Bath & Body Works Inc (BBWI) 2002 Q1 法說會逐字稿

Good morning, ladies and gentlemen. Welcome to The Limited, Inc. first quarter earnings call.

At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will follow at that time. As a reminder, this conference is being recorded.

Ladies and gentlemen, thank you for standing by. I would now like to turn the call over to Mr. Tom Katzenmeyer, Vice President of Investor Relations.

Mr. Katzenmeyer, you may begin.

Thank you. And good morning, everyone. Welcome to our first quarter earnings conference call for the period ending Saturday, May 4, 2002.

Before I begin, and as a matter of formality, I need to remind you that any forward-looking statements that we may make today are subject to our Safe Harbor statement that's found in our SEC filings.

This morning, as always, we faxed to your offices the first quarter earnings release and related financial information. This information is also available on our Web site: limited.com. If you have not received this fax, please call our offices at 614-415-7076 and we'll send it to you immediately.

This call is being taped and can be replayed by dialing 1-800-337-6551, followed by the pass code 583. You can also listen to an audio replay from our Web site.

Ann Hailey, EVP and Chief Financial Officer, Len Schlesinger, EVP and Chief Operating Officer, and Michael Weiss, CEO of Express, are joining me this morning. Ann and Michael will be making some comments after I finish, and then we will all be available to answer your questions at the end of the call. has also joined us this morning. We plan to rotate the participation of different CEOs through our quarterly call. And we're pleased to have Michael with us this morning.

All results that we will discuss on this call are adjusted results, which include the following items which were outlined in our press release:

Adjustments to eliminate minority interest expense and increase weighted average shares outstanding to reflect the recombination of Intimate Brands, Inc., as if it had occurred at the beginning of 2001. Adjustments to exclude a first quarter 2002 non-cash pre-tax special and non-recurring charge of $33.8 million or five cents per share, resulting from the Intimate Brands, Inc. recombination. Adjustments to exclude the 2001 results from Lane Bryant, which was sold to in August 2001. Lane Bryant represented earnings per share of three cents in the first quarter of 2001.

Sales for the first quarter were $2.027 billion, compared to sales of $1.890 billion last year. Comp store sales increased four percent. Adjusted first quarter earnings per share tripled to 15 cents per share this year, compared to five cents per share last year. Our reported earnings per share for the first quarter were 10 cents versus seven cents last year.

Gross margin increased 210 basis points in the quarter to 33.8 percent, and the overall SG&A rate improved by 230 points - basis points. Inventories at the end of the quarter were down three percent per square foot at cost and down 8 percent per square foot at the apparel .

Ann will discuss the first quarter results in more detail later in this call. As a result of the IBI recombination, we have changed our segment reporting. We will now be reporting results in four segments. First, the Victoria's Secret, which consists of Victoria's Secret stores, including beauty and Victoria's Secret direct.

Second, Bath and Body Works, which also includes White Barn Candle Company. Third, the apparel group, which includes Express, both women's and men's, Lerner New York, and Limited stores. And Fourth, other, which includes Mast and and total corporate overhead.

I'm going to go through that real quick, again, because it's new. Again, the four segments are, first, Victoria's Secret, which is stores, beauty, and direct. Second, Bath and Body Works, which includes White Barn Candle. Third, the apparel group, which is Express, Lerner and Limited. And fourth, other, which includes Mast, and total corporate overhead.

We have restated sales comps and operating income for these revised segments back to 1999. And this information is included in the fax or e-mail you received this morning. It is also available on our Web site, again, limited.com.

Now for the brand and segment results. As usual, you should have the following headings across your page. The name of the brand, sales, comps, external growths margin rate, operating income rate, and operating income dollars.

I'll begin with the Victoria's Secret segment. At Victoria's Secret stores, and again, this includes beauty, sales in the first quarter were 536.3 million, were 8 percent. External gross margin rate was up, and both operating income rate and operating income dollars were up significantly. An excellent first quarter at Victoria's Secret stores, results were driven by great performance in the bra and panty categories. The Body by Victoria full coverage bra launch far exceeded our expectations, allowing us to pull forward fall deliveries into July.

The very sexy bra continues the strong momentum that will begin -- that began in the fall. Beauty also had a great first quarter, driven by garden products and the continued strength of various 2001 fragrance launches, including Very Sexy for him. We also find favorable response to the April soft launch of the newest prestige fragrance, Body by Victoria.

Looking ahead to the second quarter, the focus in the first week of May was Mother's Day and sleep wear. Last week, we introduced an exclusive line of bras and accessories, multicolored straps, uniquely shaped pads, and a variety of appliqués that will allow the customer to create her own customized bra. The semi-annual sale will run from June 10 to July 8.

At Victoria's Secret Direct, sales in the first quarter were 225.8 million, that was flat to last year. External gross margin rate, operating income rate, and operating income dollars were all up significantly. vs. Direct results were driven by good performance in the spring books, which offset shortfalls in the Fall, 2001 sale books. Spring catalogues are performing well, due to an improved merchandise assortment and more compelling price point. Bras, dresses, and knit bottoms, particularly the yoga products, were strong categories in the quarter.

Gross margin rate was significantly improved, a result of a reduction in circulated pages and increased photos per page, and to a lesser extent, a change in promotional strategy to an increased use of percentage op promotion versus free shipping and handling.

For the Victoria's Secret segment in total, sales were 762 million, versus 705.8 million last year. Comps were 8 percent, external gross margin rates up significantly. Operating income rate was 13.2 percent, versus 8.6 percent last year. Operating income dollars were 100.5 million, that's against 60.7 million last year.

For the Bath and Body Works segment. First quarter sales were 320.3 million, that's against 319.8 million last year. were minus 8 percent. External gross margin rate was down, operating income rate was 8.6 percent, versus 10.6 percent last year. And operating income dollars were 27.7 million, versus 34 million last year. Bath and Body Works first quarter results were in line with our expectations. Merchandise margins were up in the quarter, however, buying and occupancy and SG&A expenses were not levered on the negative 8 percent comp.

Aromatherapy was emphasized in the front of the store for five weeks, and achieved 10 percent of shop sales for the quarter. The Real Essence candle, which was introduced in to BBW stores in mid-March, is also performing well. Aromatherapy Body Essences, and all over body mist, were launched the second week of July. This finishing mist was developed in response to customer requests, and delivers mood enhancing essential oils.

We will continue to have very conservative expectations for Bath and Body Works. The business is very focused on fourth quarter -- on the fourth quarter holiday assortment.

And now for the apparel segment, starting with Express. At Express, sales in the quarter were 482.1 million, the were plus seven percent, and external gross margin rate, operating income rate, and operating income dollars were all up significantly. Michael Weiss will provide some further detail on Express in a moment.

At New York and Company, sales were 228.5 million, the were plus 3 percent. External gross margin rate and operating income rate were both up. Operating income dollars were up slightly. New York and Company had a solid first quarter. Gross margin was up on cost of goods available for sale -- that was down 10 percent per square foot in the quarter. Results were driven by woven collections and active wear tops and bottoms. New York and Company will focus on summer outfits in the second quarter, featuring knit and the beach house pants.

At the Limited, sales in the first quarter were 155.9 million, the were plus 10 percent, external gross margin rate, operating income rate, and operating income dollars were all up significantly. Limited delivered their best first quarter since 1994. This is the fourth consecutive of improved operating income results at this .

Limited achieved significant buying and occupancy, and SG&A leveraged on the positive 10 percent comp. Results were driven by and woven tops, and accessories. Limited will feature fashion tops and crop pants in the second quarter. In summary, for the apparel brands, sales in the first quarter were 866.4 million, that's against 824.9 million last year. The were plus 7 percent. External gross margin rate was up significantly. Operating income rate was 5.1 percent, that's against minus 1.2 percent last year. And operating income dollars were 44.1 million, versus a loss of 10.2 million last year.

For the other segment, which includes Mast, and total corporate overhead, first quarter sales -- and again these are just for Mast and , were 78.4 million. That's against 39.6 million last year. , from only were plus 2 percent, and operating income was negative 34.4 million in the quarter. That's against negative 40.2 million last year.

That concludes my prepared comments, and I will now turn it over to Michael Weiss.

Good morning. I'm very happy with our first quarter results -- excuse me, first quarter performance. As Tom said, our combined comp was 7 percent. We had a record quarter in the women's business, and we continue to make progress in the men's business. To provide a little more detail, in the women's business, we had our best ever first quarter results in terms of every measure, sales, margin, and profit. That was nice to say.

We had a very effective tops presentation, which combined with a highly successful promotional strategy -- drove results throughout the quarter. Dresses, skirts, lingerie, and accessories also had very strong performances in the quarter. Men's business, , sales were slightly ahead of our expectations.

Importantly, in the men's business, we were able to achieve a significant improvement in bottom-line results through gross margin gains. Men's growth was driven by woven shirts and denim, which both experienced tremendous volume growth. Second quarter, our back to school sets will begin in July, which will of course have a strong denim presentation. With that, I'll turn the discussion over to Ann.

Thank you Michael. Good morning everyone.

As Tom mentioned, our first quarter adjusted EPS increased from 5 cents per share to 15 cents per share. We are pleased with this result. Total Limited Inc. comps increased 4 percent. We achieved a positive 7 percent apparel comp on inventories that were down 2 percent per square foot on a cost of goods available per sale basis. As a result, our apparel inventory turned faster than it has in the last five years. We focused on maximizing our ability to shorten our lead time and improve our agility in chasing proven winners. Our overall growth margin increased 210 basis points, driven by improvements in merchandise margins and by favorability in the buying and occupancy expense rate. We also leveraged SG &A, which were down 230 basis points as a percent of sales. This result was aided by our continued emphasis on our efficiency initiatives. For selling expenses, the largest expense category declined and were flat on a dollar per average store basis.

Home office expenses were also down, both as a percent of sales and on an absolute basis. Home office headcount is down by nearly 250, about 4.5 percent from August 31 which requires sign-off by both and myself before we hire home office personnel. We will continue to manage our expenses carefully on both a near term and a long term basis.

Turning to the businesses, all of our brands except Bath and Body Works achieved improvements in operating income in the quarter. And all of our brands except Limited Stores were profitable. And Limited Stores significantly improved in operating results. Our balance sheet continues to be very solid. We ended the quarter with over 1.2 billion in cash. And our investments in equity securities, including , Alliance Data and Charming Shoppes were worth 522 million at quarter end.

For the second quarter, we are comfortable with the current first call consensus earnings estimate of $0.08 per share. As much as we'd like to predict a record quarter every quarter we believe that the second quarter consensus is appropriate in the current environment, which includes the following factors. Sales patterns from week to week continue to be somewhat erratic. Mall traffic, according to the service we subscribe to, , was down in the first quarter. Initial jobless claim filings after an improvement in the last half of 2001 and the first part of 2002 are climbing again. The unemployment rate remains high. The consumer sentiment index was down in April. And the political climate remains uncertain. In this environment, we don't believe it would be prudent to plan on continued record results. The second quarter estimate reflects our plan for low, single digit positive comp, a slight increase in gross margin and roughly flat SG&A as a percent of sales. We will continue our discipline inventory approach in the second quarter. And apparel cost of goods available for sale per square foot are planned to be down in the mid single digit range. As we did in the first quarter, we will continue to focus on inventory agility. And cost of goods available per square foot will grow more slowly than sales per square foot.

For the full year, we expect adjusted earnings per share growth to be about 25 percent, which is up versus our previous release of a projection of five percent. We estimate that our capital spending this year will be at or below 430 million. The majority of our capital spending continues to be focused on stores. We plan to open approximately 100 new stores and remodel about 150 others. We expect to close about 130 stores, which would result in a flat square footage at year end.

The notable change to our beginning of the year projection is a reduction in BBW store openings from 85 stores to about 40.

With that, I'll turn it back to Tom, and we'll be happy to take your questions.

Thank you, Ann. Operator, at this time we are available for questions. We have a very short period of time, as our annual meeting begins at nine. So again, if we could, ask everyone to limit yourself to one question. With that, I'll turn it back over to the operator.

Thank you. At this time, we are ready to begin the question and answer session. If you would like to ask a question, please press star, one. You will be announced prior to asking your question. To withdraw your question, you may press star, two. Again, if you would like to ask a question please press star, one. Mark Friedman of Merrill Lynch, you may ask your question.

Thank you. Good morning, everybody. Great job on the first quarter. Michael, I was wondering if you could, talk to us a little bit more about Express and what kind of progress do you need to see from here. Or are you at the point where you're comfortable that it makes sense to be more aggressive in various kinds of remodels of Express stores either into a joint combo or other opportunities to get the stores together, men's and women's?

Pardon me. Actually, Mark, I think we're being quite aggressive right now. As you know, we started off slowly. But I think right now there is something like 55 projects on the board, which are between new stores and remodels and co-joining them. So we're feeling pretty good about that, you know, 55 projects this year.

Mark, we are testing a variety of different formats in those stores as we remodel to see what seems to work best. So we'll have good reads that should give us direction about going forward.

Operator, we're ready for the next question.

Steve of Behrman Capital, you may ask your question.

Yeah, hi. Great quarter. This is one question on terms of the cash that you have, here. You're building up this 1.2 billion in cash that you have at the end of the quarter. Could you give us some sense, Ann of what you're thinking of in terms of share repurchases or doing things with the cash that you're going to have from there because you also have the value of the shares that you own in Charming Shoppes and , et cetera.

We have over time - I'm sure you know the numbers as well as I do - consistently done share repurchases at times. And we continue always to evaluate those . Our board looks at our cash position on a regular basis. And share repurchase is one of the things we look at. We do not currently have an authorized share repurchase plan.

Thanks, Steve. Next question.

of Prudential, you may ask your question.

I'll finish Steve's and then ask mine. The question is why didn't you announce a share repurchase? And then also, just on the SG&A leverage, that was huge leverage in Q1, yet you're not expecting any in Q2. And the things you detailed sound like they were sustainable. So I was wondering if you could, comment on that and maybe throw in limited divisions operating margin in '94. I think if I ask it all fast that's one question.

Was that one question?

Part of that was Steve's.

I'm going to take them in reverse order. We did make progress on the SG&A rate in terms of leverage. But part of that was delivering you know, a solid comp. And we do plan to keep our strategies in place. And it's you know, hope for some upside . But we think right now the best thing to do you know, looking at all the analysis that we look at is to project a second quarter with roughly a flat SG&A rate. , you had a question that I didn't quite get. Was it the 1994 ...

Yeah, you said Limited hadn't had division - hadn't had that profitability since '94. So I just was wondering what was the operating margin in '94, if you had that.

That's actually a trick question. We would not disclose that. Thank you for that - she also does follow it up and said why didn't we announce the share repurchase.

Yeah, that was the second half of Steve's question. I don't have a better answer than what I gave you in answer to Steve's question. We look at it from time to time. We are not shy about doing share repurchases. But we don't have one to announce at the current time.

Thanks, . Next question, operator.

of Sanford Bernstein, you may ask your question.

Thanks. Quick question on Bath and Body Works. Can you give me your current assessment of the overall introduction of aromatherapy? It seems as though it's not quite as successful as you expected. Are their plans to reposition the marketing of it, you know or are you finding anything about its performance in different markets? You know? Are there distinct differences maybe in socioeconomic groups? Thanks.

Actually, we are happy with the aromatherapy performance. It's running about ten percent of the Bath & Body Works business, which is in line to slightly ahead of our expectations. And it is achieving that performance without promotions. So we've been careful not to put it on the promotional cadence that some of the daily beauty rituals or other products are.

There are some differences in performance by market. There are some markets that run considerably less than 10 percent of store, and there are some markets that run considerably more than 10 percent of store. We're in the process right now of analyzing those patterns and trying to figure out what it means. But overall, we are very encouraged about what aroma therapy says, which is that, you know, our customer welcomes a product in that price range. And we've - BBW has the, you know, credibility to deliver a product of that nature.

What we are doing is expanding the line, adding new items, adding new forms, and trying to capitalize on the strength that we think we currently already have.

Thanks, . Next question, operator.

Dana Cohen of Banc of America, you may ask your question.

Hello, can you hear me?

Yes.

OK, great. Well I'm going to follow up on question and then ask one of my own.

On the expense issue, SG&A dollars were actually slightly down in the first quarter. I mean is there any reason to think that you wouldn't be able to hold that at least for the second quarter? And then where do you think SG&A dollars go in the back half, as you start to round on some of the savings. And then my question would be, on inventories, I think you gave the apparel, but where do you see sort of total company inventories at sort of for the balance of the year?

OK. On the second quarter expense, the first thing I'll say is there are always some timing differences in how expenses hit our P&L. So that it's not always possible to just straight-line the trends. And secondly, in the second quarter we did start to see some initial results. You know, certainly not as much as we saw in the fourth quarter or the first quarter. But we did start seeing initial results in the second quarter, and we did start to those. So we are not as optimistic about our improvement in the second quarter.

In terms of inventory, was your question about the first quarter or the second quarter?

It's something - that apparel inventories would be down mid-single digit. I wasn't sure what timing that was. Is that for the balance of the year in total corporate inventories, sort of - not only at the end of 2/02, but as we move through the year?

That was a second quarter number for apparel.

And where would you see sort of inventories as we move through the year? Do you think they stayed down, did they flatten out?

I would see them being in the range of minus single digit to positive low single digit, depending upon the brand . We haven't finalized all our work on Fall, but they ought to be in that range. We're not going to be able to continue to be down five, down 10, forever and fund our - you know, our businesses for growth. But we're not talking about increases in the 8 and 10 percent range. We're talking about per square foot numbers in the, you know, minus mid-single digits to positive - to positive low single digits.

Thanks, Dana - next question.

John Morris of Gerard Klauer Mattison, you may ask your question.

Thanks - good morning and congratulations on a good quarter.

Thanks, John.

Can you tell me a little bit about your plans for advertising going ahead into the back half of the year, and maybe just briefly touch on it by decision if you could? Thank you.

Well the business that we have clearly been the most aggressive about advertising is Victoria's Secret. And we do plan to continue advertising at a slightly increased rate for the Fall half of the year in that business. In Express, we have done print in magazines. We will continue to do that.

And we are evaluating - and Michael would be a big proponent - of doing TV for that brand. And we're evaluating whether now is the right time and what that would be. So those are the two primary things in terms of advertising. The balance of the businesses will continue to have their customer relationship programs, their promotional programs, designed to drive profitable traffic and transactions in the stores.

Thanks, John - Operator, next question.

Maura Byrne of Salomon Smith Barney, you may ask your question.

Good morning.

I'd be interested in Michael updating us on progress at Express men's. And more information about your swing factor in operating income. I think you mentioned it was still - I guess it made money in the first quarter, is that right?

No it...

No, it did not.

OK.

It didn't. The combined business made good money, but Express men's lost significantly less money than it lost in the past, but continued to lose money. The progress there is it is basically in all of the vital signs. The margins are up, average dollar transaction is up. All of those good things are up.

We're still basically working on getting the transactions up so that all of that can convert to top line, which right now is our major, major thrust. Does that answer your question?

Focus items for the second quarter and back half?

Second quarter focus items would be our woven shirts, would be our knit shirts, our shorts and our pants.

Thanks, Maura - next question.

Jeff Klinefelter of US Bancorp Piper Jaffray, you may ask your question.

Yes, Michael, maybe just a quick follow-up on the Express men's business. Could you share with us where your average transaction value has come from and to here in the first quarter, kind of a year-over-year basis? And then maybe more specifically, we're just starting to hear that the men's business across the country is starting to pick up, the young men's business. You know, what do you attribute that to, and kind of what are your goals for sales per square feet going forward?

I think the average transaction value has gone up simply because we have the kinds of items that people want more than one of. So interestingly, it's going up partially because of - mostly because of very strong, what we would call basic items, but what really are fashion basics. On a go-forward basis, we would perceive the same thing. In terms of men's wear business picking up a bit, we believe it's picking up a bit because fashion is really changing.

Next question.

Marcia Aaron of Pacific Growth Equities, you may ask your question.

Yes, good morning.

Michael, just to continue on that thread, can you talk about maybe more of what you've learned at Express men's and where you see changes as we would look out to Spring 2003?

Yes, what we've learned is that the men's wear customer is quite interested in buying clothes when that he does not have. So our offering is directed towards that. And looking forward, we would see that the areas of our business that we were most experimental in, which is the dressier side of the business, have really paid big dividends. And that will be a larger thrust than you've seen in the past. We planned it originally at about 20 percent, and it's been running significantly higher than that.

Thanks, Marcia - next question, please.

Jeff Stinson of MidWest Research, you may ask your question.

Ann, could you talk about the progress of store payroll initiatives for you guys in the first quarter and what we might see moving forward in that area?

Yes. We have - as I commented in my earlier remarks, store payroll - store selling are the largest in its category. And we're continuing to do a number of things to manage those costs. We have efforts underway to more effectively manage the labor with the traffic. We have a report that we use that has wage rate data by mall, by business, so that we can look at hourly hiring patterns and correct if we think we need to.

We're using new labor scheduling tools right now on a manual basis. But those are being incorporated in an automated way into the new POS technology that's currently being developed. And, importantly, we're working really hard on shifting the staffing mix to be less full-time fixed-cost to a more variable base, so we can more easily adjust to the traffic.

Thanks, Jeff - next question, please.

Barbara Wyckoff of Buckingham Research, you may ask your question.

Hi - congratulations, again.

Talk about any plans to take marketing plans and BBW outside of the store. And then also about BBW, can you talk about the home fragrance business. You know, what percentage is it, where do you see it going, strength in that business opportunity?

We don't have a current plan to advertise the BBW brand, although it's kind of a saying as Michael, we always -- we consistently and regularly look at our brands to evaluate them for opportunities. We are pleased with the White Barn Candle portion of BBW. The new fill real -- I believe we call it the Real Essence Candle -- is proving to be a winner. Customers are coming back and buying that over and over. It delivers a lot of fragrance in a very clean way, and we're excited about the addition of , who has joined the business within the last year and is starting to put her touch, from a home fragrance/home decor onto the White Barn Candle piece of the business. That is -- we are optimistic about that piece -- cautiously optimistic about that piece of the business.

Thanks Barbara, next question?

Dana Telsey of Bear Stearns, you may ask your question.

Good morning. Can you talk a little bit about the gross margin? How much of the improvement was due to IMU, and how much was due to more full-price selling versus markdowns. And secondly, in your goal to be a 360 degree business, with the three master brands, any further thoughts on the evolution of that, either with Express or with the consumer products portion of the business, given that you already with Victoria's Secret. And just any update on science. Thank you.

I don't think that was one question. I -- you know, I can count pretty good, and -- the -- in each of our segments, the IMU was up and the MNU was up. So, you know, we were able to deliver on both lines. I quite frankly thank that MNU is the more relevant number, because IMU is, kind of, what we mark the product up to begin with, based on what we think is going to happen. MNU is actually what we delivered.

I'm not quite sure I understood your question, your second question about the 360 degree master brands. Can you clarify that for me?

All right. If you think about 360 degrees, selling online, selling in your stores, and selling through catalogues, Victoria's Secret's already there. You've expressed the interest to do that with Express, and maybe Bath and Body Works, any further thoughts on that? Is anything expected with that in the near future, or any plans?

Express is the next category to go online, as we think that's more amenable probably to the online category -- the online format. And we are currently evaluating when that would be. Your third question is about science, the first store opened and it's here in Columbus at and it is doing very well. It is exceeding expectations, although I would caution that one store opened for a month doesn't make a trend.

And the next one is scheduled to open in in Woodfield, in Illinois - Schaumburg, Illinois, one of the Chicago suburbs, and then we'll have four additional openings in the spring of '02. But the product is good, we have a higher level of customers who are returning to buy the product based upon using the samples that they have taken home, and so it is exceeding our expectations.

Operator, we have time for two more quick question.

Jennifer Black of Wells Fargo Securities, you may ask your question.

Good morning, and my congratulations as well. You mentioned your agility as far as lead times, and I was curious to know what your average lead times are, and how much you've reduced them on the whole. I realize it varies depending on what it is, your sort of thing.

This is Les Wexner on it, and you are right, Jennifer, it does vary dramatically by product. But the focus is the sourcing organization over the last year -- it's been oriented explicitly towards the kinds of agility that's necessary for us to be able to manage in an environment where we manage tightly. And we want to be able to increasingly manage the process of test and . So, the variations are from the ability to replenish some apparel items within 30 days, to things that obviously take significantly longer than that.

But, we continue to focus on shortening our supply lines and increasing our agility.

Operator, one last question before we wrap up.

of Neuberger Berman, you may ask your question.

Good morning, guys. I just had a question on BBW. You indicated you're cutting the square footage growth down by half. I'm wondering what your thinking is in terms of the growth rate going forward and, you know, therefore, what your expectations for the timing of a turnaround. I think it's a great idea that you do it while you're sorting things out, by the way.

Well, that's exactly why we're doing it. We think that the most important thing that BBW needs to focus on right now is the product, and the evolution of the product in the store. We have aromatherapy that's working. We have the spa products that we're restaging, and, you know, we're seeing if that's the next leg of what's next. But the reason for the reduction is to allow the business to focus on what's most important. And that's, right now, just getting the right product to get the business to next.

So, my expectations would be that we would continue to be very careful about investment in BBW real estate for the year 2002 and into '03. And then, we'll know more toward the end of '03 on what's going to happen in '04 and '05 on their real estate.

Thanks . Operator, I have one more concluding comment if I can proceed.

Yes sir.

We'd like to thank everyone for their participation in this call. Again, it will be available for replay by dialing 1-800-337-6551, followed by the pass code 583. We have one last bit of news before we end the call, and that is, in a move to further emphasize our commitment to building a family of the world's best fashion brands, the Limited, Inc. announced its decision to rename the company Limited Brands.

I'd like to read a quote from that release from our chairman and CEO Les Wexner, "The business has evolved from a group of specialty stores to some of the most recognizable brands in retail, and that justifies a more active and vital descriptor. Through the hard work and commitment of our associates, the loyalty of our customers, and the confidence of our shareholders, what was once a collection of specialty businesses has been transformed into a truly unique and vibrant portfolio of retail brands. The name Limited Brands more clearly describes who we are today, and is indicative of our strategy and commitment to brands going forward."

The name change is effective immediately, our ticker symbol will remain LTD. That concludes our call this morning. Thank you for your continuing interest in Limited Brands.