Deloitte appointed for Victoria's Secret administration

12 June 2020 Consultancy.uk

Lingerie behemoth Victoria’s Secret has appointed administrators for its UK wing, falling a rapid fall from grace for the brand’s global entity. Most of the company’s 800 staff were on furlough when Deloitte was installed to oversee proceedings, and at time of writing no redundancies have been announced.

Founded in 1977, it took until the late 1990s for Victoria’s Secret to rise to prominence – but since then it has been one of the best-known and most talked-about brands in the world. Unfortunately for the firm, in recent years a harsh change in its fortunes have seen it making headlines for very different reasons. Having risen to prominence on the back of racy lingerie and star-studded annual runway shows in its early years, the company’s star has waned rapidly in the era of #MeToo, and of increasing calls for fashion brands to represent more diverse body-types.

Any attempts that Victoria’s Secret did make to change its image were met with scepticism, while many customers complained that the quality of its goods had dropped, causing sales to slip. In February 2020, the decline of the firm’s performance saw US beauty and fashion company L Brands, which owns the global Victoria’s Secret group, announce the sale of a 55% stake in the Victoria’s Secret brand to a private equity firm.

Deloitte appointed for Victoria's Secret administration

The deal with Sycamore Partners valued the brand at $1.1 billion. At the time, the firm promised to execute a major turnaround effort, while L Brands’ long-time CEO and Chairman Les Wexner stepped down from the company, having spent nearly six decades at the helm. The new lease of life the company looked set to enjoy was short-lived, however.

By April, the private equity company that was due to acquire a majority stake in the brand filed a lawsuit, which it leveraged to try and back away from the deal. At the time L Brands said it would “vigorously defend” the lawsuit, but weeks later it confirmed that the deal had officially fallen through. The controversy could not have come at a worse time for the company – as like many major retailers, it has seen a collapse in demand thanks to the global Covid-19 lock-down.

In the UK, Victoria’s Secret has been forced to take urgent action, thanks to the storm the country’s high street is currently weathering. Professionals from Deloitte have been installed to oversee a 'light touch' administration, with all of Victoria Secret’s 25 leasehold sites having been shut since March, when the UK’s Covid-19 lock-down began. Victoria’s Secret employs over 800 staff across Britain, most of whom were furloughed when administrators were appointed.

Joint administrator Rob Harding commented, “This is yet another blow to the UK high street and a further example of the impact the Covid-19 pandemic is having on the entire retail industry. The effect of the lockdowns, combined with broader challenges facing bricks and mortar retailers, has resulted in a funding requirement for this business, resulting in today’s administration."

No redundancies have been announced yet, but according to Deloitte, it envisages major change will be needed for the business to exit the administration process. A statement from the firm suggested “it will be necessary to either restructure the lease terms across the portfolio, and, or, achieve a sale of the company’s assets to a third party.” Victoria’s Secret’s online operations are not owned or operated by the same company, and so are not affected.


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