L Brands, the American fashion retailer, announced on Tuesday (11 May) that its board has unanimously approved a tax-free spin-off of its much reputed Victoria’s Secret business into a public company.
Notably, Victoria’s Secret will now be separate from Bath & Body Works.
Confirming the same in a press release, the retailer also said that the separation is expected to be concluded in August 2021.
The preliminary Q1 results released recently reported 83 per cent net sales for the retailer (US $ 3 billion). Importantly, while Bath & Body Works saw its net sales jump by 93 per cent to US $ 1.5 billion, the same for Victoria’s Secret surged by 74 per cent to US $ 1.6 billion.
Talking of operating income, L Brands saw its operating income touch approximately US $ 570 million, with US $ 380 million at Bath & Body Works and US $ 245 million at Victoria’s Secret.
Reportedly, L Brands has been lately turning down offers of more than US $ 3 billion as it sees Victoria’s Secret’s value between US $ 5 billion and US $ 7 billion.
Meanwhile, the Board has said that this path will, going forward, return the highest value to shareholders and the separation will now allow each business to achieve its best opportunities for growth.
What’s notable is also that once Victoria’s Secret officially exits in August this year, L Brands may no longer remain an apparel retailer.
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