L Brands Falls After Founder Wexner Leads Secondary Offering

L Brands Inc. fell as much as 3.2% in extended trading Tuesday after billionaire founder Leslie Wexner and other holders embarked on a secondary offering of 20 million shares.

The Columbus, Ohio-based retailer will buy back 10 million shares from one of the shareholders, it said in a statement. JPMorgan is managing the offering.

The announcement followed an increase in L Brands’ guidance for its second-quarter earnings. The company also said its Bath & Body Works unit would pursue a $1.5 billion share buyback after Victoria’s Secret is spun off.

The company said it expects to report earnings of $1.20 to $1.30 a share for the quarter, up from an expectation of 80 cents to $1. L Brands cited higher-than-forecast profit margins amid a “strong customer response” to its merchandise and said “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 $500 million of repurchases, which had about $36 million left. The repurchase of 10 million of the offered shares is part of the new authorization. L Brands said the chain also would target debt reduction of $500 million.

Building Momentum

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 Wexner’s departure.

L Brands shares initially rose during extended trading after the close of New York markets before sliding after the company announced the offering. Through Tuesday’s close, the stock has doubled in value in 2021.

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