L Brands to Spin off Victoria’s Secret

Victoria’s Secret to go Public

L Brands (LB) is spinning off its Victoria’s Secret unit after exploring multiple buyout offers for the retailer. The owner of Victoria’s Secret and Bath & Body Works plans to create two separate publicly traded companies.

The spinoffs will likely be completed by August. L Brands’ CEO Andrew Meslow will lead Bath & Body Works while Martin Waters, the CEO of Victoria’s Secret, will continue to head the standalone lingerie retailer. L Brands’ board entertained offers from suitors for Victoria’s Secret but determined there is more value in spinning it off. The company said it has made “significant progress” in strengthening the brand over the past 10 months.

L Brands Turned Down Offers for Victoria’s Secret

Interest in Victoria’s Secret was strong among potential buyers. L Brands received several bids which valued the retailer at more than $3 billion. L Brands turned down these offers, betting Victoria’s Secret is worth more on its own. Had its sale to Sycamore Partners gone through last year, Victoria’s Secret would have fetched only $1.1 billion.

L Brands believes that splitting up the two retailers will help both brands focus more on growth. It also believes spinning them off creates the most value for its shareholders.

L Brands Beats Earnings Expectations

L Brands also announced preliminary first-quarter results which exceeded Wall Street expectations. It attributed the growth to pandemic stimulus checks and easing COVID-19 restrictions.

Victoria’s Secret dominated the lingerie market for years, but more recently the brand has run into trouble as competition increased and consumers’ tastes shifted. Victoria’s Secret responded by closing around 200 stores, changing its marketing, curbing promotions, and launching new products.

The changes started paying off this past holiday season. Momentum has kept growing and the business is now expected to be valued between $5 billion and $7 billion on its own. Investors will be eager to see if these positive trends will last.

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