L Brands Layoffs 2020: 850 Corporate Employees Cut From Victoria’s Secret, Bath & Body Works

L Brands (LB), the owners of the Victoria’s Secret and Bath & Body Works brands, said it will lay off about 850 workers within its corporate offices. The reduction in staff accounts for 15% of L Brand’s total corporate workforce and is expected to save about $400 million, including the other cost measures the company is undertaking.

L Brands said it will also manage its inventories with more “discipline” as it looks to reduce merchandise costs for Victoria’s Secret. The retailer will also move forward with the closure of 250 Victoria’s Secret stores in 2020 and is negotiating with its landlords at existing stores on rent relief.

L Brands has been under pressure to revive Victoria’s Secret even before a deal with Sycamore Partners to purchase the brand fell through. The company has looked to make Victoria’s Secret more women inclusive while it looks to spin off Bath & Body Works into its own entity.

Laid-off employees will receive a comprehensive benefits package, including severance and access to health benefits and outplacement services. A total of $175 million is expected to be saved in fiscal 2020 with pretax severance cost of about $75 million related to the corporate reductions.

“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,” Andrew Meslow, CEO of L Brands, said in a statement.

“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.”

L Brands, which closed all of its stores in March amid the coronavirus pandemic, said it has reopened the majority of its locations in North America. The company has seen strong sales for both brands but said it expects net sales for Q2 of about 20% compared to a year earlier.

The decline accounts for a 40% decrease in sales at Victoria’s Secret and an increase in sales of about 10% at Bath & Body Works. The company said it has more than $2.5 billion in cash on hand, with nothing drawn from its $1 billion revolving credit facility.

Shares of L Brands were trading at $25.47 as of 2:26 p.m. ET, up $6.35 or 33.20%