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Bath & Body Works (BBWI)

Participants
Amie Preston L Brands, Inc.
Stuart B. Burgdoerfer L Brands, Inc.
Denise Landman Victoria's Secret Stores LLC
Jan Singer Victoria's Secret Stores LLC
Greg Unis Victoria's Secret Stores LLC
Andrew Meslow Bath & Body Works LLC
Martin Waters L Brands, Inc.
Brian Jay Tunick RBC Capital Markets LLC
Omar Saad Evercore ISI Group
Kimberly Conroy Greenberger Morgan Stanley & Co. LLC
Gabriella Carbone Deutsche Bank Securities, Inc.
Samantha Lanman Oppenheimer & Co., Inc.
Paul Lejuez Citigroup Global Markets, Inc.
Adrienne Yih Wolfe Research LLC
Dana Lauren Telsey Telsey Advisory Group LLC
Kara Szafraniec Northcoast Research Partners LLC
Mark R. Altschwager Robert W. Baird & Co. Inc.
Chethan Bhaskaran Mallela Barclays Capital, Inc.
Ike Boruchow Wells Fargo Securities LLC
Oliver Chen Cowen & Co. LLC
Janet J. Kloppenburg JJK Research
Roxanne Meyer MKM Partners LLC
Call transcript
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Operator

Good morning. My name is Regina, and I will be your conference operator today. At this time, I would like to welcome everyone to the L Brands Fourth Quarter 2017 Earnings Conference Call. I will now turn the call over to Ms. Amie Preston, Chief Investor Relations Officer for L Brands. ahead. go Please

Amie Preston

morning, Quarter Good Saturday, welcome L to X, Thanks, Conference everyone, Call Fourth Earnings ending for Brands' XXXX. Regina. and the February period

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

quarter all website, our available earnings LB.com. additional and commentary release, fourth on Our earnings are presentation

and Secret CFO; Singer, Joining Greg Denise Bath CEO Meslow, filling us Burgdoerfer, Nick who is today Victoria's Jan Victoria's are: COO in Works, of Martin of Coe, of CEO CEO is EVP of and Waters, Lingerie; today. Stuart Unis, PINK; of Beauty; the International. under Body for Landman, Secret & CEO Andrew weather

today discussed are items I'll Stuart. we've that on the adjusted turn to and Thanks, results the in the of detailed and basis special press exclude our release. now over an call All

Stuart B. Burgdoerfer

morning, Thanks, Amie, good and everyone.

quarter initial lower-than-forecasted favorable fourth Absent our we to adjusted a impact $X.XX tax share $X.XX of delivered upside rate, related the the of of although operating Although $X.XX, the earnings guidance declined above was our per range. to do basis, our end share by result of the an tax a an XX-to-XX-week X%. rate. we toward earnings lower On were improvement is had expected per the this And versus quarter, result income third better. to

last Works by was income and mixed. a Body Victoria's Bath versus forecast year at Secret. performance was Our Growth operating than decline in our & more offset at

online, to on experience the our new assortments Secret XXXX, the staying very in and close Victoria's in our customer focused launches. to compelling in improving performance improving product we're Turning stores and improving customer, business,

inventory, the to be continue and capital. will in management We of disciplined expenses

investments our employer XXXX be workforce increasing approximately These The of evaluation and is of our making for help impact in of attract and talent market, rates million investments rates is and us an these our high-quality included are retain in in hourly to wage and by associates. guidance. principally will investments continue wage extensive by benefits, we an Following choice. $XXX

of a income low impact satisfied that these Denise. would hard as the single-digit our We, management the discussion working Excluding result investments, is and the our be I'll high to team, that, do forecast over end growth range. with to not better. are for wage of at turn operating With

Denise Landman

Thanks, plan I thoughts Stuart, to brief a morning, PINK's and everyone. leading spring. overview outlook QX results our brief share of into and good about

to last Panties specifically principally For and the franchises, intimate's year, Sports mid single-digit continued by collections, growth panties, all growth a were strong rates. sales and strong were also fashion drove Bra offering. our quarter, while versus Everywhere our category, Wear across expanding driven both high newness. by unit by silhouettes margin driven bras driven and and

we strongly holiday For servicing in succeeded offering. a the we felt specifically, gift-giver fashion through that strong

and our emotionally walk-through, continue collections an performance and architecture. mixed. of packages self-purchaser, cozy go-forward balance gifting learnings bling, well disappointed shared well we year prior characterize Despite drove that growth and rate. strong aggregate, success and about our of double-digit as as performed our as engage disappointment. serve were positive we last The our Our related the Therefore, comps performance, to was and the of sell-throughs. and to category to areas the had our expanded up slightly this however, ability applying and would the Therefore, QX apparel strength apparel feel result, at very we're assortment, customer. assortment to PINK's brand those Key experienced margin mixed. Apparel were high in investor mentioned, versus opulence, on

to it focus Leading to I'd simplicity. to channels social are effective. business turn into to the customer Thank will grow and and operate our PINK and up Nation and program like on and continues continue and you, over be agility strong. digital Our with Jan. is spring, our Engagement speed, we

Jan Singer

Thanks, morning, Denise. Good everybody.

As the changes XXXX. you progress read in in the post the on business XXXX, we pre-circulated materials, made resetting

While down high with from engagement high-fashion Based continued rebalance mid-single-digits This here were core, progress starting to focus bra results sales led throughout bra of our her down, business. the in we the Angel and Illusion, down and and bra customer offering improved unconstructed. the sales benefits, led on with QX. with were by margin overall was QX bras customer, the mix, we single-digits of was on by year in a with the in T-Shirt, our continue growth deep to launches the choices constructed in results constructed Max, This business. and products, balanced

addition, (XX:XX) product during we the up business, which of with the panty promised, comps program, progress to lined weeks as making X-For XX XX In reset in began in the were non-red quarter.

new advantage stay benefits, AUR also with we Our much to for consumers a In has and there's QX. but to We fashion, more the of year, in bras with to of recognize to creation, casual continue adjacent throughout X-For continuing the our like and with important, up are The categories, solutions. XXX% the and ticket. we're loyals and progressive also lounge, progress, integrated up. that our and team, to (X:XX) and business sleep be sport of a XXXX, Victoria's our pipeline leadership we bra that Lingerie we key driving continuing new key online her questions. reset build team is but mentioned, as on and XX% to marketing attract we this happened performance with business QX. business and us external to Last, with of base apparel least, our investor most not we the leveraging focused the L retention. customers and that channels. categories, on We're but new We knowledge. bra We're brand, business. spend integrated Brand look feel your shared in of for proud across results by and single of and the I this panty do, balancing which I grow to confident improve terms to this and double-digit to With reframing fashion progress, team growth efforts at to our making those Again, and offered is bra forward I'm blend loyals. connected in up worked engagement, comp Secret and strengthen and last retain acquisition competitive feel customer in core thoughts comps sport that terms chemistry competency, adjacent marketing business and and about product knowledge meeting, how Engagement and focused digital with drive a in in-store continues composition selling excited bringing optimistic attachment customer core continue are in marketing our of We're had optimistic space. diversity as building millions in it's our we will place. be into our ending as and the focusing new with

to over Greg. it Turning

Greg Unis

Thank you, Jan.

comps our progress a and for read prepared and you year mid-single-digit Beauty growth significant in with business, merchandise the ended of margin growth. QX remarks, As

growth sales experienced positive the margin. we've sequential the and Over course in year, of

margin. fragrances and fashion business We through transformed sales are we Mist year-over-year, drove relevant Our our best-selling mid-single-digit where up Collection newness. growth and in

the and the significant Our digital channel for drove year. quarter growth for full

to of a forward, number we the successfully results. As one business, our new Bombshell look which week, strong scent at off February, Beauty Last is we complementary the start. Seduction, PINK beginning a Bombshell, relaunched promising launched fragrance, with to we

through Mist We continue to newness be Collection, and fashion accessories. lip focused and (XX:XX) on driving

We agility, morning. from upon are joining you maintaining ideas working, Victoria's testing over and to Andrew We're and PINK into learning for it business our new brands. in and on making focused always and and what's bigger, to Thank confident hand big continued speed leaning our I'll Meslow. connectivity this model the growth. Secret building

Andrew Meslow

Thank XX% solid the and of the are were quarter, period. in results Works, to shared to & prepared were quarter, our part fourth that grew biggest morning, Greg, I we just on as the sales release. At we most and remarks income build in encouraged deliver important few operating both as and earnings XX-week able you, Body everyone. the that a comments will make good Bath

call, us As sales seen chase more to seasonal sales described fall. selling to the that building flexing were November we on the into That able same Christmas in as build maintain read customer and us allowed QX activities October and we had from react to collections through capabilities promotional seasonally-relevant react and both momentum expects Nick our the on read holiday December and season. earnings key approach of in our utilize momentum the and product chasing

Semi-Annual with year the end drove to able were strong comps. a Sale successful that also January very We

continuing our investing growth And Those include: relevance both conversation that optimistic digital will deliver cautiously to the and remain we remodel stores in Martin. Thank and our health investing in the experience in to continues results; XXXX, with I and turn invest long-term innovative to ongoing solid strategy that our strong the investments in income and can to fleet, and over also customer sales brand. operating our drive platforms. you. forward Looking and products; new now we to launching continue while developing of

Martin Waters

everybody. morning, Good Andrew. Thanks,

As have high in at four on I business' performance a back takeaways. I look level, key our International XXXX,

income and and growth at operating businesses Firstly, quarter are rate. good the year high with partner-based operating income doing well, for the the

were invest to market which well. we pretty China, e-commerce stores, will are quarter, in Tmall significant doing seven are full for both we continue believe of assortment progressing which platform through a VSBA the Secondly, us. the the we and fourth much stores be expected. as five in opened And

in on turn Thirdly, In open were Amie. that, in patterns was our to secondly, we'll us broadly as segment very finally, each line of continuing With in the overall, International we business the XXXX, partner-owned build continuing and it in saw the our the improving to our our American of stores; in over to finally, to scale China, stores know, with where for comps And to UK; International firstly, you the performance priorities respect success North that I'll globally. XX are: businesses. XX with in challenging UK XXXX. another

Amie Preston

this Martin. have. we'd be questions happy Thanks, that At you might any take time, to

I'll As back to question. Thanks, Regina. a to please reminder, and in courtesy over others, turn limit to and it yourself one

Operator

Bank go Our first of question Brian Canada. Tunick of Royal from Please ahead. come with will line the the

Brian Jay Tunick

investment, the guess, were I maybe on Stuart, you million about spend? unit year? in declines million decline bralettes do maybe the units Jan expecting bras. any How we employee the the Question, this curve $XXX into And guys can down lap like productivity on morning. spending we good side. already category? you're much ahead as wage in the sounded in then of maybe the talk $XXX very were when that the about that it talk Thanks, Can benefits to you from And unstructured much. start Thanks move on

Stuart B. Burgdoerfer

it's for Brian, So, investment Thanks in benefits. Stuart. on our wages the and question

Again, we that want to off announced retailers benefits, hourly to and in stable our wage levels As in enhance you provided talented, stacked evaluation how we recently as on up. critical the competitive a increase wage at benefits and having markets market-by-market our workers. we time as increases made make the looked tightening sure workers. Major workforce appreciate, we looked our very we have we And to And where business. labor labor in at we're highly paid terms focused of pay competitively, are an markets, rates. up and maternity is

productivity business, talented, hourly to Thank and And these changes is the of that stable our lots think As of having workforce. in to our ways. a them. you. with productivity, at very critical workforce we And we contribute look in starts will success

Jan Singer

working balancing question, the are Relative on you. would I mix. bralette Thank Brian. our say to we

time I the launched we the that confident QX we are mode quicker. driving bras bra in we the on us a is business. get can bralettes our very know, bras more in we And recently, still there bralette We're in and those lapping in say T-Shirt mix. you still significant QX balancing I'm have velocity faster and rebalance As the launching but are of get needed. a constructed, which there, the also Illusion like helping we're the But and and would part

Amie Preston

thanks, Great. Thanks. Brian. And

question, Next please.

Operator

go ahead. question next Please comes ISI. from line Your of Saad the Omar with Evercore

Omar Saad

XX make credit Hey, the will adjustment when looks Can question. talk thanks in the reclassification It down implying you gross the taking line kind a of gross you're bit? you about for little like income, my the margins this be but for margin year. and occupancy, the guide, through like given in margin X% puts gross there help be some leverage comp about thinking maybe Thanks X% to in takes should but there how the we're feels it us maybe guys. on walk bps,

Stuart B. Burgdoerfer

so, Stuart. Yes, it's Omar,

of better think and is work credit we'll end of that we of to merchandise do year, this To the which think be in the – so that the year-on-year. card component and provide think occupancy the we will the but the slight decline gross pressure some on about occupancy economics buying slight range So profit be or that high classification result, is flat for will rate. And margin component the in to de-leverage the some the and there'll proprietary – the we all line, of than related part your be at benefit a rate. and the of SG&A put equation point, hard buying

be on things, position there'll XXXX. pressure the little this we're But hard merch So about going line a work result bit as we through to stage, margin year. made the improve judgment think a to on we of how at that to in

Omar Saad

or is that of some in driven are Stuart, making price? you kind promo And, investments

Stuart B. Burgdoerfer

combination. It's and think of rate, margin on lot what take work pressure will it merchandise it's function our business, along to all I'm a a the ideas will with can in just as the of about a lot result. avoid different at appreciate. hard we'll as a views the the Omar. we slight a better to that we business balanced be not the XXXX, to move get of of trying quality trends you have recent things. we in of It's combination And a question, again, to And, things, the but there

our Another rate. obviously that to act dollars, margin rate, consistently between margin much this, we're do and, that balancing always shared again, volume would you a between strike and very volume is appreciate and best we thing and margin it's balance focused and to on we

Omar Saad

Thanks. Got it.

Stuart B. Burgdoerfer

business faster gross profit Again, a effect mix our channel, business in And the that a faster our in direct or online as point merchandise in a bit bit rate appreciate, profitable on than line the margin line, dilution there of equation terms rate that to that the is of due very at mix in little direct a business. growth stores. is drag last in but the grows the a rate is as online business, get of you little on you

Omar Saad

Got Thanks. it.

Stuart B. Burgdoerfer

Yeah. Thank you.

Amie Preston

Omar. Thanks,

Next question, please.

Operator

Morgan Stanley. will question Please Greenberger from Kimberly the next go Your ahead. come line of with

Kimberly Conroy Greenberger

a merchandise want merchandise a merchandise so And business of Omar's that is be other online stores? as the confirm to direct just wondering, basis is much. strictly start I'm Secret in classified could below so some My either factor some on needs the or on regarding years. because Great, the margin and is is question to the to Victoria's much. last shipping of component lost you the over what I at would operating thank lower you beyond Victoria's two Thanks margin answer causes to there or XXXX that recovering XXXX happen the margin. question explore margin XXX operating allow Stuart, it expense points if the margin, that to Secret of

Stuart B. Burgdoerfer

last result. not fulfillment the as that in Victoria's based it question better appreciate we on going due than, that get to, that's business, your Kimberly, high you see its I'll as so the for a business of in is, that to time that it's a there's best opportunity. that shipping providing you the that the what's With to running teens cost Victoria's is little store time, the question, you first, and the of back line as on it's economics of fact, not business a structurally business, segment, appreciate, quality income when your be believe, respect operating drag suggest we can't part ever And that the in the peak, PINK a should us Secret long if take business versus and no and operating reason following its at rate overnight, income will, rate if but from happen you happening. is, that part to it,

determinant there, of driver one will terms volume. of number it'll how get of that In be the that or

but have other the as of aspects and today exits secondarily, versus all business. have on P&L the being that to the we that tough-minded near-term merchandise sales the short rate P&L, to investing of focused margin continue activities deleverage needs will. top in driving spend through a thoughtful team wages, the then appropriately drive have in meaningfully driving And hurt the you there of to pressure trade-offs other short, and P&L, also put operating in And is expense other and types that make of different headline on volume. that given business. need profit that and business category about areas had promotion that We merchandise if the of that the business. made are volume, the and in But will line announcement activities big income that merchandising Thanks. significant dollars they're business and the in sure that volume lots we to the to margin rate on about is is peak, But so to we've part pressure answer rate. and through very in really down pressures scrutinize answer And volume, more

Kimberly Conroy Greenberger

Thanks.

Amie Preston

Kimberly. Thanks,

question, please. Next

Operator

ahead. from Your the Trussell comes line Paul next go question with of Bank. Deutsche Please

Gabriella Carbone

Hi, Gabby question. for This for good morning. on is Paul. Carbone our Thanks taking

for question past amount Could how is guidance the on these you our this spent compare from investments you and to the investments impact the So quantify SG&A XXXX. Thanks. marketing year?

Stuart B. Burgdoerfer

Victoria's segment. effect Card, classification company The versus for on be Angel XXXX XXXX in somewhat and the economics the the Absent of the marketing down will Yes. the for of

Gabriella Carbone

very Thanks much. Okay.

Stuart B. Burgdoerfer

You're welcome.

Amie Preston

Thanks, Stuart.

Next question, please.

Operator

Anna Andreeva Please question Oppenheimer. Your go comes ahead. with next from

Samantha Lanman

Thanks our Sam Lanman is Anna. question. for for taking This morning. Good on

time And hasn't? for for what worked expect you cadence now. various the XQ the has Thank and and using you. markdown promotions best what VS do been you've at What So kind of some in at VS year?

Amie Preston

So, then to their to go Denise for Sam, I'm Jan and that. around first going to thoughts

Jan Singer

Amie. Thanks,

So really to and able things And we can her. that consumer are I'd we marketing. a we have we're with are that, that actually we speak shown she build most and build to And when the loyalty her effective doing relationship say then responds. way resonates when is do in that

already really that promotions that upon bras So or products she's us, her we that from attract build for knowledge. bought

and who's When stores offer in. interested about brand moments, ton a that online. degrees products when responds. we and and opportunity of effective. most from both we accretive she'd have direct recommendations data be with that of We buying in That's messaging her she And comes varying we're

Amie Preston

Denise?

Denise Landman

So which echo that planful strategies calendar. what in are expounding a the PINK calendar, predominantly reactively reside points not vehicles our responsive comprised is would tends manner be promotional membership, when into them, has highest upon value that, layered promotional we at that, at into layered marketing our most point core been our intentionally laid Nation and into of and the our in shoppers strong highly constituency, to I effective calendar again, intentionally specifically our

Amie Preston

guys. Thanks,

Next question, please.

Operator

the question of next Lejuez go Please ahead. from Citi. from line Paul comes Your

Paul Lejuez

Hey, markets? growth the in thanks, experience other your guys. I'm plan business? thinking how European Thanks. just potential about improving curious. your What's influence does for attack And of the UK there

Amie Preston

one. that Martin Thanks, take Paul. will

Martin Waters

Yeah thanks, Paul, question. for the

it that we in domestic in Victoria, of see same that performance Firstly, be pattern PINK, BBW. be I as pretty would the businesses, pattern in the see the that it be we generally in internationally it the is much say

that deliver there it relatively need exacerbated we difficult go you into UK, shape priorities And Suffice XX best a we where sure now. stores a It's focus small you business stores. of conditions I've lot think making on We'll have there. that committed forward. have calls, previous my of key business except the to estate don't say, way, we've to possibly certainly if always business, execution, growing going doubling-down strong on at one of performance a in talked pretty away. already that much been pretty of that business spending real the just the say, it I we small by has really So the UK it's market that's in be I'll time only very adding be can and strong can. about home, the

Paul Lejuez

of is But, plan the Martin, rest the then? for Europe what

Martin Waters

Europe, of rest partners the two have we For place. in

have VSFA running We stores XXXX. and be and and some stores we opening in will into VSBA up XXXX

where priority know. we So We you good of know. we it's least will you other have one probably advancing lower it's partners as than as is the market, priority areas, the penetrated, that area about China. are It's there. the world be Number feel and the we a

That's business growth Alshaya the Europe. East high-priority. Eastern We see Southeast We Middle great very a in in have big Asia. a with and

partners assured, So the rest the there Continental not Europe is we do there. we be will and growing priority, but have highest business

Paul Lejuez

Okay. Good Thanks, guys. luck.

Martin Waters

Thanks, Paul.

Amie Preston

Thanks, Paul.

please. question, Next

Operator

Adrienne question Wolfe Yih with Your next the comes from Please go Research. line ahead. of

Adrienne Yih

I then Stuart, malls. talk you exposure and largely they're a another morning. for perhaps you footprints, question to rent currently? was brick-and-mortar e-commerce, as color but the profitable And store very can know some profitable, more is I the on it C wondering on much. the the Good A, Thank said profitable you about than reduction just if opportunity channel B, all almost there. it's had

Stuart B. Burgdoerfer

Yes.

first. take So again the that part I'll last of

to and mall manage at as So are types, store our very our across our both stores not in malls. every we've of more Secret. reminder, footprint, our closing businesses, actively fleet, outlined XX% well-diversified year. respect pretty real the by locations enclosed Body at and shopping businesses & online We With estate are profitable store-based Victoria's consistently, Bath we than about are and opening

buildup as given that you those strong continuing remodels, refer to that we've invest as results the a steady at expect. in them. As And sales Bath project pretty for Works, program, activity estate XXXX, China, in the our seen. continuing of Secret the the on Victoria's invest would last store we in down we're real we Barn rate continuing White the and versus investment is to several to plans level Body for look years, of capital & We're relates level it as at we're to activity and spending

rents, based a headline we're the We're there well rent on when is about one get. adjusting overpay difficult North renews believe But investment that those best of recent for other certainly in with we malls, and flexibility in and in appropriately have some the leases. situations in terms lot want don't get important it you you aspects it's America of be plan leases. are of that if terms the where you estate our real on to And worth And it the inflation thing in the respect believe result a the said, that pretty would sales that as that terms, mall, nature result a or we've to dollar more mall rent talked we is leave favorable the provisions and based So of to With consistently, there relates that with any, don't best liability game performance. lease including have little, tenancy locations. we those strategy ensure we moderating. we managing can reduction, of about And as very do. situations most we to the certainly, profit

on is reduction a per Thanks. looking So, again, portfolio, strategy, the a big we're our but not rents. to strategy actively understanding of rent managing se that as part not overpay

Adrienne Yih

luck. Great. Thank Stuart. very of Very Best much, you helpful.

Stuart B. Burgdoerfer

Sure.

Amie Preston

Thanks, Adrienne.

please. question, Next

Operator

go the ahead. Advisory Your next Dana with question Group. Telsey Telsey comes line Please from of

Your line mute. be may on

Dana Lauren Telsey

Hi. Dana. Hello? it's Hi,

Amie Preston

Hi, We hear Dana. you.

Dana Lauren Telsey

are Hi. you? How

Amie Preston

Good.

Dana Lauren Telsey

you we Stuart, terms are did And, to about you go-forward? in XXXX What any think there? puts be do what aware PINK Thank of through see go improve changes And making you the demand it assortment cadence in in to Hi. and How customer trends takes changes at of? quarterly as you. loungewear?

Amie Preston

Thanks, Dana. Denise?

Denise Landman

were mix this headline that those loungewear, we exception be the if isolated and received aggregate with trend segment, in the Those of course-correcting in rapidly are drag, have the I'd market, by with work the we that we've misses strategies you been on well-identified been agility loungewear partners, our gifting as did some we the do them. that to lounge the the respect has have fashion say through with primary the region and isolated. areas performance. would well core mass and issues would, And

I pretty think the situation time short within can order. understand we the signs that and the to at return present we normalcy see business

Amie Preston

Stuart? Great, thanks, and

Stuart B. Burgdoerfer

with in I it, of what Dana, getting year sequentially we'd respect color you result, through in the of the which rate, asking, margin detail will is result improve of merchandise would merchandise rate the margin is not the give expect year-on-year to the without you're the year. that in quarters the terms that headline

that's So that thing the key highlight. I would

thing is, other on progress, calendar we wouldn't and quarter calendar, have the see year. second through pick be hard in benefit joy of the But through working had margin evidenced a back-to-school the particularly the to that result apart terms The business, of of fundamentals as move versus to the up the year ago. merchandise XXXX, from based XXXX expecting rate that the of there as we in shift we aware a is the calendar, will fiscal a week

Dana Lauren Telsey

Thank you.

Amie Preston

Dana. Thanks, Stuart. Thanks,

Next question, please.

Operator

from Kara Northcoast of question comes Szafraniec Your ahead. Research. next line with the go Please

Kara Szafraniec

in Thank fiscal the does to get Body much. Hoping fourth XXXX? Good Works. Bath quarter Body & question your some so had XXXX I morning. plan on a through Bath the cadence how Works on and decision promotional you more color promotional much. in just compare the so increase quick with to fiscal maybe Thank & you

Andrew Meslow

Hi, question. for there. the Thanks

adjust week-to-week, traffic up that from activities, the activity that tests flat our talk full QX. those or in the the down in and constantly when online, timeframe. for were then of communicated see changes from as promotional put increase at So calls, different, we fundamentally our Semi-Annual is a very we And Really, results, products, importantly, it short-term generally are products. prior the promotional the lot margin drove group then of read day-to-day, rates quarter that group but differentiated actually, in patterns of including was accordingly, very of We of make we XXXX, down customer the had any planning December a of through market where, investments timeframe November our out-performance combination we those increased and look in to about results. basis, promotional flat. in was what, into on our enter drag month promotional new down drive forward-looking that tests acceptance cadence, tests we to tests based On make that on on first change were and of a three results what to to because January, was discussed then capability, we a we up we our for about we very or year-over-year. flat diverse both communicated required for and quarters. get group slightly we're the on we what the actually our about what And we activity from in that based of rate quarter, results merchandise strategic as essentially aggregate, fourth both on in a And we ability maximize activity what ideas much activity may promotional in of and results promotionally is of higher a that order But activity merchandise stores and of the in running. basis, Sale really react long-term the promotional short-term AURs literally, see into those of standpoint,

in be Thanks. question would to and promotional So will we a relatively we forward long-winded your activity answer adjust on accordingly. of terms flat basis, expecting

Amie Preston

Thanks, Andrew.

please. question, Next

Operator

Baird. go comes question Altschwager line ahead. Mark Please next of from Your the with

Mark R. Altschwager

question. front, some key of Stuart, year? this you the just the taking about can for Thanks talk the morning. priorities investment on Good Great. digital

Stuart B. Burgdoerfer

a for platform. platform the the running lot a will digital thanks thing XXXX investments I but foundational. for a question give been do on the over been same to It important foundation we're And foundation that'll we've also years. that a time It's platform in can't, time a XXXX's lot of do core us in a for platform today, describe most significant what that be provide platform, that foundation Victoria's in is The – intensive for a that that. look updating the needs – the we'll we current making several is a long one, long Yes. and it running we're activity we're updated, with business Mark, I'll of the most a Secret of things But substantial business. to to call the doing standpoint do next will as we've is investment technology with for from present. provide process at the to global to that a Again, stuff it would with over do but time replace customer

Mark R. Altschwager

labor Thanks. about you've years, strategies the a mean, and Stuart, than the is it taking million goals this sales given year? I slower next And about $XXX digitally, that goal SG&A success follow-up talked reality over few reasonable just long on to and over but quick of time, still for current kind the you front the you've talked out the just shown grow there, of

Stuart B. Burgdoerfer

that but to of years get won't out investment turning years to expect which done, it depends through we Thanks. recognize it more how And to stable, think of it. – get very play several will you But on to take that, capable, we you're productivity will several but Brian and over after back of is lower question, question. productivity will get that timeframe, I say, workforce, take in it get to years which be investment. we your I next the gets several out a years, that couple to look going would focused the but through more numbers. Tunick's wait And we'll on

Mark R. Altschwager

Thank you.

Amie Preston

Thanks, Mark.

Next question, please.

Operator

comes Barclays. question Mallela Your from line Please of next with Chethan the ahead. go

Chethan Bhaskaran Mallela

investments about China million $XX XXXX. step losses expecting to the want down net been then in believe ask XXXX had a morning. I the you and Hi, had business. in good around of to in peak XXXX in the and loss I

that more how ICR, provide sizing, initial you at some that just that were resolved think I you detail little learnings mentioned so where year market, you is on this fully the an on can update thinking impact that product can quick EBIT that there for in just and and in stands? around And XXXX actual give a then you're a follow-up, as So about XXXX?

Amie Preston

Chethan. Thanks,

Stuart B. Burgdoerfer

Yeah.

So thanks question. the for

rents be number. it might things As to go had into our a better XXXX the to Again, will can predict be that's to their thought guidance, dynamics we the hard or slightly a hard result. in loss six bit of and But timing. XXXX current of long-term implicit terms to what's that but, in and we'll our it'll of to about terms and ago in in think similar view that that work get we'll as various it pre-opening amount China operating be in appreciate view relates to of investment XX We the same, here months the be to sit the our today, in in on market about the similar it There's and again, work that you is result. improved, it. lot XXXX, we improve And, a we that loss have XXXX. that in specific that's a potential hard

it that's of part the turn So question. financially on and are Martin where we over with to the it other

Martin Waters

stores, the was geographies, the on business Lingerie we two with so Yes. happening When just China, stores we get in different a started in sizing. with two what opened read deliberately, could we

would anticipated up As and customers' than realized hadn't opened, and anywhere other would near enough. in up of we Well, the you bras. we as parts that XX expect, the else particularly world distorted we merchandise come the soon customer as The than significantly shows we that smaller see smaller world, distorted we brand in anywhere we that accordingly. in

our same XX-band, we of Yes, question have we we is have now inventory. your that significantly most We size, the is representation have that. of and popular we in depth which have. in So choices XX-band have more resolved

in quarter, that with the of fourth in mentioned their or when I inventory brand they least So earlier smaller. five opened XX% at stores opened XX bra the

in color, strong. to are that. brand where in customer of the We've our and resolved being ability we've And of around confident also yes, made particularly So, red preferences color, additions we execute. different terms there yes, appeal remain

for thanks question. So the

Chethan Bhaskaran Mallela

thanks much. Perfect, so

Amie Preston

you. Thank Martin. Thanks,

Next question.

Operator

ahead. with line of Your comes Ike the Please Boruchow next question go Wells Fargo. from

Ike Boruchow

the better just other results? where specifically? could piecing to online Hi, going that China XXXX, should that And maybe you better, a two you done just the little talk then your follow-up back, keep I'm you taken another for business above-plan we of you've across morning. on the good bit in-house about take and of kind we pleased where of expect you business seeing guys have you busy, side, ago. hope opened? in you're on on the just Tmall step or about just you're thanks, hope out years top Martin, pieces Can business. when business I maybe flagships just maybe that, what revenue And the to China business, stores, have do growth just a the retail guess,

Martin Waters

talk rest Yeah. take the about are to. my asking colleagues the Thanks me of question. the call, the and could for around not table China I

three be There quick. business I'll China. are So the in relatively to components

in be, When second closed as the top who terrific significant from VSBA the across what grow the with across for job. improvement right. the as we've pleased the business they over is weren't very took the definitely just ownership so not to we coming potential business. were have that, about the but the of following the see standalone deals of years. spread we year in done first stores There we business And business country. partner some good VSBA for where stores, You're we've in significantly that the (XX:XX), performance, should on but stores did And comp China of performance a XX Beauty those our year, our in Valeron of seen widely

that's first part. So the

has has week-on-week, is now as rapidly. then this our own The which really seeing next-day Global, China.cn phases. directly from platforms adding store, with Tmall expect, been largest It we're Local, XX-day response business is to customers that the on through which good and is a shipping shipping time. as our Tmall all can well second lead day-on-day, really, three and from year, business the on which that. to part to is We the North a growth online We'll, be media might began than we very and morphed business, a site, Tmall so We site basis America been a to of site. direct more also, one social as growing

and modeling Tier data to And XX cities. another now, we'll earlier, X I see mall-based reach how the X part to significant the third with QX, at of growth enables the be growth of appeal Hong China, that. great that QX XXXX or is beyond And for of have terms we in stores business feet of we're to do own enhance I all stores, sizing So, market, of it course, learning add are there three a in in mentioned Shanghai, the the right for major Beijing, you And smaller enough X,XXX plan in significant customer us then X,XXX XX. where We'll in XXXX, corner sort flagships gives the your square we think then the see. in Kong, make open probably read not active. Tier is And of and business. anchored about presence then what assortment and currently full online. the five every geographies to where commitments which progress Victoria's of early the Chinese It for and year-over-year. of us through will wait we'll opening

Ike Boruchow

you. Thank

Amie Preston

Martin. Thanks,

Next question.

Operator

go of Please comes Oliver line Company. Chen from Your & Cowen the next with question ahead.

Oliver Chen

had and level? And you What the happen to use drive of Hi. to your an are of Jan. the night as day, question customer for with Good that? overnight What a of value retention that healthy brand-appropriate can there general ensure about a and lifetime is and can just analytics thoughts acquisition, direct that look recent interplay to terms be that to performance? utilization LB you laid there? how customer and Jan, analytics. what morning. in and I about also, are in with feeling that for and loyalty mail, solving the a matrix question, the you're just you And out second about context occasions, empower

Amie Preston

with Okay, Jan. let's start

Jan Singer

know to along question. with for in mentioned product, believe it Well, and then her with Oliver. her that. the that starts night, I'd the first products year, we part, Thanks then And Hi, as Okay. like the against always serving we there is overnight we've addition and Yeah. throughout part to her. sexy, customer, solving say, life. of her the solve do And a launched in day, the way,

side her business the great for re-launched So Illusion launch been new our us from a matter. last also night, day, has and and growth it It lot let's smoothing are bra. have there's It's wings great, the about star. think of business. comes in Angels high-fashion really and about highly-provocative In Dream response. has bra, year, August, of saw a we A week And brightness. the XX%, and real an we fiscal technology, this been a this just success at every fashion segment, do is of in if strong we book VS outerwear the everyday say, bras ago strapless the you and shining bras launch fashion, part, last plus in great moments really moment about in as seeped some

life, different in clearly baskets against Our do saw to for three highly sectors reasons. traction and consumer customers offset work that in. there collaboration We buying bras wardrobing new the space. business high last the seeing for holiday like promotional drove same in real bra this I'm I interest There's year with very But ASP with her that her all to unconstructed before. was coming

part the Stuart. Second turn question, it of I'll to

Stuart B. Burgdoerfer

an it's Yes. obviously, Oliver, important just Thanks, to Jan. broadly, On loyalty and analytics, cover subject. it

and agenda, brands a thoughts, big we're With investments is one experiences that. loyalty, space. utility and As and and machine consumer in to people made meaningful great to discrete is and analytical do, online. in making the on that from capabilities, of a getting making everyone foremost, first our three loyalty, has main our with information out technology business in of our progress and company, Brands And behavior, and Obviously, that I'd a customer learning, to comes about more some on we're big stores focused investment, in we're investment, making respect L say that. data, lot behavior, business probably is but deepen lot

As a but beyond you know, another Victoria's, programs customer we're what PINK to specific to very look following nothing through do, Card as on what Bath today, as And are Thanks. communication. those investing may loyalty priorities a meaningful big like Victoria's. today a experiences. example great Angel tender XXXX, within sorting Angel & PINK activity the But about, great XXXX announce about has component will second thinking as on all thought. detail that Body evaluating, us XXXX loyalty a Nation, for But loyalty a of no a thought, and that, to it, Denise or there's to there's But in in in do. of XXXX. and at portion subject. third but Victoria's Again, specific announcements have more out capabilities, focused Cards for more and be has and

Oliver Chen

you. Thank Thanks much. very

Amie Preston

Thanks, Oliver.

have questions. We more two for time

Operator

line next Janet Research. Our of come question will Kloppenburg the from with go JJK Please ahead.

Janet J. Kloppenburg

you. your in there business you I'm Jan, at turn of Good being a when most your times Secret, Thank And, and the review look maybe on Victoria's Denise, in how PINK? to able could morning, and comment you learnings the and and as wondering a trends what short initiatives successful forward. can in confidence business about Jan. logo are little capitalize for perhaps your a question talk have around we for order you that everyone. traffic-driving the bit Denise I on fashion lead

Amie Preston

Denise. Thanks, Janet. We'll start with

Denise Landman

opportunities to respect is would efficiently two three to our worked looking our own operate lead on say, manufacturing within faster doing partnerships in-region that behalf. I (XX:XX) as would our with So enable with then we've one the that last model over, respect work influence, to facilitate systematically I work simplify upstream would decision-making lead sector; for what the on the times, of to five years speed more to our refer through sphere effective things within equally, times:

always. however, logo, logomania. brand of happen of hallmark we improvement. a deference And better. pays in speed We, always to the the avail we logo It opportunity respect year make those So slow We trend to With resides cornerstone to make be the continues that be business, some see logo our that and opportunities a the success. as to been our has every think to opportunity brand. steady of known I ourselves in as

full a the our particular point, very interest always integrity that might, own as of logo meaningful. reference take of we market the we and preserving So been freely sector important as in has as advantage which

Amie Preston

Jan? Thanks. Great.

Jan Singer

building consumer for from and it would traffic the Thanks Sure. from asked, on product, say customer what I comes Oliver great insights insights. with comes just starts, and great foremost, first question. which great

important we're reward depending way that connection on shopping our those thoughtful vehicle, drive a moment, product, and started that confident the and with have that us. is, program. against her time next or but the obviously. book product And in to with So a to then, The connects, we approach surprise the part we build thing that. for really loyals. being business, really building. the important very consumer, really and emotionally loyal we're do to that's then, great we media has also engagement and assortment traction the course, many we our we engagement agile of traffic. and we her starts into build on a of way be is shopping, feel we about we seeing get thing, just of ways, customer, when depending see exposure with thank different That of building And recently customers then we aware it we that the our a with social with When traffic engagement. awareness because for delight that is she And reward do And for on what that are most her existing her as as dialogue really emails. We're to well that

Janet J. Kloppenburg

So...

Amie Preston

go Jan. ahead. Janet, Great. Thanks,

Janet J. Kloppenburg

seems that just be and the rewarded I'm Yeah, to traffic. wondering. I wanted ask really to is drives what wants she it just discounting Jan, customer the

to and confidence start to that in margin her you continues better, do have a product great, think the and of that bit? level to hits it or get rewarding discounting do can As I looks come

Jan Singer

early discounting, Denise access fashion Yeah, reward mentioned, There think from many many giving engagement like wants our is show us. with her are and have ways to has I to customers. content rewarding she proven, things to her, your are do right. don't that there Stuart Nation, online, for with ways really just it. a Simple PINK

customer, the ways of many question. I We much but for to reward broader in have so rewarding the think a spectrum, you thank

Janet J. Kloppenburg

you. Thank

Amie Preston

question, please. Last Janet. Thanks,

Operator

the will question Roxanne Our Partners. with ahead. Please of final MKM line from go come Meyer

Roxanne Meyer

the taking that you know for PINK, about big it my workers, the balance wondering question in of how looking satisfied years lot. I out for know see business, a full-time last balance on you and wondering the the optimized? opportunity? and is you Greg. And the you're now Thanks follow-up you full-time of are just that Great, wages how And My that you spent getting think at question. the if do And that I'm launched productivity thanks I Is versus a Beauty couple how is and of just then investing that part-time. your you're workers. that for? just with

Greg Unis

to with connecting for stores of February. time very our Yeah, in assortment. the beginning question. evolve spent a thank of customer We're relaunched you the PINK. lot the about our excited at It We

have we connection tailoring to early through We reads a customer and The spent deep are assortment our of PINK lot with strong. and so campus very her a the getting appropriately. time reps, know the

into our in driving in after well, holiday with items around bigger We in and store. the that quite started stores. online of much it see can traffic it. some key really in excitement sold You QX were PINK and Lots going way a

business overall And early future. see It's the in us, we're it's we very big very for opportunity an days. but pleased. recognize, So underdeveloped

Stuart B. Burgdoerfer

full-time with we're it's progress it's whatever per to made force a how intuitive. day that associates they're the complements can business more would with try to sales that Roxanne, as customer. within and that to the we on in I assortment, With week appreciate. that do patterns, day. you have said, opportunity. And the part-time week pretty stores, respect complicated, and more Stuart. possible manage have what That's five even business, a trying a so our is With say, traffic and Fundamentally, hours given we've that has work different familiar we said,

figure you've got that know we deal got optimize. and a variable pattern you traffic with And how also out to to pretty so

that the make continuing reducing possible the other sales well which that I'd hours because on made stores sense the many as on in the in turnover to progress. a So that And have as again focused say on, part, is have store, work working to Thanks. initiative we've merchandise, customer. benefits, people we're the more to are with key and as we're familiarity they'll better drives, And goal changes consistent have wages knowledgeable our force. economically, as

Amie Preston

Thanks, Stuart. thanks, And Roxanne.

Amie Preston

Thank us you your all thank for L for today, interest Brands. continuing in you and joining

Operator

you Ladies for all and you Thank disconnect. gentlemen, this now and concludes today's joining, may conference.