A diminished Victoria's Secret sold as women look elsewhere

Photo: Victoria's Secret

Victoria's Secret, which once defined sexy with its leggy supermodels prancing around in their bras and oversized angel wings, is being sold as women increasingly look for styles that more realistically fit their body types.

The company's owner, L Brands, said that the private-equity firm Sycamore Partners will buy 55% of Victoria's Secret for about $525 million. The Columbus, Ohio, company will keep the remaining 45% stake. After the sale, L Brands will be left with its Bath & Body Works chain and Victoria's Secret will become a private company.

Les Wexner, who founded the company in 1963, will step down as chairman and CEO after the transaction is completed and become chairman emeritus. 

The selling price for Victoria's Secret signifies a marked decline for a brand with hundreds of stores that booked about $7 billion in revenue last year. Shares of L Brands, slid more than 7% Thursday before recovering their losses. Shares were up 12 cents to $24.42 as of mid-day trading.

“We believe the separation of Victoria’s Secret Lingerie, Victoria’s Secret Beauty and PINK into a privately held company provides the best path to restoring these businesses to their historic levels of profitability and growth,” Wexner said in a prepared statement. "Sycamore, which has deep experience in the retail industry and a superior track record of success, will bring a fresh perspective and greater focus to the business.''

Sycamore faces big challenges to turn around the Victoria's Secret brand, which has struggled to keep up with competition. It has also failed to respond to changing tastes among women who are demanding more comfortable styles and don't want to be dictated to.

Many experts say the executives running the company were in a sense designing for men, not for women.

‘’It was always about men feeling good,"said Neil Saunders, managing director at retail consultancy GlobalData Retail. ‘’It should be about making women feel good about themselves."

Stacey Widlitz, president of SW Retail Advisors, a retail consulting firm, said that Victoria's Secret designs in the last few years were going in the opposite direction of what women wanted, ever sexier and of poorer quality.

“'They were going down a rabbit hole,” she said.

And while last year Victoria's Secret started featuring more diverse models, including its first openly transgender model, the moves fell short.

Victoria's Secret suffered a 12% drop in same-store sales during the most recent holiday season, and L Brands said Thursday the decline during the fourth quarter was 10%. Bath & Body Works, which had been a bright spot, is now mostly a candle business, says Randal J. Konik, an analyst at Jefferies.

“The (Victoria's Secret) brand has lost its way, while the lingerie market is not large or high growth, and has become commoditized,“ Konik wrote Thursday. ”Furthermore, with athleisure taking over, the need for regular bras continues to wane.”

Victoria's Secret lit up runways and clogged up the internet with its supermodels and an annual television special that mixed fashion, beauty and music. That glamour has faded and so have sales. The show was cancelled last year and shares of Victoria's Secret have gone from triple digits less than five years ago to a quarter of that today.