Victoria’s Secret may soon be cut off from its partner: one of the shareholders of parent company L Brands has requested the separation of Victoria’s Secret from sister brand Bath & Body Works, as the latter performs much better.
Need to split up
The shareholder, Barington Capital, has called for a separation of the poorly performing lingerie brand from its more successful sibling. In an open letter, the investor insists to seriously consider that option, or at least to take Bath & Body Works to the stock market.
Barington Capital has also criticised the company’s management, which the investment group thinks lacks diversity. The investor also suggests splitting up the roles of CEO and chairman of the board: “The company has significantly underperformed its peers and the market as a whole,” stated Barington, referring to the lingerie brand’s weak figures in the last quarter.
Mounting efforts
In a press release, the company has expressed “appreciation” for the input, but it emphasises how the lingerie manufacturer is already working hard to turn the tide. L Brands mentions the sale of subsidiary brand La Senza, the appointment of new management for Pink and Victoria’s Secret, and the launch of new products. Whether the group actually intends to listen to Barington Capital and split the brands up, remains unclear.
The suggestion does not come as a surprise, as splitting up major multinationals has been a trend in these turbulent times for retail: after German retailer Metro split up, Unilever disposed of its spreads division and Nestlé dropped several departments. Only last week, fashion retailer Gap announced that its brand Old Navy would also become an independent enterprise.
