Victoria's Secret & Co Q1 2025 Earnings Call Transcript

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

Question: Brooke Roach - Goldman Sachs & Company, Inc. - Analyst : Good morning, and thank you for taking my question. Hillary, I was hoping you could dive a little bit deeper into the marketing strategy that you're planning for the rest of the year and into the future following the hiring of the new Chief Marketing Officer. What plans do you have to engage customers in a stronger way to drive better comp sales in the back half of the year? And what changes should we expect in terms of the messaging for the customer on a go-forward basis?

Question: Brooke Roach - Goldman Sachs & Company, Inc. - Analyst : Great. And just one follow-up for Scott. What level of price increases is embedded in your guide as a result of tariffs? And how are you thinking about elasticity of demand as you take some of those strategic price increases?

Question: Brooke Roach - Goldman Sachs & Company, Inc. - Analyst : Great, thanks so much. I'll pass it on.

Question: Alex Straton - Morgan Stanley & Co. LLC - Analyst : Great. Maybe for Hillary first. Just when you think about the evolution of the brands and sort of the goals when you started here, can you just highlight like where you made the most progress in the first quarter? And then I've got one follow-up for Scott. 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 11, 2025 / 12:30PM, VSCO.N - Q1 2025 Victoria's Secret & Co Earnings Call

Question: Alex Straton - Morgan Stanley & Co. LLC - Analyst : Great. And maybe just for Scott, just on the gross margin. The quality of the commentary was helpful in the quarter. But is it possible to quantitatively break down the components of that 170-basis-point decline as well as how those should evolve for the remainder of the year? It looks like you're embedding less compression in the second quarter. But I'm just curious if that can change, perhaps. the expansion in the back half?

Question: Alex Straton - Morgan Stanley & Co. LLC - Analyst : Good luck.

Question: Simeon Siegel - BMO Capital Markets - Analyst : Thanks, everyone. Good morning. Hillary, as you work through your progress, any way to help frame how you're thinking about sizing the revenue opportunity at PINK? And then just, Scott, how are you thinking about revenue by brand and gross margin embedded within the full-year guide that you gave? Thanks.

Question: Simeon Siegel - BMO Capital Markets - Analyst : So you're seeing great -- you're talking about qualitative opportunity at PINK, Hillary. I'm just curious if you thought about how you see the revenue -- how you would size the recapture opportunity.

Question: Simeon Siegel - BMO Capital Markets - Analyst : Exactly.

Question: Simeon Siegel - BMO Capital Markets - Analyst : Great. Thanks a lot, guys. Best of luck for the rest of the year.

Question: Dana Telsey - Telsey Advisory Group - Analyst : Hi, good morning, everyone. Hillary, as you think about the intimates market and how it's performing, you had mentioned before the slow start, it got off, I think, at the end of the fourth quarter. Where is it now, and how do you think of your core categories of bras and panties, and what you're seeing in terms of performance? And then, Scott, in terms of tariff mitigation measures, when do they come into play? How do you think about that opportunity going forward? Thank you.

Question: Dana Telsey - Telsey Advisory Group - Analyst : Thank you. 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 11, 2025 / 12:30PM, VSCO.N - Q1 2025 Victoria's Secret & Co Earnings Call

Question: Matthew Boss - JPMorgan - Analyst : Great, thanks. So, Hillary, how do you see the product assortment position today at both VS and PINK? Or where do you see the largest low-hanging fruit with your strategic priorities across categories that you could impact either in the back half of this year versus opportunities you see slated for next year? And then, Scott, on SG&A, what's the best way to think about permanent savings you've realized relative to reinvestments in the business that you see over time? Or what's the level of revenue growth to leverage fixed costs in the business over time?

Question: Matthew Boss - JPMorgan - Analyst : It's great color. Best of luck.

Question: Corey Tarlowe - Jefferies LLC - Analyst : Great, thanks. Hillary, I was wondering if you could just talk about your team. Do you feel like you have the right team in place at present? Because I know you mentioned that you made a couple of hires. And I would just be curious to get your perspective there. Is this the final team that you feel is best positioned to take the company into the future? And then just, Scott, on the inventory for the balance for the quarter, is there any sort of guardrails or guidance that you can give us around what we might expect for the past -- for inventory growth for the year going forward? Thank you.

Question: Corey Tarlowe - Jefferies LLC - Analyst : Great. Thank you so much, and best of luck.

Question: Lorraine Hutchinson - BofA Global Research - Analyst : Thank you. Good morning. Hillary, you made a comment earlier that younger customers are interacting with the intimates business differently. Can you elaborate on that, and also how this plays into your AURs, margins, and attachment rates for the intimates business?

Question: Lorraine Hutchinson - BofA Global Research - Analyst : Thank you.

Question: Mauricio Serna - UBS - Analyst : Great. Good morning. Thanks for taking my question. Maybe could you talk about what you're seeing quarter-to-date? I know you included like a $20 million impact on Q2 guide based on the security incident -- given the security incident. But just thinking about excluding this impact, any

Question: Mauricio Serna - UBS - Analyst : Got it. And a quick follow-up on the tariff impact. You expect a $50 million net impact. You said Q2 will include $10 million. Is it fair to assume the rest of $40 million is, I guess, mostly skewed towards Q4 given the volumes? Or is there a way maybe like that you might have more of your mitigation strategies fully applied that would lead to like more balanced impact in the second half of -- between Q3 and Q4?

Question: Mauricio Serna - UBS - Analyst : Thank you so much.

Question: Marni Shapiro - The Retail Tracker - Analyst : Hey guys, congrats. And congrats on building a really exceptional team with so many women leading a broad business and loving that. Can we talk just a little bit about PINK because I've been very impressed with the drops that you've had there? Are you getting a new shopper in? I'm assuming so because there they're younger. But are you also getting back the lapsed shopper? And when they come in to buy those fashion drops like the spring break set, are they also buying bras along with the fashion? Could you just give us a little color as to what this is looking like?

Question: Marni Shapiro - The Retail Tracker - Analyst : And could we just ask a follow-up in PINK about the active segment? Because PINK has, at times, had a very strong active business, and then it's been pulled back. What are your thoughts on PINK Active? 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 11, 2025 / 12:30PM, VSCO.N - Q1 2025 Victoria's Secret & Co Earnings Call

Question: Marni Shapiro - The Retail Tracker - Analyst : Great. Thank you so much. Best of luck in the next quarter.

Question: Jungwon Kim - TD Securities (USA) LLC - Analyst : Thank you for taking my questions. Just curious on the performance of swim, what you're seeing there. And then just the second question is around Beauty. How big is the business now? And where do you think that could go? And any commentary on the second-half units that you're thinking in the Beauty would be great. Thank you.

Question: Jungwon Kim - TD Securities (USA) LLC - Analyst : Thank you. 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 11, 2025 / 12:30PM, VSCO.N - Q1 2025 Victoria's Secret & Co Earnings Call

Question: Janet Kloppenburg - JJK Research Associates, Inc. - Analyst : Hi, everybody. Thank you for taking my questions. Hillary, I wondered what you thought of the general pricing structure at VS, PINK, and your major competitors. I mean, is the customer looking for the same quality at lower prices? Do you have to adjust your sourcing and your vendor partnerships to achieve that? It just feels like there's been a lot of pricing pressure in the sector for a while. And on the marketing side, with the increase in the GWPs, does that make -- does that pressure your gross margin going forward? But is it a vehicle to drive traffic and something that you think is the permanent part of the marketing mix? Thank you.

Question: Janet Kloppenburg - JJK Research Associates, Inc. - Analyst : Great. Thank you so much, and lots of luck to you and the team.