Victoria's Secret (VSCO) stock rallies after share buyback plan

December 29, 2021 11:19 AM PST | By Rupam Roy

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Victoria's Secret (VSCO) stock rallies after share buyback plan — Image source: Peshkova,Shutterstock

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Highlights

Victoria's Secret (VSCO) announced a share buyback plan on Wednesday.

The company entered into an accelerated share repurchase agreement (ASR) with Goldman Sachs & Co. LLC.

The firm reiterated its sales and earnings guidance for the fourth quarter of fiscal 2021

Shares of Victoria’s Secret & Co. (NYSE:VSCO) were up over 11% on Wednesday after the lingerie retailer announced a share buyback plan and robust sales during the holiday season.

The Reynoldsburg, Ohio-based company said that it entered into an accelerated share repurchase agreement (ASR) with Goldman Sachs & Co. LLC to buy back US$250 million worth of common stocks while reiterating its sales and earnings guidance for the fourth quarter.

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Under the agreement, the company will initially pay US$250 million to Goldman Sachs, and it will receive an initial delivery of around 4.1 million shares on Dec 31, 2021.

However, the final number of buyback shares will depend on the volume-weighted average price of the company’s common stocks during the term of the agreement, excluding discount and subject to adjustments under the term of the deal.

The final settlement of the agreement is expected to be closed in Q1, FY22.

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Victoria’s Secret (VSCO) stock rallied after a share repurchase announcement

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Victoria’s Secret & Co’s (NYSE:VSCO) stock price and financials

VSCO stocks were priced at US$54.36 at 11:32 am ET on Dec 29, up 11.90% from their previous close. The company has a market cap of US$4.77 billion, with a forward P/E one year of 6.90.

The stock saw the highest price of US$76.00 and the lowest price of US$39.79 in the last 52 weeks. Its trading volume was 644,751 on Dec 28.

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The company’s net sales were US$1.441 billion in Q3, FY21, up 7% from US$1.353 billion in the year-ago quarter. Its net income came in at US$75.2 million, or US$0.81 per diluted share, compared to US$143.4 million, or US$1.62 per diluted share in Q3, F20.

For the fourth quarter of fiscal 2021, the company expects its sales to grow in the range of flat to up 3% from US$2.100 billion in the same quarter of the previous year. It also projected its diluted earnings per share to be between US$2.35 and US$2.65.

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Victoria's Secret is a leading retailer of women's clothing, personal, and beauty care products. It primarily sells its products under the Victoria's Secret and PINK brands.

Bottomline

The stock saw significant gains in recent quarters. It rose 14.31% YTD. On the other hand, the S&P 500 consumer discretionary sector surged 24.32% YTD while increasing 13.27% QTD, implying a steady demand for consumer discretionary goods in the market.

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