L Brands To Focus on Bath & Body Works

L Brands, Inc.’s deal with Sycamore Partners entails making Bath & Body Works a standalone public company and spinning off Victoria’s Secret Lingerie, Victoria’s Secret Beauty and Pink (collectively, Victoria’s Secret).

Under the terms of the transaction, Victoria’s Secret, with a total enterprise value of $1.1 billion, will be separated from L Brands into a privately-held company majority-owned by Sycamore. After taking into account certain liabilities, Sycamore will purchase a 55% interest in Victoria’s Secret for approximately $525 million. L Brands will retain a 45% stake in Victoria’s Secret to enable its shareholders to meaningfully participate in the upside potential of these businesses. The company intends to use the proceeds from the transaction, along with approximately $500 million in excess balance sheet cash, to reduce debt, and expects that its overall leverage, on an adjusted debt to EBITDAR basis, will be close to its current leverage ratio.

“We have long had great respect and admiration for L Brands and its success in building a world-class portfolio of lingerie and beauty brands,” said Stefan Kaluzny, managing director of Sycamore Partners. “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. We look forward to partnering with the leadership team to pursue these objectives.” 

Upon the closing of the transaction, Wexner will step down as CEO and chairman of the board of L Brands. He will remain a member of the board as chairman Emeritus. 

“Les Wexner is a retail legend who has built incredible brands that are household names around the globe. His leadership through this transition exemplifies his commitment to further growth of Bath & Body Works and Victoria’s Secret and driving overall shareholder value,” said Tessler.

Nick Coe, the current CEO of Bath & Body Works, has been named vice chairman of Bath & Body Works brand strategy and new ventures. In Coe’s new role, he will focus more intently on the strategic position of the business, the evolution of the brand, product development and new ventures/acquisitions. 
 
Additionally, Andrew Meslow, currently COO of Bath & Body Works, has been promoted to CEO of Bath & Body Works. At the close of the transaction, Meslow will become CEO of L Brands and will join its board.

“For nearly nine years, Nick and Andrew have been a powerful combination, driving the Bath & Body Works brand to more than $5 billion in sales with best-in-class profitability. Management and the Board have been engaged in thoughtful discussions over the past few years to develop a succession plan that leverages the unique partnership established by Nick and Andrew to advance the long-term, strategic direction of the brand,” Wexner said. “We are pleased to name Andrew as CEO of Bath & Body Works and have Nick step into this new, more focused role as the team propels the brand and business forward.”
“Andrew’s deep company knowledge, his retail and financial acumen and his unwavering commitment to doing the right thing for the customer, our business and our associates make him the ideal leader for the next chapter of Bath & Body Works,” Coe said. “Andrew and I have walked side by side on this journey, and I look forward to our continued collaboration in our new roles as the entire team remains committed to keeping this exceptional brand on a growth trajectory well into the future.”
Meslow, who joined L Brands in 2003, has 29 years of experience in the retail industry, the last 15 at Bath & Body Works.