L Brands hikes outlook, brings back dividend; prepares for business separation

L Brands Inc. sees brighter days ahead.

The retailer updated its outlook and announced several actions that it said will better position its Victoria’s Secret and Bath & Body Works businesses for separation by August. The company plans to spin off or sell Victoria’s Secret, which includes the lingerie, beauty and Pink divisions. 

L Brands raised its guidance for the current quarter, and said it would reinstate its annual dividend and buy back shares. L Brands also said it would repay $1.03 billion of debt using $1.1 billion of cash on hand. 

The company announced a new $500 million share buyback plan that will replace its existing program which has $79 million remaining on it. L Brands will reinstate its annual dividend of $0.60 a share, starting with the quarterly dividend to be paid in 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, chair, L Brands. “The actions being announced today further support our effort to decrease leverage and enhance returns to shareholders, while better positioning the Bath & Body Works and Victoria’s Secret businesses for separation in August.”

The retailer is also increasing its first-quarter earnings guidance from a range of $0.35 to $0.45 to a range of $0.55 to $0.65, above analysts’ estimates of $0.43.

“We are pleased with our quarter-to-date performance at both Bath & Body Works and Victoria’s Secret,” said CEO Andrew Meslow. “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.”