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Victoria’s Secret aims for a makeover by going private


Victoria’s Secret, the US lingerie retailer that attracted criticism for its fashion shows featuring supermodel “angels”, is being bought by private equity in a $525m (£407m) deal.

It opened its first UK store in 2012, along with others in Europe and South America, although the chain might wish it had not spread itself so thinly abroad. 

The business, which has 25 shops in the UK, posted losses that balloon to £170m last year, up from £48m two years ago, mostly dragged down by onerous leases. It got a cash injection worth £11m from its owner in October, the most recent accounts show, and warned that it did not have plans to expand further in the UK. 

L Brands, which also owns Bath & Body Works in the US, has sold a controlling stake in the struggling chain, best known for its annual show featuring “angels” such as Naomi Campbell, Gigi Hadid or Miranda Kerr, to Sycamore Partners. It will take a 55pc stake in a deal that values the company at $1.1bn and plans to take it private. New York-listed L Brands, its parent company, will retain a 45pc stake.

Leslie Wexner, the retail tycoon and one of America’s longest-serving corporate chiefs, is also poised to step down after decades at the helm of L Brands. He bought the sexy lingerie brand for $1m in the Eighties and led its meteoric rise in the Nineties and 2000s.

The move puts its fate in the UK under the microscope as Sycamore could decide to offload its British operation and focus on the US. 

Although the lingerie behemoth was instrumental in defining sexy during its peak, and helping to empower women, the brand has been slow to adapt beyond padded and push-up bras.

Sales have been faltering and shoppers have often complained the retailer is not keeping us with the times. Last year it was targeted by an activist investor, calling for an overhaul of the business as its US market share fell to 24pc in 2018 – down from 33pc just two years earlier. 

It has not been helped by the fact that Ed Razek, its marketing chief, previously made controversial comments about transgender and plus-size models at a time when most businesses are waxing lyrical about their diversity credentials. 

The deal with Sycamore is an opportune time for Wexner to step down too. He has been in the spotlight because of his ties to Jeffrey Epstein, the disgraced financier who used to manage money for him. Wexner has claimed that the now-deceased Epstein defrauded him.

After Wexner’s departure, who ran L Brands for 57 years, Berkshire Hathaway’s Warren Buffett will become the longest-serving chief in the S&P 500. The 82-year-old billionaire Wexner will remain on the board of the company. 

L Brands’ market value has collapsed by about three quarters over the past five years as its star brand struggled to adjust to a new world order revolving around female beauty and the way women are represented in the sector. 

The brand has also been criticised for a culture of misogyny and bullying in the past. It will have to put those firmly behind it under new ownership to attract a fresh wave of customers and lure back some of those it has lost. Product innovation will have to be at the heart of its transformation if it is to increase sales. 

Waiting in the wings to capitalise on its travails are a wave of fledgling brands with more relevant designs. And there is money to be made: the online underwear market is forecast to grow by more than 40pc, or £550m, over the next five years, according to industry data. 

One such example in the UK is Les Girls Les Boys, set up by Serena Rees, who also co-founded Agent Provocateur, two years ago. It sells comfortable lingerie to young men and women, whose sexuality is more intertwined with each other than ever before.

It remains to be seen if Victoria’s Secret fares any better under private equity ownership. Firms such as Sycamore are known for their aggressive cost-cutting measures, which in turn affects innovation.

A string of other retailers have collapsed in the past, with private equity owners still profiting from their demise as chunks of the business tend to be sold bit by bit.

Sycamore, which has experience in leveraged buyouts, has broken up other businesses in the past and sold money-making chunks.

For now, though, Victoria’s Secret might have a better chance of reinventing itself away from the eyes of Wall Street. 


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