L Brands, Inc. (LB) SEC Filing 10-Q Quarterly report for the period ending Saturday, November 3, 2018

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Exhibit 99.1
lbrandsa02aa14.jpg
L BRANDS REPORTS THIRD QUARTER 2018 RESULTS
    
- PROVIDES FOURTH QUARTER GUIDANCE -

- PLANS TO REDUCE 2019 ANNUAL DIVIDEND TO $1.20 PER SHARE -

- ANNOUNCES VICTORIA’S SECRET LINGERIE LEADERSHIP CHANGE -

Columbus, Ohio, Nov. 19, 2018 - L Brands, Inc. (NYSE: LB) today reported 2018 third quarter results.

Third Quarter Results
The company reported a loss per share of $0.16 for the third quarter ended Nov. 3, 2018, compared to earnings per share of $0.30 for the quarter ended Oct. 28, 2017. Third quarter operating income was $54.4 million compared to $231.7 million last year, and net loss was $42.8 million compared to net income of $86.0 million last year.

Reported 2018 results above include pre-tax charges of $101.2 million ($0.32 per share), as follows:
$20.3 million, principally cash, related to the closure of the Henri Bendel business; and
An $80.9 million non-cash impairment charge related to certain Victoria’s Secret store assets.

Excluding these charges, adjusted third quarter earnings per share were $0.16 compared to $0.30 last year, adjusted operating income was $155.6 million compared to $231.7 million last year, and adjusted net income was $45.0 million compared to $86.0 million last year.

The company reported net sales of $2.775 billion for the 13 weeks ended Nov. 3, 2018, an increase of 6 percent, compared to net sales of $2.618 billion for the quarter ended Oct. 28, 2017. Comparable sales increased 4 percent for the 13 weeks ended Nov. 3, 2018 compared to the 13 weeks ended Nov. 4, 2017.

Fourth Quarter 2018 Outlook
The company stated that it expects 2018 fourth quarter earnings per share to be $1.90 to $2.10, and increased its full year 2018 adjusted earnings per share guidance to $2.60 to $2.80 from $2.45 to $2.70 previously.

Leslie H. Wexner, Chairman and Chief Executive Officer, commented, “During the quarter, we made some tough decisions that enable us to increase our focus on our core businesses and highest growth opportunities. These actions, including the closure of the Henri Bendel business and the pursuit of alternatives for La Senza, will strengthen our company in the long-term. Looking ahead, we remain focused on executing our strategy, sticking to the fundamentals of our business, staying close to our customers and leveraging the strength of our brands to deliver on our commitments for our customers, associates and stakeholders. We are confident that the steps we have taken and will continue to take will drive growth and create value for our shareholders.”




VICTORIA'S SECRET / BATH & BODY WORKS / PINK / LA SENZA / HENRI BENDEL
Three Limited Parkway Columbus, OH 43230 www.LB.com


The following information was filed by L Brands, Inc. on Monday, November 19, 2018 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-Q Quarterly Report statement of earnings and operation as management may choose to highlight particular information in the press release.

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Click a sentiment analysis snippet below from L Brands, Inc.'s Management Discussions to find these positive and negative remarks within their 10-Q Quarterly report:
  • 18420163_172
    Financial - Cash Flow
    The following table provides a summary of our cash flow activity for year-to-date 2018 and 2017: Cash and Cash Equivalents, Beginning of Period $ 1,515 $ 1,934 Net Cash Flows Provided by Operating Activities 13 138 Net Cash Flows Used for Investing Activities (538 ) (581 ) Net Cash Flows Used for Financing Activities (643 ) (758 ) Effects of Exchange Rate Changes on Cash and Cash Equivalents 1 2 Net Decrease in Cash and Cash Equivalents (1,167 ) (1,199 ) Cash and Cash Equivalents, End of Period $ 348 $ 735 Net cash provided by operating activities in 2018 was $13 million, including net income of $104 million.
  • 18420163_160
    Financial - Debt
    The following table provides our credit ratings as of November 3, 2018: Corporate Ba1 BB Senior Unsecured Debt with Subsidiary Guarantee Ba1 BB Senior Unsecured Debt Ba2 B+ Outlook Stable Negative Our Board of Directors will determine share repurchase authorizations giving consideration to our levels of profit and cash flow, capital requirements, current and forecasted liquidity, the restrictions placed upon us by our borrowing arrangements as well as financial and other conditions existing at the time.
  • 18420163_46
    Revenue - Product
    Additionally, net sales increased as a result of the change in presentation for income received from our Victoria's Secret private label credit card arrangement.
  • 18420163_84
    Revenue - Product
    Additionally, net sales increased as a result of the change in presentation for income received from our Victoria's Secret private label credit card arrangement.
  • 18420163_5
    Revenue - Product
    At Victoria's Secret, net sales decreased 1%, and operating income decreased $170 million, including a $50 million store asset impairment charge.
  • 18420163_54
    Financial - Earnings
    For the third quarter of 2018, our gross profit decreased $61 million to $928 million, and our gross profit rate (expressed as a percentage of net sales) decreased to 33.5% from 37.8%, primarily driven by the following: For the third quarter of 2018, the gross profit decrease was driven by lower merchandise margin dollars related to the decrease in net sales, increased promotional activity to drive traffic and clear inventory and due to $50 million of store asset impairment charges related to certain stores in the U.S. and Canada.
  • 18420163_207
    Revenue - Product
    The standard also will result in enhanced quantitative and qualitative disclosures, including significant judgments made by management, to provide greater insight into the extent of revenue and expense recognized and expected to be recognized from existing leases.
  • 18420163_94
    Financial - Earnings
    The gross profit rate increase was driven by buying and occupancy leverage on higher net sales.
  • 18420163_109
    Other - Other
    Cash generated from our operating activities provides the primary resources to support current operations, growth initiatives, seasonal funding requirements and capital expenditures.
  • 18420163_100
    Financial - Income
    For year-to-date 2018, our other income decreased $27 million to $1 million primarily due to fewer distributions received from our Easton investments, unrealized losses on marketable equity securities and the negative impacts of foreign currency.
  • 18420163_189
    Financial - Dividend
    Net cash used for financing activities in 2017 was $758 million consisting primarily of quarterly dividend payments of $1.80 per share, or $516 million, payments for repurchases of common stock of $283 million and tax payments related to share-based awards of $31 million, partially offset by $44 million of net new borrowings under our foreign facilities and proceeds from the exercise of stock options of $37 million.
  • 18420163_43
    Revenue - Product
    The results by segment are as follows: For the third quarter of 2018, net sales decreased $10 million to $1.529 billion, comparable sales decreased 2%, and comparable store sales decreased 6%.
  • 18420163_91
    Financial - Earnings
    For year-to-date 2018, our gross profit increased $12 million to $2.931 billion, and our gross profit rate (expressed as a percentage of net sales) decreased to 35.0% from 37.4%, primarily driven by the following: For year-to-date 2018, the gross profit decrease was driven by lower merchandise margin dollars as a result of increased promotional activity to drive traffic, attract new customers and clear inventory, $50 million of store asset impairment charges related to certain stores in the U.S. and Canada and increased distribution and fulfillment expenses related to higher direct channel sales.
  • 18420163_50
    Revenue - Product
    The increase in comparable store sales was driven by higher average dollar sales and conversion.
  • 18420163_88
    Revenue - Product
    The increase in comparable store sales was driven by higher average dollar sales and conversion.
  • 18420163_22
    Other - Other
    Further, our definition of adjusted financial information may differ from similarly titled measures used by other companies.
  • 18420163_10
    Other - Other
    The global retail sector and our business continue to face an uncertain environment and, as a result, we will continue to manage our business thoughtfully, and we will focus on the execution of the retail fundamentals.
  • 18420163_6
    Revenue - Product
    At Bath & Body Works, net sales increased 17%, and operating income increased $40 million.
  • 18420163_82
    Revenue - Product
    Net sales increased due to increases in constructed bras as we continue to focus on that core business, and in beauty, sleep and panties, driven by the merchandise assortment.
  • 18420163_51
    Revenue - Product
    For the third quarter of 2018, net sales increased $19 million to $134 million primarily related to new company-owned Victoria's Secret stores, direct channel growth in Greater China and additional stores opened by our partners.
  • 18420163_89
    Revenue - Product
    For year-to-date 2018, net sales increased $83 million to $415 million primarily related to new company-owned Victoria's Secret stores, direct channel growth in Greater China and additional stores opened by our partners.
  • 18420163_106
    Other - Other
    The year-to-date 2017 rate was lower than our combined federal and state statutory rate primarily due to the recognition of tax benefits resulting from stock options exercised.
  • 18420163_21
    Other - Other
    Instead, we believe that the presentation of adjusted financial information provides additional information to investors to facilitate the comparison of past and present operations.
  • 18420163_93
    Financial - Earnings
    For year-to-date 2018, the gross profit increase was driven by higher merchandise margin dollars related to the increase in net sales, partially offset by higher occupancy expenses due to investments in store real estate and distribution and fulfillment expenses related to higher direct channel sales.
  • 18420163_188
    Financial - Dividend
    Net cash used for financing activities in 2018 was $643 million consisting primarily of quarterly dividend payments of $1.80 per share, or $500 million, payments for repurchases of common stock of $198 million, payment of long-term debt related to our exchange of notes of $52 million and tax payments related to share-based awards of $13 million, partially offset by an $85 million borrowing from our Secured Revolving Facility and $39 million of net new borrowings under our Foreign Facilities.
  • 18420163_175
    Financial - Cash Flow
    The most significant items in working capital were the seasonal changes in Inventories (and related increases in Accounts Payable), as we build our inventory levels in anticipation of the holiday season, which generates a substantial portion of our operating cash flow for the year.
  • 18420163_180
    Financial - Cash Flow
    The most significant items in working capital were the seasonal changes in Inventories (and related increases in Accounts Payable), as we build our inventory levels in anticipation of the holiday season, which generates a substantial portion of our operating cash flow for the year.
  • 18420163_23
    Other - Other
    The table below reconciles the GAAP financial measures to the non-GAAP financial measures.
  • 18420163_163
    Financial - Shares / Equity
    Under the authority of our Board of Directors, we repurchased shares of our common stock under the following repurchase programs for year-to-date 2018 and 2017: In March 2018, our Board of Directors approved a new $250 million share repurchase program, which included the $23 million remaining under the September 2017 repurchase program.
  • 18420163_44
    Revenue - Product
    Net sales decreased due to a decline in PINK, primarily driven by merchandise performance in loungewear, and declines in unconstructed and sport bras, due to merchandise performance and category resets.
  • 18420163_209
    Other - Other
    The standard is effective beginning in fiscal 2019, with early adoption permitted.
  • 18420163_217
    Other - Other
    This guidance will be effective beginning in fiscal 2019, with early adoption permitted.
  • 18420163_97
    Financial - Expense
    For year-to-date 2018, our general, administrative and store operating expenses increased $317 million to $2.494 billion driven by the change in presentation for income received from our Victoria's Secret private label credit card arrangement, incremental wage investments and higher selling expenses related to higher sales volumes at Bath & Body Works and new company-owned stores in Greater China.
  • 18420163_56
    Financial - Earnings
    For the third quarter of 2018, the gross profit increase was driven by higher merchandise margin dollars related to the increase in net sales and reduced promotional activity, partially offset by higher occupancy expenses due to investments in store real estate and distribution and fulfillment expenses related to higher direct channel sales.
  • 18420163_53
    Revenue - Product
    For the third quarter of 2018, net sales increased $8 million to $156 million primarily due to an increase in wholesale sales to our international partners.
  • 18420163_90
    Revenue - Product
    For year-to-date 2018, net sales increased $42 million to $447 million primarily due to an increase in wholesale sales to our international partners.
  • 18420163_168
    Financial - Shares / Equity
    There were $2 million of share repurchases reflected in Accounts Payable on the February 3, 2018 and October 28, 2017 Consolidated Balance Sheets, respectively.
  • 18420163_130
    Financial - Debt
    We are required to maintain a fixed charge coverage ratio of not less than 1.75 to 1.00 and a consolidated debt to consolidated EBITDA ratio not exceeding 4.00 to 1.00 for the most recent four-quarter period.
  • 18420163_48
    Revenue - Product
    For the third quarter of 2018, net sales increased $140 million to $956 million, comparable sales increased 13%, and comparable store sales increased 10%.
  • 18420163_86
    Revenue - Product
    For year-to-date 2018, net sales increased $326 million to $2.680 billion, comparable sales increased 10%, and comparable store sales increased 8%.
  • 18420163_49
    Revenue - Product
    Net sales increased in most categories including home fragrance, body care and soaps and sanitizers, which incorporated newness, innovation and fashion.
  • 18420163_87
    Revenue - Product
    Net sales increased in most categories including home fragrance, body care and soaps and sanitizers, which incorporated newness, innovation and fashion.
  • 18420163_112
    Revenue - Product
    Historically, sales are higher during the fourth quarter of the fiscal year due to seasonal and holiday-related sales patterns.
  • 18420163_192
    Other - Other
    In certain instances, our guarantee may remain in effect if the term of a lease is extended.
  • 18420163_128
    Revenue - Geography
    The interest rate on outstanding foreign denominated borrowings is the applicable benchmark rate plus 1.50% per annum.
  • 18420163_32
    Financial - Income
    For the third quarter of 2018, operating income decreased $178 million, or 77%, to $54 million, and the operating income rate decreased to 2.0% from 8.8%.
  • 18420163_70
    Financial - Income
    For year-to-date 2018, operating income decreased $305 million, or 41%, to $437 million, and the operating income rate decreased to 5.2% from 9.5%.
  • 18420163_3
    Financial - Income
    In the third quarter of 2018, our operating income decreased $178 million, or 77%, to $54 million, and our operating income rate decreased to 2.0% from 8.8%.
  • 18420163_62
    Financial - Expense
    The following table provides the average daily borrowings and average borrowing rates for the third quarter of 2018 and 2017: For the third quarter of 2018, our interest expense decreased $3 million to $96 million due to a lower average borrowing rate partially offset by higher average daily borrowings.
  • 18420163_99
    Financial - Expense
    The following table provides the average daily borrowings and average borrowing rates for year-to-date 2018 and 2017: For year-to-date 2018, our interest expense decreased $8 million to $292 million due to a lower average borrowing rate partially offset by higher average daily borrowings.
  • 18420163_119
    Financial - Debt
    The following table provides our outstanding debt balance, net of unamortized debt issuance costs and discounts, as of November 3, 2018, February 3, 2018 and October 28, 2017: The balance includes a fair value interest rate hedge adjustment which increased the debt balance by $1 million as of October 28, 2017.
  • 18420163_183
    Other - Other
    The capital expenditures included $452 million for opening new stores and remodeling and improving existing stores.
  • 18420163_186
    Other - Other
    The capital expenditures included $527 million for opening new stores and remodeling and improving existing stores.
  • 18420163_14
    Other - Other
    These actions, including the closure of the Henri Bendel business in January 2019 and the pursuit of alternatives for our La Senza business, are intended to strengthen our company in the long-term.
  • 18420163_155
    Financial - Expense
    Our borrowing costs under our Secured Revolving Facility and Secured Foreign Facilities are linked to our credit ratings.

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Exhibit 15 - LETTER RE: INCORPORATION OF REPORT OF REGISTERED PUBLIC ACCOUNTING FIRM

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Exhibit 31.1 - SECTION 302 CERTIFICATION OF CEO

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Exhibit 31.2 - SECTION 302 CERTIFICATION OF CFO

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Exhibit 32 - SECTION 906 CERTIFICATION OF CEO AND CFO

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  • Form Type: Quarterly
  • Number of times amended: 0
  • Accession Number: 0000701985-18-000061
  • Submitted to the SEC: Tuesday, December 4, 2018 5:18:55 PM EST
  • Accepted by the SEC: Tuesday, December 4, 2018
  • Period ending: November 2018
  • Industry: Retail Womens Clothing Stores
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