EX-99.1 2 dex991.htm EXCERPT OF INVESTOR SLIDE PRESENTATION Excerpt of Investor Slide Presentation
0
Company highlights
•
Leading brands with worldwide recognition, high store productivity and a
multi-channel platform
•
Differentiated
merchandise
and
marketing
that
drives
traffic
and
sales
•
Prudent inventory, expense and capital management
•
Capital-light focus on international market opportunities
•
Strong liquidity profile and continuing significant free cash flow generation
•
Experienced management team
Exhibit 99.1

1
•
Limited Brands continues to execute on its vision to make people
feel sexy,
sophisticated and forever young
•
Limited Brands has two premier brands, Victoria’s Secret and Bath & Body Works
»
Offering high emotional content at accessible prices
•
Limited Brands has additional growth opportunities
»
International
»
PINK
»
VSX
»
Swim
»
Bendel Accessories Concept
•
Other brands include PINK, La Senza, Henri Bendel, C.O. Bigelow
and White Barn Candle Company
Business overview
1
Adjusted EBITDA in these slides means EBITDA as adjusted to exclude certain items.
2
Includes La Senza
3
Other
includes
Corporate,
Mast,
Henri
Bendel,
Bath
&
Body
Works
Canada
and
certain
centralized
activities
and
assets
that
are
not
allocated
out
to
the
segments
2008 Adjusted EBITDA
= $1.1 billion
2008 Sales = $9.0 billion
1
Works
6%

2
Segment performance highlights
•
Intimate Apparel
»
We own three of the leading brands in intimate apparel: Victoria’s Secret, PINK, and La Senza
»
This segment generated $5.6 billion in sales in 2008, $620 million in operating income
-
Of
the
$5.6
billion,
$1.5
billion
was
through
Victoria’s
Secret
Direct
»
Victoria’s Secret has over 1,000 stores with over 5.9 million selling square feet
»
La Senza is a leading intimate apparel specialty retailer in Canada with 322 stores
»
La Senza has a presence in 45 countries internationally
•
Personal Care
»
Bath & Body Works generated $2.4 billion in sales through its retail and direct channels and $215
million in operating income in 2008
»
Bath
&
Body
Works
Direct,
which
began
in
2005,
was
profitable
in
2008
and
is
growing
rapidly
»
We
ended
2008
with
1,638
Bath
&
Body
Works
stores,
representing
over
3.8
million
selling
square
feet

3
Leading brands –
Victoria’s Secret
Victoria’s Secret (VS)
•
Roughly a quarter of the U.S. intimates market
•
A number of the best-selling bras in the U.S. are Victoria’s Secret bras
•
Biofit
(launched in March 2008) was the most successful bra launch in the
history of the brand
•
Dream
Angels
is
the
#1
fragrance
franchise
in
the
U.S.
–
three
years
running
•
Icon
in
pop
culture
–
world-recognized
brand
•
Our annual fashion show is seen in approximately
90 countries
•
Victoria’s Secret Direct (internet and catalogue) is
one of the most popular sites on the Web and is a
significant contributor to the marketing and growth
of the brand
•
Ranked #1 for dollar share of the intimate apparel
market

4
Leading brands –
Bath & Body Works
Bath & Body Works (BBW)
•
Extremely high brand awareness among women in
the U.S. and Canada
•
BBW has the best overall in-store experience ratings
versus direct specialty competitors and recently won
the International Customer Service Excellence Award
for Large Businesses presented by Customer Service
Excellence Magazine
•
#1
selling specialty beauty brand in the U.S.
•
#1
fragrant body care collection in the U.S.
(Japanese Cherry Blossom)
•
#1
spa collection in the U.S. (True Blue Spa)

5
•
Maximize sales and profits in our two key segments:
Intimate Apparel and Personal Care
•
Intensive focus on executing retail fundamentals:
»
Differentiated merchandise and marketing plans that drive traffic
and sales
»
Assortment management and inventory flow
»
Store selling and execution
»
Inventory investment levels
»
Deliver returns on capital spending
»
Management of overhead and SG&A expenses
•
Develop growth opportunities by expanding our presence
in existing markets, and developing capabilities in new
markets
»
BBW Canada
»
International
»
PINK
»
VSX
»
Henri Bendel/Accessories
»
Swim
»
Home Fragrance
Strategic priorities

6
Victoria’s Secret focus for 2009
•
Focus on the core categories
»
Bras
•
Continued push-up innovation and newness
•
Expand full coverage and wireless offering
•
Expansion of product offerings at opening price points
»
Panties
•
Reinvent signature cotton panties
•
Expand lace offering
•
Supplement with new price points
•
Continue to grow PINK
»
Continued innovation of panties
»
Increased emphasis on growing bras
»
Continue to build the Collegiate Collection
•
Continued innovation to drive growth in Beauty: body care and fragrance
•
Continue to grow within our retail channel our swimwear line, which has always been a top
performer for our direct channel
•
Continue to test and grow VSX, our line of athletic, sport-inspired apparel

7
Bath & Body Works focus for 2009
•
Focus on the core categories
»
Signature Collection Restage
•
Restage launched in all stores in February
•
Improved formulation in shower gel, with body cream and
lotion to come
•
More sophisticated packaging
•
New fragrance launches in sophisticated scents (Butterfly
Flower) and more youthful orientations
»
Home Fragrance
•
Rebranded to Slatkin with repackaged candles and new
diffuser forms
•
Launching new odor elimination in 2009
»
Antibac
•
Testing new packaging and formulations for a restage in 2010
•
Capitalizing on systems capabilities
»
Segmentation
opportunities
within
Signature
Collection
and
Home
Fragrance focused stores
»
Have improved in-stock levels on key items by 10 percentage
points while at the same time substantially reducing inventory
levels

8
International opportunity
•
High awareness and demand for both Victoria’s Secret and Bath & Body Works with the
Company’s international sales including La Senza, Bath & Body Works Canada and direct sales
shipped internationally totaling $655 million in 2008
•
First priority is Canada (company-owned operations: La Senza, BBW, VS, and PINK)
»
Six
BBW
stores
opened
during
Fall
2008,
and
approximately
25
BBW
stores
and
four
PINK
stores
are
planned for 2009
•
The original six BBW Canada stores are performing at two and half times the volume of an average
U.S. Bath & Body Works store
»
La Senza has 817 locations, 322 in Canada and 495 in 45 other countries
•
Approach to the rest of the world will be capital-light (franchising and joint ventures)
•
Laying the groundwork for opening stores and meeting with potential partners
•
Experienced international leadership team

9
1
High productivity
•
Victoria’s Secret and Bath & Body Works are among the highest productivity specialty
retailers
572
496
478
475
446
339
325
297
425
444
401
Aeropostale
Victoria's
Secret
Stores
Chico's
Bath & Body
Works
American
Eagle
Outfitters
Hot Topic
Abercrombie
& Fitch
The Buckle
Pacific
Sunwear
Gap Stores
NA
Wet Seal
Average 427
Sales / Gross Square Foot –
Fiscal 2008
Source: 10-Ks
1
Adjusted to reflect sales per gross square foot
2
Gap Stores data represents U.S. Gap Stores (does not include Old Navy and Banana Republic)
1
1
2

10
1
2
Strong cash flow across the fleet
98% of our store fleet is cash flow positive on an after-tax cash basis
> $250k
< $0
$0-$250K
After-tax cash flow
Note: Data are as of year end 2008
1
Only includes stores that have been open for at least one year and have not had construction activity for at least one year
2
After-tax 2008 store profit plus depreciation
Total stores
= 2,725
1,350
49.5%
1,328
48.7%
47

11
$1,061
$1,027
$1,212
$1,492
14.0%
12.0%
11.7%
11.6%
2006
2007
2008
LTM Q1'09
Adjusted EBITDA
Margin
Historical financial performance
$10,671
$10,134
$9,043
$8,843
2006
2007
2008
LTM Q1'09
Revenues ($ millions)
Adjusted EBITDA ($ millions)
•
While sales and Adjusted EBITDA have declined amidst these challenging times the
results have been in line with our expectation

12
1
2008 results
•
Our 2008 operating income declined 17% on a 9% decrease in comparable store sales
1
2007 adjusted to exclude gain/loss on apparel divestitures, gift card breakage recognition, gain on the sales of other assets and restructuring charges;
2008 adjusted to exclude impairment on La Senza goodwill, gain on joint venture sales and restructuring charges
($ millions)
B / (W)
2007
2008
$
%
Sales
$10,134
$9,043
($1,092)
(11%)
LL %
(2%)
(9%)
Gross
Margin
3,509
3,006
(503)
(14%)
% of sales
35%
33%
Adjusted
Operating Income
860
718
(142)
(17%)
Adjusted
EBITDA
$1,212
$1,061
($151)
(12%)

13
2008 quarterly results
($ millions)
•
Our
2008
full
year
results
were
driven
by
weakness
in
the
fourth
quarter
•
Through
the
first
three
quarters,
2008
compared
favorable
y-o-y
on
an
EBITDA
basis
1
2007 adjusted to exclude gain/loss on apparel divestitures, gift card breakage recognition, gain on the sales of other assets and restructuring charges;
2008 adjusted to exclude impairment on La Senza goodwill, gain on joint venture sales and restructuring charges
Q1 –
Q3
Q4
B / (W)
B / (W)
2007
2008
$
%
2007
2008
$
%
Sales
$6,858
$6,052
($807)
(12%)
$3,276
$2,991
($285)
(9%)
LL %
(7%)
(10%)
Gross
Margin
2,213
1,982
(231)
(10%)
1,296
1,024
(272)
(21%)
% of sales
32%
33%
40%
34%
Adjusted Operating Income
1
287
327
40
14%
573
391
(182)
(32%)
Adjusted EBITDA
551
577
26
5%
$661
$484
(177)
(27%)

14
1
First quarter 2009 results
•
Our 2009 Q1 operating income declined 35% on a 7% decrease in comparable store sales
1 2008 adjusted excludes gain on joint venture sales
($ millions)
First quarter
B / (W)
2008
2009
$
%
Sales
$1,925
$1,725
($200)
(10%)
LL %
(7%)
Gross Margin
641
548
(93)
(15%)
% of sales
33%
32%
Adjusted
Operating
Income
100
65
(35)
(35%)
Adjusted EBITDA
$184
$150
($34)
(18%)

15
Prudent inventory and expense management
•
Actively managing inventories
»
Inventories per square foot
were down for 19 consecutive months through March 2009 and are
projected to end the year below 2008 levels
»
Assortments
include
a
significant
portion
of
seasonless
basics
»
Continue to pursue turn improvement opportunities
•
New advanced planning systems
»
Provide end-to-end supply chain visibility to more productively react to current market conditions,
including taking actions ranging from overhead reductions to delivering more targeted assortments at
the store level
•
Reduced home office headcount by approximately 20% and annualized overhead by $350 –
400 million since 2007
»
$100
million
mid
2007
–
mid
2008
»
$50 million Fall 2008
»
$150 million in 2009
»
$50 -
$100 million in 2010

16
Free cash flow
($ millions)
•
Despite
lower
volume,
free
cash
flow
generation
improved
in
2008
due
to
effective
management of working capital, capital expenditures and expenses
•
We expect our strong free cash flow generation to continue for 2009
Average
2002 to 2007
2007
2008
2009F
Net Income
$718
$220
Depreciation and Amortization
352
343
Change in Working Capital
(7)
109
Other
1
(298)
282
Net cash provided by operating activities
$873
$765
$954
$550 -
$650
Capital expenditures
(468)
(749)
(479)
(200)
Free cash flow before dividends
$405
$17
$475
$350 -
$450
Dividends
(227)
(202)
(194)
Free cash flow after dividends
($210)
$273
$156 -
$256
1
2007 includes ($230 million) gain/loss on Express/Limited Stores
divestitures, ($100 million) gain on Easton Town Center distribution and other assets and liability adjustments; 2008 includes $215 million
goodwill impairment,
($109 million) gain on sale of joint venture, deferred income tax of $46 million, and other assets and liability adjustments

17
Strong liquidity
84
936
916
Q109
Letters of credit —
Available Revolver —
Cash —
Total Revolver:
$1,000 million
Total Liquidity:
$1,852 million
•
Limited Brands maintains strong liquidity
with total cash and available Revolver of  
$1,852 million at Q109
•
The company has substantial cushion
under its bank covenants
–
Total leverage covenant of 5.00x
•
46% EBITDA cushion
–
EBITDAR / (interest + rents) covenant
of 1.60x
•
35% EBITDAR cushion

18
Strong credit profile
1.1x
2.4x
2.7x
2.8x
2006
2007
2008
LTM Q109
Total leverage
Rent-adjusted leverage
Capital expenditures ($ millions)
Rent-adjusted interest coverage
2.9x
4.0x
4.1x
4.2x
2006
2007
2008
LTM Q109
3.2x
2.7x
2.5x
2.5x
2006
2007
2008
LTM Q109
$548
$749
$479
$391
2006
2007
2008
LTM Q109
Note: These ratios do not reflect the Credit Facility covenants
1
Rent-adjusted leverage defined as: (Total debt + (8x minimum rent expense)) / (Adjusted EBITDA + minimum rent expense)
2
Rent-adjusted interest coverage defined as: (Adjusted EBITDA + minimum rent expense) / (interest expense + minimum rent expense)
2
1

19
2009 outlook
•
Economic environment
»
Global retail sector and our business continue to face a very uncertain and difficult environment
•
We have taken a conservative stance in terms of the financial management of our business
•
Pursuing opportunities in this market to bring compelling merchandise assortments, marketing
and store experiences to our customers
•
International expansion
»
Anticipate opening approximately 25 Bath & Body Works and four PINK stores in Canada in 2009
•
Six BBW stores opened in 2008 have exceeded our performance expectations, as have the two
new openings in 2009 year to date
»
Continue to explore other international opportunities in 2009
•
Capital expenditures
»
Plan
to
spend
approximately
$200
million
on
capital
expenditures
in
2009
•
Majority relating to opening new stores and remodeling and improving existing stores
•
Expect to open approximately 60 new stores in the U.S. and Canada and to remodel
approximately 50 stores during the year

20
2009 guidance
Guidance as of May 21, 2009 ($ millions)
Source:
Public
filings,
earnings
transcripts,
first
quarter
financial
package
2008
2009 Outlook
Comparable
store sales
(9.0%)
(5.0%) –
(10.0%)
Gross margin
rate
33.2%
Flat
to LY
SG&A expense
as % of sales
25.6%
Up slightly
to LY
EPS
$1.05
$0.67 -
$0.87
Capital expenditures
$479
~ $200
Free cash
flow
$475
$350 -
$450

21
Summary
•
We have a sound business with category-leading
brands that generate substantial income and cash
flow
•
We have been aggressively managing inventory,
expenses and capital spending for the past two
years
»
Continue to plan inventory, capital expenditure and
expenses with a very conservative view of the
business
•
We continue to emphasize maintaining a strong
cash and liquidity position while optimizing our cost
of capital
•
Our sales productivity remains among the best in
the mall and our store fleet remains highly
profitable across essentially all locations
•
We are focused on maximizing sales and margin
opportunities in this challenging time