Columbus-based L Brands announced it will separate the company into two independently-run, public companies 鈥� Victoria鈥檚 Secret will stand alone and Bath & Body Works will remain under L Brands.
The move comes a year after an agreement to sell Victoria鈥檚 Secret fell apart as the pandemic emptied malls nationwide.
L Brands has been shopping the struggling chain elsewhere since the collapse of that deal and said it had held talks with a number of potential buyers, but it appears it could not come to an agreement on price.
Victoria鈥檚 Secret was to be sold to Sycamore Partners last year but the private equity firm sued to get out of the deal citing the coronavirus pandemic.
Victoria鈥檚 Secret, which sells women鈥檚 lingerie, has been losing money over the past few years.
In comparison to Bath & Body Works, it has not been doing well. L Brands closed 233 brick and mortar Victoria鈥檚 Secret locations in 2019. First quarter 2021 sales decreased 7% compared to the first quarter of 2019.
Bath & Body Works is the best-performing brand under L Brands, increasing sales by 60% from the first quarter of 2019 to the first quarter of 2021. Bath & Body Works sells bath, body and fragrance products.
The company wants to create these companies through a tax-free spin-off of Victoria鈥檚 Secret to L Brands鈥� shareholders.
In a press release, L Brands Board Chair Sarah Nash said the company has been working hard to make Victoria鈥檚 Secret a profitable business that can stand alone.
鈥淎s a result of these efforts, Victoria鈥檚 Secret is now well-positioned to operate as a standalone, public company,鈥� Nash said in the statement. 鈥淔urther, both Bath & Body Works and Victoria鈥檚 Secret are leaders in their respective markets, and, as separate businesses, each will be ideally positioned to benefit from a sharpened focus on pursuing growth strategies best suited to each company鈥檚 customer base and strategic objectives.鈥�
The L Brands Board had been deciding whether to create a spin-off or sell Victoria鈥檚 Secret with input from its financial advisors, Goldman Sachs and JP Morgan.
L Brands CEO Andrew Meslow will also lead Bath & Body Works following the spin-off. Victoria鈥檚 Secret CEO Martin Waters will continue to lead the new standalone company.
L Brands expects the spin-off to qualify as tax-free for itself and its shareholders for U.S. federal income tax purposes. The transaction is currently expected to be completed in August 2021.
The Associated Press contributed to this story.
