Please ensure Javascript is enabled for purposes of website accessibility

Why Shares of L Brands Are Down Again Today

By John Rosevear - Mar 17, 2020 at 12:11PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The company is moving to minimize coronavirus losses.

What happened

Shares of L Brands (BBWI 3.57%) were sharply lower in midday trading on Tuesday, after the company said that it will temporarily close stores and draw down a line of credit in response to the coronavirus outbreak.

As of 1 p.m. EDT, L Brands' shares were down about 17% from Monday's closing price.

So what

L Brands is the parent company of the Victoria's Secret, Pink, and Bath and Body Works retail chains. The company said on Tuesday that all of its stores in the United States and Canada will close immediately, and will stay closed though at least March 29.

The entrance to a Victoria's Secret mall store.

L Brands has shut down all of its stores in the U.S. and Canada until March 29. Image source: L Brands.

The company also said that it has drawn down $950 million from its $1 billion revolving line of credit, in a proactive measure to ensure that it has the cash to weather the effects of the novel coronavirus pandemic. Including the drawdown amount, the company currently has over $2 billion in cash on hand, it said. 

Retailers have scrambled to minimize losses amid a steep decline in store traffic since the beginning of March. Consumers are heeding health authorities' advice to practice social distancing to slow the spread of COVID-19, staying home except for essential errands whenever possible. 

Now what

Not surprisingly under the circumstances, L Brands has also withdrawn the guidance for 2020 that it provided to investors during its earnings call on Feb. 27. The company did not give a revised outlook on Tuesday. 

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Bath & Body Works, Inc. Stock Quote
Bath & Body Works, Inc.
BBWI
$27.88 (3.57%) $0.96

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
316%
 
S&P 500 Returns
112%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 07/03/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.