L Brands : October Sales Report Transcript

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OCTOBER SALES SCRIPT

NOVEMBER 8, 2018

• GOOD MORNING EVERYONE. THIS IS AMIE PRESTON, CHIEF INVESTOR RELATIONS OFFICER.

• THIS IS L BRANDS' OCTOBER SALES REPORT FOR THE FOUR WEEK PERIOD ENDING NOVEMBER 3, 2018.

• AS A MATTER OF FORMALITY, I NEED TO REMIND YOU THAT ANY FORWARD LOOKING STATEMENTS I MAY MAKE TODAY ARE SUBJECT TO THE SAFE HARBOR STATEMENT FOUND IN OUR SEC FILINGS.

• NET SALES FOR THE FOUR-WEEK PERIOD ENDED NOVEMBER 3, 2018 WERE $860.5 MILLION COMPARED TO NET SALES OF $794.1 MILLION FOR THE FOUR-WEEK PERIOD ENDED OCTOBER 28, 2017.

• COMPARABLE SALES FOR THE FOUR WEEKS ENDED NOVEMBER 3, 2018 INCREASED 4% COMPARED TO THE FOUR WEEKS ENDED NOVEMBER 4, 2017.

• THE OCTOBER MERCHANDISE MARGIN RATE WAS DOWN SIGNIFICANTLY TO LAST YEAR.

• INVENTORIES PER SQUARE FOOT ENDED THE MONTH UP 10% VERSUS LAST YEAR, UP 5% ON A 2 YEAR BASIS, IN LINE WITH EXPECTATIONS. ABOUT 6 POINTS OF THE INCREASE RELATES TO THE CALENDAR SHIFT CAUSED BY THE 53-WEEK YEAR IN 2017. WE CONTINUE TO EXPECT TO END THE YEAR WITH INVENTORIES PER SQUARE FOOT UP IN THE LOW-SINGLE DIGIT RANGE.

• NET SALES WERE $2.775 BILLION FOR THE THIRD QUARTER ENDED NOVEMBER 3, 2018, AN INCREASE OF 6 PERCENT, COMPARED TO NET SALES OF $2.618 BILLION FOR THE QUARTER ENDED OCTOBER 28, 2017. COMPARABLE SALES INCREASED 4

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PERCENT FOR THE 13 WEEKS ENDED NOVEMBER 3, 2018 COMPARED TO THE 13 WEEKS ENDED NOVEMBER 4, 2017.

• WE EXPECT TO REPORT A THIRD QUARTER LOSS PER SHARE OF APPROXIMATELY $0.17. THE REPORTED LOSS PER SHARE INCLUDES A TOTAL CHARGE OF APPROXIMATELY $0.32 PER SHARE, WHICH CONSISTS OF AN APPROXIMATE PRETAX CASH CHARGE OF $20 MILLION RELATED TO THE CLOSURE OF THE HENRI BENDEL BUSINESS, AND AN APPROXIMATE PRETAX NON-CASH IMPAIRMENT CHARGE OF $80 MILLION RELATED TO CERTAIN VICTORIA'S SECRET STORE ASSETS. EXCLUDING THESE CHARGES, WE EXPECT ADJUSTED THIRD QUARTER EARNINGS PER SHARE TO BE APPROXIMATELY $0.15, COMPARED TO OUR PREVIOUS GUIDANCE OF $0.00 TO $0.05, PRINCIPALLY DRIVEN BY OUTPERFORMANCE AT BATH & BODY WORKS.

• NOW FOR THE INDIVIDUAL BRAND RESULTS.

VICTORIA'S SECRET

• VICTORIA'S SECRET OCTOBER COMPARABLE SALES WERE FLAT TO LAST YEAR, WITH LINGERIE, PINK AND BEAUTY ALL ROUGHLY FLAT FOR THE MONTH.

• THE MERCHANDISE MARGIN RATE WAS DOWN SIGNIFICANTLY TO LAST YEAR, DRIVEN BY INCREASED PROMOTIONAL ACTIVITY.

• THIRD QUARTER SALES AT VICTORIA'S SECRET DECREASED 1% TO $1.529 BILLION AND COMPS DECREASED 2%. SALES AT VICTORIA'S SECRET DIRECT INCREASED 19% TO $351.0 MILLION.

• IN NOVEMBER WE WILL FOCUS ON OUR CASUAL SLEEP COLLECTION IN THE LINGERIE BUSINESS AND HOLIDAY APPAREL IN THE PINK BUSINESS.

BATH & BODY WORKS

• AT BATH & BODY WORKS, OCTOBER COMPS WERE UP 11%, DRIVEN BY STRONG PRODUCT ACCEPTANCE.

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• THE MERCHANDISE MARGIN RATE FOR THE MONTH WAS UP TO LAST YEAR, DRIVEN BY LOWER PROMOTIONAL ACTIVITY AS WELL AS A FAVORABLE SHRINK RESULT.

• THIRD QUARTER SALES AT BATH & BODY WORKS WERE $956.2 MILLION AND COMPS INCREASED 13%. THIRD QUARTER SALES AT BBW DIRECT INCREASED 31% TO $147.9 MILLION.

• WE WILL CONTINUE OUR NEWEST CHRISTMAS FLOORSET, WHICH LAUNCHED THE LAST WEEK OF OCTOBER FEATURING FASHION AND SEASONAL NEWNESS IN OUR CORE BUSINESSES OF BODY CARE, HOME FRAGRANCE AND SOAPS AND SANITIZERS.

• WE WILL REPORT THIRD QUARTER EARNINGS AFTER THE MARKET CLOSE ON NOVEMBER 19THAND WILL CONDUCT OUR EARNINGS CALL AT 9 A.M. EASTERN ON NOVEMBER 20TH. TO LISTEN, CALL 1-866-363-4673 (INTERNATIONAL DIAL-IN NUMBER: 1-973-200-3978); CONFERENCE ID 7298606. FOR AN AUDIO REPLAY, CALL 1-855-859-2056 (INTERNATIONAL REPLAY NUMBER: 1-404-537-3406); CONFERENCE ID 7298606 OR LOG ONTO WWW.LB.COM.

• THANK YOU FOR YOUR CONTINUING INTEREST IN L BRANDS.