Does a Possible End to the Victoria’s Secret Sale Mean Doom for L Brands?

The situation is once again looking grim for L Brands (NYSE: LB). After reaching a deal in February to sell 55% of Victoria's Secret to private equity firm Sycamore Partners, news came out last week that Sycamore wants to end the agreement. Investors had been counting on the $525 million deal to help drive recovery of the multi-brand retailer.

On April 22, Sycamore Partners filed a lawsuit in Delaware seeking a declaratory judgment that its move to end the Victoria's Secret agreement with L Brands is valid. According to press reports, Sycamore says store closures and a halt to rent payments in April related to the coronavirus pandemic breach terms of the deal. L Brands said it would fight the lawsuit, enforce its contractual rights, and work to close the planned transaction.

If Sycamore succeeds in ending the agreement, the questions surrounding L Brands may be more about survival than recovery. Let's take a closer look at why this is such big trouble for L Brands.

Source Fool.com