Q3 2021 Victoria's Secret & Co Earnings Call
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Good morning, My name is Cedric and I will be your conference operator today at this time I'd like to welcome everyone to the Victoria's Secret and company's third quarter 2021 earnings Conference call. Please be advised that today's conference is being recorded all parties will remain in a listen only mode until the question and answer session of today's call at that time.
Speaker 1: Good morning, my name is Cedric and I will be your conference operator today at this time. I'd like to welcome everyone to the Victoria secret and companies third quarter 2021 earnings conference call. Please be advised that today's conference is being recorded. All parties will remain in the listen only mode until the question and answer session of today's call at that time to ask a question. Please press star than 1 on your phone and record your name at the prompt.
To ask a question. Please press Star then one on your phone and record your name at the problem I would now like to turn today's call over to Mr. Jason where vice President Investor Relations at Victoria's Secret and company, Jason You may begin.
Speaker 1: I would now like to turn today's call over to Mr. Jason Weir, Vice President of Investor Relations at Victoria's Secret & Company. Jason, you may begin.
Thanks, Andrew Good morning, and welcome to Victoria's Secret <unk> third quarter earnings conference call for the period ending October 32021.
Speaker 2: Thanks, Cedric. Good morning and welcome to Victoria's Secret & Co.'s third quarter earnings conference call for the period ending October 30th, 2021.
Speaker 2: 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 release.
As a matter of formality I need to remind you that any forward looking statement. We may make today are subject to our safe Harbor statement found in our SEC filings.
And in our press releases.
Speaker 2: Joining me on the call today are CEO , Martin Waters, CFO , Tim Johnson, and EVP Finance, Brad Kramer. We are available today for up to 45 minutes to answer any questions.
Joining me on the call today are our CEO Martin waters, CFO, Tim Johnson, and EVP Finance, Brad Kramer.
We are available today for up to 45 minutes to answer any questions.
Speaker 2: All of the results we discussed on the call today are adjusted results and exclusive special items described in our press release. Thanks and now I'll turn the call over to Martin.
All of the results we discussed on the call today are adjusted results and exclude the special items described in our press release, Thanks, and now I'll turn the call over to Martin.
Thanks, Jason and good morning, everybody.
Speaker 3: We're very pleased with our third quarter performance, which saw us achieve growth in all core categories. Our work to deepen our connection with the customer while improving our operational fundamentals is gaining traction, and the customer is responding positively to our brand transformation.
We're very pleased with our third quarter performance, which saw us achieve growth in all core categories.
Work to deepen our connection with the customer while improving our operational fundamentals is gaining traction and the customers responding positively to our brand transformation.
Speaker 3: We continue to improve our merchandise assortment and expand our already strong file.
We continue to improve our merchandise assortment and expand our already strong file.
I'm, so proud of the commitment and resilience demonstrated by our teams who delivered these results and obviously challenging circumstances and.
Speaker 3: I'm so proud of the commitment and resilience demonstrated by our teams who delivered these results in obviously challenging circumstances and in doing so are demonstrating the power of a happy and healthy culture.
Doing so are demonstrating the power of a happy and healthy culture.
Speaker 3: Turning to our third quarter performance, we delivered sales, margin, and operating income growth on top of solid results last year, and that in spite of significant supply chain headwinds this year.
Turning to our third quarter performance, we delivered sales margin and operating income growth on top of solid results last year and that in spite of significant supply chain headwinds this year.
Speaker 3: We reported third quarter earnings of $0.81 per share ahead of our previous guidance of $0.60 to $0.70.
We reported third quarter earnings of 81 cents per share ahead of our previous guidance of 60 to 70.
Speaker 3: The per share result was similar to last year's adjusted earnings per share of $0.82, as the impact of operating income dollar growth was offset by the interest costs associated with the debt from our public company spin-off from L Brand.
The per share result was similar to last year's adjusted earnings per share of <unk> 82.
As the impacts of operating income dollar growth was offset by the interest costs associated with the debt from a public company spin off from El brands.
Sales growth of 7% combined with significant growth in merchandise margin rate and disciplined expense management drove these results.
Speaker 3: Sales growth of 7% combined with significant growth in merchandise margin rate and disciplined expense management drove these results.
Speaker 3: Compared to 2019, sales actually decreased 9%, and that's reflecting the net closure of about 260 company-operated stores since the third quarter of 2019. However, comparable sales increased by 4% compared to 2019.
Compared to 2019 sales actually decreased 9% and thats, reflecting the net closure of about 260 company operated stores since the third quarter of 2019.
Comparable store sales comparable sales increased by 4% compared to 2019.
Operating income in the third quarter was $108 million, which is an increase of nearly $11 million or 11% compared to last year, and an increase of $204 million compared to 2019.
Speaker 3: Operating income in the third quarter was $108 million, which is an increase of nearly $11 million, or 11 percent, compared to last year, and an increase of $204 million compared to 2019.
Speaker 3: As shared in our written commentary, we believe the supply chain presses will significantly impact our results in the fourth quarter.
As shared in our written commentary, we believe the supply chain presses will significantly impact our results in the fourth quarter.
Speaker 3: Operating income for the fourth quarter is expected to be in the range of $295 to $335 million, which is down to last year's result of $388 million, driven by those same supply chain headwinds, but we're estimating $100 million of cost from those, and lapping one-time rent abatements last year, which were about $65 million.
Operating income for the fourth quarter is expected to be in the range of $295 million to $335 million.
Which is down to last year's result of $388 million driven by those same supply chain headwinds that we're estimating $100 million of costs from those and lapping onetime rent abatements last year, which were about $65 million.
Speaker 3: Thank you. That concludes our prepared remarks and at this time we'd be more than happy to take any questions that you might have.
Thank you that concludes our prepared remarks and at this time, we'd be more than happy to take any questions that you might have.
Speaker 1: As a quick reminder, if you'd like to ask a question, please press star then 1.
As a quick reminder, if you'd like to ask a question. Please press Star then one.
One moment for the first question.
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Speaker 1: And our first question comes from Lorraine Hutchinson with Bank of America. Your line is open.
And our first question comes from Lorraine Hutchinson with Bank of America. Your line is open.
Speaker 4: You had some new launches this quarter, and I just wanted to see if you could give a little bit more detail around the reaction to new launches, what you're hearing from customers, and then if you could give us a forward look into how robust the pipeline for newness is over the coming quarters.
You had some new launches this quarter and I just wanted to.
Maybe if you could give a little bit more detail around the reaction to new launches what youre hearing from customers and then if you could give us a forward look into how robust the pipeline for newness is over the coming quarters. Thank you.
Speaker 3: Yeah. Thanks, Lorraine. Thanks for the question. So as you heard me say, Lorraine, we had growth in all major categories, which is terrific and actually margin growth ahead of sales in those categories. And the good news is that it was driven by newness. So particular strength in the Infinity Flex bra, which came in at our number five bra frame, which given a relatively cautious buy was an incredible result and we'll be building on that in 2022. So that was really good. We were thrilled with the response to the maternity bra, which had amongst the highest likes and ratings of any of our social media posts through the year and actually was our number four bra frame on the days that it was featured. So from a standing start of never having been in that business,
Yes. Thanks, alright. Thanks for the question. So as you heard me say Lorraine, we had growth in all major categories, which is terrific and actually margin growth ahead of sales in those categories and the good news is that it was driven by newness. So particular strength in the Infinity Flex bra, which came in at number five for our frame.
Which given a relatively cautious by was an incredible results and we'll be building on that and 2022. So that was really good we were thrilled with the response to the maternity bra.
Which had amongst the highest likes and ratings of any of our social media post through the year and actually was our number four overall frame on the days that it was featured so from a standing start of never having been in that business. We saw a huge jump and then there were other sort of pockets of newness that were less significant to the dial moving but we're very strategically significant.
Speaker 3: but were very strategically significant, like the inclusion of a mastectomy bra, which we bought 12,000 units and sold out in five days. So all across the franchise in Victoria, we saw good growth and particular strength in the bra category.
Like the inclusion of a mastectomy bra, which we bought 12000 units and sold out in five days. So all across the franchise and Victoria, we saw good growth and particular strength in the bra category within pink the Abaza TT was very strong as was our intimates business.
Speaker 3: Within Pink, the varsity key was very strong, as was our intimates business.
Speaker 3: And it's worth noting that our logo shop had its record year, which obviously underlines the strength of the brand. So really pleased about that.
And it's worth noting that our logo shop had its record year, which obviously underlines the strength of the brand so really pleased about that.
Speaker 3: And within the beauty business, there's continued strength in bombshell, obviously the core of our business, but.
Within the beauty business. This continued strength in bombshell, obviously, the core of our business, but maybe a couple of other coal as natural beauty and the daily body care line got to five 5% of sales from a standing start which was incredible really beautiful product and in the <unk> franchise, we added two new flavors in cloud and <unk>.
Speaker 3: Maybe a couple of other callouts, Natural Beauty in the daily body care line got to five and a half percent of sales from a standing start, which was incredible. Really beautiful product.
Speaker 3: And in the Tees franchise, we added two new flavors in Creme Cloud and Candy Noir that were both really big hits. So right across the board, newness is driving the business. And you'll remember, Lorraine, from the old days when this business is at its best.
We're both really big hit so right across the board newness is driving the business and Youll remember Lorraine from the old days. When this business is at its best we have a lot of newness and his genuine innovation. So you asked about the pipeline for new products.
<unk> focused on what's new for Q4 are more focused on what's new in the next 18 months, we needed a much longer time horizon to newness than we've had in the <unk>.
Speaker 3: We need a much longer time horizon to newness than we've had.
Speaker 3: in the last couple of years. And so looking at our bra pipeline, we need at least two new bra frames per year. And I can see those.
Last couple of years and so looking at all Brian for all pipeline, we need at least two new bra frames per year and I can see those.
Speaker 3: And we need to engage and leverage the power of our collective to generate more newness. So, you may have seen the Haley Bieber collab on a silk line as an example of leveraging that group. So, lots of newness. Right now, the focus is on getting the merchandise here rather than inventing new. We have 10 weeks left in the all-important fourth quarter, and we're ready for action. Thanks.
And we need to engage and leverage the power of our collective to generate more newness. So you may have seen that hailey Bieber co.
Co lab on our silk line as an example of leveraging that group. So lots of newness right now the focus is on getting the merchandise here.
Rather than inventing new we have 10 weeks left in the all important fourth quarter and we are ready for action. Thanks for the question.
Yes.
Speaker 1: Thanks, Lorraine. Next question, please. Our next question comes from Ike Borchow with Wells Fargo. Your line is open.
Thanks Lorraine next question. Please our next question comes from Ike <unk> with Wells Fargo. Your line is open.
Hey, good morning, everyone.
Speaker 5: Hey, good morning, everyone. Wanted to focus on the direct business. So, you know, this was the second quarter in a row of year over year declines. Can you kind of walk us through what's going on in that channel? How much of this is just kind of right-sizing promotional activity and better full price selling? And then, you know, just when I look at the model, Q4 has a pretty robust compare as does Q1. Should we kind of assume that you're gonna continue to have
Wanted to focus on the direct business. So this was the second.
Second quarter in a row of year over year declines can you kind of walk us through what's going on in that channel. How much of this is just kind of right sizing promotional activity and better full price selling and then just when I look at the model Q4 has a pretty robust compare as does Q1 should we kind of assume that youre going to continue to have.
Speaker 5: year-over-year declines in that channel until we start to lap that maybe in the second quarter of next year, just trying to understand how that channel either puts and takes.
Year over year declines in that channel until we start to lap that maybe in the second quarter of next year, just trying to understand how that channel is the puts and takes of the channel right now.
Yes. Thanks.
Speaker 3: Yeah, thanks. So you talk about the climate. Remember, we're comparing against the very odd year where stores were not open. So I don't quite see it that way. The way I look at it is that our digital business in Q3 was up 23% on a 2LY basis.
So you're talking about decline, but remember we're comparing against the very <unk> stores will not open so I don't quite see it that way the way I look at it is that our digital business in Q3 was up 23% on a two hour wide basis, which is broadly similar slightly behind but broadly similar with the increase that we saw in Q2, so actually the digital business was.
Speaker 3: which is broadly similar, slightly behind, but broadly similar with the increase that we saw in Q2. So actually, the digital business was tracking pretty well. The real story is that stores came back and a significant.
Tracking pretty well the real story is the stores came back in a significant.
Speaker 3: part of our competitive advantage is having 850 points of physical distribution. Our most valuable customer is the customer that shops across both channels at the same time. So my focus is less about the absolute participation of the digital business and more about the overall health of the system.
Part of our competitive advantages, having 850 points of physical distribution, our most valuable customers the customer that shops across both channels at the same time. So my focus is less about the absolute participation of the digital business and more about the overall health of the system that said within digital we had literally hundreds of upgrade.
Speaker 3: That said, within digital, we had literally hundreds of upgrades to our user experience. And they're on the front end, but also in the back end in terms of omni-channel capability, ship from store, buy online, pick up in store, order from store, deliver from the web. We also set up our new automated DC, which is truly robotic and state-of-the-art. We've been stress-testing the digital system. We just pumped through 2,200 orders per minute.
AIDS to our user experience.
And they are on the front end, but also in the backend in terms of Omnichannel capability ship from store buy online pickup in store order from saw to deliver from from the web. We also stood up a new automated DC, which is truly robustly I can state of they are we've been stress testing the digital system and we just come through too.
200 orders per minute successfully to dimension that our peak hours would be about 30000.
Speaker 3: successfully. To dimension that, our peak hours would be about 30,000 orders per hour being processed. And in our stress test, we did 99,000 orders in an hour. So while there is still more work to do on our digital capability, and there always will be, I'm really pleased with the progress that the team has made.
<unk>.
Sure thing.
Being processed in our stress test, we did 99000 orders in and so while there is still more work to do on our digital capability and there always will be I'm really pleased with the progress that the team has made.
Speaker 3: As it relates to the fourth quarter, we don't really know. I mean, what I would like to see, as I said, is stores continuing to roll back.
As it relates to the fourth quarter, we don't really know I mean, what I would like to say as I said is stores continuing to roll back.
Speaker 3: We're at our healthiest when both channels are working really hard. And as it relates to the 2022 guidance, we're just not in a position to say, you know, 10 weeks left in the quarter, full focus on that. We will give you guidance for 2022 when we come back in January , February period. But for now, it's all about the fourth quarter. Thank you.
Healthiest when both channels.
Working really hard and as it relates to the 2022 guidance would just not in a position to say 10 weeks left in the quarter full focus on that we will give you guidance for 2022, when we come back in January February period, but for now it's all about the fourth quarter.
Thanks, Ed Thanks, Marty.
Speaker 6: Thanks, I next question please. The next question comes from Matthew Boss with JP Morgan. Your line is open.
Thanks, Mike next question please.
Question comes from Matthew Boss with Jpmorgan. Your line is open.
Maybe you're on mute, Matt Matt you may be on mute.
It's gone for coffee.
<unk> go to the next question, we will try to pick up Matt.
Speaker 1: Okay, and our next question comes from Roxanne Mai with MKM Partners, your line is open.
And our next question comes from Roxanne Meyer with MK and partners. Your line is open.
Great. Thanks, good morning, and congratulations on a strong quarter.
Speaker 7: Great, thanks, good morning, and congratulations on a strong quarter. My question is, first, on the sales metrics, you know, would you be willing to provide color on your AUR versus your basket size, and then second, I'm just curious, I know you mentioned Haley Bieber as part of the collective. Can you talk about the impact that the collective is having so far and the consumer response? Thanks a lot.
My question is first on the sales metrics would you be willing to provide color on your AUR versus your basket size.
And then second I'm, just curious I know you mentioned Hailey Bieber as part of a collective.
Can you talk about the impact that the collective is having so far and the consumer response, thanks a lot.
Speaker 3: Let's do that in reverse order. So as it relates to the
Let's do that.
In reverse order so as it relates to the collective good morning, Brooks and nice to hear from you.
We are thrilled with the response to the collective the repositioning of the brand continues to gain great momentum and that shows up in our sales. It shows up in the health of the file shows up in our social media likes and followers 71 million followers on Instagram and some really strong responses. We just did a Facebook live.
Speaker 3: the response to the collective. You know, the repositioning of the brand continues to gain great momentum, and that shows up in our sales, it shows up in the health of the file, shows up in our social media likes and followership, 71 million followers on Instagram, and some really strong responses. We just did a Facebook Live event a couple of days ago that was a terrific success, 20 million followers on Facebook, 10 million on Instagram. So, you know, there's real power in social media, and having the likes of Linda McCartney and Bella Hadid and Hayley Beaver and Valentina and Megan Rapinoe, Naomi Osaka, you know, all of these great names who advocate for women in some way, shape, or form is obviously positive for us. And you don't need to take my word for that. I can tell you last night, looking at our brand tracker, that the response to all things collective is 95% positive. That is.
Event couple of days ago. It was a terrific success 20 million followers on Facebook $10 million on Instagram, So there's real power in social media and having the likes of Linda Mccartney and Bella Hadid, and Hailey, Bieber and Valentin or Mega Luppino, Naomi Osaka all of these great names, who advocate for women in some way shape or form.
Obviously positive for us and you don't need to take my word for that we I can tell you last night looking at our brand tracker. The response to all things collective is 95% positive that is an incredibly strong rating when as you know at least some famous people not universally appreciated by everybody.
Speaker 3: the response to all things collected is 95% positive. That is an incredibly strong rating. When, as you know.
Speaker 3: athletes and famous people that are not universally appreciated by everybody.
Speaker 8: So we feel really good about the diversity that we have across that mix and we feel really good about working with those partners in different ways. It isn't necessarily about merchandise in the case of Haley, it could be about imagery in the case of Paloma, it could be about shapewear line in the case of Priyanka and it could be about advocacy for breast cancer in the case of Linda. So we have a wide variety of ways in which we can partner with these incredible women and I can tell you that the collective will grow, there will be more people included and we will grow this family in a really strong and inclusive way. So Brad, do you want to pick up the financial question that Roxanne asked? Yeah. Hi Roxanne, this is Brad. Just in terms of a couple of the retail metrics in the third quarter.
We feel really good about the diversity that we have across that mix and we feel really good about working with those partners in different ways. It isn't necessarily about merchandise in the case of Hayley it could be a bad.
Imagery in the case of Paloma it could be a bad Shapewear line in the case of Priyanka.
It could be about advocacy for breast cancer in the case of Linda So we have a wide variety of ways in which we can partner with these incredible women and I can tell you that the collective will grow there will be more people included and we will grow this family and a really strong inclusive way. So Brad do you want to pick up the <unk>.
Financial question that Roxana.
Hi, Roxanne. This is Brad just in terms of a couple of the retail metrics in the third quarter, we have made significant progress.
Speaker 8: We have made significant progress.
Speaker 8: over the last five quarters in terms of driving AUR expansion.
Over the last five quarters in terms of driving AUR expansion.
Speaker 8: And we saw those themes continue into the third quarter, we believe, in part, that's driven by the strength of the assortment and the health.
And we saw those themes continue into the third quarter. We believe in part that's driven by the strength of the assortment and the health of the brand.
Speaker 8: Of the brand, the 2 call outs would be that that expansion and margin rate expansion in Q3 is driven by a mix higher mix into full price selling and a pullback and promotional activity within the quarter.
Two callouts would be that that AUR expansion and margin rate expansion in Q3 is driven by a mix of higher mix into full price selling and a pullback in promotional activity within the quarter. We also saw balanced growth on basket size across both channels and on a year over year basis growth expansion of that.
Speaker 8: We also saw balanced growth on basket size across both channels and on a year-over-year basis growth expansion of that basket. So, very healthy indicators looking at the metabolism.
So very healthy indicators looking at the metrics in the quarter.
Speaker 3: Thanks, Brett. And forgive me, I inadvertently referred to Stella McCartney as Linda McCartney. I'm showing my age there using her mom's name. So forgive me for that, Stella.
Thanks, Brad and forgive me.
In Advertently referred to Stella Mccartney is Linda Mccartney I'm, showing my age they are using our mom's name. So forgive me for that.
Next question please.
Our next question comes from Simeon Siegel with BMO capital markets. Your line is open.
Speaker 1: Our next question comes from Simeon Segal with BMO Capital Markets. Your line is open. Thanks. Hey, good morning everyone.
Thanks, Hey, good morning, everyone. Congrats on the progress.
So just just to follow up on that briefly on different way of thinking about it any way to break out the 1% to 2% of supply chain sales pressure between the last units versus maybe kind of the offset that you have for being able to raise prices because of scarcity.
Trying to think as we go forward, how you see the balance of units versus AUR add supply chain does ultimately reopen and maybe as a follow up to that how are you buying inventory at this point into next year. Thanks, guys.
Speaker 3: I'll start with some colour around supply chain and maybe won't directly answer your question, Simeon, but I'll give a sense of what's going on in supply chain, which will hopefully be of use to everybody. So as it relates to the fourth quarter and the back half of the year, we ordered to go into the season, we ordered in the order of round numbers, 200 million units of stuff.
Yes, I'll start with some color around supply chain, maybe won't directly answer your question.
But I will give a sense of what's going on in supply chain, we still hope to be.
<unk> used to everybody so as it relates to the.
<unk> fourth quarter and the back half of the year, we ordered to go into the season, we ordered in the order of round numbers 200 million units of stock.
Speaker 3: And 90 million of those 200 million are delayed. That's 45 percent of our purchase requirements.
$90 million of those $200 million are delayed that's 45% of <unk>.
Purchase requirements for the fall season delayed and the delays of between $2 nine weeks and in some cases, we won't get the merchandise agile. So all of our plans are being reworked 90% of our merchandise will come in by air.
Speaker 3: for the fall season delayed, and the delays are between two and nine weeks, and in some cases we won't get the merchandise at all.
Speaker 3: So all of our plans are being reworked, 90% of our merchandise will come in by air.
Speaker 3: And that doesn't make it super quick because air in the old days, meaning a year ago, used to be two days. It's now more like nine days.
And that doesn't make it super quick because air in the old days, meaning a year ago used to be two days is now more like nine days and in addition to that we have 100 vessels at <unk> right now that are not coming ashore and all of that winds up to $150 million of the cost pressure 50 of which we recorded in the third quarter of 100 of which will be.
Speaker 3: And in addition to that, we have 100 vessels at anchor right now that are not coming ashore. And all of that winds up to $150 million worth of cost pressure, 50 of which we recorded in the third quarter, 100 of which will be in the fourth quarter. So it's a really big thing. I don't buy the scarcity equals faster selling. We don't see that happening at all.
In the fourth quarter. So it's a really big thing I don't buy the scarcity equals more vehicles fastest selling we don't see that happening at all.
Speaker 3: If I look at a category like PGAs right now, 25% of our PGAs are late.
If I look at a category like PJM right now.
25% of our <unk> today, we have 30% less P. J as in our system than we had a year ago.
Speaker 3: Today, we have 30% less PJs in our system than we had a year ago. That is clearly bad for business. And so.
That is clearly bad for business and so.
Speaker 3: It impacts the customer in that she doesn't see the array of newness that she's used to seeing at this time of year. Now, that'll put pressure on November . We hope that December will be better, and we're expecting that December will be better, and we think that there's some upside in January as well.
It impacts the customer and that she doesn't see the array of newness that she is used to seeing at this time of year that will put pressure on November <unk>, we hope that December will be better.
Acting that December will be better and we think that there is some upside in January as well the biggest issue frankly, and you alluded to a little bit in your question is the lack of ability to chase. So normally we would buy a season that 55%, 45% Chase we cant do that now.
Speaker 3: The biggest issue, frankly, and you alluded to it a little bit in your question, is the lack of ability to chase.
Speaker 3: So normally we would buy a season of 55% bought, 45% chased. We can't do that now. You gotta place all of your bets. And the same will be true for the spring season in that it's just not safe to leave orders on the table, money on the table, and chase to it later.
Got to place all of your beds and the same will be true for the spring season, and that is just not safe to leave orders on the table money on the table and chase to it later, so more buying forward longer lead times less agility in our supply chain more reworking of our plans on a daily basis to respond to.
Speaker 9: So more buying forward, longer lead times, less agility in our supply chain, more reworking of our plans on a daily basis to respond to what we have. With all of that said, customer doesn't care. She doesn't come into our shops and say, oh, I see that they've got some delays. So our job is to just make the best out of the assortment that we've got, and that's what we're doing on a day-to-day basis. So I hope that gives you more color on the question, but if there's anything I missed, please jump back in. No, that's great. Thanks a lot, guys. Best of luck for all of you.
What we have with all of that said customer doesn't care she didn't come into our shops and say Oh I see some delays. So our job is to just make the best out of the assortment that we've got and that's what we're doing on a day to day basis. So I hope that gives you more color on the question, but if there's anything I Miss please please jump back in.
No that's great. Thanks, a lot guys best of luck for holiday.
Cool.
Thanks, Tim next question.
Our next question comes from Matthew Boss with Jpmorgan. Your line is open.
Speaker 1: The next question comes from Matthew Boss with J.P. Morgan. Your line is open. Great, thanks. Just had some technical difficulties.
Great. Thanks, I had some technical difficulties there to start off the queue.
Congrats on a really nice quarter.
Great. Thank you.
Speaker 10: Martin or TJ, so on the multi-year.
Martin or T J.
So on the multi year mid single digit revenue target.
Speaker 10: single-digit revenue target. Thanks for all the color on the fourth quarter and my sense is that maybe there's a little lumpiness as we start the year with supply chain and lapping stimulus but as we think about that multi-year mid-single-digit annual run rate
Thanks for all the color on the fourth quarter and my sense is that maybe there's a little lumpiness as we start the year with supply chain and lapping stimulus.
But as we think about that multi year mid single digit.
Annual run rate.
Is there.
Speaker 10: Is there any change in your confidence, I mean, I think that's where you see the category growing. It seems like there's opportunity relative to the category potentially on a market share perspective. But if you could just kind of walk us through that annual target, is that an annual step up that we need to hit that target, or was that a mid-single-digit target that you planned on hitting each year if there weren't any of these kind of one-time transitory?
Is there any change in your confidence I mean, I think that's where you see the category growing.
Seems like Theres opportunity relative to the category potentially on a market share perspective.
But if you could just kind of walk us through that annual targets is that an annual step up that we need to hit that target or was that a mid single digit target that you plan on hitting each year. If there werent any of these kind of onetime transitory items.
Thanks, Matt and welcome back.
Speaker 3: Thanks, Matt, and welcome back. So, as you know, this call is all about the third quarter looking backwards and staring forward into the fourth quarter. So we're not spending a lot of time on our multi-year analysis, but I can answer your question, which is, we believe in the target of mid-single-digit growth per year on the basis that that just keeps pace with market growth. So we are not guiding to growth in market share. We're just saying, if the categories we operate in, and they're good categories, as you know, if the categories that we operate in are growing at mid-single-digit, then we should do same.
As you know this call is all about the third quarter looking backwards and staring forward into the fourth quarter. So we're not spending a lot of time on a multiyear analysis, but I can answer your question, which is we believe in the target of mid single digit growth per year on the basis that that just keeps pace with market growth. So we are not guiding.
To growth and market share with just saying if the categories. We operate in and that good categories. As you know if the categories that we operate in are growing at mid single digit then we should do same is there reason to believe we could do better than that there is but equally the competitive environment has changed beyond all recognition during the four years of our.
Speaker 3: Is there a reason to believe we could do better than that? There is.
Speaker 3: But equally, the competitive environment has changed beyond all recognition during the four years of our execution missteps. So we don't have the God-given right to assume the market shares that we had in the old days. The landscape has changed.
Execution missteps. So we don't have the goat given right to assume the market shares that we had in the old days. The landscape has changed so I think we will do incredibly well if we keep pace with the current market and we have reason to believe we might do better, but we're not guiding to that.
Speaker 3: So I think we'll do incredibly well if we keep pace with the current market. And we have reason to believe we might do better, but we're not guiding to that.
Hope that helps Matt.
Great Best of luck.
Thanks, Matt next question on.
Speaker 1: Thanks, Matt. Next question. And this question comes from Susan Anderson with the Riley. Your line is open.
Our next question comes from Susan Anderson with B Riley Your line is open.
Speaker 11: Hi, good morning. Alec leg on for Susan. Nice job on the quarter.
Hi, good morning, Alex leg on for Susan Nice job on the quarter.
Speaker 11: Um, but yeah, my question is just related to on the website. You have the brands we love section, which is essentially a third party marketplace, um, and it carries some high heat brands such as, um, how big is that for the overall business and thoughts on the direction of that going?
But my question is just related to on the website you have the brands, we'd love section, which is essentially a third party marketplace and it carries some high heat brands such as <unk>, how big is that for the overall business and thoughts on the direction of that going forward.
Well, that's a great question.
Speaker 3: Well, that's a great question. I love that question. I think that there is very high strategic significance.
That question.
I think that there is very high strategic significance and the idea of aggregating other people's content I think it's a very big idea for US one that we haven't leveraged previously so if you.
Speaker 3: in the idea of aggregating other people's content. I think it's a very big idea for us, one that we haven't leveraged previously. So if you attended our analyst call that we had just before the time of the spin, I talked about one of the four pillars of the brand going forward being aggregation, and it speaks to exactly this. So there are three reasons why I think it's a good idea. Number one, if it gets us it, meaning the idea of other people's content.
Attended.
Our analyst call that we had just before the time of the spin I talked about one of the four pillars of the brand going forward being aggregation and it speaks to exactly that so there are three reasons why I think it's a good idea number one if it gets as it meaning the idea of other people's content.
Speaker 3: If it gets us to categories or segments where we're currently underweight, that's a good idea. If it gets us to customer groups where we're currently underweight, that's a good idea. If the brand adds to the halo of our overarching Victoria's Secret positioning, it's a good idea.
<unk> two categories those segments, where we're currently underway that's a good idea.
It gets us to customer groups, where we're currently underway. That's a good idea if the brand ads to the Halo of our overarching Victoria's secret positioning its a good idea amongst those three parts of the rationale there are several places we could go for example extended sizes on the small end and the big and so Beautiful example launch this week at <unk>.
Speaker 3: Amongst those three parts of the rationale, there are several places we could go. For example, extended sizes on the small end and the big end. So a beautiful example launched this week is Mindvars.
<unk> brought us.
Speaker 3: A fantastic product where five sizes of bra in the category of double D and above get you to something like 38 different sizes.
Fantastic product were five sizes abroad.
In the category of double D and above get you to something like 38 different sizes.
Speaker 3: So, you know, it's an incredible innovation, a really wonderful product at an accessible price point. Why wouldn't we partner with them to do something good?
Abroad.
It's an incredible innovation, a really wonderful product at an accessible price point why wouldn't we partner with them to do something good.
Speaker 3: You should expect to see more in that area, including rethinking the way that we badge it, including rethinking the way that we sort and edit what's in that collection to finesse it more so that it isn't just a collection of interesting stuff. It actually has real purpose and that it aligns to our strategic purpose around advocating for women and uplifting and championing women, creating lifelong relationships with women and the power of advocacy and all of that. You asked how big it is. It's currently less than 100 million, but I think there is significant growth there for us in the years ahead, and we've created a specific department led by Patty Casato.
You should expect to see more in that area, including rethinking the way that we budget, including rethinking the way that we saw.
And edit what's in that collection to be to finesse. It more so that it isn't just a collection of interesting stuff. It actually has real purpose.
Aligned to our strategic purpose around advocating for women and uplifting and championing women great platform.
Relationships with women and the power of our advocacy and all of that you asked how big it is currently less than $100 million, but I think there is significant growth for us.
In the years ahead, and we created a specific department led by Patty because auto to get after that opportunity. So thanks for the question I appreciate it.
Speaker 3: to get after that opportunity. So thanks for the question. I appreciate it. That's very.
Helpful. Thank you.
Great. Thank.
Speaker 1: Thank you. Next question. Next question comes from Kimberly Greenberg with Morgan Stanley . Your line is open.
Thank you and next question next.
Our next question comes from Kimberly Greenberger with Morgan Stanley. Your line is open.
Speaker 12: Hi, great. This is Alex for Kimberly Greenberger. I just have a quick question on your cash level. It looks like you ended the quarter with over $300 million.
Hi, This is Alex <unk> on for Kimberly Greenberger.
A quick question on your cash levels. It looks like you ended the quarter with over $300 million in cash already.
Speaker 12: Do you have any plans for how to use that? How much leverage is the business comfortable carrying? Just trying to get a sense for the use of cash flow if you have any plans for that in the near future.
Do you have any plans for how to use that and how much leverage is comfortable carrying just trying to get it done.
Cash flow.
The answer to that in the near term.
Speaker 13: Thanks for the question. And absolutely, we're very, very pleased with where we ended the third quarter, very strong cash position at 330 million, as you mentioned, as we look out over the fourth quarter, if you were to take our guidance and kind of roll that out, that has us at a cash balance at the end of the year, probably in the range of 700 to 750 million.
Thanks for the question and absolutely we are very.
Very pleased with where we ended the third quarter very strong cash position of $330 million as you mentioned as we look out over the fourth quarter. If you were to take our guidance and kind of roll that out that has a set of cash balance at the end of the year, probably in the range of $700 million to $750 million.
Speaker 13: With arguably light leverage in the business. We feel like we have significant dry powder going into
With arguably light leverage in the business, we feel like we have significant dry powder going into 2022, and as we've talked about before kind of the run rate of the business is EBITDA and a $1 $2 billion basis. So we have a lot of flexibility on different ways that we can go having said that investing back into the business.
Speaker 13: 2022. And as we've talked about before, you know, kind of the run rate of the business is EBITDA on a $1.2 billion basis. So we have a lot of flexibility on different ways that we can go. Having said that investing back into the business.
Speaker 13: to grow our core business or look into emerging businesses as Martin just mentioned and growing relationships there. We think there's a number of different ways that we could grow our internal business.
To grow our core business or look into emerging businesses as Martin just mentioned and growing relationships there.
There's a number of different ways that we could grow our internal business.
Speaker 13: And that normally is the best return opportunity for shareholders and for the company. Having said that, we have so much cash on hand and availability that we will definitely be looking at capital allocation opportunities with our board of directors.
Normally as the best return opportunity for our shareholders and for the company, having said that.
We have so much cash on hand, and availability that we will definitely be looking at capital allocation opportunities with our board of directors.
Speaker 13: We've stated on a number of occasions we want to make sure we get through holiday where we generate the majority of our cash
We've stated on a number of occasions, we want to make sure we get through holiday, where we generate the majority of our cash and have a comprehensive view of 2022 that we can share with.
Speaker 13: and have a comprehensive view of 2022 that we can share with you strategically and capital allocation will be a part of that. So look forward to our communication, you know, end of February , beginning of March when we give fourth quarter earnings and start to talk about 2022.
With us strategically and capital allocation will be a part of that so look forward to our communication end of February beginning of March when we when we give fourth quarter earnings and start to talk about 2022.
Great. Thank you.
Thanks, Alex next question.
Speaker 1: Our next question comes from Adrian Yee with Barclays, your line is open.
Next question comes from Adrienne <unk> with Barclays. Your line is open.
Speaker 14: Well, let me add my congratulations on the progress. The store, the park looks great. I wish we had more of it.
Yes.
Congratulations.
Okay.
Alright, Thank you had more of that.
Yes.
Speaker 14: I guess my first question is to talk about the five consecutive quarters of average unit retail increase. Clearly, we're seeing a lot of promos, but we're also seeing initial retails, wondering what's happening with the initial retail side of things.
I guess my first question.
The five consecutive quarters.
Okay.
China is that we're all facing.
Initial retail format.
Also feature side of things.
Thank you.
Speaker 14: that the consumer is responding to whatever you're doing. And then two other quick questions, kind of more of the payroll side of things. What is your current average hourly rate? What's your ability to staff managerial and associate levels within the stores? And is there any type of long-term technology that you are investing in either in the stores or DCs to increase automation and productivity? Thank you very much.
Sure.
Good morning.
And then two other quick questions kind of world.
And what is your current average.
Major journals.
Yes.
In your stores.
And is there any type of long term technology that you are investing in either in the stores.
To increase automation and productivity. Thank you Daniel.
So why don't I take the last two there were multiple questions, but I'll take the last two because I couldnt get the direction of the fed.
Speaker 3: So why don't I take the last two, there were multiple questions there, but I'll take the last two because I couldn't get the direction of the first. So on the last two, our hourly rate for associates.
On the last two are hourly rate for associates differs across the geographies of the United States. So it isn't reasonable to call out a single number and when you do if I do call out a single number of people who are under that level.
Speaker 3: differs across the geographies of the United States. So it isn't reasonable to call out a single number. And when you do, if I do call out a single number, people who are under that level say, oh, it's not what I'm getting. People that are over say, I'm getting much more than that. So it isn't really a meaningful number. What I will tell you is that there has been a modest increase in the rate that we're paying in our stores.
<unk> is much more than that so it isn't really a meaningful number what I will tell you is that there has been a modest increase in the rate that we're paying in our stores.
Speaker 3: Right now, we have 25,000 people in our associate population. At peak, we're probably looking to get to about 30,000 people. So we're well on the way to getting to peak for the December period. And we've not found too much of an obstacle in getting the people that we want. And that's partly due to the health of the brand.
Right now we have 25000 people in our associate population.
Pete will probably probably looking to get to about 30000 people. So we're well on the way to getting to peak for the December period, and we've not found too much of an obstacle in getting the people that we want and that's partly due to the health of the brand.
Speaker 3: and the happy and healthy culture that we've created that people want to work for us, so we have moved wages a little bit, but not in a particularly meaningful way.
And the happy and healthy culture that we've created that people want to work for us. So we haven't we have moved wages, a little bit, but not in a particularly meaningful way as it relates to Dcs.
Speaker 3: Actually, our wage rates are up in a more meaningful way in the warehouses, very meaningful increases as that's a very, very competitive environment here in central Ohio where the majority of our DC operations are. And yes, as I mentioned earlier, we do have a fully automated DC up and running that will deliver about a third of our direct-to-consumer, maybe 40% of our direct-to-consumer merchandise for this holiday period. It's the result of $150 million investment over a couple of years period. It's very, very impressive. And if you're ever in Columbus, Ohio, I'd love to show you around.
Actually wage rates are up in a more meaningful way in the warehouse is very meaningful increases is thats, a very very competitive environment here in central Ohio with the <unk>.
Majority of our DC operations and yes, as I mentioned earlier, we do have a fully automated.
<unk> up and running that will deliver about a third of our direct to consumer and maybe 40% of our direct to consumer.
Merchandise for this holiday period is the result of a $150 million investment over a couple of your peers, it's very very impressive and if you ever in Columbus, Ohio, I'd like to show you around.
Speaker 13: Brad or Jason, do you want to take the other questions, TJ? Yeah, I think if I understood your question right, this is TJ, it was focused on I think you mentioned five consecutive quarters of average unit retail increase.
Brad or adjacent you want to take the other question T. J I think if I understood. Your question right. This is T. J. It was focused on I think you mentioned five consecutive quarters of average unit retail increase and kind of how we're feeling about that relative to promotions et cetera.
Speaker 13: and kind of how we're feeling about that relative to promotion, et cetera, I think the short answer is I think we feel very good about how our mix of spelling transpired during the third quarter and how we're positioned for fourth quarter. As Martin mentioned earlier, regular price spelling was actually up a little bit.
I think the short answer is I think we feel very good about how our mix of selling transpired during the third quarter and how we're positioned for fourth quarter as Martin mentioned earlier, our regular price selling was actually up a little bit and promotional and red lines selling was actually down a little bit and I think that that was maybe a little different than what we were hearing back from <unk>.
Speaker 13: and promotional and red line selling was actually down a little bit and I think that that was maybe a little different than what we were hearing back from investors during the quarter. I think what we were hearing
<unk> during the quarter I think what we were hearing was there was a feeling we are being more promotional and I think the numbers and the margin rate performance in the quarter don't bear that out. So I think what you were feeling from a promotional stance side was better execution in terms of messaging being clear and being very bold when we have something to say from a pre.
Speaker 13: was there was a feeling we were being more promotional. And I think the numbers and the margin rate performance in the quarter don't bear that out. So I think what you were feeling from a promotional standpoint
Speaker 13: side was better execution in terms of messaging, being clear, and being very bold when we have something to say from a promotional standpoint.
<unk> standpoint so.
Speaker 13: You know, the performance by business was a little bit different, so a little stronger regular price selling in lingerie, as an example, as Martin mentioned, particularly around bras in the launches.
The performance by business was a little bit different so a little stronger regular price selling and lingerie as an example, as Martin mentioned, particularly around <unk> and the launches.
Speaker 13: But overall, we're pleased with kind of how regular price versus promo activity is trending in the business.
But overall, we're pleased with kind of our regular priced versus promo activity is trending in the business as we look into the fourth quarter. It's important that everybody understand is as we've talked about multiple times now already the timing of when we receive deliveries the glide path to holiday and the glide path to that.
January and sell and exiting the quarter, depending on when deliveries actually hit and hit stores, we will need to be flexible with our pricing. So as you think about the messaging youre seeing from US just keep that in mind.
And kind of pivot back and look at our margin guidance and know that we've tried to take that into account.
Speaker 14: Fantastic. Best of luck for holiday. Thank you.
Fantastic Best of luck for holiday.
Thank you. Thanks, Adrian next question.
Our next question comes from Marni Shapiro with retail tracker. Your line is open.
Speaker 1: Our next question comes from Marnie Shapiro with the Retail Tracker. Your line is open.
Hey, everybody congratulations stores look great.
Speaker 4: Hi, everybody. Congratulations. Stores look great. Martin, you guys have done a really fantastic job of not just expanding sizes, but changing your marketing to speak to this customer. And so I'm curious if you could talk a little bit about growth in this category in bras and panties. Are you seeing that outpace your regular size business? And could you also talk about the growth in the customer file in particular on that size?
Martin you guys have done.
Really fantastic job of not just expanding sizes, but changing your marketing to speak to this customer and so I'm curious if you could talk a little bit about growth in this category in bras and panties are you seeing that outpace your regular.
Regular size business and could you also talk about the closing the customer file in particular on that side.
Speaker 3: And could you also talk about the growth in the customer file in particular on that size? Morning, Marnie. Thank you for the question and thank you for the congratulations. We appreciate it. As I mentioned, we are seeing our strongest growth coming out of Intimates and that's important because we're a bra company. So bra is the best growing part of the business. It's coming from all sizes to be honest. So we are seeing some pickup from the extended sizes but the growth isn't exclusively in that area. It's in all areas.
Speaker 3: Morning, Marnie. Thank you for the question and thank you for the congratulations. We appreciate it. As I mentioned, we are seeing our strongest growth coming out of Intimates and that's important because we're a bra company. So bras is the best growing part of the business.
Good morning. Thank you for that question and thank you for the congratulations we appreciate it.
As I mentioned, we are seeing our strongest growth coming out of intimates and thats important because we are a broad company. So for US. It is the best growing part of the business.
Speaker 3: It's coming from all sizes, to be honest, so we are seeing some pick up from the extended sizes, but the growth isn't exclusively in that area, it's in all areas. I'll somewhat get to your question about the file by telling you that in the last quarter, Q3,
It's coming from all sizes to be honest. So we are seeing some pickup from the extended sizes, but the growth isn't exclusively in that area or its in all areas.
Somewhat get to your question about the file by telling you that in the last quarter Q3 about 46% of our customers that we can see and recognize we're new to the business. That's a law, 46% of our customers were new to the business that shows that we're speaking to are new.
Speaker 3: about 46% of our customers that we can see and recognize were new to the business.
Speaker 3: That's a lot. 46% of our customers were new to the business.
Speaker 3: That shows that we're speaking to a new community. And as you know, you know, speaking to millennials and Gen Z's is our target, rather than necessarily winning back consumers.
Community.
Speaking to millennials and Gen Z as our as our target rather than necessarily winning back consumers. So I first less about how big will have smaller customers, where this is all those young whether she has been in our stores are not just about making the best possible impression. We can in every interaction we have with the customer either publishes.
Speaker 3: So I fuss less about how big or how small the customer is, whether she's old or she's young, whether she's been in our stores or not. Just fuss about making the best possible impression we can, and every interaction we have with the customer either polishes or tarnishes the brand. I'd like that ratio to be 100 to zero. It clearly hasn't been in our history, and so we've just got to set ourselves straight in that regard. What else can I tell you about the customer?
<unk> is the brand I'd like that ratio to be 100 to zero.
Clearly hasnt seen in our history and so we've just got to set ourselves straight in that regard.
What else can I tell you about the customer file the file after I think four years right. Now is I think four years of decline several years of decline we saw an uptick in Q2, and we saw a strong uptick in Q3, so net $400000 sorry 400000 customers.
Speaker 3: The file after, I think, four years of decline, several years of decline, we saw an uptick in Q2 and we saw a strong uptick in Q3, so a net $400,000, sorry, 400,000 customers new came to the file, and that reflects growth of several million new customers.
<unk> came to the file and Thats.
That reflects growth of several million new customers.
Speaker 3: and the usual attrition of those retiring people who haven't purchased with us for a year or so. So net growth in the file is a very strong and positive indicator.
And the usual attrition of those retiring people, who havent purchased with us for a year or so so net growth in the file is a very very strong positive indications.
Speaker 3: For obvious reasons, Marnie, I don't know how big or how small those customers are. I don't really care. I think we just need to reflect the customer base at large in everything that we do in our workforce and the way that we show up with imagery.
For obvious reasons, Marty I don't know, how big will have smaller customers.
Got it.
I don't really care I think we just need to reflect the customer base at large and everything that we do in our workforce and the <unk>.
We show up with image rates with the <unk>.
Speaker 3: the mannequins that we have in stores. Every aspect of our business needs to reflect current culture, relevant culture, and the shape and the nature of our customer base, and we're getting much better in that regard, and I think the customer's noticed.
Americans that we Havent stores every aspect of our business needs to reflect current culture relevant in culture, and the shape and nature of our customer base and we're getting much better in that regard and I think the customer is noticing.
Speaker 15: That's outstanding. And are you seeing the customers come in digitally or in stores or a mixture of both?
That sandy and are you seeing the customers coming digitally or in stores are mixture boats.
Speaker 3: It's a mixture of both, and as I said, our favorite customer is she who shops in stores and online together. So they're the ones that we really want to attract. And so as we think about building capability into 2022, building that omni focus will be important to us so that we encourage the customer to shop in both channels. Nothing gives me greater pleasure than somebody coming into our stores, having a wonderful customer experience, buying nothing, and then ordering online. Perfectly lovely. That's a great thing to do.
It's a mixture of both.
As I said, our favorite customers achieve who shops and stores and online together. So they are the ones that we really want to attract and so as we think about building capability into 2022.
Building that only focus will be important to us so that we encourage the customer to shop in both channels nothing gives me greater pleasure than somebody coming into our stores, having a wonderful customer experience buying nothing and then ordering online perfectly lovely.
Great thing to do so we have three stores of the future accounting as you know Nobody's asked me about it and I'll tell you.
Speaker 3: So we have three stores of the future coming, as you know. I know nobody's asked me about them, I'll tell you. The first one is...
Got it.
Speaker 3: Tomorrow, tomorrow, I will be in Chicago for the opening. Actually, I think it opens on Saturday. I'll be there for the pre-opening tomorrow. And that's exciting because there are some aspects of.
So tomorrow tomorrow.
Chicago for the opening actually I think it opens on Saturday.
Opening tomorrow and Thats exciting because there are some aspects of that re presentation that new presentation that speak to the idea of having a nominee channel customer and then we got a couple more opening in January and I'm pretty sure that they will lead to some further developments and changes and enhancements in the fleet at wide jewelry.
Speaker 3: that re-presentation, that new presentation that speak to the idea of having an omni-channel customer.
Speaker 16: And then we've got a couple more opening in January , and I'm pretty sure that they will lead to some further developments and changes and enhancements in the fleet at wide during 22 and 23. So thanks for the encouragement, Marnie. We appreciate it. Best of luck. Thanks, guys. Thanks, Marnie.
<unk> 2223, so thanks for the encouragement money we appreciate it.
Best of luck thanks, guys.
Thanks Marni next question please.
Next question comes from Janet Kloppenburg with JK Research Associates. Your line is open.
Hi, Martin how are you congratulations on a great quarter. Thank.
Speaker 14: Hi Martin, how are you? Congratulations on a good quarter.
Thank you Jonathan.
Speaker 14: I just wanted to get back to the supply chain pressures.
I just wanted to get back to the supply chain pressures.
Speaker 14: First question is, you know, is there any chance that some of these delayed shipments of holiday products
First question is you know.
Is there any chance that some of these delayed shipments of holiday product come in too late and that forces some markdown to a higher than expected lockdowns in the post season.
Speaker 14: coming too late and that forces some markdowns or higher than expected markdowns in the post-season. Just wondering about that, and also just wondering about your outlook for the supply chain pressure in the first quarter. How do you see that unfolding? Can it improve, or do you think it could continue to be as difficult? Thank you.
Just wondering about that and.
Also just wondering about your outlook for this.
<unk> seen pressure in the first quarter, how do you see that unfolding.
Tenant improve or do you think you could continue to be difficult. Thank you.
Great. Thanks, Shannon, So I've got three questions.
Speaker 3: Great, thanks Janet. So I got three questions there. So the first one, yeah, there is some merchandise that's at risk of not getting here and we got in front of that by cancelling.
First one.
There is some merchandise that is at risk of not getting here and we got in front of that by canceling. So I mentioned nearly a 200 million units of something.
Speaker 3: So of the, I mentioned earlier, 200 million units of something that is on its way to us, that number was 210 million back in August . And we looked at what was in danger of, that was kind of seasonally biased and that was in danger of not coming and cancelled it. So about 10 million units cancelled.
It's way too as that number was $210 million.
Back in August and we looked at what was in danger.
It was kind of seasonally.
And that was in danger of not coming and canceled it. So about 10 million units canceled anything that is <unk>.
Speaker 3: Anything that is really seasonal that needs to sell before December 25, we're confident that it will come in time. So we feel in good shape on that. We do think that we will have higher carryovers.
Really seasonal needs to sell before December 25, we're confident that it will come in time. So we feel in good shape on that we do think that we will have higher carry overs.
Speaker 3: of merchandise like PJs and robes and slippers and other things into January than we've had in previous years. And we're kind of okay about that because we know that last year we left money on the table in January , so it'll be interesting to see how our full-price selling matures during that period.
<unk> does light pjs robes slippers and other things into January than we've had in previous years, and what kind of okay about that because we know that last year. We left money on the table in January so it'll be interesting to see how our full price selling mature during that period. So I don't feel over that to your second question I don't feel overly stressed about Bob.
Speaker 3: So I don't feel, to your second question, I don't feel overly stressed about markdowns. I do think the stores.
I do think the stores will be more full of inventory in December and mid December late December then the customers used to seeing and we've just got a hold on oven, let it play out I think.
Speaker 3: will be more full of inventory in December and mid-December, late December than the customer is used to seeing.
Speaker 3: And we've just got to hold our nerve and let it play out. I think, you know, you've been following this game for a long time, as I have. The skill is in how you play your cards on a day-to-day basis, and we have a stand-up meeting every morning to look at, during December , to look at what happened the previous day and we'll adjust accordingly. So I'm not overly concerned about markdowns, but, you know, we'll be on the lookout.
You've been following this game for a long time as I have the skill is in how you play your cards on a day to day basis, and we have a standup meeting every morning to look at joined December to look at what happened in the previous day, and we'll we'll adjust accordingly, so I'm not overly concerned about markdowns, but we will be on the lookout as it relates to the first quarter with.
Speaker 3: As it relates to the first quarter, we're deliberately not guiding, as I've said, a lot. But no question there will be supply chain pressure in the first quarter. No question, because we're already moving stuff out of boats to airplanes. So we're not dimensioning it for you today, because our focus is where our focus is. But yes, there will be pressure into 2022, no doubt, same for everybody.
Deliberately not guiding as I've said, a lot, but no question there will be supply chain pressure in the first quarter. No question, because we're already moving stuff out of boats two airplanes. So we're not dimension. It for you today, because our focus is where our focus is but yes, there will be pressure in.
Into 2022 note that same for everybody.
Speaker 3: But do you expect it could improve? I don't know. You're not sure. I'm an optimist by nature. So I'm the guy who's going to go, don't worry. It's all going to be better. The reality is this is long lead time stuff, right? So we already know what's coming for February . We already know that some of it's impacted. So my reality check against my optimism says expect it to be about the same until further notice.
Do you expect it could improve or.
I'm not sure.
Yes.
I'm, an optimist by nature so.
The Guy who is going to go down where it's all going to be better.
This is long lead time stuff right. So we already know what's coming for February we already know that some of it's impacted so.
My reality check against my optimism says expect it to be about the same until further notice.
Thanks, So much and best of luck in months. Thank you. Thanks, Shannon I think we have time for one more question.
Speaker 2: Thanks so much, and best of luck. Thank you. Thanks, Janet. I think we have time for one more question.
Speaker 1: All right, and our final question comes from Oliver Chin with Collin.
Alright, and our final question comes from Oliver Chen with Cowen Your line is open.
Hi, This is Joe on for Oliver Thanks for taking our question just curious about the store refresh as you progress during the year and next year are you seeing.
Speaker 7: Hi, this is Jonah, and for all of it, thanks for taking our question. Just curious about the store refresh as you progress during the year and next year. Are you seeing any improvement in comm sales from refresh? And also, are you seeing improvement in the market where those refresh stores are in, in terms of e-comm sales? So any color will be helpful.
Any improvement in comp sales from refresh and also are you seeing improvement in the market, where the refresh stores there and in terms of E. Comm sale. So any color will be helpful.
Speaker 3: I wouldn't answer that with a not really, on the basis that we improved every store.
I would answer that with whether or not really.
On the basis that we improved every store in the chain. So we didn't have a holdout group, where we said, let's keep these stores looking terrible and see what the differences we decided it was strategically important.
Speaker 3: in the chain. So we didn't have a holdout group where we said, oh, let's keep these stores looking terrible and see what the difference is. We decided it was strategically important to
Speaker 3: to make a refresh everywhere, right across our fleet. And so every store has been touched to some level or another. And again, in terms of where we invest our energy, I've not been particularly fussed about saying, can you tell me if where we put the extra paint paid off better than where it didn't? It kind of doesn't matter. What I am focused on is the ROI that's in our future related to store of the future.
To make a refresh everybody right across our fleet and so every store has been touched at some level or another.
And again in terms of where we invest our energy.
Not been particularly fussed about saying can you tell me, where we put the extra paint paid off better than where it didn't it kind of doesn't matter what I am focused on is.
ROI, that's in our future related to store of the future.
Speaker 3: and that will reveal itself during the first quarter. What I am fussed about is the ROI as it relates to new real estate.
And that will reveal itself during the first quarter, what I am busted that.
As it relates to new real estate, so we'll be putting down at least 10, new stores in 2022 to get after a different kind of real estate that we've not been in previously or not been heavily penetrated in previously which is off mall locations, which as you probably know growing and we are underrepresented. So when we get those stores opened I think the first one.
Speaker 3: we'll be putting down at least 10 new stores in 2022 that get after a different kind of real estate that we've not been in previously or not been heavily penetrated in previously, which is off mall locations.
Speaker 3: which, as you probably know, are growing, and we're underrepresented. So when we get those stores open, I think the first one opens in May, June , and then we have, as I said, at least 10 opening. Those will be very important for us to see how they play out because they could offer us indicators for what our CapEx will look like in 23 and 24 and beyond. So not much to say about the refresh. Lots to say about Store of the Future and new stores as we get into 2020 soon. Hope that...
<unk> in May June and then we have as I said at least 10 opening those will be very important for us to see how they play out because they could offer as indicators for what Capex will look like in 'twenty, three and 'twenty four and beyond.
Not much to say about the refresh loves to say about store of the future and new stores as we get into 2020.
Thank you.
Welcome.
Okay. Thanks, everyone that concludes our call. This morning, Thanks for your continuing interest in Victoria Secret income.
Thanks, everybody.
Thank you and that concludes today's conference you may all disconnect at this time.
Mhm.