Victoria’s Secret’s UK arm sunk to a £100m operating loss before it fell into administration, with 200 creditors owed nearly half a billion pounds.
The lingerie chain, famous for its fashion shows featuring supermodel “angels”, drafted in advisors at Deloitte in June to oversee a so-called light touch administration.
For the 16 months to May, it recorded an operating loss of £109m, documents at Companies House show, having been propped up by its American owner L Brands for years. It has 25 shops in the UK.
Deloitte said that claims with 208 unsecured creditors – typically suppliers, landlords and the taxman – totalled £466m. But there should be sufficient cash to pay some of it back, although it did not say how much.
High street stalwart Next has taken over Victoria’s Secret business in the UK after fending off competition from Marks & Spencer.
It secured an exclusivity agreement until the end of September while it finalises a deal.
The administrator received three final proposals before it chose Next as the preferred franchise partner. The tie-up should allow the lingerie brand to take advantage of Next’s digital and delivery prowess, which is well-regarded in the industry.
Next has not yet agreed which sites it will keep, if any, as it tries to secure cheaper rents.
Victoria’s Secret opened its first UK store in 2012, along with others in Europe and South America. Although it was instrumental for provocative designs during its peak, it has been slow to adapt beyond padded and push-up bras.
It has been struggling in the UK before coronavirus, too. A combination of cautious spending by shoppers, higher staff wages, business rates and rents have all led to its demise.
When the pandemic hit it was forced to shut losing almost three months worth of sales. It put 804 of 827 employees on furlough, the taxpayer-backed scheme; staff have now been brought back as 24 branches have reopened.
Deloitte said it was still in talks with one landlord after seeking rent free agreements since it stepped in.
The business is still trading as normal in the US, where its parent company L Brands is based, as well as other countries.
In May, L Brands agreed to call off the sale of its majority stake in Victoria’s Secret to buyout firm Sycamore. Sycamore filed a legal complaint in late April, alleging that L Brands breached some of the terms of the deal.
The UK division posted £49m and £171m operating loss in 2018 and 2019 respectively. Its cash balance was £12m at the end of May.