Victoria’s Secret (VSCO) stock climbs 15% on repurchase plan
20:52, 29 December 2021
Victoria’s Secret stock was up as much as 15.2% on Wednesday after the American lingerie company reaffirmed its fourth quarter guidance and accelerated its share repurchase programme.
Sales from the holiday season between Thanksgiving and Christmas were encouraging and is prompting the company to announce its first ever share repurchase, CEO Martin Waters said in a press release.
The stock climbed as high as $55.97 per share up from the prior day’s close at $48.58 per share. However, by the end of the day, the stock had settled at around $54.94 per share for a 13% gain on the day. The company’s stock is up 29% year to date.
Financial guidance
With holiday sales in the rear-view mirror, Victoria’s Secret is reaffirming the fourth quarter guidance it set back on 17 November.
Sales are expected to be flat to up 3% versus last year’s fourth quarter sales of $2.1bn (£1.55bn), according to the press release. Additionally, operating income is expected to come in at a range of $295m–$335m and diluted earnings per share to be in a range of $2.35–$2.65.
The accelerated repurchase agreement is for $250m of Victoria Secret common stock. The company will give the funds to Goldman Sachs, which will deliver 4.1 million shares on 31 December. The remainder of the repurchases will be made in the first quarter of 2022, according to the release.
“Over the past few months, we have stabilised our business and created a platform for future growth while generating significant cash flow,” Waters said in the press release. “We believe this share repurchase reflects our confidence in the company and is another step on our journey to create long-term, sustainable value for our shareholders.”
Read more: Victoria Secret’s (VSCO) sales up despite by shipping backlogs
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