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Bath & Body Works (BBWI)

Participants
Amie Preston SVP, IR
Andrew Meslow Chief Executive Officer
Stuart Burgdoerfer CFO
Martin Waters CEO, Victoria's Secret
Simeon Siegel BMO Capital Markets
Lorraine Hutchinson Bank of America
Ike Boruchow Wells Fargo
Roxanne Meyer MKM Partners
Matthew Boss JPMorgan
Susan Anderson B. Riley
Kimberly Greenberger Morgan Stanley
Omar Saad Evercore
Michael Binetti Credit Suisse
Kate Fitzsimmons RBC Capital Markets
Paul Lejuez Citi Research
Janine Stichter Jefferies
Gaby Carbone Deutsche Bank
Dana Telsey Telsey Advisory Group
Oliver Chen Cowen
Janet Kloppenburg JJK Research Associates
Call transcript
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Operator

Good morning. My name is Catherine, and I will be your conference operator today. At this time, I would like to welcome you to the L Brands Fourth Quarter 2020 Earnings Conference Call. Please be advised that today's conference is being recorded.

If you have any objections, you may disconnect at this time. the to turn now will call Ms. over I Investor Company Affairs Preston, Senior L and President, Vice Amie for Relations Brands.

You may begin.

Amie Preston

Thanks. L Brands' for and welcome earnings everyone, January call ending the Good conference period XXXX. fourth morning, quarter XX, to

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

of call turn Victoria's the Joining All and are our Burgdoerfer, today L me and release. CEO Martin of Brands, discussed call and & Meslow, CEO Andrew. CFO call the results in adjusted Secret; press Thanks, exclude Works; Body on the on to are results we've Brands. Bath over special Andrew the described Stuart I'll today of Waters, L and items

Andrew Meslow

good you, everyone. Thank morning, And Amie.

hard could our appreciation partners. and As to deep done for so night, fourth we reported express efforts. dedication We'd last their the quarter, and delivered record the associates and not our and have team in of work results dedication we like we continued without whole of

free We we ran To values on associates thanks led accomplishments completed, support We just continue and take at took decisions processes didn't be this our our partners we results. actions could and an our businesses ensure total, be we to a these year to Before thought the increase the to liquidity on navigate Brands pandemic we day. and significant with margin $X.X outpaced the highlight we to to the We time, yielded billion with go and and in customers how ways drive a and in same the and the the restructured safety, in could year calendar which cash just fall operate in volume to in our of technology business. confident reflect that for business. in across forward. us the it managing separate to L We business our each a and few organization $X.X sales accomplishments with business questions support associates two We emphasis I rates season ended miss and businesses we so created presented shifted as our expectations. cash appropriate to that deliver to flow. many minutes billion but would take morning, successfully your challenges, spread the many beat so delivered actions prepare few and

tactically, where around comments the reflect to saw focused our we advancing particularly divisiveness. While The in there, on and what we communities. we and a did efforts culture, high-performance diversity, healthy, a above reflect including the unrest social for year equity and on political substantial it's business how leadership inclusion of a our also business important got ourselves,

now to In and addition deepen relate to new our & the Body team. important add Bath Works. accomplishments develop of leadership to number both that also to diversity a Shifting recruited internal that roles talent, to in our we continuing leaders of capability specifically our

and established and product traffic pillar our evolved home. and seasonally-right self-care acceptance, We of drivers emotionally-compelling sanitizers We and a predicted merchandise wellness, solid marketing. we For by the mindset we customers' the further income operating middle soaps with in nesting positioning And a XX%, or and and XX%, could sales year, true as of our strong over $XXX a designs, year third by significant delivered we $X.X enhanced of on-trend, billion brand at matched about not increased or business. pandemic global million and results have the change.

chase inventory products. of And the the We into all our which to multiple our flow during while and distribution to a to well business total and most more business allocate as US larger the Christmas. gave and choices capacity and re-plan match building smart product, was supply and high safest agility also XX% were a business where move breaking it to and needed plan of and commercialize, billion fund inventory mall our of increased we made among us the for demands or than as festive leverage most and $X of months, place centers, fulfillment our in a inside and continuity velocity chain divert XX of inventory speed and for continue direct doubled the times and to year. We watermarks manage network importantly,

turn the and it separate, to I easy accelerate over Waters. next proactively that XXXX public the brand Martin expect of smart extraordinary and environment we know and the continue business, retail I'll our that, our become as We as to XXXX a results. evolve with business we to of can continued and these with management fully will corporation world, growth. Thank And But be lap and enterprise stand-alone you. phase not

Martin Waters

Andrew, good Thanks, morning, everyone. and

to profit online I In full the more a rate or and impact that's season, say you business. we The Secret Victoria's the and to I selling the At of execution And improvement and a operating positive stores, of profit management, improved course, promotions, effective of inventory for of this of $XXX disciplined management million Secret Victoria's result have remarkable delivered our a the better about sales. merchandise turnaround in XX% XXX% of morning a in income. increase last in be assortments, Stuart, First, six led accomplished the lead am me excited let has team, how joining months. by opportunity that plan.

of Thanks, the Amie. already brand I'm While iconic by to reposition grow that and business. to accomplished, it this I'll we front opportunities us highly a been energized have as stand-alone has turn in over much and

Amie Preston

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

We today. are all in different locations

right going to the to I'm best direct folks. to So the do my questions

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

Operator

The question BMO from Instructions] coming first [Operator Simeon Markets. Capital is Siegel,

is open. line Your

Simeon Siegel

Thanks, everyone. to Big a year. nice a congrats on way cap

changes sanitizers customers can customers speak just characterizing you you. in you the and What think any to your congrats. versus higher Andrew, you help the pandemic? Maybe growth of how lasting? frequency higher aside, new us soaps Thank longer AUR? shop during shop through So proves think observed of versus

Amie Preston

Andrew, obviously. Simeon. Thanks,

Andrew Meslow

Yes. Thank you, question. Simeon, for the

remind So sanitizers, it we've soap the important growth in on first in and it's of said QX. and of the everyone, just both prepared I of part in outside your question, and to in terms remarks think QX

the called But trend significant sanitizers. come the of two-thirds for prior a we driver we've was in the as our XXXX, about two-thirds biggest growth out, fragrance outside saw of as been And sanitizer has we and that soaps calls, business business. home really from the growth on within in whole Soaps year. said, really, and

home on of spending there. As strong we've time year, growth more she continued a We've seen, strong or importantly, the at on their Clearly, and seen cetera. categories. spending do our attention is more But comfortable et growth comp in again, all double-digit the home place see to making customer. we he business, schooling, did

when year you think number entire channels that with of So see store-only did we first direct that of again, the for a at customer had mean balanced store the experienced able really a stores significantly - we dual-channel and behavior almost across customer, in represented performance total a did time our saw customer and in about we year, in was you soaps of the the think closed sanitizers our year-over-year. a saw That up three-quarters we our about stores for the growth customers - mentioned, exception, customer customers decline as and number in we the fully of the all When customer but total outsized our that across who frame. days of spending half beginning to that general, in XXXX, offset because we shopped because increase both that From little and over by the across XX very of customers. customers. in fiscal categories were

engagement we did in improved see customer finished customers, substantially. slight So with while we number XXXX total the decline a metrics of

So up more in growth saw single soaps and number spend customers that, Meaning on, customer. X reminder, substantially. within strong than magnitude, of the XX%, to - channel growth cross-category piece opposed customers. dual-channel by customer also as then customers. strong increased spending, engaging that saw direct dual and one. and shop multiple that customers categories in again, the dual And a as over And by we order I is just would of importantly, we last in really led sanitizers, customers saw both who business all times customers, And as growth a spending emphasize we strong

helps. that hopefully, So

Amie Preston

Simon. Thanks,

please. question, Next

Operator

Hutchinson, question next of Lorraine is The Bank from America. coming

Your line open. is

Lorraine Hutchinson

Works Bath you through to as to get hoping longer-term was opportunity morning. years? into use to margins. for If longer-term Good XXXX we out where the coming on talk for three puts perspective Andrew, shake two And Body the can outlook base, - post-XXXX the margins Thanks. I you takes? see your and on and & the a

Andrew Meslow

for thanks the Lorraine, Hi, question.

of So, our prepared in obviously, a went last evening. into we bit detail little remarks

margin from that those significant to at year we business, within by over again, look in reducing $XX.X about promotional half recognize and operating outlier substantially years the basis improvement, activity up promotional margin came even was out very achieved gains year. our results of So good we all million, points. as significantly XXXX merchandise margin improvements important that at was for XXXX, different XXXX And that that merchandise activity in And improvement against vehicles. were which up which of that rate pointing When were achieved rates. an margin terms to the you're of was operating definitely the XXX

power So discounts promotion traffic-driving full had fewer historically fewer we clearance pricing. selling, offered essentially mail. pricing, actually direct take we through up on And e-mail we even saw more were we price shop-wide We less on days selling, saw or promotions. flat able to had ticket than of

that improvement, stores in move think up XXXX the reopened and growth have we XXX% we direct assumption of So of the snapback, in our to that as will channel year. you we for will, that that saw give tremendous back some our saw level over got the that if the is as demand about fiscal beyond improvement we we

But required of to our are of you talked responding are So and begin market unit that as understand it's selling read-and-react maintain we back. share of as about customer traffic promotions, what terms in and to to the some as market expect know activity, we we've that constantly we lap that to in doing share. calls customers have acquisition past, testing to as on drive both what or give gain well margin will merchandise gain, to some we many do

all XXXX will and that are important those considerations we through So move we beyond. as use

in frame saw comp occupancy high we other operating in of that for the The on, was the by by obviously, half the really XX%. sales both SG&A grew that sales driven Total the And of time growth. year. buying were XXXX and grew we open by improvement margin leverage XX% very sales

we So do that obviously, ongoing level not of sales expect growth.

growth there we in supplies stores will some and more into our deleverage normal wages digital make be to supply and around capability in into costs return to we chain in investments as and investments And and labor safety and continue forward omnichannel. so as sales operating into go and

on that to I the Hopefully, we all get throughout And long-term that currently we segment will of in BBW margin exists do continuous operating said be we'll which is sense. at business testing we do dependent that that results remarks, the in the see. prepared completely mid-XXs. it net-net the as right for believe that the is, that that structure year. the pace as low our makes described, So to the we as But

Amie Preston

Thanks, Lorraine.

please. question, Next

Operator

is from question Wells next Boruchow The coming Ike Fargo. of

line open. is Your

Ike Boruchow

if that not again, then scaling how potential in business but sure approach this the how I'm trajectory, brand give sale know when I'm like the leakage Victoria's us a question and billion, much you're could pretty you think is for just guess, not Secret maybe business quick if some given Stuart, for giving sure it that business. but - tax the scenario? is year. you quickly. guidance $X he's there ones could color to - like seems potentially, - could if just two there Vickie's, on us. It would But I on I be the And of on give on, if this curious seems not about color EBITDA is

for are be go color Just any expectations on your would what helpful. profitability forward

Amie Preston

Thank, Ike. Stuart, yep?

Stuart Burgdoerfer

Yes. Thank Good you. morning, Ike.

in become a its you question, spin sale path, Victoria's where we're would option sales path a have significant separately, transaction. point where you to tax very at mentioned a our as And approach a your I out Victoria's own third-party. would would it, intent, appropriate So to done cost question, whereas Ike a way, in as the to separation think dual - looking Secret, likely And scenario, meaning to pursuing public in dual be your of certainly would be a the it company. a sell a we spin-off option which tax-free

So and one advice spin that it right option tax-free of on. so can it's the would with advantages the range a be And significant of factors council considered the is accomplished many option tax that work we as this a in considerations. the Board in the of be legal we get from and one But leakage obviously, And spin banking that the of by scenario. be way. option. be process, could will But sales other we'll through a believe

our that. profitability Ike, mentioned at that well in terms Martin And EBIT you of would year. with And then, I and half many range and circulated be in the an meaningful the perspective recognized, business we we're is basically what have back our range we that VS point, NewCo XX% made we range, as meaningful can comments as we managed of XX%. and the believe, growth. be that on prepared that of income in rate believe, on got So the what in an the operating deliver In commented of believes, progress of between that this

business. growth to move And about the we forward. We'll So is EBITDA XX% the an of EBIT this meaningful, an business. more on XX% to we're shift it's the whether dollarization basis as should Thanks. And that or obviously be a basis. growth excited of

Amie Preston

Thanks, Ike.

Next question, please.

Operator

is Meyer, MKM from Partners. question next coming The Roxanne

Your line is open.

Roxanne Meyer

I'm store part and of question growth congratulations and your store Thanks year. that, an what franchise? of is is My half around then strategy you off-mall hear, mall. there almost any curious there you your that international. around thoughts stores for certain strategy I US your on the to? of if - And locations the can BBW own Thanks characteristics I'm to top-performing that or specifically on versus I'm formats could, as long-term a curious off strong point know the are Are also results strategy, developing quarter just and lot.

Amie Preston

Thanks, Roxanne. Andrew?

Andrew Meslow

question. the for thanks Roxanne, morning Good

business. on materials, which and very, to our a through their for year good as substantially capacity operating job partners year. of out had the regarding of in capabilities a we remarks we're as first growing partners international. saw results very we franchise ways, quarter of on year, in North the International, very the first mirrored and year digital QX your strong part planning; And many in very both with store in of are question did saw XXXX, international partners, our in nicely. led the the So our closures. challenging the International, But America first called in the a strong building and bullish sales way income and half you terms business in also closing our

So we operate XX in in. markets of to further stores in existing partners that planning XXXX our primarily are XX already strongly franchise growth

And so to continued we store there. model. bullish, for bullish contemplate they model are we To or franchise opportunity specific the on would contemplating question an moving the around, are from are your owned we growth

that again, now, change never, to relationships prepared the question, comfortable with the out called part on have digital right we partners. we of specifically the of XX% next second of stores. growth stores, several mall we have growth that pleased say no, on the our portfolio again, not and part only model here but results the with that from is the I the our the our tremendous I'll down our short remarks coming getting, of with our we're place, to answer we in think in and in years. revenue to that are continued never with your And about we're strategy very off-mall in focus

almost from other coming the digital off-mall. obviously, two-thirds and So,

mall & Your we off-mall has off-mall Works type a much the as those and of what see of see itself, Body locations, Bath trip they more stores? than an performance become someone made question in a we before off-mall we not of Again, around surprisingly, in see certainly decided is is that significantly are almost our they destination higher the stores. into operating have already rates location, what conversion out in they of coming intend make to If purchase.

not off-mall And is in operating operating locations. our that in costs, probably profile our And general, our locations. lower so certainly are in surprisingly, off-mall stronger

to driven on store. behavior. customer versus but so shift be again, off-mall in mall-based our mall partly probably And this a I just And substantial tend than importantly, profit also the of average par then outperformance an longer a or pandemic, locations. by pretty better driven their year rates locations We by saw term think, our

So in about full year. for high as twice - a comp malls off-malls the about versus

articulated so And in Hopefully, to are more more we of and strategy move the wise why and important direction in again, off-mall helps. terms that that, we've elements that continue shifting locations. to

Amie Preston

Roxanne. Thanks,

please. question, Next

Operator

Matthew Our is JPMorgan. from question Boss, next coming

Your open. line is

Matthew Boss

And print. Thanks. on congrats another great

So two-part question.

opportunities You believe, post a concept? that is just top net I were Could with following debt, transaction? maybe February prioritize elaborate at how cited XX-year trends would And you you then you've line. you by the low, seen Stuart, holiday, pleased capital VS on allocation

Amie Preston

Thanks, Okay. Matt.

with So start do Andrew, to February? you want

Andrew Meslow

Sure.

of remarks, out. & a in certainly Body Bath we of the February, in already as end mentioned mentioned, month into in expecting higher than coming the we've current line we better guidance. We that and the be at we month, for performance February Frankly, to as achieved quarter. So left quarter, our in Works. trending is But slightly what came fiscal as reflected a but what days we the have it's still we therefore, that it's in performance to few solid very fourth were

even little semi-annual a moved we first couple out more sale, of of terms bit which January In around of February and of as up January. our weeks color late takes

So weeks very product, new spring weeks, Valentine's couple and last focused weeks on Day, couple January floor the of the pleased which both was was the that of looking the our been essentially first we've last the with six of performance February. at theme of in of set

and Valentine's in as As online performing been as, set and also tropical Day based moved we've past stores has now well floor are well. theme

So and overall. again, good strategies reads early merchandise on

Amie Preston

And to thanks. you. then over Great, Stuart,

Andrew Meslow

on Yes. do to Feb? want on Martin want you Martin, Feb? You provide

Martin Waters

Yes, what that's sure, We're very happy significantly V And response We been less the XX% to. very the day in solid our Very similar and good with February, of said. that's spring a positive. saw good to And the by merchandise significantly driven or in overall, what overall. higher QX AUR, higher Andrew results promotionality margin had pleased above to day rates, month we really V merchandise with response a period. have to very collection. at

So bullish. we're and upbeat we're Thank you.

Amie Preston

And Stuart, Thanks, question on Martin. debt?

Stuart Burgdoerfer

Yes.

billion as Matt, including effort, cash, we it lot holding year then ended we're operating was a strong and we've we and of from $X.X intensive you cash. So of But lot a support a an the business, and And - are our people, result. cash. including of the point generated partners of with out, lots

any is it? the as how we months with we asked this to six six the haven't evaluating where we about about, think or decisions. do going to with subject think months, are are what you the five that about are And do roundly separation, as and we think We respect And you made about money? which all next so you

subject Goldman giving to We they're the us as on you are JPMorgan well. perspectives We've retained getting us with their asked about and and help separation, advice. the outside

in just Bath to But of we're buying Board, We're of about? communicate when what stock, We about the options. the those. evaluation But have those answer or or about obviously, thinking all we do we're So do. of review are make will that in things reducing about. approve respect anything thinking resuming we'll multi-step, thinking step made. that with re-rating & will thinking Obviously, about or including thinking No we're to also timing decisions, question, debt. And drive thinking we And appreciation are before your timing a single decisions about a through separation. and in decisions to believe The evaluating that Body in we the most dividend. Works. the thinking terms opportunity We're these of been and we're the after stock.

good it's big news So place. subject. good a The is a in we're

So that profile, healthy. The cash. we've you number to took this accumulated as maturity of lot profile. is know, year of We a actions improve maturity very a

to in a and company period So the of There position. debt. in sound the dividend we opportunity, with very an is of reduce is return start a shares. an again, appropriate And But believe think, a respect important of we subject it for company a we absolutely like time, that repurchase for to form shareholders paid the long this.

So but we're it, made decisions. have evaluating any Thanks. of all not

Amie Preston

Stuart. Thanks,

please? question, Next

Operator

is Susan of The next Anderson coming from B. question Riley.

Your open. line is

Susan Anderson

I Let me I year. to congrats nice guess, the on offer a end business. PINK follow-up on the to wanted my

in you Logo apparel the curious I And XX% about comp performed? in then of the percent also now? is talked think shop. growth how other apparel prepared Logo commentary, what I'm the

Amie Preston

Martin or Stuart?

Stuart Burgdoerfer

question, to Thanks happy I'm Susan. in for there. Yes. jump the

of PINK pretty the the performance pleased we're business. yeah, with So,

half is the apparel is Logo, I And half is in PINK numbers the in in the significant apparel of and about that half saw is growth. where broadly, about round think business, we way think that's to about intimates and approaching the business that, the the of half other category. of segment,

you So the overall. dimension helps hopefully, business that

Amie Preston

Thanks, Susan.

please? question, Next

Operator

The next question Morgan from coming Stanley. is Greenberger, Kimberly

open. is Your line

Kimberly Greenberger

that there Is I consequences targeted thoughts a see than paydown? we debt a Great. more follow-up Do have spin? makes And sort might Victoria's And some Good question. Thanks. price you'd and/or to? so sale the action like a much. that quick morning. Secret the to the Thank for ratio on on One, business debt spin Victoria's sale, even the get Secret to on versus of wanted any the just ask for a on with a then, follow-up you attractive two debate. when questions. tax you leverage BBW

Amie Preston

Stuart. is That Thanks.

Stuart Burgdoerfer

like Kimberly, price spin, scale, threshold sale So, a judgment in judgment terms what's there's versus tilt the in that the you and will Board the that that's as lot appreciate, of of question, make. that a might

threshold be be all numbers were of wouldn't to it And numbers say numbers against they could So I appropriate the we on throw wall. would numerical substantially speculate those kind the year - what greater ago. a are is what those will than

certainly So on I math all news I and involved the of And performance But, what valuation the again, required numbers a be you important all think it the appreciate is implies important with we that that math, think respect may we But considerations be all valuation business. is, and good - single appreciate factor. if in that. would based to but think the are we plus as of evaluate and to and can But we a could the in the do you based that speculate, will. we cash judgment in as bigger it's on involved public tilt not the is business more minus. do markets, the as the what about the generation again, obviously, scale,

continuing Important actions make of important and make with the but about a And timing announce And a question, question, respect call those determinations, mentioned make and looking that Matt's So at things. with respect comments out an two-step the again, leverage we're thing morning. the to good but might on actions to to range like determination. see question, to it's a today. lease-adjusted when those will Board number And in a in refine we views in what Thanks feels target, some a but will say the a that. as capital on With terms on X.X% evaluating will we're then Board, believe we're leverage, would one I not nothing one-step to subjects. respect good and again, a throw that to thing work. the this we of X% that to is doing or basis, structure do judgment and a decisions We we're action, our the

Amie Preston

Kimberly. Thanks,

Next question, please.

Operator

Evercore. coming The Omar from Saad next question of is

Your line is open.

Omar Saad

information. the promotions e-com, other a of profitability all Thanks for that big promotions, as thanks for maybe inflection taking maybe question A part stores could into couple e-com on, a Secret? shift you seeing the are from time. also you key as JV and follow-ups there the there. it? in And margin transformation, great Was performance on been touch reduced of drivers the of Victoria's Secret, behind company my in And the and the margin UK lift the Victoria's I'm an long you've sure Martin, then quick at

for the know Thanks. the You see longer-term ideas kind Victoria's brand touch your you the on positioned Maybe and where brand really of could you brands well. Secret today strategy?

Amie Preston

Thanks, Omar. first Stuart, do you want to take that part?

Stuart Burgdoerfer

Yes.

was of the the the improvement So to quarter with year-on-year. respect even driver major the fourth for to particularly, results UK a the related back not half, more the Omar and quarter, profit

result pleased great partner. business. next But The and we us we we terms the a did that The in that financially. what there quarter. of in very year-on-year. doing and that good it how again, it in for are answer recorded digital the across did. did, or will it fourth make business we're of big with We for the and results is of and improve business us, a the forward think the operating Year-on-year was it But go impact improve to answer to meaningfully by saw what business rates is improvement no. With the rate margin respect that to profit its merchandise feel driven about is did the we the

the the to driven it's the merchandise business rate. And in profit a business. very in profitable business, in that again, online addition was and improved a effect meaningfully, the by business improvement top And in the good so significant line, and Thanks. growing margin rate

Amie Preston

brand want to about positioning? about thinking do you how Thanks, talk Stuart. Martin, And you're

Martin Waters

delighted Thanks be I’d question Yes, Omar. so much the of to.

So think I in taking on this role, four priorities. key about having

it's culture the within happy and business. firstly, So establishing a about healthy

really importantly, leaning the more into of being to consistent and the of be to on on really to work forward; we points; expect inclusive, offer, thirdly, Secondly, it's brand and about it product about sharp probably leading better, more And our it's about more be make our the fourthly, very it then delighted make good, more relevant, to woman. make digital-first brand that of improving XX% the focusing digital attitude so to it architecture pacing it we to and and I pricing going adopted our lifestyle mentality, business into price repositioning refresh it's opening work. modern the with the best be positioning couldn't

and we've And wear wants asking her the us some she telling being she we should craft by we should is carefully is how to sexy to think think listened change that away from her she her And what to think look. we've To there, help and to we move summarized so tell. make to her what story and change. decided that

to our her fourth to. by and commerce both winning her in channels generally. we're significantly support we that job the quarter to in for And us inspiring And obviously, however, up digital celebrating in saw and years, is her that social she's we up, supporting and was she So wants the engagement previous show to show up. needs way in whatever us, that to she her her know rooting back

big on when day, do every you will change social our media, we in that for consumer, will Monday, that every the see onwards. e-mail do show we basis. means, or in that And our magalog mentality that have on everything in - that have the that will the determined you brand, on be up on in than in will are screen described everything you expecting tarnishes on I've single it phone, day-to-day a a brand just from the the here on way get with your So interaction either polishes polish we turn whether And arrives that The positioning we we the rather brand the website, and big of presented. that Swim or that this a in reveal the is imagery the relaunch the significant change the

privately it to color, some if to people happy want So talk and about Thank hopefully, I'm hear that helps more. more you. give

Amie Preston

Thanks, Omar.

Next question please.

Operator

Binetti is Michael question Suisse. coming Credit next The of from

line open. is Your

Michael Binetti

you? here. the stores And known a us lot could to about it could I I was some and Stuarts channel? may BBW versus thanks customer. new the database the How the are Congrats merch the in we of the channel reopens on like give digital I'd as many I store nice digital profitability margin some new so the And to lines of Are the digital customers on other aside earlier leverage back in in are thoughts about comments any for you you back margin? how the below ask on it to channel, in merch all looking channel margin. then that margin the you can the if guess, holiday. from that reflect move Maybe a of to said are help think referenced from on of you lines that that improvement. merch e-commerce the know those the just

Amie Preston

Andrew? Thanks.

Andrew Meslow

Yes.

question, the thanks Michael. for So

channel on within In terms of Bath about new years. their not about Body & Bath prior the Body that for the meaning the also either any a direct the brand spending had stores shops in customer online a or digital, the only times to X greater. And or were channel purchase we new again, to online full half to Works but they channel, who were were of customers specifically were group the considered made only made the is that in first would there. customer, & magnitude stores. in half new stores, then those two be other mentioned, had spending And that with Works purchase the order the to as importantly, a historically of I'm speaking And customers dual overall, purchase year relative growth so the saw making second to associated of I now

going to that we're forward. in So growth their behavior and work hard we'll very retain dual-channel continue customers, to customers about and to excited both very drive those

Amie Preston

Stuart, color on Thanks, more margins? direct any Andrew. operating And

Stuart Burgdoerfer

have Honestly, digital I not is improved that. it really, profit comment and wouldn't commented on, the the or it I But margin because beyond we I describe don't what rate not DSA e-comm rate healthy would rate a is want me merchandise or driver rate because of channel, Newco what to which a year-on-year within as don't in the front EBIT Thanks. channel to materially it's the do. healthy meaningfully, offer very the and we provide and the for is big

Amie Preston

Thanks, Michael. And one guys, ask please, if question. you could

have trying a to. We questions that number we of to are folks get ask who to are trying

please. next So question

Operator

Markets. RBC The next Fitzsimmons, Capital question is from coming Kate

Your is open. line

Kate Fitzsimons

comps guys results. down that will inventory is the profitability in And in but Victoria's focus declines I are unit. in Obviously, XXs, taking know controlling XXs. you question. branded the the your on is PINK the be pretty lingerie, lapping AURs on brand. on question comping X%, my for Secret significant some But my as congrats tightly recovery, guess overall, I Thanks we

approach to how inventory? So Thank a just on with you're curious as approaching rebuilding you. balancing we growth return the profitability

Amie Preston

take one? that you do Martin, to want

Martin Waters

Sure. for the Happy Thanks Katie. question, to.

increases. had think I characterized significant you So rightly we've it AUR that

we've is better got probably for merchandise. the noticed, You had significantly promotionality. that reason And less we've

lap stuff got more inventories need of particularly things and where So to and we good SAS that the margin, cetera. need panty you've didn't year, then and cetera, happened same if better from got extensive the the lap we in to you've managed to parties, number January saw we et et prior didn't tightly

also off. healthier So well less as and beauty. We're on on in much back than new lingerie free we're as now right just a more that's about rather in and dependent very PINK dependent seeing business momentum talking and good promotions seeing and

earnings same all, and while of of you how ensure the and it. time, used But all that's volume. feel the I is At we think positive. we're think in I that balance, So we is drive on the about want good word profitability the track. like sales that the want to is good to quality a And we

market So to we all deep shares the we We have be which core leader. categories in want want operate. of to in the

the support made a that level promotional would right of up we're hang from first improvement in keep of year, the that balance move getting the XXXX the to against time, that on that to we were And trying the is, the we've year, same for see we gains expect at because terrific performance. the on the difficult will half we I to way that as to period ameliorate the trend last year. we're already. it already careful bit, say ensure tiller half because we're continue, back little a a well, And So of significant towards very starting to to drive And volume

more color, you hopefully, gives So, that bit Katie. a

Amie Preston

Martin. Thanks,

Next question?

Operator

is question Paul Lejuez next Research. of coming The Citi from

is line Your open.

Paul Lejuez

is level Thanks. sales I think you stores that after BBW in BBW number off-mall stores mall what mentioned outperformance productivity sales you that mentioned XX% in like if also that of you for And mall. off-mall of stores Curious on look side, are the absolute VS? could give this versus curious big year?

Amie Preston

Okay.

Let's Andrew, start then Stuart. to go and with

Andrew Meslow

Good morning, for Paul. Thanks the question.

& question sales your off-mall So Bath for outperformance. locations locations, Works productivity with mall versus Body around in the

the an stores, still mentioned, operating margin. mall closer, outperform a in that numbers that do outperformed Hopefully, Those meaningful So described at that where year, stores our absolute by off-mall costs basis, off-mall were we off-mall per on talking selling per foot costs versus as now sales locations I but in have - than locations. essentially was on mall if are last historically are in locations dollars But the the off-mall we our operating XXXX relatively mall this comp in lower mall. basis, is locations. foot helps. But, time reality double the our performance a saw with stores

Amie Preston

Thanks. Stuart? And

Stuart Burgdoerfer

Yes.

about we're Thanks. but of exclusively, non-mall, Paul, the or not largely mall, locations, XX% and the mentioned, XX-plus. as And store XX-XX, store, XX-XX it's then XX we comprised is going digital versus locations. range, So, to in XX within street largely street

Amie Preston

Okay. Thanks, Paul.

question? Next

Operator

Janine is of Jefferies. from Stichter question coming next The

is open. line Your

Janine Stichter

to one how And or direct & wanted sales? backlogs any the saw channel, Just much some a you a time line Thank sense and frame the sense about I a there? Body time improvement fulfillment of Bath ask had on Works. then a of you you. of if shipping constrained quick for

Andrew Meslow

for Hi, question. Janine. Thanks the

Body above quarter quarter moderated & incredible XX% level that that was sales the important and growth expectations. growth was, sales handle the you're Works in we over XX%. up Certainly, to industry fourth that such Obviously, a an at lower So cetera, slope ability terms the constraints and But within to shippers, Bath quarter business with of year. growth. the was holiday growth steep specifically, significantly online is remember for that, had Works their remarkable of FedEx, on, QX that sales saw & fourth poking frame even also it's Fourth some and XXX%. specifically Body of part what achievement et in a UPS, Bath reason our total putting time up the about

So go our over go we question remarkable to versus continuing make make the forward. the second to up recognize to XXXX capacity, We're But around, your part We continue we that's investments how area into of growth XX%. are saw an capacity. about we in big forward. need overall thinking fulfillment XXXX, there to that fulfillment investments progress

as And to move growth so beyond. short and business XXXX impediment answer, as see into constraints an we I do fulfillment or the not shipping

Amie Preston

Andrew. Thanks,

Next question.

Operator

is Bank Carbone Deutsche question is Gaby next The of open. coming Your line from

Gaby Carbone

e-commerce detail see Congratulations more you store give you a bit the a little on trends a you. closed bit from versus Body at & stores if great channel, quarter. Thank last Bath around out can Works I - how of, when was wondering kind year. playing excluding

Andrew Meslow

Thanks, Gaby. Yes.

viewed So growth growth What we in remarkable have year again, of years' channel. we several would saw what that all-in worth was one online. probably as

we time channel was of some in those of won't a that start when ago specifically to for I And only as will until what were and And the of to it's so assume to certainly, we be more in growth be weeks operating. approach frame terms questions our answer channel, stores direct year. from year a lap the think we in closed know we only this natural couple XXXX conservative

we'll XXX a lot days, certainly but the So to be still XX next learn. to smarter over

think about though. As the we business long-term,

for in business stand really XX% associates was that being as still But again, store environment, view We to XX% as have direct such is expression high the part grow time, over & next believe to Works of we our and our to in to all terms to between XXXX, penetration and brand, number which to the vibrant, also customers, way and able high high the growth several but So fragrance the to a our the mid strong to that the strong the that perhaps goal importantly, got Bath over of in brand. prior maintain is we we to XXs, of interaction continue have of experience XXXX. the in tremendous channel, is a direct our the strong, teens the ultimate growing total that years. the percent, the Body business should

Amie Preston

Andrew. Thanks, Great.

Next question please.

Operator

of question Advisory is Dana Telsey next coming Group. Telsey from The

line is open. Your

Dana Telsey

nice to see the progress. Good morning, everyone, and

by As that differ? see that Thank store you of think normalized AUR post about category? it the for forward this the Victoria's is year? should how XX store you closures do going you talked closures And the on about the XXX XXXX, then Victoria's to XX rate that you. expect How Secret up just you following journey progressing for Secret,

Amie Preston

Thanks, Dana. Martin, do want one? take you that to

Martin Waters

Yes, sure. Dana, Thanks, the question. for

cash that stores, for is during on it's closed reasonable the year, XX you to flow stores, pandemic. continue of a review opportunity as know, the that next XX% the expect to we'll month-to-month and So We took to fleet fleet XXX positive. think Reminder, basis. XX we our about

year And So a might is burning so. implied close that's in there's don't stores your we think forever and like to we don't Amen, be and stores. XX a XX hundreds that of question to ever, platform I feel

at go. I update we'll guidance year we So one XX as it to would and take time, XX, expect continue a to

also time, but categories. As the sleep good during it at across in the growth stay saw our pretty core relates AUR seen and COVID categories, growth, good time, AUR home categories lingerie. particularly growth lounge to in consistent have we We

don't So a good big there. in think Similarly, there's PINK, AUR I difference growth.

been a growth. the category the in there least spring at go of to the through season. less on probably has one seen we expect at you've where think Beauty trend I should is that QX, continuation But, overall, AUR the

Amie Preston

more questions. Two Martin. Thanks,

question, next So, please?

Operator

coming Chen of Cowen. The next from is Oliver

line open. Your is

Oliver Chen

Thanks. Martin. Hi,

strategy. your Are of demographics beauty. where around most better, And like you think changing in, Regarding there nature that's new comments as And Victoria’s them they Secret, on and it about sounds this important part want to Thanks. the as you existing opportunities do the What good, customers? be? versus marketing then best. you an see

Amie Preston

Thanks. Martin?

Martin Waters

Thank to Oliver. you. Happy that, take Yes.

is consumer, I think, part we the really diversity, of most targeting brand. demographic So, of part very after defined clearly important brand resonating our has around where messaging equity sustainability our Gen that the the inclusion, Z is PINK, clearly, with that we're that going know that And consumer.

the targeted. that's So most

I it that that described pretty more And we? Victoria's, we it appealing think it different be means that a ways been. have we'll our be, too And than women, broader as actually, more anything, whether through time in be that swim be of than the their specific there that life been historically, or we we significantly I think has be may whether target. vacation through life. broad don't or her brand of in we to more to narrative we've earlier it stages whatever to should stages. And the for be of for part have want been church, even If relates that that we church as more

areas and expect more sizes genders colors would I all and demographic ethnicities So of be less us specific being of and interest. to target broadly women and a of inclusive focused focused on on and all shapes and

it us principles. best really you're threshold to price had in attack of we core always I us points saying the balance sure are And of As take opening that sure haven't you that good in led has merchandising back better, that core competitors some brand right. The ourselves space. to better, categories. opportunity of the have Make those the Make key our critical relates to fundamentals represent able all good, each to to of of for areas. that think we good, best,

further the brought next have merchandising was we improvement different we And and where season. as team. areas year-over-year think, we've to can on the And way with so, fall players fall year's showed been in about even where a observations see new up credit our I into team into improvement or significant the we experience, they during

gives you thinking a we're about that it. hopefully, color of So, more how bit

Amie Preston

We’ll Oliver. to question. last move Thanks. Thanks, Thanks.

Operator

is Janet question coming Kloppenburg, last our And from Associates. Research JJK

Your line is open.

Janet Kloppenburg

Congratulations Martin, Congratulations good things. Congratulations to on the to all year. Stuart.

XX% some we for there that year could and Andrew, during for could that? if some challenging about For want wondering think How you're you compared the difficult, a this think QX, if some historical sales opportunity, margin, Martin, against, I to I'm would XX% pressure - the comparisons for complexion And much. for lower that about about very to peaks. I upside quarterly in or was there the is or wondering or we opportunity us as so historical goal that limiting Victoria's those periods? will QX And as that's margin competition about Stuart but of operating to returning you're more to albeit Secret still be just up may great and was BBW thinking should wondering levels. productivity store think there Thanks

Amie Preston

Thanks, Janet. Andrew?

Andrew Meslow

Hi, Janet.

more at for level on perform for meaningful need see obviously see up then then implied, were up even record as point And sales against incredible stores question really results. results, really as for we're over meaning opportunity we your we understanding earlier, two-year closed providing do we where to growth does some results this similarly we to really against and as towards lap only closure last we're direct looking period a what at XXXX mentioned XXXX, so as incredible quarter. we as and I QX said, into performances how about So stores do going that QX, back in year, where half of But guidance QX. those we're move handle and get performance the our

to QX point, mean what that and early too this at will for speculate So beyond.

Amie Preston

you take to Martin, And the margin? VS question do about operating want Thanks.

Martin Waters

Yeah, sure, all see happy far it. to. earnings cap on there's a that from our at We don't

best for We can in room a of to see quite have the do user stores performance business we there, that be time several spent have replatforming time. lot both years that that and we'll to those to in and we want better some And experience. a want we our sure much reinvestment over fulfillment we're right. that that now in in of we terms we digital the offer love couple However, in specific make And in business, we experience, our we're to them leave some need of of a that the over a last similarly in get out business areas. the position fundamentals

what's in want experience we deliver a same XX% the put where Thank you. earnings behind the so a possible And ourselves really to position And time. the we XX% can rate. that's best the and to of quality thinking at brand of

Amie Preston

concludes Thanks, our interest call for Thanks Janet. our That in brands. continuing today. your

Operator

today's conclude parties disconnect time. at conference. will this This may All