Pedestrians pass a Victoria’s Secret store, a subsidiary of L Brands, in New York.
Craig Warga | Bloomberg | Getty Images
L Brands’ shares soared nearly 7% in pre-market trading on Friday after the company raised its profit outlook for the current quarter, and said it would reinstate an annual dividend by paying off debt and repurchasing shares.
AL Brands said in the press release that it plans to pay $ 1.03 billion in debt using $ 1.1 billion in cash. The company also announced a new $ 500 million share buyback plan to replace its existing program, which has $ 79 million remaining in it.
L Brands, owner of lingerie brand Victoria’s Secret, as well as Bath & Body Works, also said it will reinstate its annual dividend of 60 cents per share, starting with a quarterly dividend paid in June.
Taking advantage of the momentum it saw during the holiday, L Brands now predicts that first quarter earnings per share will fall in the range of 55 cents to 65 cents, compared to a previous range of 35 cents to 45 cents.
CEO Andrew Meslow said in a statement that, while the current retail environment remained uncertain during the Covid pandemic, the company was able to raise its outlook due to the strong sales and profits it has had in the quarter so far.
L Brands is still moving forward with its plans to separate Victoria’s Secret from Bath & Body Works, which it hopes to complete in August. The company said it will be through a spin-off or a sale to another entity. Last year, L Brands struck a deal to sell Victoria’s Secret to private equity firm Sycamore Partners. But the $ 525 million deal was undone, as the health crisis temporarily closed the company’s stores.
L Brands’ shares have risen more than 180% in the past 12 months. The company has a market value of US $ 15.53 billion.
Find the complete L Brands press release here.