Today, Leslie Wexner steps down from his role as chairman and CEO of L Brands, the retail juggernaut that owns both Victoria’s Secret and Bath & Body Works. He’s agreed to sell a 55% controlling stake of Victoria’s Secret to the private equity firm Sycamore Partners for $525 million, which some analysts say is a lower sale price than expected. Andrew Meslow, currently the COO of Bath & Body Works, will take over as CEO.
Randal J. Konik, a retail analyst at Jefferies, advised investors to avoid L Brands stock and told the Wall Street Journal: “A partial sale and this low price won’t help the company’s massive debt load and shows just how desperate LB has become to try to unload VS.”
While Victoria’s Secret is still the biggest underwear brand on the market, it has been on the decline for years, taking its parent company down with it. Over the past few quarters, its revenues and profits have been spiraling downward. L Brands has accumulated $5.5 billion in debt, and this influx of cash will only help it pay down a small fraction of it.
Victoria’s Secret first came to market four decades ago at a very different time in American culture and retail. It marketed underwear using a soft-porn aesthetic, which seemed more targeted at men than the women who made up the majority of the brand’s customers. All of this was made worse by reporting over the years that revealed a culture of misogyny and harassment at the company, with female employees and models alleging that male superiors crossed many professional boundaries with them. Over the past few years, many new options have emerged for women when it comes to buying lingerie, with a host of startups including ThirdLove, Cuup, and Lively that have marketing that is far more empowering to women.
For Wexner himself, this is an ugly end to a long, largely successful career as a master retailer. The 82-year-old billionaire helped to shape the American shopping mall. Over the course of his long career, he’s owned brands ranging from The Limited and Henri Bendel to Abercrombie & Fitch and Lane Bryant. Wexner’s strategy was to work closely with sales associates to identify what products were selling well early in the process, then quickly bring more of those items to market. Over the years, he sold many of the companies within his portfolio, making billions in the process. But in recent years, he has been largely associated with the two remaining brands in his portfolio, Victoria’s Secret and Bath & Body Works.
In many ways, the decline of L Brands is also a story of the decline of the American mall. Direct-to-consumer brands began springing up over the past decade, and many of them operate primarily online, with a relatively small retail footprint, making them more nimble than the brands Wexner built, which tended to have large networks of stores. As consumer tastes have changed, these startups have been better at adapting to them with products and marketing. Meanwhile, Victoria’s Secret has remained stuck in an earlier time, losing relevance by the day.