The single life might eventually be good for Victoria’s Secret, but the breakup wasn’t easy.
The retailer’s parent company, L Brands Inc., saw its stock fall more than 15 percent in post-market trading on Monday after it walked away from the $525 million deal to sell a majority of the lingerie business to private equity firm Sycamore Partners, which got cold feet amid the coronavirus shutdown. L Brands’ shares teetered back-and-forth between positive and negative during most of Tuesday’s session — closing down 3.49 percent to $11.
But Simeon Siegel, managing director and senior retail analyst at BMO Capital Markets, pointed out that with more than $7 billion worth of revenues in the lingerie business alone last year, “arguments of VS’ death appear greatly exaggerated.”“Deal or no deal, we see value,” Siegel wrote in a note. “With the Sycamore news extinguished, noise will dissipate and it will become harder to ignore underlying fundamental value.
But that was pre-pandemic — before the coronavirus spread across the globe, forcing retailers to close stores and furlough staff; before more than 30 million people in the U.S. filed for unemployment and markets fell around the world. Then early Monday evening came the news: L Brands and Sycamore Partners had decided to consciously uncouple in a way that left neither party liable of termination fees or name-calling and cleared up any concerns about what could have been a messy fight.
Wexner is still planning to step down at the annual shareholder meeting on May 14. He will remain on the board, however, as chairman emeritus. Sarah Nash, a current member of the board, will transition to chairperson of the board. In addition, Andrew Meslow, current ceo of Bath & Body Works, will join the board and take over Wexner’s role as ceo of L Brands.
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