According to Women’s Wear Daily, the sale of Victoria’s Secret by L Brands (LB) could be in jeopardy:

Parent company L Brands’s deal to sell a 55-percent stake of the Victoria’s Secret lingerie and beauty divisions, along with the Pink business, to private equity firm Sycamore Partners was expected to close in 2020’s second quarter. But as the economy slows to a near standstill amid the coronavirus pandemic, retail and fashion brands have been some of the hardest-hit sectors.

In its annual report filed with the Securities and Exchange Commission Monday, the company offered a list of risks to its business, including that the deal might not close or that the company might not obtain the necessary regulatory approvals.

“[There are] difficulties arising from the business uncertainties and contractual restrictions while the VS transaction is pending,” the company said.

L Brands confirmed the sale of a majority stake in Victoria’s Secret in late February. Sycamore’s price implied an enterprise value of $1.1 billion, which equated to less than 2x EBITDA. A lot has changed since then. The negative effects of the coronavirus has led to social distancing, which has hurt the economy. President Trump recently extended social distancing guidelines through the month of April. With millions of Americans isolated at home, retail sales could fall sharply. That does not bode well for L Brands and Victoria’s Secret.

If Sycamore completes this deal it could blow up in their face. They will forever be linked to Victoria’s Secret and The Burning Bra. Read more:



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