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Victoria’s Secret owner expects to spend up to $370 million splitting its company in two, plus an extra $80 million a year in expenses


Victoria's Secret

Summary List Placement

L Brands announced earlier this month that it wouldn’t sell Victoria’s Secret — instead, it said it would split its company in two, separating Bath & Body Works and Victoria’s Secret as two public entities.

After markets closed on Wednesday, L Brands shared more information on how much it would cost to split itself in two.

It said it could cost up to $370 million over the next few years, plus $80 million across both brands in annual expenses, based on its best estimates.

The breakdown, from its first-quarter earnings commentary, is as follows:

  • $70 million in one-off restructuring costs.
  • $200 to $300 million for future capital expenditures, such as new IT platforms.
  • $80 million in annual costs, split between each company, to hire new employees and set up new systems to support both companies. 

In a statement, the company stood by its decision not to sell the brand. 

“Ultimately, the Board concluded that the spin-off of Victoria’s Secret into a separate, public company would provide shareholders with more value than a sale,” it said.

It also said that it expects the spin-off to be tax-free.

Read more: The rise and fall of Victoria’s Secret, America’s biggest lingerie retailer

L Brands had previously agreed to sell a 55% stake in Victoria’s Secret to a private equity firm for $525 million, but the firm pulled out during the pandemic.

After somewhat of a comeback in sales growth at the back end of 2020, L Brands headed back out to the market to find a new buyer for a higher bid — analysts were valuing the brand at as much as $2 to $3 billion this time around.

But at the start of May, these plans were abandoned and the board confirmed that it would spin off Victoria’s Secret as its own public company. 

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