Victoria’s Secret Sale to Sycamore Partners Cancelled
Thu, February 2, 2023

Victoria’s Secret Sale to Sycamore Partners Cancelled


Fueled by the evolving fashion landscape and comfort, the lingerie amount to economic activity as well. / Photo by Sorbis via Shutterstock


Retail company L Brands, owner of Victoria’s Secret, said that it has reached an agreement with private equity firm Sycamore Partners to cancel their previous deal for Sycamore Partners to buy a majority stake in the lingerie company, reports fashion industry news provider The Business of Fashion.


Victoria’s Secret buyer wants out of the deal

L Brands and Sycamore Partners likewise said in a statement that they will settle all pending litigation.  While Victoria’s Secret will be operated separately, Bath & Body Works, another retailer under the L Brands, will run as a public company. L Brands’ shares plummeted as much as 18% to $9.82 in the recent trading

The February deal was on the ice in late April when the private equity company sued to end the transaction. It argued that Columbus-based L Brands violated the terms of their agreement by closing stores and laying off workers amid the coronavirus pandemic. The retail company counter-sued, enforcing the terms in their agreement. In their February deal, L Brands was supposed to sell a majority stake of the lingerie chain for $525 million and L Brands would retain a 45% stake in Victoria’s Secret when the deal closes, which did not happen.

When Sycamore Partners walked away from the deal, some of the loudest reactions came from India, the busiest market in Asia for distressed assets. Usually, assets are considered “distressed” when their value is severely depressed not because of the general market conditions but for a reason particular to the issuer.

L Brands' board chair Sarah Nash told Business Insider India that just like all retailers, their company faces an “extremely challenging business environment.” Their Board believes that it is in the best interest of the firm, their stockholders, and their associates to focus their efforts on navigating their business environment to address the challenges. Also, it would help position their brands for success instead of engaging in “distracting” and “costly” litigation to push force the Sycamore partnership.



The focus to spin-off Victoria’s Secret brand

The company statement also reads that L Brands will maintain its goal of spinning off the brand of Victoria’s Secret, which is composed of Victoria’s Secret Lingerie, PINK, and Victoria’s Secret Beauty into a standalone and separate company.

Bath & Body Works’ Chief Operating Officer Andrew Meslow will replace Les Wexner as the CEO of L Brands and Nash will chair the Board.  Meanwhile, L Brands Chief Financial Officer Stuart Burgdoerfer will serve as the interim CEO of Victoria’s Secret. The statement of L Brands reads that their legal battle with Sycamore Partners has already come to an end. In connection with the termination of their transaction, the two firms settled to “mutually release all claims.”

Bath & Body Works has reported store sales growth in the past few years while Victoria’s Secret’s sales have declined. But even so, the latter still represents the majority of the L Brands revenue. Analysts remain split on what the future holds for Victoria’s Secret, which has dominated the intimates and lingerie market but also contended with having a struggling sale and several rivals trying to win dominance in the market.

Since 1995, Victoria’s Secret held an annual fashion show that is broadcast on TV, featuring top models called the “Runway Angels.” These models sport clothing and lingerie collections. The company is also known for its body care products and romance-themed fragrance collections.


Victoria’s Secret now has more than 1,100 stores locations around the world.  / Photo by JHVEPhoto via Shutterstock


Victoria’s Secret net sales worldwide

Victoria’s Secret now has more than 1,100 stores locations around the world. As one of the most well-known retailers of women lingerie in the world, it had global net sales of US$5.5 billion in 2018, $6.1 billion in 2011, and $6.6 billion in 2012. In 2013, its net sales worldwide amounted to $6.9 billion, $7.2 billion in 2015, $7.7 billion in 2015, $7.8 billion in 2016, $7.4 billion in 2017, and $7.4 billion in 2018 according to database company Statista.

In 2019, global research firm Coresight Research also published an analysis that showed that the $13.1 billion US women’s underwear market is undergoing a state of change. The top women’s intimates’ retailer in the US is Victoria's Secret but it has lost its market share since 2013. Emphasis on inclusivity and body positivity is prompting the change, especially in the definition of sexy. Styles of intimate wear changed to focus more on comfort and fit with the help of artificial intelligence and other technology.

Athletic retailers, such as Lululemon, Adidas, Under Armour, Nike, and Champion have also increased their market share in the women’s underwear market from 2013 to 2018.  In 2018, about one-third of the bra dollars spent by millennials were for sports bras. Compared to traditional bras, sports bra fits snugly around the upper torso and avoids discomfort, making it ideal during exercise. Sports bras have also become more fashionable and trendier. Bras accounted for approximately 55.5% of the global lingerie market, based on a 2016 survey of Statista. This just goes to show how market forces are reshaping the intimate’s industry landscape.




Global lingerie market

The lingerie market occupied a significant part in the apparel industry in the past years not only because of its functional benefits but because it is considered a basic necessity for women. The global lingerie market is divided into product types, including loungewear, bras, knickers, panties, and shapewear. It also includes camisoles, chemises, corsets, and a baby doll. Fueled by the evolving fashion landscape and comfort, the lingerie amount to economic activity as well.

Victoria’s Secret competitor J. Crew has filed for Chapter 11 bankruptcy protection, according to Forbes. Chapter 11 bankruptcy provides for the reorganization of a debtor’s business affairs, assets, and debts, usually involving a partnership or corporation. J.Crew CEO Jan Singer said that throughout the process, they will continue to provide their customers with the “exceptional” service and merchandise they expect from them and they will continue their day-to-day operations despite the pandemic-related circumstances.

Another sign of difficulty facing fashion retailers around the world even as some countries have already gradually opened their economy is many fashion chains have already posted store lease signs.

Ending the deal with Sycamore Partners is one thing but getting back on track is another, especially amid the change in consumer confidence outlook and spending.