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Can a Private Equity Firm Save Victoria's Secret?
By: MediaPost
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In a dramatic end to an underwear saga, L Brands is spinning off the struggling Victoria’s Secret. For $525 million -- a shockingly low price -- Sycamore Partners will get a 55% stake in Victoria’s Secret, including its beauty business and Pink line.

While L Brands retains a minority stake, Leslie Wexner, founder and CEO, will step down, although he will remain as chairman emeritus.

“Wexner’s exit from the business marks the end of an era for specialty apparel retailing,” says Tiffany Hogan, principal analyst at Kantar. “He’s had such a hand in growing the industry to its peak, so his departure in a way signals that specialty retail may need to change as well.”

It doesn’t seem like that long ago when, with its ever-evolving constellations of “Angels” (the supermodels who showed off its lingerie), the company was a dominant fixture in shopping malls around the country.

While still the market leader, it now has just 24% of the market, down from 31.7% in 2013, Coresight Research reports.

In its announcement, Victoria’s Secret revealed that comparable-store sales fell yet again in the fourth quarter, this time declining 10%.

Much of the weakness comes from a style shift in what younger women want from bras. Instead of lacy push-ups, they’ve shifted toward comfy sports bras made by brands like Lululemon, unstructured bralettes or the better fit of digital natives like ThirdLove.

But there’s a cultural change, too. Women have also lost interest in Victoria’s hypersexed marketing and emaciated models. Instead, they’ve begun flocking to brands like Aerie, owned by American Eagle Outfitters, which use real -- and unretouched -- women in ads, as well as many body types.

That trend extends well beyond underwear, to “retailers like Madewell, Modcloth, and Anthropologie,” says Hogan. “Beauty brands have also [begun] showing unaltered images to sell products.”


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