Rumors began whirling in January that the struggling lingerie brand might be in need of a new home. The company officially reports earnings on Feb. For the fourth quarter, the company is expecting a 10 percent comparable sales decline in the Victoria’s Secret business, while the Bath & Body Works business will likely have gains of 10 percent. L Brands stock tumbled by nearly six percent at the start of Thursday’s trading session on the news, which included L Brands estimated fourth quarter results, only to turn positive within the hour. We look forward to partnering with the leadership team to pursue these objectives.” “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. “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,” said Stefan Kaluzny, managing director of Sycamore Partners. Wexner added that the new structure will allow Bath & Body Works - which represents the vast majority of 2019 consolidated operating income and almost all of last year’s gains - to continue to grow. I think about the endless possibilities ahead for this company.” “And we have seen our business evolve and take new paths many times before. “As I’ve said before, retail is a business of change,” Wexner continued. We are pleased that, by retaining a significant ownership stake, our shareholders will have the ability to meaningfully participate in the upside potential of these iconic brands. We believe that, as a private company, Victoria’s Secret will be better able to focus on longer-term results. 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. “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. “Today is the beginning of an important new chapter in the evolution of the enterprise,” Wexner wrote in a letter sent out to L Brands associates Thursday morning. Moody’s vice president Christina Boni estimated that the deal will allow L Brands to decrease its debt by as much as $1 billion. The company said it intends to use the proceeds from the transaction, along with approximately $500 million in excess balance sheet cash, to reduce debt. L Brands will also retain a 45 percent stake in Victoria’s Secret, which Sycamore valued at $1.1 billion. We are confident that this transformative transaction is the best path forward to strengthen our iconic brands and deliver enhanced value to all L Brands shareholders.”įollowing the transaction, Wexner - who has come under fire over the last 18 months for Victoria’s Secret failure to adapt to changing market conditions, his relationship with Jeffrey Epstein and alleged sexual harassment at the company - will transition from chairman and chief executive officer of L Brands to chairman emeritus of the company he founded 57 years ago. “As the Board and its advisers explored these potential alternatives, we received valuable input from a number of shareholders, and we greatly appreciate their support. “The Board undertook a comprehensive review of a broad range of options to best position its brands for long-term success and drive shareholder value,” Allan Tessler, lead independent Board director of L Brands, said in his prepared remarks. Victoria’s Secret will become a private company, while L Brands’ remaining operation, Bath & Body Works, will become a standalone public firm. Parent company L Brands sold 55 percent of the intimates giant to Sycamore Partners for $525 million. Victoria’s Secret has been sold - and Les Wexner is stepping aside.
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