Pedestrians walk past a Victoria’s Secret store, a branch of L Brands, in New York.
Craig Warga | Bloomberg | Getty Images
L Brands shares shot up nearly 7% in pre-trading on Friday after the company increased its profit outlook for the current quarter, saying it would institute an annual dividend, pay off debt and buy back shares.
L Brands said in the press release that it intends to repay $ 1.03 billion in debt with 1.1 billion in cash on hand. The company also announced a new $ 500 million repurchase plan to replace the existing program, with $ 79 million left.
L Brands, which owns Victoria’s Secret lingerie brand and Bath & Body Works, also said it would reintroduce its annual dividend of 60 cents a share, starting with a quarterly dividend paid in June.
Based on the momentum he saw during the holidays, L Brands now predicts that earnings per share will fall within 55 cents to 65 cents in the first quarter, compared to a previous range of 35 cents to 45 cents.
CEO Andrew Meslow said in a statement that although the current retail environment remains uncertain during the Covid pandemic, the company has been able to increase its prospects due to the strong sales and profits it has seen quarterly so far.
L Brands is still working on his plans to separate Victoria’s Secret from Bath & Body Works, which he is expected to complete in August. The company said it would take place through a spin-off or a sale to another entity. Last year, L Brands entered into an agreement to sell Victoria’s Secret to private equity firm Sycamore Partners. But the $ 525 million deal fell apart as the health crisis temporarily shut down the company’s stores.
L Brands’ shares have risen more than 180% over the past 12 months. The company has a market capitalization of $ 15.53 billion.
Find the full press release from L Brands here.