Bath & Body Works, Inc.

Good morning. My name is Cedric, and I will be your conference operator today. At this time, I would like to welcome everyone to the L Brands first quarter 2021 earnings conference call. Please be advised that today's conference is being recorded. If you'd like to ask a question, please press star then one. I would now like to turn today's call over to Ms. Amy Preston, Senior Vice President in Investor Relations and Company Affairs at L Brands. Thank you. You may begin.

Thank you. Good morning. Welcome to Albrand's first quarter earnings conference call for the period ending May 1st, 2021. 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. Joining me on the call today are Andrew Meslow, CEO of L Brands and Bath and Body Works, Martin Waterer, CEO of Victoria's Secret, and Stuart Bergdorfer, CFO of 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 I will turn the call over to Andrew.

Thanks, Amy, and good morning, everyone. We delivered record results in the first quarter, and we could not have done so without the continued dedication and extraordinary efforts of our team of associates and partners. Our adjusted earnings per share of $1.25 significantly exceeded our initial earnings guidance of 35 to 45 cents, driven by stronger sales and higher merchandise margin rates than we initially forecasted. Performance was strong across the whole quarter. March benefited from stimulus payments hitting customer bank accounts, and we ended the quarter strong with good Mother's Day holiday performance at both businesses. At Bath & Body Works, we continue to deliver record results. Our U.S. and Canada stores increased sales by 47% compared to 2019, and our direct channel sales increased 123 percent versus 2019. All categories achieved solid growth, and strong sales demand continued to allow us to pull back on promotional activity. Operating income in the first quarter was $380 million, an increase of 127 percent compared to 2019. Our operating income rate for the quarter of 25.9 percent increased 760 basis points compared to 2019, driven by merchandise margin rate expansion and leverage in both buying and occupancy and SG&A on the high sales growth. As we announced last week, our board has unanimously approved a plan to separate the company into two independent public companies. Bath & Body Works, one of the world's leading bath, body, and home fragrance retailers, and Victoria's Secret, including Victoria's Secret Lingerie, Pink, and Victoria's Secret Beauty, a leading retailer of intimates and beauty products. We expect to create these companies through a tax-free spinoff of Victoria's Secret to L Brands shareholders. We believe the spinoff will enable each company to maximize management focus and financial flexibility to thrive in an evolving retail environment and to deliver profitable growth. The Board evaluated the possibility of either a spinoff or a sale of Victoria's Secret with input from its financial advisors, Goldman Sachs and J.P. Morgan. Throughout the review process, the company received significant interest from and held substantive discussions with multiple potential buyers. Ultimately, the Board concluded that the spinoff of Victoria's Secret into a separate public company would provide shareholders with more value than a sale. This decision follows a significant progress we have made over the last 10 months in the turnaround of the Victoria's Secret business, implementing merchandise and marketing initiatives to drive top line growth, as well as executing on a series of cost reduction actions, which together have dramatically increased profitability. As a result of these efforts, Victoria's Secret is now well positioned to operate as a standalone public company. We expect that the balance of 2021 will not be easy as the world, the retail environment, and our enterprise and business continue to evolve, and we lap extraordinary results. But with continued smart and disciplined management of the business, I know we can proactively accelerate to our next phase of growth. We are excited to share the details of our vision for both companies as we get closer to the targeted spinoff date in August. Thanks, and now I'll turn it over to Martin.