Bath & Body Works Inc Q1 2024 Earnings Call Summary

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

Question: Simeon Siegel - BMO Capital Markets - Analyst : Thanks. Hey, everyone. Good morning. Nice job. Thank you. So reflecting on your marketing campaign, the new product categories, the collaborations, just how are you thinking about the benefits you're seeing from these initiatives? Is it incremental customers? Is it incremental visits? Is it better pricing? Just -- I mean, how are you thinking about what you're learning through these initiatives? And then, a little bit more nuanced, you held B&O on the sales decline. You're guiding for deleverage going forward. Just what's the right way to think about the leverage point now? And I guess, I understand you're making investments in real estate, but I also wonder if you're lowering leverage points as you move off-mall? So any color there would be helpful as well. Thank you.

Question: Alex Straton - Morgan Stanley - Analyst : Perfect. Thanks for taking my questions. Just a couple here. First, on the Middle East-driven pressure, can you talk to us about your assumptions on how that evolves in the second quarter as well as your ability to offset that all -- at all? And if you could provide how much that represents as a percentage of international that would also be helpful. And then maybe taking a look forward, looking at the first quarter outcome, the second quarter guidance, full year guidance, it seems like you're embedding that gross margin would fall in the back half compared to expansion in the front half. So can you just talk to us about the assumptions there? Thanks a lot. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JUNE 04, 2024 / 1:00PM, BBWI.N - Q1 2024 Bath & Body Works Inc Earnings Call

Question: Amanda Douglas - J.P. Morgan Securities - Analyst : Great, thanks. It's Amanda Douglas on for Matt. So, Gina, could you elaborate on the drivers of 1Q's net sales outperformance versus your initial plan maybe as we think about by category? And just any changes in traffic or consumer behavior as you've progressed into May? And then Eva, just could you elaborate on the cost savings that you've identified within cost of goods sold to support your improved gross margin outlook on the year?

Question: Lorraine Hutchinson - Bank of America Corporation - Analyst : Thank you. Good morning. I wanted to dig into the moving pieces behind your outlook on AUR for the back half. Are you raising ticket to ensure you're paid for some of the new formulation investments? Or do you plan to give some of that value back to the customer through price or promotion?

Question: Kate McShane - Goldman Sachs - Analyst : Hi, good morning. Thanks for taking our question. We wondered if you could comment at all about occasion buying versus buying during a more shoulder period, which I think the second quarter is for you just with the events of Easter and Mother's Day and the REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JUNE 04, 2024 / 1:00PM, BBWI.N - Q1 2024 Bath & Body Works Inc Earnings Call like in Q1, there are not quite -- not a few -- as many occasions in Q2. So could you maybe talk to us a little bit about, again, how you view Q2 playing out given that dynamic and how we should think about it?

Question: Ike Boruchow - Wells Fargo Securities - Analyst : Hey, thanks. Good morning. Eva, I have two for you. Again, I don't mean to beat a dead horse on the AUR, but my question is, which I think has been asked a couple of different ways. When you guys gave guidance on the last call, I believe you had guided AUR flat and it came in a touch worse. I know you guys are saying that it improved on the exit of the quarter, but it just seems like something wasn't to the degree that you'd hoped it was on the upside. So just trying to understand if you could parse that out. And then a quick follow-up on the model, Eva. I know there's like 200 basis points benefit from the calendar in the first quarter. Could you kind of walk us through the next three quarters? I feel like it's a little wacky depending on the retailer in terms of like what benefits to expect I think in 2Q and 3Q, and then how big is the headwind coming in the calendar in 4Q? Thanks.

Question: Olivia Tong - Raymond James Financial, Inc. - Analyst : Great. Thank you. I wanted to better understand a few things, one of them being your view on the retail competition and how that might be impacting you. We've obviously heard a lot of comments from Ulta, some more in terms of the activity in Amazon and [OffPrice] within these categories. I know they're not direct competitors, but just thinking through how that may be impacting your business? And then, apologies for another question on AUR, but if you could potentially give us a little bit of color on what you saw in May, and then just talking about the second half initiatives that could drive the improvement that you're expecting? Thank you.

Question: Dana Telsey Telsey - Telsey Advisory Group - Analyst : Good morning. Just one more thing on AUR. As you think about the different categories of merchandise and as we go through the year, are you expecting any differences to how the categories AURs are as we go from 1Q to 2Q to 3Q to 4Q and what you're seeing? And then, on the direct business versus the retail stores business, any difference in pricing that we should be aware of? And then, Julie, just in terms of the new categories out there, what are you most excited about as we go through the balance of the year given the increased laundry? Anything we should be watching for in terms of the newness? Thank you.

Question: Jonna Kim - Cowen Group, Inc. - Analyst : Thanks for taking my question. Just wanted to get more color on your expectations for the home fragrance category and your business in the back half, if anything has changed since last quarter there? And also your increasing marketing spend and talked about full-funnel marketing, but how are you measuring ROI and how are you allocating your spend across different channels in the back half? Thank you so much.

Question: Korinne Wolfmeyer - Piper Sandler & Co. - Analyst : Hey, good morning. Thanks for taking the question. First, could you just clarify the commentary on returning to growth in the back half? I assume that's assuming the high end of your guidance range. And how are you thinking about returning to growth from like Q3 and Q4 and kind of like the cadence there? And then separately, on some of the new product launches, could you talk a little bit about now that you have some of the more like loyalty membership data, how much of that new product uptake in sales is coming from customers maybe newer to those products versus customers who are now starting to replenish those products? Thanks.