L Brands, the owner of Bath & Body Works and Victoria’s Secret, will eliminate approximately 15% or around 850 jobs at its corporate headquarters.
The company announced its decision after completing its previously announced review of its home office organizations. The job cuts are part of its effort to significantly reduce overhead expenses amid the COVID-19 pandemic, which forced businesses to shut down and incur losses.
L Brands said its employees who will be laid off will receive a comprehensive benefits package including severance, continuing access to health insurance, outplacement services, and other support.
In a statement on Tuesday, L Brands CEO Andrew Meadow said, “Decisions relating to our workforce are incredibly difficult and not taken lightly, but these actions are necessary to best position our company for the long-term.”
He added, “On behalf of the Board and management team, I’d like to extend our deepest appreciation to the impacted associates for their contributions and dedication over the years.”
L Brands to close 250 Victoria’s Secret stores
Aside from the job cuts, L Brands will also reduce Victoria’s Secret store selling costs by changing its management structure and labor model. It will also implement its previously announced plan to close 250 Victoria’s Secret stores this year while negotiating with landlords for ongoing rent relief.
L Brands is also working with suppliers to reduce its merchandise costs and increase its merchandise margin rates at Victoria’s Secret. The company said its Spring inventory receipts were 45% lower than last year and Fall receipts were approximately 50% down compared to last year.
Additionally, L Brands is taking steps to reduce the operating losses of its company-owned business in China and the United Kingdom.
The company is expecting to save around $400 million from its cost reduction measures annually. It is predicting to end fiscal 2020 with $175 million in savings and to record pretax severance costs related to its workforce reduction.
L Brands committed to separating Bath & Body Works and Victoria’s Secret
Meadow also stated on Tuesday that L Brands’ Board and management remain committed to separating the Bath & Body Works and Victoria’s Secret businesses.
The company aims to drive long-term shareholder value by establishing Bath & Body Works as a pure-play public company and Victoria’s Secret as a separate standalone company.
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