Bath & Body Works, Inc.

Good morning. My name is Amy, and I will be your conference operator today. At this time, I would like to welcome everyone to the LBRAN's fourth quarter 2019 earnings conference call. Please be advised that today's conference is being recorded. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone. If you require any further assistance, please press star 0. I will now turn the call over to Ms. Amy Preston, Chief Investor Relations Officer of LBRAND. You may begin.

Thanks, Amy. Good morning, everyone, and welcome to LBRAND's fourth quarter earnings conference call for the period ending Saturday, February 1st, 2020. As a matter of formality, I need to remind you that any forward-looking statements we may make today are subject to our Safe Harbor Statement. found in our SEC filings and in our press releases. Our fourth quarter earnings release, additional commentary, and earnings presentation are available on our website, lb.com. All of the results discussed in today's call are adjusted results and exclude the significant items described in our press release. Stuart Bergdorfer, EVP and CFO, and I will handle the call today. Thanks, and now I'll turn the call over to Stuart.

Thanks, Amy, and good morning, everyone. I'd like to take a few minutes before we open up the call for your questions to highlight some key points related to the transformative transaction with Sycamore Partners that we announced last week. As you know, last Thursday, we announced the sale of 55% of the Victoria's Secret lingerie, Victoria's Secret Beauty, and pink global businesses, collectively Victoria's Secret, to Sycamore Partners for proceeds of approximately $525 million. The transaction is the result of a comprehensive review of a broad range of options undertaken by the Board with input from outside financial advisors designed to best position our brands for long-term success and to drive shareholder value. We believe this transaction will highlight the value and performance of the standalone Bath and Body Works business, enhance management focus, and reduce structural complexity. Additionally, we believe that a private entity structure creates the best environment for a Victoria's Secret turnaround. While we recognize that Victoria's Secret's performance has deteriorated meaningfully over the last several years, The brand leads the lingerie category in North America and has high levels of global awareness. We believe that Sycamore, which has substantial experience in the retail industry, will bring a fresh perspective and greater focus to the business. We are pleased that by retaining a significant ownership stake, our shareholders will have the ability to meaningfully participate in the upside potential of this iconic brand. Andrew Meslow, former Chief Operating Officer of Bath & Body Works, has been promoted to Chief Executive Officer. He has been with the business for 15 years and has an exceptional understanding of the business and its customers. Nick Coe, previously Chief Executive Officer of Bath & Body Works, has been named Vice Chairman of Bath & Body Works Brand Strategy and New Ventures. In his new role, he will focus more intently on the strategic position of the business, the evolution of the brand, product development, and new ventures and acquisitions. We are confident that this succession plan, which leverages the unique partnership established by Nick and Andrew to advance the long-term strategic direction of the brand is the best arrangement for the business. Upon the close of the transaction, which is expected to occur in the second quarter, Les Wexner will step down as CEO and Chairman of L Brands to become Chairman Emeritus, remaining as a member of the Board. We intend to use the proceeds from the sale, as well as approximately $500 million in excess balance sheet cash, to reduce debt. There are also about $2.5 billion in balance sheet lease liabilities related to Victoria's Secret. After accounting for the expected debt and lease liability declines on an adjusted debt-to-EBITDAR basis, we expect that our overall leverage ratio will be close to its current level. We know that you have many questions about what the new standalone Bath & Body Works business will look like from a financial perspective. In the investor presentation, which we made available with the transaction announcement, We have allocated our international business and MAST functions to Victoria's Secret and Bath and Body Works for the past five years. Over the next several months, we will be reviewing the functional and corporate support required for the standalone Bath and Body Works business with a view to simplifying our existing structure and recognizing that we will still be supporting the Victoria's Secret business through transition services agreements with various terms which will minimize near-term dis-synergies. The management team, in conjunction with our board, will also be evaluating the capital structure and cash priorities for the standalone Bath and Body Works business. It is our intent, and we have greater clarity on the above, to conduct meetings with analysts and investors and provide the financial characteristics and growth plans for the standalone Bath and Body Works business. Thanks, and over to you, Amy.