L Brands Inc (LB.N) said on Thursday it will sell a controlling stake in its Victoria’s Secret unit to investment firm Sycamore Partners, valuing the lingerie brand at $1.1 billion, as it focuses on its core Bath & Body Works brand.
L Brands’ long-time Chief Executive Officer Leslie Wexner would step down from his role following the close of the transaction and become chairman emeritus.
The company’s shares were down about 10% at $21.73 in pre-market trading.
L Brands, which has a market valuation of about $7-billion, has seen sales dwindle at its Victoria’s Secret business as it fends off increased competition from online retailers and has also drawn criticism for its lingerie not being inclusive of all body types.
The brand accounted for nearly half of the company’s $13.24 billion revenue in 2019, but has seen sales decline for at least four quarters.
Columbus, Ohio-based L Brands said Sycamore Partners would own 55% of Victoria’s Secret, while L Brands would retain a 45% stake. The company’s Bath & Body Works would now run as a standalone company.
L Brands said its board and advisers had explored a range of potential alternatives before coming to the decision.
“We believe this structure will allow Bath & Body Works to continue to achieve strong growth and receive its appropriate market valuation,” Wexner said.
Wexner, the company’s largest shareholder with a 13.24% stake, has been leading the company since 1963, making him the longest-serving CEO of a S&P 500 company.
Andrew Meslow, the current chief operating officer of Bath & Body Works, has been promoted to CEO of the unit. Following the deal close, Meslow will become CEO of L Brands and join its board.