Bath & Body Works (BBWI) 27 Feb 202019 Q4 Earnings call transcript

Good morning. My name is Amy and I will be your conference operator today. At this time, I would like to welcome everyone to the L Brands Fourth Quarter 2019 Earnings Conference Call. Please be advised that today's conference is being recorded. After the speakers' presentation, there will be a question-and-answer session. Instructions] [Operator

turn Officer to of now Chief Amie call Relations Investor L the will Ms. over Preston, I Brands.

You may begin.

Thanks, to L call everyone, and quarter XXXX. morning, ending conference Xst, period for Amy. earnings the February Brands Good fourth Saturday, welcome

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

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

All results results in our call and EVP will today's exclude Stuart in I and release. of described handle discussed the today. are the CFO, and the adjusted significant press call Burgdoerfer, items

call I'll And the to turn Thanks. over Stuart. now,

Thanks, morning, Amie, and good everyone.

we questions the we for the I'd like open Partners with to up to related to some take your key transformative points transaction last week. that Sycamore before call announced a highlight minutes few

we the global Victoria's sale of know the of you announced approximately collectively $XXX Victoria's of businesses, Beauty last Secret Partners Secret, to million. XX% for As Sycamore Lingerie, proceeds Thursday, and Secret Victoria's PINK

the position is long-term and broad from by to financial review shareholder input of to board, transaction of for options The of undertaken a range the designed advisors value. outside our with result brands best comprehensive a drive success

business, We management focus the will the structural value Works highlight & believe Body enhanced transaction standalone and this and performance Bath of complexity. reduced

the entity creates private that best for we Additionally, our Secret structure a environment believe Victoria's turnaround.

America high of Secret's leads lingerie the several brand last recognize has the that over levels Victoria's North in years, While has performance awareness. meaningfully deteriorated we global category the and

in fresh and Sycamore, to business. greater perspective bring industry, which will retail that the believe has focus the substantial experience We a

a meaningfully in We that have iconic ability by upside the shareholders retaining to will brand. the potential participate this significant ownership of are our stake, pleased

for of He Bath has XX Works, been with Operating Chief has the understanding business Officer. of and Executive & the has promoted an business to exceptional customers. Andrew Chief Meslow, Body years former Officer its been and

Bath named Chief Works, New Executive will Brand the the strategic development and of previously new been Strategy Body new on & Bath Officer evolution has his intently of Nick of more In the Chairman he Coe, role Ventures. of business, the brand, position focus & Body and and Works ventures Vice acquisitions. product

are unique partnership by Nick We for which the the Andrew is strategic arrangement business. best succession and brand to this confident that of direction the leverages plan long-term the advance the established

the the will Board. close the the to to step Wexner Upon of a as second and of Chairman in transaction, Emeritus, down is which as become of quarter, Les CEO member Brands occur expected remaining Chairman L

about from million There intend $XXX We liabilities billion sheet also in as the lease reduce sale, to $X.X the use excess well are to cash, Secret. balance debt. in to related approximately Victoria's sheet balance proceeds as

After to accounting overall debt-to-EBITDAR an adjusted level. basis, declines, we current close for be its our the expected debt that ratio on will and leverage lease expect liability

perspective. about that and Bath Works Works five announcement, In the will Victoria's Secret the available from functions with allocated the years. the business Bath like standalone know Mast many financial to and & Body presentation, business & have international made look past questions Body a have you We our we investor which what we new transaction for

dis-synergies. required Secret the structure through will minimize which still Works existing our we Victoria's view to business next for will be functional Body & a standalone reviewing various recognizing months, that with be support several services the Over agreements with business the transition supporting Bath we terms, the and and corporate near-term will simplifying

the Bath and the Board, the plans characteristics Body Body our intent, conduct the standalone standalone clarity we cash Works business. is meetings team, growth provide Bath will in investors analysts and capital on financial also for and business. evaluating It and management & the & our with to be structure priorities and Works above, have The with greater conjunction for

Thanks. And over to you, Amie.

Thanks Stuart.

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

Instructions] first you're line unmute. Evercore Saad the comes [Operator Omar, Omar, please Your from if Omar question line mute, your open. ISI. on with of is

more of bit little guys see in environment? such big thoughts more of that question. there a Any a the structure that an Secret Thanks further you in things public rationale brand the wondering, was that maybe shareholders behind - obviously a a talk still on of Are a been I specific my bit and benefit private any asset for if lot of Thanks. iconic interest more the Victoria's could part there such brand? private better spin-off. that from. about taking franchise. you operate in evolve It's detail thoughts could environment help could a the Was certain Stuart, the little that how in will the or business LB

for Omar. the question, thanks Yes,

the and have So, of that certainly you, that to for the pattern and that as the know, understand. significant capital financial Omar, XXXX. and brand, is I in there you results, interest XXXX continue been the was in markets the a said, portion projected and challenged generally results With the reasons, of brand for continued people think, including

some And accelerated so, been you markets, has reported the challenging business leading in continued period brand the regards financially. iconic financially, through know, a again, key in while quarter. an gone has very And positions as - and financially in fourth with that

from certainly advice of Board, to management very got have but a to through from deal you majority the would sale from understand interest would occur, disclosed interest parties, process heavy that a process of and a the number legal appropriate, of Sycamore. that had advisors a got conclusions substantial with we that, input and a undertaken. was and And financial And as the with from so,

thought strongly about felt we about how stake. the retaining potential With respect business a to of it, the and we

mentioned, that has business experience who sector, coming a As shareholders around And very we for and iconic that the through know, and be be this positions. of retail you is and this leadership new brand, That's from as and of believe an part lot XX% new Sycamore can can value strong with with you specifically interest. that the stake. perspective retained L the significant created, Brands majority turned stabilized of sale in

sold. to Data was or thorough Systems respect other process, portfolio, our participate the to into for retaining that different businesses, in meaningful those entered had a business ways warrants we we've in retained sold, all history Brands So, rationalization Mast, retained upside, Lerner, the that that L cases, past transactions or on shareholders majority a of of monetized our in sourcing from interest. interest kinds in businesses with that benefited through process, own we've Express stake the in created, have we each thoughtful interest, And Alliance of value whether it interest other

business. terrific a it's So,

support We to business, be to these dyssynergies through doing providing respect will mentioned, if arrangements, otherwise rushed things. so transition the as with try significant one occur those service to minimize that could to

about good So, we the got a form think transaction. future. energized We're of we've

with experience We Sycamore, some good organization. have importantly, as them with experience, an

Omar. overseen through has And combination those the so, Board, by things, process, thorough to us again, all a Thank got this the of you, outcome.

Omar. Thanks,

please. Next question

and comes Your the is Chen with line line your open. Company. Cowen of Oliver Oliver, from next question

previously and priorities. digital timing? you contemplate as thoughts transaction priorities? VS And around you the strategy big Regarding bras the what as that changed your strategy, identified as mindset as the marketing Has are or with well

we've many the respects, Secret as growth the many the opportunities expect, core will that strategies of of In for about Oliver, Oliver. continue. or Thanks, talked of would or in elements category that opportunities marketing bras And will as about, continue. talked strategies those I we've matter and for PINK, around things that Victoria's Lingerie the the the fundamental

see might I of in think in you are those if will, execution, how terms some differences in respects, pursued. opportunities we

But closing the as should will happened three ago signed say, and X:XX week transaction in And definitive months the know subject other roundly the I a signed. to that. and regulatory work. time was were between morning be to at approvals I signing and indicated, The agreements,

of leadership its what best that's and begun engage specifically to close of so, already a what change, and will to the current some needs terms relaying the opportunities and as appropriately Sycamore will transaction is And with business the of business in of are. obviously, the where

perspective from next XX through XX my and - will through evolve that, the new we moves apparent become - our may through months. business should Thanks. to And move as as That business, moves say, expectation would be and of expectation. the the the as XXXX, from changes come that re-articulation I strategy a

Oliver. Thanks,

question. Next

Susan question FBR. Anderson is from Riley, comes open. line next of Your Susan, with line your B the

are been if could BBW out of growth categories, the about that you thinking products we you're across we've categories? XXXX. the year. as how there you or a about or this come about planning like be May Thanks. all look curious was product bit new strategy little I for Will talk seeing,

it Well, three business what strategy, from the the to working. major deeply, generally, and explain standpoint, go of more I I'll merchandising on say in the would has a Susan, categories been

in has business exciting strategy the periods the will assortments, time not well. a and it's been And been continue strategy that newness there will but sound the so, businesses' the with that of may over most be regular effectively. or And has is of and that they that reality merchandise which in said, very delivered that view working goal revolutionary, delivery the

in XXXX. revolutionary that will the of And business category wouldn't and a not standpoint, is day no each selling to after the just from flow a thing it's month in change I about that that because month. the well. thinks business said, in is think categories of continue major So, regular again, you XXXX after merchandise same day There running want with newness Thanks. The and needed.

with your is Your Tiffany, from Tiffany Deutsche next the question Kanaga Bank. open. of comes line line

you you growth? rolling pace I against XXXX for off and guidance, year what profit pressures providing not about growth? discuss you're but this longer-term Bath algorithm how cadence the perhaps Body anticipate At could headwinds are the these the operating Works do thinking & for you know

most top with a the Well, operating the to have at been that we margin That's to believe very deliver X% If business the the over lot growing in do of potential consistently range that, operating effectively. that And future business expenses to has there time. a comps pretty strong managing in last has both has and several XX% and the But range, years. the this and CAGR reasons line business of periods potential. question. and delivered to dollars income run, lot pretty the income had is to discipline rates low has mid-single in a

and the of But will, serves and with terms think the because investments about those management growing of the very And so as low-single healthy risks in growth to in and terms channel rate. a comp tends the on is of it ongoing there believe in business we is that financial There balance if forth. growth you well business things planning, that's the so appropriate range. direct in at

but in terms is carefully to number in There potential to of terms risks estate we're making some of that way. managing real of want related growth a in that manage thoughtful stores, sure

We have been.

the Barn lot a about heard You've remodels. White

plans. We estate have real a lot our of in flexibility

And XXXX all we importantly, into count be a is is in in subject there the malls shopping substantially opportunity. in I'll we know a lot plan. out have the growth, of while that of just to The flexibility a and that get growth have enclosed expected bit outside I store

very related the financial overall strong rates all the growth growth, and online to margin expense a comp historically, very and of sales strong carefully, drivers carefully again, that's structure in store result. resulted So, managing growth And count, growth. are

important remodels, for that to Tiffany, XX% at the I'd business, growth investing in add of the the of direct Barn above business Works are which fulfillment Bath are high making in the White returns capability & also most additional just store rate. which investments has driving we're Body growing that two been and support those

those will continue. So, investments

to Some of year tariffs start moderate of the in implementations. the sourcing pressure-related lap will the as half the we back investments

Tiffany. Thanks,

question. Next

Markets. open. Capital your next Edward, of from Yruma line the Your line Edward KeyBanc question comes is with

issues, specifically, BBW guess, Thanks. of understand business. business in how other remind BBW help the the what exactly maybe impact us I real sanitizer constituent back be comment, supply Just hand big of tariffs, I first any will the to components? Are the chain finally, then kind side, the with just a half. from you sourcing guess, that us seeing on is And

reasons Maybe rate that with for growing business It the The start understand. last first. of the Okay. high very about hand is sanitizer all we'll part at a we would total X% is of business. presently

for more yeah, for be impact $X.XX tariff a the of BBW, With full the impact in impact than terms little respect year-on-year will year. share to - in a XXXX

that as but little more fall. we pressure. some - spring to will than And extraordinary not weighted a pressure, So, it's moderate to

just on pressure the tariffs. in some So, And chain. supply generally there is inflation

and rate, being very is in inflation margin direct, it. then there to is of tariffs the there is in though bottom channel driver the merchandise for rates extent business merchandise degradation but it's fast some has of economies so related a that supply of say, shift, a should profit I most rate largely some the and lower in outpaced able or even to Generally, of margin chain. been but growing function really business a that, store's direct BBW, inflation - impact, pressure effect growth rate there the from one line world mix that but the direct cost is - at at the and the to to business, similar shift The not offset

And some big reacting of very there's these bit big reaction the pressure of has on good. the it rate. then, days consumers But days, where on results consumer strength little of dollar headline are little and a bit a are the to promotion strongly of

of So, income and little drivers rate dollar healthy in operating three dollars. still bit of very Thanks. business. margin growth, that But, dollars overall, a pressure

Thanks.

question Next please.

comes Wells line your Fargo. Ike is Your from question next Boruchow open. the line Ike, with of

policy Victoria's now you how BBW/LB that should a Victoria's Thanks. big of terms about in? about to versus on lease Stuart, business new should is revenue that's balance structure the dividend then, dividend remaining And to billion from in BBW the about sheet? liabilities Secret. what remain $X.X we potential capital least, the smaller talked be liabilities going that Can or going at perspective you will the the to any of lease is with think changes take the LB talk

Thanks, Ike.

million. exposure and literature So, BBW/LB That a related what Victoria's book to exposure estimates $XXX a will liability exposure to have is leases related accounting or the Secret The store I'll of to in roundly leases. potential, liability call, us office net terms some that exposure that. contingent gross roughly some requires

And through to contingent liability our LB that economic the the those, a we which of have go over process And leases gross the off is a what to run to $X.X we've do coming exposure exposure through exposures. billion, $XXX that but accounting will in we'll gross exercise gross think we million. books, to or off way an got terms, related about again, as is time the related They do related the an run to net is probabilities do exercise is their do liability. that to

analysis. deal Works, dividend With we'll question look is just we policy doing it. tell We've Bath and a capital right be Board. planning know we've at more, question. to advisors. We'll get work got We frankly, the take from appropriate respect input but structure Body when signed & do. you, the just outside conversations this Ike, for have the week. to, to We'll with need We'll the And the last

have We appropriate it when approval you. it a it. will take get a at the we And will at will. something to should Board get But a and time. look and fresh report, the by look, review Thank including we

Ike. Thanks,

Next question please.

Walvis your Alex Goldman is with the line open. of Your question comes from next line Sachs. Alex,

quarter for comp we in issued that. comp you inclusive about a for down what's Victoria's talk guidance of your I on wonder would was you. And low-single be first And within the the up. You share spend imply moment could guide that consolidated the if expectations digits? Can Secret. that you that comment to operating and Thank flat behind Can VS BBW expectation? slightly BBW embedded also, building What a that specifically? then does blocks income for

be and Works Bath With the Alex Amie? comp guidance, With all. the it digit. - & be down to - be high-single mid the comp on and operating up assumptions be assumptions, want pardon Bath for to pardon first comp comp - me, morning, comp Victoria's do respect Body within to respect comment, the between to of me, income digit down Victoria's for mid-single and you So, total, to between the Body's & Secret good mid-single for would up to

single-digit is reflection very I talked Sure. we've course, the pressure the chase Yes, hard cost again a business The about of just here. to double-digit think going work of that's to And, at rate. of not continue planning some what's mid what business extensively opportunities comp this was to we're lower on, some those in into and put in comp working operating quarter, pressure maximize back mentioned a from a or will But pressures a income. volume rate cost Stuart quarter, first their a cost on perspective. the from

know, expect. including these you to would this, what important numbers. and and is be incented, appreciate Alex, incented financially, management to That's will beat And would you

fact, In that's how it works.

current better hard do work this, we'll to that's So, but view. than our

Thanks, Alex.

Next question please.

Your comes Stanley. the next Greenberger line Morgan Kimberly, is from of with your Kimberly line open. question

on I for component it how of Kimberly on projecting announcement? have is grow Bath on Straton question. international Body to sales prior wanted that us stores This the the you the transaction and of taking guys been Could Greenberger. is & you Works basis sense business. touch Thank my Alex and large how you for a give the maybe to just to

Yes.

a growing In is Number terms - all numbers million. the these of $XX it bring extraordinarily that almost hand paper franchise of responsive. at million, piece stores, $XX it's all high, international income are million very XX%. revenue the a sales with rate. here, 'XX retail size, a can more going of than be Ending that didn't XXX year and its on detail round - income rate And numbers so operating somebody little doors, operating because associated I the my our fast about me with $XXX to is business. we approaching

lot About growing ending profit again, about would XX%, the about about royalty-based year, of So, I doors XX%, XXXX XXX rate model XX%, about a a high of our rattle round operating just $XX off sales expect, numbers revenue, very as growing in million. in business a growing stuff. and retail delivering income you

see part a is terrific that's segment It additional of LB business. We it's this growth segments. potential today business. So, lot within international that reporting the in of a

will But, be I you just is what again. the as that lot we it I sales in of the profile hopefully, And future Retail we business. shared folks to dimensions here forward, move more growth apparent the to this a think see XX%. and value grew for XXXX of

Thanks, Alex.

Next question please.

comes question next your of from the Mark, Baird. line with line is open. Mark Altschwager Your

follow I components wanted here. I to the of couple a real up BBW on guess estate plans.

of First, with what just said investor the is foot a lift you the flexibility, productivity lot remodels, of square year. I seeing us then, look you're of like you're know but this in does terms expansion an BBW remind the in there? in you a acceleration in planning can And presentation, it the there bit

speak white where the or picture, If to count opportunities space you Thank where just footage number ultimately that store see go? just And America you bigger square bit can could a that. you. in and North

Sure.

where we it you store of see we refer lift before. and not to period that meaning White short in It back roughly the is reverts - And for sustains, XX%. Barn years. remodel where shop-in-shop it So, it's format, boom it that is get time as format, was to sustains splat multiple we which the lift a to the a when then typically a most what the

lift us heck I financial estate us to good the both say and this. heck the very should remodel analyzed along large a real the of out - fleet. outcome the with of allowed team BBW and allows persists a has team, to out this portion and gets the that We've analyzed have of

that the perspective remodels. the on So, would be

in in in economic With strips substantially, respect new enclosed off-mall, to the malls, very an with strong profile. a new all stores power I comment, not shopping store activity, mentioned as the are earlier

lower-tier close would you we as, it stores in course, do. closing cannibalization. and we then of And Of that as opening stores malls at we in strips. stores, we're look power think mid-tier we're or expect But

XX% or business' the about shopping of more little Now, in than enclosed are a XX% malls. stores not

approach gotten and We've it's So, sound experience. more strategy. a

the ones we're why months is ask, performed the with might in it You pursuing XX have to acceleration? because have we It XX, intensity. last that that more the so XX done well

said, flexibility. we've lot that of all a And got

we So, the actually that even of leases in roundly shared, plan only those XXXX XX% are about signed.

should flexibility, We're change So, we've we lot of that, dramatic business. flexibility. obviously, in see we've got but got a lot expecting a some should the not we of that, see

the one enclosed good outside believe we strategy real shopping is locations Thanks. and it's business estate shifting the So, a further malls. to

Mark. Thanks

Next please.

with next comes line Kate the Your your Markets. of is question Fitzsimons from line RBC Kate, Capital open.

about greater nature about transaction? offsetting TSAs some you about the of with think the dyssynergies dyssynergies could TSAs maybe Stuart, frame How associated the as here? the detail some time them go shape of out well of as should five just provide the this the years. of the I some believe some of potentially we and

some just be there you. helpful. Thank color would So,

You're welcome.

thing the to like us we're is, which going heck the work first I'd what you'd dyssynergies, minimize do. to to is So, expect say

areas complexity. have length greater of of longer are that the those terms scale the in of so, the TSA and/or of that have terms duration business the And

at longest And points work minimize to complex in carefully the Victoria's is TSA logical partnership Sycamore the technology. migrate over that the the systems so, and and on And most the separate TSA cost. that's with to, economic systems business one the time, we'll related

logical might And points and that systems. many incur. And one-time or dis-synergy believe intention about, is that meaningful from be And specific transactions read do time. is of for a don't do we other would But of these to will expect, we have cost to again, to otherwise separate is day all share separate perhaps have than in that going we're what we fact, separation, systems we less some it amount so, less will we systems on we one, our that. of that unlike to the but we dyssynergies nor the may period incur at determined,

Apart Works from business, The reduced. overhead opportunities that, and will the there & go-forward complexity Bath be specifically. through a Body corporate of are simpler business, amount substantially

And so, that are dyssynergies to talked the to there we some related going be subjects about.

there the yet - work we and not and been that it, and for but specific we'll offsetting to more on more ready a as do & will be to And business about dollars and a before other business called Body to get hadn't now that, you. from done overheads. initial opportunities out dyssynergies business simplify this multi-divisional And we've finalized but from corporate some more single learn it, Works. work Bath opportunities reductions we offset to in some there with will Thank be

Kate. Thanks

question please. Next

from William, of question William Bank the of line next Your line is Reuter open. with your comes America.

trying work should It you the business through Have on go-forward about seems strong. a what be CapEx like Just for relatively cash free basis the it BBW might to thought flow. be? standalone

would is remodeling We've real the related $XXX about. to in but between in that I and the million driven that say, stores $XXX the of And and by investments numbers, this thought million. that we've I some numbers, of opening reflects new again, the majority to it. Yes. would round estate, In talked stores say of round given and

that said, range. that We'll it is done work flexible. with but initial on it, lot And and some in do more it's of that work have a to very we've on

that to on so, make quickly. real the to have estate an And we adjustments CapEx, ability

CapEx in - or $XXX LB of took the and about rate million great $XXX recession from whole million XX own the XXXX, history, - this back we run million span company our In is of down $XXX in to the about our months. for

So, hit hard. pretty times get brake the can tough, we

it. total. the why will That's $XXX starting ballpark than a $XXX be BBW again, to lower, obviously, asking good million for about profile would The number, be LB you're million assumption. And

Bill. Thanks,

Next question please.

line is next with comes Paul, Citi question Research. Lejuez line open. Your Paul your of from the

if VS at even talk there more you Stuart, as level, and fast entity? do targeting? doing getting to just you held Bath higher is a a bit you'll is Body And separate like want move back entity feel able little combined that that of you international be countries anything might better be which as about maybe & curious BBW could the do opportunity you Works. with part to How the now Thanks. from

has the With part Brands no. Body Works question Bath The kind the is no. the of part growth think of I internationally? restricted to that of pursuit answer last in first, answer, Do some way short being would respect that of be Paul, & L

As you know we're constrained. a pursuing on It's not that that basis. franchise capital

I think partners have with our strong for broad-based. opportunity franchise big is been relationships a we It's us. It globally.

As the we over hone we'll Body on Works next opportunity, our months, Paul. communication & up Bath really about tighten opportunity few in that framing that and

four years, different the it's surprise, a frankly, opportunity. to in for brands, if consumers' part part three the Paul, last any big world. Bath Body & in good surprised way, the form go your say of its And question, again, regions we But, positive we've major back been of about of or I constrained because a - wouldn't were way - been is being in of reaction we L but Works it

articulation expand really that part Body. of and of our as we opportunity be think the capital up the fuller Thanks. communication Bath a over I of work & owe will that next for and the markets months growth But tighten we opportunities few

Paul. Thanks,

Next please. question

of your open. comes Your question line from Jamie is Jamie, next Merriman with Bernstein. the line

the start, BBW business just you strongly, said. has can as growing I direct so from If been

re-platformed Victoria's know So, needs the making you're with I recently I'm e-commerce that I'm And you're tech And wondering just to at omnichannel if if about Thanks. talk something underlying you've or the similar investments if in happy platform. BBW Secret business. capabilities. could wondering e-commerce what done you be

happy is the pretty is direct for is to is a thing front front business the with And answer the It's end third in note view provided by short the important Bath distribution also the that we're outsourced. in fulfillment my flow & about Body The The party. it. most technology model, outsourced. end, and

variable it's of more a model, capital-light So, model. a

two of in are store. other And basis, now, for roundly respect now Bath of partners with making buy is is an - pursuing. a in On pursued probably for business loyalty on then, both overall Body There a pilot They're commitment are it - a pickup stores. with about importance XXX is a initiatives has is in the a pleased. total, significant stage. years One that This is couple to of We we're that in refinement online, the program in stage. pilot that business pilot our a is the it. pretty XXX given & lot the

store of then And refinement so, now in overall an in loyalty going pleased. rollout us. again, has months. terms XX XX, model. of front pickup probably in something online, outsourced And the and But is been And on of initiatives, for further pilot buy

Thanks, Jamie.

question Next please.

comes Yih Adrian, is Barclays. from line question Adrienne next your Your open. line of with the

being morning. good the thing the third the mid-single clarifying for what flow comp Victoria's questions. segment - Is Thanks Should kind clarifying that some we don't for is of my trajectory XXXX? digit think the so same mid-single digit maybe How some BBW comp, BBW with Secret quarter, deleverage or past look investments have QX. - comp? QX? much. understand the is couple A was side? that then, cash of then, And a And that you're I question, quarter-to-date, mid-single digit what Yes, does the running of in free breakeven sorry, about you in

Yes.

three So, questions.

with that. and say but to be comp comment the far that. about so February. we've comfortable is results in We're we're to on guidance mean I'll not that's on Don't First all unhelpful, going given

without capital I work we've to of and cash kind do, respect business, give Body on pieces more the picture. it don't mentioned, to of flow, the providing which of free and to short & hand we the got Works whole want Bath structure With that obviously,

profitability we're doing was and in about answered the You way. the characteristics the work terrific, asked But it. terms know of of business. they're obviously, And CapEx. the the It by Body, of more cash & on overall Bath flow

it, that which talk do. about assessment will done be I we'll when question of a But a comprehensive policy, ultimately in should we'll dividend of ready you get we're way, terms the that to think And we to talk which it. of in full it, about appreciate

we'll we've get and other to flow we can we do as it cash to busy free BBW on hopefully, you soon it views my thoughtfully. some as be would want appreciate, And with been can. things. that But So,

to with a mid-single to thirdly, of growth say, growth, breakeven getting a not a breakeven-ish digit not respect year-on-year smaller or growth, operating not I in income. Amie - should mentioned quarter. lot year-on-year then, comp, the of it's lot And that

variable so, the on And about of and just doesn't result the all quarters. for translate size you're through quarters, think asking based the leverage fixed costs, QX as on about relative you that

on would additional that question. your So, be Thanks. my third view

Thanks, Adrian.

please. question, Next

of line the Partners. your from comes Myers with question Roxanne is open. Roxanne, next MKM line Your

to opportunities on expect loyalty Just two for you feedback that the the the follow-ups. result I strong your it then, One, some of more example, And that those quick stores. spending. as wondering investments, to lot. aside you stores. technology to love - in that you a I is much would the mentioned. I'm BBW, it involved program where BOPIS see online, customer of if and pilot. very you Thanks overall, more further much already how mentioned and separation, as program is from, How technology loyalty what didn't get if was already - the that they're growth particularly XXX a investments you in how accelerate pilot in relates realize performing frequenting is just to investment

Yes.

rollout is the of the loyalty timing respect overall XXX to the So, results - mentioned about we to the of in balance with with shy it's the pleased evaluating and stores. The fleet. just program, business is

based would headlines. those the is on It based, So, spending. program her rewards-based points be a

and addition to gives in mobile It so some events to products exclusive on. the her opportunity points a it financial award, and of her in and provides new in participate value - involves app

texture some discount, So, beyond it's got if it on just quota will. you

generally it out to So, it determining and, with roll the pleased best more stores ultimately, way nationally. and to

needs as to for to won't the respect constrained business the the the online, company things in tech in to investment lot a there. outsourced. be otherwise With But like we functionality, extent BBW, mentioned, buy store of invest I pickup online this that platform in is

we call a but opportunity as that, of the there, test we're what mode profile in I'll now, there in you given there invest specific have would that plan our game just Thanks. And to that working of itself. business is plenty do will reveals partners, may in internally. extent, that don't parties, We work right meaning a as terms cash opportunity that do with manual of have may to flow some and that third And some appreciate. CapEx the of we

Roxanne. Thanks,

two take Let's questions. more

your America. line from Lorraine, question Your Hutchinson of next is open. line the Bank Lorraine with of comes

talk longevity strip the in flexibility stores a Body comments enclosed of lease & both? terms versus some could Works, And bit the and you mall little difference for the of Bath on performance then, maybe about centers? For

that thing our well first is off-mall. and in The perform stores malls both

expect. its is register of in off-mall, is experience of conversion types and a should and rates or which very So, in offering about say, you news both to merchandise based thing Apart off-mall. that well Bath addition would good occasion. that, is high customers, destination, nature high venue. I they Body destination It's more of clearly the & want extraordinarily & register I'd The - malls in are the the are both rates first but Bath Works from on the it the to with off-malls, the Body performed conversion and

a occupancy costs lastly, enclosed are off-mall malls. they lower in And shopping sales than of as are percent

one. a store, doing it So, pursuing The big financially. the types profitability. is growth, off-mall strong aggressively. Good off-mall very well. are is But opportunity earlier, again, format as we're both of you heard will, you if And good

are lease XX-year leases. a terms general As matter, our

we've in lower-tier As about these on talked - in you know, malls. many are stores. consistently our of Based

to leases provisions place lot terms strength on and the business flexibility occupancy in of we month-to-month our doing whether and business levels tenants get of name in just are a the on to related and that We our have malls. based those

a many So, flexibility situations. terms. Generally, Thanks. lot of in lease XX-year

Last Thanks, question please. Lorraine.

line open. question with Binetti Michael, final your the Suisse. comes of is line Credit Michael Your from

participate with much business. Victoria's upside maybe how you to LB results some the would miss picture, keep with Could question, for of transaction. opportunity you math, frame the this we other minute? the bigger earlier then, of do the that linearly mentioned obvious Thanks stay And to L the the leases back in you in liabilities if turns? LB Alex's participate after deal in Stuart, step with all that will today. But the remain guess, do EBIT Brands question you detail there retains since I of if our The you LB areas even has just with Are taking any case Secret anything? a upside turn the besides versus lease the how downside that XX% a corner? liabilities

Yes.

So, that question. a lot in

exposure a So, that had around liabilities business the our million. basis downside business aggregate much agreed. how are been to gross on is understand. lease limited and for put asked about. again, on reasons negotiated the $XXX would We debt There provisions on related And the you were or can VS on that's be

there we've I good might terms that So, got in think of how protection be managed.

about worth it. worth. business math contribution capital or If six capital to what this none markets were of a of it, requirements, negative there's ascribing value not years value we thought no if five and the And in respect be to essentially what upside to all the With could significance. there business lot are was doing ago just this of

was it creation. to XX%, stake. And to important meaningful us a that's that potential value so, a at And in stake retain

a you. a what very potentially So, significant business very, bracketed of could heck is downside. of math had lot the some there just And and or there you is for done off did went We've if at back it of its upside peak. be that framed it

that The very even took in half its significant. potential. you of is terms upside If of

potential have time, that in a new deliver delivered & was shareholders early realized And ownership happened to input had already the and this have to between results those looks and then. perspective Arguably, share we at to lot felt important if a at Body January through at since shareholders. of has one format. we have Works private value the it value to believe value But the the move they price Bath what marketplace to

how we that's Thanks. it. thought about So,

point, And, I on $XXX stay million sheet. to our not clarify one balance does Mike, want that just That will be... necessarily

the think an based portion number. estimate million $XXX book could assessment gross our of of is. be we is be that of the a gross a We'll That probability exposure number. - reason That's could what

It So, balance won't less be on it will be the than meaningfully that. sheet.

great. Yes,

Thanks. call today. for Brands. you L That Thank concludes guys. Okay, for our [indiscernible] your continuing

gentlemen, and this call. concludes you today's conference Thank participating. Ladies for

now may You disconnect.