Victoria’s Secret owner sees stock jump 40% as markets rebound

L Brands (NYSE:LB) stock jumped almost 40% as the fashion group behind Victoria’s Secret saw markets rebound after the US Senate agreed a $2trn relief package to combat the coronavirus outbreak.

The S&P 500 closed up more than 9% on Tuesday after the measures were passed, its highest one-day gain in 12 years. The Dow Jones Industrial Average rose more than 11%, notching up its biggest advance since 1933.  L Brands, which also owns Pink, and Bath & Body Works, closed up 39% at $12.75 on the S&P 500 where it is traded.

Many companies have made by double-digits gains over the last two days, while central banks have taken steps to encourage commercial banks to lend, allowing firms to keep trading.

Victoria's Secret owner sees...

L Brands said last week it would suspend part of its e-commerce business to focus on the production of soaps and hand sanitizers amid the ongoing pandemic. The Ohio-based group said it would continue with its Bath & Body Works online business with a priority on cleaning and health products where it has seen a sharp increase in demand.

Victoria’s Secret is the group’s largest brand, accounting for $6.8bn in sales last year with Bath & Body Works registering revenues of $5.2bn over the same period. However, Bath & Body Works is the faster growing of the two businesses.

The group has withdrawn its first-quarter guidance for this year, as it, like other retailers, waits to determine how the health emergency will impact the business.

Like many businesses, L Brands has seen its share price fall substantially over the last month. In February of this year, L Brands was trading near $28 per share, and over the last six weeks, it has traded under $10.

Victoria's Secret owner sees...


The company also opted to draw down a $950m credit facility from JPMorgan Chase, which left it with around $2bn in cash. L Brands is continuing to pay its 80,000 employees as they work from home.

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    Nicholas Say

    Nicholas Say is originally from Ann Arbor, Michigan, and has a long-standing interest in the global financial markets. In addition to writing, Nicholas also enjoys making arsenal condiments.

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