L Brands will lay off 850 employees at its home offices in Columbus and New York, reducing the corporate office staff by about 15%.
The company said in a news release July 28 the reduction in staff comes after reviewing its overhead expenses and working to decentralize and streamline shared corporate and other functions.
The layoffs are part of a cost-saving effort and to drive shareholder value. As part of L Brands’ strategy, the company is establishing Bath & Body Works as a pure-play public company and is taking steps to prepare the Victoria’s Secret Lingerie, Victoria’s Secret Beauty and PINK businesses (collectively, Victoria’s Secret) to operate as a separate, standalone company, the CJN previously reported.
The company is providing a benefits package to laid-off associates, including severance, continuing access to health benefits and outplacement services, among other support, the release said.
Local media reported that more than half of the jobs affected are in Columbus and Reynoldsburg. The layoffs are reported to take place on or near Aug. 14.
L Brands expects to save $400 million through annualized cost reductions, the company said in the release.
Other cost-saving efforts include working with suppliers to identify opportunities to reduce merchandise costs at Victoria’s Secret, which is already underway.
L Brands already announced in May it would close 250 Victoria’s Secret stores, impacting about 22% of that brand’s stores, and 50 Bath & Body Works locations – 3% of those stores – due to sales declines.
“The board and management remain committed to separating the Bath & Body Works and Victoria’s Secret businesses, as well as improving the profitability of the Victoria’s Secret business,” said Andrew Meslow, CEO of L Brands, in the release. “During the second quarter, we made meaningful progress toward these goals. 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. 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 was to sell 55% stake in Victoria’s Secret to New York-based Sycamore Partners. However, the transaction was terminated after Sycamore Partners backed out, ostensibly due to the COVID-19 pandemic.
Total company net sales for the second quarter are expected to be down approximately 20% compared to last year, including an increase of roughly 10% at Bath & Body Works and an approximate 40% decline at Victoria’s Secret.
Most Bath & Body Works and Victoria’s Secret stores in North America have reopened after closing due to the pandemic, the July 28 release said, and sales at both businesses have “been strong and have exceeded the company’s expectations.”
Leslie H. Wexner retired as CEO and chairman of L Brands May 14.
The company’s cash balance as of July 24 was more than $2.5 billion, it said in the release, with no amounts drawn under its $1 billion asset-backed loan facility.