WASHINGTON (dpa-AFX) - L Brands, Inc. (LB) said it expects to deliver approximately $400 million in annualized cost reductions through profit improvement plan for Victoria's Secret and actions to decentralize and streamline shared corporate and other functions. Approximately $175 million of savings are expected to be achieved in fiscal 2020.
The plan includes a reduction of its home office headcount by approximately 15%, or about 850 associates. In the second quarter of fiscal 2020, the company expects to record pre-tax severance costs of approximately $75 million related to the headcount reductions.
Andrew Meslow, CEO 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.'
L Brands reported that most Bath & Body Works and Victoria's Secret stores in North America have now reopened. Sales at both businesses have exceeded the company's expectations. Total company net sales for the second quarter are projected 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.
The company's cash balance, as of July 24, was more than $2.5 billion, with no amounts drawn under its $1 billion asset-backed loan facility.
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