L Brands cuts spring inventory, not paying rent on stores

By

Jennifer Braun

Published
May 1, 2020

L Brands announced on Thursday that it has amended its revolving credit facility, among other measures, to ensure liquidity in light of the ongoing coronavirus pandemic.

Victoria’s Secret parent company said that it was reducing its 2020 capital expenditures from its original forecast of approximately $550 million to approximately $250 million. 

It equally announced that it was reducing its spring inventory receipts by approximately 45 percent at Victoria’s Secret and 20 percent at Bath & Body Works versus last year.

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The Columbus, Ohio-based apparel group confirmed its not paying rent as the Covid-19 pandemic continues to force store closures across North America and globally. 

Since the beginning of the Covid-19 crisis, L Brands has announced a number of measures to strengthen its financial flexibility 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 is 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, have been furloughed since April 5, 2020. 

Earlier this month, buyout firm Sycamore Partners disclosed it had walked away from a $525 million deal to acquire a majority stake in Victoria’s Secret. 

L Brands has since filed a legal complaint against Sycamore Partners. The group said Sycamore tried to renegotiate the purchase price of the 55 percent stake, before sending a termination notice.