L Brands plans to spin off Victoria’s Secret, not sell By Reuters

(Reuters) -L Brands Inc said on Tuesday it plans to spin off its Victoria’s Secret business into a standalone company, capping a year of weighing strategic options for the brand including a sale.

The Columbus, Ohio-based company held talks with multiple interested buyers while reviewing its lingerie line, but concluded that a spin-off would offer more value to its shareholders than a sale.

Victoria’s Secret went under review after a failed attempt to sell a majority stake to buyout firm Sycamore in 2020, when the brand had to close shops and furlough staff to cope with the COVID-19 crisis.

The New York Times’ DealBook division earlier on Tuesday reported https://nyti.ms/2R91NYd, citing sources, that L Brands (NYSE:) received several bids over $3 billion for Victoria’s Secret, but the offers did not match what it expects to get in a spinoff.

Victoria’s Secret expects to be valued between $5 billion and $7 billion in a spinoff to L Brands shareholders, the NYT report said.

L Brands did not respond to a Reuters request for comment on the valuation of the brand.

After the company splits into two public units – Bath & Body Works and Victoria’s Secret – L Brands top boss Andrew Meslow will lead the personal care brand while Victoria’s Secret Chief Martin Waters (NYSE:) will head the new standalone lingerie business.

The deal is expected close in August.

L Brands also expects sales for the first quarter ended May 1 to be $3.02 billion, up from $1.65 billion a year earlier, with revenue growth across both banners.

Analysts on average expect net sales of $2.89 billion, according to IBES data from Refinitiv.

The company also expects to report adjusted earnings per share of about $1.25, up from its prior range of 85 cents to $1.

Shares in L Brands fell 2.6% in premarket trading.