L Brands founder and CEO Leslie H. Wexner is considering stepping down and might sell all or part of the company's struggling Victoria's Secret brand. Wexner transformed the company from a single store he started in 1963 into a global retail empire.
Wexner, who turned a single store that he started in 1963 into a global retail empire, is considering stepping down as CEO of L Brands and selling Victoria's Secret, a source has told The Dispatch.
Wexner is in talks that could result in a full or partial sale of Victoria's Secret, the one-time lingerie powerhouse that has struggled amid falling sales in recent years.
Any transition in leadership by the company figures to take at least several weeks, if not longer, to complete.
The potential moves come as Wexner has been criticized in recent months for his longtime association with accused child-sex trafficker Jeffrey Epstein.
The Wall Street Journal first reported the possible sale online Wednesday morning, and The Dispatch confirmed the story through a source close to the company. The company declined to comment Wednesday morning, saying it doesn't comment on rumors.
Over the past year, Wexner has faced calls from analysts and investors to consider selling Victoria's Secret.
The lingerie brand has been a drag on the profitability of L Brands, whose stock tumbled nearly 30% in 2019 on top of a nearly 60% decline in 2018. L Brand shares have sunk from a high of $100.22 on Nov. 4, 2015. The share price in Tuesday's trading closed at $20.56.
L Brands' shares were up 13%, or $2.74, to $23.30 in trading Wednesday morning on the reports.
Victoria's Secret is known for its sexy commercials that appeared on television for years and a fashion show that crashed a website in 1999.
But that approach is being questioned in the #MeToo era. The fashion show was not held last year, and the 2018 show's audience of 3.27 million viewers was the smallest since becoming a holiday season TV event in 2001.
This month, the company lowered its profit outlook for the period covering the holidays, driven by weak Victoria's Secret sales.
Sales at Victoria's Secret stores open at least a year, considered a key indicator of a retailer's strength, fell 12% over the holiday. By contrast, comparable store sales at L Brands's Bath & Body Works were up 9%.
Victoria's Secret remains a strong brand even with its recent struggles, said Lee Peterson, executive vice president at WD Partners, a Dublin, Ohio retail consulting company, who worked for Wexner in the 1980s during a period of rapid growth for the company.
"That brand is not dead by any means. The brand is really viable," Peterson said.
Having said that, Wexner might have determined that he no longer has the tools or the people to make the brand what it once was and that someone else could do better, Peterson said.
"What I have here in my toolbox is not what it takes to make it a success going forward," Peterson said Wexner could be thinking.
"He's a super-tactile, non-emotional thinker. He's not going to make an emotional decision about any of this stuff," he said.
Meanwhile, Wexner's relationship with Epstein, the New York financier who was Wexner's longtime business manager, has received nationwide media attention.
The relationship between the two dated back to the 1980s. Wexner acknowledged that he gave Epstein power of attorney and, with it, wide latitude to act on his behalf.
Epstein, 66, died in jail in November in New York while under indictment on charges accusing him of sexually exploiting and abusing dozens of underage girls between 2002 and 2005 by enticing them to engage in sex acts for money.
Epstein was a registered sex offender who was convicted of state prostitution charges in Florida in a plea deal in 2008 and served more than a year in a county jail after authorities said he paid numerous underage girls for sex.
Epstein in 1998 was identified as president _ along with Wexner _ of the New Albany Co. in Ohio business records.
He also became a trustee of the Wexner Foundation but had no executive responsibilities for running it, Wexner has said.
In response to the scrutiny, Wexner released a letter he wrote to company employees last summer saying that he severed his relationship with Epstein more than a decade ago and that he was unaware of the charges against Epstein.
"When Mr. Epstein was my personal money manager, he was involved in many aspects of my financial life. But let me assure you that I was NEVER aware of the illegal activity charged in the indictment," he wrote.
Later, Wexner wrote a letter to his foundation saying that Epstein stole tens of millions of dollars from him.
Wexner said a donation of $47 million made to a charity established by Wexner's wife, Abigail, from Epstein in 2008 came from money Epstein stole from the family.
Wexner, 82, founded what became L Brands in 1963 as The Limited, a women's clothing retailer whose first store was at the Kingsdale Shopping Center in Upper Arlington. The retailer went public in 1969, and Wexner built it into a retailing giant, acquiring and developing other brands.
He is the longest-serving CEO among the large 500 public companies that make up the Standard & Poor's 500 index.
At one time, the company's family of brands included Abercrombie & Fitch, Express, Limited Too (now called Justice), Lane Bryant and Lerner New York.
The brands were either spun out into separate companies or sold.
More recently, the company sold its Canadian lingerie chain La Senza and closed Henri Bendel.
The company's name was changed to Limited Brands in 2002 and L Brands in 2013 after the company sold off The Limited.
Wexner remains the company's largest shareholder, with estimates ranging from 13% to 17%.
