L Brands Reports Fourth Quarter and Full-Year 2018 Earnings

— Provides First Quarter and Full-Year 2019 Earnings Guidance —

COLUMBUS, Ohio , Feb. 27, 2019 (GLOBE NEWSWIRE) -- L Brands, Inc. (NYSE: LB) today reported 2018 fourth quarter and full-year results.

Fourth Quarter Results


Earnings per share for the 13-week fourth quarter ended Feb. 2, 2019 , were $1.94 compared to $2.33 for the 14-week quarter ended Feb. 3 , 2018.  Thirteen-week fourth quarter operating income was $799.4 million compared to $986.6 million for the 14-week period last year, and 13-week net income was $540.1 million compared to $664.1 million for the 14-week period last year.

Reported results above include certain significant items as follows:

In 2018:

  • A pre-tax charge, principally non-cash, related to the sale of La Senza of $99.2 million , or $0.20 per share. 

In 2017 (totaling to a net benefit of $0.22 per share):

  • A pre-tax charge of $45.0 million , or $0.10 per share, related to a loss on the early extinguishment of debt;
  • A tax benefit of $92.2 million , or $0.32 per share, related to new U.S. tax legislation.

Excluding these items, adjusted 13-week fourth quarter operating income was $898.7 million compared to $986.6 million for the 14-week period last year; 13-week net income was $595.2 million compared to $600.6 million for the 14-week period last year; and 13-week adjusted earnings per share were $2.14 compared to $2.11 for the 14-week period last year.

Net sales were $4.852 billion for the 13-week fourth quarter ended Feb. 2, 2019 , compared to $4.823 billion for the 14 weeks ended Feb. 3 , 2018.  Comparable sales for the 13-week fourth quarter ended Feb. 2, 2019 , increased 3 percent compared to the 13 weeks ended Feb. 3 , 2018. 

Full-Year Results


Earnings per share for the 52-week year ended Feb. 2, 2019 , were $2.31 compared to $3.42 for the 53-week year ended Feb. 3, 2018 . Fifty-two week full-year operating income was $1.237 billion compared to $1.728 billion for the 53-week period last year, and 52-week net income was $643.9 million compared to $983.0 million for the 53-week period last year. 

Excluding significant items, adjusted 52-week full-year earnings per share were $2.82 compared to $3.20 for the 53-week period last year; 52-week adjusted operating income was $1.437 billion compared to $1.728 billion for the 53-week period last year; and 52-week adjusted net income was $786.7 million compared to $919.5 million for the 53-week period last year.  

At the conclusion of this press release is a reconciliation of reported-to-adjusted results, including a description of the significant items.

Net sales were $13.237 billion for the 52-week year ended Feb. 2, 2019 , compared to $12.632 billion for the 53 weeks ended Feb. 3, 2018 . Comparable sales for the 52 weeks ended Feb. 2, 2019 , increased 3 percent compared to the 52 weeks ended Feb. 3 , 2018. 

2019 Outlook


The company currently expects 2019 full-year earnings per share to be between $2.20 and $2.60 , including an approximately breakeven earnings per share result in the first quarter. 

Earnings Call and Additional Information


Additional fourth quarter 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 Feb. 28.  To listen, call 1-866-363-4673 (international dial-in number: 1-973-200-3978); conference ID 3398756.  For an audio replay, call 1-855-859-2056 (international replay number: 1-404-537-3406); conference ID 3398756 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 2,943 company-owned specialty stores in the United States , Canada , the United Kingdom and Greater China , and its brands are also sold in more than 650 franchised locations worldwide.  The company’s products are also available online at www.VictoriasSecret.com and www.BathandBodyWorks.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 the fourth quarter earnings call 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 the fourth quarter earnings call or otherwise made by our company or our management:

  • general economic conditions, consumer confidence, consumer spending patterns and market disruptions including severe weather conditions, natural disasters, health hazards, terrorist activities, financial crises, political crises or other major events, or the prospect of these events;
  • the seasonality of our business;
  • 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, significant health hazards, environmental hazards or natural disasters;
    • 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;
  • our ability to retain key personnel;
  • our ability to attract, develop and retain qualified associates and manage labor-related costs;
  • 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 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 or the fourth quarter earnings call 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 2017 Annual Report on Form 10-K.

For further information, please contact:                                        
L Brands :
Investor Relations           Media Relations
Amie Preston                  Tammy Roberts Myers
(614) 415-6704               (614) 415-7072
apreston@lb.com            communications@lb.com                                                                                                                                          

L BRANDS

FOURTH QUARTER 2018


Comparable Sales Increase (Decrease) (Stores and Direct):

     
Fourth Quarter
2018
  Fourth
Quarter
2017
   
Year
2018
   
Year
2017
 
                   
Victoria’s Secret1   (3 %)   (1 %)   (2 %)   (8 %)  
Bath & Body Works1   12 %   6 %   11 %   5 %  
L Brands2    3 %    2 %    3 %    (3 %)  

1 – Results include company-owned stores in the U.S. and Canada and direct sales.
2 – Results include company-owned stores in the U.S., Canada , the U.K. and Greater China and direct sales.

Comparable Sales Increase (Decrease) (Stores Only):

    Fourth Quarter
2018
  Fourth
Quarter
2017
  Year
2018
  Year
2017
 
                   
Victoria’s Secret1   (7 %)   (6 %)   (6 %)   (8 %)  
Bath & Body Works1   8 %   4 %   8 %   2 %  
L Brands2    (1 %)    (2 %)    (1 %)    (4 %)  

1 – Results include company-owned stores in the U.S. and Canada .
2 – Results include company-owned stores in the U.S., Canada , the U.K. and Greater China .

Total Sales (Millions):

  Fourth
Quarter
 2018
(13 weeks)
  Fourth
Quarter
 2017
(14 weeks)
   
Year
2018
(52 weeks)
   
Year
2017
(53 weeks)
               
Victoria’s Secret1 $ 1,849.3   $ 2,038.3   $ 5,627.9   $ 5,878.9
Victoria’s Secret Direct   682.5     630.6     1,747.0     1,508.3
  Total Victoria’s Secret $ 2,531.8   $ 2,668.9   $ 7,374.9   $ 7,387.2
Bath & Body Works1 $ 1,626.1   $ 1,544.6   $ 3,907.2   $ 3,589.2
Bath & Body Works Direct    324.7      249.1      723.8      558.7
  Total Bath & Body Works $ 1,950.8   $ 1,793.7   $ 4,631.0   $ 4,147.9
VS & BBW International2 $   190.7   $   170.3   $   605.3   $   502.4
Other $ 179.0   $ 190.2   $ 625.7   $ 594.9
L Brands $ 4,852.3   $ 4,823.1   $ 13,236.9   $ 12,632.4

1 – Results include company-owned stores in the U.S. and Canada .
2 – Results include retail sales from company-owned stores outside of the U.S. and Canada , royalties associated with franchised stores and wholesale sales.

Total Company-Owned Stores:

    Stores  

 
    Stores
    Operating     Operating
    at 2/3/18 Opened   Closed Sold at 2/2/19
             
             
Victoria's Secret U.S.   984 2 (29 ) -   957
PINK U.S.   140 1 -   -   141
Victoria's Secret Canada   39 - -   -   39
PINK Canada   7 - (1 ) -   6
  Total Victoria’s Secret   1,170 3 (30 ) -   1,143
             
Bath & Body Works U.S.   1,592 54 (27 ) -   1,619
Bath & Body Works Canada    102 1 (1 ) -   102
  Total Bath & Body Works   1,694 55 (28 ) -   1,721
             
Victoria’s Secret U.K./Ireland   19 2 -   -   21
PINK U.K.   5 - -   -   5
Victoria’s Secret Beauty and Accessories   29 13 (4 ) -   38
Victoria’s Secret China   7 8 -   -   15
  Total International   60 23 (4 ) -   79
             
Henri Bendel   27 - (27 ) -   -
La Senza U.S.1   5 7 -   (12 ) -
La Senza Canada1   119 - (1 ) (118 ) -
Total L Brands Stores   3,075 88 (90 ) (130 ) 2,943

1 – Business was sold to an affiliate of Regent LP on Jan. 6, 2019 .

Total Noncompany-Owned Stores:

    Stores  

 
    Stores  
    Operating   Operating  
    at 2/3/18 Opened   Closed Sold At 2/2/19  
               
Victoria’s Secret Beauty & Accessories – Travel Retail   156 26 (18 ) -   164  
Bath & Body Works – Travel Retail   9 5 (2 ) -   12  
Victoria’s Secret Beauty & Accessories   241 6 (28 ) -   219  
Victoria’s Secret   32 15 -   -   47  
PINK   5 4 -   -   9  
Bath & Body Works   176 51 (4 ) -   223  
La Senza1   194 2 (17 ) (179 ) -  
Total    813 109 (69 ) (179 ) 674  
             

1 – Business was sold to an affiliate of Regent LP on Jan. 6, 2019 .

             
L BRANDS, INC. AND SUBSIDIARIES  
CONSOLIDATED STATEMENTS OF INCOME   
THIRTEEN WEEKS ENDED FEBRUARY 2, 2019 AND FOURTEEN WEEKS ENDED FEBRUARY 3, 2018  
(Unaudited)  
(In thousands except per share amounts)   
             
             
             
             
             
      2018       2017      
Net Sales $   4,852,309     $   4,823,105      
Costs of Goods Sold, Buying and Occupancy     (2,884,629 )       (2,782,769 )    
Gross Profit     1,967,680         2,040,336      
General, Administrative and Store Operating Expenses     (1,068,990 )       (1,053,697 )    
Loss on Divestiture of La Senza      (99,242 )       -      
Operating Income     799,448         986,639      
Interest Expense     (92,812 )       (106,313 )    
Other Income (Loss)     4,390         (38,146 )    
             
Income Before Income Taxes     711,026         842,180      
Provision for Income Taxes     170,944         178,108      
             
Net Income  $   540,082     $   664,072      
             
Net Income Per Diluted Share $   1.94     $   2.33      
             
Weighted Average Shares Outstanding     277,935         284,546      
             

 

           
L BRANDS, INC. AND SUBSIDIARIES  
CONSOLIDATED STATEMENTS OF INCOME   
FIFTY-TWO WEEKS ENDED FEBRUARY 2, 2019 AND FIFTY-THREE WEEKS ENDED FEBRUARY 3, 2018  
(Unaudited)  
(In thousands except per share amounts)    
           
           
           
           
           
      2018       2017    
Net Sales $   13,236,878     $   12,632,431    
Costs of Goods Sold, Buying and Occupancy     (8,338,071 )       (7,673,007 )  
Gross Profit     4,898,807         4,959,424    
General, Administrative and Store Operating Expenses     (3,562,778 )       (3,231,035 )  
Loss on Divestiture of La Senza      (99,242 )       -    
Operating Income     1,236,787         1,728,389    
Interest Expense     (384,728 )       (405,988 )  
Other Income (Loss)     5,124         (10,029 )  
           
Income Before Income Taxes     857,183         1,312,372    
Provision for Income Taxes     213,300         329,386    
           
Net Income  $   643,883     $   982,986    
           
Net Income Per Diluted Share $   2.31     $   3.42    
           
Weighted Average Shares Outstanding     278,840         287,062    
           

 

                     
  L BRANDS, INC. AND SUBSIDIARIES  
  ADJUSTED FINANCIAL INFORMATION  
  (Unaudited)  
  (In thousands except per share amounts)   
                     
                     
      Fourth Quarter   Year-to-Date  
        2018       2017       2018       2017    
  Details of Special Items - Income (Expense)                  
  Victoria's Secret Store Asset Impairment   $   -     $   -     $   (80,878 )   $   -    
  Henri Bendel Closure Costs       -         -         (20,310 )       -    
  Loss on Divestiture of La Senza        (99,242 )       -         (99,242 )       -    
  Special Items included in Operating Income       (99,242 )       -         (200,430 )       -    
  Loss on Extinguishment of Debt       -         (44,985 )       -         (44,985 )  
  Special Items included in Other Income (Loss)       -         (44,985 )       -         (44,985 )  
  Tax Benefit related to Changes in U.S. Tax Legislation       -         92,221         -         92,221    
  Tax Effect of Special Items included in Operating Income and Other Income (Loss)       44,117         16,225         57,580         16,225    
  Special Items included in Net Income   $   (55,125 )   $   63,461     $   (142,850 )   $   63,461    
  Special Items included in Earnings Per Diluted Share   $   (0.20 )   $   0.22     $   (0.51 )   $   0.22    
                     
  Reconciliation of Reported Operating Income to Adjusted Operating Income                  
  Reported Operating Income   $   799,448     $   986,639     $   1,236,787     $   1,728,389    
  Special Items included in Operating Income       99,242         -         200,430         -    
  Adjusted Operating Income   $   898,690     $   986,639     $   1,437,217     $   1,728,389    
                     
  Reconciliation of Reported Net Income to Adjusted Net Income                  
  Reported Net Income    $   540,082     $   664,072     $   643,883     $   982,986    
  Special Items included in Net Income        55,125         (63,461 )       142,850         (63,461 )  
  Adjusted Net Income   $   595,207     $   600,611     $   786,733     $   919,525    
                     
  Reconciliation of Reported Earnings Per Diluted Share to Adjusted                   
    Earnings Per Diluted Share                  
  Reported Earnings Per Diluted Share   $   1.94     $   2.33     $   2.31     $   3.42    
  Special Items included in Earnings Per Diluted Share       0.20         (0.22 )       0.51         (0.22 )  
  Adjusted Earnings Per Diluted Share   $   2.14     $   2.11     $   2.82     $   3.20    
                     
  See Notes to Reconciliation of GAAP Financial Measures to Non-GAAP Financial Measures.          
                     

 

L BRANDS, INC. AND SUBSIDIARIES

NOTES 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 2018

In the fourth quarter of 2018, adjusted results exclude the following:

  • A $99.2 million ( $55.1 million net of tax of $44.1 million ) loss on the sale of La Senza to an affiliate of Regent LP .

In the third quarter of 2018, adjusted results exclude the following:

  • An $80.9 million charge ( $72.7 million net of tax of $8.2 million ), included in buying and occupancy expenses, related to the impairment of certain Victoria’s Secret store assets.
     
  • $20.3 million ( $15.0 million net of tax of $5.3 million ) of Henri Bendel closure costs, included in buying and occupancy expenses ( $13.8 million ) and general, administrative and store operating expenses ( $6.5 million ).

In the first and second quarter of 2018, there were no adjustments to results.

Fiscal 2017

In the fourth quarter of 2017, adjusted results exclude the following:

  • A $45.0 million pre-tax loss ( $28.8 million net of tax of $16.2 million ), included in other income (loss), associated with the early extinguishment of our June 2019 notes. 
     
  • A $92.2 million tax benefit related to changes in U.S. tax legislation.

In the first, second and third quarters of 2017, 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.

 

 

2014_5 Brands LB Logo_TEMP.jpg

L Brands, Inc.