Good morning. My name is Cedric, and I will be your conference operator today. At this time, I would like to welcome everyone to the L Brands First Quarter 2021 Earnings Conference Call. Please be advised that today's conference is being recorded. [Operator Instructions] I would now like to turn today's call over to Ms. Amie Preston, Senior Vice President, Investor Relations and Company Affairs at L Brands. Thank you. You may begin.

Thank you. Good morning. Welcome to L Brands first quarter earnings conference call for the period ending May 1, 2021. As a matter of formality, I need to remind you that any forward-looking statements we may make today are subject to our safe harbor statement found in our SEC filings and in our press releases. Joining me on the call today are Andrew Meslow, CEO of L Brands and Bath & Body Works; Martin Waters, CEO of Victoria's Secret; and Stuart Burgdoerfer, CFO of L Brands. All results we discuss on the call today are adjusted results and exclude the special items described in our press release. Thanks, and now I'll turn the call over to Andrew.

Thanks, Amie, and good morning, everyone. We delivered record results in the first quarter, and we could not have done so without the continued dedication and extraordinary efforts of our team of associates and partners. Our adjusted earnings per share of $1.25 significantly exceeded our initial earnings guidance of $0.35 to $0.45, driven by stronger sales and higher merchandise margin rates than we initially forecasted. Performance was strong across the whole quarter. March benefited from stimulus payments hitting customer bank accounts, and we ended the quarter strong with good Mother's Day holiday performance at both businesses. At Bath & Body Works, we continue to deliver record results. Our U.S. and Canada stores increased sales by 47% compared to 2019, and our direct channel sales increased 123% versus 2019. All categories achieved solid growth, and strong sales demand continued to allow us to pull back on promotional activity. Operating income in the first quarter was $380 million, an increase of 127% compared to 2019. Our operating income rate for the quarter of 25.9% increased 760 basis points compared to 2019, driven by merchandise margin rate expansion and leverage in both buying and occupancy and SG&A on the high sales growth. As we announced last week, our Board has unanimously approved a plan to separate the company into 2 independent public companies: Bath & Body Works, one of the world's leading bath, body and home fragrance retailers; and Victoria's Secret, including Victoria's Secret Lingerie, PINK and Victoria's Secret Beauty, a leading retailer of intimates and beauty products. We expect to create these companies through a tax-free spin-off of Victoria's Secret to L Brands' shareholders. We believe the spin-off will enable each company to maximize management focus and financial flexibility to thrive in an evolving retail environment and to deliver profitable growth. The…

Thanks, Andrew, and good morning, everyone. The Victoria's Secret business continued its transformation with an exceptional first quarter performance. Total comparable sales increased by 9% compared to 2019, and our gross profit rate increased by more than 1,100 basis points. Compared to 2019, operating income increased by $213 million or 665% to $245 million, with an operating income rate of 15.7%. Customers are noticing and applauding our efforts to reposition the brand. We began that work by listening both to our customers and to our associates. We heard from them what they love about our brand, including the unmatched beauty, quality, fit and innovation in our products. And we also heard clearly what they want from us as a brand, which is all about representing and celebrating all women and being there for every moment of their life, including supporting and advocating the things that matter most to them, and that's exactly what we're doing. We're committed to creating lifelong relationships with customers by reflecting them, their stories, their journey, in everything we do. And you're starting to see those changes come to life, most recently with our Mother's Day campaign, our Bombshell Because campaign and the PINK mental health month campaign, which are all great examples of how we're reflecting, celebrating and championing our customers and the different moments and dimensions of their lives. Our team is fully dedicated to this repositioning work, and we could not be more excited about where we're going. I look forward to sharing more details as the work progresses. We're also heavily focused on the great work that's being done to rebuild a happy and healthy culture at Victoria's. While much has already been accomplished, I'm highly energized by the opportunities that we have in front of us to reposition and grow this iconic brand as a stand-alone public business. And with that, I'll thank you and pass it over to Amie.

Thanks, Martin. That concludes our prepared comments. At this time, we'd be happy to take any questions you might have. [Operator Instructions] Thanks, and I'll turn it back over to the operator.

[Operator Instructions] Our first question comes from Kimberly Greenberger with Morgan Stanley.

Great quarter. And before we launch in, I just want to say congratulations to Stuart. I think this is your last call with us. Is that correct?

Probably so, Kimberly. We'll see. Probably so. Thank you very much. It's been a real joy and pleasure and real honor. Thank you.

It's been a really, really impressive career, Stuart, and we've enjoyed the journey with you. I wanted to know if -- Andrew, if you could just talk to us about the new Bath & Body Works fulfillment center. Obviously, you've had an explosive digital business over the last year. It seems like you're sort of planning additional capacity to continue to grow that business. Maybe you could just talk to us about the strategy, the rationale and when you think that facility is going to be complete, that would be excellent.

Great. Thank you for the question, Kimberly. So to your point, yes, we continue to see tremendous growth out of our Bath & Body Works online business. As we just reported, results on a 2-year basis for the direct channel were up 123% in the first quarter, and that's after the full year 2020 where the business essentially doubled. So very pleased with the momentum we continue to see there. As you referenced, we are continuing to increase dramatically our fulfillment capacity. We were surprised to the upside last year at the beginning of the pandemic. And while our partners did a great job of expanding capacity throughout the year, we referenced in our script that we were a little bit backlogged at the end of the first quarter last year. And so we'll feel some of that impact on a year-over-year basis in the second quarter. But as we're looking out to the long term, while we've been very, very satisfied with our ability to work with third-party providers on our fulfillment capability, we also recognize as this business becomes larger and larger, we want the opportunity to also have some of the capability in-house, which is why we are adding the additional center that you're referencing. While we'll start to work in that center through the year this year, it really won't be online for full capacity until the back half of 2022. So while we'll get some benefit from it in early 2022, it's really preparing for the holiday peak at the end of next year that we'll be reliant on that new capability. We're also adding a lot of automation into that center, which will be new and cutting edge for us as we continue to figure out how to operate all of our fulfillment centers as both efficiently and effectively as possible go forward.

Great. Thanks, Andrew. Thanks, Kimberly.

Our next question comes from Lorraine Hutchinson with Bank of America.

I wanted to ask a question about the comp drivers for both businesses over the medium term. In your end, Martin, can you talk a little bit about your confidence in the pace of innovation that you're developing now to continue to drive consistent same-store sales in the coming years?

Thanks, Lorraine. Andrew, do you want to start?

Sure. So thank you for the question, Lorraine. At the highest level, I would reiterate that the way we look at our business across all of our businesses is asking ourselves the question first, are we, in fact, in the right categories. And as you can imagine, especially here over the last 18 months, the strong answer to that question for the Bath & Body Works business has been an absolute yes, whether it's the soap and sanitizer business that obviously has gotten a lot of momentum appropriately here during the pandemic; but then also our home fragrance business as people have shifted their lifestyles to be spending a lot more time at home; and then our body care business, which represents a real opportunity for people to treat themselves and to have a spa day, if you will, without ever leaving the house. And so certainly, those have been great product categories to be in, in the short term here. But we also look at those categories in terms of where they've been over the last 10 years, which has been consistent growth in each of those 3 big market categories. And as we look out into the future, we continue to see a lot of opportunity for growth across the categories themselves, and therefore, our ability to continue to gain and maintain very high market shares in each of them. As we think about what innovation will look like within the categories, we are very, very reliant on big key items within our big categories. And those key items represent a disproportionate share of our business. About 75% of our business comes from our biggest 10 or 11 items. So one of the things we're always looking at is the opportunity to launch new key items within our existing categories. So that is certainly something that you'll continue to see us work on whether, for example, things like moisturizing body wash or bar soap or additional candle and soap forms beyond the big forms that we already operate in. And then we're obviously very interested in, what I'll call, adjacent white space to our big 3 existing categories. And so we're constantly testing into things like hair care and skin care that are, again, large market cap areas of opportunity from a mid- to long-term basis. The last thing I would emphasize is that across all of our product categories, we're also continuing to focus on innovation and newness around more natural, good-for-you and good-for-the-planet strategies, whether that's around the ingredients themselves or around the packaging. And so those will continue to be efforts that you'll hear -- that you'll see and hear us focus more on as we go forward. So hopefully, that helps in terms of how we're thinking about it.

Thanks, Andrew. Martin?

Yes. Sure. So similar to what Andrew said, we feel very good about the categories that we operate in. Maybe if I touch on 4 or 5 things that have been really driving the comps, and then I'll address your question about innovation. So what's been really working for us to drive those comps are, firstly, better merchandise, particularly with a focus on good, better, best structures and really sharp opening price points. Second thing would be the improved brand positioning, moving from a position of, frankly, being irrelevant to being relevant, for being for him to for her, being more inclusive rather than exclusive. And the customer is really noticing and voting with their wallet. So that's great. I think thirdly, substantially better merchandise planning and allocation. When we're at our best, we go into the season only 50% bought and then we chase into real-time winners. And that's worked very well for us in the back half of '20 and into '21. And then finally, I would say our enhanced digital capability and our store teams really showing up to make the best of the traffic that they have. Traffic is down significantly in stores, and our store teams have made a great effort to build on dollars per footstep. So those are things that have driven comp to date and will continue to drive comp. As it relates to innovation, we feel really good about lots of things that we've got in the hopper, particularly new bra frames. At Victoria's, we haven't had new bra launches at the pace or rate that we should have had in the last 3 years, and we're getting back into newness in bras. We're also seeing new technology in fabrication. That's really helping. And of course, we like to think we're at the cutting edge of fashion and color and that we've chosen well in each of those 2 dimensions. So that's really what's driving the business. Thanks for the question, Lorraine.

Thanks, Martin.

Our next question comes from Dana Telsey with Telsey Group.

And Stuart, certainly has been a pleasure. Best of luck. As you think about the Victoria's Secret brand and the new marketing that you've put in place, you mentioned the strong Mother's Day that you've had. What -- marketing as a percent of sales, how are you thinking about it? What are your other initiatives with marketing that we should be looking forward to as we move on this year? And BOPIS was something that was mentioned as an initiative, where are you in each brand? And how does that come to fruition?

Thanks, Dana. Martin?

Yes. I'll try and remember those questions in order, but you might need to prompt me, Dana. So our intention over the long run is to get back to investing about 5% to retail sales in the Victoria's Secret brand. So if you think about us aspiring to a $7 billion brand, we'd be spending $350 million supporting that brand across a wide range of activities. What's different about that is the way that we spend money in the modern era is completely different than the way we spent money historically. So you should see very significant change there. The second part of the question, remind me, Amie.

BOPIS.

Was about BOPIS. So as you know, we were late to the party on BOPIS and ship from store, but we are there now. So we now have about 100 stores up and running with both of those 2 activities. And we will be moving that to 200 stores by the end of June. That, we think, covers most of the nation. So both of those initiatives are exciting. Obviously, Buy Online Pickup In Store is well regarded by customers. But the ship from store is particularly interesting for us because it enables us to leverage inventory where it exists rather than where we'd like it to be. So very significant there. And then I think the third part of the question...

I think that was it.

Was that it? Other marketing initiatives. I think it was -- what else we should expect for the marketing initiatives. So you should expect that we will start to invest in digital media more fully than we have historically. You should expect that we will have people representing for our brand who are more inclusive and more diverse, who represent our customer base in a much more inclusive way than we have done historically. I think those are the key points to note.

Thanks, Martin. Andrew?

Dana, so in terms of Bath & Body Works and Buy Online, Pick Up In Store capability, as a reminder, we had, had that in works, fortunately, as a pilot right as the pandemic hit last year. So we were able to roll that out in a limited way last year, really primarily in markets that were either fully shut down or experienced very, very tight capacity constraints. And so we got some very critical learning around the capability as we went through the back half of 2020. As we come into 2021 now, we've been able to roll out the BOPIS capability to right around 400 stores as we finished off Q1, and we intend to roll that to an additional 100 stores by the end of the second quarter. Primarily, as you might imagine, this is a capability that appears to be most effective and both well received in our off-mall locations, where it's easier for the customer to drive up and enter the store without having to walk through the mall. And we also, in general, have more space in those locations in order to be able to accommodate the packing and checkout required for BOPIS. We're very, very pleased and excited. We've gotten both great qualitative feedback from customers on the capability, and the early financial results are also promising. So definitely something that we're excited about rolling out further. And as we think about the future and build-out, especially of our off-mall locations, we'll be taking into account how to design stores in order to even better accommodate the BOPIS and ship-from-store capabilities. Thank you.

Thanks, Andrew.

Our next question comes from Matthew Boss with JPMorgan.

Congrats on another really nice quarter. So maybe this one is for Andrew and Martin. As we exit the pandemic, are you seeing any slowdown in top line momentum so far at all in the second quarter at either concept? And on profitability, could you just help walk through the drivers by concept of what's embedded in the low-40s gross margin forecast for the second quarter?

Sure. Andrew, do you want to start?

So on the first part of your question, Matt, I think we said in our prepared remarks that May has gotten off to a good start, a start that I'll say in Bath & Body Works is in line with the results that we were seeing in the first quarter and that, that is embedded already in the guidance ranges that we provided. From a category standpoint, what we also called out was that we saw a very balanced performance within the first quarter within our big 3 categories. And I would say that, that trend has also continued so far into the second quarter, and we would expect it to continue for the balance of the quarter.

Margin rate outlook?

I'm sorry?

Margin rate outlook?

Yes. So when we think about -- I'll comment on merchandise margin, if that's helpful. From a standpoint of merchandise margin improvement that we saw through 2020, as you know, was very significant as we were able to pull back dramatically on promotional activity. And that momentum, as we called out, also continued into the second quarter. We would not expect the second quarter merchandise margin on a year-over-year basis to improve. And that's really because last year, we had essentially no semiannual sale activity versus this year, a more normal year with more normal approaches to the business, we will have that. So historically, if you look back at margin over -- Q2 compared to Q1, our merchandise margin has tended to decline quarter-over-quarter by about 400 to 500 basis points. And when we look back and compare to 2019, which is really what we're trying to do as a more normal year, that's the type of relationship that we would expect here in the second quarter.

Great. Thanks, Andrew. Martin?

Yes. Substantially similar picture to what Andrew described in terms of the first quarter. So we accelerated into the back half of the first quarter, meaning that the latter 2 months were stronger than the first month. And May has been about the same as we saw from April, and that's really encouraging given that the stimulus effect has obviously been done and is behind us. So we're seeing very good momentum that we expect to continue. What's also very pleasing is that as store traffic has started to pick up, our digital momentum has not slowed down. So all in all, feeling very positive about both channels of growth. Margin has been exceptional, as I said in my opening remarks, up about 900 basis points in merchandise margin to Q1. And we expect Q2 to be about the same level of increase year-over-year. In all major categories, margin growth is outpacing sales growth. So feeling good across the board. As it relates to the very back half of the year, don't know. We could expect to see some cost pressure. We might expect to see some impact from COVID in our base of supply. So we're deliberately not giving guidance on the back half of the year at this time. But what can see for Q2 looks absolutely fine.

Great. Thanks, Matt.

Our next question comes from Simeon Siegel with BMO Capital Markets.

Congrats on the ongoing strength. And Stuart, I'll echo the well-reserved -- well-deserved congrats, and best wishes on the next chapter. So the flow-through on the stimulus sales was really impressive for both brands. So interestingly, higher at Victoria's. Can you speak to the right way to think about incremental margins at this point? Maybe what in that math is onetime versus more structural and a sustainable reset? And then the VS International operating loss shifting to breakeven was great to see. Congrats on those initiatives. How are you thinking about international profitability or pressure going forward?

Thanks, Simeon. Martin?

Yes. So the stimulus effect was about 1/3 of our beat to the guidance that we gave at the beginning of the quarter. So we think about where we were at the beginning of the quarter and where we ended up, about 1/3 of that beat was due to stimulus, we estimate. We have pretty good techniques for our estimation, so we feel pretty confident in that number. As it relates to the international business, the pickup is primarily due to 2 very significant areas of restructure that we put in place during the back half of the year and the early part of 2021. And these are obviously in the U.K. and China. In both cases, we have exited the losses in those businesses through some very, very good work to put them on a much more sound footing going forward. So with those losses behind us, we can really focus on the best bits of the business, which are in 2 areas. Firstly, the digital, meaning direct-to-consumer, where we currently ship to about 200 countries and territories around the world. And that business has been booming during COVID. And we see lots of opportunity for growth there, particularly moving to new languages. So we launched in Japanese and Korean within Q2. It should be good opportunities for us. And then secondly in the franchise business, where we feel very good about the partners that we have, operating businesses for us around the world. They've been through a tough time with many markets closed, particularly thinking about Continental Europe, very difficult. But the signs for the future are very strong in those regards. The one area of international that hasn't come back yet, and I'm not sure it will anytime soon, is travel retail. But happily, that's a relatively small part of our business and not one where we feel exposure from an operating income point of view. So across the board, feeling pretty optimistic, Simeon.

Thanks, Martin. Thanks, Simeon.

Our next question comes from Roxanne Meyer with MKM Partners.

Let me add my congratulations to -- for a phenomenal quarter and dramatic improvement over the past year. My question is for both Andrew and Martin. I'm just wondering, any initiatives or general updates around customer loyalty and loyalty programs that you can share for each brand? I know that for BBW, it's something that you are testing. Probably the past year hasn't been a great environment to expand that. But curious to get an update as you're thinking about generating that customer loyalty program. And then any steps that you can share about new customer acquisition over the past year, which I'm assuming was fairly robust online?

Thanks, Roxanne. Andrew, you want to start?

Sure. Thanks for the question, Roxanne. So I'm actually going to answer the second part of your question first, just to talk about general customer performance and growth because I think it plays into then our approach on the loyalty program that you were asking about. So as a reminder, when we talked about customers through the year in 2020, despite very, very strong customer response and reactivation through the back half of 2020 and based on the fact that our stores were essentially closed for 90 days in the first half of 2020, we did actually finish the year in customer count at Bath & Body Works down in the low single digits percentage-wise to last year. What's great news to be able to report is that tremendously strong performance in Q1 has not only closed that gap, but we're now running up low single digits on a rolling 12 basis to 2 years ago. And so a very nice turnaround based on strong customer acquisition and customer retention that we saw in really the last 3 quarters sequentially. So as we then think about, to your question, the loyalty program, the loyalty program is one that we have been piloting for the last several years. As a reminder, it's in just under 300 stores that we've been conducting those pilots in. And while we've been very pleased with the results in those areas, we have not been all that pleased with the flexibility of our loyalty application, the actual program itself. And so as discussed on prior calls, we are in the process of updating that program and that application. And we will be rolling it out to additional markets, about another 50-or-so stores later this year. And again, assuming good response to that, our intent would be to roll it out more fully sometime in 2022. The results that we see with that loyalty program even as it exists today, though, is better retention, obviously, of our customers and better overall responsiveness, both things that we will really be excited to be able to further leverage once we have that program rolled out more fully.

Thanks, Andrew. Martin?

Yes. We feel very good about where we are in terms of customer loyalty. Our best customers have been responding very well to the changes that we've made around the brand, particularly in new categories that we've reentered. So in our swim business, we've seen particular affinity from our best customers and our most loyal customers. So that's really gratifying to see. And I'm delighted to tell you that after several seasons of decline in the size of our customer file, in the last 1/3 of the year, we've actually seen an increase in our customer file. So that is incredibly encouraging proof points that our repositioning is working. As you know, I think our loyalty is tied to a credit card. And that's fine. We enjoy great success and great customer advocacy and communication through that tool. But we are committed to getting into a loyalty program that will not be tied to the credit card. And we will have tests in place on that towards the end of this year, stroke early in 2022. Thanks for the question, Simeon (sic) [ Roxanne ].

Thanks, Roxanne.

Our next question comes from Ike Boruchow with Wells Fargo.

This is Lauren Frasch on for Ike. Congratulations on a great quarter. I wanted to dig a bit more into how your thinking has shifted around VS margins now that you're managing to a mid-teens target. Could you walk us through how you got to the mid-teens as the appropriate level? And maybe how quickly you think VS can get there given its current trajectory? And as a quick follow-up, VS margins are clearly on a very robust trajectory right now as a result of the changes you've made. Is there any reason to expect that margin should not continue to expand relative to 2020 through the remainder of the year? Is there anything in the cost structure that needs to normalize in the second half that might result in margins being flat or maybe down?

Thanks, Lauren. Martin?

Yes. So we feel very good about where our merchandise margin rates are. I think you probably have the history, but our OI rate is close to our historical high for a Q1. So operating income at $245 million is about to -- about where we were in 2017. Only 2016 was higher at $280 million. The 15.7% that we proved for that quarter, we feel good about that kind of level go forward. We've said that we expect to manage the business to a mid-teens operating income. That's below where we've been on the historical high. And that kind of reflects the need for some further investments in the business where we haven't made investment in the last few years because times have been tough. So we don't want to overpromise on the margin. We want to give ourselves some room to be able to reinvest in the business, particularly in marketing strategies, but also reinvestment in our stores, which have been somewhat light in terms of investment over recent years. The good news that I can tell you is that, that margin growth is across all categories, and we do expect it to continue into the back half of the year. All of that said, we don't want to get too fascinated with our merchandise margin rates being at peak highs. We want to be more satisfied with delighting our customers, making sure we're reinvesting in the brand and putting our best foot forward for the long term. But absolutely no reason to doubt that we can operate this brand in the mid-teens.

Thanks, Martin.

Our next question comes from Susan Anderson with B. Riley.

Nice job in the quarter. I'm curious for the PINK business. Did you see at all a pickup in sales, do you think, related to some students returning to the classroom this spring? And then also just curious what your expectations are for back to school or back to college this year. And at VS, I'm curious if there's new plans for expansion of the lounge category and if you expect to continue to grow sport within that again.

Thanks, Susan. Martin?

Yes. I'll take that one. So the PINK business has been terrific. And in particular -- the PINK business particularly accelerated towards the back half of the quarter and is having an excellent May. So super strong performance, really good reaction to the new merchandise that Amy and the team have developed, but also to the brand positioning that they are pursuing. I think that, that strength is driven more by good fashion, being in good categories and delivering great marketing strategies rather than a return to campus. So we don't -- in campuses and towns and cities where we see a higher level of return of students, we don't really see a difference in performance there. The same is true with states where COVID has been relaxed, we're not really seeing a material difference. So what that tells us is the main thing is the main thing in the fashion business, which is having good merchandise and good marketing. So feel great about that. I think if Amy was on the call, she would remind me to point out that the growth has been particularly strong in intimates because that's our core. So double-digit comp same-store sales growth in our intimates business. Super strong performance in the logo business, which is particularly encouraging for the health of the brand. And maybe a couple of other snippets would be shorts are in. It's a good season for shorts. It's a good season for tie-dyes. It's a good season for yellow. And we've been on all of those trends. So big congrats to the PINK team. As it relates to the Victoria's business, yes, lounge has been great for us during COVID, and we intend to continue to invest in that category. The merchants in that area have just done a superb job. And we're starting to get to the point where we say, "Wow, our stores are too small again" because there's so much good merchandise coming. All of that said, we are a bra business. We are fundamentally a lingerie business. The most important category for us to win in is the bra business, and that has the most attention around here. And we're determined to win back customers in that core category of intimates. And what we're seeing in terms of results is that, that is working. So the mantra that I would remind you of, Susan, is growth from the core, most important. Sports bras, we've been underweight. It's a category where we've been too light. We haven't had enough investment, and we will be course-correcting that in the back half of the year. Hope that helps.

Great. Thanks, Martin. Thanks, Susan.

Our next question comes from Jenna Giannelli with Goldman Sachs.

Just as a follow-on to the margin question earlier. I'm wondering if you can extrapolate a little bit more on the potential for inflationary and/or supply chain headwinds in the second half that you mentioned in your prepared comments. Just a little bit on the magnitude of them, if it's labor, if it's distribution, freight, et cetera, and then really what you feel your strongest levers are to mitigate some of these pressures.

Thanks, Jenna. We're going to go to Stuart.

So just to comment broadly on it, and Andrew and Martin have also mentioned it, there are certainly risks out there and potential pressures. But for the back half of the year, we haven't provided guidance. And as we do so, we'll try to incorporate those views as we move through the year. But hard to quantify at this time. And obviously, the businesses are taking steps to mitigate some of the pressure. Thanks.

Thanks, Stuart.

Our next question comes from Janine Stichter with Jefferies.

Congrats on the progress. Just a clarification on the commentary on the quarter-to-date trend. I think you said for both brands, they had been tracking similar to 1Q. Is this similar to the 1Q rate ex stimulus? And I'm just curious what your expectation is for consumers. Have they spent most of their stimulus in your mind? Or is there still potentially some benefits that flow into 2Q?

Thanks, Janine. Andrew, do you want to start?

Sure. To your point, Janine, on a clarification basis, we would say it's in line to the stimulus adjusted trend to slightly better. And speaking on behalf of Bath & Body Works, the stimulus benefit that we saw was primarily in March with a little bit of carryover into April. But really not seeing any lingering stimulus benefit through late April and into May so far.

Thanks. Martin?

Yes. Kind of same answer to Andrew, the clarification point being that May has been similar to the back half of Q1, which was better than the beginning half of Q1. So that's good. And yes, we think that stimulus is behind us, and so we're not planning any benefit from that go forward.

Thank you. We'll take 2 more questions. We got to end a little early today to get to our annual meeting.

Our next question comes from Marni Shapiro with Retail Tracker.

Congratulations. So exciting. And welcome back, I guess, in a way. Martin, if you could just talk a little bit more high level about you've been with this company a long time, with Victoria's Secret a very long time. You've seen different iterations of the brand. Can you just talk, I guess, high level about the point of view you see the brand taking going forward? They've had the whole sexy bombshell things, the everyday thing, the active thing. Just in general, I guess, big categories and point of view that you see the brand taking going forward.

Yes. Brilliant. Thanks, Marni. I could take up the rest of the call with this one. This is my favorite. I'll try and be brief. It starts with the notion of redefining our purpose. We have a clear reason why we exist at Victoria's now, and that is to inspire women around the world with products and experiences that uplift them and champion them and support their journey. It's their narrative, not ours. And so how will we accomplish that? Well, we think about it in terms of creating lifelong relationships with women by reflecting what's important to them, what journey they're on, what stage in their life they're at, and perhaps more importantly, creating positive change for women through the power of our products and our platform. And also our advocacy. So advocacy is a big, big word for us going forward. And I have a bold ambition that Victoria's should be the world's biggest and best advocate for women. And that's incredibly powerful vision and mission for us to aim towards, and it's energizing for all of our people. And it does reflects a very significant turnaround from where we've been, where we're moving from what men want to what women want. We're moving from sexy for a few to sexy for all. We're moving from a look to a feeling. It's about including most women rather than excluding most women and being grounded in real life rather than mostly unattainable. So I couldn't underscore how significant this turnaround and this repositioning is. It's a very dramatic change for us, and we have significant proof points already at this early stage in our journey that this is what the customer wants from us. So expect more. Thanks, Marni.

I am so excited about this. Congratulations and best of luck. It's brilliant and overdue.

Thanks, Marni. I'm tempted to end right there, but have one more.

The final question comes from William Reuter with Bank of America.

I'll make it quick. The first is your leverage target had been 2.5 to 3x, is that still what you think with regard to the legacy LB or the BBW business? And then you got $2.8 billion of cash, which is a ton. Do you have thoughts on what you're going to do with that?

Thanks, Bill. Stuart?

So Bill, on capital structure, a few points to register. The first is the company's in great shape. We ended the quarter with $2.8 billion of cash, and the maturity profile of our debt is very well spaced out with not a lot of near-term maturity. So I really -- on the subject, I want to start there, we're in a very good place. The spin decision was made about 10 days ago. We're working with JPMorgan and Goldman Sachs on the subjects you asked about. VS is going to have some debt. The proceeds of that debt will be dividended to LB. We want the leverage for both VS and BBW to be well balanced and to compare appropriately to their respective peers. And it's a work in process. And it's all worked that the Board will review and approve as we move through the next month or 2. You asked a specific question about BBW go-forward leverage. The range that you mentioned seems about right. But again, it's preliminary. We've got a little bit more work to do. We're going to strike the right balance and more discussion to come with the Board. Thank you, Bill.

Thanks, all. That concludes our call this morning, and thank you for your interest in L Brands. Bye.

Thank you. And that concludes today's conference. You may all disconnect at this time.