The company, which also owns the Bath & Body Works chain, said it was paying back more than $1 billion in debt, reinstating its dividend, and would start buying back its stock again. The annual dividend of $0.60 per share will commence with the quarterly payout in June.
L Brands continues to explore ways to shed the Victoria's Secret chain. While a spinoff into a stand-alone company is still in the works, the possibility of a sale to private equity or some other buyer remains open. Either way, a separation will occur before the fall.
Board chair Sarah Nash said in a statement, "The actions being announced today further support our effort to decrease leverage and enhance returns to shareholders, while better positioning the Bath & Body Works and Victoria's Secret businesses for separation in August."
The retailer is repaying $1.035 billion worth of debt by calling in $285 million of its outstanding bonds that come due in February 2022, and all of the outstanding secured bonds totaling $750 million that are due in July 2025. L Brands says it will use $1.1 billion of its cash on hand to complete the repayment.
The board also authorized a new stock repurchase plan in the amount of $500 million to replace the buyback program that was suspended a year ago. That plan had $79 million remaining on it.
The dividend was also suspended last year, and the pay of executives from the senior vice president level and above was cut by 20%, while cash compensation for the board and then-chair and CEO Les Wexner was eliminated.