Bath & Body Works (BBWI) 19 Nov 202020 Q3 Earnings call transcript

Company Profile

Participants

Amie Preston	Senior Vice President, Investor Relations
Andrew Meslow	Chief Executive Officer
Stuart Burgdoerfer	Interim Chief Executive Officer, Victoria’s Secret and Chief Financial Officer, L Brands
Matthew Boss	JPMorgan
Ike Boruchow	Wells Fargo
Alexandra Walvis	Goldman Sachs
Lorraine Hutchinson	Bank of America
Susan Anderson	B. Riley
Roxanne Myers	MKM Partners
Simeon Siegel	BMO Capital Markets
Omar Saad	Evercore
Janet Kloppenburg	JJK Research Associates
Kimberly Greenberger	Morgan Stanley
Mark Altschwager	Baird
Dana Telsey	Telsey Advisory Group
Oliver Chen	Cowen
Marni Shapiro	Retail Tracker
Carla Casella	JPMorgan

Call transcript

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Operator

Good morning. My name is Brad and I will be your conference operator today. At this time, I would like to welcome everyone to the L Brands Third Quarter 2020 Earnings Conference Call. Please be advised that today’s conference is being recorded. [Operator Instructions] I will now turn the call over to Ms. President, and Vice L Affairs Senior Brands. Preston, Investor Company Relations at Amie

may You begin.

Amie Preston

morning to October and quarter Good you. Thank welcome call the earnings L for period XXXX. ending XX, conference third Brands’

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

over Andrew Victoria’s Meslow, Burgdoerfer, Joining Andrew. and CEO exclude L adjusted in today me release. And described to on Brands. Stuart of the results our items Brands discussed call Thanks. L Interim of I are, CEO we on Secret call call CFO and and results turn today will special press of All the the are the

Andrew Meslow

everyone. and morning Thanks, Amie good

of be our certainly time The an industry the continued business. world, third to unprecedented retail quarter the for and XXXX

continues priority first associates of safety Our customers. be and to our the

in providing new shopping our also while stores models on safe environment, focused are an Our operating providing engaging experience. a

significantly well deep Secret. at we distribution Body Works, centers, quarter, & their for appreciation improved dedication Additionally, record direct done distribution and work as our our I’d maximizing could offices. quarter, have centers, we the while operations results the call without an performance and all driven record centers, we in express fulfillment third our of our and by the fulfillment and stores, and business focused We in efforts. Bath to the call centers dedication home internal our centers delivered not results third and across as Victoria’s like remain at their In hard expectations, our of exceeded associates so businesses. safe on our

for the the As potential level have the itself high restrictions. fourth remainder of given quarter, a cautious we and we around the uncertainty view further pandemic of the the look year, to of

online, stores execution we challenges in continued our growth. we generating product While do our sales both store are assortment significant Christmas in and channel and strong optimistic about expect

than Our days in of years. typical allow us the week holiday from customers The volumes in have the peak situation are see prior not same about current week capacity we as quarter XX% that to additional limits and have normal X third the capacity remains limitations range larger the number average per of on XX% will times may been restrictions and announced that occur. fluid to capacity further historically, recently

Day year, stores are are in prior we Additionally, open be permitted this year last than will fewer which the on years. closed hours and open versus Thanksgiving to be

direct have capacities. channel also additional constraints We in our fulfillment shipping and

As have a result, over which our action historically a we time occurred promotions, on taking be big longer period. spread to single days, will

added also have additional in businesses. registers both to We stores

of last safety a approximate the potential carrier fourth in would of that the increased We result operating expect a higher have for all in the as equipment quarter expense cost the above range continued results. to costs, store We factors supply fourth wide channel. selling costs, very higher income the increased parcel surcharges of year’s believe direct end the fulfillment and pressures to financial quarter, higher of lead mentioned outcomes which and

you, you. in and stay Amie. fourth to the speed customers agility continue will our we back that to And leverage over Thank results. the to quarter and We close our have optimize business to

Amie Preston

operator. please Thanks, to question. limit In any take happy we have. would Andrew. to At might yourself and back I time questions and consideration to this to be concludes time, will others, one our interest you of comments. over Thanks That turn the prepared it the

Operator

Matthew the Our Boss day come will Instructions] of JPMorgan. [Operator you. of Thank from first question

is open. line Your

Matthew Boss

you the that the you category in factors material momentum. quarter the you drivers today? elaborate for cautious rank And view date? seeing you box? I Great. the Bath between seen Body on at trend continued start, to understand the to opportunities that any Andrew the share and balance that given Maybe & slowdown Thanks across congrats the How you can you’re fourth while Works on market multi-year would mentioned, cited have

Andrew Meslow

Thank Sure. you, Matthew.

So on question, our remarks first across prepared we we mentioned evening, in your our strong performance all did balance of from see continued as categories. last of

and many understandably, we’re attention think of tremendous years. seeing I that that a in so in sanitizer And count there our fortunate growth major and player to ourselves category to have be been has business the for lot we paid certainly soap a been, and

penetration was soap XXXX year. as significantly. the the QX, about that grown about the little QX, that about year, last of from as XX% of and In total at QX, it still business; the category, XX% example. it over we’ve And been XX% in has XX% up As throughout on of of the a has reminder, business, call, the a mid-teens the was this an business; and sanitizer course a about business in historically of business talked

terms performance So, remarks, of significant out But in other categories. our we’re from we the doubling growth all still called seeing as absolute also business. that volume in in of very strong

in market around XX% for and your & our that again, important and multi-year the our is consistent understand as second well; large. Bath direct true our growth board. before the opportunity, and I share really pandemic, it’s them been to experiencing has in all and strong part opportunity of our balanced Works even the On by your nice of other home think across Body years categories categories still again, the across our grew question of in stores So care, more two fragrance big the third body of channel that’s channels. each And business than quarter

to of us big gain for those. growth we our categories, care of industry the category, category, and in are meaning category each the While all and we the share continue fragrance experiencing the market those themselves, home have the of categories level, share see at sanitizer each in soap body to opportunity and

say, trends, that our the continued of last In in terms the the of we question quite have comps. talked I would with been we have what certainly seen through consistent on longer, as about call. but Certainly, open trend of normalization your the double-digit we’re some stores and last earnings they’re quarter third stores the end nicely the quarter, end at the second quarter, sales at of performing still even from channel, around

to or with QX you. part channel, as that early question. your or in you end our of when whether here back can all as stores direct part Our of closed Thank the stores have see, continued results has the from QX of and results – very were helps regardless early through consistent Hopefully not QX of reopened. deliver

Amie Preston

Thanks, Andrew.

please. question, Next

Operator

from Thank comes you. next Wells Boruchow question Fargo. The of Ike

is open. line Your

Ike Boruchow

Hey, good morning.

Let really phenomenal me quarter. add my congrats just

is Andrew maybe the So how thinking your really is making two of guess the success Thanks my on ownership Victoria’s lot and to say that having actually don’t guess past price over the the creating asking improvements for that the brand? decide of changed improvements team managing question of I that the have has EBITDA questions. been material fair you’re business with is to brand teams now making? It’s to much. actually ultimately these X there making then and like Secret strategic I so up the around handle key the the you you the of that two, moved inflection driving? and sell value And feel on first, and changes it’s brand And actually given months want has the it now guess you that I new be you given a the a may chance the is are you

Amie Preston

Thanks, Ike.

are to We Stuart. to going go

Stuart Burgdoerfer

the about the strong and we lot hard Good begin working do. ways, morning, think Ike, as of words in a at value of quarter. kind the we’ve response Secret. absolutely and very We’ve including a the Victoria’s had stabilize recognize financially, the We quarter we do Ike, business, question to to about thanks you your for in turnaround been and increased

businesses the As would third it in material been quarter measures more we EBITDA of and past. forward-looking on meaningfully we worth the those have business in progress might off and that cash expect valued recent the and made than are flow, is historic

the the was intent of through no believe will & there Works Board Bath a With business. beginning. businesses. that about There’s more Body the additional both to opportunity strategic the part that quarter growth Body lot of point to for and the lot which a the an at that are the Victoria’s Secret appropriate Works, and important has is inflection valued We’re appropriately, is respect do. enhanced in of the businesses your of but been second we Bath & be business, clear in and to We’ve doubt third got ensure a the separation question, including valuation

work visibility a in in to and advisors with to those options the we after hired path a the separation work full on be we to and QX Sachs, process companies. to get to the August, good the continue begin to for pursue results that Thanks. of advisors back a two Goldman JPMorgan with earnest We our

Ike Boruchow

Thanks.

Amie Preston

and Stuart, thanks, Thanks, Ike.

question, Next please.

Operator

you. will Goldman Thank from Sachs. Walvis question Alexandra of The next come

open. is line Your

Alexandra Walvis

thanks question landlords. the taking negotiations I and much morning on so the for here. Good a question had with

question have estate. then rent achieved abatements rent scope wonder that mentioned periods, color anything those the bit is little of relief and you of You if also achieved? could real a on I abatements or deferrals. and waivers, more you you on relating a combination share on or to closure that waivers And second some size rent

You for of & I’m about projects Bath projects wondering forward? going how thinking the just fewer had are number XXXX. in you Works Body

Amie Preston

Alex. Thanks,

then start we’ll to go So with Stuart Andrew. and

Stuart Burgdoerfer

of respect case on and Good our important important unhappy on and lot negotiations. material negotiations it, With the parties, a said, compromise are is fourth third the made that to and will. on if results, of about of and we in the With as the and effect developers will in discussions, those sides you owners, not landlords have morning, fundamental of little be full effect subject overly with very quarter the outcomes indicated on They’re quarter their quarter. we an finalization Alex. in and any discussions there negotiations still the negotiation, a both a would did as those probably discussions, probably third papering substantial you the to both was remarks, if property progress those

the impact we and to material element QX, QX again as than specifics provide quarter impact more again be not of fourth will comment about impact, more the the the QX would after conclude that the and the being QX full we to update We all but significant progress so very if result, accounting the will in overly come. in a after good fourth to better the total standpoint, the after that off fully will, the executed of deals from do progress. more and you get if Thanks. fully signed it, Good and be legal position we’ll a quarter on

Amie Preston

Stuart. Andrew? Thanks,

Andrew Meslow

Hi, the Alex. Thanks for question.

& Bath approximately few XX materially years is is Works from XXXX, in annually. last down Body to the projects rate XXX So working historical point projects. to of That your our closer real run estate on over

decision we’ve performance that driven progress. spending year with very we reminder, reduce in to caution of not the and over this make the change the we remodels early The a that by onset capital that first number back overall. on be to and last with the which abundance out of half decision continue year those to reduce cash was an based seen made several managing any of of years, to associated number As the the pandemic deals flow sure were the of pleased the in

the important that agile of any have very look investment real estate for So as important critically go-forward here still that around more provide said, applies that of have to being capital results XXXX. XXXX, executed from as the said to earnings our forward in against and we the on but help a flexible quarter it the pipeline of portfolio. read influence we XXXX would that next all here directional us all strategy will projects we be our would to number expect call, count to All fourth real and is it I guidance up we estate

Amie Preston

Thanks, Andrew. Great. Alex. Thanks,

please. Next question,

Operator

from Lorraine Hutchinson Bank excuse you. come me. America, The question next of will of Thank

You ahead. go may

Lorraine Hutchinson

morning. Good Thanks.

store any your fourth about wanted there capacity quarter growth secure about I we you think for that additional capacity to fulfillment been able holiday. to channel very I are the have e-commerce. When in quarter? fourth are you constraints So on on constraints think e-commerce, in there clear ask and

Amie Preston

start We’ll Andrew. Lorraine. Thanks, Great. with

Andrew Meslow

question. you Thank for the Lorraine. Hi,

but we capacity growth to So now – the & secure X.Xx more of were and the allowed case moved to Works, we direct Victoria’s of in us for at XXXX over speaking Works, I’m have been Secret, our have quarter, third we XXX% had to about speak Body through & ran Bath to let the be Body for we QX. significantly well capacity year, obviously as looking of I’ll year able capacity in run we in last Stuart the the the have dramatically to in amount point we increased able that where that’s channel what that Bath

up you of capacity can what we quarters the into we’re as we a than is significantly first the against imagine, higher and As through from fourth quarter historical move sales year. three what the saw

will So achieve three won’t year-over-year available more able while same quarters year. helpful. growth Hopefully certainly be first in what the in significantly it the have at of were as capacity of we that’s the we QX, level to almost

Amie Preston

Thanks, Andrew. Stuart?

Stuart Burgdoerfer

nets the that ago, that of facility additional year. some there what increase Lorraine, capacity, that is opened associated with have and off the but to had pandemic operation capacity related in respect we do with we to is Victoria’s fulfillment impact the some our a Secret some this centers versus year of we the second

is as we have there capacity, social need unit but a as safe our So distancing have for to we net great for given environment centers expected increase in the some ensure within that associates. not our would

upside, about comment units. a growth significant we’ve strict versus Victoria’s further at and average both so revenue a of growth Lorraine, online experienced that does units, Secret, and retail stores in terms on view that’s in unit Additionally, provide

we like value involved that fourth can extent to will balance the we and all So, we’ll meaningful we and feel denominator the growth ensuring larger moderate quarter keep generate the in some manage we given it and we absolute expect big of a continue source consumers, again that in would Thanks. in unit increases, pricing right importantly, provide safe, average through increases growth experience realized for QX retail QX. the and to

Amie Preston

Thanks, Stuart Lorraine. thanks, and

please. question, Next

Operator

question of come Anderson next The will Susan Riley. you. B. from Thank

line Your is open.

Susan Anderson

about Nice you’re there the comp good struggled what you I seeing I that VS in curious the where curious from? Hi, PINK of think changed morning. logo quarter Thanks. this strength noted the quarter. see was where had I talk previous quarters performance to the am I’m that in in the it you come can versus shop. double-digit think and improvement

Stuart Burgdoerfer

Susan. morning, It’s Good Stuart.

Susan Anderson

Good morning.

Stuart Burgdoerfer

and to would PINK, would the as quarter. So relates I to first in on bra panty strength it in want, the comment I businesses want the

along advancement you the And well. work and as both strong that and with improvement in shop a of work bra is also at it’s the collections done I business. think merchandising the in addition, a in highlight endorsement specific combination on Amy to has certainly it strong the a think done I shop in brand for In to assortment I’d and of that a the relates positive meaning combination performances again, the signal stores the the PINK and And in so the it But panty strong combination categories logo have selling as want as factors of well. of assortments mentioned, brand. execution, online, Thanks. evolving PINK positioning with Hauk logo PINK a in obviously

Amie Preston

Stuart. Thanks,

Susan Anderson

Thanks.

Amie Preston

Susan. Thanks,

please. Next question,

Operator

Thank question come will of Myers Partners. MKM from next you. Roxanne The

open. is line Your

Roxanne Myers

and exceptional third the congratulations on Good morning quarter. Great.

with there of the capacity terms quarter as as how gave mathematically we is of traffic peak out to may stores a you laid in clearly range lot. that I operating online. that way high you based can – performance expect about last to there well flow managing a constraints is Thanks in line kind how in be fourth a the think income You’ve you frame terms top on but being year, have? equal know in constraints Is of our of high

Stuart Burgdoerfer

as We we up So, models this own in Andrew’s really expressed introduce a to we can come we’re and and on good sharing trying with uncertainty, thoughtful, but the know that We to income. of written and your higher of operating comments is the our you’re end that there to be call what lot morning, think ranges last year’s views, that remarks our subject. build Roxanne, morning. want approximate comfortable is we forecast this

the a deal of the margin, really we’ve in aspects that talked and variables As don’t uncertainties in there with to P&L you expense is structure we given about. lot appreciate, certain the revenue, in want of

So, quarter, be there really our we the work business but of reinforce to is, higher would going Hauk outlined are also obviously we constraints, about the the view at internal and we’re that by will like the at to maximize operating them, we’ve way Thanks. end year’s ranges, level. last in income

Amie Preston

Roxanne. Thanks,

question, please. Next

Operator

Thank you. come of The BMO next from question will Markets. Simeon Capital Siegel

is line open. Your

Simeon Siegel

speak the strong I of results go-forward both can any I really help merch answer. can why expectation be say be through think great the we’re Good guys missed Andrew, so margin demand Thanks. guess for out I but you know did spreading don’t congrats. how brands? it, your inventory board, of are just I if thinking then an conservatism promotional promotions in you. And and morning, you the sorry, constraints. clearly and I when supply would talking PBW XQ? is cadence, to you understand about approaching up Stuart, receipts Thank obviously across

Amie Preston

Thanks, Simeon. start. Andrew, you can

Andrew Meslow

Sure.

the So, thanks Simeon. questions, for

think I that differently out play and to about QX. got margin it’s how might to saw improvements we in the in QX important that merch we then slightly how understand see we talk

year, versus of on able to were down as of magnitude price promotions. half we promotional in of both board promotional So, promotion, by activity in fewer days about also the then the deep third across those the deep third quarter, days able many big point combination third prior increase increase quarter we but quarter the to of many margins relatively the were substantially year-over-year order

way product the because to of as floor to point saw putting have late to we two end were in third quarter, response combination on good holiday an collections our have not sale having those fall as the third such the were drivers in the well the so we improvement of some quarter things where we and of And of the the those down our QX. actually sold historically

remarks, days. in the quarter did about prepared also quarter attempt with also way from that days, off those across peak we’ve large a have the to but our to to these we And out them points the understand try associated in got we take pressure price at days that sales the them to affirmed do of regain margin than third those some spread talked is doing historically. standpoint, fourth best dollars As tests very of testing those and days, how to in have it lap an to big multiple in promotional the higher

So why really improvement of margin of expect closely to that rates approximate moderate we would the quarter moderate more more fourth and – margin issue is probably last year to rate days. combination

We were up will that in fewer volume. having the that the going in fourth to more quarter, in to out promotion, quarter. third be of There big of big end days are promotion spread order days

to were in going As promotional Stuart of we and/or at the the reduce able we’re going product obviously, if third but earlier, acceptance and those days days, raise to obviously drive be as assumption. in in to look that’s number possible prices we’re outcome magnitude are the our and to mentioned to those promotional continue better that, big we’re seeing way nimble, quarter, either do continue of best going go we very to we’ll the the

Amie Preston

Stuart, Thanks, on inventory? Andrew.

Stuart Burgdoerfer

store in selling, broad-based be we’re and news to promotions that good effectiveness significant the obvious as manufacturing very with giving inventory we through improvements Andrew had in the we are we have the sales in like again And that would move supply approaching just an pandemic, sure for want Victoria’s. have first The intensity. and points have with and agility & we overall, them experienced we of with is rates with beginning the business, position, of we we many very really do so as the With broad-based terms clear planning which are long-standing position better comment for – of and the merchandise, thing approaching you that but respect better additional really selling the paying better combination conservative assortments, the given got inventory chasing Simeon, best to chasing receipts. with to conservatively the I better partners like Body, may marketing, I partners, quarter a expect to of better particularly spring have Bath how Victoria’s how that the of presentation, fourth where along trend, we Company receipts, stores, that trend is that want third the And that margin [ph] then of relationships a otherwise can of we to to fortunate rise with landings trend, say overall XX it’s It’s better closure mind add would to lot better assortments, inventory BBW may of you is outcome and Secret, to chain quarter. statement don’t big the as said, but we Andrew, make with overall comment got better and heck comment about side and is an dividends something So, where we quickly have heck. began the we’re in that online in that plans, it. can, onset this very heck, in on a where

Andrew Meslow

a our have I into many also year. the We Bath call upside. tremendous trend the commentary Stuart’s the Stuart. Works been of to the QX about chasing would chase echo with that all QX in around cut through of those external and accommodate agility Body & so but quarter of partners of able then receipts far and appreciation pandemic, up that pretty back receipts the internal the flexibility continued on chain for last this and Thanks, and supply of us at to originally Sure. lot needing dramatically, back talked ended onset to that

able We has inventory how shared very supply good weather feel that out increased about figured our The our is relative output goods the quarter. seasonal as to in in reality quarter, a as a way, prepared remarks, our also the fourth but overall I shared third and a As in to earlier position. and exceed very did from capacity been to and it’s we our both expectations chain we our feel operate on we safe pandemic enter fortunate sell-through we our sales increase. sales

on So that mentioned fourth end obviously inventory the also has cut prior we’re those as the we early with this inventory end able And we – holiday the I and standpoint some very we were into third to we acceptance sell-through. to fourth and on we’re quarter. back at mentioned into we prepared to our levels in read in we’re do product clean head QX allowed of appropriately the fall be the margin, our pleased positioned That around year very, an not believe quarter. a holiday our assortments goods as as based are quarter. that now as get of early remarks, come answer the sale pleased seeing of allowed It us an to overall us from

Amie Preston

Andrew. Thanks, Great.

Next question, please.

Operator

from will question Saad of next The you. Evercore. Thank Omar come

sir. open is line Your

Omar Saad

the Great Good Trying Maybe to morning. franchise follow-ups categories frame greater growth could the lastly, versus does affect for – stickiness been part the versus new think year news I of you COVID. plan this, versus fragrance customers of the on on stickiness from to so soaps existing Thanks. coming beyond way the And during about some vaccine the hear of positive your into strong home care. the and Thanks of quarter. for pandemic the taking you also that customers. vaccine I’d as to news obviously Andrew, BBW. my next question. spend views the ask body beyond? wanted like

Amie Preston

Omar. Thanks,

Andrew Meslow

Omar. Thanks,

I us both first fewer our third customers down months. The piece, is, the had year the last we saw the year, but months first good closed. the first the year still customer year-over-year point, six XX period our by this on quarter the half exit more closure third on channels, will in quarter, get to days and leave news the based customers the customers in about in as driven the fewer majority that the where the we the six last earnings on does but channel, of at we seen stores through were coming online second, of for of year-to-date call, out again shared we digit stickiness So, as stores the first your maybe than on stores that low-single of slightly substantially XX-day approximately year-to-date piece,

And And of terms as that the of as you the customers a double channel new among than more the nice about in would to are single channel, file, our the nice of last magnitude those reminder, who do profile improvements year-over-year. of up of in customer out growth order the seen seen seeing XX% about online. we’re customer spend. spend, number both around customers new we’ve tremendous brand most customers, – In new direct our customers, Xx expect, over number within and a we’ve year. that very and customers growth and productive to is shop the stores channel Directionally, those

the similar shops nice, you would as customer in we’re And a more multiple customer for mix growth very category seeing who to that and has category. of cross valuable cross category soap also cross our is shopping than is base, and sanitizer more that a customers mix shops channel as only categories mix, meaning benefit, well. customer the single customer also expect, allowed significant, benefit Within who

that customer but far can forward. associates start how what to is stay behavior, that so shopping in for friends, that foremost, to safer so all Certainly, customers I would and here if some and praying the possible, are vaccine that come would then at our impact around planning at our us vaccine of in live year, will of as of behave. believe world experienced terms I we some a question all around have on As of do how your to for year soon family, impact expect a we’ve as guess next stickiness hoping a go this high first all probably and level,

movement still business had actually for keeping For of but so material, growth think in before has expect think and that growth their I in soaps And is homes. we in and as and that enhanced people to the personal again direct the When that of to to our strong a home will changed handwashing continue a were be go again habits lifestyle go Bath we I strong would well, some our the choices forward. think comes before, categories lot But relatively have that strong overall and clean business will on those permanent continue. safer on think I good extent, Body terms customers Works, and industry and basis with at I do level to sanitizers would when categories categories about it I acceleration I lesser a & that time of a fragrance and an focus more some observing, multi-year spending channel forward. cases you the been that couple pandemic, example, of news been relevant by to specifically super expect pandemic. trend the In for the our they’ve a were play categories, think the been already

about nothing business. us in long-term say to less answer prospects any confidence the have seeing of have would the what longwinded So, we’re

Amie Preston

Great.

Omar Saad

Great color.

Amie Preston

Thanks, Omar.

Next question, please.

Operator

JJK you. next of comes question The Thank Kloppenburg Janet from Associates. Research

Your line open. is

Janet Kloppenburg

and a on quarter. Good congratulations great morning, everyone,

I And the more your and to EBIT days. wondering direction feel to able assumed also recapture a will discounting test promotional margin confident In understood wanted to that For year’s, you it be is on But period. and and levels your be in business go needs depth bit understand the the Thank of a to is you. if year-over-year? over that match guidance, will brand words, the move if are that if forward other – Andrew, you you’re to last hi, strategy learn defined was I that your top is was in clarify a Victoria’s Stuart, still shallower strategy of line – or lower. Secret’s within promotional now with you I

Amie Preston

Thanks, Janet. Andrew?

Andrew Meslow

question. you the Janet. Hi, for Thank

Janet Kloppenburg

Hi.

Andrew Meslow

strategy, the on the mixed is it’s So, promotional approach. answer short a

spread a same other there would Friday days. the last deals promotion price a than be promotional is in is more our it the extend doing last promotional as individual item, strategy our That year point to of for a depth frame. strategy. impact year, versus Hopefully up in example over than those an then more because sharp more last the of and cases, year sharp but in points year. fourth Black deal within level over planning to on big at just we’ll those Specific wide are be what be So that similar prices did the be general, being price promotion, those helps. the But days some time where over we spread around quarter, be last the out are would again will sharp that days days were around expecting wide

Janet Kloppenburg

you. Thank

Stuart Burgdoerfer

off we but to clear view and evolve that John��s results leadership, the won’t beauty, through leaders, Janet, Victoria’s to a continue improve pretty and to I thank think categories, CEOs direction evolve, the suggest We Greg’s said, developed we’re categories. days to we you lounge and good that and the brands sleep apparel ability there margin the view, and But we and evidenced to the leadership, would view rates time. continue think developed – will. are we’ll do with resonating want leadership, delivering is and meaningfully evolve next listen we the move of I wouldn’t of through because a good early future but of still I With as What do say learn I PINK the view, comment we’ll points and the from apparel think to very points against those healthy consumers learn of as of is through have significant and have brands and it’s that morning. merchant merchant while continue respect with Amy’s points we’re the and and to to more have but about volumes, executing of that still points Thanks. and start. intimate sequence the the and I

Janet Kloppenburg

Thank you.

Amie Preston

Thanks, Janet.

Next question, please.

Operator

next Morgan Stanley. Greenberger Kimberly question The from comes you. Thank of

Your line miss. is open,

Kimberly Greenberger

share performance things today talked maybe the I’m through Great. there And businesses expansion, occupancy just it normalize you store business the how points you’re offering Excellent just you sighting rate, level and average normalized then, two Andrew, brands a year, XX% guidance I levels? the of if store the you. the quarter of you October. Thank then leverage, but grade are exit about what looking both help help are hind and the buying you would would understand year’s XQ could think. could the And of gross us very or you not you reasons, And season? their XX% were in it. is, Is how that as contributed. and us think running if things XX% through any wondering think savings understand if just Andrew of Thank third third be in in expansion margin the volumes Stuart, and be solid holiday to very for between about of at coming holiday I at margin XXX here. Xx seem expense execution this you the Stuart, holiday sort that of quarter one merch it or understandable so last obviously to basis might lastly, much. helpful might components, productivity

Amie Preston

Hey, Kimberly.

for little margin The equal XXX occupancy weighted merchandise of for total and Stuart right? I’ll gross go take expansion and So roughly to another last to question that expansion. margin margin was points Stuart, merchandise we’ll rate Company basis leverage, more Then yet bit buying question. rate rate between

Stuart Burgdoerfer

was store expect... exit of She BBW assumptions asking rates about think the I and some on

Andrew Meslow

Productivity.

Amie Preston

Yes, okay.

Stuart Burgdoerfer

on for QX are BBW, same for overall total. with consistent an the trends sorry, recent in kind I exit most on Kimberly, true think year-on-year Victoria’s rates, and the change of basis selling So,

I perspective be QX the that run case on the trend both it So our rate business the the current curious current to similar and you’re that of of again, comfortable overall total. to businesses for know about And sharing. business we’re happens it,

that consistent. all however, pretty November fourth running else, of the on commented Andrew the dwarfs earlier, know business everything week we but As and is significance size and

that’s So offer there. what we’d

Andrew Meslow

something on XX% come less play, if be of and into days we’re think around with than around outside the the we’ve saw them as of improvements that a with way we helpful situation going the on give operate that biggest into a but try that’s the the your that, around in on And based because resembling if at articulated, that coy the last without without with I sale, days on not on on the guidance, can to capacity that pretty and that, average being if from hopefully require to states biggest capacity view, businesses On days that we able into a a businesses hit of have plus even to end comfortable jurisdictional does any seeing I’ll response our the year on detail last attempt spread Kim, overall cap, but max part just total traffic is max frequent question, thus changing sounded you year. to to us we a but control more out. that offer those you jurisdictions XX% basis. again, a about big those the year where those we to in both like to appreciate, know day, of regulations and capacity to constraints volumes very of second that conversion prior on running of will days us guidance, the but the the biggest strategy understand year, going you reality year, which down is capacity model. of will, fluid again, only between as you one perspectives traffic XX% some municipalities and biggest But detailed dollar those use on constraints, with will And with our capacity changes, of the the it’s gotten both had different and

Kimberly Greenberger

Thank you so much.

Amie Preston

Thanks, Kimberly.

please. question, Next

Operator

Thank you.

from Baird. is your Our Sir, open. line question comes next Mark Altschwager of

Mark Altschwager

margin. Good questions morning. wanted a I bigger ask just Thanks and on quarter. to picture great

that on about So pace Or be Andrew, this are starting margins XXXX at operating is on potential in like the don’t way tough years? year, year, this structurally quarter. forward next inflection want the to year we maybe the even guess, prior break thinking VS to How for the last this from versus normalization mid- you kind XX% Stuart, brand profitable the BBW, was any It the to to And again, roughly seem be obviously the to well is learning’s if then margin of specific fiscal impact over pretty extrapolate higher like at if quarter. high-XXs. such as to one would to ‘XX? you business but nicely numbers, QX several it would remarkable business give are seem looks the could and on the carry the in recovery business now operate frameworks I margins

rate perspective high-level you the a can is of there a where that brand understanding Thanks. just is So today? near-term run thoughts uncertainty, lot on profitability from any share

Amie Preston

Mark. Thanks,

Andrew Meslow

Hi, Mark.

it’s we’ve the an throughout XX% have especially this basis. business unique But that different talking both if year, profile low there operating the saying and operating is today periods your different around to move in need of operate out margin range we’re that basis on consistent be we’re long-term we would year, next go-forward will and as income that likely like, perspective year. And what make a we a nothing how somewhat a looks we’re a about in I question rates can of we seeing time Body is for very ROS. would that think about from to terms should XXXX in margin Works say, frankly believe lap in & operating this so very XXXX as Bath on been that that business, thinking more So that and the unique probably this us about year and

Amie Preston

Stuart?

Stuart Burgdoerfer

quarter about to a do. more got What just said, Secret say Victoria’s Mark morning. say ahead lot I at we be. we’re And Good all, And I would results, would we would based ahead where the a be. we a we of hopefully on third thought of where but in we not boastful we’re Mark. that Hi, with way that is, thought

your proud of effort so people but question. that, happy happen, quarter, about that quarter the to made as point out progress, strong of you one many make it’s So we’ve in good

as and categories businesses, and you our to income following strategically, from can with can. businesses they within us operating and in power history rate of others However, similarly own mid- know situated in-strong industry, your the brand high-teens be

of lots of periods at executing look really you you over and players well performing be. when If time, long well, where that’s can really

long We’ve we’re Now, finished solid quarter. one from way a that. just

a trying front one quality in a work of two, of if one lot lot executing a but time the in several XX% well. business potential customer business. really that’s but years, brand say when that and the us, positioning, should start, taking A potential. a be year And the and next should at and able a front be of week to assortments, in that’s it realize got and I there’s we’re opportunity lot we a front we the at is the rate execute of we us, in so Thanks. and or of So but stuff next lot time we us, of the good but a culture the the this right operating respect merchandise well the we’re off of potential got with to the that team to income experience, to the would do to month XX%

Amie Preston

Thanks Mark.

Next question, please.

Operator

Dana from Group. will next you. question Telsey come Telsey Thank of The Advisory

is line open. Your

Dana Telsey

& continuation Good for. that Stuart, the of on mentioned the guidepost Victoria’s obviously, the strength of to Secret morning, improvement there and turnaround, Body significant Nice to watch see you everyone. Works. Bath is

about XXXX, what in the happened BBW and thinking about lean you be As movement that in penetration And what Thank Andrew going potential and XXXX? looking we how lingerie and its the should you about you category KPIs XXXX, you. are think from it’s think PINK we through in going through toward? should if whether for

Stuart Burgdoerfer

Dana. morning, Good

healthy and from all respect So, problem that I don’t Secret of would come mean you work and what with is in and are revenue revenue healthy the sign line growth know you what a do. by outcomes that to and the revenue XXXX, that Victoria’s that is you I have say, done that a margins with guideposts Dana, or

balance line with is execution very it a August. to unit a between margins, us, better, for implement in pricing, say, execution, I profit continued healthy top good, healthy should with action, that the started improvement healthy on best retail unit coming we So, into put plan along ultimately, again through volume, or average

revenue standpoint healthy healthy those margin merchandising a margin strong brand characteristics. and execution a it’s it’s and with and metrics, So standpoint, along good from channel mix

the be guidepost. would those Thanks. So

Amie Preston

Andrew?

Andrew Meslow

for Hi, question. Dana. Thanks the

our we we would that would in across has rates certainly more expect again, we focus high growth as at tremendous been XXXX, look really the a balanced best possible soap will we a from current but So level, sanitizer a working what where growth trying and see are and that deliver into we product we into looking moderation on business XXXX. move to fourth down development as out in the quarter, heads for on are pipeline the portfolio

relative modeling. at move at XX% the and had as business helpful a the mix probably think growth expect relative would of higher terms we beyond, we next expect on sanitizer. of see we to assume it’s we to basis, out So care But XX% basis least fair our maintain in to around soap I and growth soap your to on fragrance under the a body of expect just home sanitizer of and that’s business, even historically, which again, and would of if been that out into would year

Amie Preston

Thanks, Andrew. Thanks, Dana.

please. question, Next

Operator

you. Oliver Cowen. The question Thank comes Chen of next from

open. is Your line

Oliver Chen

thank you. Hi,

may highlight all momentum, and/or you mobile On opportunities experience happening on progress the could have there nice you and and you the Body the division, and job what’s connection the made & digital Works online in-store, between looking Bath and you. over mix together? then the quarter are fourth we on does be important as at that And Thank margin customers about product should at have that material these in channels how know all implications BBW, time?

Andrew Meslow

Oliver. Thanks,

foremost Body brand more or & any how maybe to standpoint on scale to other we’ve So, a very you standpoint, our customers, first Bath on direct and business the experience capacity more through device. brand, probing think any from again, they from question, year are is tends a first capability and pleased through I now mobile obviously ability also what with your Works, but been Secret be and up a Victoria’s our

platform stable those And service and any move those brand very well. with our make as our to again be translates to give projection mobile look ability pleased continue future so, and as very brand through years through digital capabilities and on into into on has mobile devices continue terms that of proud we how feel, to are in we well we or and that something orders continue to will we’re of the we devices be investments

that be terms margin, short material answer any product material the has mix In on the there one. and that a of impact not would

that our is margin categories. profile. the we our are of about high that in sanitizer All at average and soap overall operate business margin categories of specifically within The

So overall or to growth rates. an Thank you. have our nothing change that impact would as

Amie Preston

Thanks, Oliver.

more going We’re to try questions. squeeze to two

question? next so, And

Operator

from Thank next you. The comes Marni question Tracker. Shapiro of Retail

Your line is open.

Marni Shapiro

lined us, if the a remind shopper a owned I curious you’ve I’m it look meaningful know the two bra up is Hey, in younger guys. experience. had first the for pick things out of then that I’m if sports talk footprint source guys? the Congrats rolled on for lightly a fantastic the little big panty – could just and and that close? They as had just Are you like age bit and point very sort a if of at a great you pretty of bras in curious And this you bra come holidays. could stores and you ones. seeing store, you��ve PINK, I’ve the quick panties quarter in. about and like coming consumer for On

Amie Preston

go So, BOPIS. first Andrew for Marni, we’ll to

Andrew Meslow

call, been a Hi, times Marni. capacity on in last and that really say sporadically able we were QX I constraints using the to in capability rolling any about store buy Yes, with the we quarter earlier had have the closures would store online we year help to pickup launch on as talked throughout we or basis.

pick interesting. to not to Really some around have but in as is what of safety them net level in it’s of really has operate, some online an the as when small and capability broadly unable incrementality, have We or in us most open ruled a manner, level now our operate – a stores a it have buy in capability. I’ll have been It are important that call and are insurance appears to policy capacity. for store out especially to to up learning keeping able that certainly operating open very off-mall locations that the fully able stores nice we if open to be

Amie Preston

Thanks. Stuart?

Stuart Burgdoerfer

Good morning, Marni.

comment brand So, for you you and really Amy know, the and of target said, is would good as age would be. to job the business doing customer. to young I through good team the our woman. college around range understanding target if the to an appeals itself that merchandise that there targeting college feel but a projection is Thanks. ages customer, of that say that again she college age will, the customer, we customer. business, the And, are like what And that the age job PINK range with a a executing that age doing That’s feels we’re that

Marni Shapiro

Stuart. Thanks,

Amie Preston

Thanks, Marni. please. question, Last

Operator

The come JPMorgan. will you. for Thank last today question Casella Carla of from

is Your open. line

Carla Casella

quarter? talked all lease closures. Hi. Have have been about question do the you have we breakage for or cash earlier you that catch-up I year? the a in that about a store cost spent spent fourth flow Has the the that in of

Stuart Burgdoerfer

Carla. feel in catch-up but about we you very projections we but Carla, It’s feel liquidity good is cash There and a and in cash as liquidity, our a bit fourth but the and the quarter about Stuart. position. and moving a that’s pieces there quarter, good be some our where morning, fourth catch-up is understand lot concentrated, Thanks. of of little will our it Good very

Amie Preston

Thanks, ahead. Carla. Go

Carla Casella

other does have international or the you debt China is that that I going Ireland related to international? or been was say, business go carrying, facilities, international that the with UK, the to

Stuart Burgdoerfer

to we end up Carla. largely near-term in Thanks. that the off China It paying may here, relates and

Carla Casella

Okay, Thank you. great.

Stuart Burgdoerfer

Yes.

Amie Preston

you Thanks. Thanks. to and interest a L Thanksgiving. We That all morning. for you Brands. wish concludes thank our Happy this Stay safe in like call your healthy and for

Operator

participation this time, disconnect. today’s Thank conference you on all all parties your At call. for may

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