Victoria’s Secret, beset by falling sales and uncomfortable questions about its billionaire owner who has run the company for four decades, is being sold.
The company’s owner, L Brands, said private-equity firm Sycamore Brands will buy 55% of Victoria’s Secret for about $525 million. The Columbus, Ohio-based company will keep the remaining 45% stake.
Shares of L Brands slid 12% in premarket trading Thursday.
The selling price signifies a marked decline for a brand with more than 1,100 stores that booked about $7 billion in revenue last year.
Sales at its stores are in decline because competition is increasing and tastes are changing. Victoria’s Secret suffered a 12% drop in same-store sales during the most recent holiday season. L Brands said Thursday that same-store sales declined 10% at Victoria’s Secret during the fourth quarter.
Sycamore has about $10 billion in assets under management. The firm’s investment portfolio includes retailers such as Belk, Coldwater Creek, Hot Topic and Talbots.
Victoria’s Secret was founded in 1977 in San Francisco by entrepreneur Roy Raymond and acquired by Wexner for $1 million in 1982. The retailer has eight mall-based stores in the Indianapolis area.
At its peak, the underwear and lingerie brand was known for its catalog filled with supermodels and a glitzy annual television special that mixed fashion, models and music. Amidst its struggles, Victoria’s Secret sales have continued to erode, the show has been pulled from network television and its stock, which traded at close to $100 in 2015, now trades at around $24.
“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, ” said Wexner in a prepared statement. “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.”
Sales at Victoria’s Secret stores are in decline because competition is increasing and tastes are changing. Rivals like Adore Me and ThirdLove, which have sprouted up online, offer more options for diverse body types.
L Brands has also come under scrutiny because its CEO, Les Wexner, has ties to the late financier Jeffrey Epstein, who was indicted on sex-trafficking charges.
Epstein started managing Wexner’s money in the late 1980s and helped straighten out the finances for a real estate development backed by Wexner in a wealthy suburb of Columbus. Wexner has said he completely severed ties with Epstein nearly 12 years ago and accused him of misappropriating “vast sums” of his fortune.
Wexner offered an apology at the opening address of L Brands’ annual investor day in Columbus last fall, saying he was “embarrassed” by his former ties with Epstein.
Wexner will step down after the transaction is completed and become chairman emeritus.
Wexner is the longest-serving CEO of an S&P 500 company. He founded what would eventually become L Brands in 1963 with The Limited retail store, according to the company’s website. Wexner owns approximately 16.71% of L Brands, according to FactSet.