Victoria’s Secret’s Stock Surges as It Makes Debut on Public Market

Victoria’s Secret’s stock is going up. 

The lingerie business, along with Victoria’s Secret Beauty and the Pink division, officially separated from Bath & Body Works on Tuesday morning. Shares of the newly formed Victoria’s Secret & Co., which now stands alone on the New York Stock Exchange and trades under the “VSCO” stock ticker, surged more than 28 percent as a result.

Meanwhile, shares of the soap and hand sanitizer brand Bath & Body Works, or BBWI, which was previously L Brands, fell more than 3 percent the same day. 

“We are thrilled to have reached this milestone and to launch Bath & Body Works as a stand-alone public company,” Andrew Meslow, chief executive officer of Bath & Body Works, said in a statement. “Innovation remains at the foundation of Bath & Body Works and with our leadership positions across key product categories, strong performance across channels and highly loyal and growing customer base, we are poised to continue our track record of industry-leading growth and profitability. On behalf of the management team and the board, I’d like to extend our sincere appreciation to all the associates who worked so hard on the successful spin-off of Victoria’s Secret. I am grateful to all of our associates for their contributions to the success of our business as we look forward to capturing the opportunities ahead and we wish the Victoria’s Secret business and associates well as they embark on their journey as a stand-alone public company.”

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Victoria’s Secret & Co. has 88.3 million shares of common stock outstanding, giving it a market cap of about $5.1 billion far above the $525 million price tag that private equity firm Sycamore Partners had planned to pay for the Lingerie, Beauty and Pink divisions in early 2020.  

Goldman Sachs and J.P. Morgan served as financial advisers to help distribute 100 percent of shares of Victoria’s Secret to Bath & Body Works shareholders (previously L Brands) after the market closed Monday. Bath & Body Works stockholders received one share of Victoria’s Secret common stock for every three shares of Bath & Body Works common stock held at the close of business on July 22. 

Bath & Body Works separates from Victoria’s Secret on the public market. Courtesy Photo

The spin-off is part of the retailer’s greater growth strategy, after the deal with Sycamore fell through amid the pandemic. The company has said the separation of Victoria’s Secret and Bath & Body Works will unlock value in the lucrative soap and hand sanitizer brand, while helping the lingerie division win back consumers and market share, which have been dwindling in the last few years because of shifts in consumer preferences toward more comfortable and inclusive looks. 

Additional growth strategies at Victoria’s Secret include hiring plus-size and transgender models, adding more comfortable styles to the assortment, including athleisure, reintroducing swimwear into the mix and canceling the high-profile fashion show. Victoria’s Secret is now in the process of updating its store fleet to reflect a changing image. 

So far the plan seems to be working and it’s not just investors who are on board. Last month, the company also revealed a mid-quarter earnings update, with Victoria’s Secret’s revenues topping more than $1.1 billion, compared with $625 million during the same period a year earlier. Sales during the first nine weeks of the quarter also surpass 2019’s pre-pandemic sales of $2.1 billion by 12 percent thanks to better-than-expected merchandise margin rates, disciplined inventory management, reduced promotional activity and positive consumer response to the updated assortment. 

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