L Brands : December Sales Report Transcript

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DECEMBER SALES SCRIPT

JANUARY 10, 2019

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

• THIS IS L BRANDS' DECEMBER SALES REPORT FOR THE FIVE WEEK PERIOD ENDING JANUARY 5, 2019.

• 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 FIVE-WEEK PERIOD ENDED JANUARY 5, 2019 WERE $2.477 BILLION COMPARED TO NET SALES OF $2.516 BILLION FOR THE FIVE-WEEK PERIOD ENDED DECEMBER 30, 2017.

• COMPARABLE SALES FOR THE FIVE WEEKS ENDED JANUARY 5, 2019 WERE FLAT COMPARED TO THE FIVE WEEKS ENDED JANUARY 6, 2018.

• THE SALES DECLINE OF 2% ON A REPORTED BASIS VERSUS THE FLAT COMP IS DRIVEN BY THE CALENDAR SHIFT CAUSED BY THE 53RDWEEK LAST YEAR, AS A HIGHER VOLUME WEEK SHIFTED OUT OF DECEMBER AND INTO NOVEMBER THIS YEAR ON A REPORTED BASIS, AND COMPS ARE ON A CALENDAR BASIS.

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

• INVENTORIES PER SQUARE FOOT ENDED THE MONTH DOWN 5% VERSUS LAST YEAR. ON A COMPARABLE CALENDAR BASIS (SHIFTED FOR THE 53RDWEEK LAST YEAR), INVENTORIES PER SQUARE FOOT ARE UP 1%.

• WE EXPECT TO REPORT ADJUSTED FOURTH QUARTER EARNINGS PER SHARE TOWARDS THE HIGHER END OF OUR PREVIOUS GUIDANCE OF $1.90 TO $2.10, NOT

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INCLUDING A PRELIMINARY ESTIMATED PRETAX CHARGE, PRINCIPALLY NON-CASH, RELATED TO THE SALE OF LA SENZA OF APPROXIMATELY $80 MILLION, OR $0.15 PER SHARE. WE CLOSED ON THE PREVIOUSLY ANNOUNCED SALE OF THE LA SENZA BUSINESS TO AN AFFILIATE OF REGENT LP ON JAN. 6, 2019.

• BEGINNING IN JANUARY, LA SENZA WILL NOT BE INCLUDED IN CONSOLIDATED L BRANDS RESULTS.

• NOW FOR THE INDIVIDUAL BRAND RESULTS.

VICTORIA'S SECRET

• VICTORIA'S SECRET DECEMBER COMPARABLE SALES WERE DOWN 6%, DRIVEN BY A DECLINE IN LINGERIE AND PINK.

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

• JANUARY WILL BEGIN WITH A CONTINUATION OF OUR SEMI-ANNUAL SALE. AT THE END OF THE MONTH WE WILL FOCUS ON VALENTINE'S DAY.

BATH & BODY WORKS

• AT BATH & BODY WORKS, DECEMBER COMPS WERE UP 11% DRIVEN BY STRONG RESULTS IN BOTH THE HOLIDAY AND SEMI-ANNUAL SALE TIME PERIODS.

• THE MERCHANDISE MARGIN RATE FOR THE MONTH WAS UP TO LAST YEAR. THE IMPACTS OF LOWER PROMOTIONAL ACTIVITY AS WELL AS THE RETAIL CALENDAR SHIFT, WERE PARTIALLY OFFSET BY CONTINUED CHANNEL MIX SHIFTS AND HIGHER SUPPLY CHAIN COSTS.

• OUR SEMI-ANNUAL SALE WILL CONTINUE INTO JANUARY. WE HAVE LESS DISTRESSED INVENTORY TO CLEAR THIS YEAR DUE TO OUR SUCCESSFUL HOLIDAY

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SEASON WHICH MAY IMPACT THE TIMING AND DEPTH OF JANUARY PROMOTIONS AS WELL AS OVERALL SALES PERFORMANCE.

• LATER IN JANUARY WE WILL TRANSITION TO OUR FIRST SPRING THEME, FEATURING NEW AND SEASONALLY INSPIRED FRAGRANCES IN OUR BODY CARE, HOME FRAGRANCE AND SOAP AND SANITIZER BUSINESSES.

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