Image: Victoria’s Secret

The diminishing relevance of Victoria’s Secret has seen the ailing retailer lose nearly 10 percent market share in the three year period between 2015 and 2018. The 42-year old lingerie giant, which is largely considered to lack a modern identity and strong leadership to back it up, has lost favor amongst the coveted millennial consumer, who has opted en masse for its younger, more modern competitors, and that has taken a striking toll on the value of its parent company, L Brands.

But beyond Victoria’s Secret’s fall from grace – complete with plummeting ratings for its Fashion Show and a general feeling of ick in the #MeToo era – is a yet thorn in the retailer’s side: one that involves the late Jeffrey Epstein.

Columbus, Ohio-based L Brands made headlines last month when it experienced a marked drop in its stock price in mid-July, one that coincided with media reports detailing founder and CEO Les Wexner’s close and long-standing relationship with Epstein, the disgraced money manager and Level 3 sex offender, who committed suicide this month while awaiting trial on sex trafficking charges. The news put a dark cloud over the already-struggling American retail empire.

Epstein-related blows to L Brands’ stock first came last month when the 66-year old financier was arrested at a New Jersey airport and charged with sex trafficking of minors. Nine days after Epstein’s arrest at Teterboro Airport, media reports began to surface, detailing the decades-long relationship between Epstein and Wexner, “the 81-year-old corporate legend who built his family’s single clothing store outside Columbus, Ohio, into a global retail empire,” per CBS.

The news sent L Brands stock into a tailspin, prompting the price to drop by 10 percent to around $25 as of July 15, nearly “the lowest it’s been since 2010.”

81-year old Wexner said in a statement that he had “severed all ties” to Epstein over a decade prior, in late 2007, “more than a year after Mr. Epstein was first charged with sexual misconduct with minors,” according to the New York Times. Epstein ultimately pleaded guilty to charges of solicitation of prostitution and procurement of minors for prostitution in a Florida state court in 2008. However, the unsealing of court documents a month later, on August 9 – the day before Epstein’s death –  did little to help quiet the connection.

Included in the 2,000 or so pages of documentation tied to a since-settled case filed by Epstein accuser Virginia Giuffre – which were ordered to be unsealed by a New York federal court of appeals in July despite objections from the former defendant – were flight logs for Epstein’s planes. One of the most frequent destinations: Columbus, Ohio, the home of L Brands and Wexner. At least one of those logs included some marked irregularities.

According to court documents, a February 2005 flight from Columbus, Ohio to Palm Beach, Florida, where Epstein maintained a residence, was made by 7 people, including Epstein, modeling executive Jean-Luc Brunel, and 19-year old model Nadia Marcinkova. That same flight log was subsequently found to have “conspicuously” failed to list the attendance of three – presumably underage – females who potentially were flying under the radar, pun intended. It is illegal and particularly egregious, after all, to take minors across state lines the purpose of sexual exploitation.

While Wexner has not been accused of proffering minors for Epstein or of engaging in sexual activity with minors, himself, the billionaire retailer figure has, nonetheless, been further cemented into the equation due to his status as Epstein’s onetime “mentor” and maybe even more significantly, the only known client of Epstein’s financial management firm.

“Unlike fund managers, such as George Soros and Stanley Druckenmiller, whose client lists and stock maneuverings act as their calling cards,” Vanity Fair noted several years ago, Epstein – a former Bear Stearns trader, who set up his own shop J. Epstein & Company in 1988 – “keeps all his deals and clients secret, bar one client: billionaire Leslie Wexner, the respected chairman of Limited Brands.”

Yes, “The knottiest financial enigma involves Epstein’s relationship with Wexner, who for years entrusted Epstein with his financial life,” as the New York Times put it in earlier this month, noting that “much remains unknown about the sources of [Epstein’s] wealth,” something that could prove to become a “focal point for investigators.”

What, exactly, Epstein’s wealth translated to is clear. The financier boasted an arsenal of real estate: a 9-story townhouse, believed to be Manhattan’s largest private residence, which “commands—the block of 71st Street between Fifth and Madison Avenues,” per Vanity Fair, and is “almost ludicrously out of proportion with its four- and five-story neighbors.” There is “what is reputed to be the largest private dwelling in New Mexico, on an $18 million, 7,500-acre ranch.” Add to that, Little St. James, a 70-acre island in the U.S. Virgin Islands, and the nearly $7 million property on El Brillo Way Palm Beach, Florida. And do not forget the Gulfstream jet, the helicopter, and the formerly-commercial Boeing 727 aircraft.

However, how, exactly, Epstein got it is less transparent; he long pointed to the need for “discretion” for his billionaire clients, but revealed that “the flat fees he received from his clients, combined with his skill at playing the currency markets ‘with very large sums of money’” were the source of his cash. Nonetheless, an investigation into his finances, including the “tens of millions of dollars [that] coursed through Epstein’s offshore companies and foundations in sometimes unusual ways” would inevitably bring Wexner even further into the mix, since “Wexner had formally delegated to Mr. Epstein virtually blanket control of his finances — the authority to sign checks, borrow money, buy and sell real estate and hire workers on his behalf” for about 16 years.

In that time, “Epstein created a complex web of investment vehicles for Wexner, then collected high fees or withdrew funds for his personal use,” per the Times. “Tax records show that many millions of dollars moved from one of Wexner’s charities to a charity that Epstein controlled.”

And even after their formal parting, ties between Wexner and Epstein lingered. In 2011, for instance, “Wexner’s charitable foundation received a $56 million contribution from a trust linked to Mr. Epstein,” according to charity records and other financial documents reviewed by the Times.

While Wexner has refused interviews, he stated in a letter this month to his family foundation,  one of the numerous Wexner-run charities on which Epstein once held a board seat, “I would not have continued to work with any individual capable of such egregious, sickening behavior as has been reported about him.” In that same letter, Wexner alleged that Epstein misappropriated “vast sums of money” from him. The funds, Wexner stated, were uncovered after he decided to sever ties with Epstein in 2007. Interestingly, the largescale misappropriation, which allegedly total well over $46 million, went unreported to the authorities, according to the Times.

With L Brands getting no small amount of flak for its ties to Epstein, the company enlisted outside legal counsel to “conduct a thorough review” of its relationship with Epstein, although the retailer noted preliminarily that it does not believe Epstein “was ever employed by nor served as an authorized representative of the company.” In his personal capacity, Wexner has reportedly enlisted counsel, Mary Jo White, a criminal defense attorney at Debevoise & Plimpton LLP and the former Securities and Exchange chairwoman.

L Brands’ stock may have rebounded after the Epstein-linked drop last month, but the company has since lost its footing again. The company’s share plummeted to $17.61 last week – the lowest they have been in nearly a decade. The performance of L Brands’ marquee lingerie brand took a toll on the group’s second-quarter earnings, the retail giant revealed. While L Brands financial performance as  a whole topped analysts’ expectations” in terms of profit, according to CNBC, it fell short on sales for the three months ending on August 3, with its $2.90 billion missing last year’s Q2 revenues of $2.98 billion.

The company has not yet revealed any findings in connection with its counsel’s Epstein-related probe.

UPDATED (October 11, 2019): In the midst of falling sales and ever-diminishing relevance, L Brands revealed that Victoria’s Secret has cut about 50 people, “ranging from senior leaders to junior staffers, at its Columbus, Ohio, headquarters,” per CNBC. The layoffs represent about 15 percent of Victoria’s Secret’s employees at the brand’s home office.

“We’re on the all-important journey to turn around the Victoria’s Secret business,” an L Brands spokesperson told CNBC in an email. “We [have] announced new leadership positions and organizational changes that help us simplify the business which allows us to be more agile. We believe these efficiencies are crucial to the evolution of our brand.”