The company’s owner L Brands has announced new steps to reduce Victoria’s Secrets’ annual costs by US$400m, after a sale of the lingerie and cosmetics company collapsed earlier this year
Victoria’s Secret is preparing to reduce its headcount by 15% as a new cost-cutting initiative takes hold.
Around 850 associates from the lingerie and cosmetics company’s head office are expected to be made redundant in an effort to reduce outgoing costs by US$400m.
In the announcement, owner L Brands said departing associates will be given a benefits package including outplacement services.
L Brands’ CEO Andrew Meslow said the group was committed to improving the profitability of the Victoria’s Secret business, which includes its beauty arm.
“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 my deepest appreciation to the impacted associates for their contributions and dedication over the years.”
The announcement comes as Victoria’s Secret and Bath & Body Works stores reopen in North America, following the ordered lockdown due to the coronavirus pandemic.
Despite the reopening, L Brands is preparing for a 40% slump in net sales at Victoria’s Secret and an approximate 10% decline in sales from Bath & Body Works.
“We are pleased to have reopened most of our retail stores in North America and to be able to service customers both online and in person,” continued Meslow.
Earlier this year, L Brands was embroiled in a legal battle with Sycamore Partners, after it attempted to back out of the purchase of the Victoria’s Secret business.
The deal, which was expected to fetch $525m, would have seen the private equity firm take over 55% of Victoria’s Secret Lingerie, Beauty and Pink fashion brand.
But following a court feud, the contract was terminated as Sycamore claimed L Brands breached the agreement by closing the company’s outlets due to Covid-19 without asking permission.
As a result, L Brands has been taking steps to separate Victoria’s Secret’s businesses from Bath & Body Works to form two different entities.
Meslow added: “The Board and management remain committed to separating the Bath & Body Works and Victoria’s Secret business, as well as improving the profitability of the Victoria’s Secret business.”