Feb. 20 (UPI) -- Private equity firm Sycamore Partners agreed to buy a majority stake in the underperforming Victoria's Secret and spin it off into a privately held, standalone entity, the companies announced Thursday.
The lingerie chain's owner, Columbus, Ohio-based L Brands, said Sycamore Partners will purchase a 55 percent stake in Victoria's Secret Lingerie, Victoria's Secret Beauty and PINK to create a separate company "focused on reinvigorating its market-leading businesses and returning them to historic levels of profitability and growth."
Under the deal, Sycamore agreed to pay $525 million for its majority share in the new Victoria's Secret entity. L Brands, meanwhile, will retain a 45 percent share in the firm, which it valued at $1.1 billion.
L Brands also announced that chairman and CEO Leslie Wexner will step down from his corporate roles, although he will remain a board member.
Wexner faced criticism after L Brands' share price underperformed the industry in 2019. Victoria's Secret revenues decreased nearly 8 percent year-over-year in the third quarter of fiscal 2019, with lower traffic in both stores and e-commerce.
L Brands said it would use the proceeds from the transaction for debt reduction and concentrate on its main business -- the Bath & Body Works, the largest bath shop retail chain in the United States.
"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," Wexner said. "We believe that, as a private company, Victoria's Secret will be better able to focus on longer-term results."
"With unmatched global brand awareness and customer loyalty, we believe there is a significant opportunity to reinvigorate growth and improve the profitability of Victoria's Secret," added Sycamore Partners Managing Director Stefan Kaluzny.