Victoria’s Secret owner L Brands said Tuesday it is preparing to cut 15% of its business labor force, or about 850 jobs, in a effort to trim expenses as its service takes a hit from the pandemic.
The company stated it hopes to save about $400 million yearly through its cost-cutting efforts, that include the layoffs. L Brands anticipates to see about $175 million of savings in fiscal 2020. It also expects to record about $75 million pretax severance expenses in the 2nd quarter of 2020, specifically connected to the job cuts.
Shares of the company shot up more than 6% in after-hours trading, having closed the day down less than 1%.
“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,” L Brands Chief Executive Andrew Meslow said in a statement, adding that the company is working toward improving the profitability of its embattled Victoria’s Secret lingerie business.
Since Feb. 1, the business had about 94,400 employees, 68,900 of those being part-time, according to L Brands’ newest annual filing.
Other cost-cutting steps consist of closing location, reducing inventory and working out with property owners for lease relief, the merchant said Tuesday.
L Brands in May said it planned to shut completely about 250 Victoria’s Secret and Pink shops in the U.S. and Canada in 2020, or roughly a quarter of its shops in North America.
“We would expect to have a meaningful number of additional store closures beyond the 250 that we’re pursuing this year … meaning there will be more in 2021 and probably a bit more in 2022,” Stuart Burgdoerfer, the interim CEO of Victoria’s Secret, said at the time.
The company on Tuesday also offered an initial look at its second-quarter monetary results, which are anticipated to be launched on Aug. 19.
L Brands anticipates overall net sales for the 2nd quarter to come in about 20% lower than a year back, in spite of an approximately 10% boost at Bath & Body Works. The company is expecting to publish a 40% decline at Victoria’s Secret.
It stated the majority of its stores in North America are open after being briefly shut due to the stay at home orders.
” Sales at both services have actually been strong and have actually exceeded the business’s expectations,” the business stated in its news release.
L Brands shares are up about 6% this year. The merchant has a market cap of $5.3 billion.