Victoria’s Secret owner to cut head office jobs as part of cost saving plan
L Brands, the owner of Victoria’s Secret and Bath & Body Works, has said it expects to make around $400 million worth of cost reductions through its profit improvement plan for Victoria’s Secret.
This will include cutting around 850 head office jobs as it looks to reduce overhead expenses and decentralise significant shared corporate and other functions in support of creating standalone companies.
The group is also implementing previously announced plans to close 250 Victoria’s Secret stores in 2020 while also negotiating with landlords for ongoing rent relief.
L Brands is already working to reduce operating losses in its businesses in the UK and China. In the UK, this has involved the business entering into a ‘light administration’ in June to enable it to restructure lease agreements and explore the sale of the business to a joint venture or franchise partner. In China, the group has closed its unprofitable flagship store in Hong Kong and is working to either close or restructure lease terms on other unprofitable stores.
The group has also decided to establish Bath & Body Works as a pure-play public company and is preparing the Victoria’s Secret Lingerie, Victoria’s Secret Beauty and PINK businesses to operate as a separate standalone company.
Andrew Meslow, chief executive of L Brands, said: “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. 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.”
Giving an update on second quarter trading, L Brands said total company net sales for the period are expected to be down approximately 20% compared to last year, including an increase of around 10% at Bath & Body Works and an approximate 40% decline at Victoria’s Secret. Total direct channel sales at both businesses are up significantly on the same period last year, but this has been offset by a decline in store sales due to shop closures during the Covid-19 pandemic.
