According to sources cited by the Wall Street Journal, Leslie Wexner, the CEO of L Brands, is reportedly considering stepping down from his position and exploring strategic alternatives for Victoria’s Secret. This could potentially lead to a full or partial sale of the lingerie brand. In recent times, Victoria’s Secret has experienced declining sales, facing criticism from an activist investor, as well as increased competition from online retailers.

Following the news, L Brands’ shares surged 13% in premarket trading. The company, however, has not made any comment on the report. Analysts from Jefferies have noted that a fresh perspective could be beneficial for “righting the ship.” However, they caution that investors may be placing too much value on the Bath & Body Works unit while underestimating the challenges faced by Victoria’s Secret.

Leslie Wexner has been leading L Brands since 1963, making him the longest-serving CEO of an S&P 500 company. He played a crucial role in building Victoria’s Secret, The Limited, and Abercrombie & Fitch into well-known national chains by placing emphasis on specialty brands. Additionally, Wexner currently holds a stake of 13.24%, making him the company’s largest shareholder.

Wexner has faced scrutiny due to his association with the late financier Jeffrey Epstein, who was responsible for managing Wexner’s personal finances. Epstein was indicted last year on charges of trafficking underage girls and died in prison in August. Wexner severed ties with Epstein over a decade ago.

Earlier this year, Barington Capital urged L Brands to separate the roles of chairman and CEO and called for the sale of Victoria’s Secret. In 2019, the lingerie brand accounted for nearly half of the company’s revenue. Over the past four quarters, sales at Victoria’s Secret have been declining as customers shift to cheaper alternatives from other brands, such as bralettes and sports bras.

In an attempt to update its marketing strategy, L Brands announced the resignation of its marketing chief, Edward Razek, last year. Furthermore, the annual Victoria’s Secret fashion show was canceled in late 2019. Analysts believe that significant efforts are needed to reinvent the brand and make it more appealing in the current “inclusive” era.

Overall, the potential CEO change and exploration of strategic alternatives for Victoria’s Secret indicate a potential new direction for L Brands. These changes may address the challenges the company has been facing in the lingerie market, such as declining sales and increased competition.

Useful links:
Wall Street Journal article
Reuters article