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Bath & Body Works (BBWI)

Participants
Amie Preston Chief IR Officer
Martin Waters CEO and President
Stuart Burgdoerfer EVP and CFO
Denise Landman CEO, PINK
Jan Singer CEO, Victoria's Secret Lingerie
Greg Unis CEO, Victoria's Secret Beauty
Nick Coe CEO, Bath & Body Works
Mark Altschwager Baird
Oliver Chen Cowen and Company
Paul Trussell Deutsche Bank
Kimberly Greenberger Morgan Stanley
Paul Lejuez Citi
Brian Tunick RBC Capital Markets
Ike Boruchow Wells Fargo
Chethan Mallela Barclays
Michael Binetti Credit Suisse
Roxanne Meyer MKM Partners
Jamie Merriman Bernstein
Marni Shapiro Retail Tracker
Susan Anderson B. Riley FBR
Simeon Siegel Nomura Instinet
Janet Kloppenburg JJK Research
Call transcript
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Operator

Good morning. My name is Shelbey, and I'll be your conference operator today. At this time, I would like to welcome everyone to the L Brands Second Quarter 2018 Earnings Conference Call. I would 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, Thank conference everyone, call second earnings ending for Brands' XXXX. you. and the August 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.

of quarter available CFO; www.lb.com. CEO website EVP and and Secret on Denise International Jan joining of earnings CEO Victoria's Stuart Beauty; additional PINK; are CEO CEO Bath and commentary Unis, us today. Victoria's release, second & Greg our Our earnings Body are of Landman, CEO Works; presentation Lingerie; Secret Waters, all Coe, Burgdoerfer, Martin Singer, of Nick

know, year. you As was a XXXX XX-week

discussed for are a calendar quarter XX, a X, now All I'll X, of the period turn quarter sales the XXXX. Thanks. on XXXX the And versus dollars, XXXX results this reported over Comparable on Stuart. in margin versus to basis comparable August it for income and X, ending are July XXXX. August sales commentary ending August operating

Stuart Burgdoerfer

everyone. good Amie, morning, and Thanks,

PINK weak with very at at performance second to Our by & we satisfied and Secret. Body Bath and share earnings results are as Victoria's Works I'm at impact towards the $X.XX Secret our $X.XX lower improving rate. an forecasted higher of focused strong our Victoria's Beauty of delivered about performance per tax result a Absent $X.XX the offset range end Secret Victoria's from favorable this benefited and on not and earnings Lingerie. of guidance the quarter initial earnings rate, result exceeded than per $X.XX of tax share

previous earnings the to PINK. yesterday $X in driven the reducing are a to per $X.XX by principally from per forecast our commentary $X.XX afternoon, in we As to share deceleration detailed $X.XX for share year released our

of approximately reductions the to and expense I'll that for $XXX as workforce turn identified the wages million. incremental discussion as benefits announced our investment includes in hourly With well guidance over Our previously Denise.

Denise Landman

you, Thank Stuart.

in We some points quarter. mid towards two business. end range lingerie to decreased with were to are quarter. and the of the PINK single-digit declines the Friday in also comps performance we which began impact second continues by for Turning exiting Swim PINK of floor negatively an the merchandise Comps Total segments in of loungewear the unfavorable. set, explosive margins the introduction comp the new event. moderating enabling QX saw

been CEO sport businesses the lounge incredibly In from adjustments of assortment. and Although, with the we as that time for is apparel, The of an a make reads Amy Amy, and closing, retire back-to-school by since frame me and personal it part to PINK such time privilege such the PINK nearly organization's that day. inception creativity, I'm to to floor-set commitment more and join journey strong to of but Merchandising share an represents President inspires talent, been for models plan of seen BBW October lead will its brand remain that to spend L thing a agility and of and and and the my It's PINK shared years. fleece right every thinking XX Brand easy go-forward Hauk, our as Brands pleased incredible surrounded it feel Development to at be enterprise. lead I PINK I'll business speed have particularly you. for to I deep roots night and understanding has have turn decision benefits PINK. the has bras for year. family. us well you and strong to merchant to fortunate Thank end segments I experienced product leverage nearly to X. I This not a last it's know Amy we my our be taking the our positioned emerging all And soft. will and respect rapid embellished outerwear in enabling critical for business important a an of the I believe as over good part hands Amy and me decision, the been to decade, organization. Jan. of BBW With have will great is

Jan Singer

Thanks Denise.

Again, positive adjacent back added critical the we've are growth Unis. gap do we've assortment forward. with in bra particularly sleep mid-single-digits made I do and business. to now creating read AUR and plan. growth the We remain margin to have new we learnings over profitability. categories to for beat loyals quarter. flow As confident more while close like T-shirt these in panty progress this changes to to attach consecutive increases you and highest book working key categories we Speed the progress handing you franchises And our back Greg as and morning. Thank value we fashion and still bra channel double-digit with balanced of see constructed to created with and signs its agility have Total fashion and of key on third and new more increases. taken sales leveraging bras of fewer are to and are for in spaces, building continued are building to see to more customers. deliver meet in frequently high also in Illusion after frames on us and our a one benefit that continues and accretive. I'm in very as the three progress joining sales dual It's the the seeing long-term going it and these pre-circulated fueling price it is to in what's up what's XXXX, are focused materials accelerate bras. gap critical

Greg Unis

Jan. you, Thank

fifth coming As of from stores positive a range, from growth the strong remarks, strong platforms. our high-teens both and saw and Beauty consecutive priorities. quarter, comps second you read quarter in in the quarter Throughout sales our comps. saw the digital prepared declared the in we business QX marked our with margin performance

his supports Today our limited scent fueling of while accessories, Specifically, and we to an test get out collection strong and very of we focus has launched excited to in Beauty to relaunched new product. presentations in invest drove edition season QX very to business. and and continue delivering In an new And results spring, our store we in results model growth our Seduction we franchise, make QX launching were Mist our strong expansion beauty of the joining category continued this the the stores in to Teese, online a on what bigger even the in are July fragrance, to Thank and optimistic. our we the momentum the successful in will are continued important Coe number Overall PINK our to number Teese will through now Nick more also Bombshell delivered business fragrance things PINK relaunch share overall and the we Bombshell our store Beauty newness and that drove collections with edgy Look remain business, fragrance look XXXX. our August. iconic remainder growth one we business. build thoughts. growth top it Teese even the Bombshell, is our and our Teese. customer. part fragrance The month We of scent hand trend July, which and In growth this the customer double-digit our as Teese we end franchise season for formats, with successfully pleased for optimistic in more for At Summer. Rebel an fashion, into throughout of Throughout country. exciting you remain updated and about morning. new two also confident Bombshell sister becomes we in for our of of our holiday over loves. the and when I to

Nick Coe

Thanks everyone. morning Greg and good

First, and initiatives These the second and investments the by that's drive stores. but our efforts about momentum our progress quarter. creating moving and we've cycle of overall and Sales our optimistic occupancy life cycle in are the in very which our income to business. of product our the pleased the fleets in half our will the had not of success. end XXXX, focus focus the the and to in product experience second comments Works investments. we quarter with in continue setting distribution year's made those In store see healthy the pleased from forward direct negatives XXXX SG&A from led product QX top great And operating Those in making quarter businesses channels I'm grew with we successes continued and business estate up are initiatives they trajectory. creating that remodels & undertook of on are by and we us growth record buying and younger wage with our growth QX Body pleased in to Investments driving to we summary at reinvent for are let results. and me that and to managements at are in both in real coupled True back us and X% on positively life to third my quarter expense our clearly continue results. say grew pressure are our XX% brand last building capabilities pressure associates, are Bath the potential.

our are turn trend and great over we is Thank business delivering positive conversation And to the focused I'll Our you. customers. to Martin. now assortments to

Martin Waters

Thanks morning Nick. Good everyone.

on a level the look three in our I'd international make business' performance at observations. second I back As quarter high

doing sales and First, VSFA VSBA growth. the good BBW, businesses and well with operating income all are franchise

we believe to - invest in for Secondly, China we continue market which us. will

ago. We in the build including stores the flagship continuing Thanks the quarter finally, our on you be U.K. continue continues over joined to more in a stores new challenged. store priorities had our additional the success direct And second consumer be of the strong China the work our We opened Hong to in U.K. growth around there of we experience improving scale Amie. who month business in and continuing to partner to full balance and three In of performance the continue Kong. XXXX business world. to leader under and business to to a do a the in to assortment

Amie Preston

to comments. have. this prepared our be At might questions concludes That happy time any Martin. we'd take Thanks you

others to reminder one time turn operator. I'll the and yourself Just a to the over back limit And interest it Thanks. consideration of in to question. please

Operator

first Our question Altschwager Baird. Instructions] [Operator comes of Mark from

Mark Altschwager

trends I'm suggest problem maybe that divergence the traffic teens curious Lingerie. activity between you discussed comps a of with VS to I that but increased isn't drive VS about would the promotional high and traffic Beauty beauty the And stores. in in big

And then the across holiday any we over that? thoughts driving So drive indexed acceptance product assortment? just what's as head how any beauty Thanks does better broader color you on on there season transactions where into the leverage the to

Amie Preston

Thanks Mark. Greg. start We'll with

Greg Unis

talking about Yes. from what's on testing We've our working has in been stemming really beauty strategy and learning. been

to and with able We are things model the really have supply at a ultimately achieve speed on from behind in. bigger center. the store and into it's and our And focused it's the tremendous really come Ultimately, tremendous the chain customer us brand working fewer focus ideas. that

that's basket In strong and lingerie a is a point. strategic is we're brand is combined a terms for of finding increasingly us which of beauty integration the what buying customer really

and stores, for integrated you'll we our so been as together. experience. total are work see categories more lingerie And who've and two like more a together the shopping those And in beauty how that people

Amie Preston

any Jan you Greg. thoughts? Thanks have

Jan Singer

should Sure, is I great a Beauty broad. the category beautifully as is little been very be lingerie and a right for I would bit. assortment say - it's has getting the in just and very - reset traction. and reasons focused that

great I the think franchise. In together. we resetting lingerie, with awareness on And that happening. things We all create Greg are promote the by together. seeing the pleased franchise progress really We are bundling is that together is resetting. saying progress. we we're We're that what is

customers back building now. brand The businesses. different We that's with high that that. one value really are working fragrances who the differentiation particular about and is buy We feel in bras our we're us two work good right

Operator

comes next Oliver Chen of Your question Cowen Company. from and

Oliver Chen

bras at lingerie Our business question relative to opportunities at PINK. the the is the VS about helping us contrast opportunity at

us should nature help possible understanding and timing curious you. those what issues of Just in would customer going we expect Thank reception two the forward. illuminate what's about

Amie Preston

question. your at So to of about we Oliver, PINK? asking lingerie want I make performance versus understand sure Are you bras

Oliver Chen

that helping the and sort would Yes. of help and bra of at also supply the just about I us timing contrast demand was opportunity and versus curious the that nature it would of and the PINK opportunity and better lingerie how understanding those VS a us contrast if and against you sense get understand opportunity.

Denise Landman

coming with in VS speaking incursion have and very different that PINK about. bra the sport Lingerie we business drives two say bra relatively to over certainly around found the historically to has would PINK are - been levels we That that higher the is hard our leverage into be to which is. which Denise the successes are business lingerie penetration I - PINK from we excited recent underdeveloped business past years category completely expand this a than business is not continue as the places. centered upon our but the and they've several work

the architecture assortment ways to speaking of to that to different start seeks differentiate So do population vantage and of that both very secondarily itself are and acknowledged in to itself the that I speaking centric we sets different from customers. core we we're customers very we're message points. two think

So evolved question, has hope it starting I've and the versus I point to accurately. answered that how central I are product differentiation, your fairly our business think, Lingerie's

Oliver Chen

you how side, more where PINK can on PINK. fix And timing, as and should do focus the what happened on you we quickly Just directly think on guess here? I and simply it?

Greg Unis

fix the I bralette the as has you core the the base been an future. way inroads the developing working business into and word. bra as that there as consider baseline aware that have in I our reference Everywhere mentioned line been an of brand's business our Sport made strongly be ability Wear to both what is through point residual volume know into just don't And might to category we're the adjacency. that bra lens don't I essential We've to be through. of in impediment grow right

Oliver Chen

That’s Thank you. helpful.

Amie Preston

anything have add on? you do Jan,

Jan Singer

business I the of it. I percentage think of Denise bras said mean different. most are our in

Our cost is different.

different center. really is down And are who customer to - very Our we the at from pricing comes place customer of product really come - you're inside all is it she a if different.

Oliver So I more unless cover questions. think Denise has

Operator

Trussell next Deutsche Paul Your from question Bank. of comes

Paul Trussell

where of wanted particular us some on And about process PINK I’m August in to there color commentary bit compare or can a just slowdown. help understand the just get if a was thought also additional you little the year is continued and in turn not just given the XQ, you. BBW. in just comps expected comps more around low-single-digit difficult strength VS at versus two the there Thank whether of an the

Amie Preston

for Stuart Paul. to go We'll that Thanks.

Stuart Burgdoerfer

in pieces Paul for is with Brands and Brands, consistent the recent L So respect pretty August and the QX major results. of L with to August total running

versus quarter results, assumptions So are our and continuing in and would to a the guidance But results. results, consistent as our third August to do result year and the Thanks. to With overall recent respect consistent dollars. with is is is implicit assumptions we're comment, fourth date that the in hard assuming working in respect modeling to suggest both balance or year-on-year dollar that Obviously quarter are than pattern generally margin that's comps consistent of better actual an recent results. with sales pretty recent team with the margin results both that. again

Paul Trussell

And then a follow-up bit Maybe picture on big just that. Denise. for more a

customer of to Victoria's what is from responding trends? on And young merchandise a the competition congrats curious and and PINK that digital. state to what retirement, extent your and the all and you and tenure industry of and view Secret those really impact how there your your And marketing just but top just of I'm standpoint? meaningful best given on on First also is the millennial wishes view of the is

Denise Landman

work mentioned answer Friday an very celebratory can. Denise. think I in as constituency. is It's to question ability is earlier, extensive with I I anyone the do nor had, lost our which consumers effectively. conversation. in that how of We best PINK things I the exuberance issue the for point and think PINK. this in connect mind we the or PINK brand The these from has edified drive and for as that excitement the celebratory well that feel in competing of all the And create customers a has not moment we're around believes folks we're I mix I'll moments. to when my view market, our in competing product explosive distinctly do think me room its So moment effectively this that core fairly

is of we healthy is delaying what a would continue to to on very my believe the a which in into benefit to I wear to business there fleece market as the which many answer if for can recent many, sectors is, from. performance now - cases product I distinct a mentioned, I much some in mind our mindset cases believe fleece and reflected we you some times. buy buy her in that's seasonally mindset due there I can emerging appropriate a think very of you inclination in ahead think consumer has now the of that are and of is And top business are, question. give true that expensive we But market

Operator

comes next Stanley. from Morgan Greenberger Kimberly question of Your

Kimberly Greenberger

at My here I last inventory I for for four flattish. three growing question quarters. basis down But ask or inventory than are on is a Stuart sales basis sales the flattish. about which has on Stuart. to wanted more faster a know is been that two-year two-year looked And not

to inventory basis, wondering well running and that a sales. are you if if could or been still on the that there at outside investments just inventory some really of both way strategies we're philosophical causing just these a I'm look want of of a inventory kind of manage sales that change And the aware in we inventory there's insight would we'd if that entering maybe conversation sort two-year if ahead find So you are on add some you to other make some helpful. of that there the be are not

Stuart Burgdoerfer

a big five make. important Four It's I subject points to subject. want of

expecting season, expect a to flat to lower so in of the that where where up maybe we we is fall fall single-digit up first we're that's first end to terms point. little season end than low The and single-digit expect the season the to fall low end

sales be would point rate inventory of slower of Second than or turn. growing our the view at improve to sales

that around in belief more our I'll Victoria's philosophy, been challenging Lingerie dynamic it lot at with degree Our situation not a a bit PINK, change lingerie little Secret in situation of describe business given growth and of Obviously international has the changed. and manage. at it the movement to has and PINK and

a through a sales know done our aggressively clear that we've twice focused very are We to as and year you inventories consistently. seasonal semiannual

aspect to qualitatively So in not of addition quantitative all. has commitment our wavered the seasons ending clean inventory at to

the variation sleep and channel bit the at and which in we are manage for are digital remarks and and business Again Kimberly important as this We described making in more it. change I little and And the category there how important fundamentally, creates internationally for of quarters hasn't of in to look us in advance terms call, a important given the on But in of how investments for a fall. making Thanks. Victoria's doesn't lingerie. we think loungewear might are outcomes growth Jan view for sleep inventory. recent bit in that but PINK some we an we we We sales. lingerie it's launch seasons, making think little and changed the challenging investment view and investments pre-circulated comment as in on inventory this further our of investment

Operator

Lejuez Your of next question Paul comes Citi. from

Paul Lejuez

March basis that break over do for e-comm Stuart, feel maybe occupancy margins, much Victoria’s Thanks. SG&A to points that business sales, it or including you margin. a deleverage seems on to - How I'm the peak, that due foot, the margin productivity? EBIT $XXX curious, right about maybe a is of deleverage? what us? productivity you business is relative with XXXX can also sort VS And down of If lower peak of Secret for sales from

Martin Waters

believe of a in as at pricing we we've in our last a when for lot are believe years brand, Appreciate Secret the reasons over Paul. talked So question. and quality cetera It's at own high-teens look stores decline the like business when business We to power, a there competition pretty hard consistently that but should And we lot like over there say we're and performing demonstrated few running nature we of that Victoria's we our best business. the about digital, performance at and high easy It's this as operating best their And optimally view performing that to that. they're be that. income when have on accomplish businesses et rate time. based history.

of in is In versus improvement meaningful business now the leverage. margin in both terms there opportunity ideal and where rates merchandise running expense is that level

a focused income as the reasons when this and footage what the and us appreciate to - a that and back that the But business things. of should to to on know expense income a wage Body out operating payroll of ideal by different Works rates and for macro years in Bath driven It's rate business. that is pulled and you over structure we've time. It'll Victoria's the XXXX healthy events, overnight. not to top period improved to the biggest for rate to stores relates the margin take achieving You in management EBIT that get we or going again, rate opportunity lot at of accomplish. of square XXXX base happen lots and both we've few team and got and that at consistently But drive is at steadily be sales real as productivity And is reasonable several the margin & look growth rates expenses over talked as about rates. profit volume and manage estate the length. discipline. continue healthy estate Secret We'll obvious most relates couple do a ago, result very to drive to to cost as and sales remain aren't Victoria's And opportunity today as We'll Thanks. on. the for healthy unit important that's economics this but biggest very around characteristics to the Victoria's as the what at and we continue the is we'll same look years at underlying that thing of The we team they cash is certainly they focused would years business have move the next - been with to part stores. and of real of of but at but forward flow big are strong operating a of and structure volume performance healthy, is but and

Operator

Your RBC next Markets. question comes from Brian Capital Tunick of

Brian Tunick

could marketing, environment think the in about in are your that changes store the whether I rate embedded hear your wanted what product, little help about Maybe And Thank more initiatives QX. fourth stabilize on gross QX Stuart in comfort thinking margin talk to maybe quarter guidance. QX guess, of about you're you versus some biggest maybe I if your you a business Jan, much. could you very about how its talk will guidance.

Stuart Burgdoerfer

relatively views vendor the the and range fourth basis the a quarter partners our in quarter. the from stretch realize some we management of. the our heroic work you margin - some lot third fourth that we outsourcing and gone either third describe fourth but unrealistic wouldn't apart done quarter, obviously, the quarter results range with or we'll you're a of with that on margin are the out multi-year out the around and has would Brian, rate as couple rates the asking So part spent benefit quarter. about realistic for at business. I And or get consistent assumptions One appropriate looking to a that I that margin rate any of an in have dollars the of Obviously is time fourth believe believes I basis. put for year-on-year a outcomes. the business inputs of remind benefit the that will recent of

a put be model that should well. feel execute we we So achievable that we if sure out

Jan Singer

Yes.

as always critical quarter fourth is T-shirt few we specifically about So launches Brian, bra right? do have and we asked fourth a you Dream. quarter in So around what

and working And for attaching even the and categories been course, that sports important the casual us. adjacent panty Of a has sleep the something the on is of the is adding fashion all like driver investment lounge comps bras and sleep and year. usual Stuart business is what sleep really important business we've been earlier, hitter mentioned the really that growth to heavy category lounge had has side But double-digit high time. really It's really categories It's the an existing week-on-week. of building core of to up the we good customer And who's customer adjacent a have profile of back value the do and what as they part to XX% of about the feel in as high frequently. business. as bringing XX% time coming a of the new We more over the big us back customer well.

Brian Tunick

And could just… if I

Amie Preston

Brian. ahead, Go

Brian Tunick

there. out and seems be topic to it marketing a curious the just was messaging, I

curious that. the of Victoria's at the of message Thank at rest how today Jan versus to Secret and the marketing changes organization, they're making years you how you're much. couple the if and Just looking very last

Martin Waters

I’ve where we as I said, think be. to brand, need The not we're exactly

team management group. and been this driving traffic it's leadership a we and are we're into marketing that that decided transitions focus we had the results for. rigorously that we've However, a as And transactional all debated looking

Operator

of Your next question Ike comes from Wells Boruchow Fargo.

Ike Boruchow

you want business of you're answer the kind question. you VS Obviously what seeing gave think to dig is I Stuart much today. a So, Paul's than into to higher

investment. rethink a capture the I ask to how by brand did how I to like Fifth the you that I But view are where potentially even of you margins. kind think just VS a of is kind was to I larger had higher Bombstreet China what and and when you a about guess keep to hot flagship, the you the things some So the balancing of kind about line you Avenue guys level really fashion looking seeing wanted balancing brand, profitability what investment investments those with protecting back of of the versus at in show. partnering mean is pressure, declines curious the behind of today they at global And structure of margins I'm higher than just ongoing volume. cost profitability. investment spend brand lot kind top in were now from guess

Stuart Burgdoerfer

- Thanks in in It's business the emotional both and mean you than is for big experience what the what has done Secret with Victoria's at this question, Ike. from generate for that of it's Les that whether which merchandise, to business and Bath content. that running the make frankly it's pricing in design, it emotional at create and got XX power the be that have it investments, of And got store about with content I that that appreciate. the as the years customers. & got great over Body subject special it, to is Works to in a more cetera, the along unique merchandise et is emotional customers different environment the sold creates to be emotion the products you content, marketing

Obviously adjust. a of that. that historically are in obvious fundamental in and so know is paid periodically. vision we involved investments that some investment. business We recent make you also looking on of generally as are work. more So investments at it And short challenging and value the created question getting look intense intuition those our return and what with having business are the myself, getting business those We that And the range getting terms investments whether that work in speaking why asking other test or I is we things - intensely, Oftentimes range understand were be have types about. shift a and are at that's evaluating that described some whether on decisions to you're of are the examples the about in paid to we're again for we the range would question is would aren't big cycle can of Les there's sure is Obviously about other this can. wanted for of them a expect. where the we and philosophy we lot relatively given the you're just leaders I that asking of for on evaluating versus not. debate you all wide evaluating had But of business. business, how things industries you're greatest investments the we judgment paid based results but or the you just able the Obviously regularly, think in really

we are So than & came things we program China the different an sales the design we could really you and up profit. where opened example. remodel stores incremental Or on take we're iterations that Bath a Body drove now in smaller as like opening stores that before store tried several Works that initial

things would those So right the big iteration subject often call multi-year those business. we in but exactly those all things evaluation that of gotten nature learning to I rigorous and you think the I and listening to testing as always running requires haven't adjusting, Thanks. assure get want part

Operator

next Mallela comes of Chethan from Your question Barclays.

Chethan Mallela

think has quarters the time was I that still years. couple comp couple the time of business past notable. for double-digit growth been strong a acceleration in the level BBW the over at has first XQ of been comp but in some And

of what's in just better So think kind how a How is rate industry growth responsible about you do over primarily idiosyncratic And that general? the trend? frame kind for backdrop for improved the can of you business just versus much the midterm?

Amie Preston

Nick. to go We'll Sure.

NickCoe

see home. first categories categories as beauty good industry for very so feel in part question of we're that the thing dynamic So is the can think, they us. we about that's the And in and being being in positive are the you I a in

in the took latter on in where we're XXXX part the and has really product would reposition the Secondly, a trying we of healthy of manifested in the to lot during I a as I had of comments and comp. the XXXX work that that investing products opening amount our itself of we say majority mentioned and that

part and we so of still programs to QX, the of we've latter into XXXX post that we roll we see continued can continue As QX grow. - XXXX business QX continually out October trajection seen the products from to out grow

we've it's that to learning forward, customer we're we more refine performance the maintenance can about going assortments hopefully So look continuing of comp , and stay close the what in we reflect on market current to continue the think, and got. as as what's to I us as to the

Operator

of The next question Michael comes from Binetti Credit Suisse.

Michael Binetti

specifically. referring the picture customer a focus Jan, gap they just discuss May commented the on today, the customer your on quite to back how can a dual customer. also in little metrics that think, you channel building of to but rebuilding marry customer for remind you around few I valuable us file briefly mentioned two relative bit the bit book. what of I some a when you the you last how think, those quarters, to are be bigger channel a and strong dual franchise total I customers you're mentioned and comments with wondering was if

Jan Singer

The the customer. the customer back short same the value building the high file dual is refers answer to channel commentary

Michael Binetti

is plan White be KPIs Nick, the maybe to the example might at and of you some how doors I us measure offer you from reminds if able Barn of remodels. those give are - progressing one you look can relative to any of with to help of goals before. the to us Could sneak just numerical with in mentioned the reorient your you kind rollout

NickCoe

took And the on activity in the that performance and I activity. think real of estate real estate existing part new our we

year we to in stop look second very agility those we continue we very lift are the being really down that or at want and to that in What the so what in if continued of real diligently to growth third the So first pace performance investments reiterate two results I that nice that and we're very, KPI read first kind is into the we in ever three. now and agility the is seeing the making able continue a terrific stores. of terms and year year have see year to in we that slows And slow of the have we that and pace.

doing north we'll well year end return into be the years of the go a on we see like. continue we of that investment and to of by this as a Now number of XXX we and

to But for continue so if to broaden feel And that. the happening we moment agility the like we have do not that's we'll invest.

So performance ours. a evaluating of is high that continually priority

Michael Binetti

to moderate guys think CapEx sneak the you the results down how a you've despite variances yield few times steady I very remained operating you along capital in approach you've the a your to help plans? I the coming in in holding about this the hard in way in of but high of operating could contrast some committed seen deployment have very, you dividend us know one the can very worked I below year. Stuart think

Stuart Burgdoerfer

management for subject Important obviously, high. at of The regularly important source payout high. ratio yield very Obviously return the look it shareholders. does. is is abnormally We

conversations conversations results quarter, it We with cash have at our we're our the lot dividend of should have with appropriate have today Obviously earnings that our we fourth comfortable obviously have be looked as that. this we coming importantly But regularly. support a board. with we and into holiday to do. to free periodically cash the but the more and about it's comfortable flow something We're insight

is with that relationships deal and expectations our a our with we're way dividend one earnings the yields price lagged to last drive said that's increase what payout in will focused share ratio an to has obviously get in several like But over more to normal expect that obviously years. Earnings the We in the increases range. performance operating on. increase

this with will and it. a Thank what look continue rigorous we'll we So at continue. We're on it we it comfortable look That you. way. periodically to based point know in at at

Operator

comes from Meyer question next of Partners. Roxanne MKM Your

Roxanne Meyer

see right rapid also categories but evolving question of us - you've portfolio also Victoria's in into account the perhaps is an BBW taking how DTCs. the you update on about growth hand one stores PINK and some Secret My just number giving to and expanded seen

of if Thank So the what change your that on of size view number even stores you. store the should all does and the how be? at

Stuart Burgdoerfer

we I'll try pretty that as but our and in may take to consistently want in to others jump communications. about talked

The year about is ago managed the are register year, being you're forecast information that at managed. XXX a out my activity first showed point asking the more the actively is stores XX-year opening I'd our a really year. we we opened, and meeting publicly investor of a this more we closed where shared In memory XXX subject than we closing activity put that and stores it's actively we every there to want and a stores. than and over We slide period store

actively being So very it's managed.

Body They're high, is at grow & productivity as and a as sales to our they Works. be know ago. not as you were years continuing high As Victoria's few Bath high

the in example of we'll an America plays manage time, stores year-by-year be see with looking and open close said, this an malls is current with flow offering, said, We'll North have of our actively managed. in at strong Secret it that Bath profile to Victoria's continue business. out going schedule. going example You mall-based that within it happening not stores be But that, brand, unaware Body doing about it's very those how execution over about actively that. would very And very are know are to an again & strong Victoria's Secret overall in cash and is retailers so XX that strong. our and it would of and well version Beauty with that to strong profit our what's retailing of year, in we're our sense. three. own

doors understand estate and whether to or a all portfolio. as there's decisions and those based. and to performance. not. how some But real that's net investments evaluate as manage production. dynamics It's of function it actively cannibalization how managed, the sales We So we it's those obviously initial and actively we performance That's be things will close evaluate and transfer consider we the

for and it very strong experience important it. working big is So that responsible team a Thanks. we of within enterprise got lot have a the subject, with

Operator

Your next Jamie Bernstein. comes question from Merriman of

Jamie Merriman

Jan, I you. think this for question is

Body T-shirt that by that for of you one. year? initiatives is like other beyond the there I Victoria's the of relaunch? next relaunched big You are still year half you maybe into this a move And second that, legacy then will need Thanks. businesses as update think give Can products bra, us just of positively timing Illusion sense of like the you've some about bra. some for us Sexy talked pretty the and

Jan Singer

Well, update part each of portfolio. we continuously the

mentioned, bra. as up a as continue with sleep we about funnel this It's acquisition of see again saw and we're I mentioned, BBW as how to and in as excited the month franchise, we moving on not I very fashion. the seeing important We're sometimes long our back thoughtful again very which term in of and are manage adjacent it. but the engagement in fashion, about build and we're business the super success and acceleration new continuing new again important The bouncing really into goods, the sport the been you is panties, well categories business we existing it's portfolio But performance fall, relaunched innovation that's has the a So that and recently is sustainable mindful color the way. just if going that file and And to sport weekly. customer lounge superfast, will as deal. the we're

on what's docket. the that's So

Operator

question next Marni of Shapiro Tracker. Your Retail comes from

Marni Shapiro

maybe It PINK brands. over at or dig several Secret. little lounge the are there's season little next so Victoria's a Secret, two bit push bit little the a pull talk Victoria's Or a the last issues you business between gravitate you Could separate these do and customer it's and ever into the been seems and season looks seeing at one season, think PINK? Victoria's to which you Secret PINK? it's Are better

Jan Singer

different the I not business in in different way PINK different lounge business different is. we're silhouettes, that which free will for sure fabrication, is se the and per We're coat the content say fashion.

effort smaller lounge of a is much coat the part Our business.

it. in in and to are not PINK fleece I is am We will fleece way speak in that the Denise

I other. trading each So as them don't see off

to target again I Denise We you to purpose different handwriting add structure. and different end pricing want know very different that. if and different don't a have a consumer,

Denise Landman

the unlike that differentiated. not and discernibly Yes, agree I hopefully commentary bras specific to they're would

is business in our now fleece age which I of that affecting think pressure habits buy our the thing specific I rapidly buying are this attributed lounge some wear the is to of phenomenon under fairly minds would now, emphasize currently the our has cohort. segment to

contact requires. But the seasonality adjusting the and points, of accurate in relevant and consumer constant feedback just business then the lounge It's consumer we're get be category we're have And silhouette category insights points that a to velocity continues drive the that business appropriate based we quantities to reference to into the consumers fabric and overall I to from seasonally these with. be so that the reference on a college say age would interest.

Operator

next Your comes of FBR. from Susan question Anderson B. Riley

Susan Anderson

margins a new as guess the on been there's profit a business follow-up at space. in the VS pop-up the I lot of competitors

in reset the the guys still shift mix potentially are guess you do bar we've part of bralettes ticket been in And then mix terms think I a and which had So be? of are has where margins the and also these sports should lower margin. bras which lower

the reset also that does So business?

Martin Waters

they and high-teens different competitive of very which run their periods operate rate. is execution terms we earlier can't income they I'll in question. the I long than run of at Susan, there's And through on company just it Where rates. strong margin high-teen about structure but Their lot segments in over ones part of run is time sustained particularly, business a for jump heard in. a I this and of cost which and time, more a intensity retailing way you a portfolio of in our us admire operating have talk they they relates an started think strong of But to back set at that many of a very competition Inditex. periods

position. business think in better no of why competition degree to I we're trading of we're an I to sure stronger in back well much think think level ours environment a the executing categories which including sort And some for in that there's segment a I questions appropriately making when comparison competing. our PINK about some investments increased off that the again of vis-à-vis to might reason extremely example so there with relative much that's competitive be Secret about set Victoria's circumstances And operate the of we're and if in

we into at this we it's high get have we've rate more view when to little get really opportunity a before with our of in us And back potential a that got job teens to we're industry. there lot we're that so there realize and bit a the even of been we've again, well and running to get the which the competition

So my to may something that'd you have Jan take. be say.

Jan Singer

and about expansiveness the that that landscape I price online a of taken four result, mean push-up this offer the week-on-week. unbelievable I upon due the to in the portfolio. bras we've we second to say that in opening T-shirt was you're and balance. about brand so the builds mentioning an we which think An assortments continue to let's price price the It's be (inaudible) example originally thing bra bra see architecture important point choices for there's

every And deal an time definitely us speaks content to that putting it's will reselling bra. It's us franchise we pay the It interesting casual for that you're when it. bra look fashion adding phenomenon. out at keep out pay and landscape the on call of to continues a that talking even the fashion So most I to. consumers it bra work. Yet important more for styles on within starting we she we're BBW again and younger to with to

interesting moving is we are time but it on and it. an are top So of things

Operator

Instinet. Your Siegel of comes from Nomura Simeon next question

Simeon Siegel

much there how - to the And what of those relevant, is then Nick side-by-side I much currently? of stores new help shop-in-shop? And or any PINK margins of percent where where on added BBW how Stuart the the are comp? or Thanks. remodels guess, operate remodels

NickCoe

point majority get want that the we that investments tends of it. view and on actually into as shop-in-shop The would continue go-forward be to where to a

side-by-side we both, of the the the and much read happy answer. pretty but actually pretty we're said more we with from that and So manage customer is terms as how moment. them But fluid where and how the I on store earlier at that's we're will manage those continue the a investment in we tends shop-in-shop and efficient and probably both ability perspective be to shop-in-shop friendly more to operationally probably

Amie Preston

think meaningful I comp less contributor a And right? has I that not been think. to a than It's point

Stuart Burgdoerfer

But very healthy into We but healthy. at fine versus about detail somewhat they peak remain rates their down versus margins down comment remain are they're of healthy their margin PINK get they that Thanks. overall They're on detail. level but margin very by are - don't Simeon remain in - an peak healthy. very but rates.

Operator

Research. final question of JJK Janet Kloppenburg Your comes from

Janet Kloppenburg

Jan us has We've light in Denise, logo Can in and quick the to a Amy logo will about you and just has of the panties job is And PINK. talked if new questions maybe been a often talk remarkable fact introductions Thanks. direction think leadership lot. --brand businesses of and margin the PINK the for taught about at PINK welcome that Couple that some there working about bra necessary at And in can of universally? maybe who do the business logo. you talk strength, I also Congratulations Denise. for And there's sleepwear? updates for great

Denise Landman

collegial Yes. By referring business? local to you're our

Janet Kloppenburg

talking all about I’m products. No. logo the PINK

Denise Landman

of defines Sorry. our The literally Logo segment business it.

Janet Kloppenburg

know. I

Denise Landman

more increasing is brand with which And lately, experiencing brand well expensive a as validation engagement iconography. we're take as what of sign I

would you very discernible with dog So well. another familiar be the as selling point brand PINK reference

from with PINK, to more in consumer manipulated of met So expensive PINK the of rejection far not creative attachment logo, logo the inclusion myriad rate love iconography it. has and a ways

Amie Preston

Jan? And

Jan Singer

the your I’m one question. I just I more with Janet, time think thing. heard sorry. don't whole

Janet Kloppenburg

gains I in seeing of just working you that categories. those very well. in products new lot margin know are whether interested you're I'm have a

Victoria able new Sexy? category you by are in Very instance, And margins say, panty levels? the historical see you rather introductions, margins on the For let's back which to to quickly, turned comparable in Body bra to, are rebound the seeing or you legacy Thanks.

Jan Singer

in these in So but talking just with and levels about, that to where I sales historical book we new the a about panties line to business. the healthy is are Bra been items certainly day, talked businesses Same on back with exist speak of sales. didn't is but I we've margin tracking can't excited we're also the that. not and top line T-shirt because Illusion

Amie Preston

you Thank morning interest continuing L us Brands. and for your all for in this you. joining Thank

Operator

call. conference today's concludes This

disconnect. now may You