L Brands, Inc. engages in the retail business. It is focused on women's intimate and other apparel, personal care and beauty categories. It operates its business through the following segments: Victorias Secret, Bath & Body Works, and Victoria's Secret and Bath & Body Works International. Its brands include Victorias Secret, Bath and Body Works, Pink, La Senza, and Henri Bendel. The company was founded by Leslie Herbert Wexner in 1963 and is headquartered in Columbus, OH.
Our net sales, profit results and cash flows are sensitive to, and may be affected by, general economic conditions, consumer confidence, spending patterns, weather or other market disruptions.
Our net sales, operating income, cash and inventory levels fluctuate on a seasonal basis.
Our net sales depend on a volume of traffic to our stores and the availability of suitable lease space.
Our ability to grow depends in part on new store openings and existing store remodels and expansions.
Our plans for international expansion include risks that could impact our results and reputation.
Our licensees, franchisees and wholesalers could take actions that could harm our business or brand images.
Our direct channel businesses include risks that could have an effect on our results.
Our ability to protect our reputation could have a material effect on our brand images.
If our marketing, advertising and promotional programs are unsuccessful, or if our competitors are more effective with their programs than we are, our revenue or results of operations may be adversely affected.
Our ability to adequately protect our trade names, trademarks and patents could have an impact on our brand images and ability to penetrate new markets.
Our ability to compete favorably in our highly competitive segment of the retail industry could impact our results.
Our ability to manage the life cycle of our brands and to remain current with fashion trends and launch new product lines successfully could impact the image and relevance of our brands.
We may be impacted by our ability to adequately source, distribute and sell merchandise and other materials on a global basis.
We rely on a number of vendor and distribution facilities located in the same vicinity, making our business susceptible to local and regional disruptions or adverse conditions.
Fluctuations in foreign currency exchange rates could impact our financial condition and results of operations.
Our stock price may be volatile.
If we are unable to pay quarterly dividends at intended levels, our reputation and stock price may be harmed.
Our ability to maintain our credit rating could affect our ability to access capital and could increase our interest expense.
We may be impacted by our ability to service or refinance our debt.
Shareholder activism could cause us to incur significant expense, hinder execution of our business strategy and impact our stock price.
We may be impacted by our ability to recruit, train and retain key personnel.
We may be impacted by our ability to attract, develop and retain qualified associates and manage labor-related costs.
We may be impacted by our vendors’ ability to manufacture and deliver products in a timely manner, meet quality standards and comply with applicable laws and regulations.
Our results may be affected by fluctuations in product input costs.
Our ability to adequately protect our assets from loss and theft.
Our results may be affected by fluctuations in energy costs.
We may be impacted by increases in costs of mailing, paper and printing.
We self-insure certain risks and may be impacted by unfavorable claims experience.
Retained or contingent liabilities from businesses that we divest could adversely affect our financial results.
We significantly rely on our ability to implement and sustain information technology systems and to protect associated data.
Our ability to maintain the security of customer, associate, third-party or company information could have an impact on our reputation and our results.
We may be impacted by our ability to comply with regulatory requirements.
We may be adversely impacted by certain compliance or legal matters.
We may be impacted by changes in taxation, trade and other regulatory requirements.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
Our operating results are generally impacted by economic changes and, therefore, we monitor the retail environment using, among other things, certain key industry performance indicators including competitor performance and mall traffic data. These can provide insight into consumer spending patterns and shopping behavior in the current retail environment and assist us in assessing our performance as well as the potential impact of industry trends on our future operating results. Additionally, we evaluate a number of key performance indicators including comparable sales, gross profit, operating income and other performance metrics such as sales per average selling square foot and inventory per selling square foot in assessing our performance.
Our number one priority is improving performance at Victoria's Secret by staying close to our customer, improving our assortment and improving the customer experience in stores and online. We have new leaders at Victoria's Secret Lingerie and PINK, and we are looking at every aspect of our business: our marketing, brand positioning, internal talent, real estate portfolio, direct business and cost structure. We are focused on improving our merchandise assortment. We believe we have significant opportunities to improve our merchandise, making sure we have a robust product pipeline, fashion that our customers really want with high emotional content. We will also be expanding our assortment to include new and previously exited categories, but doing some things differently through new licensing opportunities in eyewear and swimwear.