Victoria’s Secret parent L Brands shares rallied Thursday after it raised its quarterly outlook, saying it had strong sales in January, and reiterated plans to separate its businesses.
It also announced longtime CFO Stuart Burgdoerfer’s plans to retire in August. A search is underway for his replacement.
Burgdoerfer had been serving as interim CEO of Victoria’s Secret. He will immediately be replaced in that role by Martin Waters, who is currently CEO of Victoria’s Secret Lingerie.
The company increased its fourth-quarter earnings guidance from $2.70 to $2.80 per share to $2.95 to $3.00 per share. It said it expects same-store sales to increase by 10% in the quarter, which includes a 22% increase at Bath & Body Works and a 3% drop at Victoria’s Secret.
Shares closed at $48.07 on Thursday, up more than 9%. They touched a 52-week high of $49.12 in trading earlier in the day. As of Thursday’s close, they have risen about 102% over the past year, bringing the company’s market value to $13.37 billion.
L Brands said it plans to separate its two brands, Victoria’s Secret and the faster-growing Bath & Body Works, by August.
In a news release, the company said its board received updates from its financial advisors, Goldman Sachs and JPMorgan, at a January meeting and is considering a spinoff of Victoria’s Secret into a public company or the sale of the business.
L Brands struck a deal to sell Victoria’s Secret last year, but it fell apart. Private equity firm Sycamore Partners agreed to acquire the majority stake in Victoria’s Secret for $525 million, a move that would have taken the brand private. It was scrapped in May, however, as the pandemic temporarily shuttered stores and added to Victoria’s Secret’s challenges.
The company has been going through a reorganization as it tries to stabilize its flagship brand. It’s benefited from strong sales at its other retail chain, Bath & Body Works, during the pandemic, as Americans stock up on soap and hand sanitizer.
Last month, it reported a stronger-than-expected holiday season, with same-store sales growing 5% for the nine weeks ended Jan. 2, as shoppers bought pajama pants and candles. Its same-store sales dropped 3% during the comparable nine-week period a year prior.
The company will report its fourth-quarter earnings results on Feb. 24.
Source: Business - cnbc.com
