands had breached the terms of the deal. L Brands countersued, calling the attempt “invalid.”

“As part of L Brands’ strategy, the company remains committed to establishing Bath & Body Works as a pure-play public company,” and is preparing for Victoria’s Secret to operate as a separate company, L Brands said in a news release.

CNN Business reported: Leslie Wexner, the 82-year-old billionaire that has run L Brands for several decades and was under intense scrutiny for his close ties to disgraced financier Jeffrey Epstein, will step down as CEO and chairman as previously planned, the company said. Wexner will remain a member of the board as chairman emeritus.

In a statement on Monday, Sarah Nash, a director at L Brands and the company’s incoming chairwoman, cited the “extremely challenging business environment” for retailers as part of its decision to put an end to the deal.

Back in February of this year, the Jewish Voice reported that the selling price for Victoria’s Secret signifies a marked decline for a brand with hundreds of stores that booked about $7 billion in revenue last year.

In a statement released in February, Wexner said the deal will provide the best path to restoring Victoria’s Secret’s businesses to their ’’historical levels of profitability and growth.” The deal will also allow the company to reduce debt and Sycamore will bring a “fresh perspective and greater focus to the business, ’’ he said.

The management team at Victoria’s Secret essentially was designing what men want, not what women want, said Neil Saunders, managing director of GlobalData Retail.

“The brand is very embedded in the past,” said Saunders. “It was always about men feeling good. It should be about making women feel good about themselves.”

Victoria’s Secret had a long unparalleled run of success. The brand was founded by the late Roy Larson Raymond in the late 1970s after he felt embarrassed about purchasing lingerie for his wife. Wexner, the founder of the then Limited Stores Inc., purchased Victoria’s Secret in 1982 and turned it into a powerful retail force. By the mid-1990s, Victoria’s Secret lit up runways and later filled the internet with its supermodels and an annual television special that mixed fashion, beauty and music.