L Brands Inc. LB -1.77% said it is spinning off Victoria’s Secret to its existing shareholders, a coda in the company’s review process for the lingerie brand after longtime company leader Leslie Wexner stepped aside as chief executive last year.
The move, which the company had signaled, will result in the lingerie chain and the faster growing Bath & Body Works operating as two publicly traded companies. It comes after the company’s board evaluated the possibility of either a spinoff or sale of Victoria’s Secret.
The Columbus, Ohio-based company said the separation would give each company financial flexibility. It said it expects the spinoff to qualify as tax-free to L Brands and its shareholders for U.S. federal income-tax purposes.
L Brands Chief Executive Andrew Meslow will serve as CEO of Bath & Body Works after the spinoff, the company said. Victoria’s Secret CEO Martin Waters will continue leading the stand-alone business after the separation, L Brands added.
The company said additions to the management teams and compositions of the boards for both companies will be named at a later date.
L Brands said it expects the transaction to close in August.
L Brands spoke to potential buyers for Victoria’s Secret this year, according to people familiar with the matter, but didn’t reach a deal for the lingerie business that was once its biggest brand.
In February 2020, L Brands struck a deal to sell a majority stake in Victoria’s Secret to Sycamore Partners for about $525 million. The deal unraveled a few months later after the Covid-19 pandemic closed many stores and disrupted retailers.
The company also said it expects to turn a profit for the first quarter and post higher sales, driven by stimulus payments and the relaxation of Covid-19 restrictions. In the prior-year quarter, the company saw sales being hit by the closure of stores for about half the quarter due to the pandemic.
—Cara Lombardo contributed to this article.
Write to Dave Sebastian at [email protected]
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