Beauty and lingerie brand will operate as a separate company to L Brands’ lucrative Bath & Body Works arm
L Brand’s Board of Directors has unanimously approved the split of beauty and lingerie brand Victoria’s Secret into a separate company from its Bath & Body works business.
The company is expected to create a tax-free spin-off of Victoria's Secret to L Brands’ shareholders, allowing for L Brands to better manage and maximise the business.
The high street name has proved a problem child for the business in recent years; following the shutdown of its fashion show runway, the brand has fallen out of favour with customers and consequently been unable to deliver on revenues.
As a result, the beauty owner made the announcement last year that it would sever the Victoria's Secret business, which includes its lingerie and beauty arm, as well as fashion brand Pink, from its lucrative Bath & Body Works brand.
Bath & Body Works saw a 22% sales boost for Q4, ended 30 January 2021, while Victoria's Secret saw a 3% downturn for the period.
Despite its sales, L Brands believes the brand is prepared enough to make the split.
“In the last ten 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.
“As a result of these efforts, Victoria’s Secret is now well-positioned to operate as a standalone, public company.
“Further, both Bath & Body Works and Victoria’s 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's customer base and strategic objectives.”
She added: “With this in mind, the Board believes that this path forward will return the highest value to shareholders and that the separation will allow each business to achieve its best opportunities for growth.”