Pedestrians pass a Victoria’s Secret store, a subsidiary of L Brands, in New York.
Craig Warga | Bloomberg | Getty Images
L Brands shares rose nearly 7% in premarket trading on Friday after the company raised its profit outlook for the current quarter and said it would restore an annual dividend by paying off debt and buying shares.
L Brands said in a press release that it intends to repay $ 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 $ 79 million program.
L Brands, which owns the Victoria’s Secret lingerie brand, as well as Bath & Body Works, said it will restore its 60-cent annual dividend, starting with a quarterly dividend paid in June.
Based on the momentum he saw during the holidays, L Brands now forecasts that earnings per share in the first quarter will range from 55 cents to 65 cents, compared to a previous 35 cents to 45 cents. cents.
CEO Andrew Meslow said in a statement that while the current retail environment remains uncertain during the Covid pandemic, the company has managed to raise its outlook due to strong sales and profits to date. at the moment.
L Brands continues with its plans to separate Victoria’s Secret from Bath & Body Works, which it expects to complete by August. The company said it would be either a spinoff 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 fell apart as the health crisis temporarily shut down the company’s stores.
L Brands shares have risen by more than 180% in the last 12 months. The company has a market cap of $ 15.53 billion.
Find the full press release from L Brands here.