Good morning. My name is John, and I will be your conference operator today. At this time, I'd like to welcome everyone to the L Brands First Quarter 2015 Earnings Call. I will now turn the call over to Ms. Amie Preston, Chief Investor Relations Officer for L Brands. Please go ahead.

Thanks, John. Good morning, everyone, and welcome to L Brands' first quarter earnings conference call for the period ending Saturday, May 2, 2015. 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. Our first quarter earnings release and related financial information are available on our website, LB.com. Also available on the website is an investor presentation, which we will be referring to during this call. This call is being taped and can be replayed by dialing 1-866-NEWS LTD. You can also listen to an audio replay from our website. Stuart Burgdoerfer, EVP and CFO; Sharen Turney, CEO, Victoria's Secret; Nick Coe, CEO, Bath & Body Works; and Martin Waters, President of International, are all joining us today. After our prepared comments, we'll be available to take your questions for as long as time permits. This call is shorter today due to our annual meeting this morning. [Operator Instructions] All results that we discuss on the call today are adjusted results and exclude the pretax gain of $78.1 million or $0.23 per share related to the sale of our remaining interest in the third-party apparel sourcing business. Now I'll turn the call over to Stuart.

Thanks, Amie, and good morning, everyone. We continued to get better in the first quarter and delivered record results. We continued to deliver sales growth, merchandise margin rate improvement and sound inventory management across all of our businesses. Adjusted earnings per share increased 15% to $0.61 versus $0.53 last year. To take you through the first quarter results, as detailed on Page 4 of the presentation, net sales for the quarter increased 5% to $2.512 billion and comps increased 5%. Foreign currency negatively impacted our sales growth by about 1 point. The gross margin rate increased by 90 basis points to 42%, driven by an increase in the merchandise margin rate. SG&A expenses deleveraged by 20 basis points, primarily driven by our investment in store selling. Operating income dollars increased 11%, driven by growth in all 3 of our major business segments, and our operating income rate improved by 70 basis points. Adjusted earnings per share increased 15% to a record $0.61. Foreign currency negatively impacted our first quarter EPS results by about $0.02. Turning to the balance sheet on Page 6. Retail inventories per square foot at cost ended the quarter down 7% versus last year. We repurchased 1.9 million shares of stock in the first quarter for $170.5 million. At quarter-end, we had $79.5 million remaining under our current $250 million repurchase program. Turning to Page 8 of the presentation. Our forecast for 2015 reflects actions we are taking to grow our business. Growth in Victoria's Secret real estate, increased store selling payroll, driven by our efforts to improve the customer experience and investments in international expansion. It also reflects an estimated negative impact resulting from foreign currency exchange rates. Our second quarter earnings forecast reflects a low single-digit comp increase. We expect the second quarter gross margin rate to increase versus last year, driven by improvement in the merchandise margin rate, partially offset by buying and occupancy expense de-leverage. We expect the SG&A rate to de-leverage, driven primarily by an increase in store selling costs. We expect second quarter net non-operating expense, consisting primarily of interest expense, to be about flat to last year at $80 million. We expect earnings per share between $0.60 and $0.65 in the second quarter against last year's $0.63 result. This forecast includes a negative $0.02 to $0.03 impact from foreign exchange. We are also lapping approximately $60 million in sales of non-go-forward apparel and makeup at Victoria's Secret. We expect to end the second quarter with inventory per square foot up low single-digits to last year. For the full year, we are projecting positive low single-digit comps. Total sales growth will be about 1 point higher than comps, the growth in square footage and our international business. Foreign currency translation is expected to negatively impact sales growth by about 1 point. We expect our full year gross margin rate to be up slightly and the SG&A rate to be roughly flat to last year. Net non-operating expenses, consisting principally of interest expense, are projected to be about $315 million, roughly flat to last year. Before any discrete items, we estimate our tax rate will be approximately 37.5% versus 36.3% in 2014. The higher projected tax rate in 2015 will negatively impact earnings per share by about $0.07. We are forecasting weighted average shares of about 300 million in the second quarter and the full year. Assuming all of these inputs, we expect adjusted earnings per share for the full year 2015 to be between $3.50 and $3.70. This estimate includes an estimated negative impact from foreign exchange of about $0.10 to $0.12. We are projecting 2015 capital spending between $800 million and $850 million. As you know, about 70% of our CapEx budget is for real estate and stores. The remainder relates to investments in technology, logistics and facilities. As detailed on Page 9 of the presentation, Victoria's Secret square footage in North America will increase by about 4% this year, driven by expansions of existing Victoria's Secret stores and 25 net new openings. Bath & Body Works square footage in North America will increase by about 3%, driven by 24 net new openings and 83 remodels. Total company square footage will increase by about 3.5%. Turning to liquidity. We expect 2015 free cash flow of about $700 million to $800 million. We remain committed to returning excess cash to shareholders through a combination of share repurchases and dividends. Our free cash flow and cash position, along with the additional availability under our revolving credit facility, results in very strong liquidity, which is more than sufficient to fund our working capital, capital expenditures, dividends and any other foreseeable needs. Thanks. And now, I'll turn the discussion over to Sharen.

Thank you, Stuart, and good morning, everyone. The Victoria's Secret segment delivered positive results in the first quarter while continuing to make significant changes to the business. We were able to grow both sales and profits despite an $80 million reduction in sales from non-go-forward apparel and makeup. Total sales increased 5% to $1.7 billion and comp sales increased 5%. Operating income increased $10.6 million or 4%, and our operating income rate decreased 20 basis points to 17.1. We finished the quarter in good inventory position, down to last year. Now let's turn to specific channel performance, starting with the stores. We are pleased with the first quarter, as both sales and operating income increased to record results. Sales for the quarter increased 8% to $1.3 billion and comps increased 5. Sales growth was driven by PINK and Lingerie. Our beauty business was down to last year, reflecting the impact of the exiting of makeup category. We were very focused on our core categories. And as a result, delivered high single to double-digit growth in bras, panties and fragrance. The merchandise margin rate in dollars were up to last year, driven by strength in full-price selling. Buying and occupancy expense leveraged versus last year. SG&A de-leveraged, driven by our investment to improve the customer experience. Operating income dollars and rate increased versus last year, a result of higher sales, coupled with margin rate expansion. Now turning to the direct channel. Our first quarter results continue to reflect our strategy to exit non-core apparel categories. First quarter sales were down 6%, as we anniversary roughly $65 million of non-go-forward apparel sales in the first quarter versus last year. Our strategy to distort to core categories where we have our best growth opportunities is working collectively. Sales in bras, panties, PINK, sport, beauty and lounge were up mid-teens. The merchandise margin rate was up significantly during the quarter as we continued to distort the core merchandise margin -- as we continue to distort to the core. The merchandise margin dollars were down significantly -- down slightly to last year. Operating income dollars and rate declined, driven by the decline in sale and an increase in expenses driven by investments in our digital shopping experience. Looking ahead to the second quarter, we will continue our focused, fast and frugal approach in order to optimize our business. We are excited about our fashion offerings this quarter and are focused on driving growth in our core categories. As a reminder, we will continue to be up against the exit of non-go-forward apparel and makeup, which collectively represented roughly $60 million sales in the second quarter last year. In addition, as part of our continuing efforts to align the customer experience, we are shortening the semiannual sale in the direct channel by about 2 weeks, which will negatively impact sales in the second quarter. Thanks. And now, I'll turn the discussion over to Nick.

Thanks, Sharen, and good morning, everyone. At Bath & Body Works, we were pleased with our first quarter results, where we were able to grow sales and increase earnings versus our record performance last year. We were able to drive growth in sales while improving margin rates and managing inventory levels down. First quarter sales of Bath & Body Works North America was $613 million, up 5% or $32 million to last year, and comps increased 4% on top of 2% last year. Sales were strong across the quarter, and we were able to drive growth in each of our 3 key businesses: Our Signature Collection product line, soap and sanitizer business and our home fragrance assortment. We continue to be pleased with the customers' acceptance of products' newness and our in-store execution. For the quarter, operating income was $97 million, up 22% versus last year. Our operating income rate improved by 210 basis points to 15.8%, driven by expense leverage and improvement in merchandise margin rates. We were able to effectively pull back on promotional activity versus last year, driving growth in average unit retail. We continue to see strong performance in our BBW Direct channel, which grew sales by 15% and operating income significantly in the first quarter versus last year. Looking ahead to the second quarter of 2015. We will continue to leverage our read-and-react capabilities and provide a world-class in-store experience by constantly pushing differentiation within visual display and maintaining a strong customer service focus. We are optimistic about the trend of our business and confident in our plans, but understand, we need to keep getting better to win in a competitive retail environment. We began May focused on Mother's Day and transitioned into our Meet Me in Tahiti that features new and seasonal fragrances in our 3 key businesses. We ended the quarter with inventory down to last year well-positioned heading into the second quarter and flexible enough to react to customer preferences. We remain focused on disciplined expense management, but we'll continue to make appropriate investments to drive growth in the business. With that, I'll turn the discussion over to Martin Waters.

Thanks, Nick, and good morning, everyone. As in previous calls, I shall give you a brief overview of our progress in our international businesses. As we all know, our opportunity for international growth is significant, and we feel good about the strategic choices we made to be steady and purposeful, to pursue a test-and-learn philosophy that reflects the DNA of our company. We made good progress in the first quarter. And as detailed on Page 10 of your presentation, we opened 29 gross international locations in the first quarter to end the quarter with 420 stores in the segment. For the first quarter, revenue increased 29% to $91.5 million and operating income increased 38% to $21.5 million. At Victoria's Secret International, we are pleased with performance of our full assortment stores. In the U.K., we continued to be very pleased with all of our 10 stores. We'll open another 4 stores this year and the expansion of Bond Street opened today by chance. In the Middle East, we now have 14 Victoria's Secret stores and 1 PINK store. We continue to be very pleased with the results and will open another 8 or so this year. Staying with Victoria's Secret, our beauty and accessories business continues to progress well with 304 locations opened at the end of the quarter, about 1/3 of which are in airports. We've opened 10 VSBA stores in China and are pleased with the results. We'll open about 100 or so stores across the globe in 2015. Turning now to Bath & Body Works. We have 91 stores open, and we continue to be very pleased with their performance. We expect to open another 40 or so BBW International stores in the year ahead. So in summary, continued progress from our international business in the first quarter and we remain focused on the fundamentals, great execution of our brands wherever we go. And with that, I'll say thank you and turn it back over to Amie.

Thanks, Martin. That concludes our prepared comments. And at this time, we'd be happy to take your questions. [Operator Instructions] I'll turn it back over to John.

[Operator Instructions] And our first question comes from the line of Lindsay Drucker Mann from Goldman Sachs.

I wanted to ask about, for Bath & Body Works, the increased investment you'll have in store payroll in order to improve in-store selling. Can you help us understand, number one, how much you think that initiative might cost and some of the specific targeted improvements that you're looking for in terms of implementation in the store? And number two, in terms of what you learned when you implemented this on Victoria's Secret, how quickly do you see a payback? How quickly do you see your comps improve or your store managers start to drive incremental sales?

Lindsay, well, I think the best way to answer that is we are constantly playing around with testing and experimenting with different compensation models, looking to continue to improve the customer experience. We believe wholeheartedly that we are a brand with high emotional contents of fantastic loyal customers, so anything we can do that improves that experience is something that we're constantly looking at. As it relates to how much we've invested in that, I'm not at this stage wanting to talk about that, but more about how we're really improving the customer experience. And as we go through the year, we'll get the full [ph] results and we'll end up with, hopefully, a better experience.

At Victoria's Secret, we're doing a lot of things to really enable the associates, to give the best service and to be the best place to work and to be the most selling professionals that we can be. The things that we have instituted, we do see a reflection in the business. It's all about talent. It's all about education. And we're going to be -- we're going to pursue these initiatives with a vengeance as we go forward.

Thanks, Sharen. Thanks, Lindsay.

Our next question comes from the line of Omar Saad from Evercore ISI.

Wondering if we could ask a question on the store expansion strategy versus the new store open, net new store openings. If you can kind update us on how you're feeling those expanded stores. It seems to us in the marketplace that those larger store footprints are really -- appear to be doing really well. And as you think out over time, is the store expansion strategy opportunity even bigger than perhaps you originally thought?

This is Sharen from Victoria's Secret. We have great investments in our expansion stores, and we are very pleased with the results. We continue to see the return on investment even quicker than what we had thought it was. So you're absolutely right. We are continuing to look forward to invest every year on these expansion stores. We're not slowing down. Where we have opportunity and can get real estate, we would move faster. So this is something that we're constantly focused on. I'm excited that we have more ideas than we have real estate today to support the growth. So this is a big opportunity and something, as an enterprise, we continue to be focused on.

Great. Thanks, Sharen.

Our next question comes from the line of Barbara Wyckoff from CLSA.

Sharen, can you give us some more strengths in Swim -- results in Swim, PINK and the active business, please?

Our Swim business for the season has been very strong, growing in terms of double-digits. The PINK business has continued to perform on all cylinders in terms of the bra and panty business, as well as the lounge business. And the sport business is exceeding our expectation, especially as we continue to focus on the bra category.

Thanks, Barbara.

Our next question comes from the line of Anne-Charlotte Windal from Bernstein. Anne-Charlotte Windal: Can you talk a little bit about the drivers of merchandise margin expansion go forward? Obviously, you keep having amazing results there. So is it that this one just a pure story around like lower level of markdowns for like more speed-to-market? Do you think that you have pricing power in your key categories? So what's the growth outlook go forward for merchandise margin?

Okay, Anne-Charlotte, we're going to go to Sharen and then to Nick.

Anne, we are seeing our biggest margin expansion coming from the fact that we're using our speed, taking less markdowns, doing more regular price selling, less promotional activity. And we continue to be focused on these things.

Anne-Charlotte, this is Nick. A couple of things. One is, we continue to get better product acceptance, which is helping us to have somewhat of a less promotional experience as we've gone through the quarter, which has been really helpful. The other aspect of that is mix. We've seen a healthy mix in terms of different pieces of the business that have naturally been at a higher margin rate. And then we continue to, as we see things work, our ability to read and react to those continues to be a really powerful tool for us. And that, in general, has helped the margin rate expansion.

Great. Thanks, guys.

Our next question comes from the line of Anna Andreeva from Oppenheimer.

Question on the slight margin decline at Victoria's Secret. Should we expect continuation of that as we go through 2015 and you lap the exit of apparel and makeup categories? And just longer term, maybe talk about the margin goal at this division.

You're talking about the operating margin at Victoria's Secret, was basically the decline in the apparel business, as well as the beauty exits. We had a little bit of FX from our Canadian stores as well. We see that we will be anniversary-ing and kind of being on the upside then and as we go into the fall season, almost completely going -- not going up against any of that exit of apparel, as well as the makeup business. So we do believe that we will be back to the kind of track record that we want to do. And we always continue, in terms of our goals, to get better and better and stronger and stronger.

Thanks, Sharen.

The next question comes from the line of Kimberly Greenberger from Morgan Stanley.

My question this morning is for Stuart. Stuart, I'm wondering, I think you've been investing in store wages and payroll now for a couple of years. As the competitive set moves to $9 and then $10 an hour, do you anticipate some additional upward pressure on wages as we move into 2016? Or once we finish 2015, do you think you'll be sort of comfortably where you'd like your payroll architecture to be?

So as Nick and Sharen outlined earlier on this call, I mean, we are making investments to improve the customer experience and in-store selling generally. I would say, first and foremost, they're not in reaction to things that are happening on -- happening competitively or otherwise as it relates to wage rates. We just believe we have great brands with pricing power and great store environments. And we think there's sales growth potential through a higher paid, more stable, more motivated, better trained workforce. And we'll get sales growth from that. In terms of the specifics about selling cost as a percent of sales. Obviously, we're continuing to learn. We believe that there is some potential for driving productivity on that over time. But in specific answer to your question, when does the pressure relieve? We're still learning, Kimberly. But again, when we look at the potential to drive sales growth and overall profit growth, we're very clear-minded about that. How it plays through specifically on selling costs through '15 and into '16, we're still learning there, but very optimistic about the sales growth potential through the work that we're doing.

Thanks, Kimberly.

Our next question comes from the line of Oliver Chen from Cowen and Company.

It's Courtney in for Oliver today. Can you just talk about maybe beauty park and some of your other speed initiatives and your learnings there, and how much more improvement on speed you think could be possible?

Yes, the beauty park continues to be a very important component of our business model, allowing us to really, literally day-by-day, understand what is the customer really reacting to and how do we then fulfill her needs. In terms of what does it mean on a go-forward basis, it's really a case of more about how much -- how many styles and which styles do we put on into the beauty park that we believe is where the customer is going to go so that we can react to that. So it's very much, at this stage, it's been open for a while and we've been leveraging it for a while. It's very much business as usual. And as I said at the beginning, I think it's just a critical component of our business model. We expect to continue to leverage it and hope that it continues to allow us to read and react to customer preferences, which going back to the earlier conversation of what has helped margin expansion, that is a piece of it because it really allows us to do what we've always wanted to do, be close to the customer and focused on full-price selling.

Great. Thanks, Nick. Thanks, Courtney.

Our next question comes from line of John Morris from BMO Capital.

My question, I think, for Martin. Thanks for outlining the international progress. I'm wondering about the e-comm from an international standpoint. What are you seeing in terms of demand, if you can you read it, as it relates to the international e-comm. And an update on your capabilities there and new initiatives for this year for e-comm international?

Thanks, John. I think, actually, we're going to go to Sharen for that question.

John, we're seeing an increase in our international businesses depending on, in certain countries, in terms of where we play. Our capabilities are increasing. We're actually just now relaunching 2, where all of the pricing and being able to understand what the pricing differences and conversion differences are will be in the font of the website, not waiting until the back in terms of checking out. So we're continuing to improve our capabilities. We're continuing to improve our capabilities of shipping from Columbus to anywhere in the world. And so very pleased with the progress that we're making.

Thanks, John.

Our next question comes from the line of Brian Tunick from RBC Capital Markets.

I guess, 2 questions for Stuart on the inventory growing in the second half. Can you maybe talk about how you're thinking about inventories versus your sales expectations, especially as you lap those big inventory declines in the back half? And for Nick, obviously, mall traffic, very challenging. You've been one of the few, I guess, inflationary categories in some of your businesses. What are some other traffic drivers that you have planned? Maybe you could talk about in the back half of the year if mall traffic continues to struggle.

So on inventory, we're forecasting that it'll be up low single-digits at the end of spring season. Our commitment, Brian, to grow inventory slower than sales has been there, if you will, for, as you know, more than 5 years. That commitment continues because it's reflective of further progress on our speed agenda and offering the precious, most compelling assortments to customers. So over any meaningful period of time, our goal is to grow inventory slower than sales. We're not looking to have empty shelves and be out of stock, obviously, so we'll try to do that carefully. And as you acknowledge in your question, some of it, you got to look at multiyear comparisons to understand current year percentage changes. So we're -- inventories are in great shape and our commitment to, again, getting more productivity, fast turn, growing them slower than sales is an ongoing commitment.

Brian, it's Nick. So I think 3 things. First one would be, as I mentioned earlier on, the visual differentiation of the store is a really important aspect, I think, of driving traffic. And so we're very, very committed to, with each floor set, trying to create a very differentiated story to tell. That's the first one. Second is we have a number of interesting product launches coming up as we go through the year, which obviously, we figure out how to market and how to promote in order to drive traffic. And then, thirdly, we are constantly testing different promotional vehicles, different ways of communicating that in different price points. And in some cases, we've been able to price up as we've gone through, which is helped from the margin expansion side. But between those 3 things, those are the things we'll be focused on this year in order to combat any potential traffic challenges.

Great. Thanks, guys.

Our next question comes from the line of Mark Altschwager from Baird.

You talked about shortening the semiannual sale period within VS Direct. Could you just expand on that a bit? What drove the decision? Is it just a result of having the cleaner go-forward assortment? Or is there more to it than that? And then what do you expect the impact to be on the sales growth and the margin rate?

The #1 reason is that for -- as we continue to align our direct channel and our store channel, the direct business had always had a little longer timeframe from semiannual sale. So now, it's about putting power on power, both where the store and direct channels go out at the same time. So it would be reducing the days for semiannual. We think that by reducing the days, that we'll still be able to do close to the same amount of volume. It's just in a shorter timeframe.

Great. Thanks, Sharen. Thanks, Mark.

Our next question comes from the line of Ike Boruchow from Sterne Agee CRT.

Stuart, quick one for you. I think I just heard you mention that you expect the -- your inventories to kind of normalize and start to be up a little bit per square foot. Does that change your -- or I guess, what's baked into your outlook and your guidance for the back half of the year in terms of markdowns and pricing, both at VS and BBW?

Yes, I mean, Ike, what I would say is that we consistently work to plan our business conservatively, both as it relates to the management of inventory and the management of expenses. And again, that mindset's been forefront, if you will, for the last 5, 6, 7 years. So there isn't really any change on that. Obviously, when we execute that strategy well and plan conservatively and leverage our speed agenda and our shorter lead times, as you understand, and we've already talked about some again this morning, that creates opportunity for more full-price selling. And one of the drivers of some expansion opportunity, merchandise margin rates. So I'm not trying to be general in the answer, I'm just trying to share with you how we think about it, and that is how we plan our business conservatively. And then where we've got trend and business, we chase like heck to maximize sales. And through that, we get some opportunity to improve merchandise margin rates. And there's nothing about 2015 on that agenda that's different than how we thought about it for the last 3 to 5 years.

Thanks, Ike.

Our next question comes from the line of Janet Kloppenburg from JJK Research.

Just a couple of quick ones for Nick. The AUR increases that are driving your comps, maybe you could talk about if that's coming strictly from the fragrance category and if you expect AUR to continue to drive cost? And then you had nice growth in the direct channel, maybe you could talk a lot about investments you're making there to sustain that kind of momentum.

Yes. So AUR really has come as a result of being slightly less promotional, which has really helped. And it's come across the board. It's not just in 1 category, it's across the 3 key businesses. So being somewhat less promotional. And then as I mentioned earlier on, we've been successful being able to, in some cases, take some promotional prices up, which has also helped on the AUR expansion. In terms of the direct business, really, the investment there is going to continue to be into storytelling so that we are really trying to tell the best story we can, market the products as well as we possibly can. And that has worked extremely well for us. And again, in that category, we've been slightly less promotional, which has really helped. So the investment will continue to be into the site in terms of helping the customer not only navigate it, but really helping the customer understand the breadth of the assortment and our most compelling stories cut through.

Thanks, Nick. Thanks, Janet.

Next question comes from the line of Simeon Siegel from Nomura Securities.

Sharen, just to follow-up on your point about significantly higher merch margin rate at VS Direct versus the gross margin contraction. Can you just speak to what elements brought down the gross margin versus with merch margin being up, if there's anything to keep in mind going forward?

So in terms of the -- I think what you're asking me in terms of Victoria's Secret Direct, because of the sales that we did not have from exiting the apparel business, there was a de-leverage in terms of that. So that is -- the margins were up, but because of the true sales that you gave away, you didn't bring those dollars to the bottom line.

Thanks, Sharen. Thanks, Simeon.

Our next question comes from the line of Lorraine Hutchinson from Bank of America Merrill Lynch.

It sounds like you're still fulfilling most of your international business through Columbus. What's the tipping point there in terms of revenue to build the distribution center to fulfill some of the e-commerce and franchise in VSBA demand? And then I know you said you were pleased with China, but any other reads on potential for the rest of Asia?

Thanks, Lorraine. The direct question will go to Stuart.

Yes, as it relates to supply chain for international, as you can appreciate, that's a complex subject. And obviously, one that we're thinking about. We do believe that there are some inherent advantages to having fewer pools of inventory versus more. So that's important. You're asking about scale, obviously, that will depend on, which business we're talking about and the nature of that merchandise. And the last point I just want to register is that we don't feel compelled to "build those assets" ourselves. Meaning that there are third-parties that can help us with that, that will help us with that. And so as we get to those scales, and again, it will depend on the situation category, et cetera, we'll work with third parties to advance our supply chain internationally.

Great. Martin, China?

Yes, China's been good. We are at 10 stores so far. We're actively looking for real estate for the full assortment of stores, and for BBW stores, we think they'll open in 2016. You asked about the rest of Asia. Of course, we already have over 100 stores in Southeast Asia right now across the VSBA and BBW brands. So we're in the markets of Singapore, Malaysia, Indonesia, Thailand, all of those countries, we're actively operating in. The one part of Asia where we haven't gone and we don't intend to any time soon is North Asia. So nothing in Japan, nothing in Korea for the foreseeable future.

Thanks, Martin.

Your last question comes from the line of Dorothy Lakner from Topeka Capital Markets.

Just maybe a broader question on real estate. I think Sharen had mentioned having more ideas than space to put them in. So I wondered if you could just talk more broadly about what's going on in the real estate world. There seems to be a lot of retailers closing stores. Just what's going on there. Why can't you get the space that you want? And what's kind of happening with rents as we see all of these store closings going on?

So I'll take a crack at that. So importantly, as we think about our business, it really comes to life in the most compelling way in the store environment. Obviously, we have good direct businesses as well. But first and foremost, our brands come together most clearly in a physical environment in stores. As you know, our real estate is in very good shape in terms of the percentage of stores that generate profit and cash flow 99% plus. Productivities are very good. As it relates to what's going on in the real estate environment generally, I think generalizations can be dangerous. Obviously, the very best malls are doing very well with growing sales, growing traffic, increasing rents, reflective of the fact that they're dynamic, vibrant environments. We do see a share in outline. We talk about pretty consistently. We see the opportunity for sales growth and profitable sales growth, good returns, good expanding square footage in the United States. As it relates to what I'd call distressed real estate, typically, in the lower volume malls and maybe some others that are struggling with real estate, frankly, that would be real estate that we would be less interested in, obviously. So our real estate locations are generally very good, main-on-main locations in the better malls in the United States. And we're not as focused on how do we get $5 off the cost per foot, but rather how do we make sure that we've got great locations, driving sales growth and profitability, working with the key developers in North America and internationally. So again, generalizations are dangerous. It's not a cost game for us. Obviously, we don't want to overpay for anything. But it's -- the most important economic evaluation is getting a great location and getting the right size and creating the right store environment, and that's what we're focused on. And analytically, where that comes through is in increasing sales productivity, sales growth, good investment returns, good cash flow and profit for our store base business. So that's how we think about it.

Great. Thanks, Stuart, and thanks, Dorothy. That concludes our call. We hope everybody has a great Memorial Day weekend, and we thank you for your interest in L Brands.

This concludes today's conference call. You may now disconnect.