L Brands Inc. agreed to sell a controlling stake in its Victoria’s Secret brand to private equity firm Sycamore Partners in a deal that values the lingerie brand at US$1.1 billion.

Sycamore Partners agreed to buy 55 per cent in Victoria’s Secret in the transaction. L Brands will retain 45 per cent in a separate firm that will include Bath & Body Works, the company said Thursday in a statement.

L Brands also said billionaire founder Leslie Wexner will step down as chairman and chief executive officer. Wexner, 82, the longest-serving chief executive officer on the S&P 500 Index, will be chairman emeritus, remaining on the board of L Brands.

The transaction follows years of scandal and slumping sales at the lingerie chain. The Columbus, Ohio-based firm has struggled to mend an image tarnished by allegations of misogynistic culture under Ed Razek, its controversial former chief marketing officer, as well as lingering questions about Wexner’s relationship with late convicted sex offender Jeffrey Epstein. Wexner says Epstein defrauded him.

Lost Ground

Victoria’s Secret, still tied to the push-up bra aesthetic the company projected for many years, has lost ground to competitors that market their products as comfortable and body-positive. A broader retail shift to e-commerce and away from shopping malls has also dealt a blow.

After this sale, L Brands would be reduced to running the Bath & Body Works chain of skin care products that contributed 35 per cent to the overall revenue in the year ended February 2019. Victoria’s Secret, despite its steady declines, brought in nearly 56 per cent of L Brands’ revenue last year, according to data compiled by Bloomberg.

The deal follows L Brands’ plans, laid out last September, for a turnaround at Victoria’s Secret. At the time, executives said they would improve the in-store experience and update the marketing to be more inclusive while making sure core customers don’t feel alienated.

L Brands shares have climbed almost 36 per cent this year in New York after declining for four straight years. The company is scheduled to report quarterly results on Feb. 26.

The Wall Street Journal reported L Brands was nearing a deal earlier, citing unidentified people familiar with the development.

--With assistance from Lisa Wolfson and Jonathan Roeder.