L Brands, Inc. - Pre Recorded Sales/ Trading Statement Call

| About: L Brands, (LB)

L Brands, Inc. (LTD)

August 07, 2013 12:00 am ET

Executives

Amie Preston

Amie Preston

Good morning, everyone. This is Amie Preston, Chief Investor Relations Officer, and this is Limited Brands July sales report for the 4-week period ending August 3, 2013. As a matter of formality, I need to remind you that any forward-looking statements I may make today are subject to the Safe Harbor statement found in our SEC filings.

Total Limited Brands sales for the 4 weeks ended August 3, 2013, were $678.4 million versus sales of $649.8 million for the 4 weeks ended July 28, 2012. Limited Brands July comps, on a calendar basis, were up 3% on top of the 12% increase last year. The merchandise margin rate was up to last year.

Inventories ended the month, up 6% per square foot at cost and reflect an increase at Victoria's Secret, partly driven by the new Body by Victoria launch and previous Body by Victoria product that has been removed from the floor. This merchandise will be cleared in the January semiannual sale.

Second quarter sales increased 5% to $2.516 billion compared to $2.399 billion last year, and comps increased 2%. We expect to report second quarter earnings per share of approximately $0.60 versus our previous guidance of $0.50 to $0.55 and last year's adjusted result of $0.50.

Our comp result of 2% was in line with our guidance for the quarter of a low-single digit increase. We are pleased that we delivered earnings upside by well-managed execution, which drove better-than-expected results in merchandise margins and expenses.

At Victoria's Secret stores, July comps increased 2% on top of the 12% increase last year. The increase was driven by strength in Lingerie and PINK. July featured to the Very Sexy collection and the PINK Date Bra. Near the end of July, we launched the exciting reintroduction of our Body by Victoria Bra collection, accompanied by Victoria, an all-new fragrance. The merchandise margin rate was up to last year, driven by an increase in sales of regular-priced merchandise across our categories. This was partially offset by a strong response to Gift with Purchase and marketing activity during the month.

Second quarter sales increased 6% to $1.237 billion, and comps increased 1%. We will begin August with a continued focus on the Body by Victoria collection and Victoria fragrance. PINK will feature the Wear Everywhere collection.

At Victoria's Secret Direct, July sales were down 11% as the double-digit decrease in apparel sales more than offset a high-single digit increase in intimate apparel and PINK. The merchandise margin rate was down significantly to last year, driven by increased promotional activity.

Second quarter sales decreased 6% to $383.7 million. At Bath and Body Works, July comps were up 6%, driven by the performance of our Signature Collection, home fragrance and soap and sanitizer businesses. The merchandise margin rate for the month was flat to last year.

Second quarter sales were $630.3 million and comps increased 3%. We began August with the sweet and sexy theme, featuring our newest Signature Collection fragrances. We then transitioned to our Fresh Picked theme featuring new and seasonal fragrances in Signature Collection, home fragrance, and the soap and sanitizer businesses.

At La Senza, July comps were up 9%. The merchandise margin rate was up significantly to last year, driven by decreased promotional activity. La Senza second quarter sales were $86.1 million, and comps were up 4%.

In closing, we are planning for a positive low-single digit comps in August. We will report second quarter results on August 21 after the close of the market. And our earnings call will be held at 9:00 a.m. Eastern on August 22. Thank you for your continuing interest in Limited Brands.

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