L Brands, Inc. (NYSE: LB) today reported 2020 fourth quarter and
full-year results.
Fourth Quarter ResultsThe
company reported earnings per share of $3.03 for the fourth quarter
ended Jan. 30, 2021, compared to a loss per share of $0.70 for the
quarter ended Feb. 1, 2020. Fourth quarter operating income was
$1.273 billion compared to operating income of $81.7 million last
year, and net income was $860.3 million compared to a net loss of
$192.3 million last year.
Reported results in 2019 include pre-tax,
non-cash impairment charges of $725.0 million ($2.58 per share)
related to Victoria’s Secret goodwill and store-related assets.
On an adjusted basis, which exclude the above
charges in 2019, fourth quarter 2020 earnings per share increased
61 percent to $3.03 compared to adjusted $1.88 last year, operating
income increased 58% to $1.273 billion compared to adjusted $806.7
million last year, and net income was $860.3 million compared to
adjusted $523.7 million last year. Bath & Body Works fourth
quarter operating income increased $250 million, or 38 percent, to
$913.7 million. Victoria’s Secret adjusted fourth quarter operating
income increased $209.8 million, or 108 percent, to $403.4
million.
The company reported net sales of $4.818 billion
for the fourth quarter ended Jan. 30, 2021, compared to net sales
of $4.707 billion for the fourth quarter ended Feb. 1, 2020.
Comparable sales increased 10 percent, consisting of a 22 percent
increase at Bath & Body Works and a 3 percent decrease at
Victoria’s Secret. Fourth quarter sales in the direct channel
increased 74 percent at Bath & Body Works and 33 percent at
Victoria’s Secret.
Full-Year ResultsThe company
reported earnings per share of $3.00 for the year ended Jan. 30,
2021, compared to a loss per share of $1.33 for the year ended Feb.
1, 2020. Full-year operating income was $1.580 billion compared to
$258.4 million last year, and net income was $844.5 million
compared to a net loss of $366.4 million last year.
Excluding significant items, adjusted full-year
earnings per share increased 51 percent to $3.46 compared to $2.29
last year; adjusted operating income increased 47% to $1.808
billion compared to $1.231 billion last year; and adjusted net
income was $974.5 million compared to $637.3 million last year.
Net sales were $11.847 billion for the year
ended Jan. 30, 2021, compared to $12.914 billion for the year ended
Feb. 1, 2020. Comparable sales for the full year increased 21
percent, consisting of a 45 percent increase at Bath & Body
Works and a 1 percent increase at Victoria’s Secret. Full year 2020
sales in the direct channel increased 109 percent at Bath &
Body Works and 31 percent at Victoria’s Secret.
At the conclusion of this press release is a
reconciliation of reported-to-adjusted results, including a
description of the significant items.
Andrew Meslow, Chief Executive Officer of L
Brands, stated, “Following on our record third quarter results, the
exceptional efforts and execution of our team enabled us to deliver
another record performance in the fourth quarter. We experienced
consistent strength at Bath & Body Works along with continued
significant improvement in performance at Victoria’s Secret.
Looking forward, we remain focused on our strategy to deliver
compelling merchandise and experiences to our customers while
maintaining a safe environment. At the same time, we continue to
move ahead in our plans to separate our two businesses. As a result
of the collective initiatives underway, the company is well
positioned to continue driving value for our shareholders.”
First Quarter 2021 OutlookThe
company is forecasting first quarter earnings per share between
$0.35 and $0.45, which represents substantial growth compared to
last year when stores were closed for the majority of the quarter.
Due to the continued uncertainty in the environment, as well as the
impending separation of the Bath & Body Works and Victoria’s
Secret businesses, targeted to occur in August 2021, the company is
not providing earnings guidance for the full year 2021.
Earnings Call and Additional
InformationAdditional fourth quarter and full-year
financial information, including management commentary, is
currently available at www.LB.com. L Brands will
conduct its fourth quarter earnings call at 9:00
a.m. Eastern on February 25. To listen, call
1-888-946-7609 (international dial-in number: 1-517-308-9411);
conference ID 6362067. For an audio replay, call
1-800-685-7910 (international replay number: 1-402-998-0962);
conference ID 6362067 or log onto www.LB.com.
ABOUT L BRANDS:L Brands,
through Bath & Body Works, Victoria’s Secret and PINK, is an
international company. The company operates 2,669 company-operated
specialty stores in the United States, Canada and Greater China, in
more than 700 franchised locations worldwide and through its
websites worldwide.
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; |
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• |
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; |
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• |
the seasonality of our business; |
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• |
difficulties arising from turnover in company leadership or other
key positions; |
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• |
our ability to attract, develop and retain qualified associates and
manage labor-related costs; |
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• |
liabilities arising from divested businesses; |
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• |
the dependence on mall traffic and the availability of suitable
store locations on appropriate terms; |
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• |
our ability to grow through new store openings and existing store
remodels and expansions; |
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• |
our ability to successfully expand internationally and related
risks; |
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• |
our independent franchise, license and wholesale partners; |
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• |
our direct channel businesses; |
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• |
our ability to protect our reputation and our brand images; |
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• |
our ability to attract customers with marketing, advertising and
promotional programs; |
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• |
our ability to protect our trade names, trademarks and
patents; |
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• |
the highly competitive nature of the retail industry and the
segments in which we operate; |
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• |
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; |
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• |
our ability to source, distribute and sell goods and materials on a
global basis, including risks related to: |
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• |
political instability, environmental hazards or natural
disasters; |
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• |
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; |
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• |
duties, taxes and other charges; |
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• |
legal and regulatory matters; |
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• |
volatility in currency exchange rates; |
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• |
local business practices and political issues; |
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• |
potential delays or disruptions in shipping and transportation and
related pricing impacts; |
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• |
disruption due to labor disputes; and |
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• |
changing expectations regarding product safety due to new
legislation; |
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• |
our geographic concentration of vendor and distribution facilities
in central Ohio; |
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• |
fluctuations in foreign currency exchange rates; |
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• |
stock price volatility; |
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• |
our ability to pay dividends and related effects; |
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• |
our ability to maintain our credit rating; |
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• |
our ability to service or refinance our debt; |
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• |
shareholder activism matters; |
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• |
the ability of our vendors to deliver products in a timely manner,
meet quality standards and comply with applicable laws and
regulations; |
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• |
fluctuations in product input costs; |
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• |
our ability to adequately protect our assets from loss and
theft; |
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• |
fluctuations in energy costs; |
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• |
increases in the costs of mailing, paper and printing; |
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• |
claims arising from our self-insurance; |
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• |
our ability to implement and maintain information technology
systems and to protect associated data; |
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• |
our ability to maintain the security of customer, associate,
third-party or company information; |
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• |
our ability to comply with laws and regulations or other
obligations related to data privacy and security; |
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• |
our ability to comply with regulatory requirements; |
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• |
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: |
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|
L Brands: |
|
Investor Relations |
Media Relations |
Amie Preston |
Brooke Wilson |
(614) 415-6704 |
(614) 415-6042 |
apreston@lb.com |
communications@lb.com |
L BRANDSFOURTH QUARTER
2020
Comparable Sales Increase (Decrease) (Stores and
Direct):
|
|
FourthQuarter2020 |
|
FourthQuarter2019 |
|
FullYear2020 |
|
FullYear2019 |
|
|
|
|
|
|
|
|
|
Bath & Body Works1 |
|
22% |
|
10% |
|
45% |
|
10% |
Victoria’s Secret2 |
|
(3%) |
|
(10%) |
|
1% |
|
(8%) |
L
Brands2 |
|
10% |
|
(2%) |
|
21% |
|
(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):
|
|
FourthQuarter2020 |
|
FourthQuarter2019 |
|
FullYear2020 |
|
FullYear2019 |
|
|
|
|
|
|
|
|
|
Bath & Body Works1 |
|
9% |
|
5% |
|
26% |
|
5% |
Victoria’s Secret2 |
|
(18%) |
|
(11%) |
|
(15%) |
|
(9%) |
L
Brands2 |
|
(3%) |
|
(4%) |
|
5% |
|
(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):
|
Fourth Quarter 2020 |
|
Fourth Quarter 2019 |
|
%Inc/(Dec) |
|
Full Year 2020 |
|
Full Year 2019 |
|
%Inc/(Dec) |
|
|
|
|
|
|
|
|
|
|
|
|
Bath & Body Works Stores |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
– U.S. and Canada |
$ |
1,903.3 |
|
|
$ |
1,744.0 |
|
|
9.1 |
% |
|
$ |
4,206.9 |
|
|
$ |
4,212.4 |
|
|
(0.1 |
%) |
Bath & Body Works
Direct |
|
749.5 |
|
|
|
430.7 |
|
|
74.0 |
% |
|
|
2,003.5 |
|
|
|
958.1 |
|
|
109.1 |
% |
Bath & Body Works
International1 |
|
65.4 |
|
|
|
56.2 |
|
|
16.4 |
% |
|
|
223.7 |
|
|
|
185.2 |
|
|
20.8 |
% |
Total Bath & Body
Works |
$ |
2,718.2 |
|
|
$ |
2,230.9 |
|
|
21.8 |
% |
|
$ |
6,434.1 |
|
|
$ |
5,355.7 |
|
|
20.1 |
% |
Victoria’s Secret Stores
– |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. and Canada |
$ |
1,162.3 |
|
|
$ |
1,649.3 |
|
|
(29.5 |
%) |
|
$ |
2,795.1 |
|
|
$ |
5,111.5 |
|
|
(45.3 |
%) |
Victoria’s Secret Direct |
|
831.1 |
|
|
|
626.5 |
|
|
32.7 |
% |
|
|
2,222.7 |
|
|
|
1,693.0 |
|
|
31.3 |
% |
Victoria’s Secret
International2 |
|
106.3 |
|
|
|
200.4 |
|
|
(47.0 |
%) |
|
|
395.0 |
|
|
|
704.3 |
|
|
(43.9 |
%) |
Total Victoria’s
Secret |
$ |
2,099.7 |
|
|
$ |
2,476.2 |
|
|
(15.2 |
%) |
|
$ |
5,412.8 |
|
|
$ |
7,508.8 |
|
|
(27.9 |
%) |
Other |
|
- |
|
|
|
- |
|
|
- |
|
|
|
- |
|
|
|
49.7 |
|
|
- |
|
L Brands |
$ |
4,817.9 |
|
|
$ |
4,707.1 |
|
|
2.4 |
% |
|
$ |
11,846.9 |
|
|
$ |
12,914.2 |
|
|
(8.3 |
%) |
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 2/1/20 |
Opened |
Closed |
Transferred to joint venture |
Stores at 1/30/21 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bath & Body Works |
1,637 |
|
26 |
|
(30 |
) |
- |
|
1,633 |
|
Bath & Body Works
Canada |
102 |
|
1 |
|
- |
|
- |
|
103 |
|
Total Bath and Body Works |
1,739 |
|
27 |
|
(30 |
) |
- |
|
1,736 |
|
|
|
|
|
|
|
|
|
|
Victoria's Secret |
909 |
|
19 |
|
(225 |
) |
- |
|
703 |
|
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 |
|
(6 |
) |
- |
|
36 |
|
Victoria’s Secret Greater
China |
23 |
|
4 |
|
(1 |
) |
- |
|
26 |
|
Total Victoria's Secret |
1,181 |
|
26 |
|
(248 |
) |
(26 |
) |
933 |
|
|
|
|
|
|
|
|
|
|
Total L
Brands |
2,920 |
|
53 |
|
(278 |
) |
(26 |
) |
2,669 |
|
Total Partner-Operated Stores:
|
|
|
|
|
|
|
|
|
|
|
Stores at 2/1/20 |
Opened |
Closed |
Transferred to joint venture |
Stores at 1/30/21 |
|
|
|
|
|
|
|
|
|
|
Bath & Body Works |
262 |
|
12 |
|
(4 |
) |
- |
|
270 |
|
Bath & Body Works – Travel
Retail |
16 |
|
2 |
|
- |
|
- |
|
18 |
|
Victoria’s Secret |
72 |
|
11 |
|
(1 |
) |
21 |
|
103 |
|
PINK |
12 |
|
1 |
|
(1 |
) |
5 |
|
17 |
|
Victoria’s Secret Beauty &
Accessories |
207 |
|
4 |
|
(16 |
) |
- |
|
195 |
|
Victoria’s Secret Beauty &
Accessories – Travel Retail |
153 |
|
4 |
|
(14 |
) |
- |
|
143 |
|
Total L
Brands |
722 |
|
34 |
|
(36 |
) |
26 |
|
746 |
|
|
L BRANDS, INC. AND
SUBSIDIARIESCONSOLIDATED STATEMENTS OF INCOME
(LOSS)THIRTEEN WEEKS ENDED JANUARY 30, 2021 AND
FEBRUARY 1, 2020(Unaudited)(In
thousands except per share amounts)
|
2020 |
|
2019 |
Net Sales |
$ |
4,817,940 |
|
|
$ |
4,707,141 |
|
Costs of Goods Sold, Buying and Occupancy |
|
(2,511,020 |
) |
|
|
(2,913,454 |
) |
Gross Profit |
|
2,306,920 |
|
|
|
1,793,687 |
|
General, Administrative and Store Operating Expenses |
|
(1,034,319 |
) |
|
|
(1,022,397 |
) |
Impairment of Victoria's Secret Goodwill |
|
- |
|
|
|
(689,576 |
) |
Operating Income |
|
1,272,601 |
|
|
|
81,714 |
|
Interest Expense |
|
(116,690 |
) |
|
|
(91,977 |
) |
Other Income (Loss) |
|
(546 |
) |
|
|
3,720 |
|
|
|
|
|
Income (Loss) Before Income Taxes |
|
1,155,365 |
|
|
|
(6,543 |
) |
Provision for Income Taxes |
|
295,034 |
|
|
|
185,712 |
|
|
|
|
|
Net Income (Loss) |
$ |
860,331 |
|
|
$ |
(192,255 |
) |
|
|
|
|
Net Income (Loss) Per Diluted Share |
$ |
3.03 |
|
|
$ |
(0.70 |
) |
|
|
|
|
Weighted Average Shares Outstanding1 |
|
283,802 |
|
|
|
276,477 |
|
|
|
|
|
1 - Reported Weighted Average Shares Outstanding in the fourth
quarter of 2019 reflects basic shares due to the Net
Loss. |
|
|
|
|
L BRANDS, INC. AND
SUBSIDIARIESCONSOLIDATED STATEMENTS OF INCOME
(LOSS)FIFTY-TWO WEEKS ENDED JANUARY 30, 2021 AND
FEBRUARY 1, 2020(Unaudited)(In
thousands except per share amounts)
|
2020 |
|
2019 |
Net Sales |
$ |
11,846,891 |
|
|
$ |
12,914,236 |
|
Costs of Goods Sold, Buying and Occupancy |
|
(7,180,393 |
) |
|
|
(8,463,793 |
) |
Gross Profit |
|
4,666,498 |
|
|
|
4,450,443 |
|
General, Administrative and Store Operating Expenses |
|
(3,086,944 |
) |
|
|
(3,471,946 |
) |
Impairment of Victoria's Secret Goodwill |
|
- |
|
|
|
(720,051 |
) |
Operating Income |
|
1,579,554 |
|
|
|
258,446 |
|
Interest Expense |
|
(438,462 |
) |
|
|
(378,082 |
) |
Other Loss |
|
(48,774 |
) |
|
|
(61,830 |
) |
|
|
|
|
Income (Loss) Before Income Taxes |
|
1,092,318 |
|
|
|
(181,466 |
) |
Provision for Income Taxes |
|
247,868 |
|
|
|
184,930 |
|
|
|
|
|
Net Income (Loss) |
$ |
844,450 |
|
|
$ |
(366,396 |
) |
|
|
|
|
Net Income (Loss) Per Basic Share |
$ |
3.00 |
|
|
$ |
(1.33 |
) |
|
|
|
|
Weighted Average Shares Outstanding1 |
|
281,471 |
|
|
|
276,163 |
|
|
|
|
|
1 - Reported Weighted Average Shares Outstanding in 2019 reflects
basic shares due to the Net Loss. |
|
|
|
|
L BRANDS, INC. AND
SUBSIDIARIESADJUSTED FINANCIAL
INFORMATION(Unaudited)(In
thousands except per share amounts)
|
Fourth Quarter |
|
Year-to-Date |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
Details of Special Items - Income (Expense) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impairment of Victoria's Secret Goodwill |
$ |
- |
|
|
$ |
(689,576 |
) |
|
$ |
- |
|
|
$ |
(720,051 |
) |
Victoria's Secret Asset Impairment |
|
- |
|
|
|
(35,384 |
) |
|
|
(213,953 |
) |
|
|
(252,442 |
) |
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 |
|
|
|
- |
|
Special Items included in Operating Income |
|
- |
|
|
|
(724,960 |
) |
|
|
(228,555 |
) |
|
|
(972,493 |
) |
La Senza Guarantees |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(37,217 |
) |
Loss on Extinguishment of Debt |
|
- |
|
|
|
- |
|
|
|
(52,668 |
) |
|
|
(39,564 |
) |
Special Items included in Other Income (Loss) |
|
- |
|
|
|
- |
|
|
|
(52,668 |
) |
|
|
(76,781 |
) |
Net Tax Benefit from the Resolution of Certain Tax Matters and
Changes in Tax Legislation |
|
- |
|
|
|
- |
|
|
|
93,989 |
|
|
|
- |
|
Tax Effect of Special Items included in Operating Income and Other
Income (Loss) |
|
- |
|
|
|
8,997 |
|
|
|
57,216 |
|
|
|
45,544 |
|
Special Items included in Net Income (Loss) |
$ |
- |
|
|
$ |
(715,963 |
) |
|
$ |
(130,018 |
) |
|
$ |
(1,003,730 |
) |
Special Items included in Earnings (Loss) Per Diluted Share |
$ |
- |
|
|
$ |
(2.58 |
) |
|
$ |
(0.46 |
) |
|
$ |
(3.62 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Reported Operating Income to Adjusted
Operating Income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported Operating Income |
$ |
1,272,601 |
|
|
$ |
81,714 |
|
|
$ |
1,579,554 |
|
|
$ |
258,446 |
|
Special Items included in Operating Income |
|
- |
|
|
|
724,960 |
|
|
|
228,555 |
|
|
|
972,493 |
|
Adjusted Operating Income |
$ |
1,272,601 |
|
|
$ |
806,674 |
|
|
$ |
1,808,109 |
|
|
$ |
1,230,939 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Reported Net Income (Loss) to Adjusted
Net Income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported Net Income (Loss) |
$ |
860,331 |
|
|
$ |
(192,255 |
) |
|
$ |
844,450 |
|
|
$ |
(366,396 |
) |
Special Items included in Net Income (Loss) |
|
- |
|
|
|
715,963 |
|
|
|
130,018 |
|
|
|
1,003,730 |
|
Adjusted Net Income |
$ |
860,331 |
|
|
$ |
523,708 |
|
|
$ |
974,468 |
|
|
$ |
637,334 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Reported Earnings (Loss) Per Diluted
Share to Adjusted Earnings Per Diluted Share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported Earnings (Loss) Per Diluted Share |
$ |
3.03 |
|
|
$ |
(0.70 |
) |
|
$ |
3.00 |
|
|
$ |
(1.33 |
) |
Special Items included in Earnings (Loss) Per Diluted Share |
|
- |
|
|
|
2.58 |
|
|
|
0.46 |
|
|
|
3.62 |
|
Adjusted Earnings Per Diluted Share |
$ |
3.03 |
|
|
$ |
1.88 |
|
|
$ |
3.46 |
|
|
$ |
2.29 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See Notes to Reconciliation of GAAP Financial Measures to Non-GAAP
Financial Measures. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
L BRANDS, INC. AND
SUBSIDIARIESNOTES TO RECONCILIATION OF GAAP
FINANCIAL MEASURES TO NON-GAAP FINANCIAL
MEASURES(Unaudited)
The “Adjusted Financial Information” provided in the attached
reflects the following non-GAAP financial measures:
Fiscal 2020
In the fourth quarter of 2020, there were no adjustments to
results.
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 fourth quarter of 2019, adjusted results exclude the
following:
|
• |
A $689.6 million charge ($686.4 million net of tax of $3.2 million)
related to the impairment of Victoria’s Secret goodwill. |
|
|
|
|
• |
A $35.4 million charge ($29.5 million net of tax of $5.8 million),
included in buying and occupancy expenses, related to the
impairment of certain Victoria’s Secret store-related assets. |
In the third quarter of 2019, adjusted results exclude the
following:
|
• |
A $217.1 million charge ($199.6 million net of tax of $17.5
million), included in buying and occupancy expenses, related to the
impairment of Victoria’s Secret store-related assets. |
|
|
|
|
• |
A $30.5 million charge (no tax impact) related to the impairment of
Victoria’s Secret goodwill. |
|
|
|
|
• |
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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