A pedestrian walks past a shop window of Victoria’s Secret, closed and raised on Robson Street during the COVID-19 crisis on April 17, 2020 in Vancouver, Canada.
Andrew Chin | Picture of Getty
Victoria’s Secret L Brands owner said on Tuesday he was preparing to cut 15% of his corporate workforce, or about 850 jobs, in a bid to cut costs as his business took a hit from the coronavirus pandemic.
The company said it hopes to save about $ 400 million annually through cost-cutting efforts, including layoffs. L Brands expects to save approximately $ 175 million in fiscal 2020. He also expects to record about $ 75 million in tax exemptions in the second quarter of 2020, specifically related to job cuts.
Shares of the company rose by more than 6% in non-trading, closing the day by less than 1%.
“Decisions related to our workforce are incredibly complex and not easy to take, but these actions are necessary for the best positioning of our company in the long run,” said L Brands CEO Andrew Meslow in a statement, adding that the company is working on improving the profitability of the Victoria’s Secret lingerie business.
As of February 1, 2020, the company had approximately 94,400 employees, 68,900 of whom worked part-time, according to the latest annual L Brands submissions.
Other cost-cutting measures include closing stores, reducing inventories and negotiating with landlords for rent, the retailer said on Tuesday.
L Brands said in May that it plans to close about 250 Victoria’s Secret and Pink stores in the United States and Canada by 2020, or about a quarter of its stores in North America.
“We would expect to have a significant number of additional store closures in excess of the 250 we are holding this year. This means that there will be more in 2021 and possibly more in 2022,” said Stuart Burgdoerfer. , interim CEO of Victoria’s Secret, said at the time.
The company on Tuesday also offered a preliminary review of financial results in the second quarter, which are expected by August 19.
L Brands expects total net sales in the second quarter to be about 20% lower than a year ago, despite a 10% increase in Bath & Body Works. The company expects a 40% reduction on Victoria’s Secret.
He said most of its stores in North America are opening after a temporary closure due to the Covid-19 crisis.
“Sales at both companies were strong and exceeded the company’s expectations,” the company said in a statement.
According to real estate analyst BMP Simeon Siegel, L Brands will be much healthier as it becomes weaker.
“This is a classic example of a brand that has gone too far in its quest for growth,” he said. “But his income is proof that he still makes a huge contribution to consumers.”
As of July 24, the cash balance was more than $ 2.5 billion, and the amounts were not collected on the loan facility for $ 1 billion, the company added.
Shares of L Brands rose about 6% this year. The retailer has $ 5.3 billion.
The full press release from L Brands is here.