The company’s shares jumped 13% on the news that Les Wexner may be stepping down.
L Brands, the parent company of Victoria’s Secret, saw its shares jump Wednesday morning over a potential leadership shakeup. The company’s founder, Les Wexner, is reportedly stepping down and selling at least part of the Victoria’s Secret brand.
In previous years, the company has struggled with falling sales as Victoria’s Secret continues to fall out of favor with consumers. So could this transition be good news for the company? The market certainly seems to think so.
The backstory on L Brands
Wexner originally founded L Brands in 1963 and has run the company for 57 years. This makes him the longest-running CEO of an S&P 500 company. Wexner also owns 17% of the company’s shares, which also makes him its largest shareholder.
However, Wexner has come under fire in recent years due to his relationship with accused sex trafficker Jeffrey Epstein. Wexner allowed Epstein to manage his finances and even made him a trustee of the Wexner Foundation.
The L Brand board of directors hired outside counsel to examine Epstein’s relationship with the company. However, they haven’t yet made the results public, and the stigma continues to follow both Wexner and the company.
And for the past two years, Victoria’s Secret sales have continued to decline. Increasingly, consumers want companies that embrace body positivity and Victoria’s Secret doesn’t meet the mark.
Reports have been circulating for a while that L Brands was considering selling off Victoria’s Secret. According to a Cowen analyst, selling the lingerie brand could cause the company’s shares to rise by as much as 51%.
L Brands declined to comment on whether reports of Wexner stepping down are true. But the timing makes sense for the company.
In September, the company promised that an “evolution” lay ahead. And a Barclay’s analyst recently speculated that “change is afoot” for L Brands.
Overall, L Brands is considered a hold on Wall Street with a potential downside of more than 10%. But if Wexner does end up stepping down, analysts could quickly change their tune on the company.