Victoria’s Secret is about to hit the block again — and the company’s price tag is set to grow a few sizes.
Less than a year after a $1 billion deal to sell the struggling lingerie label got scrapped with the onset of the coronavirus crisis, the company is now preparing for a sale or a spinoff that could fetch more than four times that figure, industry experts told The Post.
In addition to aggressive cost cuts during the pandemic, analysts say the 43-year-old brand is surging in value as it finally has begun catering to women with more diverse shapes and sizes.
Victoria’s Secret’s owner L Brands — whose former chairman Les Wexner also got dinged last year because of the 83-year-old billionaire’s ties to dead pedophile Jeffrey Epstein — has tapped Goldman Sachs to lead a sale of the bra-and-panties empire. Pitchbooks with recent financials are slated to begin circulating in the coming days, sources said.
The numbers will look far better than what they did last spring, when L Brands was forced to drop a deal with the private-equity fund Sycamore Partners to sell 55-percent stake of the company for $525 million. Sycamore had sued to exit the deal after it found out Victoria’s Secret’s stores had been skipping rent after the onset of the pandemic.
This week, L Brands said Victoria’s Secret’s fourth-quarter earnings before interest and taxes more than doubled from a year earlier despite a 15-percent sales drop — a signal that shoppers are willing to pay full price for its frilly wares.
Nine months after ditching its $1 billion Sycamore deal, Victoria’s Secret now “could be worth $4 to $5 billion,” said BMO Capital Markets analyst Simeon Siegel. He reckons that prospective buyers will be willing to pay at least six times the company’s Ebitda, or earnings before interest, taxes, depreciation and amortization.
“The issue was never getting people to buy the product but to get them to pay full price,” Siegel added.
Berna Barshay, editor of Empire Financial Daily, a New York-based newsletter, confirms that “the more bullish buyside estimates at hedge funds are north of $4 billion” for a Victoria’s Secret sale, which the company is aiming to wrap up by August. The brand was valued at $15 billion just five years ago, she noted.
“Sycamore had a steal at $1 billion and will have regrets over busting out of the deal,” Barshay added. “I think Sycamore panicked and Victoria’s Secret weathered the storm better than people would have expected.”
To many, Victoria’s Secret had looked like a lost cause even before COVID-19. The splashy runway shows that anchored its supermodel-based strategy and fueled spectacular growth in the 1990s had become the butt of criticism and jokes. Meanwhile, a slew of rivals were notching growth by hawking more natural looks and catering to plus-size women.
This week, however, Victoria’s Secret executives confirmed they quietly have been reining in discounts and boosting profit margins, even as they’ve shuttered 250 of the company’s 900 stores and imposed massive layoffs. In what looked like a reference to recent marketing pushes with plus-size models like Devyn Garcia and Candice Huffine, management said Thursday the brand aims to become “more inclusive and relevant to the modern woman.”
“We are moving away from what we think is sexy to support her in whatever she thinks she needs,” said Martin Waters, chief executive of Victoria’s Secret lingerie. “We think we should be appealing to all women for more stages of her life [and] we haven’t always had that balance right which has led to opportunities for competitors being able to attack us.”
As The Post reported last month, the moves are starting to pay off as cooped-up women look for ways to splurge on themselves as their options for travel and entertainment have all but dried up, analysts say.
“It’s so nice to see a fuller figure woman in a VS ad,” a customer recently wrote on the company’s Facebook page. “I was in the store today and saw a lot more lingerie in larger sizes, especially the bras. Someone with the company is finally realizing beautiful women are in all sizes.”
–Additional reporting by Thornton McEnery
