L Brands extends store closures, halts quarterly dividend
L Brands announced on Friday that it is extending temporary store closures at its store banners and taking steps to secure its finances, as a future with Covid-19 remains uncertain.
The Columbus, Ohio-based company said that all of its Bath & Body Works, Victoria’s Secret and Pink stores in North America will remain closed indefinitely. L Brands closed stores on March 17, and initially announced that they would remain closed through March 29, 2020.
In the meantime, it is taking additional measures to protect its financial position amid the Covid-19 crisis including suspending its quarterly cash dividend as of the second quarter of fiscal 2020, and making a "substantial reduction" in capital spending and other expenditures.
In particular, it will be temporarily reducing the base compensation of senior vice presidents and above by 20 percent, while CEO Leslie H. Wexner and other members of the Board of Directors will take no cash salary at all.
Most store associates, plus those who are not currently working to support the online businesses or who cannot work from home, will equally be furloughed as of April 5, 2020 and until further notice. Although they won’t receive pay, they will continue to receive existing healthcare benefits.
"As circumstances change, L Brands will make every effort to bring these associates back to work as soon as possible,” L Brands said, in a news statement.
It also previously announced that it was drawing down $950 million from its secured revolving credit facility “in an abundance of caution and as a proactive measure.” It now has more than $2 billion in cash.
After suspending all new e-commerce orders for Victoria’s Secret and Pink on Monday, it said it will now resume shipping. The company’s Bath & Body Works e-commerce business was not effected.
L Brands agreed last month to sell a controlling stake in its Victoria's Secret unit to investment firm Sycamore Partners, which should help alleviate losses from the lingerie market amid the Covid-19 crisis.
The private equity firm owns 55 percent of Victoria's Secret, while L Brands kept a 45 percent stake.
In response to the financial uncertainty generated by the Covid-19 pandemic, the company has withdrawn the earnings guidance it issued for the first quarter of 2020 on February 26.
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