Victoria’s Secret and Co. has signed an accelerated share repurchase arrangement (“ASR”), with Goldman Sachs &. Co. LLC (“Goldman Sachs”) will repurchase 250 millions dollars of common stock. Victoria’s Secret also confirmed fourth quarter sales, operating income and earnings guidance.
Victoria’s Secret will pay Goldman Sachs an initial payment of 250,000,000 dollars. On December 31, 2021, the company will deliver approximately 4.1 million shares. The volume-weighted average stock price for the company during the term of ASR will determine the final number of shares that can be repurchased. This discount may be adjusted according to the ASR. The final settlement of ASRs is expected to take place in the first quarter 2022.
Victoria’s Secret reiterated its fourth quarter guidance on November 17, 2021. It forecasted that sales would be flat to up 3% compared to last year’s fourth quarter sales of 2.1 Billion dollars. Operating income was expected to range from 295 million to 335 million and diluted earnings per share between 2 dollars and 35cs and 2 dollars and 65cs.
Martin Waters, CEO, stated that he was very happy with the fourth quarter performance and believes that there are solid plans for the holiday season. “Particularly encouraging was our sales growth over Thanksgiving weekend and the rush of customers as we approached December 25th. As we start our semi-annual sales and celebrate the positive stimulus that had an impact on sales last January, our stores have a strong inventory position. Our businesses have performed well across the board, with our stores channel being a strong point for our results. Our teams have performed well and remained focused on the things we can control in this difficult supply chain environment. I couldn’t be prouder of their efforts.”
He said that “Over the last few months, we had stabilized our business and created an opportunity for future growth, while also generating significant cash flow. Our financial stability, cash flow potential and competitive advantages are the foundations of our strength. We are pleased to announce our first ever share repurchase with the unanimous support from our board of directors. This share repurchase is a sign of our trust in the Company, and another step in our quest to create long-term sustainable value for shareholders.”