L Brands 1Q16 Earnings Call Notes

L Brands’ (LB) Q1 2016 Results

Stuart Burgdoerfer

Decline at Victoria’s Secret

“Although we delivered first quarter results above our initial expectations, we were not satisfied with our overall results, as adjusted operating income declined to 4% compared to last year, primarily driven by a decline at Victoria’s Secret.”

Did experience a deceleration in macro trends

“From a macro perspective, we did experience a deceleration in trends through the quarter but we are focused on what we can control and we have opportunities to improve our execution.”

Amie Preston

Significantly reduced catalog spend

“Great, okay. So with respect to catalog, we did test the elimination of catalog into significant markets for a year, and saw a relatively small to no impact on sales. And if one does simple math on it, need to get a lot of sales or meaningful amount of sales to take for the catalog. And round numbers, we were spending $125 million to $150 million a year on the catalog and we ran it again for a year and two significant markets, and didn’t see a significant change in sales. ”

Nick Coe

The consumer is staying consistent, is prepared to act when there’s a good story told

“Hi, Lindsay. I think she is behaving pretty consistently actually in an odd way. I think she continues to want to be excited. I think she continues to want to have a story or a compelling story telling to her, even though she has remains value oriented, but if she sees something that she likes or if she’s engaged, clearly that value price fluctuates and we can see it in both ways. We see it fluctuates to really important when a compelling story isn’t told, but we can also see it become significantly less important when the product is good. So from that perspective I think it’s actually pretty consistent behavior. There’s lot of talk about where is the customer, what’s she doing. But from our perspective I think it’s a pretty consistent story. And I think that also ties itself to traffic where we have been — we’ve seen pretty consistent levels of traffic. Now we’re having to work very hard to maintain the traffic, given the modest assets, but my overall point of view is that the traffic is there, we’re working hard to get it and her behavior is consistent.”