Dive Brief:
- L Brands' board has officially approved the spinoff of its Victoria's Secret banner into a standalone, publicly traded company housing the Victoria's Secret Lingerie, Pink and Victoria's Secret Beauty brands.
- With the new company, dubbed Victoria's Secret & Co., separated off, L Brands plans to change its name to Bath & Body Works Inc., reflecting the banner that will carry the remaining company.
- L Brands expects the name change and spinoff — via a distribution of Victoria's Secret stock to L Brands shareholders — to become effective Aug. 2.
Dive Insight:
Had a pandemic not occurred last year, Victoria's Secret and L Brands would most likely have been on a different path right now. The lingerie giant would today be co-owned by L Brands and private equity firm Sycamore Partners, with the latter in control. That was the future imagined in a deal struck by L Brands and Sycamore in early 2020 and torn up following the chaos of the early pandemic weeks.
Instead, the banner is severing ties with L Brands entirely after a series of transformations at both the banner and its parent. Not least among them was the departure of Les Wexner, who founded and for generations led the company that became L Brands. Acquired in 1982, Victoria's Secret came to define the lingerie category — until it didn't, anymore — and was perhaps the most visible among L Brands' brands.
The company's evolution has been years in the making. Long before L Brands divested Victoria's Secret, it let go of its Abercrombie & Fitch, Express, The Limited, Henri Bendel (which shuttered in 2018), Lane Bryant and other banners. Looked at that way, the Victoria's Secret separation is the final step in a long process of disassembling L Brands. In the coming months, L Brands will cease to be "L Brands" in size, structure and in name.
The two independent companies that the split will create likely have different futures ahead of them. Victoria's Secret is the older and larger of the two brands, and has been the more vulnerable to shifting shopping patterns, as well as cultural and consumer sensibilities.
Victoria's Secret is working currently to revitalize itself after years of well-watched decline. Earlier this summer Victoria's Secret announced the "VS Collective," a group of influential women, including sports stars and activists, that the company said will shape the brand's merchandising and messaging going forward. Victoria's Secret will be heading into independence with a new board that is nearly entirely composed of women.
Victoria's Secret will also be headed into independence with more than $1 billion in debt on its books, which will fund a cash payment to L Brands on its way out the door.
As for Bath & Body Works, it has for years now been the faster-growing brand, with a loyal fan base, and an assortment and marketing strategy well-tuned for the social media age. Bath & Body Works even grew its sales during the pandemic while many of its mall peers absorbed major sales hits.
The separation will take place after certain customary conditions are met, including the Securities and Exchange Commission's sign-off on the tax-free status of the spinoff.
