By Lenore Fedow
A Victoria’s Secret store in New York City. L Brands, the lingerie brand’s parent company, has sold a controlling stake in the retailer to private equity firm Sycamore Partners. (Image courtesy of Wikimedia Commons/WestportWiki)
Columbus, Ohio—Fashion retailer L Brands Inc. announced Thursday that founder and longtime CEO Les Wexner will step down as it sells a controlling stake in Victoria’s Secret.

One of the company’s flagship brands, the lingerie and beauty retailer is being sold to private equity firm Sycamore Partners in a deal valued at $525 million, a move that will take the now-publicly traded company private.

Sycamore will hold a 55 percent majority interest in Victoria’s Secret’s lingerie and beauty brands and its teen-focused Pink line with L Brands retaining the remaining 45 percent.

The deal puts the retailer’s valuation at $1.1 billion.

L Brands will shift its focus to its Bath & Body Works brand, which it said represented the “vast majority” of its 2019 consolidated operating income.

The Victoria’s Secret brand has struggled in recent years as online lingerie brands like AdoreMe and ThirdLove gained popularity with more inclusive marketing and extended size ranges.

Ed Razek, the brand’s former chief marketing officer, came under fire following a 2018 interview with Vogue in which he said that “no one had any interest” in plus-size models and that the brand’s annual fashion show would not include transgender models because “the show is a fantasy.”

He issued a public apology for his “insensitive comments” and stepped down the following year.

Its televised fashion show, which began in 2001, was cancelled last year as the number of viewers dwindled.

According to the L Brands announcement, Wexner will step down when the deal is completed but remain on the board as chairman emeritus.

Wexner was the longest-tenured CEO of the S&P 500 companies, having served as head of L Brands for 57 years, as per a Business Insider report. That title will soon be held by Warren Buffet, who has led Berkshire Hathaway for 50 years.

Wexner’s departure comes at a time of financial turmoil for Victoria’s Secret.

The brand has faced public scrutiny for its failure to evolve with changing tastes in product and marketing, which was reflected in a rough holiday season.

Sales at its physical stores were down 8 percent year-over-year compared with flat sales in the previous holiday season. Same-store sales for both the in-store and online channels slipped 1 percent compared with a 4 percent increase a year ago.

Compounding Victoria Secret’s struggling performance was Wexner’s connection to a high-profile scandal.

Wexner joins a number of notable figures, including Britain’s Prince Andrew, who have stepped down from public roles in the wake of their connection to late financier Jeffrey Epstein, a convicted sex offender.

Epstein was a trustee of the Wexner Foundation with power-of-attorney privileges. In a letter to the foundation last year, Wexner revealed that Epstein misappropriated more than $46 million in funds.

Stepping into Wexner’s role will be Andrew Meslow, chief operating officer of Bath & Body Works. He will take the reins and join L Brand’s board when the transaction closes.

In the meantime, Meslow has been promoted to CEO of Bath & Body Works.

Current Bath & Body Works CEO Nick Coe has been named vice chairman of brand strategy and new ventures at the bath products retailer.

The company will also make changes to its board, replacing three directors, including the lead independent director.

The deal will give L Brands a chance to reduce its debt using the funds as well as its $500 million in excess balance sheet cash.

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