L Brands Inc. increased its guidance for second-quarter earnings and said its Bath & Body Works unit would pursue a US$1.5 billion share buyback after Victoria’s Secret is spun off.
The Columbus, Ohio-based retailer said Tuesday that it expects to report earnings of US$1.20 to US$1.30 a share for the quarter, up from an expectation of 80 cents to US$1. L Brands cited higher-than-forecast profit margins amid a “strong customer response” to its merchandise and “disciplined inventory management” allowed it to forego discounts.
The company said the buyback program for the independent Bath & Body Works would replace a previous authorization for US$500 million of repurchases, which had about US$36 million left. L Brands said the chain also would target debt reduction of US$500 million.
The preliminary results indicate L Brands has momentum at both of its businesses ahead of its planned split of Victoria’s Secret from Bath & Body Works, which is scheduled for August. Bath & Body Works -- with its scented soaps and oils -- is maintaining the success it saw during the pandemic, while Victoria’s Secret is rebounding from a challenging stretch marked by sluggish sales, unflattering headlines and the departure of billionaire founder Les Wexner.
L Brands shares rose as much as 2.6 per cent during extended trading after the close of New York markets before erasing the gain. The stock has doubled in value so far in 2021.