Bath & Body Works, Inc. · NYSE:BBWI
Bath & Body Works — L Brands — Investor Day (July 2021)
80 slides from Bath & Body Works's investor day presentation, Jul 19, 2021
Slide 1: Investor Presentation
Investor Prese JuLy 19, 2021
Slide 2: Forward Looking Statements
Forward Looking Statements Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995 We caution that any forward-looking statements (as such term is defined in the Private Securities Litigation Reform Act of 1995) contained in this presentation or made by our Company or our ma
Slide 3: Forward Looking Statements
Forward Looking Statements Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995 * \olatility in currency exchange rates; = local business practices and political issues; * potential delays or disruptions in shipping and transportation and related pricing impacts; * disrup
Slide 4: Andrew Meslow
Andrew Meslow Chief Executive Officer | L Brands, Inc. and Bath &
Slide 5: Agenda
Agenda 1. WhoWeAre 2, Investing in Digital 3. Optimizing Real Estate While Ban 4. International Expansion BP ecu: 5. Financials & Growth Opportunities MINT 6. Appendix Bath& Body Works: ™
Slide 6: Our Purpose
Our Purpose Bath & Body Works makes the world a brighter, happier place through the power of fragrance. This idea is what Bath & Body Works was founded on, and it's at the heart of everything we do. We're a team that cares about our customers and believes in giving them a reason to celebrate with fr
Slide 7: A Compelling Investment Opportunity
A Compelling Investment Opportunity Market leader in our product categories Q Uniquely differentiated from competitors Loyal & growing customer base Y Coa) Engaged, motivated & knowledgeable associates [onl create distinctive in-store experience ey Blend between constant flow of newness & RL repleni
Slide 8: Bath & Body Works at a Glance
Bath & Body Works at a Glance 4 $6.48 11” 24.6” Specialty Home Fragrance 2020 Net Sales Revenue Growth Average Operating Income & Fragrant Body Care (5 Year CAGR)1:2 Rate? over 5 Years in America >30% >55m . >1,750 #£~290 of Sales via Digital Platforms Customers? Stores Across the U.S. International
Slide 9: Highly Experienced Senior Leadership
Highly Experienced Senior Leadership Focused on Execution Management Team with Diverse Perspectives to Create Value for All Stakeholders Chris Cramer 2001 Chief Operating Officer Wendy Arlin 2005 Chief Financial Officer Danielle Demko 2004 Executive Vice President and General Manager of Bath & Body
Slide 10: The Premier Specialty Fragrance Retailer
The Premier Specialty Fragrance Retailer Bath & Body Works Operates Across Growing Product Categories Category Dominant $6 O 4B asst Global Sales —_ ian 2 Home Fragrance Body Care & Fragrance Soaps & Sanitizers ~40” Home Fragrance » Body Care & Fragrance ™@ Soaps & Sanitizers Bath& Body Works: Note:
Slide 11: Substantial Scale through Multiple Channels
Substantial Scale through Multiple Channels 35” 31” 31” 3” Mall Digital Off-Mall International $2.2B $2.0B $2.0B $0.2B 2020 Sales 2020 Sales 2020 Sales 2020 Sales 957 store locations Highly profitable business 779 store locations Highly profitable franchise model ~99% of stores are cash flow 655M an
Slide 12: Bath & Body Works Is a Leader in the Beauty and Home Fragrance Markets
Bath & Body Works Is a Leader in the Beauty and Home Fragrance Markets Large and Growing Addressable Markets; Including Big Segments Where BBW Doesn't Play Today Bath, Body & Beauty Industry Home Fragrance Soaps & Sanitizers ~$415 ~$5p TAM TAM 7 TAM Bath & Body Works 3% Share Bath & Body Bath & Body
Slide 13: Bath & Body Works is a Clear Leader in Fragrant Body Care and Home Fragrance
Bath & Body Works is a Bath & Body Works: Clear Leader in Fragrant Body Care and Home #7 brand 1N... Fragrance Products Kline, Global Data, IRI, NPD, Euromonitor, LB Actuals; Reflects 2020 US Sales Only Fine Fragrance Body Lotion Body Cream Candles Electric Diffuser Liquid Hand Hand Sanitizer
Slide 14: Uniquely Differentiated Versus Competition
Uniquely Differentiated Versus Competition Products Positioned at the Crossroads of Best-in-Class Vertical Retailer and CPG Business Attributes Control channels of distribution (stores and digital) Frequent newness and product launches - floorsets change every 4-6 weeks Emotional connection between
Slide 15: Our Customer at a Glance
Our Customer at a Glance 661 always love coming in to see and smell what’s new. Bath & Body Works is one of the most fun places to come and just see what’s new because there’s always so much to choose from. 3 | —Bath & Body Works customer § °55M Customers (as of Q1 2021) ~$415 Annual Spend per Custo
Slide 16: Highly Loyal, Engaged Customer Base
Highly Loyal, Engaged Customer Base Consistently Increasing Retention, Leading to Extremely Valuable Customers Customer Longevity is Key to Driving Value Loyalty is Stronger than Ever: Retention Rates Growing Total Lifetime Spend ($) Nearly Every Year, Outpacing Industry $1,200 $900 $600 $300 $0 1 2
Slide 17: Customer Spend Continues to Increase Over Time
Customer Spend Continues to Increase Over Time Average Customer Spend $65 $68 2015, 2016 Trips 23 23 Bath & Body Works: @ 4 2017 26 o & & 2018 2019 2.8 2.9 Source: BBW Customer Data Mart (CDM), data as of year-end 2020 $111 2020 27 18” of customers shop across multiple channels which has more than d
Slide 18: Customer Loyalty Program
Customer Loyalty Program mpBath&Body Works ~30% + Launched pilot into four markets + Expanding into two additional markets in More spend per loyalty Fal 2021 member vs. nor-loyalty member + Full launch in 2022 G6 Tove that I’m rewarded for being a regular customer. ‘The rewards are generous and I en
Slide 19: Julie Rosen
Julie Rosen President | Bath & Body Works
Slide 20: Product Pillars
Product Pillars Our product pillars drive every decision we make. Bath & Body Works: Sikes: Weare fragrance first 4 We drive big market leading forms and fragrances We use storytelling to amplify emotional content Weare a use-up business ... quality is a must We celebrate seasons & holidays a ~) We
Slide 21: Product Pillars: Fragrance First
Product Pillars Bath & Body Works makes the world a brighter, happier place through the power of fragrance. Sikes Weare fragrance first Bath & Body Works was founded on this idea, and it’s at the heart of everything we do. Fragrance is transportive: It is mood-enhancing. It makes us feel happy, rela
Slide 22: Product Pillars: Inclusive Brand
Product Pillars °55M customers who reflect America's diverse demographics. Focused on delivering products that celebrate the diversity and values of our brand. Leveraging our Associate Inclusion Resource Groups to ensure products celebrate our customers’ diversity. Bath & Body Works: Weare an inclus
Slide 23: Product Pillars: Masstige Positioning
Product Pillars Look to mass to size the prize, and prestige to inspire our execution. Customers are proud to use and gift Bath & Body Works products. Seek global new ideas to apply to our brand. Bath & Body Works: Weare positioned as masstige 23
Slide 24: Product Pillars: Market Leading Forms and Fragrances
Product Pillars Portfolio is driven by key items that occupy market leading positions. Portfolio includes © fragrances that individually drive \\s \ $ f biafh 100m: and collectively eA STi We drive big market leading forms and fragrances drive nearly $45 in sales. 7 forms with #4 market position. Ba
Slide 25: Product Pillars: Use-Up Business
Product Pillars Bath & Body Works products are designed to be used daily and replenished frequently. Consistent quality across all products drives repeated use. Leverage promotions to inspire trial and build loyalty. Bath & Body Works: Weare a use-up business ... quality is a must 25
Slide 26: Product Pillars: Fashion and Newness
Product Pillars Unique product development model for personal care and home. Flow of newness drives trips and repeat customers. Fashion/trend-inspired products build brand relevance and differentiate us from our competition. Merchants and designers partner with a dedicated team focused solely on tre
Slide 27: Product Pillars: Storytelling
Product Pillars Tell stories through fragrance, packaging and all customer touchpoints. Centralize story around themes that excite customers and allow them to reminisce or be transported. Continue to focus the brand on key pillars including happiness and fun. Bath & Body Works: We use storytelling t
Slide 28: Product Pillars: Seasons and Holidays
Product Pillars Embrace the seasons and holidays, and celebrating with friends and family. Foster “Celebrating 365” as a key initiative to encourage customers to celebrate daily. Strength across key holidays including Christmas and Mother’s Day. Bath & Body Works: We celebrate seasons & holidays 28
Slide 29: Product Pillars: Greener and Cleaner
Product Pillars Focused on developing clean and eco-friendly products for our customers and planet. Introduced recycled plastics across categories to migrate entire portfolio of plastic. Continue execution of “Good For You, Good for the Earth” initiative. Bath & Body Works: We are actively moving to
Slide 30: Unique Operating Platform Enables Responsiveness and Agility
Bath & Body Works Unique Operating Platform Enables Responsiveness and Agility in an Ever-Changing Environment Learn Patterning Store Visits Read Daily Sales Reports/Store Days Bath& Body Works: 30
Slide 31: Powerhouse Forms in Growth Mode with New Launches
We Keep our Powerhouse Forms in Growth Mode with a Constant Flow of New Launches Bath& Body Works: Spring 7A, FRESH |k JEBALSAM Summer 31
Slide 32: Powerhouse Forms with Formula Upgrades
We Keep our Powerhouse Forms in Growth Mode with Formula Upgrades Bath & Body Works: 2009 | Triple Moisture 2014 | Ultra Shea ; Increase of Shea Butter+24 HR Moisture Claim TH HYALURONIC ACD, a HOUR MOISTURE Fi al 2022 | Ultimate Hydration me ‘ : + Clean Beauty Launch 2021 | Ultimate Hydration Now t
Slide 33: Powerhouse Fragrances with Packaging Refreshes
We Keep our Powerhouse Fragrances in Growth Mode with Packaging Refreshes Bath & Body Works: 2013 2020 (ih 2009 2016 33
Slide 34: Aggressively Own New Categories and New Forms
We Move Aggressively to Own New Categories and New Forms... and to Explore Next Bath& Body Works: \ we 6 ANTL-BACTERIA AND SPRA\ ANTI-BACTERIAL HAND SPRAY pon 499 oP abl Fall 2021 Launch | Bar Soaps \ (CAAT EXTINCT 2021 | Green & Clean Product Development 34
Slide 35: Chris Cramer
Chris Cramer Chief Operating Officer | Bath & Body Works
Slide 36: Mimosa
MIMOSA
Slide 37: Our Business Is Enabled by an Agile Supply Chain
Our Business Is Enabled by an Agile Supply Chain Industry-leading speed in Formidable chase capabilities Long-term supplier relationships Predominately U.S. product development supply base from concept to customer + 6,000+ new SKUs launched each year across channels, including 250+ new fragrances De
Slide 38: Strategic Investments in Supply Chain to Fuel Growth
Strategic Investments in Supply Chain to Fuel Growth Past Investments Ongoing and Future Investments Third-party direct channel 5th fulfillment center opened Company-owned distribution 3 centers support U.S. and international stores recently Current permanent third-party 4 direct-channel fulfillment
Slide 39: Investing in Digital
2. Investing in Digital Bath & Body Works:
Slide 40: Digital Sales Channel Demonstrating Continued Growth
Digital Sales Channel Demonstrating Continued Growth Highly Profitable Digital Channel Bath & Body Works Direct Sales Focused on customers with: BOPIS $2B (>500 stores with capability currently) $960M uto-replenishment (in development) $725M $450M 550M Shop in App Upgraded Order Management System Ex
Slide 41: Leveraging Digital Strengths and Capabilities
Leveraging Digital Strengths and Capabilities Diverse Digital Marketing Strategy Driving Consumer Engagement a x i 665" — 285m a >30u Annual Digital Marketing airandeoey Works com White Processed Customers in Email Database 5 oi. ~ wT 10m 6.5™ ~4i5«x ~300x Facebook. Followers: , Instagram Followers:
Slide 42: Continuing to Improve the Digital Experience
Continuing to Improve the Digital Experience Continuous Improvement of Online Experience + Enhanced graphics, video, marketing/content mix > 1 * Improved ease of navigation for customer 5M * Ongoing feedback from customer ail Digital customers* Expanding Fulfillment Options to the Customer Diversifi
Slide 43: Optimizing Real Estate
Optimizing Real Estate Bath & Body Works:
Slide 44: Unique, Engaging In-Store Experience
Unique, Engaging In-Store Experience Differentiated Retail Experience Store is the best experience of the Brand with passionate, knowledgeable, engaged sales force Fragrance, sinks and testers in stores allow customers to experience products before buying Bath & Body Works:
Slide 45: Diversified Store Portfolio
Diversified Store Portfolio Total Stores 1752: =AMalls ™B Malls “C Malls © D Malls @ Off-Mall *As of May 1, 2021 Bath & Body Works: 0) (EY High profitability across all store venues in North America / = Continued off-mall expansion limiting exposure to vulnerable ral mall locations =f Leases provide
Slide 46: Real Estate Optimization
Real Estate Optimization Enhances Profitability Continued Proactive Management of Real Estate 188 Stores opened primarily in top tier and off-mall venues 2016-2020 Continue to adjust investment levels based on performance Bath & Body Works: Bath & Body Works U.S. Sales per Average Selling Square Foo
Slide 47: Strong Sales and Profit in All Location Types
Strong Sales and Profit in All Location Types Off-Mall Penetration Approaching 50% FY 2016 Store Count FY 2021E Store Count Hi Off-Mall i Off-Mall A Nalls HA Mlls HB Malls @ BMalls H CMalls CMlls D Malls D Malls # of Stores Avg. sales per store ($M) Sales per square foot Avg remaining lease term Off
Slide 48: Design Evolution / White Barn Remodel Program
Design Evolution / White Barn Remodel Program Remodel Program has Delivered Increased Sales and Profit Before After Bath & Body Works: Lv} >15” Average increase in sales and traffic one year following remodel completion About 5 O % of stores currently in White Barn design Expect to remodel Cv) ~50”
Slide 49: Go-forward Physical Retail Strategy
Go-forward Physical Retail Strategy Bestin-class [i Re-imagined Retail an est-in-Class Ey e-imagined Retai @ Future Oriented lanl Highly Profitable Cod) LYS Fleet Management Expect low-single digit annual increase in North American square footage, with off-mall penetration increasing Regularly revie
Slide 50: International Expansion
International Expansion Bath& Body Works: 50
Slide 51: Successful International Operating Model
Successful International Operating Model ~$225m ~$455M Recognized revenue in 2020 Retail sales in 2020 Partnership-based business model with small number of world-class partners + Own assortment, pricing architecture, promotions, store designs and real estate approval + Paid on royalty basis + Partn
Slide 52: Broad International Presence
Broad International Presence Number of Stores Retail Locations 2020 Year End Europe ~~» 4 incl. UK i 74 A 4 Asia 3 5 Vieng Operating Countries Middle East Americas ¥ Australia Bath & Body Works:
Slide 53: Experienced Teams Delivering on the International Opportunity
Experienced Teams Delivering on the International Opportunity Leadership team averages . " 16 years Experienced International with L Brands / Bath & Body Works Leadership Team & Strong Associate Culture ~6,000 global associates comprise the “Gingham Global Team” Fragrance portfolio z allows successf
Slide 54: Proven Track Record of Growth
Proven Track Record of Growth Consistent Record of Store Growth and Comp Growth Proving the Positive Financial Health of the Brand and Demonstrating Existing Stores’ Positive Performance Against Other Locations International Retail Sales and Stores Consistent record of both store growth and comp gro
Slide 55: International Business Expected to Drive Significant Future Growth
International Business Expected to Drive Significant Future Growth Key Areas of Focus Strong growth in existing markets coupled with growth in new markets, especially Europe, and potential Existing Market Franchise _ | emerging markets sets foundation for Stores & Digital Digital. Expansion Test New
Slide 56: Wendy Arlin
Wendy Arlin Chief Financial Officer | Bath & Body Works
Slide 57: Financials & Growth Opportunities
Slide 58: Strong Track Record of Performance
Strong Track Record of Performance Sales (Annual, in $M) 2020 $6,434 2019 $5,170 2018 $4,631 Bath & Body Works: Direct Sales (Annual, in $M) 2020 2019 2018 $958 $724 $2,003 Represents historically reported BBW segment results. Fease see reconciliation of reported to adjusted results in the appendix
Slide 59: Consistent Growth in Sales
Consistent Growth in Sales Net Sales ($M's) $7,000 $6,434 $6,000 $5,170 $5,000 $4,631 $3,852 $4,103 $4,000 $3,587 Ls $3,350 $3,033 $3,118 $3,000 $2,625 $2,822 $2,000 $1,000 5. 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 = Net Sales Bath & Body Wo rks: Note: Sales in 2017 and prior years d
Slide 60: Consistent Growth in Operating Income
Consistent Growth in Operating Income Net Sales & Operating Income ($M's) $2,000 28.5% 30% $1,800 $1,600 25% $1,400 $1,200 $1,000 20% $800 $600 15% $400 $200 $- 10% 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 mE Operating Income | —e=Operating Income % Note: Sales in 2017 and prior years
Slide 61: Topline Consistency and Success
Topline Consistency and Success Historical Quarterly Comps (U.S. & Canada Stores and Direct) Read & Quickly Correct 15% “ 13% 13% Sie 12% ON 10% 9 10% 9% ON 9% uy 8% 8% 8% 5 8% 8% 7% on _ 6% 6% 6% 5% 5% 5% 5% 5% 4% 4% 4% 3% 5 0% | 0% Qt a2 03 A At 2 _A3 As At A _B A a a A A AI A A A A A As as At QZ
Slide 62: Separation Unlocks BBW's High-Growth and High-Margin Profile
Separation Unlocks BBW’s High-Growth and High-Margin Profile Revenue Growth EBIT Margin ~12% ~28% 6.6 % 49% | 13.5 % 14.4% Best-in-Class Branded Beauty Peers Bath & Body Works Best-in-Class Branded Beauty Peers Bath & Body Works Peers Peers Current Forward EV/EBITDA 1Y Avg. Pre-COVID' EV/EBITDA 18.9
Slide 63: Continued Execution Creates Opportunities for Long-Term Growth
Continued Execution Creates Opportunities for Long-Term Growth Focusing on Key Priorities « mil Growth in Existing Categories Nm Growth in New or Adjacent Categories uN + Positioned to capitalize on growing addressable market * Opportunities for growth in new categories including hair care, skin + W
Slide 64: Multiple Category Levers for Growth
Multiple Category Levers for Growth (3 to 5 Years) Growth Across Categories ($M) 2020 Revenue Fragrant Body Care 300 $6,400 a Home Fragrance ~$1,200 Soaps & Sanitizers ~$800 Es New Categories ‘$300 Packaging & formula driven innovation in core forms Extension into adjacent cleanser & maisturizing fo
Slide 65: Multiple Channel Levers for Growth
Multiple Channel Levers for Growth (3 to 5 Years) Growth Across Channels ($M) 2020 Revenue North America Stores $6,400 Digital ~$1,200 Intemational Continued rollout of White Bam format Increase in overall selling square footage New & scaled amnichannel capabilities Bath & Body Works: Continually ev
Slide 66: Three to Five Year Financial Targets
Three to Five Year Financial Targets Metric Target U.S. & Canada Store Comps Growth Low- to mid-single digit U.S. & Canada Square Footage Growth Direct Channel Sales Growth Low-single digit High-single digits to mid-teens International Sales Growth High-teens to low-twenties Total Sales Growth Mid-
Slide 67: Capital Structure
Capital Structure Disciplined Financial Strategy to Drive Continued Profitable Growth and Reduce Leverage while Delivering Additional Value to Shareholders Mid-2x RANGE UPTO $500m $0.60 $1.58 $250 - 300m Bath & Body Works’ Targeted adjusted debt to EBITDAR leverage ratio Debt reduction Continuation
Slide 68: A Compelling Investment Opportunity
A Compelling Investment Opportunity Market leader in our product categories Q Uniquely differentiated from competitors Loyal & growing customer base Y Coa) Engaged, motivated & knowledgeable associates [onl create distinctive in-store experience ey Blend between constant flow of newness & RL repleni
Slide 69: Please Stand By: Q&A Session
PLEASE STAND BY THE Q &A SESSION WILL BEGIN MOMENTARILY Bath & Body Works:
Slide 70: Bath & Body Works’
Bath & Body Works’
Slide 71: Bath & Body Works’
Bath & Body Works’
Slide 72: Appendix
Appendix
Slide 73: Adjusted Operating Income Reconciliation for Historically Reported Segment
Adjusted Operating Income Reconciliation for Historically Reported Segment Bath & Body Works $s in millions 2018 2019 2020 Operating Income - GAAP. $ 1,103 $ 1,224 $ 1,821 Restructuring Charges* $ - $ - $1 Adjusted Operating Income $ 1,103 $ 1,224 $ 1,832 Adjusted Operating Income % of Sales 23% 23%
Slide 74: Quarterly Financial Information, Fiscal 2021
Quarterly Financial Information, Fiscal 2021 Historical Reported Results — Giving Effect to VS Spin-Off; Quarterly $s in thousands, (Unaudited) First Quarter Rath B Body Works Corporate / Other” Total LB / RemainCo gment' Net Sales $ 4,469,479 $ 1,469,479 Costs of Goods Sold, Buying and Occupancy 72
Slide 75: Quarterly Financial Information, Fiscal 2020
Quarterly Financial Information, Fiscal 2020 Historical Reported Results — Giving Effect to VS Spin-Off; Quarterly $s in thousands, (Unaudited) First Quarter Second Quarter Third Quarter Bath &BodyWorks Corporate / Total LB/ Bath &BodyWorks Corporate / Total LB/ Bath & BodyWorks Corporate / Total LB
Slide 76: Quarterly Financial Information, Fiscal 2020
Quarterly Financial Information, Fiscal 2020 Historical Reported Results — Giving Effect to VS Spin-Off; Quarterly $s in thousands, (Unaudited) Fourth Quarter Full Year Bath & BodyWorks Corporate / Total LB/ Bath & BodyWorks Corporate / Total LB/ Segment! Other RemainCo Segment’ Other RemainCo Net S
Slide 77: Quarterly Financial Information, Fiscal 2019
Quarterly Financial Information, Fiscal 2019 Historical Reported Results — Giving Effect to VS Spin-Off; Quarterly $s in thousands, (Unaudited) First Quarter Second Quarter Third Quarter Bath &BodyWorks Corporate / Total LB/ Bath & BodyWorks Corporate / Total LB/ Bath & Body Works Corporate / Total
Slide 78: Quarterly Financial Information, Fiscal 2019
Quarterly Financial Information, Fiscal 2019 Historical Reported Results — Giving Effect to VS Spin-Off; Quarterly $s in thousands, (Unaudited) Fourth Quarter Full Year Bath &BodyWorks Corporate / Total LB/ Bath &BodyWorks Corporate / Total LB/ Segment! Other RemainCo Segment’ Other RemainCo Net Sal
Slide 79: Adjusted Operating Income Reconciliation
Adjusted Operating Income Reconciliation Historical Reported Results - Giving Effect to VS Spin-Off; Quarterly $s in thousands, (Unaudited) 2019 2020 2021 Qi a2 a3 Q4 FY a Q2 Q3 a4 r¥ Qi Operating Income -AsReported $121,380 Restructuring Charges" . Operating Income - Adjusted ® woes Bath & Body Wor
Slide 80: Balance Sheet — As of January 30, 2021
Balance Sheet — As of January 30, 2021 Historical Reported Results - Giving Effect to VS Spin-Off $s in millions, (Unaudited) Assets Liabilities and Equity (Deficit) GuireritAsseis Current Liabilities 30-Jan-21 Cash and Cash Equivalents $ 3,568, Aooounts|Payeble U cS Accrued Expenses and Other 712 A