Les Wexner is stepping down as the CEO of L. Brands
L. Brands is selling Victoria’s Secret in a $525million deal to a private equity firm after being plagued by scandal and claims of sexism.
CEO Les Wexner will step down as part of the deal, after becoming tangled in public outrage over the brand’s ‘sexist’ image and his links to Jeffrey Epstein.
Wexner, 82, has been at the helm of the lingerie giant for 57 years.
On Thursday, L. Brands announced it was selling his controlling stake to a private equity firm Sycamore Brands.
L. Brands will control a 45 percent stake.
The announcement comes after months of stock plummets for the parent company and constant headlines about Wexner’s ties to disgraced pedophile Jeffrey Epstein.
Wexner is credited with legitimizing Epstein in the business world by giving him a leg up and letting him handle his finances when he was a maths teacher at a private school.
The CEO then sold his Upper East Side mansion to Epstein. It was the scene of decades of abuse of underage girls.
After the sale, L Brands will be left with its Bath & Body Works chain. Victoria’s Secret will become a private company.
The selling price 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 seven percent Thursday.
‘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,’ said Wexner 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.’
The Victoria’s Secret brand has now been sold to Sycamore Brands. Shown, models at the 2018 show
L. Brands stock had gradually plummeted amid claims of misogyny, sexism and scandal
Once the dream of aspiring supermodels, the Victoria’s Secret brand faced a harsh backlash as body positivity movements progressed.
The company was relentlessly accused of promoting unrealistic and unhealthy body types by idolizing waif-like models and using images of them in campaigns with names like ‘The Perfect Body’.
As #MeToo gained traction, it became increasingly outdated as a brand.
The brands have struggled to keep up with competition and failed to respond to changing tastes.
Rivals like Adore Me and ThirdLove, which have sprouted up online and marketed themselves heavily on social media platforms like Instagram, have focused on fit and comfort while offering more options for different body types.
Wexner’s troubling ties to pedophile Jeffrey Epstein worsened the company’s problems
Victoria’s Secret suffered a 12 percent drop in same-store sales during the most recent holiday season.
L Brands said Thursday that same-store sales declined 10 percent at Victoria’s Secret during the fourth quarter. Bath & Body Works, which has 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, which went from triple digits less than five years ago to a quarter of that.
The company has been beset by allegations of a toxic work environment and its founder recently apologized for his ties to Epstein, who was found hanged in his jail cell after his indictment.
Epstein started managing Wexner’s money in the late 1980s and helped straighten out the finances for a real estate development backed by Wexner in a wealthy suburb of Columbus. Wexner has said he completely severed ties with Epstein nearly 12 years ago and accused him of misappropriating “vast sums” of his fortune.
Wexner offered an apology at the opening address of L Brands’ annual investor day last fall, saying he was “embarrassed” by his former ties with Epstein.
Wexner is the longest-serving CEO of an S&P 500 company. He founded what would eventually become L Brands in 1963 with The Limited retail store, according to the company’s website. Wexner owns approximately 16.71% of L Brands, according to FactSet.
Sycamore has about $10 billion in assets under management. The firm’s investment portfolio includes retailers such as Belk, Coldwater Creek, Hot Topic and Talbots.
‘The separation of Victoria´s Secret into a private entity will enable L Brands to reduce debt and focus on its strong core business of Bath & Body Works, which represents over 80 percent of its operating income,’ said Moody’s vice president Christina Boni.
Then, most recently, a collection of more than 100 models signed an open letter accusing the company of misogyny.
The models singled out Wexner for creating the culture they were decrying.
‘We believe that this moment can be a wake-up call for Victoria’s Secret,’ they said.