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Jan 29, 2020
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L Brands CEO may step down, sell Victoria's Secret

Reuters API
Jan 29, 2020

Victoria's Secret-owner L Brands Chief Executive Officer Leslie Wexner is in talks to step aside from the role and is exploring strategic alternatives for the lingerie brand, the Wall Street Journal reported on Wednesday.

Photo: Victoria's Secret - DR

The discussions are ongoing and could result in a full or partial sale of Victoria's Secret, the WSJ reported, citing people familiar with the matter.

The nearly $6-billion company has faced slumping sales at the lingerie giant in recent quarters and has drawn criticism from an activist investor and increasing competition from online retailers.

Shares of the company jumped 13% in premarket trading.

L Brands declined to comment on the report.

"Fresh perspective would likely be a positive in 'righting the ship'," Jefferies analysts said in a note. The analysts cautioned that bulls are over-valuing the Bath & Body Works unit and under estimating challenges for Victoria's Secret.

Wexner, 82, has been leading the company since 1963, making him the longest-serving CEO of a S&P 500 company. Wexner built Victoria's Secret, The Limited and Abercrombie & Fitch into national chains, taking on department store stalwarts by focusing on specialty brands.

Wexner is the company's largest shareholder with a stake of 13.24%, according to Refinitiv Eikon data.

Wexner has been in focus for his association with the late financier Jeffrey Epstein, who was entrusted with managing the billionaire's personal finances and served as trustee of his charitable foundation. Wexner has not been accused of criminal wrongdoing.

Epstein was indicted last year after being charged with trafficking dozens of underage girls as young as 14 from at least 2002 to 2005. He died in prison in New York in August.

Wexner ended his association with Epstein more than a decade ago, according to previous reporting in the Wall Street Journal.

In March, Barington Capital urged the company to separate the roles of chairman and chief executive. The company also called for the sale of the struggling lingerie brand.

Victoria's Secret accounted for nearly half of the company's $13.24 billion revenue in 2019.
Sales at Victoria's Secret have fallen for at least four quarters.

The brand was once the destination for all things lingerie and has been losing customers as more women shift to cheaper bralettes and sports bras from companies like American Eagle Outfitter's Aerie and pop singer Rihanna's lingerie line, Savage X Fenty.

Earlier this month, L Brands lowered its profit forecast for the fourth quarter after reporting a 3% drop in comparable store sales for the holiday period.

L Brands has tried to update marketing strategy for Victoria's Secret.

L Brands marketing chief Edward Razek announced plans to resign last year.

Late last year, the company canceled its annual Victoria's Secret fashion show, known for its jewel-encrusted bras and supermodels sporting angel wings.

"Much work we think needs to be done to reinvent the brand for the 'inclusive' era," said CFRA Research analyst Camilla Yanushevsky.

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