Fourth Quarter and Full-Year
Board of Directors Authorizes New Share Repurchase Program
Fourth Quarter 2023 Results
The company reported net sales of
The company reported earnings from continuing operations per diluted share of
Reported fourth quarter 2023 results include a
Excluding these significant items, adjusted fourth quarter 2023 earnings from continuing operations per diluted share was
At the conclusion of this press release is a reconciliation of reported‐to‐adjusted results, including a description of the significant items.
Full-Year 2023 Results
Net sales decreased 1.7% to
The company reported earnings from continuing operations per diluted share of
Reported full-year 2023 results include a
Excluding these significant items, adjusted full-year 2023 earnings from continuing operations per diluted share was
2024 Outlook
For fiscal 2024, the company is forecasting net sales to range between a decline of 3.0% to flat relative to
The company expects first quarter 2024 net sales to decline 4.5% to 2.0% compared to
The company’s first quarter and full-year outlook excludes the impact of any future debt repurchase activity.
Earnings Call and Additional Information
ABOUT
Home of America’s Favorite Fragrances®,
Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995
We caution that any forward-looking statements (as such term is defined in the Private Securities Litigation Reform Act of 1995) contained in this press release or made by our company or our management involve risks and uncertainties and are subject to change based on various factors, many of which are beyond our control. Accordingly, our future performance and financial results may differ materially from those expressed or implied in any such forward-looking statements. Words such as “estimate,” “project,” “plan,” “believe,” “expect,” “anticipate,” “intend,” “planned,” “potential,” “target,” “goal” and any similar expressions may identify forward-looking statements. Risks associated with the following factors, among others, in some cases have affected and in the future could affect our financial performance and actual results and could cause actual results to differ materially from those expressed or implied in any forward-looking statements included in this press release or otherwise made by our company or our management:
- general economic conditions, inflation and deflation, consumer confidence, consumer spending patterns and market disruptions including pandemics or significant health hazards, severe weather conditions, natural disasters, terrorist activities, financial crises, political crises or other major events, or the prospect of these events;
- the seasonality of our business;
- the anticipated benefits from the Victoria’s
Secret & Co. spin-off may not be realized; - our ability to attract, develop and retain qualified associates and manage labor-related costs;
- difficulties arising from turnover in company leadership or other key positions;
- the dependence on store traffic and the availability of suitable store locations on appropriate terms;
- our continued growth in part through new store openings and existing store remodels and expansions;
- our ability to successfully operate and expand internationally and related risks;
- our independent franchise, license, wholesale and other distribution-related partners;
- our direct channel business;
- our ability to protect our reputation and our brand image;
- our ability to attract customers with marketing, advertising and promotional programs;
- our ability to maintain, enforce and protect our trade names, trademarks and patents;
- the highly competitive nature of the retail industry and the segments in which we operate;
- consumer acceptance of our products and our ability to manage the life cycle of our brand, develop new merchandise and launch new product lines successfully;
- our ability to source, distribute and sell goods and materials on a global basis, including risks related to:
- political instability, wars and other armed conflicts, environmental hazards or natural disasters;
- significant health hazards or pandemics, which could result in closed factories and/or stores, reduced workforces, scarcity of raw materials, and scrutiny or embargoing of goods produced in impacted areas;
- duties, taxes and other charges;
- legal and regulatory matters;
- volatility in currency exchange rates;
- local business practices and political issues;
- delays or disruptions in shipping and transportation and related pricing impacts;
- disruption due to labor disputes; and
- changing expectations regarding product safety due to new legislation;
- our ability to successfully complete environmental, social and governance initiatives, and associated costs thereof;
- our geographic concentration of third-party manufacturing facilities and our distribution facilities in central
Ohio ; - our reliance on a limited number of suppliers to support a substantial portion of our inventory purchasing needs;
- the ability of our vendors to deliver products in a timely manner, meet quality standards and comply with applicable laws and regulations;
- the spin-off of Victoria’s
Secret & Co. may not be tax-free forU.S. federal income tax purposes; - fluctuations in foreign currency exchange rates;
- fluctuations in product input costs;
- fluctuations in energy costs;
- our ability to adequately protect our assets from loss and theft;
- increases in the costs of mailing, paper, printing or other order fulfillment logistics;
- claims arising from our self-insurance;
- our and our third-party service providers’ ability to implement and maintain information technology systems and to protect associated data;
- our ability to maintain the security of customer, associate, third-party and company information;
- stock price volatility;
- our ability to pay dividends and make share repurchases under share repurchase authorizations;
- shareholder activism matters;
- our ability to maintain our credit ratings;
- our ability to service, repurchase or refinance our debt and maintain compliance with our restrictive covenants;
- our ability to comply with laws, regulations and technology platform rules or other obligations related to data privacy and security;
- our ability to comply with regulatory requirements;
- legal and compliance matters; and
- tax, trade and other regulatory matters.
We are not under any obligation and do not intend to make publicly available any update or other revisions to any of the forward-looking statements contained in this press release to reflect circumstances existing after the date of this press release or to reflect the occurrence of future events even if experience or future events make it clear that any expected results expressed or implied by those forward-looking statements will not be realized. Additional information regarding these and other factors can be found in “Item 1A. Risk Factors” in our 2022 Annual Report on Form 10-K, as filed with the
For further information, please contact:
Investor Relations
InvestorRelations@bbw.com
Media Relations
Communications@bbw.com
CONSOLIDATED STATEMENTS OF INCOME | |||||||||||||||
(Unaudited) | |||||||||||||||
(In millions, except per share amounts) | |||||||||||||||
Fourth Quarter | Full-Year | ||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||
(14 weeks) | (13 weeks) | (53 weeks) | (52 weeks) | ||||||||||||
$ | 2,912 | $ | 2,889 | $ | 7,429 | $ | 7,560 | ||||||||
Costs of Goods Sold, Buying and Occupancy | (1,575 | ) | (1,639 | ) | (4,193 | ) | (4,305 | ) | |||||||
Gross Profit | 1,337 | 1,250 | 3,236 | 3,255 | |||||||||||
General, Administrative and Store Operating Expenses | (641 | ) | (597 | ) | (1,951 | ) | (1,879 | ) | |||||||
Operating Income | 696 | 653 | 1,285 | 1,376 | |||||||||||
Interest Expense | (86 | ) | (87 | ) | (345 | ) | (348 | ) | |||||||
Other Income | 12 | 10 | 81 | 17 | |||||||||||
Income from Continuing Operations Before Income Taxes | 622 | 576 | 1,021 | 1,045 | |||||||||||
Provision for Income Taxes | 43 | 148 | 143 | 251 | |||||||||||
Net Income from Continuing Operations | 579 | 428 | 878 | 794 | |||||||||||
Income from Discontinued Operations, Net of Tax | — | 6 | — | 6 | |||||||||||
Net Income | $ | 579 | $ | 434 | $ | 878 | $ | 800 | |||||||
Net Income per Diluted Share | |||||||||||||||
Continuing Operations | $ | 2.55 | $ | 1.86 | $ | 3.84 | $ | 3.40 | |||||||
Discontinued Operations | — | 0.03 | — | 0.03 | |||||||||||
Total Net Income Per Diluted Share | $ | 2.55 | $ | 1.89 | $ | 3.84 | $ | 3.43 | |||||||
Weighted Average Diluted Shares Outstanding | 227 | 230 | 229 | 233 | |||||||||||
CONSOLIDATED CONDENSED BALANCE SHEETS | |||||||
(Unaudited) | |||||||
(In millions) | |||||||
2024 | 2023 | ||||||
ASSETS | |||||||
Current Assets: | |||||||
Cash and Cash Equivalents | $ | 1,084 | $ | 1,232 | |||
Accounts Receivable, Net | 224 | 226 | |||||
Inventories | 710 | 709 | |||||
Other | 97 | 99 | |||||
Total Current Assets | 2,115 | 2,266 | |||||
Property and Equipment, Net | 1,220 | 1,193 | |||||
Operating Lease Assets | 1,056 | 1,050 | |||||
628 | 628 | ||||||
165 | 165 | ||||||
Deferred Income Taxes | 144 | 37 | |||||
Other Assets | 135 | 155 | |||||
Total Assets | $ | 5,463 | $ | 5,494 | |||
LIABILITIES AND EQUITY (DEFICIT) | |||||||
Current Liabilities: | |||||||
Accounts Payable | $ | 380 | $ | 455 | |||
Accrued Expenses and Other | 608 | 673 | |||||
Current Operating Lease Liabilities | 181 | 177 | |||||
Income Taxes | 120 | 74 | |||||
Total Current Liabilities | 1,289 | 1,379 | |||||
Deferred Income Taxes | 147 | 168 | |||||
Long-term Debt | 4,388 | 4,862 | |||||
Long-term Operating Lease Liabilities | 1,004 | 1,014 | |||||
Other Long-term Liabilities | 261 | 276 | |||||
Total Equity (Deficit) | (1,626 | ) | (2,205 | ) | |||
Total Liabilities and Equity (Deficit) | $ | 5,463 | $ | 5,494 | |||
CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||
(Unaudited) | |||||||
(In millions) | |||||||
Full-Year | |||||||
2023 | 2022 | ||||||
(53 weeks) | (52 weeks) | ||||||
Operating Activities: | |||||||
Net Income | $ | 878 | $ | 800 | |||
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities: | |||||||
Depreciation of Long-lived Assets | 269 | 221 | |||||
Deferred Income Taxes | (128 | ) | 17 | ||||
Share-based Compensation Expense | 43 | 38 | |||||
Gain on Extinguishment of Debt | (34 | ) | — | ||||
Impairment of | 8 | — | |||||
Changes in Assets and Liabilities: | |||||||
Accounts Receivable | 2 | 11 | |||||
Inventories | (2 | ) | — | ||||
Accounts Payable, Accrued Expenses and Other | (109 | ) | 44 | ||||
Income Taxes Payable | 34 | 39 | |||||
Other Assets and Liabilities | (7 | ) | (26 | ) | |||
Net Cash Provided by Operating Activities | $ | 954 | $ | 1,144 | |||
Investing Activities: | |||||||
Capital Expenditures | $ | (298 | ) | $ | (328 | ) | |
Other Investing Activities | 12 | — | |||||
$ | (286 | ) | $ | (328 | ) | ||
Financing Activities: | |||||||
Payments for Long-term Debt | $ | (447 | ) | $ | — | ||
Dividends Paid | (182 | ) | (186 | ) | |||
Repurchases of Common Stock | (148 | ) | (1,312 | ) | |||
Payments of Finance Lease Obligations | (15 | ) | (9 | ) | |||
Tax Payments related to Share-based Awards | (11 | ) | (32 | ) | |||
Transfers and Payments to Victoria’s | (3 | ) | (25 | ) | |||
Proceeds from Stock Option Exercises | 4 | 6 | |||||
Other Financing Activities | (13 | ) | (4 | ) | |||
$ | (815 | ) | $ | (1,562 | ) | ||
Effects of Exchange Rate Changes on Cash and Cash Equivalents | $ | (1 | ) | $ | (1 | ) | |
(148 | ) | (747 | ) | ||||
Cash and Cash Equivalents, Beginning of Year | 1,232 | 1,979 | |||||
Cash and Cash Equivalents, End of Year | $ | 1,084 | $ | 1,232 | |||
ADJUSTED FINANCIAL INFORMATION FROM CONTINUING OPERATIONS | ||||||||||||||
(Unaudited) | ||||||||||||||
(In millions, except per share amounts) | ||||||||||||||
Fourth Quarter | Full-Year | |||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||
(14 weeks) | (13 weeks) | (53 weeks) | (52 weeks) | |||||||||||
Reconciliation of Reported Net Income from Continuing Operations to Adjusted Net Income from Continuing Operations | ||||||||||||||
Reported Net Income from Continuing Operations | $ | 579 | $ | 428 | $ | 878 | $ | 794 | ||||||
Impairment of | 8 | — | 8 | — | ||||||||||
Gain on Extinguishment of Debt | (6 | ) | — | (34 | ) | — | ||||||||
Tax Effect of Special Items included in Other Income | — | — | 7 | — | ||||||||||
Tax Benefit from Foreign Valuation Allowance Release | (112 | ) | — | (112 | ) | — | ||||||||
Adjusted Net Income from Continuing Operations | $ | 469 | $ | 428 | $ | 747 | $ | 794 | ||||||
Reconciliation of Reported Net Income from Continuing Operations Per Diluted Share to Adjusted Net Income from Continuing Operations Per Diluted Share | ||||||||||||||
Reported Net Income from Continuing Operations Per Diluted Share | $ | 2.55 | $ | 1.86 | $ | 3.84 | $ | 3.40 | ||||||
Impairment of | 0.04 | — | 0.04 | — | ||||||||||
Gain on Extinguishment of Debt | (0.03 | ) | — | (0.15 | ) | — | ||||||||
Tax Effect of Special Items included in Other Income | — | — | 0.03 | — | ||||||||||
Tax Benefit from Foreign Valuation Allowance Release | (0.49 | ) | — | (0.49 | ) | — | ||||||||
Adjusted Net Income from Continuing Operations Per Diluted Share | $ | 2.06 | $ | 1.86 | $ | 3.27 | $ | 3.40 | ||||||
Full-Year | ||||||||||||||
2023 | 2022 | |||||||||||||
(53 weeks) | (52 weeks) | |||||||||||||
Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow | ||||||||||||||
Net Cash Provided by Operating Activities | $ | 954 | $ | 1,144 | ||||||||||
Capital Expenditures | (298 | ) | (328 | ) | ||||||||||
Free Cash Flow | $ | 656 | $ | 816 | ||||||||||
See Notes to Reconciliation of GAAP Financial Measures to Non-GAAP Financial Measures.
NOTES TO RECONCILIATION OF GAAP FINANCIAL MEASURES
TO NON-GAAP FINANCIAL MEASURES
(Unaudited)
The “Adjusted Financial Information from Continuing Operations” provided in the attached reflects the following non-GAAP financial measures:
Fiscal 2023
In the fourth quarter of 2023, adjusted results exclude:
- An
$8 million pre-tax impairment charge ($6 million net of tax of$2 million ), included in other income, related to an equity method investment; - A
$6 million pre-tax gain ($5 million net of tax of$1 million ), included in other income, associated with the early extinguishment of outstanding notes; and - A
$112 million tax benefit related to the partial release of a valuation allowance on a foreign deferred tax asset.
In the third quarter of 2023, adjusted results exclude a:
$12 million pre-tax gain ($9 million net of tax of$3 million ), included in other income, associated with the early extinguishment of outstanding notes.
In the second quarter of 2023, adjusted results exclude a:
$9 million pre-tax gain ($7 million net of tax of$2 million ), included in other income, associated with the early extinguishment of outstanding notes.
In the first quarter of 2023, adjusted results exclude a:
$7 million pre-tax gain ($5 million net of tax of$2 million ), included in other income, associated with the early extinguishment of outstanding notes.
Fiscal 2022
There were no adjustments to results in 2022.
The adjusted financial information should not be construed as an alternative to the results determined in accordance with generally accepted accounting principles. Further, the company’s definitions of adjusted income information may differ from similarly titled measures used by other companies. Management believes that the presentation of adjusted financial information provides additional information to investors to facilitate the comparison of past and present operations. While it is not possible to predict future results, management believes the adjusted financial information is useful for the assessment of the operations of the company because the adjusted items are not indicative of the company’s ongoing operations due to their size and nature. Additionally, management uses adjusted financial information as key performance measures for the purpose of evaluating performance internally. The adjusted financial information should be read in conjunction with the company’s historical financial statements and notes thereto contained in the company’s Quarterly Reports on Form 10-Q and Annual Report on Form 10-K.
“Active members” of our loyalty program represent loyalty program members who have purchased at least once directly from the company during the preceding twelve-month period.
“Total international system-wide retail sales” means the net sales of all
Fourth Quarter 2023
Total Sales (In millions):
Fourth Quarter | Full-Year | ||||||||||||||||
2023 | 2022 | % Change | 2023 | 2022 | % Change | ||||||||||||
(14 weeks) | (13 weeks) | (53 weeks) | (52 weeks) | ||||||||||||||
Stores - | $ | 2,162 | $ | 2,078 | 4 | % | $ | 5,507 | $ | 5,476 | 1 | % | |||||
Direct - | 656 | 716 | (8 | %) | 1,582 | 1,745 | (9 | %) | |||||||||
International (a) | 94 | 95 | (1 | %) | 340 | 339 | — | % | |||||||||
Total | $ | 2,912 | $ | 2,889 | 1 | % | $ | 7,429 | $ | 7,560 | (2 | %) |
(a) Results include royalties associated with franchised stores and wholesale sales.
Total Company-Operated Stores:
Stores | Stores | |||||||
Opened | Closed | |||||||
1,693 | 93 | (47 | ) | 1,739 | ||||
109 | 2 | — | 111 | |||||
Total | 1,802 | 95 | (47 | ) | 1,850 |
Total Partner-Operated Stores:
Stores | Stores | |||||||
Opened | Closed | |||||||
International | 401 | 65 | (12 | ) | 454 | |||
International - Travel Retail | 26 | 5 | — | 31 | ||||
427 | 70 | (12 | ) | 485 |
Source:
2024 GlobeNewswire, Inc., source