Parent company to the Victoria’s Secret and Bath & Body Works brands on Friday updated its forward-looking guidance, increasing its first-quarter earnings per share estimates from $0.35 to $0.45 a share to the higher range of $0.55 to $0.65 a piece. Company shares shot up nearly 8 percent at the start of the session as a result.
“We are pleased with our quarter-to-date performance at both Bath & Body Works and Victoria’s Secret,” Andrew Meslow, chief executive officer of L Brands, said in a statement. “While the current environment still presents uncertainty, we have raised our earnings guidance for the first quarter due to strong sales and margin results quarter-to-date, which also contributed to an improvement in our expectations for the remainder of the quarter.
In addition, L Brands’ board revealed plans to pay off more than $1 billion in debt in outstanding bonds, while repurchasing $500 million in company shares and reinstating the company’s annual dividend at $0.60 a share, with the first quarterly dividend to be paid this June. “L Brands took a series of actions throughout 2020 to improve financial and operational performance, which led to record third- and fourth -quarter results, increased liquidity and a year-end cash balance of $3.9 billion,” said Sarah Nash, L Brands chairperson of the board.
The strategy is just one part of L Brands’ recovery methods. Victoria’s Secret has added a string of senior-level hires over the last few months to help turn the business around while updating the assortment and marketing materials. In addition, it sold a majority stake of the Victoria’s Secret U.K. business to Next plc and closed hundreds of unprofitable stores to make way for more lucrative markets, such as Milan and Israel.