Victoria’s Secret is single and the brand isn’t looking for a new partner — at least not for now.
The innerwear business, owned by parent company L Brands Inc., was up for discussion at the annual shareholders meeting Thursday morning. The retailer said now that the deal with private equity firm Sycamore Partners has been terminated, the company is concentrating on new merchandise, marketing and the readjustment of the c-suite.
“Our focus at Victoria’s Secret, there are two main things that we’re spending our time and energy on,” Stuart Burgdoerfer, executive vice president and chief financial officer, as well as interim chief executive officer of Victoria’s Secret, said during the meeting, which was held virtually. “The first is to strengthen and improve the business itself. And then separately, as communicated in our earlier communications in relation to the Sycamore transaction, is strategic. The second thing we’re focused on is establishing Victoria’s Secret as a stand-alone company. So job one, improve the business; job two, establish it as a stand-alone company.”
Burgdoerfer would not answer “yes” or “no” as to whether the company would seek a new buyer for the Victoria’s Secret brand. A representative from L Brands declined any follow-up questions.
L Brands and Sycamore called off the $525 million deal — which would have given the private equity firm a majority stake in the Victoria’s Secret innerwear and beauty businesses, along with the Pink brand — earlier this month.
“The board determined it was in the best interest of the company and its stockholders and associates to focus our efforts entirely on navigating this environment, facing the challenges and opportunities we have and focusing on success, rather than engage in costly and distracting litigation,” said Leslie H. Wexner, L Brands founder and chairman emeritus.
That means, not only will Victoria’s Secret become a stand-alone private firm, but the Bath & Body Works division will also separate, while continuing to be listed on the stock market.
The meeting also marked Wexner’s retirement as chairman of the board and ceo of L Brands, the company he founded more than 40 years ago.
“As of today, I will be stepping down as ceo and chairman,” Wexner said. “I think everyone expects me to be sad.” Instead, Wexner spoke of his gratitude for a successful career and said, “The handoff, the baton is passed cooperatively and completely.”
Andrew Meslow, ceo of Bath & Body Works, is now a member of the board and will also serve as ceo of L Brands. Sarah Nash took over as chairwoman of the L Brands board, while board members Allan Tessler, Gordon Gee and Raymond Zimmerman retired.
“I’m confident in Andrew and I know the business will be in terrific hands,” Wexner said.
In addition, Burgdoerfer is leading Victoria’s Secret as interim ceo, overseeing the Victoria’s Secret lingerie, beauty and Pink brands. John Mehas, Greg Unis and Amy Hauk will continue to serve as leaders of their individual divisions. There is no word yet as to whether Burgdoerfer’s role will be permanent, or whether the company will seek a successor.
“Andrew has a deep and broad understanding of the business, as does Stuart,” Wexner said. “Stuart knows the business from the inside out and the outside in. The two of them are a remarkable team.”
He added that “Sarah [Nash] has brought some fresh perspective and insights to the board.”
The Victoria’s Secret brand was in transformation mode earlier this year when it revealed its intention to sell a 55 percent stake of the business to Sycamore Partners in February. The deal was viewed by some as a lifeline for Victoria’s Secret, which had been struggling with declining revenues, a stale image, allegations of sexual misconduct within the company, as well as Wexner’s ties to the disgraced sex offender Jeffrey Epstein.
Now that the deal has been scrapped, Wexner said, “The Victoria team has been very active in improving the quality of fashion and the quantity of inventory, managing expenditures, examining all costs and being in the best position; changing the mix of merchandise, brand marketing and again, carefully managing inventory as we emerge from the pandemic and get back to normal so the Victoria brand can be in the best possible position.”
But much like the rest of the retail industry, Victoria’s Secret has suffered amid the coronavirus pandemic, the crisis that caused both its stores and those of Bath & Body Works in North America to close in March. The Victoria’s Secret and Pink e-commerce businesses also briefly went dark.
Shares of L Brands are down more than 50 percent year-over-year and, as of Thursday, stores remain closed. With more than 1,000 Victoria’s Secret stores nationwide, and 1,700 Bath & Body Works locations, the retail fleet is a major source of revenue for the company.
To help curb costs, L Brands drew down on its revolving credit facility in March, instituted executive pay cuts, reduced shareholder dividends and furloughed staff in-store and some corporate associates in April. The company also suspended rent payments while stores remain closed, decreased capital spend from $550 million to around $250 million, extended payment terms to vendors and reduced spring inventory receipts at Victoria’s Secret and Bath & Body Works.
“None of these were easy,” Wexner said. He added that the decision to furlough staff, some 65,000 employees, was “the most difficult decision I’ve ever made.”
“But we had to take these actions,” Wexner said. “We must control the things that we can control.
“I think in my career, at different points and times, I think I’ve seen everything, until the start of this pandemic,” he continued. “The challenges, the hardships that it has put on the global economy, the global society. This pandemic that we’re experiencing has changed everything for everyone.”
L Brands plans to report quarterly earnings May 20 after the market closes.