L Brands Inc. announced Tuesday that Victoria’s Secret and Bath & Body Works will separate into two publicly traded companies through a tax-free spinoff that should be completed in August 2021.
Andrew Meslow will be chief executive of L Brands LB,
Martin Waters will continue to lead the Victoria’s Secret business as a stand-alone company. The Victoria’s Secret business also includes the Pink brand, which targets a younger customer.
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There has been much talk about separating the two companies, with a sale of the Victoria’s Secret business to Sycamore Partners falling through last year.
Victoria’s Secret’s very-sexy merchandise and marketing had fallen out of step with trends as it faced heightened competition from digital-native startups and brands from well-established companies like American Eagle Outfitters Inc.’s AEO,
“In the last 10 months, we have made significant progress in the turnaround of the Victoria’s Secret business, implementing merchandise and marketing initiatives to drive top line growth, as well as executing on a series of cost reduction actions, which together have dramatically increased profitability,” said Sarah Nash, chair of the board, in a statement.
L Brands closed hundreds of Victoria’s Secret locations across the U.S. and Canada in the past year.
There will be a pro-rata distribution of common shares of the newly formed company to L Brands shareholders.
L Brands also announced preliminary first-quarter results on Tuesday.
L Brands expects to report earnings per share of 97 cents after a loss of 99 cents last year. Adjusted EPS is expected to be $1.25, ahead of the guidance for 85 cents to $1.00 and beating the FactSet consensus for 93 cents.
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Net sales of $3.024 billion for the first quarter ended May 1, 2021 are expected to be up from $1.654 billion last year and also ahead of the FactSet consensus for $2.835 billion. Sales at Bath & Body Works were $1.469 billion and Victoria’s Secret generated $1.554 billion in sales.
The company says it benefited from stimulus payments and the relaxing of COVID-19 restrictions.
L Brands is scheduled to report first-quarter earnings on May 19 after the closing bell.
L Brands stock fell 2.3% in Tuesday premarket trading, and have gained 85% for the year to date. The benchmark S&P 500 index SPX,
