Pedestrians walk past a Victoria’s Secret store, a subsidiary of L Brands, in New York.
Craig Warga | Bloomberg | Getty images
Shares of L Brands shot up nearly 7% in premarket trading on Friday after the company raised its earnings outlook for the current quarter and said it would restore an annual dividend, pay off debt and buy back shares.
L Brands said in the press release that it plans to repay $ 1.03 billion in debt with $ 1.1 billion in cash. The company also announced a new $ 500 million share buyback plan to replace its existing program, which still has $ 79 million.
L Brands, owner of the Victoria’s Secret lingerie brand and Bath & Body Works, also said it will restore its annual dividend of 60 cents a share, starting with a quarterly dividend to be paid in June.
Building on the momentum it saw over the holiday season, L Brands now forecasts earnings per share for the first quarter to fall within a range of 55 cents to 65 cents, up from an earlier range of 35 cents to 45 cents.
CEO Andrew Meslow said in a statement that while the current retail environment remains uncertain during the Covid pandemic, the company has been able to increase its outlook due to the strong sales and profits it has delivered in the quarter-to-date.
L Brands is still working on its plans to separate Victoria’s Secret from Bath & Body Works, which is expected to be completed by August. The company has said this will be either through a spin-off or a sale to another entity. Last year, L Brands signed a deal to sell Victoria’s Secret to private equity firm Sycamore Partners. But the $ 525 million deal fell apart when the health crisis temporarily closed the company’s stores.
Shares of L Brands are up more than 180% in the last 12 months. The company has a market capitalization of $ 15.53 billion.
Find the full L Brands press release here.