L Brands Inc.’s shares surged after the U.S. retailer reinstated its dividend and raised its first-quarter earnings forecast, signaling an improving outlook ahead of a separation of its Victoria’s Secret business.

The company, which also owns Bath & Body Works, restored an annual dividend of 60 cents a share, effective in June, according to a statement Friday. It raised its guidance for first-quarter earnings to a range of 55 cents to 65 cents a share, from the previous forecast of 35 cents to 45 cents. Analysts were looking for 37 cents, according to data compiled by Bloomberg.

L Brands has said it plans to sell or spin off Victoria’s Secret by August, separating its beleaguered lingerie chain from the growing Bath & Body Works business.

Columbus, Ohio-based L Brands also announced a plan to repay US$1.035 billion in debt and created a new US$500 million share-buyback program.

The shares climbed 7.1 per cent at 9:37 a.m. in New York. The stock was up 50 per cent this year through Thursday’s close and surged 105 per cent last year.