Shares of beleaguered apparel/beauty product retailer L Brands (LB) - Get Report fell Friday, after it announced that it’s suspending its dividend and furloughing most store associates as a result of the coronavirus pandemic.
The steps represent “an effort to further strengthen its [the company’s] financial flexibility and efficiently manage through the pandemic,” L Brands said in a statement.
The furlough applies to most store associates plus those who aren’t currently working to support the online businesses or who can’t work from home. L Brands said it “will make every effort to bring these associates back to work as soon as possible.”
On March 17, L Brands closed its Bath & Body Works, Victoria’s Secret and Pink stores in the U.S. and Canada. The closures were originally scheduled to end March 29, but now the company says it doesn’t know when the stores will re-open.
L Brands said it’s greatly reducing expenses and capital expenditures. “This includes an ongoing reduction in forward inventory receipts,” it said.
Senior vice presidents and above will temporarily see their base compensation cut by 20%. Salaries for CEO Leslie Wexner and other members of the Board of Directors have been suspended.
L Brands has suffered from Wexner’s close association with deceased sex offender Jeffrey Epstein, changing consumer tastes and accusations the company mistreated women. The stock has sunk 55% in the 12 months through Friday.
L Brands agreed in February to sell a controlling stake in Victoria's Secret to private equity firm Sycamore Partners, as it focuses on its core Bath & Body Works brand. Wexner will step down as CEO and chairman after that deal transpires.
L Brands shares closed at $12.59 Friday, down 4.19%.