"We believe the separation of Victoria's Secret Lingerie, Victoria's Secret Beauty and PINK into a privately held company provides the best path to restoring these businesses to their historic levels of profitability and growth, " said Wexner in a prepared statement.
"Sycamore, which has deep experience in the retail industry and a superior track record of success, will bring a fresh perspective and greater focus to the business."
Bath & Bodywork, which has been a bright spot, is now mostly a candle business, says Randal J. Konik, an analyst at Jefferies.
"The (Victoria's Secret) brand has lost its way, while the lingerie market is not large or high growth, and has become commoditised," Konik wrote Thursday.
"Furthermore, with athleisure taking over, the need for regular bras continues to wane."
Victoria's Secret lit up runways and clogged up the internet with its supermodels and an annual television special that mixed fashion, beauty and music.
That glamour has faded and so have sales. The show has been pulled from network television and shares of Victoria's Secret, which went for triple digits less than five years ago, now cost a quarter of that.
Sales at Victoria's Secret stores are in decline because competition is increasing and tastes are changing. Rivals like Adore Me and ThirdLove, which have sprouted up online, offer more options for diverse body types.
Victoria's Secret suffered a 12 per cent drop in same-store sales during the most recent holiday season. L Brands said Thursday that same-store sales declined 10 per cent at Victoria's Secret during the fourth quarter.
The company has been beset by allegations of a toxic work environment and its founder recently apologised for his ties to Jeffrey Epstein, who was found hanged in prison after being indicted on sex-trafficking charges.
Epstein started managing Wexner's money in the late 1980s and helped straighten out the finances for a real estate development backed by Wexner in a wealthy suburb of Columbus. Wexner has said he completely severed ties with Epstein nearly 12 years ago and accused him of misappropriating "vast sums" of his fortune.
Wexner offered an apology at the opening address of L Brands' annual investor day last fall, saying he was "embarrassed" by his former ties with Epstein.
Wexner is the longest-serving CEO of an S&P 500 company. He founded what would eventually become L Brands in 1963 with The Limited retail store, according to the company's website. Wexner owns approximately 16.71 per cent of L Brands, according to FactSet.
Sycamore has about $10 billion (A$15 billion) in assets under management. The firm's investment portfolio includes retailers such as Belk, Coldwater Creek, Hot Topic and Talbots.
"The separation of Victoria's Secret into a private entity will enable L Brands to reduce debt and focus on its strong core business of Bath & Body Works, which represents over 80 per cent of its operating income," said Moody's vice president Christina Boni.
