Les Wexner resigns as CEO of L. Brands
L. Brands sells Victoria’s Secret in a $ 525 million deal to a private equity firm after being plagued by scandals and claims of sexism.
CEO Les Wexner will step down as part of the deal after he gets entangled in public outrage over the brand’s ‘sexist’ image and his ties with Jeffrey Epstein.
Wexner, 82, has been at the helm of the lingerie giant for 57 years.
On Thursday, L. Brands announced that it was selling its majority stake to a private equity firm, Sycamore Brands.
L. Brands manages an interest of 45 percent.
The announcement comes after months of stock prices for the parent company and constant headlines about Wexner’s ties with the disgraced pedophile Jeffrey Epstein.
Wexner is credited with legitimizing Epstein in the business world by giving him a leg and having him arrange his finances when he was a math 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 by Epstein – who was hanged in his prison cell in New York last year after being charged with federal allegations of sex trafficking.
After the sale, L Brands is left behind with its Bath & Body Works chain. Victoria’s Secret becomes a private company.
The selling price means a clear drop for a brand with hundreds of stores that recorded around $ 7 billion in revenue last year. Shares of L Brands slid more than seven percent on Thursday.
“We believe that the separation of Victoria’s Secret Lingerie, Victoria’s Secret Beauty and PINK in a private company is the best way to restore these companies to their historic levels of profitability and growth,” Wexner said in a prepared statement.
“Sycamore, with in-depth retail experience and an excellent track record of success, will bring a new perspective and greater focus to the company.”
The Victoria’s Secret brand is now sold to Sycamore Brands. Pictured, models at the 2018 show
L.’s brands were gradually plummeted in the midst of claims of women’s hatred, sexism and scandal
Once the dream of aspiring supermodels, the Victoria’s Secret brand experienced a hard setback as the positivity movements in the body progressed.
The company was relentlessly accused of promoting unrealistic and unhealthy body types by idolizing waif-like models and using images in campaigns with names such as “The Perfect Body.”
As #MeToo got a better grip, it became increasingly old-fashioned as a brand.
The brands have difficulty keeping up with the competition and did not respond to changing tastes.
Rivals such as Adore Me and ThirdLove, who have emerged online and marketed themselves on social media platforms such as Instagram, have focused on fit and comfort and offer more options for different body types.
Wexner’s troubling links with pedophile Jeffrey Epstein aggravated the company’s problems
Victoria’s Secret fell 12 percent in the same store sales during the most recent holiday season.
L Brands said on Thursday that sales in the same store fell 10 percent at Victoria’s Secret during the fourth quarter. Bath & Body Works, which was a bright spot, is now primarily a candle company, says Randal J. Konik, an analyst at Jefferies.
“The brand (Victoria’s Secret) has lost its way, while the lingerie market is not growing large or strong and has become commoditized,” Konik wrote on Thursday.
“Moreover, with the leisure activities of Athleisure, the need for normal bras continues to decrease.”
Victoria’s Secret lit runways and hid the internet with its super models and an annual television special that blended fashion, beauty and music. That glamor has faded and so does the sale. The show was canceled last year and the shares of Victoria’s Secret went from triple digits less than five years ago to a quarter of that.
Then, recently, a collection of more than 100 models signed an open letter accusing the company of misogyny.
The models chose Wexner to create the culture that they were deciphering.
“We believe that this moment can be a wake-up call for Victoria’s Secret,” they said.
The company has been hit by accusations of a toxic working environment and the founder recently apologized for his ties with Epstein.
Epstein began managing Wexner’s money in the late 1980s and helped to get the finances for real estate development with Wexner in a rich suburb of Columbus. Wexner said he broke ties with Epstein almost 12 years ago and accused him of abusing “huge amounts” of his fortune.
Wexner apologized to the opening address of L Brands’ annual investor day last fall and said he was “ashamed” of his earlier ties with Epstein.
Wexner is the oldest CEO of an S&P 500 company. He founded what would eventually become L Brands in 1963 with The Limited store, according to the company’s website. Wexner owns around 16.71% of L brands, according to FactSet.
Sycamore has approximately $ 10 billion in assets under management. The company’s investment portfolio includes retailers such as Belk, Coldwater Creek, Hot Topic and Talbots.
“By separating Victoria’s Secret into a private entity, L Brands can reduce debt and focus on its strong core activities, Bath & Body Works, which represent more than 80 percent of its corporate income,” said Christina Boni, vice president from Moody’s.