L Brands Reports Record Third Quarter 2014 Earnings

-- PROVIDES FOURTH QUARTER AND RAISES FULL-YEAR 2014 EARNINGS GUIDANCE --

COLUMBUS, Ohio , Nov. 19, 2014 /PRNewswire/ --  L Brands, Inc. (NYSE: LB) today reported 2014 third quarter results.

Third Quarter Results

Earnings per share for the third quarter ended Nov. 1, 2014 , increased 42 percent to a record $0.44 compared to $0.31 for the quarter ended Nov. 2 , 2013.  Third quarter operating income increased 35 percent to $284.1 million compared to $211.0 million last year, and net income was $131.8 million compared to $92.0 million last year. 

The company reported net sales of $2.319 billion for the third quarter ended Nov. 1, 2014 , an increase of 7 percent compared to sales of $2.171 billion for the quarter ended Nov. 2 , 2013.  The company reported a comparable store sales increase of 5 percent for the quarter ended Nov. 1, 2014 .

2014 Outlook

The company stated that it expects 2014 fourth quarter earnings per share to be $1.61 to $1.71 , which is consistent with its previous guidance.  The company raised its full-year earnings forecast to $3.21 to $3.31 per share from $3.03 to $3.18 previously, which includes the previously announced estimated full-year negative impact of about $0.10 to $0.12 related to the exit of certain non-core categories in the Victoria's Secret direct and beauty businesses to allow the brand to focus on faster growing, more profitable product lines.

Earnings Call Information

L Brands will conduct its third quarter earnings call at 9 a.m. Eastern on Nov. 20.  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 third quarter 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 2,971 company-owned specialty stores in the United States , Canada and the United Kingdom , and its brands are sold in about 600 additional franchised 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 third 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 third 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 licensees and franchisees;
  • 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 third quarter earnings call to reflect circumstances existing after the date of this report 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 2013 Annual Report on Form 10-K.

 

L BRANDS

THIRD QUARTER 2014


Comparable Store Sales Increase (Decrease):












Third
Quarter
2014


Third
Quarter
2013


Year-to-

Date

2014


Year-to-

Date

2013










Victoria's Secret1


3%


4%


3%


2%

Bath & Body Works1


7%


2%


4%


3%

L Brands


5%


3%


3%


3%

Victoria's Secret

Direct Sales


2%


(1%)


0%


(4%)










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

 


Total Sales (Millions):










Third

Quarter

 2014


Third

Quarter

 2013


Year-to-

Date

 2014


Year-to-

Date

 2013









Victoria's Secret Stores1

$ 1,177.6


$ 1,104.1


$ 3,785.9


$ 3,570.4

Victoria's Secret Direct

274.7


268.9


1,015.4


1,011.6

  Total Victoria's Secret

$ 1,452.3


$ 1,373.0


$ 4,801.3


$ 4,582.0

Bath & Body Works1

$ 602.7


$ 558.0


$ 1,771.1


$ 1,686.5

Bath & Body Works Direct

56.7


48.7


174.5


149.0

  Total Bath & Body Works

$ 659.4


$ 606.7


$ 1,945.6


$ 1,835.5

VS & BBW International2

$  80.0


$  59.8


$  230.4


$  146.5

Other

$ 127.2


$ 131.6


$ 408.1


$ 391.0

L Brands

$ 2,318.9


$ 2,171.1


$ 7,385.4


$ 6,955.0









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, royalties associated with franchised stores and wholesale sales.

 

Total Company-Owned Stores:








Stores


Stores



Operating


Operating



at 2/1/14

Opened

  Closed

at 11/1/14







Victoria's Secret U.S.


977

9

(4)

982

PINK U.S.


83

32

(1)

114

Victoria's Secret Canada


24

6

-

30

PINK Canada


10

-

-

10

   Total Victoria's Secret


1,094

47

(5)

1,136







Bath & Body Works U.S.


1,559

13

(11)

1,561

Bath & Body Works Canada 


79

10

(1)

88

   Total Bath & Body Works


1,638

23

(12)

1,649







Victoria's Secret U.K.


5

4

-

9

Henri Bendel


29

-

-

29

La Senza Canada


157

-

(9)

148

Total L Brands Stores


2,923

74

(26)

2,971

 

Total Franchise Stores:






Stores


Stores


Operating


Operating


at 2/1/14

Opened

Closed

at 11/1/14






Victoria's Secret Beauty & Accessories

198

54

(7)

245

VS International (Full Assortment)

4

4

-

8

BBW International

55

13

(1)

67

La Senza International

331

3

(66)

268

Total Franchise Stores

588

74

(74)

588

 

L BRANDS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME 

THIRTEEN WEEKS ENDED NOVEMBER 1, 2014 AND NOVEMBER 2, 2013

(Unaudited)

(In thousands except per share amounts) 








2014


2013

Net Sales


$       2,318,851


$       2,171,087

Costs of Goods Sold, Buying and Occupancy


(1,372,424)


(1,314,378)

Gross Profit


946,427


856,709

General, Administrative and Store Operating Expenses


(662,314)


(645,683)

Operating Income


284,113


211,026

Interest Expense


(80,344)


(76,840)

Other Income


701


7,238






Income Before Income Taxes


204,470


141,424

Provision for Income Taxes


72,662


49,440






Net Income 


$          131,808


$           91,984






Net Income Per Diluted Share


$               0.44


$               0.31






Weighted Average Shares Outstanding


298,134


296,544






 

L BRANDS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME 

THIRTY-NINE WEEKS ENDED NOVEMBER 1, 2014 AND NOVEMBER 2, 2013

(Unaudited)

(In thousands except per share amounts) 








2014


2013

Net Sales


$       7,385,392


$       6,954,997

Costs of Goods Sold, Buying and Occupancy


(4,412,513)


(4,168,252)

Gross Profit


2,972,879


2,786,745

General, Administrative and Store Operating Expenses


(1,976,712)


(1,906,733)

Operating Income


996,167


880,012

Interest Expense


(246,297)


(232,181)

Other Income


6,314


11,243






Income Before Income Taxes


756,184


659,074

Provision for Income Taxes


279,037


245,674






Net Income 


$          477,147


$          413,400






Net Income Per Diluted Share


$               1.60


$               1.40






Weighted Average Shares Outstanding


297,600


295,734






 

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SOURCE L Brands, Inc.

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