L Brands shares shot up nearly 7% in premarket trading Friday after the company hiked its profit outlook for the current quarter, and said it would be reinstating an annual dividend, paying down debt and buying back shares.
L Brands said in the press release that it plans to repay $1.03 billion of debt using $1.1 billion of cash on hand. The company also announced a fresh $500 million share buyback plan to replace its existing program, which has $79 million remaining on it.
L Brands, which owns the Victoria’s Secret lingerie brand as well as Bath & Body Works, also said it will reinstate its annual dividend of 60 cents per share, beginning with a quarterly dividend paid in June.
Building on the momentum it saw over the holidays, L Brands now forecasts first-quarter earnings per share to fall within a range of 55 cents to 65 cents, up from a prior range of 35 cents to 45 cents.
CEO Andrew Meslow said in a statement that, while the current retail environment remains uncertain during the Covid pandemic, the company was able to raise its outlook due to the strong sales and profits it has seen quarter-to-date.
L Brands is still forging ahead with its plans to separate Victoria’s Secret from Bath & Body Works, which it expects to complete by August. The company has said that will either be through a spinoff or a sale to another entity. Last year, L Brands had struck a deal to sell Victoria’s Secret to the private equity firm Sycamore Partners. But the $525 million agreement fell apart, as the health crisis temporarily shut the company’s stores.
L Brands shares are up more than 180% over the past 12 months. The company has a market cap of $15.53 billion.
Find the full press release from L Brands here.
Source: Business - cnbc.com
