2/17/2021 L Brands Bets Its Future on Baths, Not Lingerie | Barron's

CONSUMER PREVIEW

The New Face of L Brands: Baths, Not

Lingerie
By Evie Liu Feb. 21, 2020 8:00 pm ET

Illustration by Elias Stein

The good news at L Brands is that the company has finally begun to deal with its
troubled lingerie brand, Victoria’s Secret, as its CEO, Leslie Wexner, gives up his
post. The company is unloading 55% of the lingerie chain as the 82-year-old
Wexner retires.

Victoria’s Secret once dominated the lingerie world with a marketing strategy
stressing flamboyant fashion shows full of supermodels wearing sexy underwear.
But the chain struggled with falling sales as women turned to brands that catered
to more diverse body shapes.

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2/17/2021 L Brands Bets Its Future on Baths, Not Lingerie | Barron's

Wexner built Victoria’s Secret, but also failed to turn it around (see Power Play,
“Activist Hedge Fund Gets a Chance to Make Over Victoria’s Secret”). The longest-
running CEO in the S&P 500 index—he ran the place for 57 years and holds 70% of
the shares—was also a former associate of the late Jeffrey Epstein.

But it was Victoria’s Secret that dragged L Brands

stock down. The shares, which hit $96 in December 2015, are now at $24—and
that’s up 32% year to date on hopes that L Brands would sell the chain. Victoria’s
Secret generated $7.4 billion in revenues in fiscal 2018, but only $462 million in
operating income. By comparison, L Brands’ other big chain, Bath & Body Works,
posted over $1 billion in income on $4.6 billion in revenue during the same period.

With L Brands selling the Victoria’s Secret stake for $525 million to Sycamore
Partners, it can focus on Bath & Body Works. When the company reports its fourth-
quarter results on Thursday, Wall Street expects Bath & Body Works to gain 11% in
revenue from last year. L Brands’ new mantra: pay down debt and buy back shares.
Not sexy, but satisfying.

Next Week

Monday 2/24
Japanese bourses are closed in observance of the emperor’s birthday.

HP Inc. , Intuit, Keysight Technologies, Oneok,

and Palo Alto Networks report quarterly results.

Tuesday 2/25
American Tower, Bank of Montreal, Bank of Nova Scotia, Cheniere Energy, Home
Depot, Macy’s, Public Storage, and Salesforce.com, report earnings.

JPMorgan Chase hosts its 2020 investor day in New York.

The Conference Board releases its Consumer Confidence Index for February.
Consensus estimates are for a 132 reading, in line with the January figure.

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