Victoria's Secret & Co.

Good morning. My name is Missy, and I will be your conference operator today. At this time, I'd like to welcome everyone to the Victoria's Secret & Company second quarter 2021 earnings conference call. Please be advised that today's conference is being recorded. All parties will remain in a listen-only mode until the question and answer session of today's call. At that time, if you would like to ask a question, please press star 1. I would now like to turn the call over to Mr. Jason Ware, Vice President, Investor Relations at Victoria's Secret & Company. Jason, you may begin.

Thank you, Missy. Good morning and welcome to Victoria Secret & Co's second quarter earnings conference call for the period ending July 31st, 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 filing and in our press releases. Joining me on the call today are CEO Martin Waters, CFO Tim Johnson, and EVP Finance Brad Kramer. All of the 2020 results we discussed on the call today are adjusted results and exclude the special items described in our press release. Also, as a reminder, our results are on a carve-out basis and include the Victoria's Secret segment and a portion of the unallocated overhead costs as part of L Brand. Thanks, and now I'll turn the call over to Martin.

Thanks, Jason. Good morning, everyone. We're excited to have launched Victoria's Secret & Co. as a standalone public company. And on behalf of the management team and the board, I'd like to extend our sincere appreciation to all associates who worked so hard on the successful spin-off. I'm grateful to all of our associates for their contributions to the success of our business as we look forward to capturing the opportunities ahead. And of course, we wish the Bath & Body Works business and their associates well as they embark on their journey as a standalone public company. Turning to our second quarter performance, we delivered very strong results, exceeding expectations and delivering our most profitable spring season in five years. We reported second quarter earnings of $1.71 per share, compared to an adjusted loss of 97 cents per share last year. Sales growth of 51%, combined with significant growth in merchandise margin and disciplined expense management drove these results. Compared to 2019, sales decreased 10%, reflecting the net closure of about 240 Company operated stores since the second quarter of 2019. However, comparable sales increased 5% compared to 2019. Operating income in the second quarter was $203 million, an increase of $314 million compared to last year, and an increase of $197 million compared to 2019. Second quarter operating income on a historical segment reporting basis as part of LBRANS totaled $233 million, significantly exceeding our previously communicated guidance of more than $200 million. As shared in our written commentary, given the COVID-19 related uncertainty in our basic supply, we're only providing guidance for the third quarter of 2021. We believe the supply chain headwinds may impact merchandise flow and the promotional cadence of the business. Operating income for the third quarter on a historical segment reporting basis as part of L Brands and before stand-up and separation costs is expected to be in the range of $110 to $120 million, which is broadly in line with last year's results of $115 million. Thank you, and that concludes our prepared comments. At this time, we'd be happy to take any questions you may have.