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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The group has withdrawn its first-quarter guidance for this year, as it, like other retailers, waits to determine how the health emergency will impact the business.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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    All trading carries risk. Views expressed are those of the writers only. Past performance is no guarantee of future results. The opinions expressed in this Site do not constitute investment advice and independent financial advice should be sought where appropriate. This website is free for you to use but we may receive commission from the companies we feature on this site.
    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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