Q2 2025 Bath & Body Works Inc Earnings Call

Prince call. Please.

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.

Melissa: Good morning. My name is Melissa, and I will be your conference operator today. At this time, I'd like to welcome everyone to the Bath & Body Works second quarter 2025 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'll now turn the call over to Luke Long, Vice President of Investor Relations. Luke, you may begin.

I'll now turn the call over to Luc long Vice President of Investor Relations. Luke you may begin.

Speaker #1: 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 *1.

Good morning, and welcome to Bath <unk> body works second quarter 2025 earnings Conference call.

Joining me on the call today are Daniel <unk>, Chief Executive Officer, and <unk> Chief Financial Officer.

Speaker #1: I'll now turn the call over to Luke Long, Vice President of Investor Relations. Luke, you may begin.

In addition to this call in this morning's press release, we have posted a slide presentation on our website that summarizes the information in these prepared remarks. In addition to providing some related facts and figures regarding our operating performance and guidance.

Speaker #2: Good morning and welcome to Bath & Body Works' second quarter 2025 earnings conference call. Joining me on the call today are Daniel Heaf, Chief Executive Officer, and Eva Boratto, Chief Financial Officer.

Luke Long: Good morning and welcome to Bath & Body Works' second quarter 2025 earnings conference call. Joining me on the call today are Daniel Heaf, Chief Executive Officer, and Eva Boratto, Chief Financial Officer. In addition to this call and this morning's press release, we have posted a slide presentation on our website that summarizes the information in these prepared remarks, in addition to providing some related facts and figures regarding our operating performance and guidance. As a reminder, some of the comments today may include forward-looking statements related to future events and expectations. For factors that could cause the actual results to differ materially from these forward-looking statements, please refer to the risk factors in Bath & Body Works' 2024 Form 10-K. Today's call also contains certain non-GAAP financial measures.

As a reminder, some of the comments today may include forward looking statements related to future events and expectations for.

Speaker #2: In addition to this call and this morning's press release, we have posted a slide presentation on our website that summarizes the information in these prepared remarks in addition to providing some related facts and figures regarding our operating performance and guidance.

For factors that could cause the actual results to differ materially from these forward looking statements. Please refer to the risk factors in Bath <unk> body works 2024 Form 10-K.

Speaker #2: As a reminder, some of the comments today may include forward-looking statements related to future events and expectations. For factors that could cause the actual results to differ materially from these forward-looking statements, please refer to the risk factors in Bath & Body Works' 2024 Form 10-K.

Today's call also contains certain non-GAAP financial measures. Please refer to this morning's press release and supplemental materials for important disclosures regarding such measures, including reconciliations to the most comparable GAAP financial measure.

With that I'll turn the call over to Daniel.

Speaker #2: Today's call also contains certain non-GAAP financial measures. Please refer to this morning's press release and supplemental materials for important disclosures regarding such measures including reconciliations to the most comparable GAAP financial measure.

Hello, everyone and thank you for joining us.

Luke Long: Please refer to this morning's press release and supplemental materials for important disclosures regarding such measures, including reconciliations to the most comparable GAAP financial measure. With that, I'll turn the call over to Daniel.

I am excited to be here on my 105th day as CEO of Boston <unk>.

Q2 was a quarter, where I focused on three things.

Speaker #2: With that, I'll turn the call over to Daniel.

Firstly deeply immersed myself in the business.

Speaker #3: Hello everyone, and thank you for joining us. I'm excited to be here on my 105th day as CEO of Bath & Body Works. Q2 was a packed quarter, where I focused on three things: firstly, deeply immersing myself in the business; secondly, driving forward; and thirdly, making no regret moves. Finally, I worked on shaping our long-term vision.

Daniel Heaf: Hello, everyone, and thank you for joining us. I'm excited to be here on my 105th day as CEO of Bath & Body Works. Q2 was a packed quarter where I focused on three things. Firstly, deeply immersing myself in the business. Secondly, driving forward three no-regret moves. Finally, shaping our long-term vision. At the same time, our team navigated the quarter with focus, and we delivered solid results. We ended the quarter with revenue and adjusted earnings at the high end of our guidance range. Given our strong first half result and confidence in our outlook, we are raising the low end of our full-year adjusted earnings per share guidance. This quarter, our customers remained cautious and value-seeking, and we continue to see more intentional purchasing behavior. Consumers are prioritizing purchases that support personal well-being and convenience while spending selectively.

Secondly, driving forward three no regret moves.

And finally shaping our long term vision.

At the same time, our team navigated the quarter with focus and we delivered solid results.

We ended the quarter with revenue and adjusted earnings at the high end of our guidance range.

And given our given our strong first half result, and confidence in our outlook. We are raising the low end of our full year adjusted earnings per share guidance.

Speaker #3: At the same time, our team navigated the quarter with focus, and we delivered solid results. We ended the quarter with revenue and adjusted earnings at the high end of our guidance range. Given our strong first half results and confidence in our outlook, we are raising the low end of our full-year adjusted earnings per share guidance.

This quarter, our customers remained cautious and value seeking and we continue to see more intentional purchasing behavior.

Consumers are prioritizing projects that support personal well being and convenience while spending selectively.

Regardless of the macro environment, we are well positioned to serve consumers with affordable high quality products that bring joy to that <unk> and I believe there is even more opportunity ahead.

Speaker #3: This quarter, our customers remained cautious and value-seeking, and we continue to see more intentional purchasing behavior. Consumers are prioritizing purchases that support personal well-being and convenience while spending selectively.

Over the past 105 days I focus on understanding where our biggest opportunities lie to accelerate growth.

Speaker #3: Regardless of the macro environment, we are well-positioned to serve consumers with affordable, high-quality products that bring joy to their lives. And I believe there is even more opportunity ahead.

Daniel Heaf: Regardless of the macro environment, we are well positioned to serve consumers with affordable, high-quality products that bring joy to their lives. I believe there is even more opportunity ahead. Over the past 105 days, I've focused on understanding where our biggest opportunities lie to accelerate growth. I've had the privilege of connecting with associates at Beauty Park, our distribution centers, and our stores across the United States. I've spoken with many of our shareholders. I've traveled internationally, where I've engaged with our partners in key markets such as Dubai, Malaysia, and the UK. Of course, I've spoken with our customers. It was important for me to collect direct insights from our most critical stakeholders, and I will continue doing this going forward. What stands out most from my time on the ground is the tremendous upside potential across the entire value chain.

I've had the privilege of connecting with associate at Beauty Park, our distribution centers and our stores across the United States.

Speaker #3: Over the past 105 days, I've focused on understanding where our biggest opportunities lie to accelerate growth. I've had the privilege of connecting with associates, at beauty parks, our distribution centers, and our stores across the United States.

I've spoken with many of our shareholders.

Travelled internationally, where I've engaged with our partners in key markets, such as Dubai, Malaysia, and the U K and.

And of course.

Broken with our customers.

It was important for me to collect direct insights from our most critical stakeholders and I will continue doing that going forward.

Speaker #3: I've spoken with many of our shareholders, I've traveled internationally where I've engaged with our partners in key markets such as Dubai, Malaysia, and the UK.

What stands out most from my time on the ground is the tremendous upside potential across the entire value chain.

Speaker #3: And of course, I've spoken with our customers. It was important for me to collect direct insights from our most critical stakeholders, and I will continue doing this going forward.

From product innovation, and merchandising to alternative distribution and storytelling across both our physical stores and digital platform.

Speaker #3: What stands out most from my time on the ground is the tremendous upside potential across the entire value chain. From product innovation and merchandising, to alternative distribution, and storytelling across both our physical stores and digital platforms.

When I joined I spoke to many of you about my philosophy.

We will accelerate growth by putting the consumer at the center of everything we do.

Daniel Heaf: From product innovation and merchandising to alternative distribution and storytelling across both our physical stores and digital platforms. When I joined, I spoke to many of you about my philosophy. We will accelerate growth by putting the consumer at the center of everything we do. That commitment remains unchanged, but we must continue to evolve with our consumers, positioning ourselves as a global leader in home fragrance and personal care. To be clear, Bath & Body Works has a very strong foundation. An iconic brand. Over 1,900 North American stores. More than 530 international stores. 39 million active loyalty members. Knowledgeable and passionate store associates. A predominantly U.S.-based vertically integrated supply chain. In recent years, we've invested heavily to strengthen this foundation, from building a loyalty program and enhancing our technology to expanding into new categories.

That commitment remains unchanged, but we must continue to evolve with our consumer positioning ourselves as a global leader in home fragrance and personal care.

Speaker #3: When I joined, I spoke to many of you about my philosophy. We will accelerate growth by putting the consumer at the center of everything we do.

To be clear.

<unk> has a very strong foundation.

Speaker #3: That commitment remains unchanged, but we must continue to evolve with our consumers, positioning ourselves as a global leader in home fragrance and personal care.

An iconic brand.

Over 1900, North American stores.

More than 530 international stores.

Two 9 million active loyalty members.

Speaker #3: To be clear, Bath & Body Works has a very strong foundation, an iconic brand, over 1,900 North American stores, more than 530 international stores, 39 million active loyalty members, knowledgeable and passionate store associates, and a predominantly US-based vertically integrated supply chain.

<unk> and passionate store associates, and a predominantly U S based vertically integrated supply chain.

In recent years, we've invested heavily to strengthen this foundation from building a loyalty program and enhancing our technology to expanding into new categories.

These moves have made us stronger.

But we have not yet delivered a consistent.

Speaker #3: In recent years, we've invested heavily to strengthen this foundation. From building a loyalty program and enhancing our technology to expanding into new categories, these moves have made us stronger.

<unk> and profitable growth, we expect of ourselves.

The reality is clear to me.

We have grown spend and increased retention with existing customers.

Daniel Heaf: These moves have made us stronger, but we have not yet delivered the consistent, durable, and profitable growth we expect of ourselves. The reality is clear to me. We have grown spend and increased retention with existing customers. We have not achieved the new customer growth we aspire to, and we are not connecting deeply enough with the younger consumers who are driving growth in our industry. There is also an opportunity to drive market share growth in our core categories and reduce our reliance on promotions. We are confident in the steps we must take to unlock growth potential. To meet the opportunity, we are taking swift action in the short term while actively shaping our long-term strategy. This is about performing and transforming simultaneously. It's about making strategic moves that resonate both with current and future customers.

Speaker #3: But we have not yet delivered the consistent, durable, and profitable growth we expect of ourselves. The reality is clear to me: we have grown spend and increased retention with existing customers.

We have not achieved the new customer growth, we aspire to and we are not connecting deeply enough with the younger consumers who are driving growth in our industry.

There is also an opportunity to drive market share growth in our core categories and reduce our reliance on promotions.

Speaker #3: We have not achieved the new customer growth we aspire to, and we are not connecting deeply enough with the younger consumers who are driving growth in our industry.

We are confident in the steps, we must take to unlock growth potential.

To meet the opportunity we are taking swift action in the short term while actively shaping our long term strategy.

Speaker #3: There is also an opportunity to drive market share growth in our core categories and reduce our reliance on promotions. We are confident in the steps we must take to unlock growth potential. To meet this opportunity, we are taking swift action in the short term while actively shaping our long-term strategy.

This is about performing and transforming simultaneously, it's about making strategic moves that resonate both with current and future customers.

Confident we can achieve it while not only maintaining but expanding our operating margin.

Speaker #3: This is about performing and transforming simultaneously. It's about making strategic moves that resonate both with current and future customers. I'm confident we can achieve this while not only maintaining but expanding our operating margins.

Looking at Q2, we made progress with improvements to our semi annual sale and we launched successful collections like submarine, where we highlighted Halloween themed product during the late summer period.

Daniel Heaf: I'm confident we can achieve this while not only maintaining but expanding our operating margin. Looking at Q2, we made progress with improvements to our semi-annual sales, and we launched successful collections like Summer Ween, where we highlighted Halloween-themed products during the late summer period. As we build a durable, consistent, long-term growth model, we were pleased to announce that we have entered into a multi-year partnership with Disney. This builds on the successful momentum of Disney Princesses and our recently announced Disney Villains collaboration, which Eva will share more about. From a process perspective, I'm pushing our marketing, digital, and merchandising teams to work in a more integrated and omnichannel way to deepen brand connection by telling powerful and emotional stories, delivering innovative products, and engaging consumers across all touchpoints. This is just the beginning.

And as we build a durable consistent long term growth model. We were pleased to announce that we have entered into a multiyear partnership with Disney.

Speaker #3: Looking at Q2, we made progress with improvements to our semi-annual sales, and we launched successful collections like Summerween, where we highlighted Halloween-themed products during the late summer period.

This builds on the successful momentum of Disney Princesses, and our recently announced Disney villains collaboration with Eva will share more about.

Speaker #3: And as we build, a durable, consistent, long-term growth model we were pleased to announce that we have entered into a multi-year partnership with Disney.

From a process perspective, I am pushing our marketing digital and merchandising team to work in a more integrated and Omnichannel way.

Speaker #3: This builds on the successful momentum of Disney Princesses, and our recently announced Disney Villains collaboration, which Eva will share more about. From a process perspective, I'm pushing our marketing, digital, and merchandising teams to work in a more integrated and omnichannel way to deepen brand connection by telling powerful and emotional stories, delivering innovative products, and engaging consumers across all touchpoints.

To deepen brand connection by telling powerful and emotional story, delivering innovative products and engaging consumers across all touch points.

And this is just the beginning.

Early in my tenure.

I laid out three no regret moves to act on now while we shape, our vision and strategy for the future.

Firstly.

The facing our own digital platform the.

The consumer experience and revenue growth of our digital business are not where they need to be and we're making rapid progress to address these now.

Speaker #3: And this is just the beginning. Early in my tenure, I laid out three no-regret moves to act on now. While we shape our vision and strategy for the future, firstly, elevating our own digital platform.

Daniel Heaf: Early in my tenure, I laid out three no-regret moves to act on now while we shape our vision and strategy for the future. Firstly, elevating our own digital platform. The consumer experience and revenue growth of our digital business are not where they need to be, and we're making rapid progress to address these now. Our focus is on elevating our digital platform to meet the expectations of today's consumers, delivering a more experiential, frictionless, and convenient way to shop. Improving our digital platform is expected to drive stronger results both online and in stores. Starting this September, you will see meaningful improvements across our digital platforms, including enhanced functionality, better product imagery and copy, and richer and more emotional storytelling. You can see examples of these improvements on our slide presentation. Over time, we believe these digital improvements will boost brand equity and direct channel sales.

Our focus is on elevating our digital platform to meet the expectations of today's consumer.

Delivering more experiential frictionless and convenient way to shop.

Speaker #3: The consumer experience and revenue growth of our digital business are not where they need to be, and we're making rapid progress to address these now.

Improving our digital platform is expected to drive stronger results, both online and in stores.

Speaker #3: Our focus is on elevating our digital platform to meet the expectations of today's consumers, delivering more experiential, frictionless, and convenient way to shop. Improving our digital platforms is expected to drive stronger results both online and in stores.

Starting this September you will see meaningful improvement across our digital platforms, including enhanced functionality better product imagery, and copy and richer and more emotional storytelling.

You can see examples of these improvements on our slide presentation.

Speaker #3: Starting this September, you will see meaningful improvements across our digital platforms, including enhanced functionality, better product imagery, and copy and richer and more emotional storytelling.

Overtime, we believe deep digital improvements will boost brand equity and direct channel sales.

Next we are amplifying our efficacy message by more clearly communicating claims and modernizing packaging to better reflect the key product attributes such as efficacy safety and emotional benefits.

Speaker #3: You can see examples of these improvements on our slide presentation. Over time, we believe these digital improvements will boost brand equity, and direct channel sales.

This will help us connect more meaningfully with consumers and reinforced the value of our products.

Speaker #3: Next, we are amplifying our efficacy message by more clearly communicating claims and modernizing packaging to better reflect the key product attributes such as efficacy, safety, and emotional benefits.

Daniel Heaf: Next, we are amplifying our efficacy message by more clearly communicating claims and modernizing packaging to better reflect the key product attributes such as efficacy, safety, and emotional benefits. These will help us connect more meaningfully with consumers and reinforce the value of our products. Our formulas are of exceptional quality, but our packaging doesn't emphasize it. We will evolve our packaging to more consistently educate the consumer and build awareness of the numerous benefits of our products, especially to younger and ingredient-conscious consumers. For example, starting this fall, we are enhancing in-store and online messages of our aromatherapy line to focus on stress relief and sleep. Also, our body lotion and body cream packaging will highlight 48-hour hydration, and over time, we'll be updating our labeling to more prominently signal that our products are dermatologist-tested.

All formulas are of exceptional quality.

Our packaging doesn't emphasize it.

We will evolve our packaging to more consistently educate the consumer and build awareness of the numerous benefits of our products, especially to younger and ingredient conscious consumers.

Speaker #3: These will help us connect more meaningfully with consumers and reinforce the value of our products. Our formulas are of exceptional quality, but our packaging doesn't emphasize it.

For example, starting this fall we are harvesting in store and online messages of our aromatherapy line to focus on stress relief and sleep.

Speaker #3: We will evolve our packaging to more consistently educate the consumer and build awareness of the numerous benefits of our products, especially to younger and ingredient-conscious consumers.

Also our body lotion and body cream packaging will highlight 48 hour hydration and overtime, we will be updating our labeling to more permanently signal that our products are dermatologists tested.

Speaker #3: For example, starting this fall, we are enhancing in-store and online messages of our aromatherapy line to focus on stress relief and sleep. Also, our body lotion and body cream packaging will highlight 48-hour hydration, and over time, we'll be updating our labeling to more prominently signal that our products are dermatologist-tested.

We're also introducing consistent elevated messaging across all of our stores to reinforce trust in every product we offer.

Thirdly, we are focused on putting our product in the path of the consumer.

Because to attract new consumers, we must meet them, where they are that means strategically and thoughtfully exploring new forms of distribution beyond the owned channels. We currently sell through.

Speaker #3: We're also introducing consistent, elevated messaging across all of our stores to reinforce trust in every product we offer. Thirdly, we are focused on putting our product in the path of the consumer.

Daniel Heaf: We're also introducing consistent, elevated messaging across all of our stores to reinforce trust in every product we offer. Thirdly, we are focused on putting our products in the path of the consumer. Because to attract new consumers, we must meet them where they are. That means strategically and thoughtfully exploring new forms of distribution beyond the own channels we currently sell through. Our recent entry into college bookstores is a fantastic example and one we are excited about. As back-to-school season kicks off, we're in more than 600 campus stores with access to 7 million young consumers. This push into alternative distribution is the first time we have distributed products at this scale outside of our stores, and we believe it provides an exciting avenue to reach and engage new, younger consumers and is the perfect environment to drive brand discovery.

Our recent entry into college bookstores is a fantastic example, and one we are excited about.

Speaker #3: Because to attract new consumers, we must meet them where they are. That means strategically and thoughtfully exploring new forms of distribution beyond the own channels we currently sell through.

As back to school season kicked off.

And more than 600 campus stores with access to <unk> 7 million young consumers.

This push into alternate distribution is the first time, we have distributed products at this scale outside of our stores and we believe it provides an exciting avenue to reach and engage new younger consumers and is the perfect environment to drive brand discovery.

Speaker #3: Our recent entry into College Bookstores is a fantastic example and one we are excited about. As back-to-school season kicks off, we're in more than 600 campus stores with access to 7 million young consumers.

Speaker #3: This push into alternative distribution is the first time we have distributed products at this scale outside of our stores, and we believe it provides an exciting avenue to reach and engage new younger consumers and is the perfect environment to drive brand discovery.

Deep no regret initiatives will place us in the path of even more consumers.

And they will accelerate our growth over time.

However, the opportunity ahead extend well beyond these three moves with potential upside to how we innovate and execute and how we reach and connect with consumers.

Speaker #3: These no-regret initiatives will place us in the path of even more consumers, and they will accelerate our growth over time. However, the opportunity ahead extends well beyond these three moves, with potential upside to how we innovate and execute, and how we reach and connect with consumers.

Daniel Heaf: These no-regret initiatives will place us in the path of even more consumers, and they will accelerate our growth over time. However, the opportunity ahead extends well beyond these three moves, with potential upside to how we innovate and execute and how we reach and connect with consumers. For example, we see opportunities in how we manage and merchandise our assortment, how we leverage our store footprint to further enhance brand storytelling, how we maximize the potential of our supply chain and Beauty Park, and how we drive growth across international markets. Looking at our store experience and our assortment, many consumers tell us that when they walk into our stores, the assortment feels overwhelming. We also tend to lead with discounts and promotions instead of highlighting product benefits.

For example, we see opportunity in how we manage and merchandise our assortment how.

How we leverage our store footprint to further enhance brand storytelling, how we maximize the potential of our supply chain and beauty Park and.

And how we drive growth across international markets.

Speaker #3: For example, we see opportunities in how we manage and merchandise our assortment, how we leverage our store footprint to further enhance brand storytelling, how we maximize the potential of our supply chain, and beauty parks, and how we drive growth across international markets.

Looking at our store experience and our assortment many consumers tell us that when they walk into our stores the assortment feels overwhelming.

We also tend to lead with discounts and promotion instead of highlighting product benefit.

We believe we have an opportunity to focus our assortment and spotlight product attributes.

Speaker #3: Looking at our store experience and our assortment, many consumers tell us that when they walk into our stores, the assortment feels overwhelming. We also tend to lead with discounts and promotions, instead of highlighting product benefits.

Alongside price and value as compelling purchase drivers.

Our stores also provide us with an opportunity to amplify bacup Boulder marketing messages.

Speaker #3: We believe we have an opportunity to focus our assortment and spotlight product attributes alongside price and value as compelling purchase drivers. Our stores also provide us with an opportunity to amplify bigger, bolder marketing messages.

For example, we've moved our store base to predominantly off mall location and we've gained tens of thousands of feet of windows based.

Daniel Heaf: We believe we have an opportunity to focus our assortment and spotlight product attributes alongside price and value as compelling purchase drivers. Our stores also provide us with an opportunity to amplify bigger, bolder marketing messages. For example, we've moved our store base to predominantly offshore locations, and we've gained tens of thousands of feet of window space. Historically underutilized, these windows are now being used to activate and tell rich brand storytelling that draws in new consumers. Turning to our supply chain, our strategic partners at Beauty Park and our relationship with leading global fragrance houses provide us with unmatched speed and quality. We are focused on better leveraging these strengths to accelerate our innovation cycle and reinforce our position as a category leader. Finally, we have tremendous untapped opportunity to reach and connect with more consumers internationally.

Historically under utilized these windows are now being used to activate and tell rich brand storytelling that drawing new consumers.

Speaker #3: For example, we've moved our store base to predominantly off-mall locations, and we've gained tens of thousands of feet of window space. Historically underutilized, these windows are now being used to activate and tell rich brand storytellings that draw in new consumers.

Turning to our supply chain after.

Our strategic partners at Beauty Park, and our relationships with leading global fragrance houses provides us with unmatched speed and quality.

We are focused on better leveraging these strengths to accelerate our innovation cycle and reinforce our position as a category leader.

Speaker #3: Turning to our supply chain, our strategic partners at beauty parks and our relationships with leading global fragrance houses provide us with unmatched speed and quality.

And finally, we have tremendous untapped opportunity to reach and connect with more consumers internationally.

Speaker #3: We are focused on better leveraging these strengths to accelerate our innovation cycle and reinforce our position as a category leader. Finally, we have tremendous untapped opportunities to reach and connect with more consumers internationally.

We are thoughtfully evaluating these and other opportunities and integrating them into our long term strategy.

Before I hand off to Eva.

I want to take a moment to thank our teams for the hard work dedication and focus on delivering for our customers and our company.

Speaker #3: We are thoughtfully evaluating these and other opportunities and integrating them into our long-term strategy. Before I hand off to Eva, I want to take a moment to thank our teams for their hard work, dedication, and focus on delivering for our customers and our company.

Daniel Heaf: We are thoughtfully evaluating these and other opportunities and integrating them into our long-term strategy. Before I hand off to Eva, I want to take a moment to thank our teams for the hard work, dedication, and focus on delivering for our customers and our company. Change is already underway at Bath & Body Works. We understand the challenges and our opportunities, which is exactly why we've moved quickly on our no-regret moves, and we are building a strategy to perform and transform in parallel. With razor-sharp priorities, disciplined execution, and a strong team, we are determined to return Bath & Body Works to durable revenue and profitable growth. We look forward to sharing more on our long-term vision in the coming quarters. I'll hand it over to Eva.

Change is already underway at Bath <unk> body work, we understand the challenges and opportunities which is exactly why we've moved quickly on a no regret move and we are building a strategy to perform and transform in parallel.

Speaker #3: Change is already underway at Bath & Body Works. We understand the challenges and our opportunities, which is exactly why we've moved quickly on our no-regret moves, and we are building a strategy to perform and transform in parallel.

With razor sharp priority disciplined execution and a strong team we are the timing to return Bath and body works to jewelry revenue and profitable growth.

We look forward to sharing more on our long term vision in the coming quarters.

Speaker #3: With razor-sharp priorities, disciplined execution, and a strong team, we are determined to return Bath & Body Works to durable revenue and profitable growth. We look forward to sharing more on our long-term vision in the coming quarters. Now, I'll hand it over to Eva.

And now I'll hand, it over to Eva.

Thank you Daniel and good morning, everyone.

Energy level here at BBW is high and our teams are hard at work to accelerate growth under Daniel leadership.

I'll begin with a high level summary of the quarter, including key business drivers I will then share more detail on our Q2 financial performance and provide an update on our Q3 and fiscal year 2025 guidance.

Speaker #4: Thank you, Daniel, and good morning, everyone. The energy level here at BVW is high, and our teams are hard at work to accelerate growth under Daniel's leadership.

Eva Boratto: Thank you, Daniel, and good morning, everyone. The energy level here at Bath & Body Works is high, and our teams are hard at work to accelerate growth under Daniel's leadership. I'll begin with a high-level summary of the quarter, including key business drivers. I'll then share more detail on our Q2 financial performance and provide an update on our Q3 and fiscal year 2025 guidance. Throughout the quarter, we were disciplined and decisive in our actions while navigating through continued macro volatility, and our Q2 performance is evidence of that. As a reminder, we are focused on three priority areas. First, accelerating top-line growth while maintaining or expanding margins. Second, enhancing operational excellence. Third, consistently deploying our strong cash flow to invest in growth opportunities and return value to shareholders.

Throughout the quarter, we were disciplined and decisive in our action, while navigating trend continued macro volatility and our Q2 performance is evidence of that.

Speaker #4: I'll begin with a high-level summary of the quarter, including key business drivers. I'll then share more detail on our Q2 financial performance, and provide an update on our Q3 and fiscal year 2025 guidance.

As a reminder, we are focused on three priority areas.

First accelerating top line growth, while main floor or expanding margins.

Speaker #4: Throughout the quarter, we were disciplined and decisive in our actions while navigating through continued macro volatility, and our Q2 performance is evidence of that.

Second enhancing operational excellence and third consistently deploying our strong cash flow to invest in growth opportunities and return value to shareholders.

Speaker #4: As a reminder, we are focused on three priority areas: first, accelerating top-line growth while maintaining or expanding margins; second, enhancing operational excellence; and third, consistently deploying our strong cash flow to invest in growth opportunities and return value to shareholders.

Overall, we delivered a solid quarter with net sales up one 5% and adjusted earnings per diluted share of 37.

At the high end of our range.

In terms of our topline performance. It was our fourth consecutive quarter of underlying sales growth with positive dual channel traffic in stores traffic exceeding third party benchmarks we track.

Speaker #4: Overall, we delivered a solid quarter, with net sales up 1.5% and adjusted earnings per diluted share of $37, both at the high end of our range.

Eva Boratto: Overall, we delivered a solid quarter with net sales up 1.5% and adjusted earnings per diluted share of $0.37, both at the high end of our range. In terms of our top-line performance, it was our fourth consecutive quarter of underlying sales growth with positive dual-channel traffic and stores traffic exceeding third-party benchmarks we track. This performance was led by a strong semi-annual sale, thanks to focused execution by our team. We put our learnings from prior semi-annual sales into action, strategically shifting the event back by two weeks to better align with the market dynamics and consumer mindset. Our stores were ready with the right mix of product and clearly signaling the sale event, effectively drawing in deal-seeking shoppers from the start. We also built excitement across social media.

This performance was led by a strong semiannual sale.

Speaker #4: In terms of our top-line performance, it was our fourth consecutive quarter of underlying sales growth, with positive dual-channel traffic and store traffic exceeding third-party benchmarks we track.

The focused execution by our team.

We put our learnings from prior semiannual sales into action strategically shifting the event back by two weeks to better align with the market dynamics and consumer mindset, our stores were ready with the right mix of product and clearly signaling this sale event.

Speaker #4: This performance was led by a strong semi-annual sale, thanks to focused execution by our teams. We put our learnings from prior semi-annual sales into action, strategically shifting the event back by two weeks to better align with the market dynamics and consumer mindset.

Actively drawing long deal seeking shoppers from the start.

We also built excitement across social media delay the dock our newly relaunched brand mascot became a breakout star driving strong engagement across platforms and generating over 260 million impressions Adil.

Speaker #4: Our stores were ready, with the right mix of product and clearly signaling the sale event. Effectively drawing in deal-seeking shoppers from the start. We also built excitement across social media.

Additionally, partnerships with leading fragrance influencers helped boost awareness and traffic.

Speaker #4: Billy the Duck, our newly relaunched brand mascot, became a breakout star, driving strong engagement across platforms and generating over 260 million impressions. Additionally, partnerships with leading fragrance influencers helped boost awareness and traffic both online and in stores.

Eva Boratto: Billy the Duck, our newly relaunched brand mascot, became a breakout star, driving strong engagement across platforms and generating over 260 million impressions. Additionally, partnerships with leading fragrance influencers helped boost awareness and traffic both online and in stores. There were other key contributors to our performance in the quarter. First, our sanitizer business performed above the shop, with consumers responding positively to our newer products like our moisturizing pocket back and our one ounce sanitizer spray. We drove growth in our men’s business, which we highlighted during Father’s Day, and were pleased with the performance of our True Blue Spa collection relaunch. Finally, we launched our Summer Ween product collection earlier to capture consumer demand. Fan-favorite fragrances like Ghoul Friend and Vampire Blood performed well, and our new Frankenstein's Bakery concept featuring ice cream float became a standout hit.

Online and in stores.

Additionally, there were other key contributors to our performance in the quarter.

First our sanitizer business performed above the shop with consumers responding positively to our newer products like our moisturizing pocket backs and our one ounce sanitizers spray reached.

Speaker #4: Additionally, there were other key contributors to our performance in the quarter. First, our sanitizer business performed above the shop, with consumers responding positively to our newer products like our moisturizing pocket bags and our one-ounce sanitizer sprays.

We drove growth in our men's business, which we highlighted during father's day and were pleased with the performance of our <unk> collection relaunch.

Finally, we launched our summer wound product collection earlier to capture consumer demand.

Speaker #4: We drove growth in our men's business, which we highlighted during Father's Day, and we're pleased with the performance of our True Blue Spa collection relaunch.

Fan favorite fragrances, like girlfriend, and vampire blood performed well.

Our new Frankenstein bakery concept, featuring <unk> screened flow became a standout hit law.

Speaker #4: Finally, we launched our Summerween product collection earlier to capture consumer demand, fan-favorite fragrances like Gulfriend and Vampire Blood performed well, and our new Frankenstein's Bakery concept featuring ice cream float became a standout hit.

Looking ahead, we will bring consumers more newness and more collaboration in Q3 and Q4.

We're excited about the fragrance experiences will drive this fall, including our Disney villains collaboration which launched with early access to loyalty members. This week.

Speaker #4: Looking ahead, we will bring consumers more newness and more collaborations in Q3 and Q4. We're excited about the fragrance experiences we'll drive this fall, including our Disney Villains collaboration which launched with early access to loyalty members this week.

Eva Boratto: Looking ahead, we will bring consumers more newness and more collaborations in Q3 and Q4. We're excited about the fragrance experiences we'll drive this fall, including our Disney Villains collaboration, which launched with early access to loyalty members this week. Building on the success of our princess collaboration, this launch will soon be available to all consumers globally. We have also introduced a new ceramic candle vessel, elevating our assortment with an enhanced design. At the same time, we're evolving our in-store technology and loyalty program. Along with the planned enhancements to our digital capabilities, we'll strengthen the consumer experience. This quarter, we successfully completed the deployment of a new point-of-sale system across our store base with no consumer disruption. This new point-of-sale is easier for our store associates to navigate and allows them to provide a better customer experience.

Building on the success of our Princess collaboration this launch will soon be available to all consumers globally.

We have also introduced a new ceramic candle vessel elevating our assortment with an enhanced design.

At the same time, we're evolving our old store technology and loyalty program, along with the planned enhancements to our digital capabilities will strengthen the consumer experience.

Speaker #4: Building on the success of our Princess collaboration, this launch will soon be available to all consumers globally. We have also introduced a new ceramic candle vessel, elevating our assortment with an enhanced design.

This quarter, we successfully completed the deployment of our new point of sale system across our store base with no consumer disruption. This new point of sale is easier for our store associates to navigate and allows them to provide a better customer experience are.

Speaker #4: At the same time, we're evolving our in-store technology and loyalty program. Along with the planned enhancements to our digital capabilities, we'll strengthen the consumer experience.

Speaker #4: This quarter, we successfully completed the deployment of a new point-of-sale system across our store base, with no consumer disruption. This new point of sale is easier for our store associates to navigate and allows them to provide a better customer experience.

Loyalty program is performing well with existing customers and is driving increased spend trip frequency cross channel purchases and retention in Q2, we had approximately 39 million active loyalty customers up 5% compared to the prior.

Speaker #4: Our loyalty program is performing well, with existing customers, and is driving increased spend, trip frequency, cross-channel purchases, and retention. In Q2, we had approximately 39 million active loyalty customers, up 5% compared to the prior year.

Eva Boratto: Our loyalty program is performing well with existing customers and is driving increased spend, trip frequency, cross-channel purchases, and retention. In Q2, we had approximately 39 million active loyalty customers, up 5% compared to the prior year. Now, I'll turn to the details of our Q2 financial performance and guidance. In Q2, we delivered net sales of $1.5 billion, up 1.5% to the prior year. These results were at the high end of our guidance range, led by strong semi-annual sale performance, as I previously stated. In U.S. and Canadian stores, net sales totaled $1.2 billion, an increase of 5% versus the prior year. Direct net sales were $267 million, a decrease of 10% compared to last year. When adjusted for buy online, pick up in store, which is reported as store sales, direct net sales were down 3%.

Your year.

Now I'll turn to the details of our Q2 financial performance and guidance.

In Q2, we delivered net sales of one 5 billion up one 5% to the prior year. These.

These results were at the high end of our guidance range led by strong semiannual sale performance as I previously stated.

Speaker #4: Now, I'll turn to the details of our Q2 financial performance and guidance. In Q2, we delivered net sales of 1.5 billion dollars, up 1.5% to the prior year.

In U S and Canadian stores net sales totaled $1 2 billion.

An increase of 5% versus the prior year.

Speaker #4: These results were at the high end of our guidance range, led by strong semi-annual sale performance as I previously stated. In US and Canadian stores, net sales totaled 1.2 billion dollars, an increase of 5% versus the prior year.

Direct net sales were $267 million, a decrease of 10% compared to last year when adjusted for buy online pickup in store, which is reported in store sales.

Net sales were down 3%.

That said, we're not satisfied with our digital business and as Daniel noted our teams are moving quickly to enhance the digital experience.

Speaker #4: Direct net sales were $267 million, a decrease of 10% compared to last year. When adjusted for buy online, pick up in store— which is reported as store sales— direct net sales were down 3%.

International net sales were $86 million.

In the second quarter, a decline of 3% and in line with expectations the.

Speaker #4: That said, we're not satisfied with our digital business and, as Daniel noted, our teams are moving quickly to enhance the digital experience. International net sales were 86 million dollars, in the second quarter, a decline of 3% and in line with expectations.

Eva Boratto: That said, we're not satisfied with our digital business, and as Daniel noted, our teams are moving quickly to enhance the digital experience. International net sales were $86 million in the second quarter, a decline of 3% and in line with expectations. The decline in the quarter was driven by the timing of ship sales between Q1 and Q2. Year-to-date net sales were up 2% versus prior year, representing the first positive seasonal net sales result we've seen since the start of the Middle East conflict. International system-wide retail sales grew 9% in the quarter, in line with our expectations and a continued improvement in performance. Our second quarter gross profit rate of 41.3% exceeded our expectations and increased 30 basis points compared to prior year, while including $16 million or approximately 100 basis point headwind from tariffs.

The decline in the quarter, which driven by the timing of ship sales between Q1 and Q2.

Year to date net sales were up 2% versus prior year, representing the first positive seasonal net sales results. We've seen since the start of the middle East conflict.

Speaker #4: The decline in the quarter was driven by the timing of shipped sales between Q1 and Q2. Year to date, net sales were up 2% versus the prior year, representing the first positive seasonal net sales result we've seen since the start of the Middle East conflict.

International system wide retail sales grew 9% in the quarter in line with our expectations and a continued improvement in performance.

Our second quarter gross profit rate of 41, 3% exceeded our expectations and increased 30 basis points compared to prior year, while including $16 million or approximately 100 basis point headwind from caris.

Speaker #4: International system-wide retail sales grew 9% in the quarter, in line with our expectations, and a continued improvement in performance. Our second quarter growth profit rate of 41.3% exceeded our expectations and increased 30 basis points compared to prior year.

Gross profit expansion resulted from BMO leverage largely due to the exit of a third party fulfillment center.

Adjusted SG&A as a percentage of net sales was 32% representing a 110 basis point deleverage compared to the prior year. The increase was driven by selling expense, including investments in new stores and higher health care costs now.

Speaker #4: While including $16 million, or approximately 100 basis points, headwind from tariffs, growth profit expansion resulted from B&O leverage, largely due to the exit of a third-party fulfillment center.

Eva Boratto: Gross profit expansion resulted from B&O leverage, largely due to the exit of a third-party fulfillment center. Adjusted SG&A as a percentage of net sales was 30.2%, representing 110 basis points deleverage compared to the prior year. The increase was driven by selling expense, including investments in new stores and higher health care costs. Now, bringing it all together, second quarter adjusted operating income was $172 million, down 6% to last year. With respect to inventory, we ended the second quarter with total inventory up 13% to prior year. This includes the impacts of tariffs on purchases as well as planned strategic pull forward. We exited the season with healthy inventory levels. To real estate, our portfolio remains healthy, with 58% of our fleet in off-mall locations. In the second quarter, we opened 20 new North American stores, all in off-mall locations, and permanently closed 16 stores, primarily in malls.

Speaker #4: Adjusted SG&A, as a percentage of net sales, was 30.2%, representing a 110 basis point deleverage compared to the prior year. The increase was driven by selling expenses, including investments in new stores and higher healthcare costs.

Now, bringing it altogether second quarter adjusted operating income was $172 million down 6% to last year.

With respect to inventory we ended the second quarter with total inventory up 13% to prior year.

Speaker #4: Now, bringing it all together, second quarter adjusted operating income was $172 million, down 6% compared to last year. With respect to inventory, we ended the second quarter with total inventory up 13% versus prior year.

This includes the impacts of tariffs on purchases as well as planned strategic pull forward, we exited the season with healthy inventory levels.

Turning to real estate, our portfolio remains healthy with 58% of our fleet and off mall locations in the second quarter. We opened 20, new North American stores, all in off mall location and permanently closed 16 stores primarily in malls.

Speaker #4: This includes the impacts of tariffs on purchases, as well as planned strategic pull-forward. We exited the season with healthy inventory levels. Turning to real estate, our portfolio remains healthy, with 58% of our fleet in off-mall locations.

Internationally, our partners opened 14, new stores and closed one store during the quarter and we ended the quarter with 537 stores.

Speaker #4: In the second quarter, we opened 20 new North American stores, all in off-mall locations, and permanently closed 16 stores, primarily in malls. Internationally, our partners opened 14 new stores, and closed one store during the quarter, and we ended the quarter with 537 stores.

Our international store expansion plans for 2025 remain on track with at least 30 plan net new store openings.

Eva Boratto: Internationally, our partners opened 14 new stores and closed one store during the quarter, and we ended the quarter with 537 stores. Our international store expansion plans for 2025 remain on track with at least 30 planned net new store openings. Turning now to our 2025 financial guidance. Our full year and third quarter guidance includes the estimated impact of all tariff rates communicated by the U.S. government and other countries as of this week, including the recent removal of Canadian retaliatory tariffs effective September 1. For the full year, we expect tariffs, net and mitigation efforts to negatively impact gross profit by approximately $85 million, with $40 million of that impact in Q3. As a reminder, we import approximately 10% of goods from China and 7% from Canada and Mexico.

Turning now to our 2025 financial guidance, our full year and third quarter guidance includes the estimated impact of all tariff rates communicated by the U S government and other countries as of this week, including the recent removal of Canadian retaliatory tariffs effective set.

Speaker #4: Our international store expansion plans for 2025 remain on track, with at least 30 planned net new store openings. Turning now to our 2025 financial guidance, our full-year and third-quarter guidance includes the estimated impact of all tariff rates communicated by the US government and other countries as of this week.

Timber one.

For the full year, we expect tariffs net of mitigation efforts to negatively impact growth gross profit by approximately $85 million with $40 million of that impact in Q3.

Speaker #4: Including the recent removal of Canadian retaliatory tariffs effective September 1st. For the full year, we expect tariffs, net and mitigation efforts to negatively impact growth profits by approximately 85 million dollars, with 40 million dollars of that impact in Q3.

As a reminder, we import approximately 10% of goods from China, and 7% from Canada, and Mexico, We believe our vertically integrated predominantly U S based supply chain positions us well to compete in the current environment and to fully absorb the impact of tariff.

Speaker #4: As a reminder, we import approximately 10% of goods from China and 7% from Canada and Mexico. We believe our vertically integrated, predominantly US-based supply chain positions us well to compete in the current environment and to fully absorb the impact of tariffs at current levels in our fiscal 2025 guidance.

At current levels in our fiscal 2025 guidance.

Looking ahead, we are confident in our ability to further mitigate these costs over time through strategic sourcing operational efficiencies and other targeted initiatives.

Eva Boratto: We believe our vertically integrated, predominantly U.S.-based supply chain positions us well to compete in the current environment and to fully absorb the impact of tariffs at current levels in our fiscal 2025 guidance. Looking ahead, we are confident in our ability to further mitigate these costs over time through strategic sourcing, operational efficiencies, and other targeted initiatives. For the full year, we are narrowing our net sales guidance from 1% to 3% growth to 1.5% to 2.7% growth and raising the low end of our adjusted earnings per diluted share guidance from $3.25 to $3.60 to $3.35 to $3.60. Our guidance reflects strong first-half performance and consistent expectations of 1% to 3% net sales growth for the second half of the year.

For the full year, we are narrowing our net sales guidance from 1% to 3% growth to one 5% to two 7% growth and raising the low end of our adjusted earnings per diluted share guidance from $3 25 to $3 60 to $3 35 to $3 60.

Speaker #4: Looking ahead, we are confident in our ability to further mitigate these costs over time through strategic sourcing, operational efficiencies, and other targeted initiatives. For the full year, we are narrowing our net sales guidance from 1% to 3% growth to 1.5% to 2.7% growth.

Our guidance reflects strong first half performance and consistent expectations of 1% to 3% net sales growth for the second half of the year.

Speaker #4: And raising the low end of our adjusted earnings per diluted share guidance from 3.25% to 3.60% to 3.35% to 3.60%. Our guidance reflects strong first-half performance, and consistent expectations of 1% to 3% net sales growth for the second half of the year.

We continue to expect gross profit rate of approximately 44% and I am confident in our ability to absorb the 85 million dollar impact of tariffs most of which was not included in our initial guidance range back in February.

Speaker #4: We continue to expect growth profit rate of approximately 44%, and I am confident in our ability to absorb the 85 million dollar impact of tariffs, most of which was not included in our initial guidance range back in February.

We now expect our adjusted SG&A rate to be approximately 27, 7% driven by higher health care costs and strategic investments.

Eva Boratto: We continue to expect a gross profit rate of approximately 44%, and I am confident in our ability to absorb the $85 million impact of tariffs, most of which was not included in our initial guidance range back in February. We now expect our adjusted SG&A rate to be approximately 27.7%, driven by higher health care costs and strategic investment. We are increasing our planned share repurchases to $400 million, up from $300 million. Turning now to the third quarter, we expect net sales growth of 1% to 3% growth versus the prior year. We expect Q3 system-wide international retail sales to be up high single digits, with reported net sales up mid-single digits. We expect the third quarter gross profit rate to be approximately 42.2%, including approximately $40 million of tariff impact.

And we are increasing our planned share repurchases to $400 million up from $300 million.

Speaker #4: We now expect our adjusted SG&A rate to be approximately 27.7%, driven by higher healthcare costs and strategic investments. We are also increasing our planned share repurchases to $400 million, up from $300 million.

Turning now to the third quarter, we expect net sales growth of 1% to 3% growth versus the prior year. We expect Q3 systemwide international retail sales to be up high single digits with reported net sales up mid single digits.

Speaker #4: Turning now to the third quarter, we expect net sales growth of 1% to 3% growth versus the prior year. We expect Q3 system-wide international retail sales to be up high single digits, with reported net sales up mid-single digits.

We expect third quarter gross profit rate to be approximately 42, 2%, including approximately $40 million of tariff impact.

Tariffs are expected to disproportionately impact third quarter results due to inventory receipts that were subject to the 145% China tariff rate between April nine through May 13.

Speaker #4: We expect third-quarter growth profit rate to be approximately 42.2%, including approximately $40 million of tariff impact. Tariffs are expected to disproportionately impact third-quarter results due to inventory receipts that were subject to the 145% China tariff rate between April 9th and May 13th.

We expect our third quarter SG&A rate to be approximately 31, 5% also reflecting higher healthcare and technology costs as well as strategic investments we are diligently working to mitigate these impacts.

Eva Boratto: Tariffs are expected to disproportionately impact third-quarter results due to inventory receipts that were subject to the 14.5% China tariff rate between April 9 through May 13. We expect our third-quarter SG&A rate to be approximately 31.5%, also reflecting higher health care and technology costs, as well as strategic investments. We are diligently working to mitigate these impacts. Our third-quarter outlook includes interest expense and other of approximately $65 million and a tax rate of approximately 25% and weighted average diluted shares outstanding of approximately 206 million. Considering all of these inputs, we are forecasting third-quarter earnings per diluted share of $0.37 to $0.45. You can find additional details on our guidance in our slide presentation. Now for an update on capital allocations. We are a strong cash-flow-generating business, and our top priority remains driving durable, profitable growth through strategic investments in the business.

Our third quarter outlook includes interest expense and other of approximately $65 million and a tax rate of approximately 25% and weighted average diluted shares outstanding of approximately $206 million.

Speaker #4: We expect our third-quarter SG&A rate to be approximately 31.5%, reflecting higher healthcare and technology costs, as well as strategic investments. We are diligently working to mitigate these impacts.

Considering all of these inputs, we are forecasting third quarter earnings per diluted share of 37.

Speaker #4: Our third-quarter outlook includes interest expense and other of approximately $65 million, a tax rate of approximately 25%, and weighted average diluted shares outstanding of approximately 206 million.

45 set you can find additional details on our guidance in our slide presentation.

Now for an update on capital allocation, we are strong cash flow generating business and our top priority remains driving durable profitable growth through strategic investments in the business.

Speaker #4: Considering all of these inputs, we are forecasting third-quarter earnings per diluted share of $37.00 to $45.00. You can find additional details on our guidance in our slide presentation.

To support this we continue to plan capital expenditures of $250 million to $270 million during the year with a focus on real estate and technology in the second quarter capital expenditures totaled $56 million, bringing.

Speaker #4: Now for an update on capital allocations. We are a strong cash flow-generating business, and our top priority remains driving durable, profitable growth through strategic investments in the business.

Speaker #4: To support this, we continue to plan capital expenditures of $250 million to $270 million during the year. With a focus on real estate and technology, in the second quarter, capital expenditures totaled $56 million, bringing the year-to-date total to $93 million.

Eva Boratto: To support this, we continue to plan capital expenditures of $250 million to $270 million during the year, with a focus on real estate and technology. In the second quarter, capital expenditures totaled $56 million, bringing the year-to-date total to $93 million. Our full-year free cash flow expectation remains in the range of $750 to $850 million, reflecting working capital improvements driven by our Fuel for Growth initiative. In Q2, we returned $42 million to shareholders through dividends and repurchased 4.1 million shares of Common Stock for $121 million at an average price of $29.14 per share. Year to date, we have returned $85 million to shareholders through dividends, and we have repurchased 8.5 million shares of Common Stock for $256 million. As I mentioned, we are increasing our planned full-year share repurchases from $300 million to $400 million.

Bringing the year to date total to $93 million.

Our full year free cash flow expectation remains in the range of $750 million to $850 million, reflecting working capital improvement driven by our fuel for growth initiatives.

In Q2, we returned $42 million to shareholders through dividends and repurchased four 1 million shares of common stock for $121 million at an average price of $29 14 per share.

Speaker #4: Our full-year free cash flow expectation remains in the range of $750 million to $850 million, reflecting working capital improvements driven by our fuel-for-growth initiatives.

Year to date, we have returned $85 million to shareholders through dividends and we've repurchased eight 5 million shares of common stock for $256 million.

Speaker #4: In Q2, we returned 42 million dollars to shareholders through dividends, and repurchased 4.1 million shares of Common Stock for 121 million dollars. At an average price of 29 dollars and 14 cents per share.

As I mentioned, we are increasing our planned full year share repurchases from $300 million to $400 million.

Speaker #4: Year to date, we have returned $85 million to shareholders through dividends, and we have repurchased 8.5 million shares of common stock for $256 million.

Our business generates strong free cash flow and we view our shares as an attractive investment at current levels.

In summary, and encouraged by our first half performance and energized by the opportunity to accelerate growth, we believe that our agile business model positions us well to compete effectively in today's dynamic consumer and macro environment, we are executing with discipline.

Speaker #4: As I mentioned, we are increasing our planned full-year share repurchases from 300 million dollars to 400 million dollars. Our business generates strong free cash flow, and we view our shares as an attractive investment at current levels.

Eva Boratto: Our business generates strong free cash flow, and we view our shares as an attractive investment at current levels. In summary, I'm encouraged by our first-half performance and energized by the opportunity to accelerate growth. We believe that our agile business model positions us well to compete effectively in today's dynamic consumer and macro environment. We are executing with discipline, focusing on what we can control, and introducing newness and collaborations to consumers in the second half of the year. I'd like to extend my gratitude to our teams across the company for their hard work and strong execution. Now, let's open it up for questions.

Speaker #4: In summary, I'm encouraged by our first-half performance and energized by the opportunity to accelerate growth. We believe that our agile business model positions us well to compete effectively in today's dynamic consumer and macro environment.

Focusing on what we can control and introducing newness and collaborations to consumers in the second half of the year.

I'd like to extend my gratitude to our teams across the company for their hard work and strong execution now, let's open it up for questions.

Speaker #4: We are executing with discipline, focusing on what we can control, and introducing newness and collaborations to consumers in the second half of the year.

Thank you if you'd like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue.

Speaker #4: I would like to extend my gratitude to our teams across the company for their hard work and strong execution. Now, let's open it up for questions.

You May press star two if you'd like to remove your question from the queue for participants using speaker equipment. It may be necessary to pick up your handset before pressing the star keys.

Speaker #5: Thank you. If you'd like to ask a question, please press *1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue.

Conference Q&A Moderator: Thank you. If you'd like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key. To allow for as many questions as possible, we ask that you each keep to one question and one follow-up. Thank you. Our first question comes from the line of Matthew Boss with JPMorgan. Please proceed with your question.

To allow for as many questions as possible, we ask that you each keep to one question and one follow up thank you.

Our first question comes from the line of Matthew Boss with Jpmorgan. Please proceed with your question.

Speaker #5: You may press star two if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key.

Great. Thanks.

Daniel with a full quarter now under your belt, how would you assess opportunities ahead versus your perspective, maybe when you first walked into the building and Eva could you speak to traffic trends during the quarter and trends that you've seen in August supporting the 1% to 3% sales outlook for the third quarter.

Speaker #5: To allow for as many questions as possible, we ask that you each keep to one question and one follow-up. Thank you. Our first question comes from the line of Matthew Boss with JP Morgan.

Speaker #5: Please proceed with your question.

Speaker #6: Great, thanks. So, Daniel, with a full quarter now under your belt, how would you assess opportunities ahead versus your perspective maybe when you first walked into the building?

Luke Long: Great, thanks. Daniel, with a full quarter now under your belt, how would you assess opportunities ahead versus your perspective maybe when you first walked into the building? Eva, could you speak to traffic trends during the quarter and trends that you've seen in August supporting the 1% to 3% sales outlook for the third quarter?

Good morning, everyone.

Good morning, Matt.

I've been at Bath <unk> body works now for just over 100 days and deeply immersed in the business that you heard meeting with consumers.

Speaker #6: And Eva, could you speak to traffic trends during the quarter and trends that you've seen in August supporting the one to three percent sales outlook for the third quarter?

<unk> partners shareholders and the real headline is.

Beyond market of diligence from outside the company I see even more opportunity to accelerate growth and I did 30 days ago.

Speaker #3: Good morning, everyone, and good morning, Matt. Yeah, I've been at Bath & Body Works now for just over 100 days and have been deeply immersed in the business, as you heard, meeting with consumers, teams, partners, and shareholders. The real headline is that beyond my diligence from outside the company, I see even more opportunity to accelerate growth than I did three days ago.

Daniel Heaf: Good morning, everyone, and good morning, Matt. I've been at Bath & Body Works now for just over 100 days and deeply immersed in the business, as you heard, meeting with consumers, teams, partners, shareholders. The real headline is, beyond my sort of diligence from outside the company, I see even more opportunity to accelerate growth than I did three days ago. I mentioned on my first earnings call on day 10 our three no-regret moves: elevating our digital platforms, amplifying the efficacy of our products, and expanding our distribution. We are making good progress against those important initiatives. Beyond those, I do see opportunities right across the value chain to accelerate growth. Let me give you a few examples of the things I've seen. Firstly, in terms of our assortment and merchandising, our stores are beautiful and experiential, exceptionally strong.

I mentioned on my first earnings call on data in all three no regret moves elevating our digital platforms amplifying the efficacy of our products and expanding our distribution and we are making good progress against those important initiatives.

Speaker #3: You know, I mentioned on my first earnings call on Day 10 our three no-regret moves: elevating our digital platforms, amplifying the efficacy of our products, and expanding our distribution. We are making good progress against those important initiatives.

But beyond those I do see opportunities right across the value chain to accelerate growth.

Let me give you a few examples of the things I've seen firstly.

In terms of our assortment and merchandising.

Speaker #3: But beyond those, I do see opportunities right across the value chain to accelerate growth. Let me give you a few examples of the things I've seen.

All stores.

It's a full and experiential.

Exceptionally strong, but many new consumers.

Tell me they find the assortment overwhelming it's not that we don't have the product for them. We really do it's just that they find it hard to find and we also lead with price sometimes over benefit so we're addressing that.

Speaker #3: Firstly, in terms of our assortment and merchandising, you know, our stores are beautiful and experiential—exceptionally strong. However, many new consumers have told me that they find the assortment overwhelming. It's not that we don't have the products for them; we really do.

Daniel Heaf: Many new consumers have told me they find the assortment overwhelming. It's not that we don't have the product for them. We really do. It's just that they find it hard to find. We also lead with price sometimes over benefits. We're addressing that. We're editing our assortment to amplify what we truly stand for for the consumer, telling bigger and bolder stories to drive greater demand through a smaller selection of products at lower discounts. That's where we're focused there. Another opportunity has been in Beauty Park. It's incredible, the foundation that this company has built with its agile, domestically, vertically integrated supply chain. It gives us speed, agility, and quality. We can truly use this asset to drive innovation in our core categories and reinforce our position as a category leader.

Editing our assortment to amplify what we truly stand for for the consumer selling bigger and bolder stories to drive greater demand through a smaller selection of product.

Speaker #3: It's just that they find it hard to find. And we also lead with price sometimes over benefits. So, we're addressing that. You know, we're editing our assortment, to amplify you know what we truly stand for.

Discounts.

That's where we're focused that another opportunity.

<unk> been in Beauty Park, it's incredible the foundation of this company has built with its agile domestically vertically integrated supply chain that gives us speed at.

Speaker #3: For the consumer, telling bigger and bolder stories to drive greater demand through a smaller selection of products at lower discounts. That's where we're focused there.

Agility and quality, but we can truly use this asset to drive innovation in our core categories and reinforce our position as a category leader.

Speaker #3: Another opportunity has been in beauty parks. It's incredible the foundation that this company has built with its agile domestically vertically integrated supply chain, it gives us speed and agility and quality, but we can truly use this asset to drive innovation in our core categories, and reinforce our position as a category leader.

Im.

I am focused on making sure that we have the right innovation in the pipeline for our core category and we are looking forward to bringing those to market in the next fiscal.

And then finally on brand.

So important we have this iconic brands in so many consumers have shared with me that.

Speaker #3: I am focused on making sure that we have the right innovations in the pipeline for our core categories, and we are looking forward to bringing those to market in the next fiscal.

Daniel Heaf: I am focused on making sure that we have the right innovations in the pipeline for our core categories, and we are looking forward to bringing those to market in the next fiscal. Finally, on brand, so important. We have this iconic brand, and so many consumers have shared with me that there's deep love for the Bath & Body Works brand. We have this incredible social following, as you might have seen, about 7.4 million Instagram followers. We're posting, not programming social the way that top brands do, creator-led, at the speed of culture, and commerce integrated. We need to reframe social, Instagram, TikTok as a growth system. I think about the four C's: content, community, creators, and commerce. We know this is the modern brand heat and demand generation playbook, and we are getting after that in short order. Eva.

That deep love for.

The Boston <unk> brand and we have this incredible social following as you might have seen about seven 4 million Instagram followers, but we're posting not programming social the way that top brands do create a lead at the speed of culture and commerce integrated we need to re frame social.

Speaker #3: And then finally, on brand, you know, so important, we have this iconic brand, and so many consumers have shared with me that there's a deep love for the Bath & Body Works brand. We have this incredible social following, as you might have seen, about 7.4 million Instagram followers.

Instagram take top either growth system, I think about the fourth feed content community creators and commerce. We know this is a modern brand heat and demand generation playbook and we are getting after that in short order.

Speaker #3: But we're posting not programming social the way that top brands do, creator-led, at the speed of culture and commerce integrated. You know, we need to reframe social, Instagram, TikTok as a growth system.

Great. Thanks, Thanks, Daniel and good morning, Matt.

No.

Speaker #3: I think about the four C's, s, content, community, creators, and commerce. We know this is the modern brand heat and demand generation playbook, and we are getting after that in short order.

Your first question about how the month played out in the quarter and in particular traffic as you know, we changed and really improved our retail calendar to drive performance storing SaaS.

Speaker #3: Eva?

Speaker #4: Great, thanks. Thanks, Daniel, and good morning, Matt. So, your first question about how the months played out in the quarter and in particular traffic.

We launched Halloween earlier than prior years and created space for father's day. So as you look at the monthly trends.

Eva Boratto: Great, thanks, thanks, Daniel, and good morning, Matt. Your first question about how the months played out in the quarter and in particular traffic. As you know, we changed and really improved our retail calendar to drive performance during SAS. We launched Halloween earlier than prior years and created space for Father's Day. As you look at the monthly trend, May was softer, but largely negatively affected by the timing of SAS. June was very strong from a sales and traffic perspective. July, I would say, was more back to normal when you normalized for the Halloween launch and the Prime Days. Traffic overall was up in the quarter. It was above external benchmarks, but it was a bit softer than Q1. Your question in terms of Q3 and what we're seeing in August.

Speaker #4: As you know, we changed and really improved our retail calendar to drive performance during SaaS. We launched Halloween earlier than prior years and created space for Father's Day.

May was softer, but largely negatively affected by the timing of SaaS June was very strong from a sales and traffic perspective.

In July I would say it was more was more back to normal when you normalize for the Halloween launch in the Prime days. So traffic overall was up in the quarter. It was above external benchmarks, but it was a bit softer than than Q1 now you're your question in terms of Q.

Speaker #4: So, as you look at the monthly trends, you know, May was softer, but largely negatively affected by the timing of SaaS. June was very strong from a sales and traffic perspective.

Speaker #4: And July, I would say, was more back to normal when you normalized for the Halloween launch and the Prime Days. So, traffic overall was up in the quarter.

Three and what we're seeing in August 1st I, just want to say is as always our performance to date is included in our outlook for the quarter as you think about our key drivers for the quarter, It's our Disney Billings launch our fall assortment and our single fragrance launch that will come at the end of the quarter.

Speaker #4: It was above external benchmarks, but it was a bit softer than Q1. Now, your question in terms of Q3 and what we're seeing in August, first, I just want to say is, as always, our performance to date is included in our outlook for the quarter.

Eva Boratto: First, what I just want to say is, as always, our performance to date is included in our outlook for the quarter. As you think about our key drivers for the quarter, it's our Disney Villains launch, our fall assortment, and our single fragrance launch that'll come at the end of the quarter. We're excited about this newness and are confident in the outlook we provided today.

So we're excited about this about this newness and are confident in the outlook we provided today.

Speaker #4: As you think about our key drivers for the quarter, it's our Disney Villains launch, our fall assortment, and our single fragrance launch that'll come at the end of the quarter.

Thank you. Our next question comes from the line of Lorraine Hutchinson with Bank of America. Please proceed with your question.

Speaker #4: So, we're excited about this newness, and our confidence in the outlook we provided today.

Thank you good morning, you've talked about marketing changes.

On pricing and promotions and more on emotionally connecting with customers.

Some of the changes you've made in marketing and health customers been responding and then for Eva can you talk to the tariff impact between <unk> and <unk>.

Speaker #5: Thank you. Our next question comes from the line of Lorraine Hutchinson with Bank of America. Please proceed with your question.

Conference Q&A Moderator: Thank you. Our next question comes from the line of Lorraine Hutchinson with Bank of America. Please proceed with your question.

Speaker #7: Thank you. Good morning. You've talked about marketing changes to focus less on pricing and promotions, and more on emotionally connecting with customers. What are some of the changes you've made in marketing, and how have customers been responding?

Luke Long: Thank you. Good morning. You've talked about marketing changes to focus less on pricing and promotions and more on emotionally connecting with customers. What are some of the changes you've made in marketing, and how have customers been responding? For Eva, can you talk to the tariff impact between Q3 and Q4?

Yes, thank you very much Lorraine.

We are focused on elevating our market and what I would call. The most practical ways. So you can start to see already the changes that we are driving to all digital.

Speaker #7: And then for Eva, can you talk to the tariff impact between Q3 and Q4?

Experienced just a product photography for villains and the product copy for billings is a marked improvement on what this brand has already done and as I've said before that will drive both in store and online sales as well as raising the overall profile and feeding of the brand.

Speaker #3: Yeah, thank you very much, Lorraine. We are focused on elevating our market in what I would call the most practical ways. So, you can start to see already the changes that we are driving to our digital experience. Just the product photography for Villains and the product copy for Villains is a marked improvement on what this brand has already done.

Daniel Heaf: Thank you very much, Lorraine. We are focused on elevating our market in what I would call the most practical ways. You can start to see already the changes that we are driving to our digital experience. Just the product photography for the Disney Villains collection and the product copy for the Disney Villains collection is a marked improvement on what this brand has already done. As I've said before, that will drive both in-store and online sales, as well as raising the overall profile and feeling of the brand. Secondly, in stores, I would say we have a real opportunity to tell bigger, bolder stories. I'm really pleased with the way that Summer Ween came to pass.

And then secondly in stores I would say, we have a real opportunity to tell bigger bolder story Im really pleased with the way that some of ween came to Paul it shows that when we.

Speaker #3: And as I've said before, that will drive both in-store and online sales, as well as raising the overall profile and feeling of the brand.

When we stick to our growth formula or the growth philosophy, creating innovative coveted product, telling bolt and emotional stories and bring it to life in the marketplace we win.

Speaker #3: And then secondly, in stores, I would say, we have a real opportunity to tell bigger, bolder stories. I'm really pleased with the way that Summerween came to pass.

Many collections in fall and holiday as they move to the back half where the consumer will notice the elevated storytelling in our fleet jetblue.

Speaker #3: It shows that when we stick to our growth formula, or the growth philosophy—creating innovative and coveted products, telling bold and emotional stories, and bringing it to life in the marketplace—we win.

Daniel Heaf: It shows that when we stick to our growth formula or the growth philosophy, creating innovative and coveted products, telling bold and emotional stories, and bringing it to life in the marketplace, we win. I see many collections in fall and holiday as we move to the back half where the consumer will notice the elevated storytelling in our fleet. Just one practical example, as we've moved our stores off more, we've ended up with thousands of feet of windows, which we have historically not utilized. We have started to roll out really eye-catching windows, and we have been testing and learning with them and expanding it more into fall and holiday. I must say, it looks wonderful and consumers are responding.

Just one practical example, as we've moved.

Our stores off mall, we've ended up with thousands of feet of windows.

Speaker #3: And I see many collections in fall and holiday as we move to the back half, where the consumer will notice the elevated storytelling in our fleet.

Have historically not utilized.

We have started to rollout really eye catching windows, and we have been testing and learning with them and expanding it more into fall and holiday and I must say it looks wonderful and consumers are responding.

Speaker #3: Just one practical example, as we've moved our stores off-mall, we've ended up with thousands of feet of windows. What we have historically not utilized, we have started to roll out really eye-catching windows and we have been testing and learning with them and expanding it more into fall and holiday.

Great. Thanks, Daniel net anything I'll add to that is as we work to continue to optimize and improve our modeling we're going to need making sure. We're measuring the returns and getting the most value and driving the most growth outlets out of those investments now Maureen to your question around Q3.

Speaker #3: And I must say, it looks wonderful, and consumers are responding.

Speaker #4: Great, thanks, Daniel. No, the only thing I'll add to that is, as we work to continue to optimize and improve our modeling, we're going to be making sure we're measuring the returns and getting the most value and driving the most growth out of those investments.

Eva Boratto: Great, thanks, Daniel. The only thing I'll add to that is, as we work to continue to optimize and improve our modeling, we're going to be making sure we're measuring the returns and getting the most value and driving the most growth out of those investments. Now, Lorraine, to your question around Q3 versus Q4 and the impacts of tariffs, we're pleased that for the year we raised the low end of our guidance while absorbing these impacts of tariffs. If you think about the second half of the year versus where we were sitting here a quarter ago, we haven't changed things materially, right? We're maintaining up 1% to 3% guidance. As you look at the overall frame of our gross profit in particular, Q3 is disproportionately impacted by tariffs.

Versus Q4, and the and the impacts of tariffs.

We're pleased that for the year, we've raised the low end of our guidance while absorbing this impacts of tariffs and if you think about the second half of the year versus where we were sitting here a quarter ago, we havent change things materially right, we're maintaining up 1% to three.

Speaker #4: Now, Lorraine, to your question around Q3 versus Q4 and the impacts of tariffs, we’re pleased that for the year, we’ve raised the low end of our guidance while absorbing this impact of tariffs.

Percent guidance, but as you look at the overall frame of our gross profit in particular Q3 is disproportionately impacted by tariffs of $40 million that I quoted in my prepared remarks affects margins by about 240 basis points.

Speaker #4: And if you think about the second half of the year, versus where we were sitting here a quarter ago, we haven't changed things materially, right?

Speaker #4: We're maintaining up 1% to 3% guidance. But as you look at the overall frame of our growth profit in particular, Q3 is disproportionately impacted by tariffs.

And that compares to Q4 at 100 basis point.

Largely driven by the China tariffs had a 145% back between April 9th in May 13.

Speaker #4: The 40 million dollars that I quoted in my prepared remarks affects margins by about 240 basis points, and that compares to Q4 at 100 basis points.

Eva Boratto: The $40 million that I quoted in my prepared remarks affects margins by about 240 basis points, and that compares to Q4 at 100 basis points, largely driven by the China tariffs at 145% back between April 9 and May 13. That disproportionately impacts that, as well as some of the mix of our business quarter versus quarter. Overall, we feel good about where we are in our ability to absorb the tariffs and longer term to mitigate the impacts over time.

That disproportionately impacts that as well as some of the mix of our <unk>.

Business quarter versus this quarter. So overall, we feel good about where we are and our ability to absorb the tariffs and longer term to mitigate the impacts over time.

Speaker #4: Largely driven by the China tariffs at 145%, back between April 9th and May 13th. So that disproportionately impacts that, as well as some of the mix of our business quarter versus quarter.

Thank you. Our next question comes from the line of Alex <unk> with Morgan Stanley. Please proceed with your question.

Speaker #4: So overall, we feel good about where we are and our ability to absorb the tariffs and, longer-term, to mitigate the impacts over time.

Hi. Thank you this is Katie delahunt on for Alex Triton.

Just a question for Daniel I know the prior management team thoughts with business that could return to mid single digit high single digit growth over time do you agree with that sale and if so what are the building blocks as you think about core growth versus some of the newer ideas you have like wholesale or international.

Speaker #5: Thank you. Our next question comes from the line of Alex Strain with Morgan Stanley. Please proceed with your question.

Conference Q&A Moderator: Thank you. Our next question comes from the line of Alex Straton with Morgan Stanley. Please proceed with your question.

Speaker #8: Hi, thank you. This is Katie Delahunt on for Alex Strain. This is a question for Daniel. I know the prior management team thought this was a business that could return to mixing legitimate high single-digit growth over time.

Katie Dalladhon: Hi, thank you. This is Katie Dalladhon on for Alex Straton. This is a question for Daniel. I know the prior management team thought this was a business that could return to mid-single digit, high single digit growth over time. Do you agree with that still? If so, what are the building blocks as you think about core growth versus some of the newer ideas you have, like wholesale or international?

Thanks, Casey, Yes, we are absolutely anchored to getting to mid single digit high single digit and.

We look at it both from a growth perspective, but also where we're a brand that wants to take share in our core categories and we know that we are an exciting.

Speaker #8: Do you agree with that still? And if so, what are the building blocks as you think about core growth versus some of the newer ideas you have, like wholesale or international?

Our categories are growing.

Speaker #3: Thanks, Katie. Yeah, we are absolutely anchored to getting to mid-single digit, high single digit, and we look at it both from a growth perspective, but also we're a brand that wants to take share in our core categories.

Daniel Heaf: Thanks, Katie. We are absolutely anchored to getting to mid-single digit, high single digit. We look at it both from a growth perspective, but also we're a brand that wants to take share in our core categories, and we know that we are in exciting and our categories are growing. When it comes to the core, we believe that we have all the right products, and really it's about making sure that we are bringing it to market in the best possible way. I can't emphasize enough how fast we will act on our digital opportunity. We know that this is an opportunity to bring new consumers to the brand, which, as I said in my opening remarks, is the single largest opportunity that we have to drive durable and profitable growth.

When it comes to the call we believe that we have.

All of the right product and really it's about making sure that we are bringing it to market in the in the best possible way I cant emphasize enough.

Speaker #3: And we know that we are in an exciting time, and our categories are growing. When it comes to the core, we believe that we have all the right products, and really it's about making sure that we are bringing them to market in the best possible way.

How.

How fast we will act on all digital opportunity. We know that this is an opportunity to bring new consumers to the brand, which as I said in my opening remark is the single largest opportunity that we have to do.

Speaker #3: I can't emphasize enough how fast we will act on our digital opportunity. We know that this is an opportunity to bring new consumers to the brand, which, as I said in my opening remarks, is the single largest opportunity that we have to drive durable and profitable growth.

Drive durable and profitable growth, we know that consumers.

On digital channel with researching what are they want to buy when they purchase in store and online and as we move through September October and into the next year, we will be unrelenting and making sure that we are delivering consumer right progress on that channel.

Speaker #3: We know that consumers are on digital channels researching what it is they want to buy whether they purchase in-store and online. And as we move through September, October, and into the next year, we'll ll be unrelenting in making sure that we are delivering consumer-right progress on that channel.

Daniel Heaf: We know that consumers are on digital channels researching what it is they want to buy, whether they purchase in-store and online. As we move through September, October, and into the next year, we will be unrelenting in making sure that we are delivering consumer-right progress on that channel. In terms of new priorities, we do see being in the path of the consumer as fundamental to growing new consumers and returning to consistent, durable, high single digit, mid-single digit growth. We're very excited by the announcement of our launch in college bookstores, 7 million young consumers with more convenient access to the brand. This is the first of many initiatives in this area.

And then in terms of knee.

<unk> priorities, we do see being in the path of the consumer as fundamental to growing new consumers and returning to consistent durable high single digit mid single digit growth. We're very excited by the announcement of our launch in college bookstores and $7 million.

Speaker #3: And then in terms of new priorities, we do see being in the path of the consumer as fundamental to growing new consumers and returning to consistent, durable, high single digit, mid-single digit growth.

Consumers with more convenient access to the brand and this is the first of many initiatives in this area.

Hey, Danielle Fund fund switching between calls here, it's Alex I have one follow up for you and it's really just a similar question, but on this path of potentially 20% EBIT margin over time that the prior management team was pretty keen on.

Speaker #3: We're very excited by the announcement of our launch in college bookstores, 7 million young consumers with more convenient access to the brand. This is the first of many initiatives in this area.

Similar question do you agree with that still in building blocks on that piece. Thanks, so much.

Speaker #6: Hey, Daniel. Fun switching between calls here. It's Alex. I have one follow-up for you, and it's really just a similar question. But on, you know, this path potentially 20% EBIT margin over time that the prior management team was pretty keen on.

Alex Straton: Hey, Daniel. Fun switching between calls here. It's Alex. I have one follow-up for you, and it's really just a similar question, but on this path of potentially 20% EBIT margin over time that the prior management team was pretty keen on. Do you agree with that still and building blocks on that piece? Thanks so much.

Thanks, Alex.

When it when it comes to.

Investing in our strategy I think that.

Im still anchored to the principles that management have outlined what.

Speaker #6: So, similar question, do you agree with that still? And building blocks on that piece. Thanks so much.

We're going to do is refocus our capital internally refocus our capital allocation internally to invest in the largest growth drivers and we don't expect ourselves to certainly don't expect ourselves to dilute our margins in the coming quarters.

Speaker #3: Thanks, Alex. When it comes to investing in our strategy, I think that I'm still anchored to the principles that management have outlined. What we're going to do is refocus our capital internally, refocus our capital allocation internally to invest in the largest growth drivers.

Daniel Heaf: Thanks, Alex. When it comes to investing in our strategy, I think that I'm still anchored to the principles that management have outlined. What we're going to do is refocus our capital internally, refocus our capital allocation internally to invest in the largest growth drivers. We don't expect ourselves to, certainly don't expect ourselves to dilute our margins in the coming quarters.

Thank you. Our next question comes from the line of Kate Mcshane with Goldman Sachs. Please proceed with your question.

Hi, This is Emily <unk> on for Kate Thank you for taking our question.

Speaker #3: And we don't expect ourselves to certainly don't expect ourselves to dilute our margins in the coming quarters.

We were wondering if you could provide more detail around the drivers of SG&A deleverage in the quarter, including the investments in new stores and higher health care costs, and then do you guys expect to see similar costs in the second half of the year. Thank you.

Speaker #5: Thank you. Our next question comes from the line of Kate McShane with Goldman Sachs. Please proceed with your question.

Conference Q&A Moderator: Thank you. Our next question comes from the line of Kate McShane with Goldman Sachs. Please proceed with your question.

Speaker #8: Hi, this is Emily Ghosh on for Kate. Thank you for taking our question. We were wondering if you could provide more detail around the drivers of SG&A de-leverage in the quarter, including the investments in new stores and higher healthcare costs, and then do you guys expect to see similar costs in the second half of the year?

Luke Long: Hi, this is Emily Ghosh on for Kate. Thank you for taking our question. We were wondering if you could provide more detail around the drivers of SG&A deleverage in the quarter, including the investments in new stores and higher health care costs. Do you guys expect to see similar costs in the second half of the year? Thank you.

Great. Thanks for the question Emily.

Overall in the quarter.

As I mentioned in my as I mentioned in my prepared remarks.

A few things right the investing investment in stores as normal the store growth to build out that we're doing we also invested in some training we are seeing some pressure on healthcare costs that is factored in to our outlook you solve for the year, we took our SG&A.

Speaker #8: Thank you.

Speaker #4: Great, thanks for the question, Emily. Overall, in the quarter, as I mentioned in my prepared remarks, a few things, right? The investment in stores is normal, the store growth, the build-out that we're doing.

Eva Boratto: Great. Thanks for the question, Emily. Overall, in the quarter, as I mentioned in my prepared remarks, a few things, right? The investment in stores is normal, the store growth, the build-out that we're doing. We also invested in some training. We are seeing some pressure on health care costs that is factored into our outlook. You saw for the year we took our SG&A guidance up a bit, if you think about that. It's the health care costs, it's some technology costs, and some investments we're making in building out the strategic plans that Daniel has outlined.

Guidance update a few.

And if you think about that and it's the health care cost, it's some technology costs and some investments we're making in building out the strategic plans that Daniel has outlined.

Speaker #4: We also invested in some training, we are seeing some pressure on healthcare costs, that is factored in. To our outlook, you saw for the year, we took our SG&A guidance up a bit if you if you think about that, and it's the healthcare costs, it's some technology costs, and some investments we're making in building out the strategic plans that Daniel has outlined.

Yeah.

Thank you.

Next question. Our next question comes from the line of Ike BARDA with Wells Fargo. Please proceed with your question.

Hey, good morning, everyone I wanted to focus on the digital side of the business understanding it.

Speaker #8: Thank you.

Luke Long: Thank you.

The focus is having a headwind there, but still negative I guess Daniel.

Speaker #4: Next question.

Conference Q&A Moderator: Next question? Our next question comes from the line of Ike Boruchow with Wells Fargo. Please proceed with your question.

I'd love to hear some of the initial learnings you have on year end, obviously from from your background Big DTC digital platform.

Speaker #5: Our next question comes from the line of Ike Borcha, with Wells Fargo. Please proceed with your question.

Speaker #9: Hey, morning everyone. I wanted to focus on the digital side of the business. Understanding it's, you know, the bonus is having a headwind there, but still negative.

Luke Long: Hey, good morning, everyone. I wanted to focus on the digital side of the business, understanding it's the Bopus is having a headwind there, but still negative. I guess, Daniel, I'd love to hear some of the initial learnings that you have on your end, obviously from your background, big DTC digital platform. Would love to know what you think you can enact in kind of the near term and the medium term. What are the biggest opportunities and what's your outlook for Bath & Body Works' kind of digital and e-commerce platform over the next couple of years?

No.

What you think you can enact in kind of the near term and the medium term what are the biggest opportunities and what's your outlook for Bakken bodies kind of digital and E Commerce.

Speaker #9: I guess, Daniel, I'd love to hear some of the initial learnings that you have on your end. Obviously, from your background, big DTC digital platform.

Platform over the next couple of years.

Thank you Ike.

Speaker #9: Would love to know what you think you can enact in kind of the near term and the medium term. What are the biggest opportunities, and what's your outlook for Bath & Body's kind of digital and e-commerce platform over the next couple of years?

You're absolutely right our digital business is not up to our standard our stores.

<unk>, an experiential and.

Digital platform is not.

No.

The digital drive brand relevance discovery and sales in all channels and we are taking steps to address this immediately as I said and consumers are going to start to feel it.

Speaker #3: Thank you, Ike. You're absolutely right. Our digital business is not up to our standard. Our stores are beautiful and experiential, and our digital platform is not.

Daniel Heaf: Thank you, Ike. You are absolutely right. Our digital business is not up to our standard. Our stores are beautiful and experiential, and our digital platform is not. We know that digital drives brand relevance, discovery, and sales in all channels. We are taking steps to address this immediately, as I said. Consumers are going to start to feel this. You see it in the product photography for Disney Villains. We will launch a new app in September. We will relaunch mobile web starting in October. We have a plan that goes three months, six months, nine months, 12 months, and we are going to be unrelenting in improving this channel because we know that it will drive brand and it will drive sales in-store as well as sales online. It is key to capturing the new consumer.

And the product photography surveillance.

And we will launch a new App in September we will re launch mobile web starting in October.

Speaker #3: We know that digital drives brand relevance, discovery, and sales in all channels, and we are taking steps to address this immediately, as I said.

And we have a plan that goes three months six months nine months 12 months, and we're going to be an unrelenting and improving this channel because we know that it will drive.

Speaker #3: And consumers are going to start to feel this. You see it in the product photography for Villains, and we will launch a new app in September.

Brand and it will drive sales in store as well as sales online and it is key to capturing the new consumer we believe we have so many of the fundamentals in place, but this will be a key driver in the coming months quarters and years and we are on it.

Speaker #3: We will relaunch mobile web starting in October. And we have a plan that goes three months, six months, nine months, 12 months, and we're going to be unrelenting in improving this channel, because we know that it will drive brand and it will drive sales in-store as well as sales online.

Do you have.

Follow up do you have an expectation on when that channel can realistically. So some inflection is there an algo or growth rate that you would target over the longer term just kind of curious more into the numbers.

Speaker #3: And it is key to capturing the new consumer. We believe we have many of the fundamentals in place, but this will be a key driver in the coming months, quarters, and years.

Daniel Heaf: We believe we have so many of the fundamentals in place, but this will be a key driver in the coming months, quarters, and years. We are on it.

So obviously, we look at the retail equation, just as we do with all of our channels.

Speaker #3: And we are on it.

Speaker #9: You have, Daniel, just a follow-up. Do you have an expectation on when that channel can realistically show some inflection? Is there an algo or a growth rate that you would target over the longer term?

Luke Long: Daniel, just a follow-up. Do you have an expectation on when that channel can realistically show some inflection? Is there an algorithm or a growth rate that you would target over the longer term? Just kind of curious more into the numbers.

I think the way I think about it as consumers are going to start seeing improvements immediately.

We do expect that to grow over time.

Speaker #9: Just kind of curious more into the numbers.

Quite when it reaches.

Speaker #3: So, obviously, we look at the retail equation just as we do with all of our channels. I think the way I think about it is consumers are going to start seeing improvements immediately.

Daniel Heaf: Obviously, we look at the retail equation just as we do with all of our channels. I think the way I think about it is consumers are going to start seeing improvements immediately. We do expect that to grow over time. Quite when it reaches what the growth rate should be, I actually have learned in my time at Nike that the important thing is to be moving at the pace of the consumer. We're not looking to overly advantage our digital channel over our stores channel. What we're looking to do is ensure that we are in the path of the consumer with a channel that's right for them and bringing new consumers to the brand.

The growth rates should be I actually has been done in my time at Nike that we the important thing needs to be moving at the pace of the consumer we're not looking to over.

Speaker #3: And, you know, we do expect that to grow over time. You know, quite when it reaches what the growth rate should be, I actually have learned in my time at Nike that the important thing is to be moving at the pace of the consumer.

Overly advantage our digital channel overall stores channel what we're looking to do is ensure that we are in the path of the consumer with a channel that's right for them and bringing new consumers to the brand.

Speaker #3: We're not looking to overly advantage our digital channel over our stores channel. What we're looking to do is ensure that we are in the path of the consumer with the channel that's right for them and bringing new consumers to the brand.

Thank you. Our next question comes from the line of Paul Lajoie with Citi. Please proceed with your question.

Hi, Dan This is Kelly on for Paul. Thanks for taking my question I, just wanted to dig a bit more into the tariffs the $85 million, bringing youre seeing this year seems.

Very high relative to your sourcing exposure any way to sort of quantify what.

Speaker #8: Thank you. Our next question comes from the line of Paul Lesjoy with Citi. Please proceed with your question.

Conference Q&A Moderator: Thank you. Our next question comes from the line of Paul Lejuez with Citi. Please proceed with your question.

Tariffs impact you've seen from those higher rates.

Speaker #10: Hi there, this is Kelly on for Paul. Thanks for taking our question. I just wanted to dig a bit more into the tariffs. The $85 million burden you're seeing this year seems very high relative to your sourcing exposure.

Luke Long: Hi there. This is Kelly on for Paul. Thanks for taking our question. I just wanted to dig a bit more into the tariffs. The $85 million burn you're seeing this year seems very high relative to your sourcing exposure. Any way to sort of quantify what sort of tariff impact that you've seen from those higher rates does not repeat next year? It's sort of viewed as a margin opportunity. That's my first question. The second question is just on how AUR shook out the quarter and your views on that task. Thanks.

It does not repeat next year, so certainly viewed as a margin opportunity.

That's my first question and then second question just on how AUR.

Speaker #10: Any way to sort of quantify what sort of tariff impact that you've seen from those higher rates? You know, does not repeat next year, so it would sort of be viewed as a margin opportunity.

<unk> got in the quarter and your views on back half. Thanks.

Sure Kelly I'll start with the tariff question.

The net impact of about $85 million syncs up with our with our sourcing I would I would remind you that until September 1st right. The Canadian retaliatory tariffs of 25% were in place we have a business a strong business in Canada. Thus we were in <unk>.

Speaker #10: That's my first question. Then the second question is just on how AUR shook out in the quarter and your views on back half. Thanks.

Speaker #4: Sure, Kelly. I'll start with the tariff question. The net impact of about 85 million syncs up with our sourcing. I would remind you that until September 1st, the Canadian retaliatory tariffs of 25% were in place.

Eva Boratto: Sure, Kelly. I'll start with the tariff question. The net impact of about $85 million syncs up with our sourcing. I would remind you that until September 1, the Canadian retaliatory tariffs of 25% were in place. We have a business, a strong business in Canada. Thus, we were importing our product there. That may be the delta on your math there. Overall, on AURs, our mixed adjusted AURs were up low single digits in the quarter. We were less promotional overall for the quarter. Obviously, we had a larger sales mix into this last timeframe, but we continue to use our agile model to meet consumers where they are, and we'll do that.

<unk> are our product there so that that may be the delta on on your math there.

Overall on an AUR.

Our mix adjusted <unk> were up low single digits in the quarter.

Speaker #4: We have a business—a strong business—in Canada; thus, we were importing our products there. So that may be the delta on your math there.

We were less promotional overall for the quarter, obviously, we had a larger sales mix into the SaaS timeframe, where we continue to use our agile model to meet consumers where we're.

Speaker #4: Overall, on AURs, our mix-adjusted AURs were up low single digits in the quarter. We were less promotional overall for the quarter. You know, obviously, we had a larger sales mix into the SaaS timeframe.

Where they are and.

We'll do that.

Okay.

Thank you our next question.

Speaker #4: But we continued to use our agile model to meet consumers where they are, and we'll do that.

It comes from the line of Mark <unk>.

Swogger with Baird. Please proceed with your question.

Good morning, Thank you for taking my question.

Couple here first on wholesale how should we be thinking about the contribution from the campus stores. This year, while from topline and gross margin and just bigger picture, maybe update us on how youre thinking about the timing and scale of future wholesale opportunities.

Speaker #5: Thank you. Our next question comes from the line of Mark Altschwager with Baird. Please proceed with your question.

Conference Q&A Moderator: Thank you. Our next question comes from the line of Mark Altschwager with Baird. Please proceed with your question.

Speaker #9: Good morning. Thank you for taking my question. A couple here. First, it's on wholesale. How should we be thinking about the contribution from the campus stores this year, both from top line and gross margin?

Luke Long: Good morning. Thank you for taking my question. A couple here. First, it's on wholesale. How should we be thinking about the contribution from the campus stores this year, both from top line and gross margin? Just bigger picture, maybe update us on how you're thinking about the timing and scale of future wholesale opportunities. Separately, just SG&A, I wanted to follow up there. The deleverage has intensified a bit. Maybe just help us reconcile the Q2 trend and the guide with the plans to accelerate growth while sustaining or expanding margin. Thank you.

And then separately just SG&A wanted to follow up there I mean, the deleverage has intensified a bit maybe just help us reconcile the Q2 trend in the guide with the plans to accelerate growth, while sustaining or expanding margins. Thank you.

Speaker #9: And just bigger picture, maybe update us on how you're thinking about the timing and scale of future wholesale opportunities. And then separately, just SG&A—I wanted to follow up there.

Thank you Mark let me kick off and then hand to Eva so.

The contribution from campus is.

Speaker #9: I mean, the de-leverage has intensified a bit. Maybe just help us reconcile the Q2 trend and the guide with the plans to accelerate growth while sustaining or expanding margin.

Campus bookstore, that's built into our full year guidance. So.

That's the most important thing I think case this is a statement of intent.

Speaker #9: Thank you.

Speaker #3: Thank you, Mark. Let me kick off and then hand it to Eva. So, the contribution from campus is a campus bookstore that's built into our full-year guidance.

Daniel Heaf: Thank you, Mark. Let me kick off and then hand to Eva. The contribution from campus is a campus bookstore is built into our full-year guidance. That is that. The most important thing, I think, is this is a statement of intent. We are a consumer-led brand, and consumers don't shop channels. They shop brands. To introduce new consumers, we must be in their path. We are going to thoughtfully and strategically explore new channels of distribution. College bookstores is the first example. It targets younger consumers in a really convenient location. We are hard at work thinking about which are the next opportunities, and we're looking forward to providing you an update when we come back with our long-term growth strategy.

We are a consumer led brand and consumers don't shop channel they shop brands and to introduce new consumers, we must be in that path and say, we're going to thoughtfully and strategically explore new channels of distribution College bookstores as the first example.

Speaker #3: So, that's that. The most important thing, I think, is this is a statement of intent. You know, we are a consumer-led brand, and consumers don't shop channels; they shop brands.

It targets consumers younger consumers in a really convenient location.

<unk>.

Speaker #3: And to introduce new consumers, we must be in their path. And so we're going to thoughtfully and strategically explore new channels of distribution. College bookstores is the first example.

We are hard at work thinking about which are the next opportunities and we're looking forward to providing you an update when we come back with our long term growth strategy.

Speaker #3: It targets consumers, younger consumers, in a really convenient location. We are hard at work thinking about what the next opportunities are, and we're looking forward to providing you with an update when we come back with our long-term growth strategy.

Yes, Mark and I will take your SGA SG&A question.

From an SG&A pressure and the trends, we're seeing as I said, it's really the higher healthcare cost some strategic investments that that we're making to drive the new strategy in a bit of technology now looking at it more holistically by P&L.

Speaker #4: Yeah, Mark. I'll take your SG&A question. From an SG&A pressure and the trends we're seeing, as I said, it's really the higher healthcare costs, some strategic investments that we're making to drive the new strategy, and a bit of technology.

Eva Boratto: Yeah, Mark, I'll take your SG&A question. From an SG&A pressure and the trends we're seeing, as I said, it's really the higher health care costs, some strategic investments that we're making to drive the new strategy, and a bit of technology. Now, looking at it more holistically, right, SG&A is leveraging as we exited a third-party fulfillment center, as we're driving strength in our stores. That pressure is more of the SG&A versus the SG&A. We'll continue. We've had a strong Fuel for Growth program. We've taken out $300 million of cost over the last couple of years, and we will continue to flex that muscle to offset some of these impacts we're seeing.

Is leveraging as we exited our third party fulfillment center as we are driving strength in our stores that pressures more of the SG&A versus versus the P&L will.

<unk>, we've had a strong fuel for growth program, we've taken out $300 million of cost over the last couple of years and we will continue to to flex that muscle to offset some of these impacts we are seeing.

Speaker #4: Now, looking at it more holistically, right, B&O is leveraging as we exited a third-party fulfillment center. As we're driving strength in our stores, that pressure is more of the SG&A versus the B&O.

Thank you. Our next question comes from the line of Jonna Kim with TD Cowen. Please proceed with your question.

Speaker #4: We'll continue; we've had a strong fuel for growth program. We've taken out $300 million in costs over the last couple of years, and we will continue to flex that muscle to offset some of these impacts we're seeing.

Thank you for taking my question I would love to hear more about the fragrance and body.

Did that perform during the quarter and Daniel I know beauty is a focus area for you.

Our plans around that category.

Speaker #5: Thank you. Our next question comes from the line of Jonah Kim with TD Cowen. Please proceed with your question.

Conference Q&A Moderator: Thank you. Our next question comes from the line of Dana Telsey with TD Cowen. Please proceed with your question.

Any color around this new partnership in terms of how long the new drop will loss and cadence of future launches as well. Thank you so much.

Speaker #8: Thank you for taking my question. I would love to hear more about the fragrance and body myths that have performed during the quarter.

Luke Long: Thank you for taking my question. I would love to hear more about the fragrance and body mix that performed during the quarter. Daniel, I know beauty is a focus area for you. What are your plans around that specific category? Any color around the Disney partnership in terms of how long the new drop will last and cadence of future launches as well? Thank you so much.

Speaker #8: And Daniel, I know beauty is a focus area for you. What are your plans around that specific category? And any color around the Disney partnership, in terms of how long the new drop will last, and the cadence of future launches as well?

Great Jenna.

Start with with body care and how it performed in the quarter. We overall, we were disappointed with body cameras. As you saw we were down low single digits.

We had stronger results during the semiannual sale.

Speaker #8: Thank you so much.

Our mens business continued to grow nicely, we relaunched <unk>.

Speaker #4: Great, Jonah. I'll start with body care and how it performed in the quarter. Overall, we were disappointed with body care; as you saw, we were down low single digits.

Eva Boratto: Great, Jenna. I'll start with body care and how it performed in the quarter. Overall, we were disappointed with body care. As you saw, we were down low single digits. We had stronger results during the semi-annual sales. Our men’s business continued to grow nicely. We've relaunched True Blue Spa. Mother's Day didn't perform to our expectations in this growing category. We believe we needed more newness as you approach the event. What I'll say is this is a really strong category that we're a leader in, and it will continue to be a priority area for us, and we're going to learn from consumers and innovate in both form and function.

But mothers day didn't perform to our expectations in this growing category.

We'll high insight that we believe we needed more more newness as you approach the event and what I'll say is this is a really strong category that we're a leader in and it will continue to be a priority area for us and we're going to learn from consumers and innovation in both form and function.

Speaker #4: We had stronger results during the semi-annual sale. Our men's business continued to grow nicely. We relaunched TrueBlue Spa. However, Mother's Day didn't perform to our expectations in this growing category.

Speaker #4: You know, we'll high insight that. We believe we needed more newness as we approach the event. And what I'll say is this is a really strong category that we're a leader in.

Thanks, Steve and now let me just follow up with a few comments on Disney and co labs, we have seen great success from our collaboration in the past with Disney Disney Princesses, specifically in the first quarter and we're very excited about the launch of billions in mid quarter, we have taken learnings from what we did at Princess is eminent.

Speaker #4: And it'll continue to be a priority area for us, and we're going to learn from consumers and innovate in both form and function.

Speaker #3: Thanks, Eva. Now, let me just follow up with a few comments on Disney and collaborations. You know, we have seen great success from our collaboration in the past with Disney, specifically Disney Princesses, in Q1.

Daniel Heaf: Thank you.Eva,

Melissa: Now let me just follow up with a few comments on Disney and collabs. We have seen great success from our collaboration in the past with Disney, Disney Princess line specifically, in the first quarter. We're very excited about the launch of Disney Villains collection in this quarter. We've taken learnings from what we did at Princesses and applied them to this launch. We're excited that this is our first global launch of a collaboration. There are two strategic things that I should mention. Firstly, collaborations like this are proof points to the growth philosophy, putting the consumer at the center, innovative and coveted product, amazing storytelling, and then bringing it to life in the integrated and elevated marketplace. I've seen what Disney Villains collection is going to look like in stores. It raises the bar for storytelling in our stores, and I know our consumers will respond positively.

<unk> them to this launch and we're excited that this is off.

Global launch of our collaboration.

But there are two strategic things that I should mention firstly collaborations like this all proof points to the growth philosophy, putting the consumer at the center innovative and coveted product amazing storytelling, and then bring it to life.

Speaker #3: And we're very excited about the launch of Villains in this quarter. We've taken learnings from what we did at Princesses and applied them to this launch.

Speaker #3: And we're excited that this is our first global launch of a collaboration. But there are two strategic things that I should mention. You know, firstly, collaborations like this are proof points to the growth philosophy.

In the integrated and elevated marketplace I've seen what billings is going to look like in stores and again it raises the bar for storytelling in our stores and I know our consumers will respond positively.

Speaker #3: Putting the consumer at the center, innovative and coveted product, amazing storytelling, and then bringing it to life in the integrated and elevated marketplace. I've seen what Villains is going to look like in stores and, again, it raises the bar for storytelling in our stores.

Secondly, we are focused on consistent durable unprofitable growth levered and so the announcement of our signing a multi year deal with Disney is exciting with timing a one off into a durable and profitable growth lever for this company. It will be the first of many that we will be talking about in the <unk>.

Melissa: Secondly, we are focused on consistent, durable, and profitable growth levers. The announcement of our signing a multi-year deal with Disney is exciting. We're turning a one-off into a durable and profitable growth lever for this company. It will be the first of many that we'll be talking about in the coming quarters.

Coming quarters.

Thank you. Our next question comes from the line of Olivia Tong with Raymond James. Please proceed with your question.

Mr. <unk> your line is live.

Thanks, Good morning could.

Could you talk a little bit more about price and promotion in your views less so in Q2, given the semiannual sale, but more in Q3 and second half.

Conference Specialist: Thank you. Our next question comes from the line of Olivia Tong with Raymond James. Please proceed with your question. Ms. Tong, your line is live.

Whether tariff mitigation.

Plans with.

The state any pricing and then just.

On tariffs overall.

Could you talk about any other initiatives that you have.

What youre planning to embark on to lower the pressure there. Thank you.

David Brown: Thanks. Good morning. Could you talk a little bit more about price and promotion in your views, less so on Q2 given the semi-annual sale, but more in Q3 and second half, and whether tariff mitigation plans necessitate any pricing? Then just on tariffs overall, could you talk about any other initiatives that you have that you're planning to embark on to lower the pressure there? Thank you.

Thanks, Olivia this is Eva start.

As you think about tariffs.

We've been working to mitigate this.

Since tariffs were announced or became possibility and as we look over a multiyear period.

We have three areas that we're clearly focused on one supply chain optimization, we've done that before right with 80% of our supply chain use space. So our teams are working hard there that takes time to shift and have the right capacity in the right location targeted.

Luke Long: Thanks, Olivia. This is Eva. I'll start. As you think about tariffs, we've been working to mitigate this since tariffs were announced or became a possibility. As we look over a multi-year period, we have three areas that we're clearly focused on. One, supply chain optimization. We've done that before, right, with 80% of our supply chain U.S.-based. Our teams are working hard there. That takes time to shift and have the right capacity in the right location. Targeted assortment changes, how we can optimize our assortment to minimize tariffs while continuing to satisfy the customer. We've made some of those changes. It's reflected in our outlook and our back half of the year, our back half of the year expectation. Finally, you know, strategic pricing assumptions. As Daniel has said, relying less on promotional, elevating our value equation. We're an affordable luxury.

<unk> made changes how we can optimize our assortment to minimize tariff while continuing to satisfy the customer we've made some of those changes it's reflected in our outlook in our back half of the year.

Our back half of the year expectation.

And finally.

Strategic pricing assumptions and as Daniel has said relying less on promotional elevating our value equation, we're an affordable luxury so really bringing the innovation to elevate that value and drive AUR up.

Thank you. Our next question comes from the line of Ashley Hogan with Jefferies. Please proceed with your question.

Hi, This is city on for Ashley. Thanks for taking our question have you ever quantified the difference in store productivity between on and off mall stores.

Luke Long: Really bringing the innovation to elevate that value and drive AUR up.

And then just on newness and thinking about that as a sales driver.

Targeted assortment changes, how we can optimize our assortment to minimize tariffs while continuing to to satisfy the customer. We've made some of those changes. It's reflected in our Outlook, and our back half of the year, um, our back half of the Year expectation. And and finally, you know, um, strategic pricing assumptions and as Daniel's has said, relying Less on promotional. Elevating our value equation. We're at affordable luxury. So really, um, bringing the Innovation to elevate that value and drive aura.

In size, maybe what percent of comp is driven by noon at historically and kind of where you would like to see that go going forward. Thank you.

Conference Specialist: Thank you. Our next question comes from the line of Ashley Helgans with Jefferies. Please proceed with your question.

Thank you. Our next question comes from the line of Ashley Hoggins with Jeff. Please proceed with your question.

Daniel Heaf: Hi, this is Sydney on for Ashley. Thanks for taking our question. Have you ever quantified the difference in store productivity between on and off mall stores? On newness and thinking about that as a sales driver, have you sized maybe what % of comp is driven by newness historically and where you would like to see that go going forward? Thank you.

Yeah on the.

On your question on the on and off mall.

Both have very strong four wall economics.

Hi. This is Sydney on for Ashley thanks for taking our question. Have you ever Quantified the difference in store productivity between on and off Mall stores?

In the quarter and this is very consistent with prior periods off mall stores.

Are performing better than mall based stores driven by conversion some some traffic, but overall the economics are both are strong in both and leave a very healthy portfolio.

And then just on newness, and thinking about that as a sales driver, you know, have you sized, maybe what percent of comp is driven by newness historically, and kind of where you would like to see that go going forward? Thank you.

Luke Long: On your question on the on and off mall, both have very strong four-wall economics in the quarter. This is very consistent with prior periods. Off mall stores are performing better than mall-based stores, driven by conversion, some traffic. Overall, the economics are both strong in both and leave a very healthy portfolio. In terms of your question on what % of growth is driven by newness, we have an overall portfolio of products. We know our customers respond to the newness that we bring. That's a way to drive traffic, excitement, bring new consumers in. It's part of the overall equation. We have not broken it out specifically.

And in terms of your question on what percent of growth is driven by newness. We have an overall we've been overall portfolio of products, we know our customers respond to the newness that that we bring that that's the way to drive traffic excitement.

<unk>, new consumers and so it's part of the overall equation, we have not broken it out specifically.

Yeah, on the um, on on your question, on the on and off Mall, both have very strong 4 wall economics, um, in the quarter and this is very consistent with prior periods. All small stores are performing better than Mall Bay stores driven by conversion, some some traffic. But overall, the economics are both are strong in both and we have a very healthy portfolio.

Thank you. Our final question. This morning comes from the line of Dana Telsey with Telsey Advisor Group. Please proceed with your question.

Hi, Good morning, everyone. As you think about one topline to drive drivers of innovation and now obviously, the new College campus.

Initiative are there other initiatives that you can see putting your product outside of your own stores that could be a topline enhancer and marrying that with the profitability and margin metrics.

I think that's a way to drive traffic excitement and bring new consumers in. So, it's part of the overall equation. We have not broken it out specifically.

Conference Specialist: Thank you. Our final question this morning comes from the line of Dana Telsey with Telsey Advisory Group. Please proceed with your question.

Eva Boratto: Hi, good morning, everyone. As you think about one top line, the drivers of innovation and now obviously the new college campus initiative, are there other initiatives that you can see putting your product outside of your own stores that could be a top-line enhancer and marrying that with the profitability and margin metrics? How do you think of accelerating those margins going forward in the wake of tariffs? Lastly, on the third and fourth quarter guide, the fourth quarter obviously shows much more improvement than the third quarter. As you think about the fourth quarter, any changes in how you're thinking about the promotional cadence and innovation or marketing? Thank you.

Do you think of accelerating those margins go forward in the wake of of <unk>.

Thank you. Our final question. This morning comes from the line of Dana telsey. With telsey Advisory Group. Please proceed with your question.

<unk>.

And just lastly on the third and fourth quarter guide the fourth quarter, obviously chose much more improvement than.

And then the third quarter as you think about the fourth quarter any changes in how you're thinking about the promotional cadence and innovation or marketing. Thank you.

Okay.

Yes.

Good morning, Dana I'll start with your I'll start with your last question first right.

The dynamics between the third and fourth quarter and the pressures on margin is largely driven to that tariff dynamic that I spoke to earlier about 230 240 basis points of pressure in Q3 in Q4 of 100 basis points of pressure.

Hi, good morning everyone. As you think about 1 Top Line, the drive drivers of innovation. And now obviously the new college campus um initiative other other initiatives that where you can see putting your product outside of your own stores. That could be a Topline enhancer and marrying that with the profitability and margin metrics. How do you think of accelerating those margins go forward in the wake of of tariffs and just lastly on the third and fourth quarter guide, the fourth quarter obviously shows much more Improvement um, than the third quarter. As you think about the fourth quarter, any changes in how you're thinking about the promotional Cadence and Innovation or marketing. Thank you.

Luke Long: Yeah, good morning, Dana. I'll start with your last question first, right? The dynamics between the third and fourth quarter and the pressures on margin are largely driven to that tariff dynamic that I spoke to earlier, about 230, 240 basis points of pressure in Q3. In Q4, 100 basis points of pressure. We know Q4 is about winning in holiday. We're excited about our holiday assortment. Our expectation is not to be meaningfully different than last year from a promotional cadence. We'll continue to use our agile model to meet the customer and drive demand.

Yeah. Um, good morning, Dana. I'll start with your...

We know Q4 is about winning in holiday, we're excited about our holiday assortment.

Our expectation is not to be meaningfully different than last year from a promotional cadence and we will continue to use our agile model.

To meet the customer and and drive demand.

Let me just comment finally on the topline drivers I mean, I think Thats My Big Takeout for my first hundred days.

It was clear to me that we are going to drive top line growth by elevating our digital platforms by amplifying the efficacy of our products, which is something that new and younger consumers are asking for and we have already invested in the formulas that are efficacious and clean and so it's really about messaging and bringing them to.

Melissa: Dana, let me just come in finally on the top-line drivers. I think that's my big takeout from my first hundred days. It was clear to me that we are going to drive top-line growth by elevating our digital platforms, by amplifying the efficacy of our products, which is something that new and younger consumers are asking for. We have already invested in the formulas that are efficacious and clean. It's really about messaging and bringing them to the market in the right way. As you said, as we expand our distribution points to be in the path of the consumer, we see that being a top-line driver as well. I can't emphasize enough how many opportunities I've seen in this business to drive growth.

I'll start with your last question first. The dynamics between the third and fourth quarters and the pressures on margin are largely driven by the tariff dynamic that I spoke to earlier: about 23-40 basis points of pressure in Q3 and 100 basis points of pressure in Q4. We know Q4 is about winning in the holiday season, and we're excited about our holiday assortment. Our expectation is not to be meaningfully different than last year from a promotional cadence, and we'll continue to use our agile model to meet the customer and drive demand.

The market in the right way and then as he said as we expand our distribution points to be in the path of the consumer we see that being a top line driver as well, but beyond those things.

I can't emphasize enough how many opportunities I've seen in this business to drive growth that is my big takeout from the first 100 days, whether that is in marketing and in social whether that is in innovation through our partnerships and the beauty park whether that is.

The opportunities that we have.

Just with some of our iconic fragrances.

Data. Let me just come in come in finally, on the top line drivers. I mean, I think that's my big take out from my first 100 days, you know, it was clear to me that we are going to drive Topline growth by elevating our digital platforms by amplifying, the E efficacy of our products, which is something that new and younger consumers are asking for. And we have already invested in the formulas that are efficacious and clean and so it's really about messaging and bringing them to the market in the right way. And then, as you said, as we expand our distribution points to be in the path of the consumer, we see that being a top live driver as well, but beyond those things,

Go into our stores.

The big drivers of growth in our classic fragrances mahogany teak word into the stall Champagne toast.

Melissa: That is my big takeout from the first hundred days, whether that is in marketing and in social, whether that is in innovation through our partnerships in the beauty park, whether that is the opportunities that we have just with some of our iconic fragrances. I go into our stores and I see some big drivers of growth in our classic fragrances. Think Mahogany Teakwood, Into the Stars, Champagne Toast. Once we've launched those products, we rarely go back and market them. We don't necessarily take them to a new consumer. They sit on the shelves and people walk in and buy them. It's almost like an annuity. When we take those products to a new consumer and we treat them with the iconic status they deserve, I believe we will bring new consumers to the brand and drive repeat purchase from existing consumers.

Once we've launched those products, we really go back and market them, we don't necessarily tightened to a new consumer they sit on the shelves and people walk in and buy them as almost like an annuity when we take those products to a new consumer and we treat them with the iconic status they deserve.

I can't emphasize enough how many opportunities I've seen in this business to drive growth. That is my big takeaway from the first 100 days, whether that is in marketing and social, whether that is in innovation through our partnerships, in the beauty park, or whether that is the opportunities that we have.

I believe we will bring new consumers to the brand and drive repeat purchases from existing consumers.

Just with some of our iconic fragrances. I go into our stores and I see some big drivers of growth in our classic fragrances, like Mahogany Teakwood, Into the Stars, and Champagne Toast.

There is so much opportunity for this company and we are getting after making sure that we identify the largest opportunity and focus the company behind them in the short term and as we bring on we bring our strategy to the market in the next couple of quarters in the medium and long term too.

Thank you, ladies and gentlemen that concludes our time allowed for questions I'll turn the floor back to Mr. <unk> for any final questions.

Melissa: There is so much opportunity for this company. We are getting after making sure that we identify the largest opportunities and focus the company behind them in the short term. As we bring our strategy to the market in the next coming quarters, in the medium and long term too.

Once we've launched those products, we rarely go back and market them. We don't necessarily take them to a new consumer; they sit on the shelves, and people walk in and buy them. It's almost like an annuity. When we take those products to a new consumer and we treat them with the iconic status they deserve, I believe we will bring new consumers to the brand and drive repeat purchases from existing consumers.

Final comments.

Thank you and thank you so much for joining us today in summary, while we delivered solid results this quarter.

Still much work for us to do ahead, we are energized by the path forward and we believe the actions. We are taking now are positioning us well for profitable consistent and durable long term growth.

There is so much opportunity for this company, and we are focused on identifying the largest opportunities and ensuring we concentrate on the ones that will deliver results in the short term. As we bring our strategy to the market in the next couple of quarters, we are also considering the medium and long term.

Conference Specialist: Thank you. Ladies and gentlemen, that concludes our time allowed for questions. I'll turn the floor back to Mr. Heaf for any final comments.

We are without question, making progress on three three.

Melissa: Thank you. Thank you so much for joining us today. In summary, while we delivered solid results this quarter, there is still much work for us to do ahead. We are energized by the path forward, and we believe the actions we are taking now are positioning us well for profitable, consistent, and durable long-term growth. We are, without question, making progress on those three no-regret moves and actively evaluating all the other untapped opportunities we have spoken to today, all while executing with strength and delivering newness for our customers. The customer is the center of everything that we do. I want to say thank you to all of our associates who are making all of this progress possible. We couldn't be more excited about what lies ahead.

Thank you, ladies and gentlemen. This is our time allowed for questions. I'll turn the floor back to Mr. Heaf for any final questions.

<unk> those three no regret moves and actively evaluating all of the other untapped opportunities we've spoken to today, all while executing with strength and delivering units for our customers and the customer is the center of everything that we do I want to say, thank you to all of our associates, who are making all.

This progress possible.

Thank you. And thank you so much for joining us today. In summary, while we delivered solid results this quarter, there is still much work for us to do ahead. We are energized by the path forward, and we believe the actions we are taking now are positioning us well for profitable, consistent, and durable long-term growth.

And we couldnt be more excited about what lies ahead.

Thank you. This concludes today's conference call you may disconnect. Your lines at this time. Thank you for your participation.

All of everything that we do. I want to say thank you to all of our associates who are making all of this progress possible.

And we couldn't be more excited about what lies ahead.

Conference Specialist: Thank you. This concludes today's conference call. You may disconnect your lines at this time. Thank you for your participation.

Thank you. This concludes today's conference call. You may disconnect your lines at this time. Thank you for your participation.