A Wall Street Journal report said L Brands' CEO is considering a full or partial sale of its Victoria's Secret unit
The shares of L Brands Inc (NYSE:LB) are eyeing their biggest one-day percentage in nearly 10 months, up 12.1% and trading at $23.05, after the Wall Street Journal reported that CEO Leslie Wexner is not only exploring a full or partial sale of the company's struggling lingerie unit Victoria's Secret, but is also in discussions regarding his resignation. Wexner has been CEO of L Brands since 1963 and recently came under fire for his associations with Jeffrey Epstein, who was arrested last year on trafficking charges.
L Brands is trading back near its mid-August levels in response, and is now well above its 200-day day moving average, which has served as pressure on the charts since a post-earnings bear gap all the way back in March 2018. While the stock has yet to eclipse its early July peak near the $27 level, for the year it has already added over 20%.
With disappointing holiday sales figures just in the rear view, its no wonder short sellers have been swarming. In fact, during the past 10 days, short interest has shot up 26.2% to 18.04 million shares sold short, which represents a healthy 7.9% of the stock's available float.
On the other hand, bullish sentiment in the options pits still pervades, per LB's 50-day call/put volume ratio of 5.47 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which sits in the top percentile of its annual range. Given the amount of short interest tied up in the stock, it's possible some of this call buying could be shorts seeking an options hedge against any unexpected upside.
There's pessimism among the brokerage bunch. Thirteen of the analysts in coverage consider L Brands a "hold" or worse, while only six say "strong buy." Meanwhile, the consensus 12-month price target of $21.02 is just a hair higher than last night's close.