L Brands Reports Record Fourth Quarter and Full-Year Earnings

— Updates February Comp Guidance and Provides First Quarter and Full-Year 2016 Earnings Guidance —

COLUMBUS, Ohio , Feb. 24, 2016 (GLOBE NEWSWIRE) -- L Brands, Inc. (NYSE:LB) today reported record 2015 fourth quarter and full-year results.

Leslie H. Wexner , chairman and chief executive officer, commented, “We delivered record results in a year when many retailers struggled.  These results are a reflection of the strength of our brands and were driven by tremendous focus and execution across the enterprise.  I am very optimistic heading into 2016 and confident in our growth opportunities.”

Fourth Quarter Results


Earnings per share for the fourth quarter ended Jan. 30, 2016 , increased 14% to $2.15 from $1.89 for the quarter ended Jan. 31 , 2015.  Fourth quarter operating income increased 13% to $1.078 billion from $957.0 million last year.  Net income increased 13% to $636.0 million compared to $564.8 million last year.

Net sales for the fourth quarter ended Jan. 30, 2016 , were $4.395 billion , an increase of 8% compared to $4.069 billion for the quarter ended Jan. 31 , 2015.  Comparable store sales for the fourth quarter ended Jan. 30, 2016 , increased 6%. 

Full-Year Results


Adjusted earnings per share for the year ended Jan. 30, 2016 , which exclude a $78.1 million ( $0.23 per share) first quarter pre-tax gain on the sale of the company’s remaining interest in the third-party apparel sourcing business, increased 14% to $3.99 compared to $3.50 for the year ended Jan. 31 , 2015.  Full-year operating income increased 12% to $2.192 billion compared to $1.953 billion last year, and adjusted net income was $1.184 billion compared to $1.042 billion last year.

Including the gain from the sale of the sourcing business mentioned above, reported full-year earnings per share were $4.22 compared to $3.50 last year, and net income was $1.253 billion compared to $1.042 billion last year.

Net sales for the year ended Jan. 30, 2016 , were $12.154 billion , an increase of 6% compared to $11.454 billion for the year ended Jan. 31 , 2015.  Comparable store sales for the year ended Jan. 30, 2016 , increased 5%.

2016 Outlook


The company currently expects 2016 full-year earnings per share to be between $3.90 and $4.10 , including earnings per share between $0.50 and $0.55 in the first quarter.  The 2016 earnings per share forecast includes negative impacts related to continued pressure from foreign currency exchange rates and incremental interest expense related to the $1 billion October 2015 note issuance.

The company expects to report a mid-single digit increase in February comparable store sales, above expectations for a low-single digit increase, reflecting a mid-single digit increase at both Victoria’s Secret and Bath & Body Works.

Beginning with the February 2016 sales report, the company will include direct sales in comparable store sales results, consistent with industry practice.

Earnings Call and Additional Information


L Brands will conduct its fourth quarter earnings call at 9 a.m. Eastern on Feb. 25.  To listen, call 1-866-363-4673 (international dial-in number: 1-973-200-3978).  For an audio replay, call 1-855-859-2056 (conference ID 33156271) (international replay number: 1-404-537-3406 (conference ID 33156271)) or log onto www.LB.com.  Additional fourth quarter and full-year financial information is also available at www.LB.com.

ABOUT L BRANDS :


L Brands , through Victoria’s Secret, PINK, Bath & Body Works, La Senza and Henri Bendel , is an international company.  The company operates 3,005 company-owned specialty stores in the United States , Canada and the United Kingdom , and its brands are sold in more than 700 additional noncompany-owned locations worldwide.  The company’s products are also available online at www.VictoriasSecret.com, www.BathandBodyWorks.com, www.HenriBendel.com and www.LaSenza.com.

Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995

L Brands, Inc. cautions 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 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:

  • 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 a high volume of 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 into global markets and related risks;
  • our relationships with independent franchise, license and wholesale partners;
  • our direct channel businesses;
  • our failure to protect our reputation and our brand images;
  • our failure to protect our trade names, trademarks and patents;
  • the highly competitive nature of the retail industry generally and the segments in which we operate particularly;
  • consumer acceptance of our products and our ability to 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;
    • 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;
  • fluctuations in foreign currency exchange rates;
  • stock price volatility;
  • our failure 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 employees and manage labor-related costs;
  • the inability of our manufacturers to deliver products in a timely manner and meet quality standards;
  • fluctuations in product input costs;
  • 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 failure to maintain the security of customer, associate, supplier or company information;
  • our failure to comply with regulatory requirements;
  • tax matters; and
  • legal and compliance 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 the fourth quarter earnings call 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 2014 Annual Report on Form 10-K.

L BRANDS

FOURTH QUARTER 2015


Comparable Store Sales Increase (Decrease):

    Fourth Quarter   Year
      2015      2014      2015      2014 
                 
Victoria’s Secret Stores1     5 %     4 %     5 %     3 %
Bath & Body Works1     6 %     8 %     5 %     6 %
L Brands      6 %      6 %     5 %     4 %
Victoria’s Secret Direct Sales      15 %     (2 %)     3 %     (1 %)

1 – Results include company-owned stores in the United States and Canada .


Total Sales (Millions):

  Fourth Quarter   Year-to-Date
    2015       2014       2015       2014  
               
Victoria’s Secret Stores1 $ 2,047.2     $ 1,914.2     $ 6,112.5     $ 5,700.2  
Victoria’s Secret Direct   567.1       492.1       1,559.6       1,507.4  
  Total Victoria’s Secret $ 2,614.3     $ 2,406.3     $ 7,672.1     $ 7,207.6  
Bath & Body Works1 $ 1,361.8     $ 1,276.7     $ 3,225.0     $ 3,047.8  
Bath & Body Works Direct    157.8        127.3       361.6       301.8  
  Total Bath & Body Works $ 1,519.6     $ 1,404.0     $ 3,586.6     $ 3,349.6  
VS & BBW International2 $   112.3     $   105.5     $   385.2     $   335.9  
Other3 $ 148.8     $ 152.9     $ 509.9     $ 561.0  
L Brands $ 4,395.0     $ 4,068.7     $ 12,153.8     $ 11,454.1  

1 – Results include company-owned stores in the United States and Canada .
2 – Results include retail sales from company-owned stores outside of the United States and Canada and royalty and wholesale sales associated with partner-operated stores.
3 – Results include La Senza, Henri Bendel and Mast external sales.


Total Company-Owned Stores:

    Stores         Stores
    Operating         Operating
    at 1/31/15  Opened    Closed  at 1/30/16
           
Victoria's Secret U.S.   983 12   (5 ) 990
PINK U.S.   115 16   (3 ) 128
Victoria's Secret Canada   31 6   -   37
PINK Canada   10 -   (1 ) 9
  Total Victoria’s Secret   1,139 34   (9 ) 1,164
           
Bath & Body Works U.S.   1,558 23   (7 ) 1,574
Bath & Body Works Canada    88 10   -   98
  Total Bath & Body Works   1,646 33   (7 ) 1,672
           
Victoria’s Secret U.K.   8 4   -   12
PINK U.K.   2 -   -   2
Henri Bendel   29 -   -   29
La Senza Canada   145 1   (20 ) 126
Total L Brands Stores   2,969 72   (36 ) 3,005


Total Noncompany-Owned Stores:

    Stores         Stores
    Operating         Operating
    at 1/31/15  Opened   Closed  at 1/30/16
           
Victoria’s Secret Beauty & Accessories   290 88   (5 ) 373
Victoria’s Secret   13 3   -   16
PINK   1 2   -   3
Bath & Body Works   80 47   (2 ) 125
La Senza   266 5   (50 ) 221
Total    650 145   (57 ) 738
           


L BRANDS, INC. AND SUBSIDIARIES  
CONSOLIDATED STATEMENTS OF INCOME   
THIRTEEN WEEKS ENDED JANUARY 30, 2016 AND JANUARY 31, 2015  
(Unaudited)  
(In thousands except per share amounts)   
             
      2015       2014      
Net Sales $   4,395,039     $   4,068,685      
Costs of Goods Sold, Buying and Occupancy     (2,392,626 )       (2,233,914 )    
Gross Profit     2,002,413         1,834,771      
General, Administrative and Store Operating Expenses     (924,435 )       (877,818 )    
Operating Income     1,077,978         956,953      
Interest Expense     (97,151 )       (77,744 )    
Other Income     1,274         337      
             
Income Before Income Taxes     982,101         879,546      
Provision for Income Taxes     346,084         314,733      
             
Net Income  $   636,017     $   564,813      
             
Net Income Per Diluted Share $   2.15     $   1.89      
             
Weighted Average Shares Outstanding     295,174         299,040      
             

 

L BRANDS, INC. AND SUBSIDIARIES  
CONSOLIDATED STATEMENTS OF INCOME   
FIFTY-TWO WEEKS ENDED JANUARY 30, 2016 AND JANUARY 31, 2015  
(Unaudited)  
(In thousands except per share amounts)    
           
      2015       2014    
Net Sales $   12,153,789     $   11,454,078    
Costs of Goods Sold, Buying and Occupancy     (6,950,299 )       (6,646,427 )  
Gross Profit     5,203,490         4,807,651    
General, Administrative and Store Operating Expenses     (3,011,981 )       (2,854,531 )  
Operating Income     2,191,509         1,953,120    
Interest Expense     (333,739 )       (324,042 )  
Other Income     76,609         6,653    
           
Income Before Income Taxes     1,934,379         1,635,731    
Provision for Income Taxes     681,387         593,771    
           
Net Income  $   1,252,992     $   1,041,960    
           
Net Income Per Diluted Share $   4.22     $   3.50    
           
Weighted Average Shares Outstanding     296,788         297,960    
           

 

L BRANDS, INC. AND SUBSIDIARIES  
CONSOLIDATED STATEMENTS OF INCOME   
FIFTY-TWO WEEKS ENDED JANUARY 30, 2016 AND JANUARY 31, 2015  
(Unaudited)  
(In thousands except per share amounts)      
                     
      2015     2014  
                     
    Reported   Adjustments   Adjusted   Reported    
Net Sales $   12,153,789     $   -     $   12,153,789     $   11,454,078      
Costs of Goods Sold, Buying & Occupancy     (6,950,299 )           (6,950,299 )       (6,646,427 )    
Gross Profit     5,203,490         -         5,203,490         4,807,651      
General, Administrative and Store Operating Expenses     (3,011,981 )           (3,011,981 )       (2,854,531 )    
Operating Income     2,191,509         -         2,191,509         1,953,120      
Interest Expense     (333,739 )       -         (333,739 )       (324,042 )    
Other Income     76,609         (78,057 )       (1,448 )       6,653      
                     
Income Before Income Taxes     1,934,379         (78,057 )       1,856,322         1,635,731      
Provision for Income Taxes     681,387         (9,079 )       672,308         593,771      
                     
Net Income  $   1,252,992     $   (68,978 )   $   1,184,014     $   1,041,960      
                     
Net Income Per Diluted Share $   4.22         $   3.99     $   3.50      
                     
Weighted Average Shares Outstanding     296,788             296,788         297,960      
                     
                     
See Notes to Consolidated Statements of Income and Reconciliation of Adjusted Results for additional information.  

 


L BRANDS, INC. AND SUBSIDIARIES 

NOTES TO CONSOLIDATED STATEMENTS OF INCOME AND 

RECONCILIATION OF ADJUSTED RESULTS 

(Unaudited)

The “Adjusted Results” provided in the attached unaudited Consolidated Statements of Income and Reconciliation of Adjusted Results are non-GAAP financial measures and reflect the following:

Fiscal 2015

In the second, third and fourth quarters of 2015, there were no adjustments to results.

In the first quarter of 2015, adjusted results exclude the following:

  • A $78.1 million pre-tax gain ( $69.0 million net of tax) included in other income, related to the sale of our remaining interest in the third-party apparel sourcing business.           

Fiscal 2014

In the first, second, third and fourth quarters of 2014, there were no adjustments to results.

The Unaudited Adjusted Consolidated Statements of Income 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.  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. The Unaudited Adjusted Consolidated Statements of Income 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.

 

For further information, please contact:

L Brands:
Investor Relations
Amie Preston
(614) 415-6704
apreston@lb.com

Media Relations
Tammy Roberts Myers
(614) 415-7072
communications@lb.com

Primary Logo

L Brands Inc