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Some retail outlets that were already reeling financially due to the dramatic growth in online shopping now look to be falling victim to the coronavirus pandemic, including upscale lingerie franchise Victoria’s Secret.
The outlet’s owner, L Brands, announced this week that it will close 250 Victoria’s Secret stores for good in the coming months, according to reports.
In addition, the company warned that closures of the lingerie brand are most likely the first in a series of additional cost-cutting measures aimed at reorganizing and downsizing in a period of economic contraction, noting that some of its 850 additional stores could also shutter over the next couple of years.
Stuart Burgdoerfer, the interim CEO of Victoria’s Secret, said Thursday that the closures are vital to L Brands’ long-term economic viability.
“We would expect to have a meaningful number of additional store closures beyond the 250 that we’re pursuing this year, meaning there will be more in 2021 and probably a bit more in 2022,” he told analysts, the New York Daily News reported.
Victoria’s Secret has 1,091 stores in the United States and Canada; there are 909 in the U.S. and 144 Pink stories. The closures involve 235 U.S. Victoria’s Secret stores and three Pink stories; 13 of the brand’s 38 stores in Canada will close.
L Brands also announced that it will close 50 Bath & Body Works stores, most of which are located in shopping malls that have been bereft of foot traffic due to coronavirus-related shutdown orders.
And though the franchise faces the loss of some outlets, it nevertheless posted a solid first quarter in earnings as online revenue exploded by 85 percent over the same period last year, no doubt because more Americans were sheltering in place due to COVID-19.
L Brands also said it expected to see sales of its sanitizers triple to $300 million.
But that said, overall the company’s sales dipped 37 percent over the first quarter because most of its physical retail outlets have been closed since March, adding to financial woes after a $500 million plan to take L Brands private cratered just weeks ago.
The company had already planned to sell off a 55-percent stake in Victoria’s Secret to a private equity firm, but that deal fell through in April during the early pandemic-related closures when the firm backed out.
News of the demise of Victoria’s Secret comes after J.C. Penny’s announced it would close an additional 242 locations and Pier 1 announced it would be closing all of its remaining retail outlets, USA Today reported.
The J.C. Penny’s closures amount to a shuttering of 29 percent of the brand’s remaining retail outlets, part of the company’s bankruptcy plan.
In a Wednesday press release, L Brands said the company “remains committed to establishing Bath & Body Works as a pure-play public company and is taking the necessary steps to prepare the Victoria’s Secret Lingerie, Victoria’s Secret Beauty and PINK businesses to operate as a separate, standalone company.”
The company added that it’s now working to reopen stories ordered closed as part of coronavirus mitigation efforts.
Overall, job losses in the U.S. have been horrendous. The Associated Press noted Friday that, according to U.S. Department of Labor figures, nearly 39 million Americans have sought first-time jobless benefits since March, when coronavirus-related business closures began.
That said, the AP also noted that there are signs of renewed business activity around the country as states begin their reopening processes.
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