Victoria's Secret & Co Q3 2025 Earnings Call Transcript

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

Question: Mauricio Serna - UBS AG - Analyst : Great. First, could you elaborate a little bit more on how are you maintaining the momentum so far post the Fashion Show? And just give a little more detail on initiatives that you're thinking as you look into the startup of '26 just to maintain like the momentum around the brand. And generally speaking, I guess, where do you see the market share opportunities in bras and beauty, particularly with the comment about PINK intimates returning to [equal].

Question: Mauricio Serna - UBS AG - Analyst : Got it. Just a quick follow-up on the part of promotions. Maybe could you elaborate on strategies in place to keep pulling back on promotions? And how much is this lever contributing to gross margin expansion? LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies. DECEMBER 05, 2025 / 1:30PM, VSCO.N - Q3 2025 Victoria's Secret & Co Earnings Call

Question: Mauricio Serna - UBS AG - Analyst : Great. Congratulations on the results.

Question: Brooke Roach - Goldman Sachs & Co. LLC - Analyst : Hillary, I wanted to talk a little bit more about the change in rate of new customer acquisition that you're seeing this quarter. Can you talk a little bit about the profile of those customers? Are they younger? Are they higher income? What are you seeing across your brands, particularly in North America? And what drives your plans for marketing as a result as you look ahead into '26?

Question: Brooke Roach - Goldman Sachs & Co. LLC - Analyst : Great. And then just a follow-up for Scott. Historically, the business had targeted a low double-digit EBIT margin profile. Is this rate achievable in your view? And how are you thinking about the potential pace of expansion, offset by any reinvestment to continue the positive comp momentum?

Question: Adrian Yee - Barclays PLC - Analyst : Great. And really great to see the stores, the product, the brands really turning. Hillary, I guess on that, the fall of this year, we really started to see that bra focus and the franchise bra focus is kind of calling out those products. And it kind of reminded me of kind of historically when Victoria's Secret would regularly come to market with bra launches. And so I'm wondering kind of what do you have in the pipeline for 2026 to keep that going? And then on PINK, sort of more at the high level kind of from a trend perspective, it does feel like -- and maybe I'm wrong here, but it does feel like we're kind of in a little bit of a retro, maybe like with the tracksuits coming back, some of that kind of juicy look that's sort of like very good for PINK. So I'm wondering if you can talk about some of that, that's happening. And then, Scott, really kind of want to talk about kind of the multiyear opportunity. We're sitting at a mid-single-digit op margin. You just talked about a 10% opportunity. Promos are inflecting. And really wanted to just kind of understand where we are in that merch margin journey. It seems like we're in the very, very early signs of that with some good underpinnings for long term.

Question: Matthew Robinson - JPMorgan Chase & Co. - Analyst : Congrats on a nice quarter. So Hillary, could you speak to the inflection in your performance relative to intimates category growth as we think about market share capture relative to larger picture category trends in the US or globally? And then near term, could you just help break down the cadence of your monthly comps like you saw in the third-quarter, particularly October, or the exit rate and just elaborate LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies. DECEMBER 05, 2025 / 1:30PM, VSCO.N - Q3 2025 Victoria's Secret & Co Earnings Call on the strong start that you cited to the fourth-quarter, maybe relative to 8% comps in the third-quarter or relative to second half of the quarter or October? Have you seen any change in momentum or demand?

Question: Matthew Robinson - JPMorgan Chase & Co. - Analyst : Got it. Maybe just as a follow-up. Relative to the benefit from lower promotional activity in the third-quarter, I mean, to what extent did you embed opportunity in the fourth-quarter? And maybe just what inning overall do you see this opportunity on the promotional front? Or is there a way to kind of bifurcate the margin to get to double digits relative to where we're at today? How much of this is promotional activity? How much of this is SG&A? Maybe just any way to break down that delta.

Question: Dana Telsey - Telsey Advisory Group LLC - Analyst : Congratulations on the nice progress. Two things. As you think about beauty, which I think you've always mentioned is the bigger market than intimates, how do you think about the beauty progress over the next year, what it could do on the top line and how it could impact margins? And then also the marketing being as effective as it is in attracting new customers, any framework of those customers' age, income levels? Anything that you're noticing and what you'd do differently next year at all to keep the active customer growth going? And then just lastly, Store of the Future. Thoughts on next year for Store of the Future. Any changes or enhancements that you want to make?

Question: Jonna Kim - TD Cowen - Analyst : Just curious on the apparel side, what's the mix now and where you see that trending over time. And also, I know you've been working on your lead time on the apparel side. What is the lead time now? And is there further opportunities to expedite that?

Question: Marni Shapiro - Retail Tracker Advisors - Analyst : Congratulations. The stores have had so much energy. It's been a pleasure to shop. So I'm so curious, I want to dig into Beauty a little bit, dovetailing on what everybody has said. I really liked your home launch in Victoria's Secret. And I'm curious, I guess, what you're thinking about in the future. Specifically candles are a big opportunity in general in the market. I thought it was really beautiful. And then just also in PINK beauty, with this brand coming back and the younger customer coming back in, the younger customer today is much more sophisticated than they were when PINK first launched. And there's a lot of good youth-facing brands that have come to market. LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies. DECEMBER 05, 2025 / 1:30PM, VSCO.N - Q3 2025 Victoria's Secret & Co Earnings Call So are you seeing a different kind of PINK beauty? And I would assume, like isn't there room for real PINK beauty business out there in light of the way the customer has changed?

Question: Marni Shapiro - Retail Tracker Advisors - Analyst : And then can I just ask one quick follow-up on marketing? You've done a lot of collaborations, a lot of fun things this year. As we think about marketing as a percentage of sales into '26, are you guys going to play up? Or as sales increase, you're going to keep the percentage falling? What's just the thinking, I guess, behind where marketing spend should be?

Question: Ike Boruchow - Wells Fargo Securities LLC - Analyst : Scott, a couple of ones on the gross margin I was hoping to ask. So just the way you're talking about ex the gift card breakage last year, the gross margin you're planning ex tariffs is up 200 basis points. Is that an accurate ballpark?

Question: Ike Boruchow - Wells Fargo Securities LLC - Analyst : Okay. And that's a little bit lower than the ex-tariff gross margin in 3Q because you're not planning as much as you are. So I guess that makes sense. I guess the other follow-up question I would have to that is, is this kind of run rate the way we should think about the first half assuming tariffs stay in place? And then obviously, your margin trajectory is now starting to move up. Does next year kind of act as a buffer year to that just because of the first couple of quarters of the year where you have to kind of like embed these tariff headwinds into the business? Just kind of curious like how much that throws you off, your trajectory. Like can you take margins up next year despite those pressures that you guys have in front of you?