Pedestrians walk past a Victoria’s Secret store in New York, a subsidiary of L Brands.
Craig Warga | Bloomberg | Getty Images
L Brands shares rose nearly 7% in premarket trading on Friday after the company raised its earnings outlook for the current quarter and announced it would reintroduce an annual dividend, pay off debt and buy back shares.
L Brands announced in a 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 has $ 79 million remaining.
The company, which owns lingerie brand Victoria’s Secret as well as Bath & Body Works, also said it will reinstate its annual dividend of 60 cents a share, starting with a quarterly dividend paid out in June.
Building on the momentum of the holidays, L Brands forecasts earnings per share in the range of 55 to 65 cents for the first quarter, from 35 to 45 cents previously.
CEO Andrew Meslow said in a statement that while the current retail environment remains uncertain during the Covid pandemic, the company has improved its outlook due to the strong sales and earnings it has posted since the quarter.
L Brands is continuing its plans to separate Victoria’s Secret from Bath & Body Works, which are expected to be completed in August. The company has announced that this will either be done through a spin-off or a sale to another company. Last year, L Brands signed a deal to sell Victoria’s Secret to private equity firm Sycamore Partners. However, the $ 525 million deal fell apart when the health crisis temporarily shut down the company’s operations.
L Brands stocks are up more than 180% in the past 12 months. The company has a market capitalization of $ 15.53 billion.
The full press release from L Brands can be found here.