VSCO - Earnings call transcript Q4 2024

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Operator

Good morning. My name is Fran and I will be your conference operator today. At this time, I'd like to welcome everyone to the Victoria's Secret & Company's Fourth Quarter 2023 Earnings Conference Call. Please be advised that today's conference is being recorded. [Operator Instructions]

to call like to now would turn over the Mr. I Financial Vice Company. Investor President Wynk, Reporting of & Kevin Secret External and Victoria's Relations at you begin. Kevin, may

Kevin Wynk

Victoria's Quarter Thanks, & X, XXXX. the welcome morning, Fran. February to Good period ending Company's Conference Earnings Fourth Call for and Secret

releases. As of in in our to safe would statements found formality, like that and remind you subject a forward-looking today statements press are SEC matter our our filings any we I to may make harbor

me today and Joining call CFO, Tim Waters; the CEO, Martin on is Johnson.

questions. XX We are up for available today minutes to to answer any

Certain Thanks. today SEC and measures Investors filings are of most posted comparable exclude described and results our these SEC on included we certain on presentation the our to the in in discuss of the non-GAAP our are adjusted items other measures of release, impact call website. and GAAP filings. results, press release section investor our press the Reconciliations the and our

the Martin. And I'll over turn now call to

Martin Waters

Kevin, of and Thanks, for in and delighted executed customers everyone. work strategies, first financial to solid quarter. partners hard the and want dedication my our I appreciation the associates the share all-important world gratitude and our around who good results holiday delivered our and morning,

quarter I'm midpoint the the at were that and guidance. at up the last pleased income compared and guidance. fourth our in were in to X% report EPS high our came quarter operating adjusted Sales end year of of to

our Foundation to increased chain. expectations, driven by and Our supply related cost management significantly to our Transform initiative gross exceeding disciplined fourth compared the quarter our margin to last modernize rate inventory year, reductions

unit North compared improving trend the volatile were were retail fourth as but with in we trends stores quarter digital average our our in a channels, encouraged last increasing traffic in by by the to quarterly and the stores Sales driven and year. improvement in in sequential week, both traffic during by sales America, quarter

our in early leading November strong and and improving with both the and digital pleased particularly peak and giftable to response holiday channels, assortment, by in merchandise stores our during were messages. We marketing Christmas, weekends customer experiences days through to our sales up led

strategically team margins the the inventories. and moments lower period sale during up inventory period sale to days we leading weeks amplify the to and with through activities key Christmas, healthy the managed us semiannual year, allowed last season spring levels The maximize to promotional entered and into with which than

by system-wide up last Our than International to business with franchise continued in quarter China and and with XX% globally compared performance, year, strong significant driven more retail sales retail the growth fourth its in partners. travel our

experience digital, continue to profitable across about plans digital and our expand around our and we're the aggressive growth world. footprint stores in and growth stores both We excited to

a intimate both the in decreased which the in sales market quarterly bras for mid-single America leader North share a the fourth perspective, last intimates as year, quarter the the digits panties. From year-over-year whole was in We for market remain decline. compared category, and market including consecutive to

our digital and with up were increase store panties. in share in We down Our share share market digital slightly. gain bras our XX%, remains by at and category the slightly intimates share about both in our encouraged

was business for and sleepwear the From Victoria's growth continued starting casual consecutive in panties by merchandise our best year-over-year second with with Secret, followed performing a perspective, beauty bras. and be category category, performance to our quarter

sleepwear outperformed intimates Within PINK, and apparel.

fourth of and challenges last The the to X roll approximately category assortment to the PINK compared PINK down in our to trend cautiously. fourth merchandising quarter we year, to buy points year. compared the X The still apparel improved, continue while sales continue in reimagined out the We was to last apparel quarter. impact

and strategy several executed we've of our the long positioning brand Over days, the last XX actions for key term. support in

For now sales PINK which of XX and we're turning loyalty of more customer further we weekly and basis. our million program, than through to experiences. on understanding example, on a insights multi-tender Secret XX% more our world-class has our than Victoria's data, Through her develop our our members, focused of customer continue understanding who drive into

bras In of without #X our by relaunched design lightweight increase, smooths, innovation. our padding. we shapes Body popularity with bra all for and styles latest technology The lift offers and invisible and newest an supports February, ounce collection, new Victoria, our to that online continues

comfy we Natalia our also places, with apparel PINK PINK campaign released February, featuring fits. and spring going In new styles Bryant the

categories, Frankies Bikini, expand reimagined our our iconic Bikinis, label, Frankies part under PINK the of Director celebrates new As our Aiello. of to through Founder swim Francesca of lens and collaboration the which we products swim debut Creative by commitment PINK brand

and perspective, enterprise. customer Google AI the a technology online a multiyear we VS&Co's to partnership on improving experience to Cloud improving From across efficiency on focus operational experience on entered with the journey our mobile improving embark associate apps, and

internationally. of or Future Store to our approximately XX expanded to footprint and we XX% North stores expand the in fleet the our of As continue fleet America

perspective, million year $XXX From sheet to strategic over $XXX plans. our liquidity with cash balance ended capital fourth in execute the generated debt flow We allocation year and ended and with ample year-over-year. a we the and of down liquidity and a quarter significant the million balance a cash strong

of approved company's a the authorizing to has up new of stock. share common Additionally, repurchase repurchase million program, $XXX Board the our

recognize America consecutive broader X market we has look new macro down been the the in consumer. year, environment for remains pressure intimates putting challenging, and we the the North quarters, As into on

growth open longer near any in time, we conservatively the on on same At term business drive trend. the changes the remain delivering the planning on focused in initiatives multiple capitalize to are we maintaining and to such, business over to buy As our in term.

assumes quarters, out back the and growth XXXX, America North improving sales second as our For and new XXXX remain we pressured customer to roll continue will half fiscal trends throughout broader strategies through in forecast market first intimates with the the of experiences.

billion adjusted operating about sales $X single income to forecasting about of year $XXX fiscal comparative low digits to for expect For we the XXXX. level XXXX, or weeks this XX-week to the $XXX million. year be a At sales, XX down from fiscal to million be we're

$XX challenges to in in the be of will first first the in cautious international of in sales, strength offset range sales by of decrease continued the income to adjusted to range level $XX of For environment. forecasting this the to This we're customer that forecast quarter These mid-single-digit be quarter will At the that our sales intimates business. market first remain this our and XXXX. of operating we're challenged core be $X.XXX our the partially in quarter compared billion domestic million. forecasting XXXX, reflects expectation will million

with to inventory in The and and discipline, team inventories our first businesses the continues manage PINK end Victoria's down to Secret year. digits expect levels with mid-single compared last we core to quarter

margin gross October we track initiatives of realize drive XXXX. million $XXX Day We opportunity the million Investor remain margin. operating in a through that savings by operating expansion our At our savings transform the in to in primarily and of the committed foundation to on model. in discussed total realized 'XX, expect to Investor our October goal XXXX, and the of company modernizing X-year XXXX of we $XXX We million approximately to at Day $XX about established in

to Lastly, long-term growth; committed remain the the in core; firstly, business shared health mind, to of the have strategic we the second, inside to foundation. thirdly, as with we priorities: to consistently our transform and outside accelerate business, and ignite

convert opportunity new As we to position market our into to unlock financial committed the designed the look and are initiatives influence our long-term cultural year, our leadership we into leverage to growth. significant

and value our you. position of business delivering potential We targets shareholders. our Thank we strategies and remain to financial believe committed our to confident deliver brand, will to and category-defining evolving the are long-term returning

our at happy this have. whatever more be remarks. questions prepared concludes you And That we'd time, take might to than

Operator

now question-and-answer We Our [Operator Stanley. from Straton will session. Morgan with question begin now Alex is Instructions] the first

Alexandra Straton

Great.

full Just on guidance, it quarter harder. year looks first the the embedded like an there's acceleration compares getting after despite revenue

back follow-up. can have it's that weighted? about enables And talk sounds then acceleration? what you like It just just quick one So I particularly half

Timothy Johnson

the for question, Alex. Thanks Yes.

the assumptions thought might kind where the domestically market might in trends intimates the quarter the or been go share the we market domestic seeing relationship in first year when around go. So that the business, of we've some made full about to and we

in now. So row his in market the mentioned prepared comments, intimates as Martin X a quarters for has down been

at to look the to appears QX beginning we parts a be and As continue XXXX, it to of it's going challenge. us

this we move We've guidance market but start into that assumed year. be continue not season intimates the of domestic through spring the down will and to will back grow, as in half stabilize our stabilize, to for the

cost align structure align forecast with So We've our inventory we've in to our that mind. and with tried tried to that.

will the many season. that at recognize flight as Investor were move in be the through merchandising in Day we fall year, the strategies Additionally, the we as October that move into articulated we full of

So things the like Investor at Greg spoke the that Day. spoke to relaunch of Sport, category which adjacencies to, Greg

merchandising high-level year. initiatives the present put store half different products out back in in are that in full flight will really differently those and the of So the

around year. intimates intimates particularly expansion relates category of and ever and combination as quarter-to-quarter our the the So and category, assumptions it part an move presentation slightly of as the of for and an trend, are and to throughout stabilizing Sport we so bras assumption improving market in newness

the of flat So the of balance to year. year, down get low kind mid-singles, down the low down singles singles, for you to

Alexandra Straton

Great. about Or through. or the quick contemplated That's guidance? on that ruling super late helpful. we credit just what that fee one means recently the card follow-up, just think Have you for proposal headlines Victoria's? the maybe And should with how in going

Timothy Johnson

to topic. out several topical Obviously, question. be quarters, seem but a momentum been does there it's Good not but Yes. picking bit several and of new lately. the up months for at that's very little moment, a It's

provider the are discussed understand and impacts think their not that do it's certainly, that model. I any important First, some debated, but of necessarily that fees or to revenue we does, our on recognize being

I a long-standing It's the got on directly important to them. discussed relationship that our need not understand are try relationship go we've it's of we'll to our with work continue some partner partner, think something will P&L. to being now. do that that certainly into But work So with to our fees and

a might maybe big, of the non-tender obviously, in it communicate to or additionally, recall might big customers opportunity the the the move and year, others than launch big in company to last was of past. understand loyalty or multi-tender and think part middle for the a differently I recall you program Alex,

to do So ways a stores, dimension be couple encourage our and in in years continue them not have to one shop working to different we just our by. customers like with of gone traffic to internet

Operator

Boruchow from Ike next Wells now Our question with is Fargo.

Irwin Boruchow

maybe Two for both T.J. questions from me,

it's it's guidance, you guidance, lower the low revenue X% us that? look XX%, XX% the about next honestly. for can below cost about flow-through things to the seems that It lot structure? EBIT. single outlook? we digits, at a lost not on much I year, talk Are Street the when sales How for but can there about below EBIT think Just not just of think on fiscal lost at like on in we as should the revenue, look you

on kind the of look And to do then is follow-up year? plan second How the that share just be out for opportunistic of you you the with rest the buyback. as

Timothy Johnson

Yes. Thanks question, for the Ike.

in terms for me full might to have year difficult model. guide, the the what to it's of In others speak

it compares the in thinking October. So we're to Investor and to how about back speak how it Day I'll

not business needed to talked to to you number operating That income. to So margin range. that single-digit not be order things happen that October, for the North in significant and in forecasting into current about in happened the the expand we has sales back needed America our to flow-through to about to and year. needed move We We're happen operating in a low talked yet. to the of improve

bit a a of that's headwind. So

it XXXX, to case. the just and the continue business become of where part larger came our a will was across talked or Clearly, growth fourth needed in We higher. quarter that about business international mid-teens grow of we the the to

So mark next I'll well by job the done for check team. that put to a a

grow to XXXX, and for profitability. continue relatively to their in targets They needed growth for sales and Me XXXX. have to close plans Adore in both that said we We were

feel we good about element So of model. that the

in increase, cost doing that would to through goods on We see sales, in said quarter but also up, around started guide. that quarter cost our of the and based based the go work on the embedded gross margin rate sold, of fourth we're first would you come some that's both

So that is working as intended.

you we rate, increase expense current said about leverage X% that's to the year. a need not expenses, to forecast in for The X% sales our on

that comfortable on review a that Board, expenses and our would sales the we were with X% leveraging plans X%. regular up internal our basis to be are However, we're line in as

should and just to Xx came well. that We as our year EBITDA across less, is or where our or debt be true the also leverage that said ratio we

now you're challenging. in So America what and single challenge North would biggest majority of the that's trend, the the flow-through that driving sales be is model right the the

So year, look our I sales. I'm even confident at that lower the gross estimates, when above rate the was gross margin, margin for the the Street likely on actually,

North look When comes given quarter, expense year-over-year, it talking and opportunities that element. about sales back rate at leverage American expense are in any to minimally Ike, dollars we the we're really up

to million I we're first to Even to guided the talking the quarter that to year-over-year. provide to I expense continues see And maybe and through just $XX a merit, you're et wage find are when numbers those elsewhere. about good think dollars invest technology in start relative good $XX might a minimal work being to what business that want as that for in model, we continues you million cetera, pretty probably up think going to you to and a

feel need to back North see that top comes America. the are movement good to we control. that in I well So It really under expenses line

The mentioned for assumption of in think your second guidance repurchase, repurchase we no share our around question activity share there that our comments prepared part I XXXX. for is in

with on of repurchase a and So our worked we we Board authorization. share aligned Directors,

at any time, based we're go we how into on feedback time. in But providing feel shareholders from might at confident market and be to wanted when. that a the on this given they forecast not that the Candidly, or market we could know

execute making trend the on making to we've based market. do that focused improve we on very to increment sufficient know of got trying profitability forecast. a down We're we and sure very we're and that strategies focused the intimates liquidity business, the in sure our We're stabilize our that on

be future Board concert decisions basis. allocation on Hope So made the capital in helps. repurchase quarterly that and will a with share on

Operator

now Our question Capital next Markets. is Simeon BMO with Siegel from

Simeon Siegel

this Just investments assume Martin, in lapping. going year? marketing had to I guess, tour -- a some how are you I big about thinking that be you year, we're last Mariah,

How you're planning learnings this spends? So any those on marketing year?

profit is showing little gross Any revenue higher about made And the down, top the And then how are are. just the T.J., promotions they value and you a profits? just a about in level, pressures of point thinking despite versus recognizing just maybe line then, what changes operating industry's maybe guide the you're balancing margin on improvement. focus

Martin Waters

start to Yes. so with we in about that I'll Thank Good continue dollars to of percentage marketing the plan Simeon. you, invest did same in the marketing. invest questions. brand. sales at We XXXX, the

about across that's talked we areas Day. Essentially, at our the X Investor that

understanding So the file, the and firstly, of really customer terms deeply building in customer, customer data segmenting personalizing.

investment media, terms around spend site, on relevance on through our continued in confident, is also supporting brand personalized product positioning and social on through more the more powerful, but focusing particularly app heat, sexy So curated and and our of her going then through launches. online experiences marketing, and through brand

appeal back into beyond category broader intimates Our sport. getting

with of initiatives supported All dollars. those will marketing be

to back And a at last trying to toe world brand a find and year. And to to sort intersection go that some product the market ways into was tip of extent, entertainment. and tour the that of are

media media positive. enormous like XX% that coverage, say, in impressions excess were of got hindsight, we I would As we XX billion

could of So that the that fourth that use intent. certainly quarter about assets gave was it marketing. popular some and good. good And the our us in culture, We was were part narrative we

it extent, our To objectives. large a met

went sequence. then Tour way World start We the is quarter it. of However, I the Wings, more think the of we a during to market My was which of Way fourth very work the extremely My had Mariah year. which then that received about was all last our and campaign, was successful of Carey, And led into the we did that popular. that best

of next products. be ethereal the iteration fashion It time be more sales it product what to people's own think less It focused year. be will less commercial commercial events, our think and of commercial. will marketing I more and more all-important And will into less fun. and will holiday on more and building other flagship it our forward will be of as the So I of be

to So from forward, build we've continue which rather and and I tour what about and always excited to We're us move Simeon, progressive our got backwards. forward. try forward. to than of look expression basis The world a a bold gives look brand to coming was

As it second about, into in to but we margins, on as maintain very relates your talked still, the gross did to we're We lean in was to a promotionality. quarter up down slightly fourth prior promotions, our need TJ environment healthy competitive the to in promotionality of year. relative a market, feel able question level

about tell up The are a of with and offering it's balancing it's and on core the the aggressive first you at categories. that this will I quarter the same promotions in year price, different And art by with looks slightly. newness much very category. We, our art science, of full being day-to-day of balance basis,

In of difficult we be differentiated requirement. some aggressive areas where defend where as and promotions value, as leaning and true need it's into aggressively us share, less we've a got other areas which it's less panties, you category, more is have. differentiation to us merchandise a we see will ever added like will for to In

proud that you we the that it question. basis, manage we carefully Thank scale that's I'm doing and day-to-day and of work. a what of your team very are for So very Simeon, on do, the

Fran. question, Next

Operator

Jonna TD Cowen. Kim with

Jungwon Kim

you and strength traffic and conversion? you drivers will in what curious, talk throughout And terms the year. gives in then of of momentum seen that what quarterly continue you've Just international key confidence if also about behavior, can consumer data behind terms

Martin Waters

would behavior, year-over-year. spikes in see nothing consumer traffic. meaningfully particularly On I Yes. We different say did

and be see selling We stores traffic to certain an did So put our to peak increase came ready. traffic. at browsing back on that weeks, organization pressure in

So that business. in us in slightly dollars, partly enhanced stores digital and conversion digital than performed picked We with to the saw quarter some our in stores our That's more some we're efficient due being due seeing. better down to We peak our business was digital. partly up share that times. experiences the actually marketing

think I honestly, about than the about So behavior. us it's is more it consumer

particularly meaningful. nothing I say So would

of end income As we cohorts were bracket. as the the the the customers, the of were income higher end bracket they similar the at at different at look across broadly behaviors lower of

to As where international, strength, relates Regina that Miracle partnership continues it working closely strength well. team from is working the direct-to-consumer our experiences about China, with headline on experiences, digital really are extremely to that to with go

I well to growth very come. have of the and a lot still we think brand we're marketing still China, in

Across a us franchise pleased around saw the network, going with model the our expand, Getting to XX open this partner store we We're health year. we're globe. that XX to operations. very all enables to stores

So more international to in quickly, both. and footprint capital partners, us a by get digital embracing enables it the with also that operated space, customers be of our a by smaller to combination a expense or lower more operated us

All driving those of growth. factors are

new both Scandinavia, also stores. markets some opportunity and in in see Balkans, Benelux, We digital again, in in

I Travel Retail, So didn't system, Retail all across well. mention I should the in strength Travel mention as and

to opportunity the grow we continue that across business. see system, all to So

team. Thank you question. the to well the done international for So

Operator

question from with the next Group. Dana now Our Telsey is Telsey

Dana Telsey

Collective how on Future? PINK about the along how and introduced the you any message to you're Store How tweak thinking the with that improvement how progressing tool. change, you're apparel, looking you there Victoria's to expand with directional that's and the you path And and it's first on utilizing of marketing the Martin, can it? since the Secret and

Martin Waters

Dana. Thanks, Yes.

I ask of Let's Store and on TJ question. the go the to then PINK Future -- first, to comment retail might the on

very didn't collegiate So to needed Victoria the XX was in clearly significant PINK we had younger PINK we being like a and age PINK targeting identified PINK, -- business an developed that on-ramp about pressure. know, the We customer to I or business. under for ago, get the consumer. in a We don't back consumer, months

the we categories the we way identity rebuilding So brand brand. about the the the brand, the market, to set everything of operate about in, go that that we

the we PINK, we such during number rebuild, conservatively came that was of it and increase for good. an so a had swing decided buy found customers Because the big very fences. to And in the not was very, in that we fourth what was to quarter

of well. brand improved quarter. as Our up was the markedly the equity a during And worth perceived the touch brand

What do awareness, all the of we awareness, with you consumer. it young lost as awareness comes Well, to back? we it mind top-of-mind get know. that was didn't we see How top have down product,

innerwear, sleepwear being gift really And a assortment. strong suits, strong so having in leading intimates compelling strong and being with body a strong and assortment,

of All positives the were things those in brand.

found I we that and based outer is of area apparel. apparel, sort toughest mean The

into we So lean continue to that.

continue positive market. find We Natalia with very like, new to particularly to with looks pleased We're that that campaign it's ways Bryant, Places go for to us. the Going

and we're giving So chase. X the to been have has X opportunity time better and position or right do, in drag we've to last work we reduced, and buying steadily cautiously than now any in a but it years. at has ourselves the taking open-to-buy still We're PINK

that open full, been completely almost to while. which position in for we've not a we're for So buy

to are aggressively the into the opportunity and working. test ourselves giving then really So things learn buy and that

to Store of want you do the the Future? T.J., take

Timothy Johnson

Absolutely.

well So the of the was as both second year. Dana, are of by in which their be from results, that class to we in of encouraged as Future stores very class XXXX, new Store stores continue XXXX, now this executed in

So the see continue sales been double-digit stores the to have longest, increases. that remodeled

very a that good for strong performance, us. do So very

time. high digits particularly growing. same at what to over and most traffic The likely in the build, the level, to XXXX narrative Again, They stores one continue single out we experienced and stores. as that or start renovated have they in more through mid- been recently

So we're very happy with remodels the and renovations.

of a meaning fixtures tested utilizing of walls kind some we've that less or in that the and can do disruptive gotten place. changed different? and were utilizing a, or what's say, Candidly, comfortable better What's remodel, we

happen. to So construction needs less that there's

learned. So something disruptive element same it's we the a lower the we've at a at cost. of less like it process obviously, that And That's productivity. cost lower

So that's do. a good

think by a I have And Future consolidate store with bring that store together VS stores. to a and I combined it to is win, our freestanding of big location. is a what PINK relates Store another as the opportunity mean freestanding

As more the team the obviously, teams just been stores. PINK really business opportunity has productive challenged, freestanding be it our gives Becky additionally, her place. And with leverage that team, and and an challenges to we have in

go So much, so bringing higher. maintained, seeing we're sales stores are in sales together, footage or square XX% per down foot much XX%

smaller And to up of footage opened that then number Martin's expanding the mention to the international, a doors to underline the shop, and an basis. on way Store point I'll last the to really a to navigate easier international and the easier just has in Future format, on from adding getting stores new increasing comments big we're square of

for productive. our ever do and as a cost lower partners it's So

learnings. key of lot a So

of I think we've the date Store think -- off-mall, in format, centers. outlet in particularly about Future I had to as in stores new the success good very

markets our work to good with format particularly in exposure be the So mall, very or off for Future new we're locations do very, might as we Store mall consolidating, malls outlet is us. center of a finding certain in the decrease where certain

learnings good and very of Thanks. lot a So the future. store encouraging of results continue and

Operator

Our question with now next Matthew is from Boss JPMorgan.

Matthew Boss

bra picture, that early to And speak response way March. larger February, in recent the initial you could customer saw to you if any Victoria on on just to by elaborate Martin, customer maybe current launch? trends So Body initiatives,

view the then have embedded And second for of what year? what for Or in just supports outlook half half for first the you back the the promotional your TJ, intimates in improvement category? versus

Martin Waters

for Matt. X and Thanks The was the Great. years. launch Yes. question. biggest our Victoria launch by successful Thanks, bra Body most in

memory big lighter, previously The innovation of meets we better Plus and segment online terms trend in the visible very Power comfort BBV being even we was technology on lift bigger of So us. and bra pads. about endless Love our launch very and even much thinner had category. and initiative in for talked a

bra customers which be is seen and minimizer expanded marketing expanded BBV, success finding a with panty it. Within supported the skin sizes to and has have also of we've low coverage. innovative relatively had also assortment, that We with that successful tone in that very proved level and new And shimmer launch. very we

of pleased with we're all across we've strength, So very the of seen it. the franchise, performance kind and

trends, us. To point about for for trends lighter, definitely comfort supports it your more

feel we that with So very pleased overall.

The we bra has while successful very challenge haven't that that lift have we is business. overall, to that bra able been overall been the launch

finding great the sale the maintaining we're same way really, time, unlock launches the a and of focused. at of So to across level bra rest really the franchises where

blurty, sort broader we traditionally what more provocative consumer about over we overtly trends, period, And to than at, sophisticated with of and comfort-driven did your observe the question sexy Day say, think as there we casual, Valentine's we would with merchandise I look is that merchandise. had more success

just We those long-term on a dimensions. permanent short both or trend to that's be remains of feel appropriately seen. the covered Whether term

for show her sexy, in being of thing way anybody means we don't just we're a we terms, journey that comfort all and talked As we rather that else that as of brand bras on sexy than important about the women's that the before, and is market. embrace up sport through and life aspects one provide an Victoria's better

the trends. to how So I customer would T.J.? that's respond

Timothy Johnson

Yes.

quarter extra getting line, the week for think X there moment, differently. the a and to guidance results your in on was we question the of the little March, basis quarter, based first early were but really the characteristics on early that were aside that here we the in first fourth a fourth were for saw our but was additionally, put quarter. weeks very the quarter, really Matt, similar characteristics I what on what very similar to And the -- February top bit the

more quarter, in and flat. traffic, lighter. our really traffic than challenged into fourth in little was quarter in We year was is traffic relatively is conversion mall store moved much bit our where first earlier better So conversion and a stores last the traffic and to down And and year. mall it's than the

metrics So relative on line. customers. similar Certain of differently us key QX for early for different part it's outcome in top producing holiday. of and the a a little the behaving proposition bit the to here our just is a much are Holiday

part, second assumption would as We assumption of on an in not stabilize your assumption spring. that part stabilize, The be go around maybe make the fall. difficult question forward, that market improve, to did it or we made but continue intimates into an would we third move

assumption. market So that's a

we're of Inside doing merchandising the strategies Investor season, mentioned terms the different outcome, what remarks, and bras. earlier Day in the spoke to new differently get some fall be the that full in that Greg includes to flight in a box sport at we will in to of as try more

As and of of sport sport, on as a not market to the XX%, underpenetrated. overall occasions, is in we've growing bras about talked we're number is range it The for in it's stores. our relates about in the market XX% and

half and newness business, of the that that's, the after the market towards as category as we again, in the in sport move representation product back ought similar to intimates So go And we think of a year. help well.

we change the and in things and So our we're doing we for some point, assumptions. a there intimates performance, the hopefully stabilization fall stabilization assuming, trend are are that guidance at in picked that

in a you've singles down of you year. you get the for the the model, through quarter, here work when what mid-singles perspective, from first line low you got overall top So got down kind and

assuming if half significant not level hockey we it's of we are have of as stick, the a stabilization year. some in the So back but

Operator

from Marni Our Retail Shapiro Tracker. next is question with

Marni Shapiro

sales. in there right? have this like on of new to sales? are little new stores touching the little you Secret sales about driving bit the Fun not well? And goal for And traffic the a then products, the sounds whole do as Victoria's on hear the like like it's driving in driving could the 'XX but is of and Me to you sounds that like store, it even year, I like stuff Body could a by they're strategy the Martin, touch little because couple drive of here some it as Victoria. a stores, this they selling, a some bit we newer of bit I are the they noticed talk And Adore rest Just you is notion, Wink stores? Flirty, know

Martin Waters

for question, there you newness thank have is you that we brand thank at the in Marni, best, When noticing store. is and our the newness. for abundant our

We business. have what the category. every newness across drives That's

the biggest over important probably and launch few multiple to most get years pipeline putting year. having so per was and the bra innovation launches an last back to it's overhaul. franchise, was our in place it overdue we've been because BBV bra And

of our bra franchises need overhaul. All an

renewing continually be refreshing. and to have We

news good The at the when that, do is, hinted that and you notices. customer we

had in team The The bra, the noticed, noticed, X biggest Sports best years. So there, over was PINK launch BBV, Featherweight Max Wink we've and noticed. impact. immediate customers, bra,

get more is yes, got we've overall. it. product product us feedback customer the So she into tells the stores challenge sees new our appreciates franchise and to away people The finds and channel new the the straight when

So means to marketing. our new that the get relevant It into means people file. targeting more spend

key that is of the the that good do for to have news we the is program. ways And one loyalty us

more in investment million more programs investment. to be people. us products million marketing can at a loyalty XX enables That Our targeted the and that structured surgical And the to just means people. we that target, that more now we point marketing appropriate so over the much appropriate way people, XX

others, more be effective and can and products that we the So cheerful way. in I when in right pipeline audience develop significant have that we an the think we there's to referenced them lots reasons new to you've market the

real have domain very, X out so a for owner owner of brand. eye about [indiscernible] X XXX in stores of going of and we those just in very to have what's You stores have as We be stores brand cabinets spotting the eagle Me the we're on that Adore proud because a the

marketing fourth Adore if important the quarter. expand the and responds diversity, know to in building inclusivity great grew for that in both peak growth. on. New across the Me the right that they're In Week distribution wholesale we doing positioned online channels has and is It work. shoppable DailyLook. And there. through for well test and that you file aspect It's so embracing Adore the full Me It continues license of and It's in year, York the every The fashion consumer I brand year. the to And really new fashion don't how in was to really, the cool was show a success, which grew Fashion XXXX a balance into now, only brand. event of saw show content.

by Gen really some stuff cool in brand. supported AI doing that So

a it. Being stores the owner That thing all. our with But the at is not business, of part interact way sense possible that test in as our of main customer digital makes every business. is the it we which will business

but as Me enormous embrace to So we family work as going to see do of can an and more mine opportunity brand part to us expect hard amount expect stores, brands it of don't forward. Adore possibly to continue our of in for that to as

Marni Shapiro

day. of this for of could in on trend ask Great. bras? are could one more to actually the actually pretty style, like it coming feels way be been were in up And in back for up bubble because bras it There that not guys, they your back coming significant bras couple if But follow-up this bubbling I broad can what brand? years style, back have up, continues is style Because a out for you the are push bras now. trend mean a

Martin Waters

push-up been part dominate would if we because like be what look, the we and come over Yes. that at would the of trends back, about different that one bra I the have years, mean, bras you the the the think the market. strongest to most

online or significantly Our other in up is than any aspects share bras. or in push of sport and is higher it

So trend, right yes, now that advantage Marni. ears at. to well I your be that it, of change a don't if be see we'll structural would looking positioned to as that data is lips that very great. I'm that take is God's very, But from a the in

Operator

is Warren question next from Our now Cheng with Evercore ISI.

Warren Cheng

guys I little gross sounds the bit a shaping little walk can detail. us leverage second the a in was bit margin a wondering in It of half. little picks up through the like through if more the you year

higher this can quarter. with savings, I drivers contextualize first year? know I for be cost callouts but us some moving the the will think any you shaping? And on maybe there's you in pieces said if promotions

Timothy Johnson

Yes. this is Warren, TJ. I'll do there. my best

we of of I level, place have we sold the the initiatives as think So cost be up the high very to in rate a would by the foundation. year, that at for transforming part goods largely driven expect margin

Additionally, see early the a in year, to from part here the of transportation continue we favorability standpoint.

So our embedded transportation lower in rates are inventory are that year-over-year.

So that's a net positive.

activity seeing mentioned, side, we here front part are the On flip more promotional the the as slightly of year. in Martin

And follow from the, last are perspective. those which deleverage, would sales. I'll then a say, margin be So one going is elements the key the really to

initiative we So how we is I recent just benefit fourth to trend quarters. of if talked X start the about especially this us get first what for the which or would the goods think embedded about throughout fourth the to quarter, majority year, happened anniversary sales most of to quarter. the When in sales expect you we sold trend just the year, cost the have

quarters more of it's present X first the year. the in So

potentially in in and necessarily transportation opportunity, we go back where is second, The the available and us quarter rates to of a ball we don't think year. half transportation still will crystal first have the

in that way. positive a likely spring So impacts benefit

to than Martin a year in standpoint, here From mentioned, more a expect promotional last first be do the promotional we quarter. little

through are the hopefully, that year, promotional need and market stabilizes, assumptions the abates As a our intimates move little bit. correct, if we

sales And like. will attract then B&O look are sales as I where going what and trends mentioned,

move X. in mid-single the as down quarter, first for better or down we and through year here single So slightly low digits the QX, X

think do just in the be of potentially for and in there's We opportunity an margin the the to think key would how drivers. we quarter strong when the first about rate that might obviously, a I I second So third. that's get in up kind we'll total, I up margin we quarter came across, but in be bit had gross very more we can there. we challenging, that see just think what fourth so performance a anniversary do little the -- and

opportunity, based again, our about gross very margin on stores good distribution feel on how sales managing lower and the inventories I in centers. teams the So are our

Warren Cheng

I just input to comment And indirectly It the late clarify fees earlier directly just an of like the into CFPB impact flow are to [indiscernible] wanted on an just the on whether they arrangement? ruling. saying don't I to seeing you're sounds the also or say flow you your wanted P&L,

Timothy Johnson

That's our that input an is P&L. something our to between the provider customer. not and It's

Martin Waters

one for I time more we Fran, think question. have

Operator

from Then UBS. today final is our with Serna Mauricio

Mauricio Serna Vega

the operating Maybe the SG&A. help about ask outlook. you to wanted could on just I reconcile margin us

$XX like in it SG&A mentioning the As were think earlier QX, quarter, called you million is which dollars out year-over-year you in $XX are first I X%. seems roughly up that X% call, to like million,

excluding like Is coming that impact should marketing, looks that what building technology, that to week the additional what rest be Just assume And for like year, for on should run would it if QX? like is of of where that? wondering the the sense. kind get like increase, Just -- is be the wanted from? rate more the we like the of

Timothy Johnson

this where X We're and the breaking us. not Yes. you see line down item QX, at point X at

further driven really what say So much than I than you slightly expense by can't or too done. here you being being X help things. the dollars up Other X first is really in we've quarter

I talked that think technology investing first initiatives into lean and the customer to off, we're continuing in experience at Investor Day. about were

I and piece file year. our sales the Adore spend, Me the marketing Martin over a grow second the ago, of moment are at on to business grow some think referred the that to seeing entirety timing we principally

pressure and have some or level more. across associates still merit stores our distribution of will centers XX,XXX and XXX-plus We

So there pressure. merit are of some level

pretty year, difficult we think So I slightly, base $XXX a up in on business managing the tightly being prior in think a of or so the roughly million environment. is

year. leverage very X% good to on is basis an an accomplish feel that So point that to SG&A range for X% able the annual throughout the in team

Martin Waters

Okay. today. Thanks, time a the everyone. Appreciate great Have day.

Timothy Johnson

Thank everybody. Thanks, you.

Operator

this are day. concluded. your you much time. participation. disconnect great Again, your We for now thank Have very Please at

Victoria's Secret & Co. (VSCO) 7 Mar 242024 Q4 Earnings call transcript