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HomeBusinessAugust Spin Off of Victoria’s Secret of L Brands in Quest for...

August Spin Off of Victoria’s Secret of L Brands in Quest for Higher Value

On Tuesday, L Brands announced that it has received multiple offers for its popular brand Victoria’s Secret. However, its board has decided to spin off the brand to increase its value. It believes that a spinoff will fetch more revenues when compared with a sale. By August, there will be two separately trading companies: Victoria’s Secret and Bath & Body Works.

 

According to the company, Andrew Meslow, the CEO of L Brands will retain his position and will also head Bath & Body Works after the spinoff while Martin Waters, who is the CEO of Victoria’s Secret, will continue with his position after the spinoff.

 

Sarah Nash, L Brands Chair released a statement saying that the company has significantly progressed in the last ten months in turning around the business of Victoria’s Secret.

 

L Brands also released preliminary results of Q1. These results were better that the predictions of analysts as per a survey by Refinitiv. The company said that the earnings per share in the period ending May 1, after adjustments would be $1.25 per share. The prior outlook had been between 85 cents to a dollar per share.

 

They have also said that the net sales have been estimated at $3.02 billion and this is much higher than the $1.65 billion sales in the earlier year. Refinitiv had predicted 98 cents per share as earnings and said that the revenue would be $2.89 billion.

 

L Brands said that the split would benefit both the companies. It added that each brand would be able to focus better on growth. The brands could also adapt with more flexibility to a changing retail landscape.

 

Victoria’s Secret had come under a cloud as its overtly sexy marketing campaign caused normal women to flock to other brands which offered comfort and inclusivity such as Aerie. This holiday season, Victoria’s Secret put its consumer’s needs into focus by adding bralettes and has seen some of its consumers returning to the popular lingerie brand.

 

There was a 3.7 percent fall in the company’s shares in premarket trading.

Photo Credit: Wikimedia

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