Bath & Body Works : Supplemental Investor Presentation - DO Reporting

BATH & BODY WORKS, INC.

CONSOLIDATED STATEMENTS OF INCOME (LOSS) - FISCAL 2019

DISCONTINUED OPERATIONS PRESENTATION - GIVING EFFECT TO THE VICTORIA'S SECRET & CO. SPIN-OFF

(Unaudited)

(In thousands, except per share amounts)

		First
		Quarter
Net Sales	$	958,408	$
Costs of Goods Sold, Buying and Occupancy		(561,261)
Gross Profit		397,146
General, Administrative and Store Operating Expenses		(275,766)
Operating Income		121,380
Interest Expense		(97,150)
Other Income (Loss)		5,603
Income from Continuing Operations before Income Taxes		29,832
Provision (Benefit) for Income Taxes		6,143
Net Income from Continuing Operations		23,689
Income (Loss) from Discontinued Operations, Net of Tax		16,566
Net Income (Loss)	$	40,255	$
Earnings (Loss) per Common Share - Basic
Continuing Operations	$	0.09	$
Discontinued Operations	$	0.06	$
Total Earnings (Loss) per Common Share - Basic	$	0.15	$
Earnings (Loss) per Common Share - Dilutive
Continuing Operations	$	0.09	$
Discontinued Operations	$	0.06	$
Total Earnings (Loss) per Common Share - Dilutive	$	0.14	$
Weighted Average Shares Outstanding
Basic		275,481
Dilutive		278,165

Second

Quarter

1,116,846 $

(664,376)

452,470

(313,247)

139,224

(93,143)

(36,534)

9,548

(5,076)

14,623

22,973

37,596 $

0.05 $

0.08 $

0.14 $

0.05 $

0.08 $

0.14 $

276,297

278,487

Third

Quarter

1,099,261 $

(617,626)

481,635

(315,311)

166,324

(90,094)

(35,244)

40,987

13,260

27,727

(279,719)

(251,992) $

0.10 $

(1.01) $

(0.91) $

0.10 $

(1.01) $

(0.91) $

276,398

277,985

Fourth
Quarter		Full Year
2,230,947	$	5,405,461
(1,174,879)		(3,018,142)
1,056,068		2,387,319
(443,007)		(1,347,332)
613,060		1,039,987
(90,023)		(370,410)
3,822		(62,352)
526,859		607,225
133,819		148,146
393,040		459,079
(585,296)		(825,475)
(192,255)	$	(366,396)
1.42	$	1.66
(2.12)	$	(2.99)
(0.70)	$	(1.33)
1.41	$	1.65
(2.10)	$	(2.97)
(0.69)	$	(1.32)
276,477		276,163
278,785		278,356

Reflects the Consolidated Statements of Income (Loss) of Bath & Body Works, Inc. (the "Company") as if the Victoria's Secret business was reported as a discontinued operation for the periods presented. Income (Loss) from Discontinued Operations, Net of Tax reflects the after-tax operating results of Victoria's Secret, and does not include any allocation of general corporate overhead expense or interest expense of the Company to Victoria's Secret. Beginning in the third quarter of fiscal 2021, Victoria's Secret's historical financial results for periods prior to the spin-off will be reflected in the Company's consolidated financial statements as discontinued operations.

BATH & BODY WORKS, INC.

CONSOLIDATED STATEMENTS OF INCOME (LOSS) - FISCAL 2020

DISCONTINUED OPERATIONS PRESENTATION - GIVING EFFECT TO THE VICTORIA'S SECRET & CO. SPIN-OFF

(Unaudited)

(In thousands, except per share amounts)

		First
		Quarter
Net Sales	$	760,602	$
Costs of Goods Sold, Buying and Occupancy		(492,754)
Gross Profit		267,847
General, Administrative and Store Operating Expenses		(231,678)
Operating Income		36,169
Interest Expense		(94,688)
Other Income (Loss)		3,749
Income (Loss) from Continuing Operations before Income Taxes		(54,770)
Provision (Benefit) for Income Taxes		(54,001)
Net Income (Loss) from Continuing Operations		(769)
Income (Loss) from Discontinued Operations, Net of Tax		(296,097)
Net Income (Loss)	$	(296,867)	$
Earnings (Loss) per Common Share - Basic
Continuing Operations	$	(0.00)	$
Discontinued Operations	$	(1.07)	$
Total Earnings (Loss) per Common Share - Basic	$	(1.07)	$
Earnings (Loss) per Common Share - Dilutive
Continuing Operations	$	(0.00)	$
Discontinued Operations	$	(1.07)	$
Total Earnings (Loss) per Common Share - Dilutive	$	(1.07)	$
Weighted Average Shares Outstanding
Basic		276,988
Dilutive		276,988

Second

Quarter

1,253,132 $

(694,266)

558,866

(296,127)

262,740

(102,810)

(80)

159,850

47,460

112,390

(161,987)

(49,597) $

0.40 $

(0.58) $

(0.18) $

0.40 $

(0.58) $

(0.18) $

277,795

279,880

Third

Quarter

1,702,177 $

(839,471)

862,706

(426,648)

436,058

(119,317)

(51,531)

265,210

69,068

196,142

134,440

330,582 $

0.70 $

0.48 $

1.19 $

0.69 $

0.48 $

1.17 $

278,629

283,001

Fourth
Quarter		Full Year
2,718,192	$	6,434,102
(1,311,854)		(3,338,345)
1,406,338		3,095,757
(537,110)		(1,491,563)
869,228		1,604,194
(115,642)		(432,457)
(2,366)		(50,228)
751,220		1,121,508
194,321		256,848
556,899		864,660
303,432		(20,210)
860,331	$	844,450
2.00	$	3.11
1.09	$	(0.07)
3.08	$	3.04
1.96	$	3.07
1.07	$	(0.07)
3.03	$	3.00
279,038		278,112
283,802		281,471

Reflects the Consolidated Statements of Income (Loss) of Bath & Body Works, Inc. (the "Company") as if the Victoria's Secret business was reported as a discontinued operation for the periods presented. Income (Loss) from Discontinued Operations, Net of Tax reflects the after-tax operating results of Victoria's Secret, and does not include any allocation of general corporate overhead expense or interest expense of the Company to Victoria's Secret. Beginning in the third quarter of fiscal 2021, Victoria's Secret's historical financial results for periods prior to the spin-off will be reflected in the Company's consolidated financial statements as discontinued operations.

BATH & BODY WORKS, INC.

CONSOLIDATED STATEMENTS OF INCOME - FISCAL 2021

DISCONTINUED OPERATIONS PRESENTATION - GIVING EFFECT TO THE VICTORIA'S SECRET & CO. SPIN-OFF

(Unaudited)

(In thousands, except per share amounts)

Net Sales

Costs of Goods Sold, Buying and Occupancy Gross Profit

General, Administrative and Store Operating Expenses Operating Income

Interest Expense Other Loss

Income from Continuing Operations before Income Taxes Provision for Income Taxes

Net Income from Continuing Operations

Income from Discontinued Operations, Net of Tax Net Income

Earnings per Common Share - Basic

Continuing Operations

Discontinued Operations

Total Earnings per Common Share - Basic

Earnings per Common Share - Dilutive Continuing Operations Discontinued Operations

Total Earnings per Common Share - Dilutive

Weighted Average Shares Outstanding

Basic

Dilutive

$

$

$

$

$

$

$

$

First		Second			First
Quarter		Quarter			Half
1,469,479	$	1,703,726	$	3,173,205
(727,781)		(875,348)			(1,603,129)
741,698		828,379			1,570,076
(404,534)		(444,217)			(848,751)
337,164		384,161			721,325
(113,701)		(96,684)			(210,385)
(105,186)		(230)			(105,416)
118,276		287,247			405,524
28,017		71,983			100,000
90,259		215,265			305,524
186,356		158,929			345,285
276,616	$	374,193	$	650,809
0.32	$	0.78	$	1.10
0.67	$	0.58		$	1.25
0.99	$	1.36	$	2.35
0.32	$	0.77	$	1.08
0.66	$	0.57		$	1.22
0.97	$	1.34	$	2.31
279,121		274,978			277,050
284,461		280,002			282,232

Reflects the Consolidated Statements of Income of Bath & Body Works, Inc. (the "Company") as if the Victoria's Secret business was reported as a discontinued operation for the periods presented. Income from Discontinued Operations, Net of Tax reflects the after-tax operating results of, and costs to separate, Victoria's Secret, and does not include any allocation of general corporate overhead expense or interest expense of the Company to Victoria's Secret. Beginning in the third quarter of fiscal 2021, Victoria's Secret's historical financial results for periods prior to the spin-off will be reflected in the Company's consolidated financial statements as discontinued operations.

BATH AND BODY WORKS, INC.

ADJUSTED FINANCIAL INFORMATION

DISCONTINUED OPERATIONS PRESENTATION - GIVING EFFECT TO THE VICTORIA'S SECRET & CO. SPIN-OFF

(Unaudited)

(In thousands except per share amounts)

								2019															2020												2021
		First			Second			Third			Fourth			Full			First			Second			Third			Fourth			Full			First			Second			Year-to-
		Quarter			Quarter			Quarter			Quarter			Year			Quarter			Quarter			Quarter			Quarter			Year			Quarter			Quarter			Date
Details of Special Items - Income (Expense)
Restructuring Charges (a)	$	-	$	-	$	-	$	-	$	-	$	-	$	(29,572)	$	-	$	-	$	(29,572)	$	-	$	-	$	-
Special Items included in Operating Income		-			-			-			-			-			-			(29,572)			-			-			(29,572)			-			-			-
Loss on Extinguishment of Debt (b)		-			(39,564)			-			-			(39,564)			-			-			(52,668)			-			(52,668)			(105,464)			-			(105,464)
La Senza Charges (c )		-			-			(37,217)			-			(37,217)			-			-			-			-			-			-			-			-
Special Items included in Other Income (Loss)		-			(39,564)			(37,217)			-			(76,781)			-			-			(52,668)			-			(52,668)			(105,464)			-			(105,464)
Net Tax Benefit from the Resolution of Certain Tax Matters (d)		-			-			-			-			-			50,360			-			-						50,360			-			-			-
Tax Effect of Special Items included in Operating Income and Other Income (Loss)		-			9,532			9,516			-			19,048			-			5,713			12,640			-			18,353			25,337			-			25,337
Special Items included in Net Income (Loss) from Continuing Operations	$	-	$	(30,032)	$	(27,701)	$	-	$	(57,733)	$	50,360	$	(23,859)	$	(40,028)	$	-	$	(13,527)	$	(80,127)	$	-	$	(80,127)
Reconciliation of Reported Operating Income to Adjusted Operating Income
Reported Operating Income	$	121,380	$	139,224	$	166,324	$	613,060	$	1,039,987	$	36,169	$	262,740	$	436,058	$	869,228	$	1,604,194	$	337,164	$	384,161	$	721,325
Special Items included in Operating Income		-			-			-			-			-			-			29,572			-			-			29,572			-			-			-
Adjusted Operating Income	$	121,380		$	139,224		$	166,324		$	613,060		$	1,039,987		$	36,169		$	292,312		$	436,058		$	869,228		$	1,633,766		$	337,164		$	384,161		$	721,325
Reconciliation of Reported Net Income (Loss) from Continuing Operations to Adjusted Net Income (Loss) from Continuing Operations
Reported Net Income (Loss) from Continuing Operations	$	23,689	$	14,623	$	27,727	$	393,040	$	459,079	$	(769)	$	112,390	$	196,142	$	556,899	$	864,660	$	90,259	$	215,265	$	305,524
Special Items included in Net Income (Loss) from Continuing Operations		-			30,032			27,701			-			57,733			(50,360)			23,859			40,028			-			13,527			80,127			-			80,127
Adjusted Net Income (Loss) from Continuing Operations	$	23,689		$	44,655		$	55,428		$	393,040		$	516,812		$	(51,129)		$	136,249		$	236,170		$	556,899		$	878,187		$	170,386		$	215,265		$	385,651
Reconciliation of Reported Earnings (Loss) from Continuing Operations Per Diluted Share to Adjusted Earnings (Loss) from Continuing Operations Per Diluted Share
Reported Earnings (Loss) from Continuing Operations Per Diluted Share	$	0.09	$	0.05	$	0.10	$	1.41	$	1.65	$	(0.00)	$	0.40	$	0.69	$	1.96	$	3.07	$	0.32	$	0.77	$	1.08
Special Items included in Earnings (Loss) from Continuing Operations Per Diluted Share		-			0.11			0.10			-			0.21			(0.18)			0.09			0.14			-			0.05			0.28			-			0.28
Adjusted Earnings (Loss) from Continuing Operations Per Diluted Share	$	0.09	$	0.16	$	0.20	$	1.41	$	1.86	$	(0.18)	$	0.49	$	0.83	$	1.96	$	3.12	$	0.60	$	0.77	$	1.37

1. - In the second quarter of 2020, we recognized a $29.6 million charge ($23.9 million net of tax of $5.7 million), included in general, administrative and store operating expenses, related to previously announced restructuring actions.
2. - In the first quarter of 2021 we recognized a $105.5 million pre-tax loss ($80.1 million net of tax of $25.4 million), in the third quarter of 2020 we recognized a $52.7 million pre-tax loss ($40.0 million net of tax of $12.7 million) and in the second quarter of 2019 we recognized a $39.6 million pre-tax loss ($30.0 million net of tax of $9.5 million) associated with the early extinguishment of outstanding notes. These pre-tax losses are included in other income (loss).

(c ) - In the third quarter of 2019, we recognized a $37.2 million charge ($27.7 million net of tax of $9.5 million), included in other income (loss), to increase reserves related to ongoing guarantees for the La Senza business which was sold in the fourth quarter of 2018.

(d) - In the first quarter of 2020, we recognized a $50.4 million tax benefit related to the resolution of certain tax matters.

The Adjusted Financial Information should not be construed as an alternative to the reported results determined in accordance with generally accepted accounting principles. Further, the Company's definition 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 information is useful for the assessment of the ongoing operations of the Company because the adjusted items are not indicative of our ongoing operations due to their size and nature. Additionally, management uses adjusted financial information as key performance measures of results of operations 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.

BATH & BODY WORKS, INC.

ADJUSTED STATEMENTS OF INCOME FROM CONTINUING OPERATIONS - FISCAL 2019

DISCONTINUED OPERATIONS PRESENTATION - GIVING EFFECT TO THE VICTORIA'S SECRET & CO. SPIN-OFF

(Unaudited)

(In thousands, except per share amounts)

		First
		Quarter
Net Sales	$	958,408	$
Costs of Goods Sold, Buying and Occupancy		(561,261)
Gross Profit		397,146
General, Administrative and Store Operating Expenses		(275,766)
Operating Income		121,380
Interest Expense		(97,150)
Other Income (a)		5,603
Income from Continuing Operations before Income Taxes		29,832
Provision for Income Taxes (b)		6,143
Net Income from Continuing Operations	$	23,689	$
Earnings (Loss) per Common Share - Basic
Continuing Operations	$	0.09	$
Earnings (Loss) per Common Share - Dilutive
Continuing Operations	$	0.09	$
Weighted Average Shares Outstanding
Basic		275,481
Dilutive		278,165

Second

Quarter

1,116,846 $

(664,376)

452,470

(313,247)

139,224

(93,143)

3,030

49,112

4,456

44,655 $

0.16 $

0.16 $

276,297

278,487

Third

Quarter

1,099,261 $

(617,626)

481,635

(315,311)

166,324

(90,094)

1,973

78,204

22,776

55,428 $

0.20 $

0.20 $

276,398

277,985

Fourth
Quarter		Full Year
2,230,947	$	5,405,461
(1,174,879)		(3,018,142)
1,056,068		2,387,319
(443,007)		(1,347,332)
613,060		1,039,987
(90,023)		(370,410)
3,822		14,429
526,859		684,006
133,819		167,194
393,040	$	516,812
1.42	$	1.87
1.41	$	1.86
276,477		276,163
278,785		278,356

1. - In the second quarter we recognized a $39.6 million pre-tax loss ($30.0 million net of tax of $9.5 million) associated with the early extinguishment of outstanding notes. In the third quarter, we recognized a $37.2 million charge ($27.7 million net of tax of $9.5 million), to increase reserves related to ongoing guarantees for the La Senza business which was sold in the fourth quarter of 2018.
2. - Includes the income tax effects of the items referenced above.

Reflects the Adjusted Statements of Income from Continuing Operations of Bath & Body Works, Inc. as if the Victoria's Secret business was reported as a discontinued operation for the periods presented. Refer to "Adjusted Financial Information" for more information on the adjustments made to historical results. Beginning in the third quarter of fiscal 2021, Victoria's Secret's historical financial results for periods prior to the spinoff will be reflected in the Company's consolidated financial statements as discontinued operations.