Victoria’s Secret acquisition deal with Sycamore Partners cancelled; L Brands will still spin off Victoria’s Secret as private company

May 4, 2020

by Daphne Sorenson

Models at the 2018 Victoria’s Secret Fashion Show (Photo by Jeff Neira/ABC)

In February 2020, Victoria’s Secret parent company L Brands (based in Columbus, Ohio) had announced that it sold a 55% stake in Victoria’s Secret to private equity firm Sycamore Partners, for a reported $525 million, but that deal has now been cancelled.  According to fashion trade publication WWD, L Brands still plans to spin off Victoria’s Secret into a private company, while also doing the same for Bath & Body Works. As part of the restructuring, L Brands chairman/CEO Les Wexner stepped down from his position, after founding the company in 1963. In March 2020, it was announced that Sarah E. Nash is his replacement.

Victoria’s Secret and its Pink spinoff brand have been experiencing a sharp decline in sales in recent years. The coronavirus pandemic, which resulted in the temporary closures of numerous clothing retailers worldwide, worsened the fortunes of Victoria’s Secret. The $525 million price tag for Victoria’s Secret was far lower than the $7.6 billion that Victoria’s Secret was valued at in 2015. The brand’s sales peaked during the 2006-2016 CEO leadership of Sharen Jester Turney, who left the company in 2016. After the coronavirus pandemic, Victoria’s Secret value no doubt plummeted even lower than $525 million.

Even before the coronavirus pandemic, Victoria’s Secret was on a downward spiral. The year 2019 was turbulent for Victoria’s Secret and L Brands. In August 2019, more than 100 models and several of their allies (including Models Alliance and Times Up) signed an open letter to Victoria’s Secret CEO John Mehas to demand an end to the sexual abuse and sexual harassment that has allegedly been running rampant against Victoria’s Secret models.

The letter was published just two days after L Brands chief marketing officer Ed Razek publicly announced he was leaving the company. Wexner and Razek had close ties to convicted sex offender Jeffrey Epstein, who was arrested again in July 2019, for sex crimes, specifically, for sex trafficking of women and underage girls. Epstein was found dead in his jail cell at the Metropolitan Correctional Center in New York City on August 10, 2019. According to the Associated Press, he died of an apparent suicide by hanging.

Razek came under fire in 2018, when he said in a Vogue interview that Victoria’s Secret was not interested in hiring plus-sized or transgender models. In August 2019, Victoria’s Secret hired its first transgender model: Valentina Sampaio, who posted the news on her Instagram account. But that milestone was apparently too little, too late.

The open letter blasting Victoria’s Secret was among several blows to the company in 2019.  The Victoria’s Secret Fashion Show was completely canceled only a few months after it was announced that the show would not be televised anymore.

In addition, about 15% of Victoria’s Secret employees (about 50 people) were laid off in October 2019, the same month that Victoria’s Secret head of stores and store operations April Holt stepped down from her position after 16 years working for the company.

Meanwhile, rival lingerie brands such as Aerie, ThirdLove, Adore Me and Lively have experienced an increase in sales in recent years. Many market analysts have noted that Victoria’s Secret alienated many customers by having only tall and thin models in its marketing, while newer brands embrace a more diverse variety of body sizes in their marketing and in their product selections. In addition, websites that track customer feedback for retailers have noted that there have been numerous complaints about the decreasing quality of Victoria’s Secret products and customer service.