Specialty clothing retailer Victoria’s Secret & Co. (NYSE: VSCO) recently revealed that it has entered into an accelerated share repurchase agreement to repurchase the company’s common stock worth $250 million from Goldman Sachs.
Following the news, shares of the company rose 12.2% on Wednesday. The stock further added to its gains and closed at $54.85 in the extended trading session.
Details of the Plan
Under the terms of the repurchase agreement, initially, the company will make a payment of $250 million to Goldman Sachs for about 4.1 million shares of the company’s common stock on December 31, 2021.
The total number of shares to be repurchased will hinge on the volume-weighted average price of the company’s common stock, subject to some discount and terms.
The final settlement of the agreement is likely to be completed in the first quarter of 2022.
Management Commentary
The CEO of Victoria’s Secret, Martin Waters, said, “Our financial stability and cash flow potential are pillars of strength and competitive advantages. With the unanimous support of our Board of Directors, we are announcing our first-ever share repurchase. We believe this share repurchase reflects our confidence in the Company and is another step on our journey to create long-term, sustainable value for our shareholders.”
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Price Target
Recently, Morgan Stanley analyst Kimberly Greenberger reiterated a Hold rating on the stock. The analyst, however, lowered the price target from $69 to $54, which implies slight downside potential from current levels.
Consensus among analysts is a Strong Buy based on 5 Buys and 1 Hold. The average Victoria’s Secret price target of $81.83 implies upside potential of 50.2% from current levels. Shares have gained 28.2% over the past year.
Website Traffic
TipRanks’ Website Traffic Tool, which uses data from SEMrush Holdings (SEMR), the world’s biggest website usage monitoring service, offers insight into Victoria’s Secret’s performance this quarter.
According to the tool, the website of Victoria’s Secret recorded a 21.42% monthly fall in global visits in November, compared to the same period last year. Moreover, year-to-date, website traffic has declined 20.76%, compared to the previous year. Download the mobile app now, available on iOS and Android.
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