Bath & Body Works, Inc.

Good morning. My name is Brad, and I will be your conference operator today. At this time, I would like to welcome everyone to the L Brand's third quarter 2020 earnings conference call. Please be advised that today's conference is being recorded. During the question and answer session, if you would like to ask a question, please press star then one on your phone's keypad. I will now turn the call over to Ms. Amy Preston, Senior Vice President, investor relations and company affairs at L Brands. You may begin.

Thank you. Good morning and welcome to L Brands' third quarter earnings conference call for the period ending October 31st, 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 FCC filings and in our press releases. Joining me on the call today are Andrew Meslow, CEO of the L Brands, and Stuart Bergdorfer, interim CEO of Victoria's Secret and CFO of the L Brands. All results we discuss on the call today are adjusted results and exclude the special items described in our press release. Thanks, and now I'll turn the call over to Andrew.

Thanks, Amy, and good morning, everyone. The third quarter of 2020 continued to be an unprecedented time for the world, the retail industry, and certainly our business. Our first priority continues to be the safety of our associates and our customers. Our new operating models in our stores are focused on providing a safe environment while also providing an engaging shopping experience. Additionally, we remain focused on the safe operations of our distribution centers, fulfillment centers, and call centers while maximizing our direct businesses. We delivered record results in the third quarter, and we could not have done so without the hard work and dedication of all associates across our business in our stores, distribution, and fulfillment centers, call centers, and our home offices. I'd like to express our deep appreciation for their dedication and their efforts. In the third quarter, we significantly exceeded our internal expectations, driven by record results at Bath and Body Works, as well as an improved performance at Victoria's Secret. As we look to the remainder of the year, we have a cautious view of the fourth quarter, given the high level of uncertainty around the pandemic itself and the potential for further restrictions. While we are optimistic about our Christmas product assortment, and our continued strong execution in both stores and online, we do expect significant challenges in generating store channel sales growth. Our typical holiday volumes are about three times larger per week than the average week in the third quarter historically, and the current capacity limitations that range from 25 to 50% of normal capacity will not allow us to see the same number of customers on peak days that we have in prior years. The situation remains fluid, as additional capacity limits have been recently announced and further restrictions may occur. Additionally, the hours which stores are permitted to be open are fewer than last year, and we will be closed on Thanksgiving Day this year versus open in prior years. We also have additional constraints in our direct channel fulfillment and shipping capacities. As a result, we will be taking action to spread our big promotions, which historically have occurred on single days, over a longer time period. We have also added additional registers to stores in both businesses. We expect continued increased cost pressures in the fourth quarter as a result of higher store selling costs, safety equipment and supply costs, increased fulfillment expense, and higher parcel carrier surcharges in the direct channel. We believe that all of the factors mentioned above have the potential to lead to a very wide range of financial outcomes for the fourth quarter. the higher end of which would approximate last year's operating income results. We will continue to stay close to our customers and leverage the speed and agility that we have in the business to optimize our fourth quarter results. Thank you, and back over to you, Amy.