Bath & Body Works, Inc. · NYSE:BBWI
Bath & Body Works — L Brands — Merger or Acquisition (February 2020)
23 slides from Bath & Body Works's merger presentation, Feb 20, 2020
Slide 1: Transaction Overview
Transaction Overview January 2020 February 20, 2020
Slide 2: Transaction Overview
Transaction Overview Note: 2019E based on earnings estimates provided in the transaction press release. (1) Standalone BBW does not include financial performance of 45% stake in Victoria’s Secret. Sycamore Partners to purchase 55% of Victoria’s Secret at a ~$1.1 billion total enterprise valuation Cu
Slide 3: Transaction Highlights
Transaction Highlights Sycamore Partners purchase of 55% interest in Victoria’s Secret for $525mm o VS entity will be 55% owned by Sycamore Partners o Total enterprise value of $1.1 billion; after accounting for certain liabilities assumed by Sycamore, Sycamore will purchase a 55% interest for ~$525
Slide 4: Transaction Rationale
Transaction Rationale Highlight value and performance of Standalone Bath & Body Works business Enhance management focus Reduce structural complexity Create best environment for Victoria’s Secret to execute turnaround Allow existing shareholders to participate in future value creation at Victoria’s S
Slide 5: Balance Sheet Implications
Balance Sheet Implications Selling a majority of VS will allow Standalone BBW to remove significant amounts of debt and lease obligations from its balance sheet. of cash proceeds from VS Sale >$0.5bn of excess balance sheet cash ~$0.5bn of VS lease obligations ~$2.5bn Reduction in Standalone Bath &
Slide 6: Value Enhancing Partnership
Value Enhancing Partnership (1) Represents select list of current and exited portfolio companies. o Extensive carveout experience involving similar levels of structural complexity o Seasoned operations team with relevant experience and knowledge of specialty apparel o Strong track record as collabor
Slide 7: Transaction is Next Step in Strategic Repositioning
Transaction is Next Step in Strategic Repositioning to Unlock Additional Value and Address Shareholder Input Key leadership changes at Victoria's Secret North America to execute turnaround plan • Amy Hauk, CEO of PINK, announced in August 2018 • John Mehas, CEO of Victoria’s Secret Lingerie (“VSL”),
Slide 8: Transformational Transaction Delivering a Stronger L Brands
Transformational Transaction Delivering a Stronger L Brands Note: 2019E based on earnings estimates provided in the transaction press release. Adjusted operating income is depicted on a No n - GAAP basis. See reconciliation of reported to adjusted results in Appendix. (1) Standalone BBW does not inc
Slide 9: BBW has leaders with 9+ years of working together
BBW has 12 leaders with 9+ years of working together; ~10 years average experience VP & above; selected leaders listed below Corporate Leaders: Andrew Meslow - Chief Executive Officer • Bath & Body Works Tenure: 15 years • Previous Experience: Victoria’s Secret, Gap Inc. / Banana Republic, Ann Taylo
Slide 10: Governance
Bath & Body Works Governance • Sarah Nash and Anne Sheehan elected to the Board in 2019 Sarah Nash • Chair & CEO, Novagard Solutions • Board member: Blackbaud, Inc., Knoll, Inc., Irving Oil Company • Previous Experience: JPMorgan Chase & Co. Anne Sheehan • Chair, Securities and Exchange Commission’s
Slide 11: Investment Highlights
Bath & Body Works Investment Highlights • Differentiated from competition as the specialty fragrance retailer, with high unaided brand awareness and a loyal customer base • Dominant market share in Beauty and Home markets with accessible price points and brand elasticity • History of consistent grow
Slide 12: Who We Are: The Business
Who We Are: The Business T WO B RANDS ~1,700 Stores (North America) • ~800 White Barn • ~900 Core ~260 International Franchised Locations Remodels performing S TORES (N ORTH A MERICA ) D IRECT (N ORTH A MERICA ) $4.2B 81% OF TOTAL $1.0B 19% OF T OTAL 12 • Sizable Footprint in North America • High Un
Slide 13: Who We Are: THE Specialty Fragrance Retailer
13 Who We Are: THE Specialty Fragrance Retailer Fashion Everyday Use Giftable Category Dominant A Uniquely Differentiated POV
Slide 14: Appendix
Appendix 14
Slide 15: L Brands Historical Performance
L Brands Historical Performance Note: 2019E based on earnings estimates provided in the transaction press release. 2017A represents a 53 - week year. La Senza an d Henri Bendel are excluded from all years. See reconciliation of reported to adjusted results in Appendix. (1) 2019E Standalone BBW does
Slide 16: L Brands Historical Financials by Business
L Brands Historical Financials by Business 16 Note: 2019E based on earnings estimates provided in the transaction press release. Adjusted operating income is depicted on a N on - GAAP basis. See reconciliation of reported to adjusted results in the Appendix. 2017A represents a 53 - week year. All pe
Slide 17: Net Sales Reported to Adjusted (2019E)
17 Net Sales Reported (Estimated) Non-GAAP Adjustments (Estimated) Adjusted (Estimated) Combine Victoria's Secret North America and International 1 Combine Bath & Body Works North America and International 2 Allocate Mast 3 Allocate Corporate 4 Adjusted As Presented (Estimated) Add-back: Non-GAAP Ad
Slide 18: Reconciliation of Reported to Adjusted Results
18 Reconciliation of Reported to Adjusted Results Net Sales Reported (2018 Form 10-K) Non-GAAP Adjustments (2018 Form 10-K) Adjusted Combine Victoria's Secret North America and International 1 Combine Bath & Body Works North America and International 2 Allocate Mast 3 Allocate Corporate 4 Adjusted A
Slide 19: Reconciliation of Reported to Adjusted Results
19 Reconciliation of Reported to Adjusted Results Net Sales Reported (2017 Form 10-K) Non-GAAP Adjustments (2017 Form 10-K) Adjusted Combine Victoria's Secret North America and International 1 Combine Bath & Body Works North America and International 2 Allocate Mast 3 Allocate Corporate 4 As Present
Slide 20: Reconciliation of Reported to Adjusted Results
20 Reconciliation of Reported to Adjusted Results Net Sales Reported (2016 Form 10-K) Non-GAAP Adjustments (2016 Form 10-K) Adjusted Combine Victoria's Secret North America and International 1 Combine Bath & Body Works North America and International 2 Allocate Mast 3 Allocate Corporate 4 Adjusted A
Slide 21: Net Sales Reported to Adjusted (2015)
21 Net Sales Reported (2015 Form 10-K) Non-GAAP Adjustments (2015 Form 10-K) Adjusted Combine Victoria's Secret North America and International 1 Combine Bath & Body Works North America and International 2 Allocate Mast 3 Allocate Corporate 4 As Presented Victoria's Secret 7,672$ -$ 7,672$ 334$ -$ 1
Slide 22: Safe Harbor Statement
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 management involve risks a
Slide 23: Safe Harbor Statement
Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995 • disruption due to labor disputes ; and • changing expectations regarding product safety due to new legislation ; • our geographic concentration of vendor and distribution facilities in central Ohio ; • fluctuations in