Bath & Body Works Inc at Bank of America Consumer & Retail Conference Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Lorraine Hutchinson - Bank of America - Merrll Lynch - Analyst : You recently reported fourth quarter, you gave 2025 guidance. You reaffirmed that this morning. On the call, you said you were pleased with how the first quarter started. Can we interpret that to mean quarter-to-date revenue is at or above your 1% to 3% guidance?

Question: Lorraine Hutchinson - Bank of America - Merrll Lynch - Analyst : Great. Thank you. Very confident in the high end. That's probably not something we'll hear a lot today. So that's good news. Can you give us an overview of how you think the year plays out? Any big headwinds or tailwinds we should be aware of?

Question: Lorraine Hutchinson - Bank of America - Merrll Lynch - Analyst : Great. And on your target consumer, you pointed that out as a risk. How would you characterize the health of that consumer this year? And what purchasing patterns are you seeing?

Question: Lorraine Hutchinson - Bank of America - Merrll Lynch - Analyst : Great. And maybe you could follow that with talking about some of the growth drivers for 2025 that you're most excited about?

Question: Lorraine Hutchinson - Bank of America - Merrll Lynch - Analyst : Okay. On the Disney topic, can you talk about the customer response you're seeing to that collection? What's working and any takeaways you have for future collabs?

Question: Lorraine Hutchinson - Bank of America - Merrll Lynch - Analyst : Great. And on the fourth quarter call, Gina talked about being excited about the 2025 product innovation pipeline. I know you can't give us details on collaborations or specific products. But would you characterize it as a similar level of newness in the pipeline for '25 as '24?

Question: Lorraine Hutchinson - Bank of America - Merrll Lynch - Analyst : Okay. And maybe let's talk about the candle market. That's been a pressure on results for the past couple of years. When do you expect the market to return to growth? And does your '25 guidance assume that this happens this year?

Question: Lorraine Hutchinson - Bank of America - Merrll Lynch - Analyst : So flattish candle market is the guidance?

Question: Lorraine Hutchinson - Bank of America - Merrll Lynch - Analyst : Okay. And the adjacencies have been rolled out. What's the focus in each of these adjacencies? I won't ask you to pick favorites, but maybe if we could talk through some of the focus now that they're all in the fleet, where do we go from here?

Question: Lorraine Hutchinson - Bank of America - Merrll Lynch - Analyst : Great. And then just pivoting to international. You guided to a return to sales growth in 2025. How much of that is due to stabilization in areas driven by the war versus organic growth drivers and new markets?

Question: Lorraine Hutchinson - Bank of America - Merrll Lynch - Analyst : Great. And then any change to your marketing strategy moving forward?

Question: Lorraine Hutchinson - Bank of America - Merrll Lynch - Analyst : Okay. And then just shifting to margin. You guided some slight 2025 gross margin pressure, driven in part by merchandise margin headwinds from new products, collaborations, what are the ways you're looking to offset this?

Question: Lorraine Hutchinson - Bank of America - Merrll Lynch - Analyst : Okay. And then one gross margin driver, you didn't call out was promotions. I think that's one of the toughest nuts to crack sitting outside the Bath & Body Works organization. How are you thinking about the promotional cadence for this year?

Question: Lorraine Hutchinson - Bank of America - Merrll Lynch - Analyst : Okay. And then how about pricing? As you think about the pricing architecture for your products, are there any changes planned?

Question: Lorraine Hutchinson - Bank of America - Merrll Lynch - Analyst : What do you think -- I get this question a lot about loyalty, what makes people loyal to Bath & Body Works, if they could buy a cheaper candle on another website. Is it scent? Is it quality? Is it burn time? Like what do you think are the key attributes of why people love the brand so much?

Question: Lorraine Hutchinson - Bank of America - Merrll Lynch - Analyst : Okay. Thanks. So fourth quarter AURs were pressured by five fewer shopping days in the holiday. Can you just explain what that means? Why that happened? And was that part of your plan? Were you expecting that?

Question: Lorraine Hutchinson - Bank of America - Merrll Lynch - Analyst : Okay. And then just as you think about the 2025 algorithm, is that an AUR driven sales growth? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 11, 2025 / 12:00PM, BBWI.N - Bath & Body Works Inc at Bank of America Consumer & Retail Conference

Question: Lorraine Hutchinson - Bank of America - Merrll Lynch - Analyst : Okay. You mentioned Fuel for Growth, [$300 million] of savings over the past two years. Thank you, next. What can we think about as far as the go-forward opportunities for cost cutting?

Question: Lorraine Hutchinson - Bank of America - Merrll Lynch - Analyst : Okay. And you mentioned earlier the flattish SG&A rate includes some investments. Can you talk about what exactly you're spending on in IT? And then also if there are any offsets to potentially create some leverage on the SG&A line?

Question: Lorraine Hutchinson - Bank of America - Merrll Lynch - Analyst : And then as you think out to 2026, would you expect a similar level of investment? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 11, 2025 / 12:00PM, BBWI.N - Bath & Body Works Inc at Bank of America Consumer & Retail Conference

Question: Lorraine Hutchinson - Bank of America - Merrll Lynch - Analyst : Okay. You talked about an off-mall target of 75%. It's new. Is there a timeline for that goal? Should we expect any kind of accelerated store openings, closings, relocations in '25?

Question: Lorraine Hutchinson - Bank of America - Merrll Lynch - Analyst : Okay. I wanted to ask you to just touch on Beauty Park for a minute. I think probably a lot of -- those in the audience don't really know what it is or the advantages that it gives you, can you talk a little bit about it and how you're using that to maybe potentially mitigate some of the tariff exposure?

Question: Lorraine Hutchinson - Bank of America - Merrll Lynch - Analyst : How long do you think that would take to move the China, Mexico 7% here?

Question: Lorraine Hutchinson - Bank of America - Merrll Lynch - Analyst : Okay. Okay. That's interesting. And then 85% -- 80% of your total production is done at Beauty Park or in North America?

Question: Lorraine Hutchinson - Bank of America - Merrll Lynch - Analyst : Yeah. Okay. Okay. Before we open it up to audience questions, I wanted to ask about free cash flow, probably should have started with actually. $170 million of dividend payments, $300 million of share repurchase, that leaves you with about $300 million of extra free cash flow generation. How are you thinking about further share repurchase, debt repayments? How do you use that extra cash?

Question: Lorraine Hutchinson - Bank of America - Merrll Lynch - Analyst : Yeah. Okay. Let's see if there are any questions from the audience. Unidentified Participant My name is Mannan. I had just a quick follow-up question on share repurchases.

Question: Lorraine Hutchinson - Bank of America - Merrll Lynch - Analyst : We have time for one more if somebody has it. Unidentified Participant Thank you very much. Just a clarification on your comment about towards the high end of your guide. Was that a 1Q comment, just to clarify?

Question: Lorraine Hutchinson - Bank of America - Merrll Lynch - Analyst : I think we are about out of time. Eva, thank you so much for joining us today.