CNBC reported that Victoria’s Secret will be going private. Victoria’s Secret was once a powerful and popular lingerie brand. Sycamore Partners, a private equity firm, made the deal that shows how little value Victoria’s Secret has had in recent years. The firm will purchase a 55 percent stake in Victoria’s Secret from L Brands. Les Wexner, L Brands founder, will be its chairman and CEO. Wexner will continue to serve as chairman emeritus.
CNBC reported that L Brands’ stock dropped 10% in pre-market trades after the announcement. This is likely to be a sign that the market was not thrilled with the deal. Victoria’s Secret’s value has been valued at $1.1 billion. L Brands will use the money and $500 million of surplus balance sheet cash to reduce its debt. L Brands will now be focusing on its Bath & Body Works brand.
Total Retail’s Turn: In recent years, consumers have chosen to shop at lingerie brands with more inclusivity, comfortable products and body positivity. Victoria’s Secret, the brand that is known for its “fantasy”, supermodels, and high-end products, has struggled with adapting to changing consumer mindsets. It has been criticized for not including women in its sizes. In 2018, Victoria’s Secret was still defending its exclusive ways. Ed Razek (CEO of L Brands at that time) stated that Victoria’s Secret should not have plus-sized models in its fashion shows as the brand promotes a fantasy world. Victoria’s Secret remains the most popular brand in the lingerie category. Perhaps with new leadership, it can strengthen its position. But I believe that millennials might be sceptical about Victoria’s Secret’s brand and will reject any attempts Victoria’s Secret makes at being more inclusive, if they aren’t genuine.
US Stores to Stay Open after Forever 21 Acquisition
Three companies have completed the acquisition of Forever 21. This was announced by Authentic Brands Group earlier in this week. Brookfield Property Partners and Simon Property Group, along with Authentic Brands, are the new owners of Forever 21’s 448 U.S. locations. According to court filings, the price of the sale was $81 million. The new owners intend to keep the Los Angeles headquarters of fast-fashion retailer and its e-commerce operations running.
Total Retail’s View: Mall owners have an interest in the success of their largest tenants. Here are Joe Jackman’s thoughts as CEO of Jackman Reinvents and author of ” The Reinventionist Mindset”: Learn to love change and how to do it brilliantly.
“Does Forever 21 really have a chance of redemption under new ownership?” My starting point is always “yes” provided that some fundamentals are true. I am a reinventionist. Is there a solid, core idea? What is the core idea that made the brand so special? Is it possible to reimagine the idea today with the same will and resources as when the brand was created in the mid-80s?
Forever 21 was founded out of the American dream. It was founded on the belief that exciting and current fashion could be affordable to all. But it also believed that anyone could choose to be anything they want. The Forever 21 story is the story its immigrants founders. It sold fast-fashion long before this was commonplace. It was selling what customers really wanted: a better version themselves, closer towards their aspirations than their reality. This is a powerful, timeless idea that’s even more relevant today. But the idea was never realized. This is just one example of the many options available, proving yet again that interchangeability is not a winning strategy. Forever 21 was able to be another mall-based retailer selling cheap, disposable clothing. This is a disturbing trend in today’s wider landscape. But that core idea shines brightly…
“On the second point, the will and the wherewithal — I like the vision of a diverse ownership group that has a common goal: to not only create brand value but also create a compelling reason for people to go to the mall. They have deep pockets.
“My conclusion is that Forever 21 can last forever if it continues to innovate and think thoughtfully.”