Victoria’s Secret is the USA’s biggest underwear retailer that has been promoted by glorious supermodels. Barington Capital holds more than 1 per cent of the retailer and BBRC has acquired 12.9 per cent stake. The share of the company is underperforming. Its stock has lost more than half its value. It seems the company has lost touch. They replaced male-dominated set up with a group of women recognized for their accomplishments and opinions. However, the sales remained placid, and the group was disbanded.
It holds an annual marketing event — a fashion show. Still against nimbler rivals such as Kim Kardishian’s Skims, and Rhinna’s Savage X Fenty, it has still to find its gravitas.
The brand has huge recognition, even with Gen Z consumers. It should further strengthen its image and improve its stores. It requires financial commitment. Its market value has shrunk to $ 1.5 billion, and in takeover bids, the premium commanded is 30 per cent. The equity value of the company amounts to $2 billion. Considering the overall decline in value, a premium of 50 per cent seems appropriate. The net debt (excluding lease liabilities) is considered to reach an enterprise value of $3 billion. It could be acquired by many private equity groups.
A proposal to put yourself at sale is not a sign of weakness, but it is also not luring enough per equity buyers since it should pay shareholders some of the recovery value. It is a journey for Victoria’s Secret from being a lingerie selling company to selling a company.
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