L Brands, Inc. (NYSE:LB) today reported 2015 third quarter results.
Third Quarter ResultsEarnings
per share for the third quarter ended Oct. 31, 2015, increased 25
percent to a record $0.55 compared to $0.44 for the quarter ended
Nov. 1, 2014. Third quarter operating income increased 19
percent to $338.8 million compared to $284.1 million last year, and
net income was $164.0 million compared to $131.8 million last
year.
The company reported net sales of $2.482 billion
for the quarter ended Oct. 31, 2015, an increase of 7 percent
compared to net sales of $2.319 billion for the quarter ended Nov.
1, 2014. Comparable store sales increased 7 percent for the
quarter ended Oct. 31, 2015.
Leslie H. Wexner, Chairman and CEO, commented,
“We delivered record results in the third quarter. Our brands
are differentiated and have high emotional content and we continue
to deliver new, compelling merchandise in an exciting in-store
experience. We remain focused on executing fundamentals and
staying close to our customers. We are pleased with our
month-to-date performance and we are well-positioned for the most
significant part of our year which is in front of us.”
2015 OutlookThe company stated
that it expects 2015 fourth quarter earnings per share to be $1.85
to $1.95. The company raised its adjusted full-year earnings
forecast to $3.69 to $3.79 per share from $3.58 to $3.73
previously, which incorporates the third quarter earnings beat to
its previous forecast and increased fourth quarter interest expense
of approximately $0.04 per share related to its recent $1 billion
note issuance. The full-year guidance also includes the
previously announced negative foreign exchange impact of
approximately $0.12 per share.
Earnings Call InformationL
Brands will conduct its third quarter earnings call at 9:00 a.m.
Eastern on November 19. 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
3,003 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 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 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
third quarter earnings call to reflect circumstances existing after
the date of this press release or the third 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 BRANDSTHIRD QUARTER
2015
Comparable Store Sales Increase (Decrease):
|
|
Third Quarter |
|
Year-to-Date |
|
|
|
2015 |
|
|
|
2014 |
|
|
|
2015 |
|
|
|
2014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Victoria’s Secret1 |
|
|
7 |
% |
|
|
3 |
% |
|
|
5 |
% |
|
|
3 |
% |
Bath & Body
Works1 |
|
|
6 |
% |
|
|
7 |
% |
|
|
5 |
% |
|
|
4 |
% |
L
Brands |
|
|
7 |
% |
|
|
5 |
% |
|
|
5 |
% |
|
|
3 |
% |
Victoria’s
Secret Direct Sales |
|
|
4 |
% |
|
|
2 |
% |
|
|
(2 |
%) |
|
|
0 |
% |
1 – Results include company-owned stores in the United States
and Canada.
Total Sales (Millions):
|
Third Quarter |
|
Year-to-Date |
|
|
2015 |
|
|
|
2014 |
|
|
|
2015 |
|
|
|
2014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Victoria’s Secret
Stores1 |
$ |
1,282.1 |
|
|
$ |
1,177.6 |
|
|
$ |
4,065.3 |
|
|
$ |
3,785.9 |
|
Victoria’s Secret
Direct |
|
285.4 |
|
|
|
274.7 |
|
|
|
992.5 |
|
|
|
1,015.4 |
|
Total Victoria’s
Secret |
$ |
1,567.5 |
|
|
$ |
1,452.3 |
|
|
$ |
5,057.8 |
|
|
$ |
4,801.3 |
|
Bath & Body
Works1 |
$ |
637.2 |
|
|
$ |
602.7 |
|
|
$ |
1,863.2 |
|
|
$ |
1,771.1 |
|
Bath & Body Works
Direct |
|
68.3 |
|
|
|
56.7 |
|
|
|
203.8 |
|
|
|
174.5 |
|
Total Bath &
Body Works |
$ |
705.5 |
|
|
$ |
659.4 |
|
|
$ |
2,067.0 |
|
|
$ |
1,945.6 |
|
VS & BBW
International2 |
$ |
92.8 |
|
|
$ |
80.0 |
|
|
$ |
273.0 |
|
|
$ |
230.4 |
|
Other3 |
$ |
115.8 |
|
|
$ |
127.2 |
|
|
$ |
361.0 |
|
|
$ |
408.1 |
|
L
Brands |
$ |
2,481.6 |
|
|
$ |
2,318.9 |
|
|
$ |
7,758.8 |
|
|
$ |
7,385.4 |
|
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 10/31/15 |
|
|
|
|
|
|
Victoria's Secret
U.S. |
|
983 |
9 |
|
(3 |
) |
989 |
PINK U.S. |
|
115 |
15 |
|
(3 |
) |
127 |
Victoria's Secret
Canada |
|
31 |
4 |
|
- |
|
35 |
PINK Canada |
|
10 |
- |
|
- |
|
10 |
Total Victoria’s
Secret |
|
1,139 |
28 |
|
(6 |
) |
1,161 |
|
|
|
|
|
|
|
|
Bath & Body Works
U.S. |
|
1,558 |
19 |
|
(4 |
) |
1,573 |
Bath & Body Works
Canada |
|
88 |
10 |
|
- |
|
98 |
Total Bath &
Body Works |
|
1,646 |
29 |
|
(4 |
) |
1,671 |
|
|
|
|
|
|
|
|
Victoria’s Secret
U.K. |
|
8 |
- |
|
- |
|
8 |
PINK U.K. |
|
2 |
- |
|
- |
|
2 |
Henri Bendel |
|
29 |
- |
|
- |
|
29 |
La Senza Canada |
|
145 |
1 |
|
(14 |
) |
132 |
Total L Brands
Stores |
|
2,969 |
58 |
|
(24 |
) |
3,003 |
Total Noncompany-Owned Stores:
|
|
Stores |
|
|
|
|
Stores |
|
|
Operating |
|
|
|
|
Operating |
|
|
at 1/31/15 |
Opened |
Closed |
at 10/31/15 |
|
|
|
|
|
|
Victoria’s Secret Beauty
& Accessories |
|
290 |
57 |
|
(5 |
) |
342 |
Victoria’s Secret |
|
13 |
2 |
|
- |
|
15 |
PINK |
|
1 |
2 |
|
- |
|
3 |
Bath & Body Works |
|
80 |
32 |
|
(2 |
) |
110 |
La Senza |
|
266 |
3 |
|
(37 |
) |
232 |
Total |
|
650 |
96 |
|
(44 |
) |
702 |
|
|
|
|
|
|
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 and third 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 and third 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.
|
|
|
|
|
|
|
L BRANDS, INC. AND SUBSIDIARIES |
|
CONSOLIDATED STATEMENTS OF
INCOME |
|
THIRTEEN WEEKS ENDED OCTOBER 31, 2015 AND
NOVEMBER 1, 2014 |
|
(Unaudited) |
|
(In thousands except per share
amounts) |
|
|
|
|
|
|
|
|
|
|
|
2015 |
|
|
|
2014 |
|
|
|
Net Sales |
$ |
2,481,575 |
|
|
$ |
2,318,851 |
|
|
|
Costs of Goods Sold, Buying and Occupancy |
|
(1,450,301 |
) |
|
|
(1,372,424 |
) |
|
|
Gross Profit |
|
1,031,274 |
|
|
|
946,427 |
|
|
|
General,
Administrative and Store Operating Expenses |
|
(692,510 |
) |
|
|
(662,314 |
) |
|
|
Operating Income |
|
338,764 |
|
|
|
284,113 |
|
|
|
Interest Expense |
|
(78,862 |
) |
|
|
(80,344 |
) |
|
|
Other Income |
|
(440 |
) |
|
|
701 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
Before Income Taxes |
|
259,462 |
|
|
|
204,470 |
|
|
|
Provision for Income Taxes |
|
95,431 |
|
|
|
72,662 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income |
$ |
164,031 |
|
|
$ |
131,808 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income Per Diluted Share |
$ |
0.55 |
|
|
$ |
0.44 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average Shares Outstanding |
|
295,923 |
|
|
|
298,134 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
L BRANDS, INC. AND SUBSIDIARIES |
|
CONSOLIDATED STATEMENTS OF
INCOME |
|
THIRTY-NINE WEEKS ENDED OCTOBER 31, 2015 AND
NOVEMBER 1, 2014 |
|
(Unaudited) |
|
(In thousands except per share
amounts) |
|
|
|
|
|
|
|
|
|
|
2015 |
|
|
|
2014 |
|
|
Net Sales |
$ |
7,758,750 |
|
|
$ |
7,385,392 |
|
|
Costs of Goods Sold, Buying and Occupancy |
|
(4,557,673 |
) |
|
|
(4,412,513 |
) |
|
Gross Profit |
|
3,201,077 |
|
|
|
2,972,879 |
|
|
General,
Administrative and Store Operating Expenses |
|
(2,087,546 |
) |
|
|
(1,976,712 |
) |
|
Operating Income |
|
1,113,531 |
|
|
|
996,167 |
|
|
Interest Expense |
|
(236,587 |
) |
|
|
(246,297 |
) |
|
Other Income |
|
75,334 |
|
|
|
6,314 |
|
|
|
|
|
|
|
|
|
|
|
|
Income
Before Income Taxes |
|
952,278 |
|
|
|
756,184 |
|
|
Provision for Income Taxes |
|
335,304 |
|
|
|
279,037 |
|
|
|
|
|
|
|
|
|
|
|
|
Net Income |
$ |
616,974 |
|
|
$ |
477,147 |
|
|
|
|
|
|
|
|
|
|
|
|
Net Income Per Diluted Share |
$ |
2.08 |
|
|
$ |
1.60 |
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average Shares Outstanding |
|
297,326 |
|
|
|
297,600 |
|
|
|
|
|
|
|
|
|
|
|
|
|
L BRANDS, INC. AND SUBSIDIARIES |
|
CONSOLIDATED STATEMENTS OF
INCOME |
|
THIRTY-NINE WEEKS ENDED OCTOBER 31, 2015 AND
NOVEMBER 1, 2014 |
|
(Unaudited) |
|
(In thousands except per share
amounts) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2015 |
|
|
2014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported |
|
Adjustments |
|
Adjusted |
|
Reported |
|
|
Net Sales |
$ |
7,758,750 |
|
|
$ |
- |
|
|
$ |
7,758,750 |
|
|
$ |
7,385,392 |
|
|
|
Costs of Goods Sold, Buying & Occupancy |
|
(4,557,673 |
) |
|
|
|
|
|
|
(4,557,673 |
) |
|
|
(4,412,513 |
) |
|
|
Gross Profit |
|
3,201,077 |
|
|
|
- |
|
|
|
3,201,077 |
|
|
|
2,972,879 |
|
|
|
General,
Administrative and Store Operating Expenses |
|
(2,087,546 |
) |
|
|
|
|
|
|
(2,087,546 |
) |
|
|
(1,976,712 |
) |
|
|
Operating Income |
|
1,113,531 |
|
|
|
- |
|
|
|
1,113,531 |
|
|
|
996,167 |
|
|
|
Interest Expense |
|
(236,587 |
) |
|
|
- |
|
|
|
(236,587 |
) |
|
|
(246,297 |
) |
|
|
Other Income |
|
75,334 |
|
|
|
(78,057 |
) |
|
|
(2,723 |
) |
|
|
6,314 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
Before Income Taxes |
|
952,278 |
|
|
|
(78,057 |
) |
|
|
874,221 |
|
|
|
756,184 |
|
|
|
Provision for Income Taxes |
|
335,304 |
|
|
|
(9,079 |
) |
|
|
326,225 |
|
|
|
279,037 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income |
$ |
616,974 |
|
|
$ |
(68,978 |
) |
|
$ |
547,996 |
|
|
$ |
477,147 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income Per Diluted Share |
$ |
2.08 |
|
|
|
|
|
|
$ |
1.84 |
|
|
$ |
1.60 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average Shares Outstanding |
|
297,326 |
|
|
|
|
|
|
|
297,326 |
|
|
|
297,600 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See Notes to Consolidated Statements of Income and
Reconciliation of Adjusted Results for additional information. |
|
|
|
|
|
|
|
|
|
|
|
|
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
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