L Brands, Inc. (NYSE: LB) today reported 2020 third quarter
results.
Third Quarter ResultsThe
company reported earnings per share of $1.17 for the third quarter
ended Oct. 31, 2020, compared to a loss per share of $0.91 for the
quarter ended Nov. 2, 2019. Third quarter operating income was
$580.6 million compared to an operating loss of $151.2 million last
year, and net income was $330.6 million compared to a net loss of
$252.0 million last year.
Reported results above include the following
significant items:
In 2020, a net gain totaling $0.04 per share
resulting from the following:
- A $52.7 million pre-tax loss ($0.14
per share) on early extinguishment of debt;
- A $29.9 million pre-tax gain ($0.10
per share) related to the establishment of a joint venture for the
Victoria’s Secret U.K. business with Next PLC; and
- A $23.1 million net tax benefit
($0.08 per share) related to tax matters associated with foreign
investments and recent changes in tax legislation.
In 2019, charges of $0.93 per share resulting
from the following:
- A $247.5 million non-cash pre-tax
impairment charge ($0.83 per share) related to certain Victoria’s
Secret store and other assets; and
- A $37.2 million pre-tax charge
($0.10 per share) to increase reserves related to ongoing
guarantees for the La Senza business which was sold in the fourth
quarter of 2018.
Excluding the above items, adjusted third
quarter earnings per share were $1.13 compared to $0.02 last year,
adjusted operating income was $550.7 million compared to $96.3
million last year, and adjusted net income was $320.3 million
compared to $5.7 million last year.
At the conclusion of this press release is a
reconciliation of reported-to-adjusted results, including a
description of the above items.
The company reported net sales of $3.055 billion
for the 13 weeks ended Oct. 31, 2020, compared to net sales of
$2.677 billion for the quarter ended Nov. 2, 2019. Comparable sales
increased 28 percent for the quarter ended Oct. 31, 2020.
Andrew Meslow, Chief Executive Officer of L
Brands, stated “L Brands reported a record third quarter, driven by
exceptional results and continued strength at Bath & Body
Works, and a significant improvement in performance at Victoria’s
Secret. On behalf of the Board of Directors and the management
team, I’d like to express our sincere appreciation to our
associates, whose hard work and dedication during these
unprecedented times made these results possible. As we head into
the holidays, our inventories are well-positioned, and we are
encouraged by customers’ early response to our merchandise
assortments. However, we are cautious about our ability to exceed
last year’s fourth quarter sales and earnings results, given
anticipated constraints on store traffic, online fulfillment and
shipping capacity, as well as other uncertainties related to the
COVID pandemic. We are confident in the strength of our brands and
remain focused on execution and delivering the best possible
outcome for the fourth quarter.”
Earnings Call and Additional Information
Additional third quarter financial information,
including management commentary, is currently available
at www.LB.com. L Brands will conduct its third quarter
earnings call at 9:00 a.m. Eastern on November 19. To
listen, call 1-888-946-7609 (international dial-in number:
1-517-308-9411); conference ID 6362067. For an audio replay, call
1-888-676-2681 (international replay number: 1-402-220-6447);
conference ID 6362067 or log onto www.LB.com.
ABOUT L BRANDS:L Brands, through Victoria’s
Secret, PINK and Bath & Body Works, is an international
company. The company operates 2,681 company-operated specialty
stores in the United States, Canada and Greater China, and its
brands are also sold in more than 700 franchised locations
worldwide. The company’s products are also available online at
www.BathandBodyWorks.com, www.VictoriasSecret.com and
www.PINK.com.
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” 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, 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;
- divestitures or other dispositions, including any divestiture
of Victoria’s Secret and related operations, could negatively
impact our business, and contingent liabilities from businesses
that we have sold could adversely affect our financial
statements;
- the seasonality of our business;
- difficulties arising from turnover in company leadership or
other key positions;
- our ability to attract, develop and retain qualified associates
and manage labor-related costs;
- liabilities arising from divested businesses;
- the dependence on mall traffic and the availability of suitable
store locations on appropriate terms;
- our ability to grow through new store openings and existing
store remodels and expansions;
- our ability to successfully expand internationally and related
risks;
- our independent franchise, license and wholesale partners;
- our direct channel businesses;
- our ability to protect our reputation and our brand
images;
- our ability to attract customers with marketing, advertising
and promotional programs;
- our ability to 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 brands, keep up with fashion trends, 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, environmental hazards or natural
disasters;
- significant health hazards or pandemics, which could result in
closed factories, reduced workforces, scarcity of raw materials,
and scrutiny or embargoing of goods produced in infected
areas;
- duties, taxes and other charges;
- legal and regulatory matters;
- volatility in currency exchange rates;
- local business practices and political issues;
- potential 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 geographic concentration of vendor and distribution
facilities in central Ohio;
- fluctuations in foreign currency exchange rates;
- stock price volatility;
- our ability to pay dividends and related effects;
- our ability to maintain our credit rating;
- our ability to service or refinance our debt;
- shareholder activism matters;
- the ability of our vendors to deliver products in a timely
manner, meet quality standards and comply with applicable laws and
regulations;
- fluctuations in product input costs;
- our ability to adequately protect our assets from loss and
theft;
- fluctuations in energy costs;
- increases in the costs of mailing, paper and printing;
- claims arising from our self-insurance;
- our ability to implement and maintain information technology
systems and to protect associated data;
- our ability to maintain the security of customer, associate,
third-party or company information;
- our ability to comply with laws and regulations 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.
For further information, please contact:
L Brands: |
Investor
RelationsAmie Preston(614) 415-6704apreston@lb.com |
Media
RelationsBrooke Wilson(614) 415-6042communications@lb.com |
L BRANDSTHIRD QUARTER
2020
Comparable Sales Increase (Decrease) (Stores and
Direct):
|
|
ThirdQuarter2020 |
|
ThirdQuarter2019 |
|
Year-to-Date2020 |
|
Year-to-Date2019 |
|
|
|
|
|
|
|
|
|
Bath & Body Works1 |
|
56 |
% |
|
9 |
% |
|
70 |
% |
|
10 |
% |
Victoria’s Secret2 |
|
4 |
% |
|
(8 |
%) |
|
3 |
% |
|
(6 |
%) |
L Brands2 |
|
28 |
% |
|
(2 |
%) |
|
30 |
% |
|
(1 |
%) |
NOTE: Stores are excluded from
the comparable sales calculation when they have been closed for
four consecutive days or more. Therefore, comparable sales results
for 2020 exclude periods of time that stores were closed for four
consecutive days or more as a result of the COVID-19 pandemic.
Refer to our SEC filings for further discussion regarding our
comparable sales calculation.1 – Results include company-operated
stores in the U.S. and Canada and direct sales.2 – Results include
company-operated stores in the U.S., Canada, the U.K. (pre-joint
venture) and Greater China and direct sales.
Comparable Sales Increase (Decrease) (Stores
Only):
|
|
ThirdQuarter2020 |
|
ThirdQuarter2019 |
|
Year-to-Date2020 |
|
Year-to-Date2019 |
|
|
|
|
|
|
|
|
|
Bath & Body Works1 |
|
38 |
% |
|
5 |
% |
|
45 |
% |
|
5 |
% |
Victoria’s Secret2 |
|
(10 |
%) |
|
(9 |
%) |
|
(13 |
%) |
|
(8 |
%) |
L Brands2 |
|
13 |
% |
|
(3 |
%) |
|
13 |
% |
|
(3 |
%) |
NOTE: Stores are excluded from
the comparable sales calculation when they have been closed for
four consecutive days or more. Therefore, comparable sales results
for 2020 exclude periods of time that stores were closed for four
consecutive days or more as a result of the COVID-19
pandemic. Refer to our SEC filings for further discussion
regarding our comparable sales calculation.1 – Results include
company-operated stores in the U.S. and Canada.2 – Results include
company-operated stores in the U.S., Canada, the U.K. (pre-joint
venture) and Greater China.
Total Sales (Millions):
|
Third Quarter 2020 |
|
Third Quarter 2019 |
|
%Inc/(Dec) |
|
Year-to-Date 2020 |
|
Year-to-Date 2019 |
|
%Inc/(Dec) |
|
|
|
|
|
|
|
|
|
|
|
|
Bath & Body Works Stores – U.S. and Canada |
$ |
1,201.8 |
|
$ |
871.7 |
|
37.9 |
% |
|
$ |
2,303.6 |
|
$ |
2,468.4 |
|
(6.7 |
%) |
Bath & Body Works Direct |
|
446.5 |
|
|
192.4 |
|
132.1 |
% |
|
|
1,254.0 |
|
|
527.3 |
|
137.8 |
% |
Bath & Body Works
International1 |
|
53.9 |
|
|
34.8 |
|
54.9 |
% |
|
|
158.3 |
|
|
128.9 |
|
22.8 |
% |
Total Bath & Body
Works |
$ |
1,702.2 |
|
$ |
1,098.9 |
|
54.9 |
% |
|
$ |
3,715.9 |
|
$ |
3,124.6 |
|
18.9 |
% |
Victoria’s Secret Stores – U.S.
and Canada |
$ |
755.2 |
|
$ |
1,080.9 |
|
(30.1 |
%) |
|
$ |
1,632.8 |
|
$ |
3,462.2 |
|
(52.8 |
%) |
Victoria’s Secret Direct |
|
470.0 |
|
|
331.3 |
|
41.9 |
% |
|
|
1,391.5 |
|
|
1,066.5 |
|
30.5 |
% |
Victoria’s Secret
International2 |
|
127.9 |
|
|
165.3 |
|
(22.6 |
%) |
|
|
288.7 |
|
|
503.9 |
|
(42.7 |
%) |
Total Victoria’s
Secret |
$ |
1,353.1 |
|
$ |
1,577.5 |
|
(14.2 |
%) |
|
$ |
3,313.0 |
|
$ |
5,032.6 |
|
(34.2 |
%) |
Other |
|
- |
|
|
0.3 |
|
- |
|
|
|
- |
|
|
49.9 |
|
- |
|
L Brands |
$ |
3,055.3 |
|
$ |
2,676.7 |
|
14.1 |
% |
|
$ |
7,028.9 |
|
$ |
8,207.1 |
|
(14.4 |
%) |
1 – Results include royalties associated with franchised stores
and wholesale sales. 2 – Results include company-operated stores in
the U.K. (pre-joint venture) and Greater China, royalties
associated with franchised stores and wholesale sales.
Total Company-Operated
Stores:
|
Stores at |
|
|
Transferred to |
Stores at |
|
2/1/20 |
Opened |
Closed |
joint venture |
10/31/20 |
|
|
|
|
|
|
|
|
|
|
|
|
Bath & Body Works |
1,637 |
24 |
(18 |
) |
- |
|
1,643 |
Bath & Body Works
Canada |
102 |
1 |
- |
|
- |
|
103 |
Total Bath and Body Works |
1,739 |
25 |
(18 |
) |
- |
|
1,746 |
|
|
|
|
|
|
Victoria's Secret |
909 |
18 |
(223 |
) |
- |
|
704 |
PINK |
144 |
2 |
(3 |
) |
- |
|
143 |
Victoria's Secret Canada |
33 |
- |
(10 |
) |
- |
|
23 |
PINK Canada |
5 |
- |
(3 |
) |
- |
|
2 |
Victoria’s Secret
U.K./Ireland |
21 |
- |
- |
|
(21 |
) |
- |
PINK U.K. |
5 |
- |
- |
|
(5 |
) |
- |
Victoria’s Secret Beauty and
Accessories |
41 |
1 |
(4 |
) |
- |
|
38 |
Victoria’s Secret Greater
China |
23 |
3 |
(1 |
) |
- |
|
25 |
Total Victoria's Secret |
1,181 |
24 |
(244 |
) |
(26 |
) |
935 |
|
|
|
|
|
|
Total
L Brands |
2,920 |
49 |
(262 |
) |
(26 |
) |
2,681 |
Total Partner-Operated
Stores:
|
Stores at |
|
|
Transferred
to |
Stores at |
|
2/1/20 |
Opened |
Closed |
joint venture |
10/31/20 |
|
|
|
|
|
|
Bath & Body Works |
262 |
10 |
(3 |
) |
- |
269 |
Bath & Body Works – Travel
Retail |
16 |
1 |
- |
|
- |
17 |
Victoria’s Secret |
72 |
9 |
(1 |
) |
21 |
101 |
PINK |
12 |
1 |
(1 |
) |
5 |
17 |
Victoria’s Secret Beauty &
Accessories |
207 |
2 |
(14 |
) |
- |
195 |
Victoria’s Secret Beauty &
Accessories – Travel Retail |
153 |
2 |
(11 |
) |
- |
144 |
Total L
Brands |
722 |
25 |
(30 |
) |
26 |
743 |
L BRANDS, INC. AND SUBSIDIARIES |
CONSOLIDATED STATEMENTS OF INCOME (LOSS) |
THIRTEEN WEEKS ENDED OCTOBER 31, 2020 AND NOVEMBER 2,
2019 |
(Unaudited) |
(In thousands except per share amounts) |
|
|
|
|
|
|
|
2020 |
|
|
2019 |
|
Net Sales |
$ |
3,055,276 |
|
|
$ |
2,676,747 |
|
Costs of Goods Sold, Buying and Occupancy |
(1,695,787 |
) |
|
(1,936,244 |
) |
Gross Profit |
1,359,489 |
|
|
740,503 |
|
General,
Administrative and Store Operating Expenses |
(778,878 |
) |
|
(891,717 |
) |
Operating Income (Loss) |
580,611 |
|
|
(151,214 |
) |
Interest Expense |
(120,729 |
) |
|
(92,098 |
) |
Other Loss |
(50,418 |
) |
|
(34,051 |
) |
|
|
|
|
|
|
Income (Loss)
Before Income Taxes |
409,464 |
|
|
(277,363 |
) |
Provision (Benefit) for Income Taxes |
78,882 |
|
|
(25,371 |
) |
|
|
|
|
|
|
Net Income (Loss) |
$ |
330,582 |
|
|
$ |
(251,992 |
) |
|
|
|
|
|
|
Net Income (Loss) Per Diluted Share |
$ |
1.17 |
|
|
$ |
(0.91 |
) |
|
|
|
|
|
|
|
Weighted Average Shares Outstanding1 |
283,001 |
|
|
276,398 |
|
|
|
|
|
|
|
|
1 - Reported Weighted Average Shares Outstanding in the third
quarter of 2019 reflects basic shares due to the Net Loss. |
|
|
L BRANDS, INC. AND SUBSIDIARIES |
CONSOLIDATED STATEMENTS OF INCOME (LOSS) |
THIRTY-NINE WEEKS ENDED OCTOBER 31, 2020 AND NOVEMBER 2,
2019 |
(Unaudited) |
(In thousands except per share amounts) |
|
|
|
|
|
|
|
2020 |
|
|
2019 |
|
Net Sales |
$ |
7,028,951 |
|
|
$ |
8,207,095 |
|
Costs of Goods Sold, Buying and Occupancy |
|
(4,669,373 |
) |
|
|
(5,550,340 |
) |
Gross Profit |
|
2,359,578 |
|
|
|
2,656,755 |
|
General,
Administrative and Store Operating Expenses |
|
(2,052,625 |
) |
|
|
(2,480,024 |
) |
Operating Income |
|
306,953 |
|
|
|
176,731 |
|
Interest Expense |
|
(321,772 |
) |
|
|
(286,105 |
) |
Other Loss |
|
(48,228 |
) |
|
|
(65,550 |
) |
|
|
|
|
|
|
|
Loss Before Income
Taxes |
|
(63,047 |
) |
|
|
(174,924 |
) |
Benefit for Income Taxes |
|
(47,165 |
) |
|
|
(783 |
) |
|
|
|
|
|
|
|
Net Loss |
$ |
(15,882 |
) |
|
$ |
(174,141 |
) |
|
|
|
|
|
|
|
Net Loss Per Basic Share |
$ |
(0.06 |
) |
|
$ |
(0.63 |
) |
|
|
|
|
|
|
|
Weighted Average Shares Outstanding1 |
|
277,804 |
|
|
|
276,059 |
|
|
|
|
|
|
|
|
1 - Reported Weighted Average Shares Outstanding in 2020 and 2019
reflects basic shares due to the Net Loss. |
|
L BRANDS,
INC. AND SUBSIDIARIES |
ADJUSTED
FINANCIAL INFORMATION |
(Unaudited) |
(In
thousands except per share amounts) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Third Quarter |
|
Year-to-Date |
|
|
|
2020 |
|
|
|
2019 |
|
|
|
2020 |
|
|
|
2019 |
|
Details of Special Items - Income (Expense) |
|
|
|
|
|
|
|
|
Victoria's
Secret Asset Impairment |
|
$ |
- |
|
|
$ |
(247,532 |
) |
|
$ |
(213,953 |
) |
|
$ |
(247,532 |
) |
Restructuring Charges |
|
|
- |
|
|
|
- |
|
|
|
(80,807 |
) |
|
|
- |
|
Hong Kong
Store Closure and Lease Termination |
|
|
- |
|
|
|
- |
|
|
|
36,287 |
|
|
|
- |
|
Establishment of Victoria's Secret UK and Ireland Joint Venture
with Next PLC |
|
|
29,918 |
|
|
|
- |
|
|
|
29,918 |
|
|
|
- |
|
Special
Items included in Operating Income (Loss) |
|
|
29,918 |
|
|
|
(247,532 |
) |
|
|
(228,555 |
) |
|
|
(247,532 |
) |
La Senza
Guarantees |
|
|
- |
|
|
|
(37,217 |
) |
|
|
- |
|
|
|
(37,217 |
) |
Loss on
Extinguishment of Debt |
|
|
(52,668 |
) |
|
|
- |
|
|
|
(52,668 |
) |
|
|
(39,564 |
) |
Special
Items included in Other Income (Loss) |
|
|
(52,668 |
) |
|
|
(37,217 |
) |
|
|
(52,668 |
) |
|
|
(76,781 |
) |
Net Tax
Benefit from the Resolution of Certain Tax Matters and Changes in
Tax Legislation |
|
|
23,085 |
|
|
|
- |
|
|
|
93,989 |
|
|
|
- |
|
Tax Effect
of Special Items included in Operating Income (Loss) and Other
Income (Loss) |
|
|
9,920 |
|
|
|
27,015 |
|
|
|
57,216 |
|
|
|
36,547 |
|
Special
Items included in Net Income (Loss) |
|
$ |
10,255 |
|
|
$ |
(257,734 |
) |
|
$ |
(130,018 |
) |
|
$ |
(287,766 |
) |
Special
Items included in Earnings (Loss) Per Diluted Share |
|
$ |
0.04 |
|
|
$ |
(0.93 |
) |
|
$ |
(0.46 |
) |
|
$ |
(1.04 |
) |
|
|
|
|
|
|
|
|
|
Reconciliation of Reported Operating Income (Loss) to
Adjusted Operating Income |
|
|
|
|
|
|
|
|
Reported
Operating Income (Loss) |
|
$ |
580,611 |
|
|
$ |
(151,214 |
) |
|
$ |
306,953 |
|
|
$ |
176,731 |
|
Special
Items included in Operating Income (Loss) |
|
|
(29,918 |
) |
|
|
247,532 |
|
|
|
228,555 |
|
|
|
247,532 |
|
Adjusted
Operating Income |
|
$ |
550,693 |
|
|
$ |
96,318 |
|
|
$ |
535,508 |
|
|
$ |
424,263 |
|
|
|
|
|
|
|
|
|
|
Reconciliation of Reported Net Income (Loss) to Adjusted
Net Income |
|
|
|
|
|
|
|
|
Reported Net
Income (Loss) |
|
$ |
330,582 |
|
|
$ |
(251,992 |
) |
|
$ |
(15,882 |
) |
|
$ |
(174,141 |
) |
Special
Items included in Net Income (Loss) |
|
|
(10,255 |
) |
|
|
257,734 |
|
|
|
130,018 |
|
|
|
287,766 |
|
Adjusted Net
Income |
|
$ |
320,327 |
|
|
$ |
5,742 |
|
|
$ |
114,136 |
|
|
$ |
113,625 |
|
|
|
|
|
|
|
|
|
|
Reconciliation of Reported Earnings (Loss) Per Diluted
Share to Adjusted Earnings Per Diluted Share |
|
|
|
|
|
|
|
Reported
Earnings (Loss) Per Diluted Share |
|
$ |
1.17 |
|
|
$ |
(0.91 |
) |
|
$ |
(0.06 |
) |
|
$ |
(0.63 |
) |
Special
Items included in Earnings (Loss) Per Diluted Share |
|
|
(0.04 |
) |
|
|
0.93 |
|
|
|
0.46 |
|
|
|
1.04 |
|
Adjusted
Earnings Per Diluted Share |
|
$ |
1.13 |
|
|
$ |
0.02 |
|
|
$ |
0.41 |
|
|
$ |
0.41 |
|
|
|
|
|
|
|
|
|
|
See Notes to Reconciliation of GAAP Financial Measures to Non-GAAP
Financial Measures. |
|
|
|
|
|
|
|
|
|
|
|
|
L BRANDS, INC. AND
SUBSIDIARIESNOTES TO RECONCILIATION OF GAAP
FINANCIAL MEASURESTO NON-GAAP FINANCIAL
MEASURES(Unaudited)
The “Adjusted Financial Information” provided in
the attached reflects the following non-GAAP financial
measures:
Fiscal 2020
In the third quarter of 2020, adjusted results exclude the
following:
- A $52.7 million pre-tax loss ($40.0 million net of tax of $12.7
million), included in other income (loss), associated with the
early extinguishment of outstanding notes.
- A $29.9 million pre-tax gain ($27.2 million net of tax of $2.7
million), included in general, administrative and store operating
expenses, related to the establishment of a joint venture for the
Victoria’s Secret U.K. and Ireland business with Next PLC.
- A $23.1 million net income tax benefit related to tax matters
associated with foreign investments and recent changes in tax
legislation.
In the second quarter of 2020, adjusted results exclude the
following:
- A $117.1 million charge ($98.7 million net of tax of $18.5
million), included in buying and occupancy expenses, related to the
impairment of certain Victoria’s Secret lease and store
assets.
- An $80.8 million charge ($65.2 million net of tax of $15.6
million), included in general, administrative and store operating
expenses, related to previously announced restructuring
actions.
- A $36.3 million gain ($24.7 million net of tax of $11.6
million), principally included in buying and occupancy expenses,
related to the closure and termination of our lease and the related
liability for the Victoria’s Secret Hong Kong flagship store.
- A $20.5 million income tax benefit related to recent changes in
tax legislation included in the CARES Act.
In the first quarter of 2020, adjusted results exclude the
following:
- A $96.8 million charge ($72.0 million net of tax of $24.8
million), included in buying and occupancy expenses, related to the
impairment of certain Victoria’s Secret store assets.
- A $50.4 million tax benefit related to the resolution of
certain tax matters.
Fiscal 2019
In the third quarter of 2019, adjusted results exclude the
following:
- A $247.5 million charge ($230.0 million net of tax of $17.5
million), $217.1 million included in buying and occupancy expenses
and $30.5 million included in general, administrative and store
operating expenses, related to the impairment of certain Victoria’s
Secret store and other assets.
- 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.
In the second quarter of 2019, adjusted results exclude the
following:
- A $39.6 million pre-tax loss ($30.0 million net of tax of $9.5
million), included in other income (loss), associated with the
early extinguishment of $764 million in outstanding notes maturing
between 2020 and 2022 through the issuance of $500 million of new
notes maturing in 2029 and the use of $315 million in cash,
lowering total debt by $264 million.
In the first quarter of 2019, there were no adjustments to
results.
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.
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