Bath & Body Works Inc (BBWI) 2003 Q1 法說會逐字稿

Good morning, welcome to The Limited Brands first quarter earnings call. At this time, all participates 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, welcome to Limited Brands first quarter earnings conference call for the period ending Saturday, May 3, 2003.

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

This morning, we faxed to your offices the first quarter earnings release and related financial information. This information is also available on our website www.limitedbrands.com. If you have not received this fax, please call our offices at 614-415-7076 and we'll get it out to you right away.

The 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 website.

Len Schlesinger, Vice Chairman and Chief Operating Officer, Ann Hailey, EVP and Chief Financial Officer, Grace Nichols, President and CEO of Victoria's Secret stores and Michael Weiss, President and CEO of Express are all joining me this morning. Tracy Travis, Senior VP of Finance and Stuart Bergdorfer, Senior VP and Controller are also with us this morning. We will be available to answer your questions at the end of our prepared remarks.

I will start with a brief overview of the first quarter results, first overall and then by brand. Then Grace and Michael will discuss their brands and Len will provide an update on Bath and Body Works. Ann will close our prepared remarks with comments about our financials.

Our GAAP results have been reported in our press release, all results that we will discuss on this call are adjusted results which is include the adjustments outlined in our press release. A reconciliation of GAAP to adjusted results is included in the press release and is also available from our website.

For the first quarter, sales were $1.842 billion, compared to $1.799 billion last year. Comps for the quarter were down 1%. First quarter earnings per share were 9 cents, that's against 14 cents last year.

An increase in operating income at Victoria's Secret was more than offset by declines at Bath and Body Works and the apparel segment. Gross margin decreased 140 basis points in the quarter to 33.2%. The first quarter SG&A rate improved by 10 basis points to 27.3%.

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

I'll begin with the Victoria's Secret segment. At Victoria's Secret stores, which includes beauty, first quarter sales were $561.8 million, the comps were plus 1%, external gross margin rate was flat, operating income rate was down slightly, and operating income dollars were flat.

At Victoria's Secret Direct, sales in the first quarter were $229.5 million, the sales change was positive 2% and external gross margin rate, operating income rate and operating income dollars were all up significantly. At Direct, panty and sleepwear sales were up to last year, sales in the clothing, shoes and accessories category were about flat to last year.

The increase in gross margin was the result of improved sourcing and a change in promotional offers from last year. The Internet continues to experience strong growth.

For the Victoria's Secret segment in total, sales in the first quarter were $791.3 million, that's again $762 million last year, the comps again were plus 1%, external gross margin rate was up. The operating income rate in the segment was 14% against 13.2% last year, and operating income dollars were $110.9 million, versus $100.5 million last year.

For the Bath and Body Works segment, sales in the first quarter were $321.4 million, that's again $320.3 million last year, the comps were down 2%, external gross margin rate was down significantly. Operating income rate was 5.1% against 8.6% last year, and operating income dollars were $16.5 million against $27.7 million last year.

And now for the Total Apparel segment. Sales in the first quarter were $615.6 million, that's against $638 million last year, the comps were down 3%. External gross margin rate was down significantly.

Operating income rate was 2.4%, that's against 5.4% last year. Operating income dollars were $14.5 million against $34.4 million last year. Both sales and margins for the apparel brands were below plan in the first quarter.

Now, for the individual apparel brand results beginning with Express. At Express, sales were $472.6 million, the lights were down 2%, external gross margin rate operating income rate and operating income dollars were all down significantly.

At Limited stores, sales in the first quarter were $143 million, the comps were down 5%, and external gross margin rate, operating income rate and operating income dollars were all down. It was actually -- external gross margin rate operating income rate down significantly, operating income dollars down.

First quarter sales on Limited stores were below planned, growth in cut and sew tops, jackets and wear to work pants was not enough to offset declines in sweaters, casual pants and accessories. The decline in gross margin in Limited stores was the result of the inability to leverage buying and occupancy costs on the 5% decline in comp store sales.

In the second quarter, Limited stores is up against the plus 13% comp result last year which was driven by promotion. Therefore, we are projecting continued negative comps for Limited stores in the second quarter.

They will continue to emphasize [INAUDIBLE] pants and cut and sew tops in the second quarter with particular emphasis on the growing casual aspects of these categories. That concludes my prepared remarks and now I'd like to turn it over to Grace Nichols.

Thank you, Tom. And good morning everyone.

Our comp result of the first quarter, as you heard, although positive, was below our expectations. The performance of the introduction of new styles in the Angels collection in March and the introduction of the Body by Victoria racer back and sport styles in April, although good products were not enough to generate growth against a strong bra performance last year.

As you'll recall, last year we experienced double digit growth in bras, driven by the highly successful launch of the Body by Victoria unlined full coverage bra. In addition, in January of this year, we aggressively exited a substantial number of lower productivity styles and the absence of these styles contributed to lower bra volume in the quarter.

The panty category continues to experience strong growth. Sleepwear also achieved positive comps and total beauty sales including Niche and Side by Side stores were up to last year.

Looking ahead to the second quarter, our stores are currently featuring the Bras of Summer. In June, we will move to our semiannual clearance sale which will run through July 7th, the same number of days as last year.

The back-to-school time period will feature a cotton event which begins on July 8th. Also in July, we will introduce a new prestige fragrance called "Breathless". With that, I'll turn the discussion over to Michael.

Thanks, Grace. And good morning to everyone.

Express got off to a slow start in the first quarter with negative 7% comps in February, but we rebounded and finished the quarter with flat comps for the combined March/April period against record sales last year.

In the women's business, our summer floorset which began on March 23rd and features our colorful terry group has been performing quite well. For the quarter, strong growth in knit pants and tops and dresses was offset by declines in sweaters, in woven pants and in denims.

In men's we achieved positive comps in the quarter solid results but slightly below expectations. Growth in knit tops, denim and woven shirts was partially offset by declines in shorts and in casual pants.

Operating income for the quarter was about 40% lower than last year, a large portion of which was lost in February. The remainder of the profit decline through last year was driven by markdowns to liquidate underperforming sweater and denim styles in women's as we worked to reposition ourselves in these categories.

Looking ahead to the second quarter in women's, we are invested in key items in terry, in our paratrooper crop pants and in mini tee shirts, which have all been strong performers. These programs, along with the transitional fall assortment that is just hitting the stores are the backbone of the second quarter assortment that will offer more wear-now goods than we offered last year.

In men's we will continue to focus on knits, denim and dress shirts which all realized solid growth in the first quarter and will work to revive the casual pants category. Dual gender stores continue to be a bright spot, outperforming balance of company for the quarter.

Thanks and now I'd like to turn the discussion over to Len.

Thanks, Michael and good morning everyone. Today I'd like to give you an update on Bath and Body Works.

As you'll recall on the fourth quarter call, I spent some time discussing the operational, organizational and strategic changes at Bath and Body Works. Changes which relate to the new direction of the brand, which we're calling the 21st century apothecary of beauty and well being.

As we've said, Bath and Body Works is in the midst of a significant transition and we believe we made real progress in the first quarter. The new leadership team has devoted significant effort to the development of strategies to accelerate Bath and Body Works evolution, particularly in the areas of product development and launch sequences.

We're developing a consumer based integrated brand calendar and disciplined cadence to the business which will tie to the mindset of the customer.

Although first quarter performance was disappointing, trends improved at the end of the period. Comps in April improved to plus 9%, driven by the Easter shift, strong performance in gift sets, True Blue Spa and home fragrance, and direct mail programs that brought last customers back to the store.

Gross margin declined in the first quarter driven by the additional direct mail programs and changes in sales mix.

Looking to the second quarter, the current focus of the store is True Blue Spa with an emphasis on five treatments, hands, feet, face, body, and legs. The June sale will begin in the second week and run for four weeks, which is one week shorter than last year, but comparable to the brands history.

The store will convert to a summer refresh theme in early July. Further out in the fall, we will introduce new products to existing lines as well as introduce completely new categories in the areas of face care and hair care. We will be providing more information on these products as we get closer to the launch date.

With that, I'd like to turn it over to Ann.

Thank you, Len. Good morning.

Looking back at the first quarter, our earnings result was in line with our initial expectations. Soft sales results in February and a promotional March were somewhat offset by a better trend in April.

Of the 5-cent decline in earnings year-over-year, 3 cents was the result of one-time items which impacted interest expense and other income. These items are, first, as we announced on fourth quarter call, we retired $250 million in notes which had a maturity in 2023. The expense related to this early redemption was $13 million and is included in our first quarter interest expense.

Second, we sold several nonstrategic [MAST] joint ventures at a loss which reduced other income by about $7 million in the quarter. The balance of the year-to-year reductions, 2 cents per share, was attributable to a gross margin rate decline of 140 basis points.

This decline was principally the result of an expected reduction in merchandise margins driven by the declines at Bath and Body Works and Express which we've discussed and by declines at Mast.

We responded to soft sales trends with our continued focus on expenses, and achieved a 10 basis point improvement in the SG&A rate. Somewhat better than our initial expectations, particularly given our first quarter comps as negative 1%.

We held store selling expense, our largest expense category, about flat on a dollar basis which translates to a 20 basis point improvement as a percent of sales. Our balance sheet continues to be very strong and we ended the quarter with $2.2 billion in cash.

There were several first quarter events that impacted our cash balance. First, we sold 7 million shares of Alliance Data Systems in the secondary offering. The after tax cash impact of this sale was about $94 million. These shares represented about half of our interest in ADS, we still own about 10% of the company.

Second, we issued 350 million in 6.95% 30-year debt and as I previously mentioned, we used a portion of the proceeds to pay off $250 million in higher rate debt.

And finally, we have repurchased 2.2 million shares of stock under our 150 million authorization at a cost of $28 million, and an average of $12.82 per share. Our strong financial position, both protects us against down sides and affords us the flexibility to pursue growth opportunities as they present themselves.

We believe that the economy may be stabilizing, but there are mixed signals as to the timing and the strength of the future recovery. The war in Iraq is substantially complete, and the geopolitical situation seems slightly less turbulent.

Jobless rates seem to have stabilized but at the relatively high level of 6%. At this point, given the high jobless rate, and the lack of a catalyst for economic growth, we remain somewhat cautious.

Looking forward at this point, we are comfortable with the current second quarter First Call consensus earnings estimate of 16 cents per share flat to last year. This estimate is predicated on low single-digit positive comps, a decline in gross margin of about 100 basis points, and some leverage in SG&A costs.

For the year, we are comfortable with our previous guidance for earnings per share growth of flat to plus 5% versus 99 cents per share last year.

With respect to capital, we estimate that our spending in 2003 will be about $375 million versus our previous projection of $400 million. The majority of the decrease relates to a reduction in planned 2003 dual gender conversions at Express due to changes in timing.

As I said on the fourth quarter call, the majority, about 70%, of our capital spending relates to stores and it's focused on reconstruction. In particular, we are spending behind our initiative to optimize our real estate in the top 160 malls.

The net effect of the activity related to this initiative will be to hold square footage flat in the top 160 malls while positioning our brands for growth in sales, productivity and profit. Our specific 2003 real estate plans by brand including openings, closings and reconstructions are included with the information you received this morning. This information is also available from our website.

Turning to inventory, we ended the quarter up 5 cents per square footed cost, 5% per square foot of cost, and down 6% per square foot at the apparel segment. The increase in total inventory is being driven by increases in core styles at Victoria's Secret.

We continue to focus on our disciplined management and analysis of our inventory investment. We expect that apparel inventories will be down slightly in the second quarter and in the fall on a cost of goods available for sale per square foot basis.

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

Thanks, Ann. Operator, that concludes our prepared comments and at this time, we'd be happy to take questions from the audience. We, unfortunately, have to end this call promptly at about 8:45 to go to our annual meeting. So in the interest of time and consideration to others, we'd like to ask people again to limit themselves to one question. I'll turn it back over to Stacy and I will help by serving as the moderator and directing questions.

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 1 on your touch-tone phone. You will be announced prior to asking your question. To withdraw your question, you may press star 2. Again, if you would like to ask a question, please press star 1. Our first question comes from Emme Kozloff of Sanford Bernstein.

Hi, thanks. A question for Michael. We've been hearing about weak denim trends in the industry and is sounds like you guys weren't any exception in the first quarter. Can you comment on what you think the problem is and how you plan on addressing that for back-to-school? Thanks.

Yes. I think the problem was that for the first quarter we did not have enough of the lightweight denim that they really wanted in the core area. We did not deliver any core denim to speak of in the entire quarter, which put us in a runout position. And we invested heavily in certain other styles on the fashion end of the business. That actually worked quite good. In terms of the second quarter with delivering brand-new core, totally new in the core department, and we're depending quite heavily on these styles which we have indeed tested. So we believe the trend will change for us in the third quarter.

Thanks, Emmy, next question, operator.

Dana Telsey of Bear Stearns you may ask your question.

Good morning. Grace, can you talk a little bit about on Victoria's Secret, the sourcing initiatives that you've put in place there. Has any of that helped your margins and also the new Pink Boutiques? I think I've seen some Aura Science stores inside of Victoria's Secret. And Neal, can you just talk a little bit about the 22 flagship stores [INAUDIBLE]? Thanks.

All right, we'll try to get to all of these. Let's start with Grace first.

I'll first answer the question about Pink. You know that last year we started testing in a very small amount of stores, 15 stores. We had terrific sell-throughs for the spring season, we expanded to 50 stores and we've had very good results. And our plans are to continue to expand as we go into the fall holiday season and we are currently relooking at our spring '04 assortment strategy in that category.

So we continue to see positive results there and are continuing to expand on a cautious basis. And the reason why is we have to evaluate the baseline cannibalization of our existing cotton business and get control of that.

In terms of the question on sourcing and our strategy there, it really -- the initiative is really to substantially reduce our lead times. Number one, so that we can better reorder basics in season, and also better reorder fashion in season. And thirdly, to begin our sleepwear design cycle more appropriate to the rest of the fashion world.

The reality is we are just formulating those initiatives and we're not yet in a position to say that we've substantially reduced our lead times. And we're currently serving that as a potential '04 initiative. Which will really heavily impact '05.

Thanks, Grace, we'll go to Tracy Travis for an update on Aura Science and the test at Victoria's Secret.

Yes, good morning Dana. As you're probably aware, Aura Science currently has nine freestanding stores. We have been relatively pleased with the customer response that we've gotten in those stores, particularly the conversion that we're seeing once we get customers to go in the store, the conversion rate is relatively high. We have been a little bit disappointed with the slow build from a traffic standpoint, walking into the store. And one of the things that we are doing to test the proposition of Aura Science is testing in six Victoria's Secret beauty stores. One of which is the 34th Street store to see if we can capitalize on the traffic in those stores and build awareness quicker for the brand.

We will go to Len for just an update on what's happening at the flagship stores at Bath and Body Works.

As you know Dana, there are 23 flagships today and that number is going to grow to roughly 40 stores by year-end. At this point, it's way too is soon to talk about how many stores we're likely to have ultimately but we do view this as the future of the brand. We are planning on building more stores in the near future over the next year or so. These stores continue to experience sales growth at significantly greater than the balance of the chain and we still expect more sales growth out of these stores as we evolve the assortment to support them.

Thank you, Len. Operator, next question.

Richard Baum of Credit Suisse First Boston, you may ask your question.

Thank you. Good morning. I know originally, this is for Len, the plans for the new product launch in Bath and Body Works were for July. Now, I understand based on your comments that that's going to come later in September. Could you comment on the reasons for the delay in this launch?

Yeah. The fundamental reasons for the delay in the launch are to match up to what I talked about earlier, about the consumer-based integrated brand calendar and to link the launches to the times of the year that the consumers are most suited and most oriented towards buying those products, nothing else.

Thank you, Richard. Next question operator?

Mark Friedman of Merrill Lynch, you may ask your question.

Thank you, good morning everybody. Grace, I was wondering if you could just give us a little bit more insight in understanding the performance of the racer back and the Angels versus the unlined last year. How much when you think you look at that, you attribute just to the quality of last year's product versus this year's versus the economy? And then how, when you look at planned launches for this fall, as some of the numbers get a little bit easier, do you think you have opportunity or any changes that might need to be made to the product or the marketing side of the business? Thanks.

It's an interesting and complicated question. Let's see what I can do with it. First of all, I want to comment that -- and I think you're aware, that the total bra market at all channels of distribution has been troubled for the last two years. And actually posted declines. We had a strong increase in market share last year, substantially outperforming the sector.

And I would also reiterate that that is true according to our information into the first quarter of this year. So we're kind of generally rowing upstream against a tide there. So some it is our own strong comps and some of it is a result of the category.

The reality is that what we did was launch two products in the first quarter that had exceptional wear tests, and good intent to purchase, but when we looked deeper into the information, they were not necessarily perceived as wardrobe loading multiple purchase type of items. That's what really caused us significant problems up against a very incredible launch from the prior year.

Based on that, those products we anticipate will lift our baseline and are anticipating a slight improvement as we go into the second and third quarter, so I guess there will be more to tell in three or four months from now.

Grace, thank you. Operator, next question?

Lauren Levitan of SG Cowen, you may ask your question.

Thank you, good morning. Ann, you commented that the CAPEX plan is slightly lower now than you had discussed earlier, and said it was partially related to a shift in timing of the dual gender conversions. Can you give us some update on where you expect to end the year with respect to dual gender stores, and if a slowing of that pace has any implications for the productivity going forward, given you have seen nice productivity gains relative to the base? Thanks.

Lauren, we'll go to Stewart Bergdorfer on that answer.

On the information sent out on dual gender conversions for the year, we're expecting, let's see, four of those.

We're opening four, there will be 40 conversions.

Opening four and having 40 conversions for a total at the end of the year of 93.

So Lauren, we'll have 93 at year-end. Operator, next question.

Stacy Pak of Prudential Securities, you may ask your question.

Thanks. One is just, can you comment on the use of co-branding, the seven jeans and Express and just the idea of adding brands to BBW and other stores? And then just as a follow-up, to an earlier question, Grace, can you comment on the number of launches in advertising versus last year in Q3 and four?

Stacy, first we'll go to Michael Weiss for the question about the seven jeans program then we'll go to Grace.

The seven is a test we're enthusiastic about because it would be sub branding seven for Express at a much higher price point for a different kind of a product. So we would reserve judgment on its validity until after we test it.

The answer on the Q3 and Q4 bra launches and advertising expenses, it's relatively comparable to last year. We had a bra launch in August, a bra launch in September and a bra launch in late October and that's our plans this year as well.

Thanks, operator. Next question.

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

Yes. Perhaps Michael could address this one. Looking at some of the larger retailers talking about a little bit of deflation pressure coming here in the second quarter, could you comment a little bit about your pricing structure or your mix? Any pressure points you're seeing in terms of promotional activity? And then just a little update on the supply side with respect to the issues we've had in the Asian countries, any delays at all in receipts?

Jeff we'll go to Len Schlesinger for that answer.

Let me start with the second question first. As it relates to the SARS situation in Asia, clearly it's not business as usual and we've had to defer to substantially more use of electronic media for managing the communications processes with factories that we have overseas and with our own people overseas. To date at this point, it has been an inconvenience. And nothing more than an inconvenience. It is not disruptive to the supply chain in any material way, nor do we expect that it is likely to over the next several weeks or months, barring no significant progression in the disease as it currently exists.

As it relates to the deflation issue, I've been reading many of the same articles you've been reading, the deflation effect and have been looking for it in our business. And struggling to look for it in our business and have been unable to find it. I've talked to people who have been around doing both the sourcing and selling side in this industry for over 35 years and at least in the context of specialty apparel, they've not seen it having a material impact. If in fact deflation did exist on a sustained basis, there's no way that we wouldn't be able to pass that on to the customer in a material way, but we have not as of yet seen it in a significant way.

Thanks, Len. Operator, next question?

John Morris of GKM you may ask your question.

Thanks, good morning. It looks like you had some pretty good cost control in the quarter and you talked about gaining some more leverage in the second quarter. Can you give us a little bit more color on that and what you see ahead on into the back half? Can we expect to continue to see some leverage? And as a follow-up, unless I missed it, can you give us a sense of how you're thinking about planning your inventory levels in the back half as well?

John, we're going to go to Ann Hailey for both of those questions.

Uhm, we're planning to see in the second quarter some additional leverage. The primary driver -- our largest expense category is, as you know, selling expense. And we have been working for some time on initiatives to get more efficiency and productivity in that category. Whether that be better labor scheduling tools, or a reduction in the fixed cost of store management and allocation of those costs to the more variable hourly labor so that we can flex up and down.

We saw that we were able to do that more successfully in the first quarter than we had historically and we would expect to continue to focus on that category going forward. We are, for inventories, expecting roughly in line for apparel with what we had been doing in the past. So it will be down slightly in the first quarter and into the fall on a per square foot basis.

Thanks, Ann, next question operator?

Todd Slater of Lazard, you may ask your question.

Thank you and good morning. I had a question for Len on BBW about the more promotional posture in the April period, especially in the direct mail piece, I'm just wondering if this was a near term response to the environment or does this represent any kind of departure to a more sort of promotional posture for BBW going forward?

We're going to go to Tracy Travis for that answer.

As we had talked about on the last conference call, BBW's plans for the spring season were to increase the level of direct mail that they were circulating this season. To do some prospecting to lapsed customers. So what you saw in the April time frame and what you will see throughout the balance of the second quarter is a significant level of incremental direct mail targeted very specifically at lapsed customers to bring them back into the store to see the new merchandise. The aroma therapy, the spa categories. And we have very good information about who those customers are.

The initial response has exceeded expectations and as Len mentioned, the 9% comps in April showed the result of some of those efforts. The program has been very successful and we're very pleased with it and we're seeing a higher level of redemption in those direct-mail programs than we had initially expected.

Thanks Tracy. Next question, operator?

Barbara Wyckoff of Buckingham Research you may ask your question. Ms. Wyckoff, please check your mute button.

Can you hear me now?

Yes.

Okay.

Good morning, Barbara.

Good morning, the mute was not on. Denim cycle for Michael, a couple years ago there was a lot of newness with the low-rise silhouette and stretch and washes and whiskers. Outside of the seven, is there a lot of newness to drive demand this fall, and/or do you think that the shift to sort of the utility styling will be enough to drive demand?

I think the answer is a couple of things. There are several new washes and processes that we think will assist the business. Certainly the utility styling is new from last year in terms of the interpretations of it. And also the lighter weight goods which we're extending into the fall is significantly different than last year. It seems to be getting tremendous customer acceptance so that we believe that the numbers which we're coming up against this fall, which are significantly easier than they have been, are not as problematic as the spring numbers have been.

Thanks, Michael. Next question, operator? I think we have time for about two more.

Dorothy Lakner of CIBC World Markets you may ask your question.

Yes, thank you. Good morning everyone. A question on Victoria's Secret first, if Grace, could you quantify perhaps in the exiting of the low productivity styles, how much that might have accounted for held you back in the quarter? And then for Michael, could you just give us a little bit more color on the progress you're making in the men's business? Thanks.

The -- it was about $30 million worth of volume over the season, anticipated over the spring season that we will be up against.

And Michael for a men's update?

Yes, in terms of men's, we had made initial terrific progress in denim and in woven shirts, which continue. We have not made progress at all in the knit tops which we're currently making really good progress in. And the last frontier for us will be casual pants which we believe we will begin to crack this fall.

Operator, we have time for one last question.

Our final question comes from Donald Trott of Jeffries and Company.

Donald Trott, CFA: Good morning. Could you discuss as specifically as you can get as to what are the possible options with respect to the big cash balance you have?

Thank you, Don. That question goes to Ann Hailey.

We do, as everyone knows, have a significant cash balance and we believe that that gives us substantial strength, particularly in the environment. We announced a couple of items, as you know, which was the increase in dividends, and we are in the midst of executing the 150 million share repurchase. We'll continue to do that. Our board regularly discusses the cash balance, both in terms of what makes sense defensively, what makes sense offensively, and what makes sense in terms of dividends and share repurchase and we will continue to do that going forward.

Thank you, Ann. That concludes our call this morning. Again we'd like to thank everyone for their continued interest in Limited Brands.