Investment firm Sycamore Partners is seeking to end its deal to buy a stake in L Brands Inc’s (LB.N) lingerie brand Victoria’s Secret, citing business decisions the retailer took during the coronavirus pandemic, a court filing on Wednesday showed, sending the company’s shares down over 20%.
Sycamore said less than one month after entering the deal with L Brands, the company closed nearly all of its about 1,600 Victoria’s Secret and PINK stores globally, including more than a thousand stores in North America.
L Brands also furloughed most of its Victoria’s Secret employees and reduced compensation for senior staff and took other actions that could hurt the lingerie business, Sycamore said in the filing.
“That these actions were taken as a result of or in response to the COVID-19 pandemic is no defense to L Brands’ clear breaches of the transaction agreement,” the firm said in its filing.
Earlier this year, L Brands had said it would sell a controlling stake in its Victoria’s Secret unit to Sycamore, valuing the lingerie brand at $1.1 billion, to focus on its better-performing Bath & Body Works brand. The deal would have led to the private equity firm owning more than half of Victoria’s Secret, the world’s best-known specialty retailer for lingerie.
L Brands and Sycamore were not immediately available for a comment.