Victoria’s Secret & Co said Tuesday that it will sell a 49% stake in its China business to Hong Kong-based Regina Miracle International for $45 million in cash, according to a statement. The retailer added that it aims to raise sales in China with the support of a local partner.
Details of the deals
As part of the agreement, Victoria’s Secret and Regina Miracle will establish a joint venture, which will run all Victoria’s Secret stores in China as well as the related online business, the statement read.
Victoria’s Secret said it will hold 51% of the merged entity, adding that it will receive $45 million in cash from Regina Miracle as consideration for its investment in the joint venture.
The Hong Kong manufacturer has a market capitalization of $1.17 billion (HK$ 9.18 billion) as of January 25, 2022, according to the Stock Exchange of Hong Kong. It has been a merchandise supplier partner to Victoria’s Secret for more than twenty years, the statement said.
The deal, aiming to capture growth opportunities in China, is expected to close in the first quarter of the fiscal year 2022.
Crucial quote
“Together with Regina Miracle, we aim to grow the China business through joint investment in product development, distribution, and marketing. This JV with Regina Miracle in China completes a multi-year repositioning of the International business of the Company [Victoria’s Secret], and we believe establishes a platform for accelerated sales and earnings growth in the market over the next several years,” said Martin Waters, CEO of Victoria’s Secret, in a statement.
Key background
Victoria’s Secret has a market capitalization of $4.8 billion as of January 25, 2022, according to data published by Nasdaq. Last August, it demerged from Bath & Body Works to become an independent, publicly-traded company.
In December, the apparel and beauty retailer announced that it has entered into an accelerated share repurchase (ASR) agreement with Goldman Sachs to repurchase $250 million of its common stock, with the final settlement of the ASR expected to be completed in the first quarter of 2022.
Victoria’s Secret’s anticipated financial results for the fourth quarter of 2021 comprise an expectation of sales to be flat to up 3% against last year’s fourth-quarter sales of $2.1 billion, according to a statement. The company also foresees operating income in the $295 million to $335 million range and diluted earnings per share to settle between $2.35 and $2.65.
Big number
$763.9 billion.That’s how much the global women’s clothing market value is expected to reach by 2026, according to market research publisher Global Industry Analysts.