Q3 2021 Bath & Body Works Inc Earnings Call

Okay.

[music].

Good morning, My name is Julie and I will be your conference operator today at this time I would like to welcome everyone to the Bath and body works third quarter 2021 earnings conference call. Please be advised that today's conference is being recorded during the question and answer portion you may ask a question from the phone by pressing star one I will now.

Turn the call over to MS, Wendy Ireland, Chief Financial Officer at Bath <unk> body works when do you may begin.

Good morning, welcome to the Bath and body works third quarter earnings conference call for the period ending October 31, 2021, as a matter of formality I need to remind you that any forward looking statements. We may make today are subject to our safe Harbor statement found in our SEC filings.

And in our press releases joining me on the call today are CEO, Andrew Meso and senior Vice President of Investor Relations, Amy Preston All results. We discussed on the call today are adjusted results and exclude the third quarter loss on extinguishment of debt in both years as described in our press release all.

Results, we discussed today represent the continuing operations of the Bath and body works business as the Victoria's secret business has been classified as discontinued operations due to its spin off on August 2nd 2021, Thanks, and now I'll turn the call over to Andrew.

Yeah.

Thanks, Wendy and good morning, everyone.

Turning to our third quarter performance, we delivered strong results and we could not have done without the continued hard work and commitment of our associates and partners in stores distribution and fulfillment centers.

All centers at our vendors and our offices.

We'd like to express our deep appreciation for their ongoing dedication and efforts.

We reported adjusted third quarter earnings from continuing operations of <unk> 92 per share compared to 83 per share last year.

This results significantly exceeded our third quarter guidance for earnings per share between <unk> 55, and.

60.

The upside versus our guidance was driven by better than forecasted sales and a higher merchandise margin rates.

We continued our strong momentum in the third quarter.

Net sales were $1 68, 1 billion a decline of just 1% versus last year's exceptionally strong results and a 53% increase compared to the 2019, which was consistent with the two year growth we delivered in the first half of the year.

Performance was strong across all months of the quarter as we saw good customer response to our fall seasonal and Halloween merchandise.

We also launched two new fragrances in the third quarter, It's fairy tale and open sky, both of which exceeded our expectations.

We are satisfied with our inventory position as we head into holiday.

While we are better positioned than most retailers due to are primarily domestic supply chain, we are not immune to challenges.

We have proactively managed production and promotions throughout the third quarter and did not experience significant out of stocks and we do expect our assortments to be full and abundant for holiday.

We are partnering closely with our vendors to support production needs in order to continue to meet customer demand.

In terms of our product offering and marketing stories.

We invite you to watch a video showcasing our holiday assortment, which we posted to our website. This morning.

Inflationary pressures in raw materials wages supply chain and transportation costs negatively impacted our third quarter results.

We will put even more pressure on our fourth quarter as we described in the commentary, which we released yesterday evening we.

We will continue to proactively manage pricing and promotion with the goal of offsetting as much of this cost pressure as possible.

We are forecasting fourth quarter sales and earnings per share growth over last year and significant growth versus 2019.

Specifically, we expect fourth quarter earnings per share between $2 10, and $2 25.

<unk> earnings per share from continuing operations of $1 96, and 2020 and $1 41 in 2019.

And we expect sales growth in the mid to high single digit percent range compared to last year.

We are well positioned as we go into the important holiday season, and fourth quarter, we have confidence in our merchandise assortments and although it is very early customers are responding positively and quarter to date sales are in line with our expectations.

Risks related to Covid persist and we will continue to operate both of our channels in a safe manner for our customers and our associates.

With continued smart and disciplined management of the business I believe we can deliver a strong holiday and fourth quarter.

Thanks, and now I'll turn it over to Amy Preston.

And that concludes our prepared comments.

This time, we'd be happy to take any questions you might have in the interest of time and consideration to others. Please limit yourself to one question, thanks, and I'll turn it back over to Julie.

Thank you if you would like to ask a question. Please press star one you will be prompted to record your first and your last name. Please Amit your phone when recording your name and to withdraw your question Press Star two once again to ask a question. Please press star one.

Our first question comes from Ike <unk> with Wells Fargo. Your line is open.

Hey, good morning, everyone and congrats.

On the sustained growth I guess Andrew.

I'm sure someone's going to ask this so obviously the one I mean your margins.

Were very elevated last year your guidance really were a key beneficiary, but youre really sustaining those levels of profitability in a way that I think most people did not think wounds.

Can you kind of just give us an update are we still thinking that this is a low twenty's margin business I mean, youre going to be above the mid 20. This year just kind of curious like structurally how are you seeing things evolve I would love some higher level perspective for me if that's okay.

Yes sure. Thanks for the question. So yes, we've said pretty consistently on earnings calls and in Investor meetings that we believe that an operating margin in the low to mid 20 range is appropriate for this business.

Because we think it affords us the right balance of investing in our product our customer experience.

Our capabilities, while also generating a very high return on sales and as we've also talked about really the.

The driver of.

The breadth of that range from low to mid is really going to come down to most likely how we're able to maintain the merchandize margin improvement that we've realized here over the last 18 months.

And so I would say that our confidence on that from a promotional and pricing power standpoint remains high.

And as we've seen in each of the first three quarters of this year, we've been able to keep promotion levels.

At or below where we were in 2020 and meaningfully below where we were in 2019 and again Thats a combination of all the different levers that we use in terms of.

More full price selling less clearance.

Days of real power traffic driving promotions higher prices when we do run promotions selective higher tickets.

Fewer shop wide discounts.

Really the wildcard that's come into play, though last quarter Q3 in this coming quarter and forward is going to be around inflationary pressure.

And so again as you look at our margin improvement in Q3 relative to Q2. It was not as much as it was in the first half of the year and that difference was really about those inflationary pressures and again those are in raw materials, there in transportation in supplies and in wage rates.

And we expect those costs as we disclosed in our in our comments to only go up further in the fourth quarter.

So that really is.

We believe more of a short term.

On a rolling 12 month basis, probably Q3 of 'twenty, one through first half of 'twenty, two where we start to lap some of those costs, but as we look beyond that again, it's going to come down to how much of that merchandize margin pricing power are we able to sustain and again as of right now we're still very confident.

And our ability to do that.

So to address your question.

Yes, thanks, so much and we appreciate it.

Great. Thanks.

Next question please.

Yes. Our next question comes from Lorraine Hutchinson with Bank of America. Your line is open.

Thanks, Good morning.

Andrew can you talk a little bit about some of the pricing actions that you have taken and what the consumer response has been and then also if youll continue to adjust pricing and promotions on a go forward basis to offset some of these supply chain issues.

Yeah. Thanks Lauren.

So again as I kind of highlighted there in the prior answer we have lots of different levers at our disposal around pricing and promotions.

Including ticket price increases and frequency of promotional promotions and depth of promotions on the ticketing front as we started to get line of sight to what the inflationary pressures where we can.

Coming in the end of Q2 and into the back half of the year, we did make select ticket changes. So the biggest example would be on our big three which candle business. We did take the ticket up by a dollar there. We also selectively took some tickets up in our.

Body care key forms as well as in some of our wallflower heaters.

More importantly, though because again the majority of our sales actually come from every day promotions. We are also based on our testing and our read and react capability, we have been gradually raising the level of promotion prices.

Across all of our categories here over the last 12 to 18 months and that's frankly something that we do every day that constant test read and react.

Changes something we've been doing for years.

But honestly, even more important in a timeframe like this where we are facing the inflationary pressures. So we've continued to do that.

We believe we've been successful in that we have not seen.

Negative customer reactions to this point in terms of the changes that we've made either to tickets or to promotional levels.

And we'll continue to do more of that I will say as we move into the fourth quarter. The reality is the fourth quarter is a much more promotional timeframe than the other three quarters of the year.

We as a business rely much more on key promotional days with both drives volume traffic and customer acquisition.

So while we will.

We still use that read and react capabilities that I described as we head into the fourth quarter.

We are expecting a promotional activity more in line with last year, both from a <unk>.

Frequency of pricing promotions as well as a depth of pricing promotions.

And so thats, what our forecast that's what is embedded in our forecast.

Great. Thanks, Andrew Thanks, Larry next question. Please.

Yes. Our next question comes from Kimberly Greenberger with Morgan Stanley. Your line is open.

Okay, great. Thanks, so much I'm really nice results here.

Andrew I wanted to ask about the.

Sort of degree of magnitude that you are considering or contemplating for the fourth quarter gross margin.

You talked about.

Having the fourth quarter down compared to last year.

Two Q4 of last year that is being driven by the inflation inflation.

Inflation, we called out roughly half of it is raw materials.

And the other part of it being driven by transportation wage pressures and supplies, but a significant pressure on our auc's is occurring in queue for and that combined with the fact that on the on the pricing side is Andrew said, we're planning to be.

Generally consistent from a promotional strategy in queue for compared to last year. So you add that up so to speak and that's that's what's driving or gross profit or gross margin right down significantly in the quarter.

And then and and women talked.

Talk about potential upside the calf.

Sure. So again the opportunity we have.

From a racist standpoints is is really about whether or not we were able to.

Be a little bit less promotional than last year as I mentioned and when do you.

Reaffirmed our current guidance is very similar approach to last year. So if we weren't able to be a little bit more aggressive in terms of pricing them that that could potentially result in some upside.

And then the other piece would be if we're able to perform at the high high or even higher range of our forecast obviously some of the costs are.

More fixed and magnitude and so we could get some leverage if we weren't able to dip over deliver on those sales line vs. Our forecast.

Great. Thanks, so much.

Thanks Kimberley.

Question. Please.

Yes. Our next question comes from Simeon Segal with BMO capital markets. Your line is open.

Thanks morning, everyone, perhaps on the ongoing results really well done.

So.

Great feels pretty well understood. This point I think in the script. You said you saw low double digit increase in <unk> as well if I got that right can you just speak to that growth I don't know if there's any new shopping tendencies with higher button. When you are seeing vs. Pre COVID-19. If there's something you think that'll that'll last or if there is a one time COVID-19 lap. So just trying to think about the <unk> going from here and then too.

The last one if you can speak to the 90 $100 million increase in forecasted cost. If you can break that down between raw material supply chain and transportation at all that would be really helpful. Thanks guys.

Okay. So let's start.

Andrew.

Thanks for the question is to me I just wanted to make sure I understood. The first part I was specific to the digital business.

Or to the right.

Whatever it was I think you called out a pretty notorious for transaction and huge ppm loved depo to you to a studio yeah. So when we think about the business on a two year.

Basis in general.

<unk>.

The growth that we've seen in stores has been phenomenal and really that started with the reopening trend from last year.

The July August September timeframe and from there.

We saw continued strength through the balance of the year so in the third quarter.

Vs. Two years ago, we saw traffic.

We saw a traffic up we saw conversion up vs. Two years ago, and we saw transactions up significantly and then to your question. We saw average dollar sale meaningfully.

Meaningfully on a two year basis and again the driver within that is both <unk>.

AUR.

Or through some of the pricing and promotional pieces that we were talking about earlier, but on the <unk> side, it's really been driven by the continued move of our customer to purchase across multiple categories.

And that has been something that we have been.

Frankly, driving for in terms of how we build our assortments. So we do a lot more across category collections now than we did further back in our history.

We do a lot more across category merchandising, both in the stores and online.

Online and we occasionally do cross category promotions as well and so the combination of all of those activities as driven us to see on a multi year basis, Joe from about 55% of our customers.

Purchasing multiple categories two years ago, now close to 60% of our customers purchasing across multiple categories and that obviously has.

Great impact on the <unk> and more importantly on that average dollar sale great.

Great and look as to when to a print that question.

[laughter].

On inflation in terms of the guidance roughly half of the dollars that we mentioned in our prepared remarks relate to raw materials. So we're seeing pressure throughout the component that we use in our business, including lax in other in other parts of our product.

So that's roughly half I would say roughly a quarter or 25% of the pressure we're seeing as in transportation, so that would be able to inbound outbound and parcel and then the balance would be primarily and wage wages. So whether it's the wage rates at our vendors that produced our product or.

Or in our distribution centers and fulfillment centers, we are seeing and all those places we are seeing wage pressure. So that's how it breaks down.

<unk> claimed his next to me.

Congrats guys that's left for the holiday.

Thank God.

Next question please.

Yes. Our next question comes from Matthew box with J P. Morgan Your line is open.

Great Thanks, and congrats on another great corner.

Thanks, Matt.

Andrew can you speak to growth in the customer file that you've seen during the pandemic. How how you think this translates to market share opportunity by category going forward and then.

Question that I just had to in terms of the the P&L to your guidance fourth quarter sales up mid to high single digits again, 22% growth a year ago. So as we think about the algorithm mid to high single digits going forward. Obviously compares will ease over time does that provide potential.

Upside.

Multiyear about your ability to lap up against vs material compares and what it may mean going forward.

Thanks, Matt and Andrew.

In terms of the customer so the great news there.

Is that what we were talking about at the end of last year at the end of 2020 was that despite the fact that we had overall a very strong year, we actually had seen a decline in our customer file.

In 2020 really driven by the fact that our stores were closed for 90 days in the middle of the first half and so while we.

We saw a great performance in the back half of 21.

Bill came up short.

The good news is that the first half of 2021 and Q3 have continued a strong trend of of absolute customer growth.

So that we are now up on a rolling 12 month basis, we're up low double digits two two years ago.

In addition, so that's in terms of the number of customers that we're seeing and we're also continuing to see really very strong customer engagement metric.

Metrics that are up from a spend standpoints in the.

Hi, 20% vs. Two years ago, so very very strong file and within that.

Part of your question, we're seeing nice growth on a two year basis now across all of our categories from a customer standpoint, and as mentioned earlier that percent of customers who are shopping across multiple categories is also up meaningfully.

As we've disclosed in the past those multi category customers spell.

Spend over three times more than a customer who purchases only one category and.

In a similar way.

We're also seeing nice growth in our dual channel customers. So.

Low teens percent of our business now in dual channel customers vs high single digit percent of our customers who will channel.

Two years ago and noticed customers also spend order of magnitude three times more than a single channel.

Customer so nice performance there again, we gained what this is.

All telling us is obviously weekday and customers here during the pandemic.

Some of that obviously through soaps and Sanitizers.

But as we are now lapping really that the extreme of those time friends and Q2 and Q3 of last year, we're seeing very nice retention rates, our retention rate on customers is actually higher than it was prepandemic even on a much higher customer base. So that's great as I mentioned earlier the.

Engagement metrics continue to be very strong and importantly, I think one of the things to also note is that the profile and performance of the new customers that we've gained inside of this timeframe is very comparable to the performance art.

Prior customer file. So these are equally valuable customers that at this point, we believe should be very valuable on a go forward business as well.

Great.

Matt.

Oh, you're a question to the head of a second question rhythms about Q Ford guidance. So yeah, yeah on queue for I think you are asking about our longer term growth algorithm and what does our queue for guidance tell us about the longer term I would say, our multiyear growth algorithm and as you.

Pointed out we communicated was we anticipate total sales growth of being up mid to high single digits over time, we believe that is still the appropriate growth algorithm I think what's important to note about Q4 is that we are lapping capacity restrictions in Q4 of last year.

So that's something that as we look for a multiyear growth algorithm, we won't have that as we go forward in 2022 and and later.

Great.

Thanks, Matt next question please.

Thank you. Our next question comes to mind, Stephanie was sync with Jeffries. Your line is open.

Hi, Good morning, this is Chris mankind of our staff.

If you could talk about the trends that you're seeing in Kansas is a sham and the outlook for that part of the business going forward. Thank you.

Thanks, Andrew.

Yeah. So.

We looked at the soap and sanitizer business together.

And really think about how that's performed during the pandemic relative to where it was.

Prior to the pandemic and as we've shared in the past.

In 2019 for example.

The soap and sanitizer business was.

Right around 14% of our business total business for the year lap.

Last year, it got up to almost 20% of the business, obviously driven by really the pandemic buying that was occurring and.

And Q2 and in Q3.

And as we said at the beginning of this year, we expected to moderate this year and probably stabilize somewhere in the mid to low teens percent of the business. What I would say is that our year to Dave results and our Q3 results.

We're all in line with that level of expectation in terms of where we expect it to to shake out and I think it is important to know that in the third quarter.

Where I think there was legitimate concern about would we be able to anniversary the tremendously high sales growth that we saw last year of mid fifties percent in the total business with.

With soap and sanitizer driving a number that was in the north of 70% range in that timeframe.

The good news is that while we did see unexpected year over year decline and search the sanitizer in Q3, the growth that we were able to generate on a year over year basis, and our body care business or home fragrance business and are getting an accessory businesses were almost able to fully offset so concerned.

Decline and so again.

On a on a longer term trend, we do expect it to to be up to where it was prepandemic, but it certainly won't be as high I'm speaking about substance sanitizers and won't be as high as it was in 2020.

That helps great.

Great. Thanks next question please.

Thank you. Our next question comes from Roxanne Maya M. K M partners to your line is open.

Great Congrats on the improved south and pump price selling in third quarter.

My question is on White firing you still have a nice runway for for growth in your remodeled can.

Can you remind us of the productivity of these how much more productive. They are then your stories without an attached Wifi iron and how you see the path for growth over the next year and few years and then as a follow up on that flat promotional strategy for four Q I know that last year you. Adjusted your approach to promo has just given you a <unk>.

<unk> constraints. So for example, running.

Running your candle day for multiple days.

How how are you could add impact things like that this year. Thanks a lot.

Thanks, Sam Andrew.

Thanks, Roxanne, yes so.

I appreciate the question on the White barn.

Strategy and performance.

Prior to the pandemic that was one of the major things we were talking about in the business again as we had.

To the start of the pandemic gotten about half of our fleet.

True a white barn remodel as we call it where we add that way.

<unk> barn room.

To to our existing real estate and as we talked about pretty extensively the productivity increases that we see out of those stores when we do that of.

Hi, teens to low 20% increases.

It was something we continue to be very excited about and the good news is after taking a an understandable break on a real estate activity in 2020 at an abundance of caution as we've ramped up in 2021, two numbers that aren't.

Where we were in 17 18, and 19 in terms of a number of projects, but still meaningfully higher than 2020. The good news is that the performance of those way farm remodels or new stores continues to be very very strong and online in line with the level of performance that we were seeing prior to the pen.

Demick, so where does that leave us by the end of this year, we will have about a thousand of our stores in the white barn.

Remodeled format.

And ultimately we would like all of our stores to be in that format really the question will be of the venues. The mall venues that are at risk.

Are vulnerable how many of those do we do vs. How many of those do we replace with different off mall locations.

So the second part of your question on the queue for promo strategy.

Then as I mentioned earlier, we are planning activity. That's in line with last year and to your point the last year promotional strategy was meaningfully different than our prior year strategy that included.

On some of our try it to believe it days, which are key promotional sharp price stays on individual categories. The candle date being the the biggest of those as you as you mentioned, we took from historically being only one day deals generally on a big Saturday to last year, we were successful.

Spreading those out over multiple days.

In addition are.

Friday deal that historically has been a one day only deal that also last year will be spread and basically made that promotion over the whole Black Friday week and so in both of those cases, both of those key price point tries to believe a days and that Black Friday deal. Our intent is to be similar to last.

A year and extend them over multiple days.

Great. Thanks, correct. Sam next question please.

Yes. Thank you. Our next question comes from J saw with UBS. Your line is open.

Great. Thank you so much and you have a question about hand sanitizer about the market in general.

Your sense for how the hand sanitizer market overall cross Yosses performed and you can you compare that to your business just to help us maybe understand the trends within Bath and body works vs. Some of the trends more broadly speaking and then secondly.

Catch on.

Some of the.

Constraints last year in stores during the holiday season, because there was no vaccine yet in some of that book can you also talk about some of the constraints online last year I mean last year. There's a lot of talk about shipping surcharges and difficulty fulfilling online orders because of the man was so strong what will that look like this year, how will that online business compare this year to last year. Thank you.

Thanks Kay.

Andrew.

Thanks, J so on Sanitizers obviously.

The market in 2020 saw an explosive grew.

Growth.

And I think as we've talked about on on a prior call or two.

That included many many.

People, who historically have not been in the hand, sanitizer business getting into the hand sanitizer business.

As a reaction to that tremendous increase in the market that was occurring driven by a customer demand obviously.

So.

As we've come out of 2020 and through 2021 many of those players.

Ancillary players that have gotten into the business, obviously got out of the business and in some cases has to go too deep.

Rice promotions in order to exit their positions and so we are still very happy that we are in the hand sanitizer business, we're in it and Ah meaningfully and profitable way. It is up materially from where it was two years ago as mentioned earlier, it's obviously down on a one year basis as well.

Lapping that explosive growth last year, but we view it is definitely a very attractive market to be part of on a go forward basis. As we do expect and frankly are continuing to see that customer behavior is different now and 2021 and then it was back in 2019 and.

Prior.

So again, a market that saw a tremendous growth last year I think the market is experiencing a decline. This year, we won't have full year numbers on that until early in the new year, but certainly from what we're able to gauge that's what's happening, but we're very pleased with our business within that.

So the second part of your question on capacity online so yes last year.

Certainly we or constrained in multiple ways. So one way was the online business for Bath and body works was order of magnitude doubling year over year that certainly was not our plan as we entered the year in 2020 and while the team did a phenomenal job of procure.

Seeing additional fulfillment capacity through the full year. The reality is we were we were really hand to mouth in terms of our ability to fulfill the business last year and so while we were pleased with the overall business results.

The lead times or the amount of time it was taking to ship products to our customer was was longer than we would like it to be our shipping cutoff as we headed into holiday was earlier than we would have liked it to be.

And.

Some cases based on inventory levels are online business was unable to participate in all the different promotions that we were running in stores. So I think the good news is this year.

We're in much better shape in terms of having procured the appropriate amount of fulfillment capacity that will allow us to have.

Quarter shipping windows, and knocking on wood, hopefully be able to extend our shipping cutoff pre Christmas some of that will obviously depend on the on the macro environment and what our carriers are able to provide year over year, but that as well as our inventory levels were confident will will.

Leave us with much less constrained online this year vs last year.

Thanks, Dan.

Next question please.

Question comes from Paul Lashway with City. Your line is open.

Hey, just one quick short term and one longer term.

Short term where their ticket changes that were taken for the fourth quarter. This holiday season that had not taken effect.

Three Q.

Curious if you've made any changes recently and then just longer term I'm just kind of curious Andrew what do you look at is the lowest hanging for does she think about that mid to high single digit top line growth over the next several years, but even as we look out to 22 any new categories new opportunities that you see is kind of low hanging fruit as we look out.

Next year and beyond.

Okay.

Yes, thanks, Paul so.

On the first part of your question in queue for tickets differences vs. Q3, I think the short answer to that would be no.

The ticket changes that we made as we started to get visibility into the inflationary pressures as I talked about earlier, we really made as we moved into the the back half of the year. So the third quarter had those ticket increases and it already so nothing that we're doing differently from a ticket standpoint Q4 vs Q3.

And then on your question on long term.

We talked about over the summer are are long term outlook in our business plan associated with that we talked about lots of things and.

In terms of further expansion within our existing core categories as well as getting into adjacent categories.

But my belief is the lowest hanging fruit within that is still around.

Key item.

Opportunities to further <unk>.

Expand out our assortment in the categories in which we already play. So examples of that are things like an additional.

Form and candles today, we're very reliance on the one three weeks and to a lesser extent on a single with candles.

Additional opportunity there within body care opportunities around things like bar so.

Things like Antiperspirants, deodorants, and the men's business things like moisturizing body wash across the body care Assortments.

And then within soaps were also very reliant on our foaming soap and so further expansion of additional so forms and sanitizer forms of.

Obtuse again from our lowest hanging fruit.

Within the categories that were already very successful an opportunity to expand key items.

Got it. Thank you good luck.

Thanks, I think we have time for one.

Justin.

Thank you our last question comes from mining apparel with retail track or your line is open.

Yes, Andrew.

Andrew I was actually still happy to see the bar setbacks. So thank you for that.

I am curious as you guys have raised prices a little bit pullback on promotion are you seeing kind of Conversely, a stronger reaction when you do promotions in place and how should we think about your.

Post Christmas traditional sale this year.

Thanks, Smarmy, Andrew Yeah. Thanks Mare good question so.

Again, the short answer to the first part of your question would be yes, so as as we've.

They're done a ticket price increases or shallower every day deal promotions. When we then do go to a sharper promotion, whether it's on the try it to believe it days or even on other what we would call power promotions.

A buy one get one free event on our three with candles for example.

Are seeing nice strong reactions to those promotions to your point showing that.

That is while the customer has gotten accustomed to the higher prices. They deals they still do really respond well when we when we do that deeper promo.

The second part of your question on semi annual sale.

Semiannual sale last year, we did run one but it was.

Significantly shower shallower discounts than we are historically and the penetration within that semiannual sale driven by clearance merchandise.

And specifically bought for sale merchandise was down meaningfully over prior years and in 2021, which will be calendar of 2022 for that Jan. So we are expecting a return to a more traditional approach to semiannual sale. Both in terms of depth of offer and then.

Terms of amount of clearance and bought for sale vs history.

Excellent thanks, guys and that's all embedded that's all embedded in our guidance.

So I figured you promotions are doing well, sometimes it's like a friend in your store when you run some of them.

We do like a frenzy [laughter].

We're all safe and socially distance [laughter].

Thanks Martin.

Conclude.

Wow.

Thanks.

Interest in Bath and body works and we wish you are healthy and happy Thanksgiving.

Thanks.

Thank you for your participation participants you may disconnect at this time.