Q3 2022 Bath & Body Works Inc Earnings Call
Okay.
Good morning, My name is Danielle 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 2022 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 Island, Chief Financial Officer at Bath and body works Wendy you may begin.
Thank you Danielle good morning, and welcome to Bath <unk> body works third quarter earnings Conference call for the period ended October 29, 2022 as of March.
Matter of formality any forward looking statements. We may make today are subject to our safe Harbor statements found in our SEC filings and in our press releases.
Joining me on the call today are executive chair of the board and interim CEO , Sarah Nash and brand President Julie Rosen.
All of the results. We discussed today are adjusted and exclude the charges related to the early extinguishment of debt in 2021. Additionally, the results represent results from continuing operations and exclude the discontinued operations related to Victoria's secret I will now turn the call over to Sarah.
Thanks, Wendy and thank you everyone for joining the call today.
Let's start with our third quarter results.
We are pleased to have delivered EPS of <unk> 40.
Double the high end of our guidance range.
Given the strong bottom line results, we are raising our full year EPS guidance to $3 two to $3 20.
From our prior guidance range of $2 70 to $3.
Our sales for the quarter or at the high end of our expectations and reflected our team's closeness to our customer and our focus on innovation and newness.
And our success in leveraging our vertically integrated supply chain to chase key winners.
Our nationwide launch of our loyalty program has been a great success.
We achieved industry, leading speed and customer adoption in our program with over 21 million members enrolled to date.
Loyalty members now make up more than a third of our overall customer base and loyalty sales represent about two thirds of our total U S sales since launch.
We are excited about the potential of this program as our loyalty customers spend more and visit us more and have significantly higher retention rates than that.
Not in the program.
We continue to take rigorous actions to improve profitability, including proactively revisiting our promotions and pricing plans as well as product costing to improve merchandise margin.
Additionally, we are actively working with our vendor base to streamline operations to combat inflationary pressures and improve product cost without compromising our focus on quality.
We have also implemented several expense reduction actions during the quarter.
Including optimization of corporate overhead and store selling expenses.
We will continue our focus in this area given the challenging business environment.
Before I turn it back to Wendy I'd like to share my perspective on our recent CEO announcement and the company's overall positioning.
Our board was very thoughtful as we conducted a search for our next CEO .
We're delighted that we've found in Jena that global Omnichannel personal care company leader that we were looking for.
Gina brings more than 30 years of experience, including leadership roles at global companies, such as Unilever Alberto Culver, Our company and the Este Lauder companies.
She has deep expertise in sales marketing brand building and business development and strategy, along with strong operational experience and a demonstrated track record of delivering successful business outcomes.
The board is confident Gena is the right leader to drive the company's next chapter of growth across our channels and categories globally, while delivering enhanced value for shareholders.
During my time as interim CEO I have been impressed by the talent and dedication of the Bath <unk> body works team.
Like to thank the company's management team and all our associates for.
Their commitment to driving innovation and agility and to enhancing our customers' experience.
I am confident that Bath <unk> body works will continue to capitalize on our tremendous potential to expand our brand globally. Wendy. Thank you Sarah I will be providing financial highlights, but I encourage you to review our slides posted remarks and press release, which each contain additional.
Details.
For the third quarter as Sarah said, we reported EPS of <unk> 40.
These better than expected results compared to our guidance of 10 to 20 per share were driven primarily by a better margin rate due principally to category mix and transportation expense favorability together with SG&A expense favorability.
In U S and Canada stores third quarter sales were $1, one 8 billion.
A decrease of $60 million or 5% compared to last year.
Sales were up $306 million or 35% compared to 2019.
Third quarter direct sales were $345 million.
A decrease of $24 million or 6% compared to 2021 customers continue to choose our omni focused option of buy online pick up in store. Our focus we ended the third quarter with focus availability and more than 280 stores.
Our international business sales for the third quarter were $81 million and increased 10% compared to last year. Our international business continues to perform consistent with expectations. Our third quarter recognized revenues were negatively impacted by timing shifts related to product shipments.
Now to guidance for the remainder of the year for the fourth quarter of 2022, we expect sales to decrease between mid single digits to low double digits compared to 2021 sales of three point O $2 7 billion.
We are forecasting fourth quarter EPS to be between $1 45, and $1 65 per share.
For the full year, we are forecasting sales to be down mid single digits compared to $7 9 billion in 2021.
Our full year guidance contemplates inflationary costs totaling $220 million to $230 million and the estimated revenue deferral impact from the loyalty program rollout of approximately $40 million.
Now onto the balance sheet total inventories ended the quarter up 10% compared to last year better than expectations finished goods retail units were up 7% compared to last year in line with expectations. The difference between dollar growth and unit growth is due primarily to inflationary.
<unk> and product costs, partially offset by lower component inventory compared to last year.
The finished good unit increase relates to categories that were very lean last year, particularly soaps and body care. We are confident that our inventory is well positioned to support a strong holiday season.
We believe our guidance reflects a disciplined expense and inventory management approach in light of the dynamic operating environment at the same time, we continue to be strategic about the investments we make to support the growth of the business, including investments in products technology and omni capabilities.
I will now turn the call over to Julie.
Thank you Wendy for the third quarter, we saw customers responding well to our iconic <unk> in multiple forums fragrances and packaging our top fragrances, such as lead pumpkin pecan waffles and sweater, whether in multiple categories and forums continues to be a unique point of differ.
<unk> for the brand.
Our mens business continued to significantly outpace the shops as we test new forms and merchandising ideas to further fuel this growing business, including through the launch of leather and brandy and coffee and whiskey in the fourth quarter, we launched after dark a new single fragrance.
The men's business.
<unk> also continued to perform well.
Outpacing the shop as we continue to expand our new formulation that is made without parabens sulfates or die.
Our relaunch of gel so has it been performing very well and we see opportunities for meaningful growth through this form.
As expected, we continue to see a shift out of our sanitizer business, which accelerated during the pandemic.
Body care also outpaced the shop in the third quarter Fine fragrance Smith had a strong quarter that was bolstered by our new fragrance fallen plume that met the customer mindset. During this time of year.
As part of our effort to focus on customer and deliver on innovation and newness, we launched our aluminum vessels and so this past quarter and expect to begin testing carton that will enable our customers to refill their sub containers in 2023.
In men's we introduced Antiperspirants deodorants, which is already in 650 stores and will roll through the balance of chain and spring of 2023.
We also recently launched a test of.
Our new line of space and hair care products and dietary supplements online and an 11 stores.
In the early stages of this launch and we are listening and learning.
This is always an exciting time of year, we have a mix of returning holiday favorites and new giftable offerings.
As an affordable luxury brands, we have gifts at all price points as we further expand our loyalty program and introduced compelling new product Assortments. We are confident that we will continue to deepen our relationships with our existing customers and attract new customers to our brand with <unk>.
I'll turn it back to you. Thanks.
Thanks, Julie that concludes our prepared comments at this time, we'd be happy to take any questions. You may have as a reminder, in the interest of time and as a courtesy to others. Please limit yourself to one question today, we are going to go to about $9 45.
Danielle I'll turn it over to you.
Thank you as a reminder, if you'd like to ask a question over the phone. Please dial star one our first question comes from Jay sole with UBS. Your line is now open.
Great. Thank you so much.
To touch to talk about how the sales trended through the quarter and what Youre seeing here in November a lot of other companies have talked about a big slowdown in traffic in the last two weeks of October beginning of November you just talk about what you've seen is sort of what's implied in the guidance for <unk>. Thank you.
Sure. Thanks Jay.
So.
We went back on Q3, what we saw during the course of the quarter was that the customer really did respond to promotion.
On the days that we were incrementally promotional year over year, where we had sharp price points are compelling deals those days outperformed and on the days that we were flat to last year or less promotional those days underperformed. So for US the story of the quarter was really promotion and meeting the.
Customer where their mindset at is clearly the customer is very price sensitive.
And we saw that we had planned for it and we're planning for that in <unk> as well. So in terms of November our guidance is is incorporates what we're seeing month to date and we are prepared to be very sharp and have deals that resonate with our customer during during the all important fourth quarter.
Thank you next question please.
Our next question comes from Corinne Wolf Meyer with Piper Sandler Your line is now open.
Hey, good morning, all thanks for taking the question and congrats on the quarter. So I'd just like to ask a little bit on what youre seeing in terms of input costs I mean, that's been a pretty hot topic.
Quarter for a lot of players, especially within the fragrance category can you just talk about any kind of challenges or headwinds you are seeing that and how youre combating that thank you.
Sure. Thanks, Craig for your question, Yeah, as we've talked about in the last several.
Call input costs and in particular in raw materials for us continue to be a challenge you know the markets are volatile they can.
Continue to be very elevated in pricing compared to pre pandemic and so it continues to be a pressure point for US you know almost just over 50% of our inflation pressures that we've quantified our raw materials and it just does continue to be a pressure.
<unk>.
<unk> seen a little bit of green shoots and candle wax, but I would describe it as modest and our other input costs continued to be challenged now that being said, we're working with our suppliers to mitigate those price increases we're looking at opportunities to be smart in how the product cost out and were looking for.
<unk> engineering opportunities as well to mitigate those prices, but but raw materials do continue to be a pressure point for us in our business.
Thank you.
Thanks, Karen My question. Please.
Our next question comes from Olivia Tong with Raymond James Your line is now open.
Thanks, Good morning, I wanted to ask you about the the loyalty members are there.
And I'm, making up a third of your base now if you could give any insight in terms of whether you think peak.
Big here.
Certain income level.
How much more they're buying it looks like you know if they're sort of your member base and two thirds of sales. It's obviously quite a quite a big differential between their purchasing levels versus <unk>.
The other two thirds.
And then I just had a.
If I could sneak one more in just around SG&A.
<unk> this quarter and how that influences your thoughts on the pace of improvement until fiscal 'twenty, three because you're talking about a handful of expenses last quarter that we're hiring second half. So I'm just kind of curious what came in better than expected because I imagine that wage inflation from the home expenses. Those came in in line with where you had anticipated. Thank you so much.
Great. Thanks, Olivia we will go to Julie for loyalty and then I'll take SG&A, yes.
Yes, so for our loyalty program, we are absolutely thrilled with the program, we're pleased with enrollment and engagement evidenced by.
Our 65% of total company sales I think it's important to remember as Sarah mentioned that are a loyalty customer has a higher retention rate higher spend makes more chip and shop more cross category and more than non loyalty members. One thing that's very exciting about our law.
Royalty program is that we have exceptional match rates on member data collection and this is really going to enable us to help identify trends and changes in customer behavior and the data will help us enhance the effectiveness of our marketing. It will also help us create a more meaningful.
Personalized experience that foster brand connection and capture share of wallet.
And we have plans in the future to continue to evolve the program to further drive member trips.
Thanks, Julie on the SG&A, So a couple of comments on SG&A.
Our SG&A rate has increased compared to last year, which of course I know you saw in the numbers.
<unk>, we talked about in prior calls I breakdown the rate increase compared to L. Y about two thirds of it was home office and about a third of it was in our store selling.
Cost structure, and maybe to start with stores, we made a very planned and thoughtful investment in our store associates. As we went into this time period, we did increased wage rates for our store associates, including a premium for the fall season, what we've discovered is that investment has been very.
Successful our stores are fully staffed we had success recruiting so were very confident that that investment will pay off as we go into Q4, because we have great store associates hired and we are ready to go.
In terms of the other increase year over year. It is home office.
Talked about.
We continue to make investments there as well so we're in the process of investing in technology to separate from Victoria's Secret. We've also invested in our home office folks as well in terms of the favorability to beginning of quarter.
I would say two things are driving it number one as we emphasized in our prepared remarks, we continue to try to manage expenses thoughtfully and frugally. During this quarter, we are being very thoughtful about where we spend our money just given the macro environment out there. So we did see some expense.
Favorability.
Across the board the other thing that did come in favorable this quarter as our technology spend was favorable to plan. All we're just seeing a little bit of ramp up.
The ramp up in terms of the work on separation occur.
Occurred a little bit slower than what we expected, but that's going well, but it did result in some expense favorability compared to beginning of quarter expectations.
Sure.
Thank you for your question next question. Please.
Our next question comes from Ike <unk>. Your line is now open.
Hey, guys. This is Jesse Olson on for Ike Thanks for taking our questions here.
We're just curious for an update on the profitability algorithm withdrew business is it realistic to assume the company could return to its low to mid Twenty's margin goal next fiscal year.
Thanks, Jason for your question.
So I would tell you a couple of things number. One is you know you will definitely hear from us in terms of guidance for next year in February we are thoughtfully thinking about our plans for next year in terms of things that we're focused on that will impact how we think about our long range planning to two major.
Things come to mind are actually three number one as you know as I as I answered earlier your inflation in costs are cost pressures still do exist in our business, we're working to mitigate those but those still exists as we turned the calendar into 2023.
Two is we do want to be thoughtful on our promotional approach as we go into 2023.
As we said the customers extremely price sensitive right now and we want to be mindful of that and thoughtful with how we price our products in this tough environment and the third point is we are investing in technology right. Now we're focused on separation, but as we look beyond separation, we see a lot of ways that we can improve our customer.
Her experience and we're thinking about how do we want to do that and what investments we make there so more to come when we talk to you in February and we right now we are focused on winning at Christmas. So we will work.
Work as hard as we can to deliver a successful Q4.
You next question please.
Our next question comes from Paul Lajoie. Your line is now open.
Hey, Thanks, guys I just wanted to go back to the loyalty program for a second I'm curious if you know what Youre seeing is when you have a cost can rejoin are you seeing that customer actually spend more than they did previously or is it more that the folks that are signing up just happened to be your.
Higher spending customer I'm kind of curious if you have any data that that might show that once you get somebody kind of over that line that they increase their spend anything you could provide there. Thanks.
Sure Yeah. So what we've seen so as a reminder, we've just launched in the U S.
<unk> wide in August , but prior to that we were running a test and the test for a meaningful amount of time and what our tests showed was that but on a decile adjusted basis loyalty customers spend more and visit us more often so in other.
Words, it wasn't just looking at the customers that love us and come all the time I mean, if you decile adjust it and look at levels of spend the program was effective in test in terms of getting customers to spend more money and visit us more often so we're barely very early in the nationwide rollout, but we are very optimistic.
About the future benefits of this program, we are seeing such high levels of engagement as Julie indicated so we do get.
Get excited when we think about the loyalty program and what it can do for this business in the future.
Any quantification of the lift.
So right.
<unk> seen a lift.
Like I said, it's very early we just we just launched in August so so more to come but we have seen positive results from the program.
Thank you. Our next question question. Our next question comes from Joanna Kim with Cowen. Your line is now open.
Alright. Thank you for taking my question and congrats on the quarter just wanted to get little bit more color around your New York categories seems like the men's category is doing well and your launch Moxie, we focus on skincare and hair care curious on your strategy going for and would love more your thoughts around some marketing initiatives you have around that.
Holiday season around these categories. Thank you.
Great we'll go to Julie yes.
So as far as the mens business goes I know, we have said before on these calls that we believe that we can more than double our men's business.
Based on our market data, we continue to increase market share at an accelerated rate and we are absolutely thrilled with those results men's continues to significantly outpace our shop, we launched leather and brandy and coffee and whiskey this quarter they absolutely exceeded our.
The patients the men's business also continues to be our fastest growing category in the total body care and we continue to test new form the merchandising ideas to fuel the business. So for instance, as we mentioned we have been testing Antiperspirants deodorants and about 650 stores.
And we are thrilled to be rolling this out to all stores in spring just as an aside antiperspirants deodorants is the number one form in the mens market and we know in order to double this business to grow market share, we're going to have to own this form.
So we've also been doing a lot of tests in men's we have some expanded shop in shop test. We have some tests that are just marketing test. So we are testing not only products, but merchandising and placement and the goal of these tests is to raise awareness with our current customers as well as to gain new customers. So we.
We are very bullish and excited about this business and think it's a great opportunity.
As far as Moxie goes I would say that the assortment is still flowing on site and again as we mentioned it's only in 11 stores. So we are right now it's been a month just learning and listening so more to come on that.
Tells us about marketing initiatives holiday anything on holiday approach, Yes, you will see marketing initiatives around men's it's an incredibly important business for us, particularly in the fourth quarter, because we sell a lot of guests we sell gifts at multiple price points. We will have gets that's been men.
And we also launched for the first time. This Q4, our first single fragrance launch in men's after dark. So we're very very excited about that you will see some more moxie.
Moxie marketing, but this is our most important quarter of the year and we are really buckling down and focusing first and foremost on delivering our core business and learning and listening for marketing.
And Joanna the only other thing I would add as we go into Q4 as we are really excited about our gifting assortment. So we know gifting is a huge part of Q4, and we have really been thoughtful about our price points on gifting and showing our guests for everybody at every price point. So we think we're well positioned to win in.
In the gifting time of the year.
And just to say keeping to adding on but gifting did outperform the shop in Q3 as well so it really bodes well for Q4, and we offer gift set a range of price points and quite frankly, we believe all of our products our guests here at BBW. So.
We are excited about that great. Thanks, Julie next question. Please.
Our next question comes from Lorraine Hutchinson with Bank of America. Your line is now open.
Thank you good morning.
I just wanted to follow up on Paul's question about the loyalty program from the other end of the cost side.
I know there was a margin impact this quarter as you deferred some revenue and profits, but as you think forward does the cost of the loyalty program change the earnings algorithm or margin targets in any meaningful way.
Yes. Thanks for your question Lauren So so the program does have a cost to it.
As.
You could imagine so the program design has a reward aspect to it where one customer hits 100 dollar threshold they earn a reward.
The program also has a birthday component to it and a welcome offer component to it so those.
Elements of the program to add cars it is under a point.
Is is good and we think it's margin accretive in terms of dollars because we as I said earlier, we know those customers spend more and visit us more often we do see future opportunity. In addition, now to reduce our CRM and direct mail in the future too.
To partially offset the cost of this program. So at the end of the day, we feel that although there is a cost. This program is definitely accretive to the business.
Other thing I would say is as we look in the future down. The road is we know that we have great data in this program as Julie mentioned earlier, we full full match on this data and we know once we have the data, we'll be able to deliver better personalized and individual marketing.
<unk>, which we will believe will be much more effective as we really learn to use that data effectively.
Thank you next question please.
Our next question comes from Alex <unk> with Morgan Stanley . Your line is now open.
Great. Thanks late evening and congrats on a great quarter and thanks for taking my question I think some of the script last night mentioned that you all adjusted the pricing architecture for the consumer being more price sensitive perhaps you could just elaborate on what you did and how youre thinking about that heading into holiday.
And then just one other one for me is on inventory you had a great do you saw this quarter from from last quarters levels, but it sounds like you expect that to tick up a little bit next quarter could you just talk to us about what's driving that uptick. Thank so much.
Great Yeah. Thanks, Alex for your question. So I think I'll do them in reverse I'll start with the inventory and then I'll mention a few things on pricing and then hand, it over to Julie to talk Additionally, about pricing. So on inventory. So first of all we're very pleased with where we are with inventory. We think that we are well positioned to support our strong Q4.
We mentioned in the last call we entered the season clean which is extremely important for us. So we are confident in our inventory position.
What our inventory consist of and you saw it in our remarks, a little bit as we have finished goods of course that are available for sale. In addition, we also own componentry that is not has not yet made things like pump or soap et cetera et cetera. The biggest driver in terms of Q that benefited the Q3.
Dollar number is that our component tore down substantially mostly because we had in transit inventory that we were lapping. So if you think about the supply chain challenges a year ago, we had a lot of our componentry that was in transit. So when we reported the dollars. This third quarter, we were lapping an.
In transit number which drove the percentage down to the 10%.
Our guide for Q4 is more normalized assumption on componentry, which is taking our guide up to the mid teens. So it's not so much a phenomenon of the inventory creeping up.
More just the componentry and what we're anniversarying in terms of where we're focused on year end is we have a very we are maniacally focused on ending the season clean.
We have a goal as what you saw in our prepared remarks to end with units flat year over year.
We will focus our efforts on selling as much as we can during the all important holiday time period, and then of course, we have our semiannual sale that we will use to end the season clean. So we are definitely focused on prioritizing clean inventories, we know that if we end the season clean it will enable us to start 2023 on.
A very solid footing.
In terms of pricing as you saw in our remarks, we were.
More promotional in Q3 year over year, and we're planning to be similarly, more promotional in Q4 as we look forward. We saw as I said earlier, we saw that the customer is extremely price sensitive right now and we have made our plans too.
Meet the customer where their mindset is in both we did that in Q3, and we're planning that in Q4 Julie.
From a pricing and promo related question as we enter this holiday season, we are absolutely confident in our strategy to read and react with agility and speed are operating model really enables us to effectively manage pricing and promotion to meet the customer mindset.
And drive profitability. So we are taking a very strategic lens to our pricing architecture. Currently as we've all been saying the customer is very price sensitive to higher prices. So we are slowly and methodically raising prices in a way that don't impact our customers very dramatically.
Such as reevaluating some of our everyday deals and also increasing prices in our better for you formula. So we continue to use really our robust testing agenda to see where we can raise prices and help to build the basket.
Thanks, Julie next question please.
Our next question comes from Warren Cheng with Evercore ISI. Your line is now open.
Hey, good morning, Thanks for taking my question I wanted to ask about the <unk> seasonality of your business and whether that's changed since 2019.
So if I if I run the <unk> sales guidance through my model, it's a slight detail on a one year trend, but it's a pretty significant diesel if I look at a three year stack and assume that 2018 in 2019 or are more representative of normal seasonality. So just wanted to ask if there's any any change in the seasonality versus pre pandemic or anything unusual about this.
Year.
You would call out thank you.
I would call nothing unusual about this year I mean, what what's unusual as of yet.
Our growth during pandemic was.
Accelerated and extremely strong.
And over the last two years did vary dramatically.
Stores during certain periods were reopened and we were lapping restrictions etcetera etcetera. So I think if you go back and look at our business pre pandemic versus now the seasonality is generally consistent.
Great. Thank you.
Next question please.
Next question comes from Matthew Boss with Jpmorgan. Your line is now open.
Great. Thanks <unk>.
Wendy.
A number of moving parts in this year's P&L I guess is there a way to help quantify the costs that you see as more one time or more contained to this year. If we think about CEO transition separation costs versus maybe the IP investments in SG&A than we have the elevated transportation.
Nation in the loyalty deferral I guess I'm just trying to see if there's any way you can help provide maybe as it relates to as we think about an opportunity into next year versus costs or investments that you see as more ongoing any help would be great.
Sure.
Well I wish I had perfect visibility to next year, but I'll try and help you out as much as I can so you heard my conversation a few minutes ago on raw materials.
I'm, just kind of working my way down down the P&L raw materials like I said to continue to be challenging and it's a volatile market and as I said, we'll continue to try and mitigate those costs as best we can transportation, we are seeing some favorability in transportation.
Im optimistic that that will continue into 2023, but.
TBD on that but we are we are seeing some signs that transportation is peaking and potentially will.
Abate in 2023.
You mentioned ITE so quant.
Quantify the it investments if thing as we look forward to two it spend is we are currently focused on separation that work will continue this year into next with the goal of being separated from Victoria's in 2023, we are working on a roadmap beyond separation. So right now we're spending money on <unk>.
Operations, we will not spend that money again once we're done but we really wanted to be thoughtful thoughtful about our technology spend we see a lot of the areas of opportunity, where we can make investments in the customer experience or an omni capabilities or in our loyalty program or end.
Sure. So I mean, we see many areas in the business, where we can use technology to improve our customer experience. So we're working on roadmaps and thinking about that currently and so when we get to February we will give a little bit more color on how we're thinking about spending money in technology, but that will be an area we want.
To continue to invest because at the end of the day, we want to continue.
To grow this company.
You mentioned loyalty I would say, it's a loyalty as as we are.
Essentially it will peak the impact peaks essentially in Q4 in terms of that deferred revenue.
The impact that we've talked about and then once we lap the program in the summer of next year, you won't see that impact and then I guess the last thing that comes to mind as people I mean.
A lot of our cost structure is people so.
In SG&A about two thirds of our SG&A expenses, our stores and we want to continue to pay the wages that are appropriate to attract great talent and that's been a dynamic space and we continue to think about what wage rates are appropriate.
It's true that actually not just for stores is true for home office as well just given the current environment. We're in so we'll continue to make the investments in our people is as appropriate in the in the current environment.
We have quantified on past calls as you know that we do have some retention.
That will.
That is one time that will come off.
Starting next year.
And.
And then we do have some CEO transition costs, which will go away and.
2023, so lots of moving pieces.
It's a very dynamic environment.
We are committed to trying to manage expenses as prudently and as smartly as we can and we will be back to you in February with a lot more information and guidance as we think about 2023.
Thanks next question please.
Our next question comes from Janet Kloppenburg with J J K Research Associates. Your line is now open.
One and congratulations on the progress a couple of quick questions last year in the fourth quarter. The semiannual sale I believe did not meet your expectations, perhaps you could talk about what's embedded in guidance issue and what some of the opportunities might be year over year in terms of promotion.
<unk> and contents etcetera, and just on the men's business nice rollout I noticed that perhaps the Cologne asps.
Is higher on average versus the women's and I wondered if you could talk about that opportunity. Thank you.
Thanks Janet.
Julie.
Yeah as far as the sale does this year.
It will not be quite as long as last year, we have tightened that up we know that our customer response to newness. So we have a different flow strategy. This year to throughout January .
Dropping in small drop of newness to offset sale. We also are committed to having clean unit at the end of the year. So we are highly cognizant of what we bought for sale and using our agile supply chain to ensure that we're not over bought.
And that we and clean so I think we're very confident that our sale will be short and sweet and get us to clean inventory.
The men's Cologne is slightly higher than the womens it's definitely something that we're looking at and I would say that both of those forms have been performing incredibly well for us and we do not promote them. They are so comfortable the designs are just so beautiful.
That our customer comes back season after season to get the new one and almost keep them theyre very counter proud so.
We will continue to look at that but our single fragrance launches.
Have just been such a great success for us over the last few quarters, which is why we launched after dark for men in Q4.
Packaging is beautiful really beautiful Julie.
Thank you.
Danielle I think we have time for one more question.
Our final question comes from Marni Shapiro with retail tracker. Your line is now open.
Hey, guys, congratulations on a great quarter and the launch of Moxie.
I actually wanted to ask you a little bit about moxie I guess, how long has it been in development what costs were associated with it and is that embedded it's obviously been ongoing and how should we think about that going forward and specifically what are you doing about marketing. This brand will it be pushed through I know.
It's tiny but will it be pushed with the marketing cost to be pushed through BBW. What do you think he has a separate entity that could it be sold third party. It's just where is your bigger picture had about this and then what are the finances look like.
Okay, Yeah I'll take the question on the finances, and then ill turn it over to Julie on the Moxie launch and rollout so Marty.
This company has a long history of innovation and product development, not just in marketing, but <unk> seen it in our ongoing assortment so product development is.
Always built into our margin margin structure, we spend money on it every quarter not just in moxie, but in the balance of the assortment as well. So we know that the key to success is not just newness.
In something like Moxie, but youll continue even in 2023 to see new new and exciting things coming out of our core business. So all embedded in our existing cost structure Julien yes.
Yes, so hi marni.
One thing to say about Moxie is this is our first foray and a very long time into what we call above the neck. The Bath <unk> body works has always been below the next so we are really learning a lot about face and hair and supplements.
We'll be delivering body and moxie in the new year. So right now the strategy is to focus on our channels stores and website that is not to say that wont change in the future. We are open to all different ways of growth, we just want to pace ourselves.
At it three times now, but we really do want to be in a listening and learning mode. So that we do this in a very thoughtful way.
You will see more marketing of Moxie after Christmas.
Okay. She was important this quarter, we don't want to take our eye off the ball and get distracted by the new thing one other thing to say is we have our own Instagram account for moxie and so we're trying some different things there.
And I think that we will continue to learn and refine so there there are so many opportunities for this brands and ways to go out and attract new customers.
And we will be really starting to focus on them come January .
That's great. It was the Instagram account that caught my eye that made me wonder this is bigger than just a little lunch intelligent VW best of luck for the holiday season guys.
Thank you Marnie and thank you everybody for your continuing interest in Bath and body works. Thank you.
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