L Brands’ Victoria’s Secret U.K. Arm Appoints Administrators

(Bloomberg) -- Lingerie chain Victoria's Secret U.K. arm is appointing an administrator to help overhaul its business, amid plunging sales across the retail sector.

The unit of Ohio-based L Brands Inc., which operates 25 stores in the country, will appoint Deloitte to renegotiate leases or sell the stores, Stuart Burgdoerfer, the unit's interim chief executive officer, said in an emailed statement on Friday.

Victoria's Secret U.K., which reported 127 million pounnds ($160 million) of revenues in the last financial year, about 1% of the total for L Brands, is represented by law firm Linklaters, according to a court filing.

The company is seeking to overhaul the division in a “light touch administration during which they will seek to restructure the U.K. lease terms, explore options for a sale of that portion of business or other alternatives,” said Burgdoerfer, who is also the chief financial officer for the parent company. “This action has no impact on our stores in any other part of the world.”

“It is currently envisaged that, in order for the business to exit the administration process, 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,” Deloitte said in a separate statement.

Representatives for Linklaters didn't immediately return calls and emails seeking comment. The news was first reported by Dow Jones.

All of the Victoria's Secret stores in the U.K. are now closed with 785 employees on furlough. The administration will not include L Brands operations outside the U.K., Burgdoerfer said.

L Brands raised $1.25 billion of new bonds on Thursday after it failed to sell a majority stake in Victoria's Secret brand to Sycamore Partners. The deal would have raised $525 million.

Its shares were trading around 6% higher at $18.90 as of 10:15 a.m. in New York, according to data compiled by Bloomberg.