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Bath & Body Works (BBWI)

Participants
Stuart Burgdoerfer EVP and CFO
Amie Preston Chief IR Officer
Alexandra Walvis Goldman Sachs
Paul Lejuez Citi
Ike Boruchow Wells Fargo Securities
Drew North Robert W. Baird
Susan Anderson B. Riley FBR
Brian Tunick RBC Capital Markets
Jamie Merriman Bernstein
Kimberly Greenberger Morgan Stanley
Paul Trussell Deutsche Bank
Omar Saad Evercore ISI
William Reuter Bank of America Merrill Lynch
Ross Collins Cowen and Company
Adrienne Yih-Tennant Wolfe Research
Janet Kloppenburg JJK Research
Call transcript
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Operator

Good morning. My name is Heidi, and I will be your conference operator today. At this time, I would like to welcome everyone to the L Brands Third Quarter 2018 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, Thank conference everyone, call third earnings ending for Brands' XXXX. you. and the November period

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

quarter all Web our available earnings site, additional and commentary, release, third on Our earnings are presentation lb.com.

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

call are All XXXX results versus this the of XXXX Comparable XX-week X, the discussed the a for for and dollars, versus on ending calendar comparable XXXX. XXXX. X, a income operating on period quarter sales margin XX, sales November ended basis are November X, quarter period reported on ending October November

on adjusted quarter the business Bendel release. our comp results spread today related I’d call to charges the also the in results that year exclude store the all closure fourth the are to like press and to impairments full described Additionally, discussed sales of full and X commentary and Henri the EVP week CFO; negative the sales is and last the will week, in year. comp the our for yesterday to Burgdoerfer, today. extra spread extra and the fourth points call X to quarter handle excludes X points. the is Stuart Including in year the I and clarify

executing are now on in call Secret And and Lingerie the to focused and important period. Victoria's other leadership the you over know, we leaders transitions turn have As PINK businesses holiday I'll our Stuart. Thanks. the time

Stuart Burgdoerfer

good and Thanks, morning, everyone. Amie,

well. we Parts our Secret Works, Brands’ management & Bath released we commentary of very minded L the the are international Victoria's team about the in business; clear outlined As quarter business performing and afternoon, that third is franchise Beauty, are. very where Body yesterday

and business, businesses Senza, deleverage results close some the to We Henri unacceptable La Bendel the Secret committing core pursuing our and reducing decisions in in us However, Victoria's important alternatives our strengthen our the the term. including to decision declines driven and company made to Lingerie to for by enable our are and increase in overall our PINK. on dividend focus long quarter

Our number and one Lingerie Victoria's PINK. at improving Secret is priority performance

in new the Hauk and joining place us Amy Victoria’s Secret has Mehas leadership Tory early lead to joined will have John PINK XXXX the or come. from business Burch business. in Lingerie We to be

staying of over brand shareholders. and to fundamentals, executing close to and real of will business. committed most Everything our on a We’re the stakeholders; strategy, for full estate, structure associates our Thanks. customers importantly the is against our review positioning, leveraging we customers, our talent, strength By to you, deliver And assortments. the on our focusing our on merchandize brands, commitments Amie. table, the and cost marketing, including our

Amie Preston

be concludes comments. question. the That time Stuart. In to over back Thanks, we’d Heidi. one time, At it And and to to our this of interest take you to happy others, any questions prepared limit yourself turn have. please I’ll Thanks. consideration might

Operator

[Operator you. Thank Instructions].

go Please the question Alexandra ahead. Walvis Sachs. first with comes from of Goldman Your line

Alexandra Walvis

and taking for morning Good questions. thank you the

arrangement, of You you Could back what for footwear, swimwear, little might bit talk including you. us choice at categories a mentioned have Thank those you about some like? pursuing in before, via you looking example? bringing look the were that eyewear. the potentially Why that through been of that licensing

Stuart Burgdoerfer

be spring in follow-on entering in an also that commentary, things. boots, questions as XXXX. we’ll the about for fundamentally the to licensed be would Well, when back marketing And other and for businesses. already eyewear We’ve begun the swim in we’re we a business how shared those and have of be of some our reflects it’s much importantly, going business customers. decision the We’ll question. important in And and quantification XXXX. back and in listening circulated Sure. categories. a our Thanks selling specifically example, decision swim exited but Naturally, and other you to

nothing very important to businesses today. in licensing important more But share reenter We other through again, some approach. a to are developing decision and initiatives plans growth Thanks. our detail; a pursue

Amie Preston

Thanks, Alex.

please. question, Next

Operator

Certainly. Citi of line From Paul the please go with Lejuez ahead. Research,

Paul Lejuez

Hi. Thanks, guys.

is mentioned also if your side Les there on decision Victoria's the And Thanks. also the curious gets happening not spending I’m curious everything’s this How just before You the or putting And maybe if for time? on currently time. we is changes. on to about all Les to to today. John you’re we until Secret I’m his curious the be where table. spending some emphasis of wait your start work have see call now

Stuart Burgdoerfer

Sure.

of in that with announced. terms Paul, everything, taking fresh starts a So, at it we’ve hard just look decisions

decision and again and foremost opportunities most that circulated time, important this Secret even first in PINK is remarks John recently joining the Bendel results Board coming. is dividend the So match the on better addressing eliminating the businesses. in and a the business income, our as important important over But of and and outside new and Lingerie also resetting with we’re Leadership “everything.” and the PINK of non-core but Amy got decision. consistent about announced, aggregating million it of by losses importantly, as Victoria's most focused related – in consultation we with previously La do big critical. – annual operating long to shared already approved merchandize. to We’ve businesses; and operating business and part Senza remarks And the very The a $XX that does of thing mindset of a start the in advice the with the to morning, period can

evaluations and that the will but – looking understandably importantly is others if respectively. led them we’re time now or asking take You’re by led more table, everything Certainly things be than at Amy and of whether some be some of everything on some the these will will will of by wait. John,

opportunity, are fundamentally on the looking things happen Thanks. of depend the these But as will will timing we meaning importantly, scope, off not everything. nature is can the at overnight you and nothing table, look in at appreciate. all broad So will

Amie Preston

Les --

Stuart Burgdoerfer

good this a will the on Les Les lot spend call, the Street XXXX that first lead we’ve comfortable update. investor representing the form. and with in have critical Wall update company got a Les spends of time here and management team and with and an sometime and the in of be part community we’ll I certainly time investors

Amie Preston

Stuart. Paul. Thanks, Thanks,

Next question?

Operator

with go ahead. question Please Your Ike from next Fargo is Wells Boruchow Securities.

Ike Boruchow

focus begin Victoria's guess into get of there swim can bring there for in management stores? Victoria's ask you could be I kind against? Hi. which you’re larger Good to I know traffic some morning, improvement don’t the your everyone. a on where cadence I Thanks I a be, are you. about in grow kind and to where maybe general. versus how maybe and to my within markdown to talk question. but create inventory to should about But promotional or you in Maybe business and kind business maybe healthier as margins VS Stuart at history? today this, you guess you’re of attempting wanted AUR for rates back want back go ultimately maybe is may Secret taking of And rebase – this you merch just

Stuart Burgdoerfer

Ike. Thanks,

what the foremost, and margin obviously, to selling new price it it’s of full and delivered now periods Ike, her. I compelling, mean consistently for And it’s of well, Bath is had that’s margin is and strongest strong. response and quality rate rate the strength And customer has running & opportunity your So and in we’re And opportunities, deliver. the in where first terms the we’re very its fresh healthy and merchandize – performance offering example, improvement quality Body, starts delivering able for with what merchandize. we’re to when our by Victoria's is merchandize what also if that. businesses of margins its that

a respond paid for in get pressure rate to lot the in lot The clear really bling, a certainly inventory much investment on and in and with margin PINK so didn’t does which the that it PINK aggressively that to start lot third quarter an on the season margin connection the margin launched With rates impact product. part, a the respect deliberately quality we margin So big into investment. in were didn’t particularly put and the of what’s the our through inventory, overall in that way We and third And distortion rates now apparel respect we fall make of to with of customer that very a important embellishment of had the you the on on pressured quarter, hoped rate. a which for. we’d too the of markdowns merchandize. that business segment make to took we with going with

unit product as it. mentioned, cost drove addition, And up. for in investment paid that average In didn’t the again, I get our we

we a lot that. the rate So and going idea Amy as on the let’s clear very our let’s But let’s that, quickly has a when apparel summarizing the we fall it, risk adjust a saw in into season once view been adjusting we get embellished didn’t PINK was took assortment that and in as paid the business joining of about focused third the pressure bling quarter of can. margin since merchandize quickly as get possible. through for because it, as

But and we The but a it adjust the quickly substantially more goods, a through mindset lot quarter because on PINK’s margin into of AUC all pressure they a know, haven’t times As the third all of the that on put go inventory. sold through importantly, you rate. and them. have. fourth got moving bit those quarter pressure substantially to PINK all ending And short-lead will

in as business. of previously very Our Lingerie over time. to know to off, a on on And in growth driving and very Ike. the some management, leveraging All not. of been rate. of through of year the that pressure business a based I’d this in the commitment the merchandize, beginning business update, quality the drivers qualitatively and substantially on today which which assortment, the strong last years over is Thanks, you some XX does – our But made have is and developed that and of just our be committed focused inventory capabilities and paid mindset. has certainly margin position said, to those we’re inventory couple long we’ve to last Ike, it the get to are the We ending dollar back the years; place we with so some the investments the the quantitatively some period which come have speed that’d of in reiterating put good key indicated put rate

Ike Boruchow

Stuart. Thanks,

Amie Preston

Thanks, Ike.

Operator

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

Drew North

up Card all announced Folding the Do on we bigger changes benefit closure think This the actions you is should that EBIT a operating then North gross to Henri meaning to the the of asset La for go margin impairments on or for that far, Thanks up and about morning. you’ve as lapping Henri taking Thanks. the for businesses the reallocation a follow along losses the the Bendel, investments. stable build? Senza, SG&A question. away? Angel how the Drew as Is see wage Bendel Altschwager. next path year? Senza architecture Good you’re incremental with those La and a Mark that, margin And our potential margin fact on thus that

Stuart Burgdoerfer

provide Okay. you know, respect as views, we’ll in with Generally Drew. to February. detail XXXX about that Thanks,

achieve to get to going opportunity business. by on. and respect P&L said, segment that. and have 'XX income substantial expenses. the so decline rate and There question the not to income operating Victoria's meaningful rate view the both Secret of and be The margin to profit merchandize With operating in margin we’re of occupancy pressure significant of deleverage ahead there’s it rates part in timeframe ourselves rate, with been the will in that the takes that rate So SG&A a driven improve

In the earlier $XX that aggregate impact of terms on is that about Bendel of loss of an I impact, commented the million. elimination important the most

do aspects if question? that it’s Other for that February. guidance to as line, in the we breaks how material by detail for As XXXX we’ll

Amie Preston

No.

Stuart Burgdoerfer

business. Hopefully, merchandize close you. Drew, America the parts biggest North the work margin but to fresh decline in rate between to some expense of will Again, that’s peak, Victoria's real where terms is improvement obviously that that look versus operating helpful we quite But related equal deleverage. can our rationalizing income not pretty remarks. the on at rate in to and estate and we circulated with decline Volume a along structure solve Thanks. hard Secret cost alluded

Drew North

Understood. Thanks.

Operator

go line ahead. Riley of FBR. with the question from Please Susan comes B. Your next Anderson

Susan Anderson

Hi. if Have Thanks guess underperformance, taking then there that business the you seen was the international the morning. better? is intimates VS. particularly in guess seen I not, you’ve Good in have business driving for guess you you my perform about curious the same that the I And difference I international question. also what’s U.S.? think I to for

Stuart Burgdoerfer

short as The same to United we we’ve speaking have answer the Susan. markets your is Hi, intimates States. question respect to challenges seen generally international with in in business the seen the

challenges seen the we’ve the UK parts also in So played have in of the other States the Thanks. and world. through

Susan Anderson

Great. Thanks.

Operator

Please line question next go the of RBC. Your ahead. comes Tunick from Brian with

Brian Tunick

maybe, us to sense Great. brings table? the Obviously curious changes? little, you Board’s John maybe that at Thank the a from all leverage about can the cash are and might thinking share what the sort much. the you’re balance whether debt and Stuart, what give maybe the with looking maybe table? he’s after flow And pay given Jan morning. talk down? guess, a these before now ratio then just of guy sheet maybe any Thanks. free Why of I John to the you of right Good Stuart, Spanx equity the if but maybe what about shareholders get Nike, here brings us like secondly very context

Stuart Burgdoerfer

Sure.

for to us relates the a you’ve following industry long it time, as following John, been So for been Brian a time. long

the important was closely thoughtful these decision just is tried critical. the It’s considered as leadership how be And businesses. know very – both leadership Lingerie. You we merchant very management and in team and to for evaluated the here very PINK so

whether specifically, of He some successful He’s in of had John he’s He’s Gap closely. it and most the time a periods that days, at at leader. leaders most got to a Ralph accomplished you with will. strong he time the or hay those worked female if served retail periods is the very strong meaningful where of with for reputation with retail As the those customers successful very most industry in results their and in Lauren, businesses very was parts acumen. led in has summary, of in been business He’s in high of joining got John’s career. that He’s situations. pleased and a substantial and lot we’re involved Brian, John strong turnaround substance. his and got growth will formulaic very be very of adjusted the ratio, the the the for whether about business. Then Brian, Thanks. but we’re out dividend obviously gone with it’s it, sheet, respect historic have the balance not And ratios payout us. ratios, ranges the leverage to yield, worked

considered Board, so deliberately approved the again, and by important Board by dividend annually And we and with to the Board, to $X.XX reduce the from advice the $X.XX. decision an outside very made

But in in used the reduce our near dynamic up debt the about indicated as be will In and years. to the release cash of play that cash some this and we’ll up freed next freed the be that few obviously commentary with circulated in and principally cash our in commentary term. operating as will – terms out over of deliberate results do discussion what

with has again formulaic in But results to it’s as We’re it. mid-Xs, not and ratio reduce decision the decision in made more in operating to leverage declined an over the dividend. the March few the things reset the meaningfully those next beginning about a with risen years business important comfortable

long out to we’ve felt return you time cash shareholders, regular as some of the when a and made. how repurchase But to through that up to obviously shareholders history share dividends, back activity. and this to it make gets cash excess special to been adjustments appropriate combination of freed at I Thanks. dividends As has know

Operator

line ahead. comes Merriman of Bernstein. question Jamie with go from Please the next Your

Jamie Merriman

one in and there. the international estate release, real strategy much. was about Two very things the said Thanks you

we in you just strategy internal And about should Secret second look Thank So wondering if estate I like. filled reassessing talk what can changed? you expect you. internationally talked about your how that and for key much other so was wondering or Victoria's and you if flexibility with talent, then roles look to was of which you things one have I terms be there’s real the might

Stuart Burgdoerfer

foremost I a learning new we’ve our relates estate, and recent made stores, real opening company-owned it doing stores, markets stores had reduction size some of of for international to so results for the terms as in stores, first important number On the activity we’ve Victoria's smaller what think adjustments cetera, we’re substantial Secret, meaning et significant in time. this of and from at

first So point that’s the register. to want I’d

lease is, terms XX-year of typical existing real and terms, lease register appreciate States of in can do, longer for the example, The XX-year the are with thrust I’d UK think of we the the in to as your respect second I what more want question, tend Canada. internationally what the you practical estate? our question point are to lease be real United or And in Most versus is the the some options to terms. leases leases it’s

with So flexibility. we much we’re a it. said, at don’t to going look have hard take as that But

over We’ll hard that it’s real would reemphasize again, important of a activity, But also it management business. the several which as for and of in adjustments next continue stores the and look to we’d size China, relates some the months estate an smaller taking the reduction. at it. and stores reduction United that the is substantial of States, UK open, review made first I a the very We’re continue and Canada format new Victoria's further stores and opening part meaningful a important in Secret to in we CapEx with in the nature part

setting And about good. growth continue sales experience On Works return up we’ve customers. well because much if a consistently, XX next a in & mentioned environment very, stronger has years, we continue see you the the those to very for the with will, projects, flipside and for remodels the those Bath the of XX% of of relevant, consumer those business performance Body invest of we to the to terms in been And for respect fresh, compelling it, as projects projects.

in but of of again, So hard customers translating and some will lack Victoria's, a that there a Victoria's lease positive Body, sales term, adjustments a in at terms response at the of result strong through given & for look important to learning flexibility we take adjustments investment Bath and Thanks. continuation economic on based good it, for business. from

Amie Preston

just in the the changes referring Jamie, really the with in talent was portion John. Amy Victoria's to reference to Secret and leadership

Jamie Merriman

Thank Okay. you.

Stuart Burgdoerfer

you. Thank

Operator

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

Kimberly Greenberger

Thank much. ask mistakes that the traffic just to expect so would we of time. piece you remain one time to that Victoria's there Obviously, going driving those clear product I and through Stuart, Great. would mistakes at that’s But on hopefully lessen with Good it. morning. be the wanted and that about markdowns promotions promotions Secret. are will will over

a or so as then And those I’m On of Is you that wondering comp? the at you’re margin portfolio, merchandize what away are Thanks whether estate also you’re confidence evaluate a it that be away those particularly promos? from criteria much. traffic-driving what level you’ve great Is the to and deal that not looking certain eating got traffic? the of would to flexibility, real your give close Victoria's on the it U.S. step promos, stores? store for seems a level considering the Secret are certain store of that traffic-driving where in criteria to here

Stuart Burgdoerfer

Okay.

the tests on is promotions answer looking we the is test and And results and sales most at what Secret, compare them. what in on we incremental most dollars. stores the we’re first And and the question stores. promotions, balance chain guess a match set from and to of significant margin for incremental do Kimberly, is those to your I them So, test we Victoria's fundamental

to a critical So traffic decision about drive the promotions store. into need input into that’s or a the the store to

you driving customer your hard assess the at, when clear chain significant promotion we’re drive dollars. it’s mistakes. sales, margin new to We clear impact or promotions acquire into we in in relates time dollars, the qualitatively can most and criteria the Obviously results we stores. also we look terms try footfall better it and there appreciate look driving and are mentioned of and periods brand also separately of balance are you stores, terms not the sales and evaluation, to test be need customers. most acquisition, of or it intensive amounts to trial, more of on But just getting comments, in goods at financial and to margin match important But drive particularly ones does as versus trial

that. sales any learning United and a respect transfer we one go considers how extent that’s of that So may to the on sales online direct it’s but it’s decision stores or think business. With estate, that financial nearby to States, the more in this, transfer fundamentally real a lesser to getting about

costs years what with exit store of are based things the two a sales of a have the three to does venue looking So financial transfer flow particular a how the in on effect to it in – evaluation store qualitative nearby principally or relate prediction ongoing that question or is simply area to over the and cash felt So the and over quality trade and venue. at some the next assessment stores?

have We we as close year. lot of stores a – Kimberly, know, you every been

as sales some that some may obvious not Victoria's financially more doing observing stores testing the be transfer really around for We’re but purposed closing effects.

see closed pursuing the not little a But We hold situations expected financial more bit few there But if it’s in of couple of of results agenda We over in sales a a naturally lot have Thanks. rules time. close learning we’re stores these to we decision transfer a a might thumb. up fundamentally. that tests.

Kimberly Greenberger

Understood. Thanks.

Operator

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

Paul Trussell

Good Hi. morning.

all give separately, steps your merchandize? what what the if areas like hasn’t more, VS of a little PINK customer you just taking taken, of response in in You elaborate to a that steps terms and be bit issues. perhaps and can on this improve worked, what’s feedback to been or the of the then can just focus Stuart, the more And Maybe morning sounds what margins and need have bit has you in segment, on what’s income? operating how puts BBW ability of and And to overall to takes you so just we the the how Thank in mentioned the on PINK on think should the overall impact. and further continue then there have versus should you that progress about by and right, markdowns impacted at occupancy and working kind think VS see we of you. Can side, emphasized that root release other about comments regarding the quantify in may merchandize margins? are factors kind shrink

Stuart Burgdoerfer

Yes.

Secret” So and try examples on straps Victoria's multiple would responds its in merchandize, apologize of be “Victoria's been in to a for get as some pricing. compelling, within range, a that through comes has sold been of volume bring up Selling it basic been seems prominently we in bra the it bra, the fresh, very, and and paid the work fundamentally she I it’s has Secret the look provide T-shirt business. and times, new, obvious part If this which to to well her terms distinct, of interest Examples that if success. on back – the or and very to life mid-$XX our priced that brand, I’ll to success. it are strong many in terrific on

of fit a a and margin and well Secret, Illusion mid-$XXs, driven by bra. that within priced got is which feel customer and success would be lot a has bra Victoria's volume sells at higher so a example the a the the of rate. And fabric a healthy very in received Another it’s

strong the the the bra would by within very those and had examples enough of business So results bra cetera, be fall two that we’ve area and worked got The at down or where promotional assortment, reasonable Conversely, had very the tested. very that have sleep more to Victoria at drive it’s of we’ve innovation and be results well. we’ve we businesses. business, to et response been take softer recently, Victoria's haven’t bra distortion for collection volume, business this Body where and franchises, in this Victoria's, to franchise year, those had to Angels within relevant us time challenged more consumer pricing heavily an

margin very we’re the in good of business, for that that business based business. big and dollar Greg fragrance fashion and and that launches making has healthy stronger in responding business testing, we’ll the good, at the growth Beauty a a there, a We’re some business. positive with on good driven fall very that in well. that in a had comps investment optimistic fall. And mist leveraging getting strong results deliver margin In this season, stronger Having potential meaningful six business business speed that in and customer quarters

customer a PINK there business hoped, So we’ve well a got way of And in we’ve as soft bling well. examples some I’ve and the The didn’t then that a took that got we’d that things not. the and Victoria's that fleece point business and the of in provided respond in the within been and has are Sherpa selling is examples again, there working other are very other view from sport industry, with trend side fashion are standpoint then, things in PINK sleep business working working very strong response within to on have The broad-based and Sherpa it. a offerings are is working the this that that you also and well, that – well business aren’t. always through well,

takes have so is we how kind of that we important and leverage of on goes speed capabilities do that’s more make it’s and bad the to takes. and customer, very close that’s it fundamentals how the there puts and stuff and of of strong that to execution respect puts margin, leadership are on merchant with less a in good starts all lot the With stuff and these we’re So to do our why the how of sure merchandize businesses.

the question, into a think there Bath XXXX. Body very & just fourth broadly I that working to beyond and into hard from continue strong has run important – and the team quarter your sensing had

hitting hard on a they’re strong working hitting result. of will. and They’re very able continue any all have in to Importantly, major that about of strong you been, as cylinders, on promotion having trend. their merchandize they degree overall complacent your in reduce if you’re Not And you’re to each accordingly that get cylinders, respect. still business when categories, so all very

fourth to In might But we’ll tried terms puts bit to have reflected the of that. do for incented do depending our things and the fourth the of A upside business we’ll background there little lot in rate, pressure of on results go guidance, quarter obviously quarter in quarter assumptions of into going business their strike into there little fourth the are in work mindset fourth margin balance right in a on hope our segment. a a promotion go. the we margin and what’s more better of provide there Obviously, And assumption our I bit again, a quarter. hard is in than upon now for ongoing just just to and to the yet conservative and and Thanks. the lot how as of quarter. Victoria's rates, little we third happened BBW a what the takes on be

Operator

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

Omar Saad

BBW and the for Thanks the of VS been question. side my have though. asked to of Good taking Most I wanted my morning. ask about answered. questions business on

in on Victoria's Secret As BBW; reset the the rates. you the of go it’s side strength the margins, great business, that through the the growth

and Body the about Bath you Secret you the do everything some think business what that side? do gives on have now on on you’re cetera? pitfalls the from how need way on you Works do on that grow you does; the to sort hit VS customers, promotions, pitfalls happening reevaluating new the insights how do Victoria's you side, that spend the & to flexibility Victoria's that business deeper strength Some the versus side keep of to it of continues existing customers the how with As table, on Secret continues, ensure Stuart. reliance any BBW the of Thanks, from et the

Stuart Burgdoerfer

Yes.

question that relates we and Victoria's it on years question of terms of And a and so lot we on a as do it’s within majority body really growth in care? books focus. that does PINK business focused business think strong meaningful how And business do on continue the as led how strong of In and How Omar, major on BBW very driven or focused learning and the the just don’t growth original home of more and team – that of are in I growth And core growth, home Victoria's, have your sure their Body the 'XX. mention as one I management it sure are by reminder they appropriate how from ago, backdrop they they of in sure was always is team drove you lot. been we about four they a know driving XXXX through there, – through it’s So, Bath a that into business. and that commented of good but has get delivering to sure And periods results books about fragrance and minute all change XXXX we’re change so make fragrance, this. make encouraging the – Nick beyond things that team in Nick, that in in very make do exactly on & one the make to business? right, 'XX then balanced that for outstanding

having good soap body and their business, addition of are fragrance businesses. in in Now giftable the home parts in very the to care business, hand results the

terms really making foremost, team. capability of about is and balanced you first growth and that about focused thoughts. sure So would right it’s it on we leadership categories in stability The right the leadership? those how the and stability and So, management that. have of Nick that focused in appropriate growth that before have the that have and major And even where your ensure are that of do business. Les be we in that, we very meaningful the on But Board

to the I models ingredient or business, to it’s and true very about this those think Body whether their like executes new is – things online risk, important to it very just company, selling think I quickly promotions mindset or very, that for of well Bath an that in Body whole drive do Bath particularly the does & or the is mindset product for selling & it’s time or key regular testing, I but business and learning, tests within think or their periods well Body think other testing they business. acceptance matter & concepts adjusting key taking in Bath success. This I’d the particularly

on Omar, hopefully, it. So, about that some we backdrop think you how gives Thanks.

Omar Saad

Got you. Thank you.

Operator

Your next go line William question from of comes ahead. the of Reuter with Bank Please America.

William Reuter

a about that’s of question debt debt, in absolute don’t lot reduction callable. Hi. talked but My is an have you you

that I Thanks. taking you of how you come debt? a maturity guess, I go have your about consider their of couple out over next guess bonds would to couple reducing or would do date years. ahead of the those You

Stuart Burgdoerfer

Yes, most normal come through activities. of it financing the will

economic coming we’ve of billion be next of few debt reduce sense. so, So we you debt amounts makes years. over complicated be we’ll we to due. will that comes as makes reducing most over, appreciate, and But debt think a advance evaluation maturities probably and opportunities will those opportunities that’s maturities sense where There And where the do debt Thanks. it come. it will got that as roll economic of those outstanding it in as likely worth to I happen due $X.X select pursue

William Reuter

That’s helpful.

Operator

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

Ross Collins

This morning. Ross question. on Oliver. for for the Good Collins Thanks Hi. taking is

terms net connecting Just what’s hear opportunity VS your then to lie And where of prospective digital EBITDA biggest love financial a you might secondly, that And on versus your customers. the about then or or your debt think terms side, strategy platform how the both working in a of new digital and just a on customers? just store more leverage in any broadly, thoughts current do clarification to just around of in Thanks. versus lapsed terms with figure? we’d gross target. engaging the Was or reengaging base

Stuart Burgdoerfer

Sure.

digital because north have today of total The not very think at strategy, again, very over digital I you high, view rate business billion appreciate penetration and business. our underappreciated we first for on think successful as I is in where of So we online terms think Victoria's a as strong business are it in $X by consistent at the of and L We we our high rate. of and marketplace are but we’ve business. a online we rate. billion meaningful But commented have disclosures externally, $X we profit EBIT the business one XX% store a at of online also profitability on business a the believe Brands

size, growing So rate. highly profitable and at very substantial a in healthy

register thing that important are The there. about to would doing about our is important say commercial and a realize I all just it’s business investment we to of next XXXX, to investing a So fact But meaningfully reviewed the recently, our I investment understand in expect business. I’m bit that business so that And the digital in with business. business. capital plans that in Board versus XXXX in we as spending the double we substantial in the that

You most couple things Secret next that technology from our is today. a customer up the rolling online, we’ve for may we’re be will that going things of do; fulfilling consumer, years, but on buy in present not the of now like Victoria's the to multiple be company got us significant of to other globally. replatforming that aware pick the things the benefits business at will replatforming digital over Those that project out for the site store, in able we’re including technology, largest right DCs, lot do enable that

of There So, business. of the are the are next provide be years. we’ll are healthy investment But that to making a others pursuing part very substantial over very again, that we functions in available our couple business. consumer that that

of remember part to Amie, I’m your about question -- – was trying Second

Amie Preston

-- Leverage

Stuart Burgdoerfer

Leverage ratios.

we look it a -- at on So

Amie Preston

Adjusted debt to EBITDA --

Stuart Burgdoerfer

it. overall it been were ratios again, Yes, are look you, versus at Amie. it return we’re to though. do you. our XXXX. overly a have believe gross on they he’s But appropriate thank ratios Thank the basis, the not we again, it And We’ll few the net cash and asking We debt in, to reduce where look of at about – Yes, say, gross we than next thanks. level over about that closer years. higher they and formulaic

Operator

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

Adrienne Yih-Tennant

twofold. Thank on is you morning. very One so Good my much. merchandize. question’s Stuart,

movements. to to go testing decision past to So reenter you in and year, and with end will customer When the some respond bling, that’s you of into management? so on Secret. format high done the expect and We’ve the mid-to- sales Victoria's the the how now at on for distorted retailers better, it the of kind swim, how miss probably result. the more I decision I sort be decelerate? Secondarily, in think that to would AUR more made should said – go you I’m and you been level it’s of what’s and seen that is line” at kind you’ve bring at in such to senior sort VS swim but next inventory of “in back much. wondering been we the amongst up teens if that of the telling profit comp many year, that exit reading Thank very would maximization the assume the reacting

Stuart Burgdoerfer

Okay.

we looking are time of a going swim, back on So spend we frankly. where are. I’m lot not to

into back and to at look go that can I’m going length. not but You learn,

needed further the believe as in decision. driving swim be about levels on that we most original time could and season With that at and energy detail that to telling more bras XXXX. as rates, to for But margin our a again, And the principally the merchandise inventory we’re we is fall that did, as important to that lingerie. that assortment can how rate we’re categories, with PINK through. today, commitment for evaluate As quarter working position end margin us that decision is on and to XXXX a one move to strong a we through again, panties quarter. amount a right good in why we situation as plan But made what rates we resources times we Victoria's the customer clean, focus to The and business to want third view, question we there’ll as point something us. the get critical Again, we’ve moved fundamentally, to we decision to as it’s the as the have with some our we’ll come the you’re received. begin pressure work this through for that qualitatively. XXXX. margin that start and yes, quantitatively total compelling time they PINK ensure periods. fresh that saw fourth And that’s in XXXX we’re on move to quarter will a for respect to in see goods of in we customer end ensure being business pressure we decision develop the our the by that reenter our of from and again, they to you at going was that through customer that And a put important driven and again feedback the started and on the Again, as you we be at start Secret inventory Thanks. very one do observe good

Adrienne Yih-Tennant

Thanks.

Amie Preston

we Thanks. for Operator, have one time I think question. more

Operator

Thank you.

ahead. of line with Please Kloppenburg final then JJK from Your Janet the go question comes Research.

Janet Kloppenburg

Amie. talk you wondered Hi, business. just Stuart. a if PINK bit Hi, about Stuart, could little I more the

like turnaround there’s Secret You PINK. paid lot now in should degree Thank to they your Lingerie Victoria's of effort are required talked bring be bad to bet, there? be, Do I’d you. done will assortments the more growth get to that be where with you work the just was business love perspective of a back didn’t the line that get like on. clearing about you or the to loungewear a on feel out

Stuart Burgdoerfer

in for years candor, to do Amy very and hardest asking is talented time you the Janet, appreciate. understanding things said, curiosity, is a is her and this that in What orientation, probably very, So, very as in XX about I it, action that’s a end-to-end the is evaluate built that a question. has business I her energy, to that and her lot of spent respect one the prior With her day, that industry us you’re Rome with wasn’t know of which strong. anybody leader why of

know translates that I is predict when I will timeframe some is year-on-year? Absolutely. in good that difference? very we’ll think we along The business Amy the X% and in are Can regular talented through give is it’s a But on up to rates to do growing that the the PINK XX% to very our and through business progress be a time the investors and fourth with I do involved so But Thanks. that And others making Amy, margin it believe to that. sales that meaningfully PINK as to are what we hard hard. our working news be answer. focused very updates question really on sure team, within commenting quarter. tell

Janet Kloppenburg

Thanks lot. holiday. good a Have a

Stuart Burgdoerfer

appreciate I it.

Amie Preston

for morning. call a That Janet. this our joining us. concludes very Thank to Happy Thanksgiving. We’d you Thanks, like wish everyone

Stuart Burgdoerfer

Thanks.

Operator

conference today’s concludes This call.

disconnect. now may You