Institutional Investors Wait for L Brands Plans for the Future
Posted on 05/18/2020
Norway’s Government Pension Fund Global (GPFG) and AZ Multi Asset Institutional T Fund out of Luxembourg are both major holders of L Brands, Inc., parent of Victoria’s Secret and Bath & Body Works. GPFG holds 2,484,659 shares and AZ Multi Asset owns 2,750,000. Both received a lifeline in the form of a deal from Sycamore Partners to take the company private – a 55% stake for US$ 525 million, but now Sycamore has backed out. L Brands fought the retreat, but ultimately accepted that Sycamore Partners would not be following through in the wake of the most devastating crisis in retail in a generation. L Brands employs 80,000 and cleared US$ 12.9 billion in revenue in 2019, but it is largely viewed as a declining play among investors. New York-based Sycamore Partners, which manages U.S. pension money through funds, has its own retail portfolio to deal with such as Coldwater Creek, Aeropostale, Torrid, Talbots, Jones New York, Nine West, and Staples. Sycamore Partners acquired Staples in 2017 for US$ 6.8 billion.
On April 13, 2020, Sycamore Partners wanted to adjust the purchase price due to the COVID-19 outbreak. L Brands declined to discuss that and then Sycamore Partners moved to terminate the agreement and file suit in Delaware. Sycamore Partners claimed that L Brands breached deal terms. L Brands then countersued, pushing that the contract be enforced.
L Brands put out a statement that lists its go-forward strategy: “As part of L Brands’ strategy, the company remains committed to establishing Bath & Body Works as a pure-play public company and is taking the necessary steps to prepare the Victoria’s Secret Lingerie, Victoria’s Secret Beauty and PINK businesses (collectively, Victoria’s Secret) to operate as a separate, standalone company.” Sarah Nash, incoming Chair of the Board at L Brands wrote about the soured Sycamore deal: “Rather than engaging in costly and distracting litigation to force a partnership with Sycamore. We are implementing significant cost reduction actions and performance improvements at Victoria’s Secret while continuing to drive strong growth at Bath & Body Works.” Andrew Meslow, CEO of Bath & Body Works, will take over for Leslie Wexner, who will step down as CEO of L Brands. Wexner founded the company in 1963. L Brands had once had Abercrombie & Fitch, Lane Bryant, and Express, under its corporate belt.
The U.S. retail industry has been hit hard by the COVID-19 pandemic. Since the great lockdown, Neiman Marcus, J. Crew, and J.C. Penney have all filed for bankruptcy.
Keywords: Norway Government Pension Fund Global.
