Victoria's Secret & Co Q3 2024 Earnings Call Transcript

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

Question: Simeon Siegel - BMO Capital Markets - Analyst : Nice job on the progress. So -- from the outside, it kind of feels like a switch has been flipped, but obviously, there's much more to it. So it's amazing to see the residents PINK, Back to Campus, VSX launch, fashion show. But can you speak to the why the seemingly Southern residents? How are you thinking about product versus marketing versus promotions at this point as the brands do appear to be regaining that perception among consumers? And then I don't know if this is Hillary or TJ, but we've gone back and forth over history with co-located versus independent stores, you're talking about closing, I think, 42, I think there's 35 renovations. You're talking about consolidating the co-located stores. Any color you can share on what you expect that would do to productivity and profitability as that progresses?

Question: Brooke Roach - Goldman Sachs - Analyst : Hillary, you spoke about elevating brand (inaudible) through creating the conversation and moving into Flex marketing opportunities. You've also mentioned TikTok a few times here this morning. Can you talk about what we should expect on the evolution of your marketing strategy where might you spend those dollars and the percent of sales that you might spend on marketing over time? And then just as a follow-up for TJ. Can you talk a little bit more about the promotion plans that you have for holiday if you continue to outperform your plans, what we see in promo plans on a go-forward basis? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 06, 2024 / 1:00PM, VSCO.N - Q3 2024 Victoria's Secret & Co Earnings Call

Question: Alex Straton - Morgan Stanley - Analyst : Congrats on a great quarter. I wanted to focus on the digital business. It seems like that had some real standout momentum. So curious what you attribute that to and what that percentage of the business can be over time? And then one quick secondary question is just on the recent momentum. Is that driven by like a new customer or existing customer, a combination of both? I'd love some thoughts on that as well.

Question: Irwin Boruchow - Wells Fargo - Analyst : Two questions. First for Hillary, you talked about a lot of change over the last four months in apparel, which I assume predominantly talks to PINK. Can you just give us a little bit more insight on what changes in KPIs you've seen that's given you renewed confidence. And then on TJ, real quick, just I'm trying to understand the adore payments that are being made this year, I think it's like $200 million -- I'm just trying to make sure I understood. Is that because of the business is outperforming? How should we think about that impacting cash flow? And then is there more payments in future years if the business continues to outperform.

Question: Matthew Boss - JPMorgan - Analyst : Hillary, can you elaborate on driving the balance between top line growth and gross margin expansion? Or with promotions expected flat to slightly down in the fourth quarter on 2% to 3% top line growth, do you see this as a potential multiyear inflection in the model? And to that point, TJ, what do you see as the potential markdown recapture opportunity as we think about maybe next year? Or any change to the 39% to 40% gross margin by FY26 as a target?

Question: Matthew Boss - JPMorgan - Analyst : Great, thanks, best of luck.

Question: Dana Telsey - Telsey Advisory Group - Analyst : Nice to see the progress. Hillary, in your assessment of the stores as you've gone around the country, as you look at the classification, the space allocation, what do you see as the opportunities going forward? And with the store of the future, are there any new visions that you have to enhance what's been there already? And just lastly, can you remind us about China manufacturing and sourcing given what could be tariffs coming up?

Question: Adrienne Yih - Barclays - Analyst : Great. Hillary, I was wondering if you can talk to us about customer reactivations. I'm really interested what you had said that you were seeing a younger customer come in. And I think that's the key to kind of consumer in this day and age that Gen Z. So reactivation of existing customers and then what source are you getting the new customers from -- and then, TJ, just a clarification on the comment that you made on discount rate. I think that's -- there's a huge differential between the normalized and when you are highly promotional. Does that include clearance? Or are you only talking about the percent at reg price to promo.

Question: Adrienne Yih - Barclays - Analyst : Fantastic. And then, Hillary, one last one. Historically, back in the day, Victoria's Secret, with node for to see systematic Bra launch, Bra franchise launches, the newness and kind of really having almost a seasonal kind of cadence to that. Can you talk about kind of what you've learned when you kind of go back into the archives and are thinking about kind of how to execute that going forward.

Question: Jungwon Kim - TD Cowen - Analyst : Just wanted to get more thoughts around the beauty business, how large is beauty now and where do you think that business could evolve over time? And also would love any comments on Adore Me, how that has performed and where you see that particular brand going forward? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 06, 2024 / 1:00PM, VSCO.N - Q3 2024 Victoria's Secret & Co Earnings Call

Question: Mauricio Serna - UBS - Analyst : Great. Congratulations on the results. Could you talk -- if you talk are you seeing in the sports rock category and what your opportunities are in that segment? And also your overall view on the internal target, it seems that it's been down. So as you -- just wondering are you seeing any improvement in the next couple of quarters? And then also, could you give us what you're seeing in China just giving the macro environment?