Q4 2025 Victoria's Secret & Co Earnings Call

March 5, 2026

Operator: Good morning. My name is Amanda. I will be your conference operator today. At this time, I'd like to welcome everyone to the Victoria's Secret & Co.'s Q4 and fiscal 2025 earnings conference call. Please be advised that today's conference is being recorded. All parties will remain in a listen-only mode until the question-and-answer session of today's call. I would now like to turn the call over to Priya Trivedi, Senior Vice President and Global Head of Investor Relations and Treasury at Victoria's Secret & Co. Priya, you may begin.

Speaker #1: Please be advised that today's conference is being recorded. All parties will remain in a listen-only mode until the question-and-answer session of today's call. I would now like to turn the call over to Priya Trivedi, Senior Vice President and Global Head of Investor Relations and Treasury at Victoria's Secret & Company.

Speaker #1: Priya, you may begin. Good morning, and welcome to Victoria's Secret & Company's fourth quarter and fiscal 2025 earnings conference call for the period ended January 31, 2026.

Priya Trivedi: Good morning, welcome to Victoria's Secret & Company's Q4 and fiscal 2025 earnings conference call for the period ended 31 January 2026. Joining me in the call today is Chief Executive Officer, Hillary Super, and Chief Financial and Operating Officer, Scott Sekella. We are available today for approximately 30 minutes to answer questions. I would like to remind you that any forward-looking statements we may make today are subject to our safe harbor statement found in our SEC filings and in our press releases. Certain results we discuss on the call today are adjusted results and exclude the impact of certain items described in our press releases and in our SEC filings.

Speaker #1: Joining me in the call today is Chief Executive Officer Hillary Super, and Chief Financial and Operating Officer Scott Sekella. We are available today for approximately 30 minutes to answer questions.

Speaker #1: I would like to remind you that any forward-looking statements we may make today are subject to our safe-harbor statement found in our SEC filings and in our press releases.

Speaker #1: Certain results we discuss on the call today are adjusted results and exclude the impact of certain items described in our press releases and in our SEC filings.

Priya Trivedi: Reconciliations of these and other non-GAAP measures to the most comparable GAAP measures are included in our press release, our SEC filings, and in the investor presentation posted on the investor section of our website. With that, I'll turn the call over to Hilary.

Speaker #1: Reconciliations of these and other non-GAAP measures to the most comparable GAAP measures are included in our press release, our SEC filings, and in the investor presentation posted on the investor section of our website.

Speaker #1: With that, I'll turn the call over to Hillary. Thanks, Priya. Good morning, everyone, and thank you for joining us today. This was a standout year for our business.

Hillary Super: Thanks, Priya. Good morning, everyone, thank you for joining us today. This is a standout year for our business. We returned to growth mode in 2025 with full-year comp sales up 5%. Q4 and full-year results exceeded top and bottom-line guidance, reflecting strength across brands, channels, and geographies. In Q4, we grew comp sales 8% to deliver our highest Q4 revenue since becoming an independent public company. Brand momentum is building, our customer file is growing, and we are gaining market share. 18 months ago, I joined Victoria's Secret because I saw one of the most compelling transformation opportunities in retail.

Speaker #1: We returned to growth mode in 2025 with full-year comp sales up 5%. Fourth quarter and full-year results exceeded top and bottom line guidance, reflecting strength across brands, channels, and geographies.

Speaker #1: In the fourth quarter, we grew comp sales 8% to deliver our highest fourth-quarter revenue since becoming an independent public company. Brand momentum is building.

Speaker #1: Our customer file is growing, and we are gaining market share. 18 months ago, I joined Victoria's Secret because I saw one of the most compelling transformation opportunities in retail.

Hillary Super: To capture that opportunity, we put in place a clear roadmap for the business, our Path to Potential strategy, built on four pillars: supercharging our bra authority, recommitting to PINK, fueling growth in beauty, and evolving our brand projection and go-to-market strategy. Throughout the year, we executed this strategy with focus and discipline. We assembled a leadership team that has rallied around the new direction for our business, recentering the organization around what matters most, creating emotionally compelling product, building brand heat, and deepening our connection with the customer. While still early in our transformation, the results to date are clear. We reasserted our leadership in bras, restoring the category to growth for the first time in four years. We reignited PINK, delivering its strongest growth year in a decade, and we steadily grew our nearly $1 billion beauty business.

Speaker #1: To capture that opportunity, we put in place a clear roadmap for the business, our path to potential strategy, built on four pillars: supercharging our bra authority, recommitting to pink, fueling growth and beauty, and evolving our brand projection and go-to-market strategy.

Speaker #1: Throughout the year, we executed this strategy with focus and discipline. We assembled a leadership team that has rallied around the new direction for our business, recentering the organization around what matters most: creating emotionally compelling product, building brand heat, and deepening our connection with the customer.

Speaker #1: While still early in our transformation, the results to date are clear. We reasserted our leadership in bras, restoring the category to growth for the first time in four years.

Speaker #1: We reignited pink, delivering its strongest growth year in a decade. And we steadily grew our nearly $1 billion beauty business. We also expanded our customer file for the first time in years.

Hillary Super: We also expanded our customer file for the first time in years. A signature brand moment in 2025 was the fashion show, which reestablished Victoria's Secret at the center of the cultural conversation and translated directly into business momentum. It also marked a meaningful step forward in our new era of sexy, defined not as a single look or standard, but as a feeling of confidence and authenticity. The progress we made in 2025 reflects a deliberate evolution in how we operate. When we combine great product, powerful storytelling, and an elevated experience, our customer responds. I'd like to spend a few moments discussing our holiday and Valentine's Day execution, which reflects marked improvement versus the prior year. I'll cover our international performance, followed by the progress we are making against our strategic pillars. Scott will walk you through our detailed financials and 2026 outlook.

Speaker #1: A signature brand moment in 2025 was the fashion show, which reestablished Victoria's Secret at the center of the cultural conversation and translated directly into business momentum.

Speaker #1: It also marked a meaningful step forward in our new era of sexy, defined not as a single look or standard, but as a feeling of confidence and authenticity.

Speaker #1: The progress we made in 2025 reflects a deliberate evolution in how we operate. When we combine great product, powerful storytelling, and an elevated experience, our customer responds.

Speaker #1: I'd like to spend a few moments discussing our holiday and Valentine's Day execution which reflects marked improvement versus the prior year. I'll then cover our international performance, followed by the progress we are making against our strategic pillars.

Speaker #1: Scott will then walk you through our detailed financials and 2026 outlook. As we reflected on the last year's holiday and Valentine's seasons, we saw an opportunity to further strengthen our position and translate learnings and insights into growth.

Hillary Super: As we reflected on last year's holiday and Valentine's seasons, we saw an opportunity to further strengthen our position and translate learnings and insights into growth. In 2025, we amplified the fashion show to drive sustained traffic and engagement through November and into Black Friday, delivering our highest customer turnout since 2021, with strong participation from new customers. In December, we maintained a consistent cadence of fashion newness, especially in bras and sleep. We supported key categories with deliberate inventory investments, targeted digital and social marketing, and refreshed store windows and merchandising. In particular, sleep significantly outperformed expectations and became a key growth engine for the business during the quarter. For Valentine's Day, we reinforced Victoria's Secret as the destination. We shortened the semi-annual sale and set the assortment earlier, extending the selling window and broadening the lifestyle offering.

Speaker #1: In 2025, we amplified the fashion show to drive sustained traffic and engagement through November and into Black Friday, delivering our highest customer turnout since 2021, with strong participation from new customers.

Speaker #1: In December, we maintained a consistent cadence of fashion newness, especially in bras and sleep. We supported key categories with deliberate inventory investments, targeted digital and social marketing, and refreshed store windows and merchandising.

Speaker #1: In particular, Sleep significantly outperformed expectations and became a key growth engine for the business during the quarter. For Valentine's Day, we reinforced Victoria's Secret as the destination.

Speaker #1: We shortened the semi-annual sale and set the assortment earlier, extending the selling window and broadening the lifestyle offering. For VS, this was my favorite floor set since joining the business.

Hillary Super: For VS, this was my favorite floor set since joining the business. Elevated, beautifully executed, and undeniably Valentine's Day. Anchored in bras, the floor set was powerful and offered a range of sensibilities from glamorous to casual. We supported the launch with a high-impact campaign featuring Hailey Bieber, driving engagement and new customer acquisition. At PINK, we built on the viral fashion show moment featuring the K-pop group Twice with a bra-centered Valentine's Day campaign. The campaign focused on self-expression, friendship, and empowerment in a way that was unmistakably PINK. The campaign resonated and drove continued acceleration in the PINK bra business. The VS and PINK Valentine's collections outperformed our expectations, delivering double-digit sales growth. The week of Valentine's Day, store traffic increased significantly year-over-year, meaningfully outperforming the mall. Turning to international.

Speaker #1: Elevated, beautifully executed, and undeniably Valentine's Day. Anchored in bras, the floor set was powerful and offered a range of sensibilities from glamorous to casual.

Speaker #1: We supported the launch with a high-impact campaign featuring Hailey Bieber, driving engagement and new customer acquisition. At PINK, we built on the viral fashion show moment featuring the K-pop group TWICE with a bra-centered Valentine's Day campaign.

Speaker #1: The campaign focused on self-expression, friendship, and empowerment in a way that was unmistakably pink. The campaign resonated and drove continued acceleration in the pink bra business.

Speaker #1: The VS and pink Valentine's collections outperformed our expectations, delivering double-digit sales growth. The week of Valentine's Day store traffic increased significantly year over year, meaningfully outperforming them all.

Hillary Super: For Q4, net sales increased 43% year-over-year, with growth across channels and geographies, led by continued strength in China. In that market, social commerce and live streaming are critical to the purchase journey and powerful drivers of engagement and conversion. This year, we took a more coordinated global approach to product, marketing, and storytelling. We aligned our merchandising to our strategic pillars to ensure each market delivers the right assortment and messaging. We have complemented our global assortment with exclusive local product, allowing us to move quickly to meet demand. We also benefited from a more global approach to the fashion show, resulting in a brand halo that extended internationally. During my recent visit, I saw firsthand the work our teams are doing to drive outsized results, and I am confident we have significant runway to grow digitally and in stores.

Speaker #1: Turning to international, for the fourth quarter, net sales increased 43% year over year, with growth across channels and geographies, led by continued strength in China.

Speaker #1: In that market, social commerce and live streaming are critical to the purchase journey and powerful drivers of engagement and conversion. This year, we took a more coordinated global approach to product, marketing, and storytelling.

Speaker #1: We aligned our merchandising to our strategic pillars to ensure each market delivers the right assortment and messaging. We have complemented our global assortment with exclusive local product, allowing us to move quickly to meet demand.

Speaker #1: We also benefited from a more global approach to the fashion show, resulting in a brand halo that extended internationally. During my recent visit, I saw firsthand the work our teams are doing to drive outsized results, and I am confident we have significant runway to grow digitally and in stores.

Hillary Super: International remains a significant long-term opportunity for us. In fiscal 2026, we expect to deliver double-digit growth by expanding in existing markets, entering new markets, and maximizing our digital and social commerce opportunity. Now let's turn to the progress we've made in each of our four pillars of the strategy. We'll begin with supercharging our bra authority. Over the past year, we put bras back at the center of the Victoria's Secret brand while strengthening our operating muscle. Recognizing that bras are not typically a holiday gifting category, we focused on our core franchises. We delivered a steady flow of newness as well as fun in the assortment, supported by digital storytelling and the right inventory levels to meet demand. Our disciplined execution drove outsized growth across our top bra franchises and sustained customer engagement through the holiday.

Speaker #1: International remains a significant long-term opportunity for us. In fiscal 2026, we expect to deliver double-digit growth by expanding an existing markets, entering new markets, and maximizing our digital and social commerce opportunity.

Speaker #1: Now let's turn to the progress we've made in each of our four pillars of the strategy. We'll begin with supercharging our bra authority. Over the past year, we put bras back at the center of the Victoria's Secret brand while strengthening our operating muscle.

Speaker #1: Recognizing that bras are not typically a holiday gifting category, we focused on our core franchises. We delivered a steady flow of newness as well as fun in the assortment, supported by digital storytelling and the right inventory levels to meet demand.

Speaker #1: Our disciplined execution drove outsized growth across our top bra franchises and sustained customer engagement through the holiday. As a result, the Victoria's Secret bra business grew mid-single digits in the fourth quarter.

Hillary Super: As a result, the Victoria's Secret bra business grew mid-single digits in Q4. We continued reducing promotions throughout the year, which drove a mid-single-digit increase in our bra AUR. This performance was partially enabled by our industry-leading bra-fitting experts who build meaningful connections that deepen customer loyalty in our stores. Our efforts returned the Victoria's Secret brand bra business to annual growth for the first time since 2021. When we win in bras, we see a halo across the brand. That effect was evident in panties as well as in sleep, which I noted earlier. We've made panties more fun and playful. We introduced more newness, balanced our silhouette offering, and expanded fabrics. The results were strong. VS panty AURs increased, and the business significantly accelerated in Q4, driving our best performance in panties since 2021.

Speaker #1: We continued reducing promotions throughout the year, which drove a mid-single digit increase in our bra AUR. This performance was partially enabled by our industry-leading bra fitting experts who build meaningful connections that deepen customer loyalty in our stores.

Speaker #1: Our efforts returned the Victoria's Secret brand bra business to annual growth for the first time since 2021. When we win in bras, we see a halo across the brand.

Speaker #1: That effect was evident in panties as well as in sleep, which I noted earlier. We'd made panties more fun and playful. We introduced more newness, balanced our silhouette offering, and expanded fabrics.

Speaker #1: The results were strong. VS panty AURs increased, and the business significantly accelerated in the fourth quarter, driving our best performance in panties since 2021.

Hillary Super: This momentum is particularly meaningful since this is our number one new customer acquisition category. We leaned into sleep this quarter, an important gifting category and a meaningful driver of Q4 performance. Sleep is highly visible. Customers wear it, share it, and signal their affinity for the Victoria's Secret brand. Our social channels were flooded with real moments as our sleep assortment was celebrated in posts from holiday gatherings, family photos, themed parties, and festive occasions. Our iconic sleep assortment was a standout through the holiday and into Valentine's Day, led by hero styles in logo and heritage stripe. Applying insights from the last year, we were better positioned with inventory and digital activation to capture demand. As a result, sleep delivered outsized growth and became our third-largest new customer acquisition category in the quarter.

Speaker #1: This momentum is particularly meaningful since this is our number one new customer acquisition category. We leaned into sleep this quarter and important gifting category and a meaningful driver of Q4 performance.

Speaker #1: Sleep is highly visible. Customers wear it, share it, and signal their affinity for the Victoria's Secret brand. Our social channels were flooded with real moments as our sleep assortment was celebrated in posts from holiday gatherings, family photos, theme parties, and festive occasions.

Speaker #1: Our iconic sleep assortment was a standout through the holiday and into Valentine's Day, led by hero styles and logo and heritage stripes. Applying insights from the last year, we were better positioned with inventory and digital activation to capture demand.

Speaker #1: As a result, sleep delivered outsized growth and became our third-largest new customer acquisition category in the quarter. Altogether, the Victoria's Secret brand delivered low double-digit growth for the quarter, a clear demonstration of the multiplier effect of our strategy.

Hillary Super: Altogether, the Victoria's Secret brand delivered low double-digit growth for the quarter, a clear demonstration of the multiplier effect of our strategy. We carried our momentum into Q1 with the outperformance of our Valentine's Day collection and immediately followed with the launch of the VS Signature Collection. Signature elevates the comfortable bra she reaches for every day, bringing new energy to an essential category and is anchored by our best-selling wireless T-shirt bra, featuring a stylized update to our classic logo. The collection was supported by a thumb-stopping campaign with a cast of fan favorite VS angels that drove strong social engagement and cultural buzz. Beyond Signature, we have a powerful pipeline of innovation. Watching our spring floor sets come together genuinely made my heart race. They're vibrant, saturated with color, and completely alive.

Speaker #1: We carried our momentum into the first quarter with the outperformance of our Valentine's Day collection, and immediately followed with the launch of the Victoria's Secret signature collection.

Speaker #1: Signature elevates the comfortable bra she reaches for every day, bringing new energy to an essential category, and is anchored by our best-selling wireless T-shirt bra featuring a stylized update to our classic logo.

Speaker #1: The collection was supported by a thumb-stopping campaign with a cast of fan-favorite VS Angels that drove strong social engagement and cultural buzz. Beyond Signature, we have a powerful pipeline of innovation.

Speaker #1: Watching our spring floor sets come together genuinely made my heart race. They're vibrant, saturated with color, and completely alive, I can't wait to see customers step into this experience and feel that same energy.

Hillary Super: I can't wait to see customers step into this experience and feel that same energy. Our second pillar is recommitting to PINK. For several years, the brand had drifted from its core, losing clarity, energy, and cultural edge. In 2025, we reset the foundation and returned PINK to a differentiated position, a digitally native, socially driven lifestyle brand for 18 to 24-year-olds rooted in its bold, playful, and irreverent DNA. One year into our Path to Potential strategy, PINK has a stronger brand definition, growing awareness and relevance, and renewed affinity. All of this is showing up in the numbers. In Q4, PINK grew high single digits, driven by increased apparel penetration and renewed momentum in bras. Importantly, we pulled back on promotions, driving more regular price selling and double-digit AUR expansion, which benefited margins across PINK's portfolio, showing that the brand is regaining pricing power.

Speaker #1: Our second pillar is recommitting to pink. For several years, the brand had drifted from its core, losing clarity, energy, and cultural edge. In 2025, we reset the foundation and returned pink to a differentiated position, a digitally native, socially driven lifestyle brand for 18 to 24-year-olds, rooted in its bold, playful, and irreverent DNA.

Speaker #1: One year into our path to potential strategy, pink has a stronger brand definition, growing awareness and relevance, and renewed affinity, all of this is showing up in the numbers.

Speaker #1: In the fourth quarter, pink grew high single digits, driven by increased apparel penetration and renewed momentum in bras. Importantly, we pulled back on promotions, driving more regular price selling and benefited margins across pink's portfolio, showing that the brand is regaining pricing power.

Hillary Super: On the apparel side, PINK won the holiday season with core icon styles and fashion newness. Our Wednesday drops have become highly anticipated as customers check in regularly with growing urgency to purchase. Our second drop from LoveShackFancy collaboration resonated with our brand fans and drove significant regular price selling in December. PINK's bra business also exceeded expectations for the quarter. TWICE's appearance in the fashion show sparked viral demand and drove two sellouts of the Wear Everywhere bra. We built on that momentum by featuring TWICE again in our Valentine's Day campaign, deepening the emotional connection with our customer. I saw that firsthand during a visit to our Dadeland Mall store in Miami, where young customers gathered together to dance and learn the choreography. This is exactly the kind of emotional connection that we have been working towards.

Speaker #1: On the apparel side, pink won the holiday season with core icon styles and fashion newness. Our Wednesday drops have become highly anticipated as customers check in regularly with growing urgency to purchase, and our second drop from Loveshack Fancy collaboration resonated with our brand fans and drove significant regular price selling in December.

Speaker #1: Pink's bra business also exceeded expectations for the quarter. Twice's appearance in the fashion show sparked viral demand and drove two sellouts of the wear-everywhere bra.

Speaker #1: We built on that momentum by featuring Twice again in our Valentine's Day campaign, deepening the emotional connection with our customer. I saw that firsthand during a visit to our Dayland Mall store in Miami, where young customers gathered together to dance and learn the choreography.

Speaker #1: This is exactly the kind of emotional connection that we have been working towards. The Twice campaign became our most viewed pink campaign ever, generating more than $79 million social views.

Hillary Super: The Twice campaign became our most viewed PINK campaign ever, generating more than 79 million social views. PINK app downloads increased 50% in the quarter as customers sought early access to drops and exclusive product, with downloads accelerating further following the Valentine's Day launch. Importantly, PINK brand equity and consideration among 18 to 24-year-olds are at their highest levels in years. As we enter Q1, we are maintaining a disciplined cadence of product newness, activating around spring break, continuing to innovate our icon styles, and seeing early progress in revitalizing the PINK panty category. Later this year, we will open a standalone PINK pop-up in Soho, NY, bringing the brand to life physically. In 2026, we see a long runway to expand PINK.

Speaker #1: Pink app downloads increased 50% in the quarter as customers sought early access to drops and exclusive product with downloads accelerating further following the Valentine's Day launch.

Speaker #1: Importantly, pink brand equity and consideration among 18 to 24-year-olds are at their highest levels in years. As we enter the first quarter, we are maintaining a disciplined cadence of product newness, activating around spring break, continuing to innovate our icon styles, and seeing early progress in revitalizing the pink panty category.

Speaker #1: Later this year, we will open a standalone pink pop-up in Soho, New York, bringing the brand to life physically. In 2026, we see a long runway to expand pink.

Hillary Super: Our focus is on building relevance with Gen Z by celebrating the moments that matter to her and meeting her in her digital world through entertainment, culture, and community. By moving at the speed of culture from high-impact moments like the fashion show and Valentine's Day to partnerships that spark conversation and engagement, we believe we can strengthen emotional connection and drive growth. Our third pillar is fueling growth in beauty. In beauty, scent is our secret weapon. It is often her first layer and her lasting impression, tied to memory and the moments that matter most. For her, fragrance is emotional. For us, it's powerful. It creates loyalty and connection in a way that few categories can. This emotional resonance is translating into meaningful growth. Newness in fine fragrance, including the holiday edition of Bombshell, resonated strongly, amplified by integrated marketing across channels.

Speaker #1: Our focus is on building relevance with Gen Z by celebrating the moments that matter to her and meeting her in her digital world through entertainment, culture, and community.

Speaker #1: By moving at the speed of culture from high-impact moments like the fashion show and Valentine's Day to partnerships that spark conversation and engagement, we believe we can strengthen emotional connection and drive growth.

Speaker #1: Our third pillar is fueling growth in beauty. In beauty, scent is our secret weapon. It is often her first layer and her lasting impression, tied to memory and the moments that matter most.

Speaker #1: For her, fragrance is emotional. For us, it's powerful. It creates loyalty and connection in a way that few categories can. This emotional resonance is translating into meaningful growth.

Speaker #1: Newness in fine fragrance, including the holiday edition of Bombshell, resonated strongly. Amplified by integrated marketing across channels. As a result, beauty grew low single digits in the quarter, driving another year of growth for the business.

Hillary Super: As a result, beauty grew low single digits in the quarter, driving another year of growth for the business. Fine fragrance continues to lead our beauty business and remains a key differentiator. While many brands compete primarily in mist, we have established ourselves as a world-class fine fragrance destination with craftsmanship and creative rigor of couture fashion houses. This is anchored by Bombshell, America's number one fragrance. We are investing in our team and creative capabilities in beauty. Looking ahead, we are strengthening our innovation pipeline, expanding into adjacencies, and differentiating PINK's beauty offering. We are also using real-time insights to respond to demand. We see a meaningful runway to accelerate growth in 2027 and beyond. Finally, our brand projection and go-to-market pillar is transforming how our brands show up. Over the past year, we have clarified each brand's distinct positioning.

Speaker #1: Fine fragrance continues to lead our beauty business and remains a key differentiator. While many brands compete primarily in mist, we have established ourselves as a world-class fine fragrance destination, with the craftsmanship and creative rigor of couture fashion houses.

Speaker #1: This is anchored by Bombshell, America's number one fragrance. We are investing in our team and creative capabilities in beauty, looking ahead. We are strengthening our innovation pipeline, expanding into adjacencies, and differentiating pink's beauty offering.

Speaker #1: We are also using real-time insights to respond to demand, seeing a meaningful runway to accelerate growth in 2027 and beyond. Finally, our brand projection and go-to-market pillar is transforming how our brands show up.

Speaker #1: Over the past year, we have clarified each brand's distinct positioning. That clarity now guides our product, marketing, and cultural engagement. We have sharpened our marketing model, shifting investments towards digital and social, and leaning into bold, entertainment-led creative.

Hillary Super: That clarity now guides our product, marketing, and cultural engagement. We have sharpened our marketing model, shifting investments towards digital and social, and leaning into bold, entertainment-led creative. This is allowing us to tell more brand stories on more platforms and with greater frequency. Recent examples include the January release of our behind-the-scenes fashion show documentary, which keeps the fashion show top of mind and brings the creativity and the people behind the brand to life. Social activations for the documentary have generated over 36 million views. Additionally, our Valentine's Day campaigns drove over 10.5 billion impressions, three times that of last year. These events extended the halo of our biggest brand moments. That brand heat is translating into strong results.

Speaker #1: This is allowing us to tell more brand stories on more platforms and with greater frequency. Recent examples include the January release of our behind-the-scenes fashion show documentary, which keeps the fashion show top of mind and brings the creativity and the people behind the brand to life.

Speaker #1: Social activations for the documentary have generated over 36 million views. Additionally, our Valentine's Day campaigns drove over 10.5 billion impressions—three times that of last year.

Speaker #1: These events extended the halo of our biggest brand moments. That brand heat is translating into strong results. In the quarter, we grew our total intimates business at a high single-digit rate and expanded intimates market share for the third consecutive quarter with share up low single digits.

Hillary Super: In the quarter, we grew our total intimates business at a high single-digit rate and expanded intimates market share for the third consecutive quarter with share up low single digits. Our overall customer count grew at low single-digit rates, led primarily by new customer acquisition, including amongst young customers, while retention among existing customers improved. Growth spanned both digital and stores, and spend per customer increased mid-single digits, reflecting the continued progress and quality of sale. At the same time, our brand relevance and purchase consideration metrics are at their highest levels in several years, including across digital. Our app is a highly engaging way to connect with customers, offering personalized experiences and deeper insights into how customers shop. In Q4, app downloads increased 25%, and our apps now drive approximately 1/3 of our digital sales.

Speaker #1: Our overall customer count grew at a low single-digit rate, led primarily by new customer acquisition, including among young customers, while retention among existing customers improved.

Speaker #1: Growth spanned both digital and stores, and spend per customer increased mid-single digits, reflecting the continued progress in quality of sale. At the same time, our brand relevance and purchase consideration metrics are at their highest levels in several years, including across digital.

Speaker #1: Our app is a highly engaging way to connect with customers, offering personalized experiences and deeper insights into how customers shop. In the fourth quarter, app downloads increased 25%, and our apps now drive approximately one-third of our digital sales.

Hillary Super: For the remainder of 2026, we continue to execute a disciplined cadence of brand-building moments. With sharper positioning, stronger consumer insight, and a more modern go-to-market model, we see a path to converting brand heat into sustained market share gains. In closing, we delivered exceptional results. One year in, the Path to Potential strategy is taking hold. The acceleration in the back half of 2025 underscores the impact of our disciplined execution and sharper focus. This performance is especially meaningful because our team is just hitting its stride. Many members of the management team have been here for less than a year and are already driving tangible impact. Over the past several months, I've spent time in our stores across the US and internationally. The energy of our teams and the engagement of our customers are unmistakable.

Speaker #1: For the remainder of 2026, we continue to execute a disciplined cadence of brand-building moments. With sharper positioning, stronger consumer insight, and a more modern go-to-market model, we see a path to converting brand heat into sustained market share gains.

Speaker #1: In closing, we delivered exceptional results. One year in, the path to potential strategy is taking hold. The acceleration in the back half of 2025 underscores the impact of our disciplined execution and sharper focus.

Speaker #1: This performance is especially meaningful because our team is just hitting its stride, many members of the management team have been here for less than a year, and are already driving tangible impact.

Speaker #1: Over the past several months, I've spent time in our stores across the US and internationally. The energy of our teams and the engagement of our customers are unmistakable.

Hillary Super: We are listening closely, responding quickly, and translating real-time insights into incredible product and experiences. That responsiveness, combined with innovation and more effective marketing, has strengthened our trajectory and positions us to build on our success. We enter fiscal 2026 with strong momentum and confidence in our ability to lap our recent performance. The guidance we are issuing today reflects the strength building across all three businesses and how our Path to Potential strategy is creating a multiplier effect that supports sustained growth. I want to thank our teams for the commitment, creativity, and discipline they bring to this business every day. Our performance is a direct result of their execution. We are still early in this transformation, but the progress is real, the momentum is building, and the opportunity ahead is significant.

Speaker #1: We are listening closely, responding quickly, and translating real-time insights into incredible product and experiences. That responsiveness, combined with innovation and more effective marketing, has strengthened our trajectory and positions us to build on our success.

Speaker #1: We enter fiscal 2026 with strong momentum and confidence in our ability to lap our recent performance. The guidance we are issuing today reflects the strength-building across all three businesses and how our path to potential strategy is creating a multiplier effect that supports sustained growth.

Speaker #1: I want to thank our teams for the commitment, creativity, and discipline they bring to this business every day. Our performance is a direct result of their execution.

Speaker #1: We are still early in this transformation, but the progress is real, the momentum is building, and the opportunity ahead is significant. With that, I will turn it over to Scott to walk through the financials and our fiscal 2026 guidance.

Hillary Super: With that, I will turn it over to Scott to walk through the financials and our fiscal 2026 guidance.

Scott Sekella: Thanks, Hillary. Thank you everyone for joining today's call. Before I begin, as a reminder, in Q4 2024, we recorded a change in our accounting estimate related to the expected future redemption of outstanding gift cards issued by the company. As a result of this change in accounting estimate, we recognized a one-time cumulative adjustment, which increased net sales, gross margin, and operating income by approximately $26 million in Q4 of fiscal 2024. That said, we are pleased to report Q4 and full year results that exceeded the high end of our guidance on both the top and bottom line. For fiscal 2025, excluding last year's gift card breakage benefit, net sales grew 6% to $6.553 billion. Adjusted operating income rose 16% to $403 million.

Speaker #2: Thanks, Hilary. And thank you, everyone, for joining today's call. Before I begin, as a reminder, in the fourth quarter of 2024, we recorded a change in our accounting estimate related to the expected future redemption of outstanding gift cards issued by the company.

Speaker #2: As a result of this change in accounting estimate, we recognized a one-time cumulative adjustment, which increased net sales, gross margin, and operating income by approximately $26 million in the fourth quarter of fiscal 2024.

Speaker #2: That said, we are pleased to report fourth quarter and full-year results that exceeded the high end of our guidance on both the top and bottom line.

Speaker #2: For fiscal 2025, excluding last year's gift card breakage benefit, net sales grew 6% to $6.553 billion, adjusted operating income rose 16% to $403 million, and adjusted EPS increased 22% to $3.

Scott Sekella: Adjusted EPS increased 22% to $3, all despite $85 million in net tariff pressure. Now, let's review our Q4 results in more detail. Net sales for the quarter were $2.27 billion, an increase of $164 million or 8% over last year, or 9% excluding the one-time gift card breakage benefit. Comp sales increased 8% for the second consecutive quarter. These results exceeded expectations and reflected broad-based growth at Victoria's Secret, PINK, and Beauty, and across all channels and geographies. We saw increases in sales metrics, including higher comp traffic and average order value, reduced promotions, and increased regular price selling. AURs in the quarter were up 6% compared to last year and up 7% excluding panties.

Speaker #2: All despite 85 million in net tariff pressure. Now let's review our fourth quarter results in more detail. Net sales for the quarter were $2.27 billion, an increase of 164 million, or 8% over last year.

Speaker #2: We're 9% excluding the one-time gift card breakage benefit. Comp sales increased 8% for the second consecutive quarter. These results exceeded expectations and reflected broad-based growth at Victoria's Secret, Pink, and Beauty.

Speaker #2: And across all channels and geographies, we saw increases in sales metrics, including higher comp traffic and average order value, reduced promotions, and increased regular price selling.

Speaker #2: AURs in the quarter were up 6% compared to last year and up 7% excluding pennies. Hilary explained how we accessed the insights from fourth quarter of 2024 and applied these learnings across the business.

Scott Sekella: Hillary explained how we accessed the insights from Q4 of 2024 and applied these learnings across the business. I wanna highlight the operational excellence we are building as an organization. Our cross-functional teams have delivered more frequent product newness and bolder marketing and storytelling. This strong execution translated into impressive Q4 results. In North America, our total intimates business across VS and PINK grew at a high single-digit rate. We outperformed the intimates market in the quarter, driven by strong performance in bras and delivered low single-digit market share gains. We exited the year having grown our total intimates business for the first time in four years. Combined with the success in sleep and Valentine's Day that Hillary mentioned, the VS brand grew low double digits in the Q4.

Speaker #2: But I want to highlight the operational excellence we are building as an organization. Our cross-functional teams have delivered more frequent product newness and bolder marketing and storytelling.

Speaker #2: This strong execution translated into impressive fourth quarter results. In North America, our total intimates business across VS and Pink grew at a high single-digit rate.

Speaker #2: We outperformed the intimates market in the quarter, driven by strong performance in bras and delivered low single-digit market share gains. We exited the year having grown our total intimates business for the first time in four years.

Speaker #2: Combined with the success in sleep and Valentine's Day that Hilary mentioned, the VS brand grew low double digits in the fourth quarter. At Pink, we invested in depth behind our key icon styles while delivering fresh fashion newness, returning both Pink apparel and the total Pink brand to growth.

Scott Sekella: At PINK, we invested in depth behind our key icon styles while delivering fresh fashion newness, returning both PINK apparel and the total PINK brand to growth. Fiscal 2025 marked PINK's strongest growth in a decade. In beauty, we grew low single digits in the quarter, supported by fine fragrance and mist, which continued to perform well. For 2025, beauty delivered yet another year of growth. Our international business also continued to perform exceptionally well during the quarter. Reported Q4 sales grew 43% to $276 million, driven by outstanding performance in China, primarily in the digital channel. Adjusting for the shift in the reporting of European digital sales, which were previously fulfilled from our US distribution center and recorded in North American direct sales, international sales grew 27%.

Speaker #2: Fiscal 2025 marked Pink's strongest growth in a decade. In beauty, we grew low single digits in the quarter, supported by fine fragrance and mist, which continue to perform well.

Speaker #2: For 2025, Beauty delivered yet another year of growth. Our international business also continued to perform exceptionally well during the quarter. Reported fourth quarter sales grew 43% to $276 million, driven by outstanding performance in China, primarily in the digital channel.

Speaker #2: Adjusting for the shift in the reporting of European digital sales, which were previously fulfilled from our US distribution center and recorded in North American direct sales, international sales grew 27%.

Scott Sekella: International results included high single-digit retail comp sales gains, combined with continued new store openings. Q4 adjusted gross margin dollars were $895 million. Adjusted gross margin rate in Q4 was 39.4% compared to an adjusted gross margin rate of 39.7% in Q4 last year or approximately 38.9% excluding the $26 million gift card breakage benefit. Excluding the gift card breakage benefit, we expanded our year-over-year adjusted gross margin rate by 50 basis points, despite approximately $60 million or 250 basis points of net tariff pressure in Q4. We mitigated this headwind with margin expansion driven by our strong operational foundation, which enabled us to scale effectively, resulting in significant leverage on buying and occupancy expenses. Additional drivers included a pullback in promotions and increased regular price selling.

Speaker #2: International results included high single-digit retail comp sales gains, combined with continued new store openings. Fourth quarter adjusted gross margin dollars were $895 million. Adjusted gross margin rate in the quarter was 39.4% compared to an adjusted gross margin rate of 39.7% in the fourth quarter last year.

Speaker #2: Or approximately 38.9% excluding the 26 million gift card breakage benefit. Excluding the gift card breakage benefit, we expanded our year-over-year adjusted gross margin rate by 50 basis points, despite approximately $60 million or $250 basis points of net tariff pressure in the quarter.

Speaker #2: We mitigated this headwind with margin expansion driven by our strong operational foundation, which enabled us to scale effectively resulting in significant leverage on buying and occupancy expenses.

Speaker #2: Additional drivers included a pullback in promotions and increased regular price selling. Adjusted SG&A dollars were $579 million in the fourth quarter, and our adjusted SG&A rate was 25.5% compared to 25.4% last year, or 25.8% excluding the 26 million gift card breakage benefit.

Scott Sekella: Adjusted SG&A dollars were $579 million in Q4. Our adjusted SG&A rate was 25.5% compared to 25.4% last year or 25.8% excluding the $26 million gift card breakage benefit. We levered on the SG&A line by 30 basis points driven by the sales beat and continued discipline in expense management across the business. This was partially offset by investments in store labor and higher incentive compensation expense associated with our outperformance in Q4.

Speaker #2: We levered on the SG&A line by 30 basis points, driven by the sales beat and continued discipline in expense management across the business. This was partially offset by investments in store labor and higher incentive compensation expense associated with our outperformance in the quarter.

Scott Sekella: Adjusted operating income was $316 million for the Q4, above the high end of our guidance of $265 million to 290 million, and up from last year's Q4 adjusted operating income of $299 million or $273 million, excluding the $26 million gift card breakage benefit. Non-operating expenses consisting principally of interest expense were $14 million in the quarter, better than our guidance of approximately $17 million and down from last year, driven primarily by a lower level of weighted average borrowings and lower interest rates. Our adjusted net income per diluted share was $2.77, significantly better than our guidance of adjusted net income per diluted share of $2.20 to 2.45.

Speaker #2: Adjusted operating income was $316 million for the fourth quarter, above the high end of our guidance of $265 million to $290 million. And up from last year's fourth quarter adjusted operating income of $299 million or $273 million excluding the 26 million gift card breakage benefit.

Speaker #2: Non-operating expenses consisting principally of interest expense were $14 million in the quarter, better than our guidance of approximately $17 million and down from last year, driven primarily by a lower level of weighted average borrowings and lower interest rates.

Speaker #2: And our adjusted net income per diluted share was $2.77, significantly better than our guidance of adjusted net income per diluted share of $2.20 to $2.45, and last year's fourth quarter adjusted net income per share of $2.60, or approximately $2.35 excluding the gift card breakage benefit.

Scott Sekella: Last year's Q4 adjusted net income per share of $2.60 or approximately $2.35 excluding the gift card breakage benefit. Turning to the balance sheet. Our inventories remain in a healthy position. Q4 total inventories were up 12% year-over-year. Excluding the impact of the Adore Me inventory reserves, inventory growth would have been in line with our previous mid-teen guidance. From a liquidity standpoint, we ended the Q4 with a cash balance of $518 million, an increase of $291 million above last year. We generated free cash flow of $312 million for the full year. Included in free cash flow was a $69 million benefit related to the settlement of a long-standing Interchange Fee Litigation.

Speaker #2: Turning to the balance sheet, our inventories remain in a healthy position. Fourth quarter total inventories were up 12% year over year. Excluding the impact of the Adormi inventory reserves, inventory growth would have been in line with our previous mid-team guidance.

Speaker #2: From a liquidity standpoint, we ended the fourth quarter with a cash balance of $518 million, an increase of $291 million above last year. We generated free cash flow of $312 million for the full year.

Speaker #2: Included in free cash flow was a $69 million benefit related to the settlement of a longstanding interchange fee litigation. Excluding this one-time item, our adjusted free cash flow was $244 million, more than $30 million above the high end of our guidance.

Scott Sekella: Excluding this one-time item, our adjusted free cash flow was $244 million, more than $30 million above the high end of our guidance. As planned, we repaid all outstanding borrowings under our $750 million ABL credit facility in the quarter. Our cash balance and the full availability under our ABL agreement leaves us in a strong financial position with ample flexibility for continued execution of our strategic priorities. Before moving to our outlook, I wanna briefly address the DailyLook and Adore Me businesses. As noted in our press release this morning, we have initiated a strategic review of DailyLook, which operates as a digitally based premium subscription women's apparel and accessory styling service and represents a non-core asset within our portfolio. We are evaluating options to best position DailyLook for long-term success.

Speaker #2: As planned, we repaid all outstanding borrowings under our $750 million ABL credit facility in the quarter. Our cash balance and the full availability under our ABL agreement leave us in a strong financial position with ample flexibility for continued execution of our strategic priorities.

Speaker #2: Before moving to our outlook, I want to briefly address the daily look in Adormi businesses. As noted in our press release this morning, we have initiated a strategic review of daily look, which operates as a digitally based premium subscription women's apparel and accessory styling service and represents a non-core asset within our portfolio.

Speaker #2: We are evaluating options to best position daily look for long-term success. We also continue to assess the Adormi business and explore opportunities to optimize it within our portfolio.

Scott Sekella: We also continue to assess the Adore Me business and explore opportunities to optimize it within our portfolio. As a result of this ongoing review, we recently discontinued Adore Me's intimates-based subscription offering and converted it to a loyalty program designed to provide customers with a flexible, improved, and seamless shopping experience. We also decided to exit the Adore Me distribution center in Mexico, and we have transitioned all fulfillment operations to the US. In conjunction with these actions, in the quarter, we recorded a non-cash pre-tax impairment charge of $120 million related to the long-lived assets of Adore Me and a $36 million charge related to inventory reserves and other restructuring charges. These charges have been excluded from our adjusted non-GAAP results. Moving to our outlook, which is based on tariff assumptions consistent with the rates in place prior to recent developments.

Speaker #2: As a result of this ongoing review, we recently discontinued Adormi's Intimates-based subscription offering and converted it to a loyalty program designed to provide customers with a flexible, improved, and seamless shopping experience.

Speaker #2: We also decided to exit the Adormi distribution center in Mexico and we have transitioned all fulfillment operations to the US. In conjunction with these actions, in the quarter, we recorded a non-cash pre-tax impairment charge of $120 million related to the long-lived assets of Adormi and a $36 million charge related to inventory reserves and other restructuring charges.

Speaker #2: These charges have been excluded from our adjusted non-gap results. Moving to our outlook, which is based on tariff assumptions consistent with the rates in place prior to recent developments.

Scott Sekella: We have not included any impact of any potential changes to tariff rates and will continue to monitor developments closely and remain agile in our approach. As we discussed, we saw outperformance in Q4 and that momentum has carried into Q1 of 2026. Our spring offering is resonating well and looking ahead, we have a strong pipeline of floor sets and brand moments. Brand heat continues to build as our product resonates with customers, driving market share gains and growth in our customer base. Our Path to Potential strategy is in its early stages, and we see substantial opportunity ahead to continue to deliver top line growth.

Speaker #2: We have not included any impact of any potential changes to tariff rates, and will continue to monitor developments closely and remain agile in our approach.

Speaker #2: As we discussed, we saw outperformance in the fourth quarter, and that momentum has carried into the first quarter of 2026. Our spring offering is resonating well and looking ahead, we have a strong pipeline of floor sets and brand moments.

Speaker #2: Brand heat continues to build as our product resonates with customers, driving market share gains and growth in our customer base. Our path to potential strategy is in its early stages, and we see substantial opportunity ahead to continue to deliver top-line growth.

Scott Sekella: For fiscal year 2026, we expect net sales to be in the range of $6.85 billion to $6.95 billion, compared to net sales of $6.553 billion in fiscal year 2025, representing growth of approximately 5% to 6%. We expect fiscal 2026 operating income to be in the range of $430 million to $460 million, compared to adjusted operating income of $403 million in 2025. This implies operating margin expansion of approximately 20 to 50 basis points despite the incremental tariff headwinds. We have built a solid operational foundation that enables us to scale effectively and supports growth. As our top line grows, this foundation provides meaningful leverage across our buying and occupancy expenses.

Speaker #2: For fiscal year 2026, we expect net sales to be in the range of $6.85 billion to $6.95 billion, compared to net sales of $6.553 billion in fiscal year 2025, representing growth of approximately 5% to 6%.

Speaker #2: We expect fiscal 2026 operating income to be in the range of $430 million to $460 million, compared to adjusted operating income of $403 million in 2025.

Speaker #2: This implies operating margin expansion of approximately 20% to 50 basis points, despite the incremental tariff headwinds. We have built a solid operational foundation that enables us to scale effectively and supports growth.

Speaker #2: As our top-line grows this foundation provides meaningful leverage across our buying and occupancy expenses. In addition, we believe our disciplined expense management, tariff mitigation efforts, and ongoing focus on reducing promotions and increased regular price selling positions us to continue to expand our operating margins.

Scott Sekella: In addition, we believe our disciplined expense management, tariff mitigation efforts, and ongoing focus on reducing promotions and increased regular price selling positions us to continue to expand our operating margins. Our fiscal 2026 guidance assumes an incremental gross tariff cost of approximately $160 million. We expect to mitigate most of that impact, resulting in an incremental net tariff impact of about $40 million. Our mitigation efforts include optimizing costs with vendors, further diversifying our sourcing, ensuring we have a more efficient air versus ocean freight mix, and implementing strategic pricing actions, including more targeted promotions, increased regular price selling, and selective price adjustments where we identify value gaps in the market. We expect tariffs to have the greatest impact in the first half of the year, with the Q1 seeing the largest impact since last year's Q1 was not affected by tariffs.

Speaker #2: Our fiscal 2026 guidance assumes an incremental gross tariff cost of approximately $160 million. We expect to mitigate most of that impact, resulting in an incremental net tariff impact of about $40 million.

Speaker #2: Our mitigation efforts include optimizing costs with vendors, further diversifying our sourcing, ensuring we have a more efficient air versus ocean freight mix, and implementing strategic pricing actions including more targeted promotions, increased regular price selling, and selective price adjustments where we identify value gaps in the market.

Speaker #2: We expect tariffs to have the greatest impact in the first half of the year, with the first quarter seeing the largest impact since last year's first quarter was not affected by tariffs.

Scott Sekella: That impact eases in the back half as we begin to lap tariffs and our mitigation efforts increase. Given these inputs, we are forecasting fiscal year 2026 net income per diluted share to be in the range of $3.20 to 3.45 compared to adjusted net income per diluted share of $3 in fiscal year 2025. We estimate capital expenditures in the range of $220 million to 240 million in fiscal 2026, or approximately 3% of sales. Capital investments will continue to focus on stores, the customer experience, and technology and logistics supporting our strategic initiatives to drive growth and operating efficiencies. We estimate 2026 free cash flow of approximately $220 million to 250 million.

Speaker #2: That impact eases in the back half as we begin to lap tariffs and are mitigation efforts increase. Given these inputs, we are forecasting fiscal year 2026 net income per diluted share to be in the range of $3.20 to $3.45, compared to adjusted net income per diluted share of $3 in fiscal year 2025.

Speaker #2: We estimate capital expenditures in the range of $220 million to $240 million in fiscal 2026, or approximately 3% of sales. Capital investments will continue to focus on stores, the customer experience, and technology and logistics supporting our strategic initiatives to drive growth and operating efficiencies.

Speaker #2: We estimate 2026 free cash flow of approximately $220 million to $250 million. As for store counts and renovation plans in North America in 2026, we expect store counts to be flat to slightly up this year.

Scott Sekella: As for store counts and renovation plans in North America in 2026, we expect store counts to be flat to slightly up this year. By the end of the year, we estimate our Store of the Future presence in North America will be approximately 250 stores or 30% of the fleet, up from 25% in 2025. Internationally, we expect our Store of the Future presence at the end of 2026 to be approximately 55% of the fleet, up from 45% in 2025. By the end of fiscal 2027, we expect approximately 50% of our global fleet will be converted to this format. Turning to our outlook for the Q1 of 2026.

Speaker #2: By the end of the year, we estimate our Store of the Future presence in North America will be approximately 250 stores, or 30% of the fleet, up from 25% in 2025.

Speaker #2: Internationally, we expect our store of the future presence at the end of 2026 to be approximately 55% of the fleet, up from 45% in 2025.

Speaker #2: By the end of fiscal 2027, we expect approximately 50% of our global fleet will be converted to this format. Turning to our outlook for the first quarter of 2026, we are forecasting net sales in the range of $1.49 billion to $1.525 billion, compared to net sales of $1.353 billion in the first quarter of 2025.

Scott Sekella: We are forecasting net sales in the range of $1.49 billion to $1.525 billion, compared to net sales of $1.353 billion in Q1 2025. This outlook assumes top line growth of approximately 10% to 13% based on our continued momentum quarter to date in our North American business, as well as strength in our international business. With this sales outlook, we expect Q1 2026 operating income to be in the range of $32 million to $42 million, compared to an adjusted operating income of $32 million in Q1 2025. We expect our Q1 2026 gross margin rate to be about 35.5% compared to an adjusted gross margin rate of 35.2% in Q1 2025.

Speaker #2: This outlook assumes top-line growth of approximately 10% to 13% based on our continued momentum quarter to date in our North American business, as well as strength in our international business.

Speaker #2: With this sales outlook, we expect first quarter 2026 operating income to be in the range of $32 million to $42 million, compared to an adjusted operating income of $32 million in the first quarter of 2025.

Speaker #2: We expect our first quarter 2026 gross margin rate to be about 35.5%, compared to an adjusted gross margin rate of 35.2% in the first quarter of 2025.

Scott Sekella: This means we anticipate the Q1 2026 gross margin rate to expand approximately 30 basis points year-over-year. Our margins are expanding despite the approximately 175 basis points of tariff pressure in the quarter, which we expect to more than offset based on the strength of our operational model, which continues to deliver leverage on buying and occupancy expenses as net sales grow, as well as our disciplined promotional strategy and more regular price selling. The SG&A rate in the Q1 2026 is expected to be approximately 33% compared to the Q1 2025's adjusted rate of 32.8%.

Speaker #2: This means we anticipate the first quarter 2026 gross margin rate to expand approximately 30 basis points year over year. Our margins are expanding despite the approximately $175 basis points of tariff pressure in the quarter, which we expect to more than offset based on the strength of our operational model, which continues to deliver leverage on buying and occupancy expenses, as net sales grow, as well as our disciplined promotional strategy and more regular price selling.

Speaker #2: The SG&A rate in the first quarter of 2026 is expected to be approximately 33%, compared to the first quarter 2025's adjusted rate of 32.8%.

Scott Sekella: The forecasted increase in SG&A dollars is primarily driven by store labor investments and other costs to support the customer experience and top line growth, as well as higher incentive compensation expense as Q1 of last year benefited from a reduced level of incentive compensation expense. Given these inputs, we estimate Q1 earnings per diluted share to be in the range of $0.20 to $0.30, compared to adjusted earnings per diluted share of $0.09 in Q1 2025. We expect to end Q1 with inventories up high single digits compared to last year. This expected increase reflects growth to support business trends, the impact of tariffs, and timing related to our operations, mostly due to our strategic shift towards ocean freight from air freight, which results in us taking ownership of inventory earlier as compared to last year.

Speaker #2: The forecasted increase in SG&A dollars is primarily driven by store labor investments and other cost-to-support the customer experience and top-line growth. As well as higher incentive compensation expense as the first quarter of last year benefited from a reduced level of incentive compensation expense.

Speaker #2: Given these inputs, we estimate first quarter earnings per diluted share to be in the range of $0.20 to $0.30, compared to adjusted earnings per diluted share of $0.09 in the first quarter of 2025.

Speaker #2: We expect to end the first quarter with inventories up high single digits compared to last year. This expected increase reflects growth to support business trends, the impact of tariffs, and timing related to our operations—mostly due to our strategic shift towards ocean freight from air freight—which results in us taking ownership of inventory earlier as compared to last year.

Scott Sekella: In closing, our Path to Potential strategy is delivering tangible results, as evidenced by the significant acceleration in our business during the back half of 2025. We are entering 2026 with momentum. Despite an uncertain macro environment, our fundamentals remain strong and resilient. We remain focused on managing costs. We'll continue to invest in product innovation, brand strength, and the customer experience. We are positioned to continue to scale effectively, giving us confidence in our ability to drive sustainable long-term value. I would now like to open it up for questions. Operator?

Speaker #2: In closing, our path to potential strategies delivering tangible results is evidenced by the significant acceleration in our business during the back half of 2025.

Speaker #2: We are entering 2026 with momentum. Despite an uncertain macro environment, our fundamentals remain strong and resilient. We remain focused on managing costs and will continue to invest in product innovation, brand strength, and the customer experience.

Speaker #2: We are positioned to continue to scale effectively giving us confidence in our ability to drive sustainable, long-term value. I would now like to open it up for questions.

Speaker #2: Operator?

Operator: Thank you. Ladies and gentlemen, if you wish to ask a question, please press star one and record your name clearly when prompted. To withdraw your question at any time, you may press star then two. As a reminder, we ask that each participant limit themselves to one question and one follow-up to allow ample time to respond to each participant that may wish to participate in this portion of the call. For our first question, we will go to the line of Matthew Boss with J.P. Morgan. Your line is open.

Speaker #1: Thank you, ladies and gentlemen. If you wish to ask a question, please press star one and record your name clearly when prompted. To withdraw your question at any time, you may press star then two.

Speaker #1: As a reminder, we ask that each participant limit themselves to one question and one follow-up, to allow ample time to respond to each participant that may wish to participate in this portion of the call.

Speaker #1: For our first question, we will go to the line of Matthew Boss with JPMorgan. Your line is open.

Matthew Boss: Great. Thanks, and congrats on a nice quarter.

Speaker #2: Great. Thanks. And congrats on a nice quarter.

Scott Sekella: Thanks, Matt.

Matthew Boss: Maybe Hillary, could you elaborate on new customer acquisition trends following the inflection in the file to growth last quarter, and just what inning you see marketing and product improvement in today as we think about sustaining momentum into 2026?

Speaker #3: Thanks, Matt.

Speaker #2: So maybe Hillary, could you elaborate on new customer acquisition trends following the inflection in the file to growth last quarter? And just what inning you see marketing and product improvement in today as we think about sustaining momentum into '26?

Hillary Super: Sure, sure, Matt. Customer acquisition. When you look at our total customer file, we're seeing growth across new, retained, and reactivated, but the highest growth in new, and within that, we're seeing a nice uptick in younger customers. It's a little gray because there's a delayed matching in age range, so it's not a precise science. We do see that, and we see anecdotally in our business that we are increasing our count of new customers, which feels great. I would also add that from an income perspective, we are seeing consistent performance across the board in all income cohorts, and we are seeing growth in the customer count across all income cohorts as well as spend. We're feeling really good about the complexion of customers as we enter 2026.

Speaker #4: Sure. Sure, Matt. So customer acquisition. When you look at our total customer file, we're seeing growth across new, retained, and reactivated, but the highest growth in new.

Speaker #4: And within that, we're seeing a nice uptick in younger customers. It's a little gray because there's a delayed matching in age range. So see that and we see anecdotally in our business that we are increasing our count of new customers, which feels great.

Speaker #4: I would also add that from an income perspective, we are seeing consistent performance across the board in all income cohorts. And we are seeing growth in the customer count across all income cohorts, as well as spend.

Speaker #4: So we're feeling really good about the complexion of customers as we enter 2026. In relation to marketing and what we have planned, the team is just getting started.

Hillary Super: In relation to marketing and what we have planned, you know, the team is just getting started. When we executed Q3 and Q4, the majority of the leadership team was, on the brand side, was new. While we are tremendously happy with the success we had in the back half of the year, we're just getting started, and we are learning things every day that we are planning forward. I think our Valentine's execution is an example of that, where we learned the power of the virality of a K-pop group like Twice, brought them back to collaborate on Valentine's Day and just saw record results from that collaboration. We are moving quickly.

Speaker #4: When we executed Q3 and Q4, the majority of the leadership team was on the brand side, was new. And so while we are tremendously happy with the success we had in the back half of the year, we're just getting started.

Speaker #4: And we are learning things every day that we are playing forward. I think our Valentine's execution is an example of that, where we learned the power of the virality of a K-pop group like TWICE, brought them back to collaborate on Valentine's Day, and just saw record results from that collaboration.

Hillary Super: We have a number of events planned for both brands, and I think, you know, one of the things I'm most excited about is we're really starting to find our voice with the PINK brand and what resonates there. I think we were farther along with VS and, you know, building brand heat in VS, and I'm very excited about some of the things that are in the pipeline for PINK. All the way around, we're feeling really positive.

Speaker #4: So we are moving quickly. We have a number of events planned for both brands. And I think one of the things I'm most excited about is we're really starting to find our voice with the pink brand and what resonates there.

Speaker #4: I think we were farther along with VS and building brand heat in VS, and I'm very excited about some of the things that are in the pipeline for pink.

Matthew Boss: Great. Maybe Scott, as a follow-up, I think you mentioned momentum, multiple times. I lost count in terms of the Q1 to date. Maybe just if you could elaborate on the momentum that you're seeing Q1 to date, maybe relative to the 10% to 13% revenue growth outlook, and just drivers of the demand acceleration that you're seeing relative to holiday.

Speaker #4: So all the way around, we're feeling really positive.

Speaker #2: Great. And then maybe, Scott, as a follow-up—I think you mentioned momentum multiple times; I lost count—in terms of the first quarter to date. But maybe just, if you could elaborate on the momentum that you're seeing first quarter to date, maybe relative to the 10% to 13% revenue growth outlook, and just drivers of the demand acceleration that you're seeing relative to holiday.

Scott Sekella: Yeah, I mean, you know, coming off of holiday and what started with the fashion show heat, you know, continued with the product newness. When you think about towards the end of Q4, setting Valentine's Day a little bit earlier and getting the heat around Valentine's Day into Q4, that carried into February through Valentine's Day. We saw, you know, impressive traffic, especially the week of Valentine's Day, which has set us up for a strong Q1 with that guide of +10 to +13. I will say, you know, February is probably our easiest comp month, given, you know, last year, the trends were down and then it sort of rebounded in March and April.

Speaker #3: Yeah. I mean, coming off of holiday and what started with the fashion show heat, continuing with the product newness, and then when you think about the towards the end of Q4, setting Valentine's Day a little bit earlier and getting the heat around Valentine's Day end of Q4, that carried in to February through Valentine's Day.

Speaker #3: And we saw impressive traffic, especially the week of Valentine's Day, which has set us up for a strong Q1 with that guide of plus 10 to plus 13.

Speaker #3: I will say, February is probably our easiest comp month given last year, the trends were down, and then sort of rebounded in March and April.

Scott Sekella: For Q1, we expect that, you know, 10 to +13, but the March, April timeframe will probably be a little bit below what we're seeing in February.

Speaker #3: So for Q1, we expect that 10 to plus 13, but the March, April timeframe will probably be a little bit below what we're seeing in February.

Hillary Super: I'll just jump in on the categories. We're really pleased in February to see very broad-based success across business units, across channels, and even in the categories that we're really focusing on. I would say very consistent, very broad-based success. That being said, the things that I'm really paying attention to in VS, it's sleep and intimates. In PINK, it's bras, apparel, and collaborations. In Beauty, it's fine fragrance and mist. I'm really happy to report that all of those businesses are performing very well and very consistently.

Speaker #4: And then I'll just jump in on the categories. We're really, really pleased in February to see very broad-based success across business units, across channels, and even in the categories that we're really focusing on.

Speaker #4: So I would say very consistent, very broad-based success. That being said, the things that I'm really paying attention to in VS, it's sleep and intimates.

Speaker #4: In pink, it's bras, apparel, and collaborations. And in beauty, it's fine fragrance and mist. And I'm really happy to report that all of those businesses are performing very well and very consistently.

Matthew Boss: It's a great color. Best of luck.

Speaker #2: That's great color. Best of luck.

[Operator]: Thank you. Our next question comes from Simeon Siegel with Guggenheim Partners. Your line is open.

Operator: Thank you. Our next question comes from Simeon Siegel with Guggenheim Partners. Your line is open.

Speaker #1: Thank you. Our next question Partners. Your line is open.

Simeon Siegel: Great. Thanks. Hey, everyone. Morning. Really nice job. Hilary and team, obviously, you have this nice year behind you. You're seeing what's working, what isn't, maybe feels like you have a really nice handle on the brand. Just as we take a step back, anything you're willing to share about how large you think each brand can and should be? I don't know if this is Hilary or Scott, just any notable discrepancy in AUR at PINK versus Victoria in this past quarter, do you see greater go-forward opportunity at either brand? Thank you.

Operator: Great. Thanks. Hey, everyone. Morning. Really nice job. Hilary and team, obviously, you have this nice year behind you. You're seeing what's working, what isn't, maybe feels like you have a really nice handle on the brand. Just as we take a step back, anything you're willing to share about how large you think each brand can and should be? I don't know if this is Hilary or Scott, just any notable discrepancy in AUR at PINK versus Victoria in this past quarter, do you see greater go-forward opportunity at either brand? Thank you.

Speaker #5: Great. Thanks. Hey, everyone. Morning. Really nice job. So Hillary and the team, obviously. So you have this nice year behind you. You're seeing what's working, what isn't.

Speaker #5: Maybe your feels like you have a really nice handle on the brand. So just as we take a step back, anything you're willing to share about how large you think each brand can and should be?

Speaker #5: And then I don't know if this is Hillary or Scott, but just any notable discrepancy in AUR, PINK versus Victoria in this past quarter?

Speaker #5: And do you see greater go-forward opportunity at either brand? Thank you.

Hillary Super: Sure. I mean, I'm just very optimistic about all three business units. I don't see a reason why we cannot hit historical levels of sales in VS and Co. in general. I'm not gonna point to any specific numbers by brand, but we see tremendous runway in all of them, and we're working towards delivering that. I'm feeling great across the board with. With PINK, I think we're just really getting started. In terms of AUR, we are seeing broad-based success across removing promotions. Two things I wanna highlight is real strength in bra AUR, which just goes back to leaning into our expertise, authority, and storytelling, as well as our in-store service. The other thing I would highlight as a real win was PINK apparel, where we saw double-digit AUR increases.

Speaker #4: Sure. I mean, I'm just very optimistic about all three business units. I don't see a reason why we cannot hit historical levels of sales in VS & Co.

Speaker #4: in general. I'm not going to point to any specific numbers by brand, but we see tremendous runway in all of them. And we're working towards delivering that.

Speaker #4: I'm feeling great across the board with PINK. I think we're just really getting started. In terms of AUR, we are seeing broad-based success across removing promotions.

Speaker #4: But two things I want to highlight is real strength in a bra, AUR. Which just goes back to leaning into our expertise, authority, and storytelling, as well as our in-store service.

Speaker #4: And then the other thing I would highlight as a real win with pink apparel where we saw double-digit AUR increases. And we've been able to, I think, make the most headway with delayering promotions.

Hillary Super: We've been able to, I think, make the most headway with delayering promotions. We still think there's tremendous room to continue delayering, and we continue to look at that and discuss it and work towards it every day.

Speaker #4: But we still think there's tremendous room to continue delayering. And we continue to look at that and discuss it and work towards it every day.

Simeon Siegel: That's really great. Great job, guys. Best luck for the year.

Hillary Super: That's really great. Great job, guys. Best luck for the year.

Speaker #5: That's really great. Great job, guys. Best of luck for the year.

[Operator]: Thank you. Our next question comes from Mauricio Serna with UBS. Your line is open.

Operator: Thank you. Our next question comes from Mauricio Serna with UBS. Your line is open.

Speaker #1: Thank you. Our next question comes from Mauricio Serna with UBS. Your line is open.

Scott Sekella: Great. Good morning, and thanks for taking our questions. First, to Hillary, maybe could you talk about, you know, on a higher level, in what inning do you see yourself on the turnaround of VS and PINK? You know, just curious 'cause, you know, you've had now, three consistent quarters of very strong comp sales. Just thinking like, how far along do you think you are on this turnaround? And maybe could you elaborate on the market share trends you saw in the quarter for the North America bras and panties categories? Thank you.

Mauricio Serna: Great. Good morning, and thanks for taking our questions. First, to Hillary, maybe could you talk about, you know, on a higher level, in what inning do you see yourself on the turnaround of VS and PINK? You know, just curious 'cause, you know, you've had now, three consistent quarters of very strong comp sales. Just thinking like, how far along do you think you are on this turnaround? And maybe could you elaborate on the market share trends you saw in the quarter for the North America bras and panties categories? Thank you.

Speaker #6: Great. Good morning and thanks for taking our questions. First, to Hillary, maybe could you talk about, on a higher level, in what inning do you see yourself on the turnaround of VS and pink?

Speaker #6: Just curious because you've had now three consistent quarters of very strong comp sales. So just thinking how far along do you think you are on this turnaround?

Speaker #6: And maybe could you elaborate on the market share trends you saw in the quarter for the North America bras and panties categories? Thank you.

Hillary Super: Sure. What inning are we in? I, you know, early to mid. I think it's different for each business unit. Victoria's Secret brand, I think, is farthest along. That team has been working together for the longest. I think we, you know, have the clearest view of what we needed to be dominant in there, which is obviously bras being at the heart of that business. It's really just clicking and there's so much that we can build upon there, and I feel great about that. I think in PINK, you know, we're seeing equally strong results, but we are more in learning mode. I would say this customer has changed more than the Victoria's Secret customer. The 20-year-old today is very different than the 20-year-old 20 years ago when this brand started.

Speaker #4: Sure. What inning are we in? Early to mid, I think it's different for each business unit. Victoria's Secret brand, I think, is farthest along.

Speaker #4: That team has been working together for the longest. I think we have the clearest view of what we needed to be dominant in there, which is obviously bras being at the heart of that business.

Speaker #4: It's really just clicking, and there's so much that we can build upon there, and I feel great about that. I think in PINK, we're seeing equally strong results, but we are more in learning mode, I would say, as this customer has changed more than the Victoria's Secret customer.

Speaker #4: The 20-year-old today is very different than the 20-year-old 20 years ago when this brand started. So we are learning and acting quickly and seeing real success.

Hillary Super: We are learning and acting quickly and seeing real success. One of the things that I would point to outside of Twice and what we've been able to do with that collaboration is really learning through the LoveShackFancy collaboration, applying those learnings to our PINK by Frankies collab that just dropped just a couple weeks ago, and seeing that turn into measurable results. We are consistently reading, learning, and reacting in PINK and, I think, you know, we're in earlier innings because of that. In beauty, you know, beauty is a much a very technical business. There's a lot of innovation that's required. We've made some key hires, and we're really thinking a little bit longer term in beauty. That innovation and that regulatory element of beauty takes a little bit of time.

Speaker #4: And one of the things that I would point to outside of twice and what we've been able to do with that collaboration is really learning through the Loveshack Fancy collaboration, applying those learnings to our Pink by Frankie's collab that just dropped this couple of weeks ago.

Speaker #4: And seeing that turn into measurable results. And so we are consistently reading, learning, and reacting in PINK. And I think we're in earlier innings because of that.

Speaker #4: And then in beauty, beauty is a very technical business. There's a lot of innovation that's required. We've made some key hires, and we're really thinking a little bit longer term in beauty.

Speaker #4: So that innovation and that regulatory element of beauty takes a little bit of time. So we're going to be a little more conservative with beauty in 2026, with the intention to start ramping up in 2027.

Hillary Super: We're gonna be a little more conservative with Beauty in 2026, with the intention to start ramping up in 2027. I think you asked me 1 other question. Market share. Super pleased with market share, increases in all of the key categories. The only other thing that I would say to elaborate is it does look like we're taking that share from the value sector primarily, which was where we had targeted all along. We continue to see that coming to fruition. We're super excited that we're able to provide the emotional connection versus having to drive promotions to entice those customers. That's also just feeling like a real proof point for us.

Speaker #4: And I think you asked me one other question—market share. Super pleased with market share, increases in all of the key categories. The only other thing that I would say to elaborate is it does look like we're taking that share from the value sector primarily, which was where we had targeted all along.

Speaker #4: And so we continue to see that coming to fruition. And we're super excited that we're able to provide the emotional connection versus having to drive promotions to entice those customers.

Speaker #4: And that's also just feeling like a real proof point for us.

Mauricio Serna: Great. Just a quick follow-up for Scott, maybe could you talk about the cadence of a tariff impact throughout the year? You kind of said that the first quarter was gonna be the biggest one, but just more details would be very helpful. Just to clarify on the rates you're using, you're assuming 20% for, you know, every country except China. Does that include also like India being like 18%, coming down to 18% from 50? Just wanted to understand that since I think you have exposure to that market. Thank you.

Speaker #6: Great. And just a quick follow-up for Scott. Maybe could you talk about the cadence of the tariff impact throughout the year? You just kind of said that the first quarter was going to be the biggest one, but just more details would be very helpful.

Speaker #6: And just to clarify on the rates you're using, you're assuming 20% for every country except China. Does that include also India being like 18% coming down to 18% from 50?

Speaker #6: Just wanted to understand that since I think you have exposure to that market. Thank you.

Scott Sekella: Yeah. Yeah. Let me start with the second and then tackle the first. We're assuming tariff rates in place prior to Supreme Court ruling. We'll continue to monitor the developments with that. With India, we had a good chunk of the 50% mitigated. Going to 18%'s a smaller impact for us. Doesn't really move the needle in a significant manner. In terms of the cadence of tariffs throughout the year, as we said, it'll be heavier kind of in the first half, and particularly even in Q1. If you think about tariffs weren't in place in Q1 last year, we'll see, you know, a bit over 100, about 175 bips headwind in the quarter on that tariff pressure for Q1.

Speaker #3: Yeah. Yeah. Let me start with the second, then tackle the first. So we're assuming tariff rates in place prior to the Supreme Court ruling.

Speaker #3: And so we'll continue to monitor the developments with that. With India, we had a good chunk of the 50% mitigated. So going to 18% a smaller impact for us.

Speaker #3: So it doesn't really move the needle in a significant manner. In terms of the cadence of tariffs throughout the year, as we said, it'll be heavier kind of in the first half, and particularly even in the first quarter, if you think about tariffs weren't in place in Q1 last year.

Speaker #3: So we'll see a bit over 100, about 175 bips headwind in the quarter on that tariff pressure for Q1. And then it will still be an impact in Q2, but it'll be lesser of an impact in the back half as one we start to lap tariffs.

Scott Sekella: It will still be an impact in Q2, but it'll be lesser of an impact in the back half as one, we start to lap tariffs, but two, our mitigation even continues to execute and ramp up through the back half.

Speaker #3: But two, our mitigation even continues to execute and ramp up through the back half.

Mauricio Serna: Thanks so much and best of luck.

Speaker #4: Cool.

Speaker #6: Got it. Thanks so much. And best of luck.

[Operator]: Thank you. Our next question comes from Corey Tarlowe with Jefferies. Your line is open.

Operator: Thank you. Our next question comes from Corey Tarlowe with Jefferies. Your line is open.

Speaker #1: Thank you. Our next question comes from Corey Tarlow with Jefferies. Your line is open.

Corey Tarlowe: Great. Thanks, and good morning. Hillary, I wanted to ask you about what worked well for you in 2025, and then as you think about 2026, if you could for us, just zoom in on what you're looking to change in the first half specifically. I think if you compare what we saw in the back half of last year, some of that product and floor sets had your mark on it. We heard it in your prepared remarks today about how much how emphatic you are about the new floor sets that are really hitting. I was curious about what it is that you really see as the biggest factors of change in the first half of this year.

Speaker #5: Great, thanks, and good morning. Hillary, I wanted to ask you about what worked well for you in 2025 and then, as you think about 2026, if you could, for us, just zoom in on what you're looking to change in the first half specifically. Because I think, if you compare what we saw in the back half of last year, some of that product and floor sets had your mark on it.

Speaker #5: But we heard it in your prepared remarks today about how much emphatic you are about the new floor sets that are really hitting. So I was curious about what it is that you really see as the biggest factors of change in the first half of this year.

Corey Tarlowe: If you would like to elaborate about back half as well, that'd be great too, but wanted to zoom in there. Thanks so much.

Speaker #5: And if you would like to elaborate about that half as well, that would be great too. But I wanted to zoom in there. Thanks so much.

Hillary Super: Sure, Corey. really proud of 2025 across the board. I think both from a product evolution standpoint, a cultural connection standpoint, and from a marketing optimization standpoint. I would say those were the three major levers that we pulled and worked in concert together to create the tangible results. As I think about assortment specifically to your question, Q1, the quarter we're in right now, really starting with Valentine's Day, is the first season that we as a new team all work together from beginning to end, from concept to customer. you are seeing all of our insights, all of our conversations, all of our debates, and hard work come to fruition with these floor sets.

Speaker #4: For Corey, I'm really proud of 2025 across the board—I think both from a product evolution standpoint, a cultural connection standpoint, and from a marketing optimization standpoint.

Speaker #4: I would say those were the three major levers that we pulled. And worked in concert together to create the tangible results. As I think about the first and as I think about assortment specifically to your question, Q1, the quarter we're in right now, really starting with Valentine's Day, is the first season that we, as a new team, all work together from beginning to end, from concept to customer.

Speaker #4: And so, you are seeing all of our insights, all of our conversations, all of our debates, and hard work come to fruition with these floor sets.

Hillary Super: I think more than anything, we've breathed new life into this assortment. It's more energetic, it's more fun, it's a little more youthful. We're not taking ourselves super seriously. Intimates should not be a serious business. This is about fun, escape, and joyfulness, and I think that's really coming through on our floor sets. Particularly in the front half of the year, we have marketing optimization as a huge lever as that team really started to impact the back half of the year. From our analysis on back half of the year marketing optimization, the analysis is telling us that, like, there's even more we can do with, in particular, how we put the fashion show into the world.

Speaker #4: And I think more than anything, they just have we've breathed new life into this assortment. It's more energetic. It's more fun. It's a little more youthful.

Speaker #4: We're not taking ourselves super seriously. Intimates should not be as serious business. This is about fun and escape and joyfulness. And I think that's really coming through on our floor sets.

Speaker #4: Particularly in the front half of the year, we have marketing optimization as a huge lever. As that team really started to impact the back half of the year.

Speaker #4: And from our analysis on back half of the year marketing optimization, the analysis is telling us that there's even more we can do. With in particular, how we put the fashion show into the world.

Hillary Super: We had a very specific pre, during, and post media strategy that worked very well, much better than it did the year prior, but even more to do there next year. We have a very robust calendar of deliveries, activation, new ideas, new cultural connections in both brands throughout the entire year. I'm not gonna tell you what they are. But we're excited. I think what you will see is the power of this executive team coming together as they all anniversary a year together and they start supercharging their ideas, and really driving outsized results.

Speaker #4: So we had a very specific pre, during, and post-media strategy that worked very well, much better than it did the year prior. But even more to do there next year.

Speaker #4: So we have a very robust calendar of deliveries, activation, new ideas, new cultural connections in both brands throughout the entire year. I'm not going to tell you what they are.

Speaker #4: But we're excited. And I think what you will see is the power of this executive team coming together as they all anniversary a year together, and they start supercharging their ideas.

Corey Tarlowe: That's great. I guess a follow-up for Scott. Given all the excitement that's flowing into the business and sort of circling that square with the outlook for the year, how do you think about the factors of upside to the current guidance? Thanks so much.

Speaker #4: And really driving outsized results.

Speaker #5: That's great. So I guess a follow-up for Scott. Given all the excitement that's flowing into the business and sort of circling that square with the outlook for the year, how do you think about the factors of upside to the current guidance?

Scott Sekella: Yeah. I mean, we feel really good about our current guide. You know, it's as we've shared with Q1, a +10 to +13% touched on the momentum coming into the quarter and what we're seeing. I think you'll see that momentum sort of carry into Q2, and then as we start lapping the higher comps in the back half, we see a runway to growth there, but it probably won't be as high as the growth in the front half is how we're thinking about it right now. But excited for all of these new floor sets. Excited for how the marketing is bringing the story to life, and I think it's setting us up for that sustainable growth throughout the year.

Speaker #5: Thanks so much.

Speaker #3: Yeah. I mean, we feel really good about our current guide. As we've shared with Q1, a plus 10, a plus 13, touched on the momentum coming into the quarter and what we're seeing.

Speaker #3: I think you'll see that momentum sort of carry into Q2. And then as we start lapping the higher comps in the back half, we see a runway to growth there, but it probably won't be as high as the growth in the front half is how we're thinking about it right now.

Speaker #3: But excited for all of these new floor sets. Excited for how the marketing is bringing the story to life. And I think it's setting us up for that sustainable growth throughout the year.

Mauricio Serna: Okay, great. Thanks so much, and best of luck.

Speaker #5: Okay. Great. Thanks so much, and best of luck.

[Operator]: Thank you. Our next question comes from Brooke Roach with Goldman Sachs. Your line is open.

Operator: Thank you. Our next question comes from Brooke Roach with Goldman Sachs. Your line is open.

Speaker #1: Thank you. Our next question comes from Brooke Roach with Goldman Sachs. Your line is open.

Brooke Roach: Good morning. Thank you for taking our question. Hillary, I was hoping I could follow up on Matt's question on marketing. What marketing spend as a % of sales is embedded in the plan this year versus last year? Do you expect that rate to move higher on a medium-term basis given the success that you have with your customer engagement strategy?

Speaker #6: Good morning, and thank you for taking our question. Hillary, I was hoping I could follow up on Matt's question on marketing. What marketing spend as a percent of sales is embedded in the plan this year versus last year, and do you expect that rate to move higher on a medium-term basis given the success that you have with your customer engagement strategy?

Scott Sekella: Yeah, I'll touch on the first part. Hillary can give some color. In terms of marketing as a % of sales, we see it ticking up slightly right now. We see there's an opportunity to potentially invest more where we can get a return on that ad spend. We did invest more through the back half, where we saw those opportunities last year and we're planning for a slight uptick this year.

Speaker #3: Yeah. I'll touch on the first part, and then Hillary can give some color. But in terms of marketing as a percent of sales, we see it ticking up slightly right now.

Speaker #3: We see there's opportunity to potentially invest more where we can get a return on that ad spend. And so we did invest more through the back half where we saw those opportunities last year.

Speaker #3: And we're planning for a slight uptick this year.

Hillary Super: I would just add that we have, you know, we have tremendous opportunity in the optimization of marketing, especially in terms of segmented marketing. I think the early stages of really evolving with the customer as she evolves her purchase and sort of consideration journey with agentic commerce. We're gonna be looking for places where we have opportunities, where we have a, like, absolutely unbelievable idea that is potentially out of the box and something that we wanna bring to market. We are working to make sure that we have levers we can pull when those things arise, and we can manage it within our budgets. You know, those are some of the things I'm most excited about, to be honest with you.

Speaker #4: And then I would just add that we have tremendous opportunity in the optimization of marketing. Especially in terms of segmented marketing, I think the early stages of really evolving with the customer as she evolves her purchase and sort of consideration journey with agentic commerce.

Speaker #4: And then we're going to be looking for places where we have opportunities. Where we have absolutely unbelievable idea that is potentially out of the box and something that we want to bring to market.

Speaker #4: And so we are working to make sure that we have levers we can pull in those things arise. And we can manage it within our budgets.

Speaker #4: And those are some of the things I'm most excited about, to be honest with you.

Brooke Roach: That's great color. Scott, as you look at the merch margin opportunity ahead, how much more opportunity do you see from promotional reduction, and what are your pricing plans, and how might that change as a result of the dynamic tariff environment that we currently find ourselves in?

Speaker #1: That's great, Hillary. Scott, as you look at the merch margin opportunity ahead, how much more opportunity do you see from promotional reduction? And what are your pricing plans?

Speaker #1: And how might that change as a result of the dynamic tariff environment that we currently find ourselves in?

Scott Sekella: Yeah, great question. You know, as we went through 2025, you know, we had tailwinds from pulling back on promotions pretty much all year, even into Q4, which is a heavier promotional period. We were still identifying days of promotions that we could shorten. We also increased our holiday GWP buy-in. We're always looking for those opportunities, and we see those opportunities all through 2026 as well. As these brands become more about e-motion versus promotion, we'll continue to get tailwinds from pricing and promotions throughout the year. We also talked last year where we implemented some strategic price increases here and there, where we saw value gaps. Some of that will lap in the front half. We continue to monitor the consumer reaction, but we haven't seen the consumer pull back.

Speaker #3: Yeah, great question. As we went through 2025, we had tailwinds from pulling back on promotions pretty much all year, even in Q4, which is a heavier promotional period.

Speaker #3: And we were still identifying days of promotions that we could shorten. We also increased our holiday GWP buy-in. So we're always looking for those opportunities.

Speaker #3: And we see those opportunities all through 2026 as well. As these brands become more about emotion versus promotion, we'll continue to get tailwinds from pricing and promotions throughout the year.

Speaker #3: We also talked last year where we implemented some strategic price increases here and there. Where we saw value gaps. So some of that will lap in the front half.

Speaker #3: We continue to monitor the consumer reaction, but we haven't seen the consumer pull back. So I think you'll see AURs continue to tick up, then, throughout the year.

Scott Sekella: I think you'll see AURs continue to tick up then throughout the year. We continue to monitor tariffs. I mean, as we said, we're planning as with the tariffs that were in place prior to the recent developments. Talked about the color of how that's gonna weigh on the front half versus the back half. The other piece I'd touch on with margins is just, you know, as we grow, we've got that low leverage point. As we go north of that 1% to 2%, we're gonna continue to leverage in a meaningful way on buying and occupancy, which is what we've seen these last couple quarters, where as tariffs have come on in a big way, we've been able to still grow that gross margin rate.

Speaker #3: And then we continue to monitor tariffs. I mean, as we said, we're planning as with the tariffs that we're in place prior to the recent developments.

Speaker #3: Talked about the color of how that's going to weigh on the front half versus the back half. But the other piece I'd touch on with margins is just as we grow, we've got that low leverage point.

Speaker #3: So as we get as we grow north of that 1 to 2 percent, we're going to continue to leverage in a meaningful way on buying and occupancy which is what we've seen these last couple of quarters.

Speaker #3: Whereas tariffs have come on in a big way, we've been able to still grow that gross margin rate.

Brooke Roach: Great. Thanks so much. I'll pass it on.

Speaker #1: Great. Thanks so much. I'll pass it on. Thank you. Our next question comes from Marnie Shapiro with the retail tracker. Your line is open.

[Operator]: Thank you. Our next question comes from Marni Shapiro with The Retail Tracker. Your line is open.

Operator: Thank you. Our next question comes from Marni Shapiro with The Retail Tracker. Your line is open.

Marni Shapiro: Hey, guys. Congratulations, especially on Valentine's Day. I'm still shook that you had Hailey Bieber. It looked so beautiful. I do wanna focus a little bit on PINK. It feels like PINK is getting its grounding and footing around the balance of apparel versus intimates versus beauty and accessories. I'm curious if you could kind of outline what it should look like long term with the hits of fashion from your collaborations, like the denim that you popped in there, and where does active and beauty kind of fit into the PINK assortment now?

Speaker #6: Hey, guys. Congratulations. And especially on Valentine's Day, I'm still shook that you had Hailey Bieber. It looked so beautiful. I do want to focus a little bit on pink.

Speaker #6: It feels like PINK is getting its grounding and footing around the balance of apparel versus intimates versus beauty and accessories. I'm curious if you could kind of outline what it should look like long-term with the hits of fashion from your collaborations, like the denim that you pop in there.

Speaker #6: And where does Active and Beauty kind of fit into the Pink assortment now?

Hillary Super: Sure. You're right. I think we are hitting our stride, we are putting the puzzle pieces together here. Ally said to me last week, she said, you know, it's really feeling great that the business is about 30% intimates, 30% core icons, and then 30% collaborations and fun that is unexpected. I thought that was a good comment and something that, you know, we're really thinking about and refining. Lots of runway here, lots of experimentation. The key is, you know, when something clicks, is how fast we can run with it to the next idea. I think the team has done a tremendous job at that.

Speaker #4: Sure. You're right. I think we are hitting our stride and we are putting the puzzle pieces together here. And Ali said to me last week, she said, "You know, it's really feeling great that the business is about 30% intimates, 30% core icons, and then 30% collaborations and fun." That is unexpected.

Speaker #4: And so I thought that was a good comment and something that we're really thinking about and refining. So lots of runway here. Lots of experimentation.

Speaker #4: And then the key is, when something clicks, it's how fast we can run with it to the next idea. And I think the team has done a tremendous job at that.

Hillary Super: In terms of accessories and beauty, I, you know, I think I'm an accessories merchant from way back, so I have a lot of passion about that category, and I think there is upside and opportunity there. I think, I think we need to spend some time really brainstorming that. We are not quite there yet. That will be future upside. With beauty, we are actively working on that. I expect that to be an early 2027 evolution as the team gets in place and starts working on longer term ideas for PINK beauty. You know, we know that that customer is deeply engaged with beauty, and we certainly think we have an opportunity there.

Speaker #4: And then, in terms of accessories and beauty, I think I'm an accessories merchant from way back, so I have a lot of passion about that category.

Speaker #4: And I think there is upside and opportunity there. I think we need to spend some time really brainstorming that. We are not quite there yet.

Speaker #4: So that will be future upside. And then with beauty, we're actively working on that. So I expect that I expect that to be an early 2027 evolution as the team gets in place and starts working on longer-term ideas for pink beauty.

Speaker #4: But we know that that customer is deeply engaged with beauty. And we certainly think we have an opportunity there.

Marni Shapiro: Does active fall into core icons?

Hillary Super: Oh. Sorry.

Marni Shapiro: if you could.

Speaker #6: And so does active fall into core icons? And then, if you could just—it's okay. And if you could also touch on VSX, which I feel like also seems to have more consistency and a real home in the stores over the last four to six months.

Marni Shapiro: if you could.

Hillary Super: It's.

Marni Shapiro: It's okay. If you could also touch on VSX, which I feel like also seems to have more consistency and like a real home in the stores over the last, you know, four to six months.

Hillary Super: Yes. Okay. active within PINK it's actually in apparel. That being said, I think that the trend is moving away from like sort of a head-to-toe leggings bra look, and so we are evolving with that into more of a lifestyle look. It won't be as pure of an active category as it has been in the past. It'll be a bit more mixed. As it relates to VSX, you know, we continue to have great success in our authority with sports bras and really thinking of those as an extension of our bra authority initiatives. I think we have an opportunity to sharpen that assortment, focus it in, and in many cases, I think it is more of a digital opportunity than a stores opportunity.

Speaker #4: Yes. Okay. So active within pink is it's actually in apparel. That being said, I think that the trend is moving away from sort of a head-to-toe leggings bra look and so we are evolving with that into more of a lifestyle look.

Speaker #4: So, it won't be as pure of an active category as it has been in the past. It'll be a bit more mixed. As it relates to VSX, we continue to have great success in our authority with sports bras, and really thinking of those as an extension of our bra authority initiatives.

Speaker #4: I think we have an opportunity to sharpen that assortment, focus it in, and in many cases, I think it is more of a digital opportunity than a store's opportunity.

Hillary Super: We are right-sizing that square footage in stores as we move towards the back half of this year. We have a little fine-tuning to do there. As we see the enormous opportunities in the four pillars, we're really focusing our effort on that. We have some of these other secondary opportunities, which we will start more aggressively pursuing in the out years.

Speaker #4: And so we are right-sizing that square footage in stores as we move towards the back half of this year. But we have a little fine-tuning to do there.

Speaker #4: And so as we see the enormous, enormous opportunities in the four-pillars, we're really focusing our effort on that. And then we have some of these other secondary opportunities which we will start more aggressively pursuing.

Marni Shapiro: Fantastic. Thank you, guys.

Speaker #4: In the out years.

Speaker #6: Fantastic. Thank you, guys.

[Operator]: Thank you. Our next question comes from Ike Boruchow with Wells Fargo. Your line is open.

Operator: Thank you. Our next question comes from Ike Boruchow with Wells Fargo. Your line is open.

Speaker #1: Thank you. Our next question comes from Aik Borcha with Wells Fargo. Your line is open.

Ike Boruchow: Hey, everyone. Let me add my congrats. Just wanted to ask about two things, I think, for Scott, maybe for Hillary. Firstly, on the momentum quarter to date, I'm sorry if I missed this. Did you reference what the US business is comping thus far? Is there any shifts that are impacting the business in Q1, Chinese New Year, anything that we should be thinking about? Then a follow-up, Scott, just on the margins. I think you had guided some slight leverage in Q4, and we saw some slight deleverage even though the revenue was significantly better. Can you kind of walk us through what exactly happened on the cost line and why there wasn't some better flow through there?

Speaker #5: Hey, everyone. Let me add my congrats. Just wanted to ask about two things I think for Scott, maybe for Hillary. Firstly, on the momentum quarter to date, I'm sorry if I missed this.

Speaker #5: Did you reference what the US business is comping thus far? Is there any shifts that are impacting the business in the first quarter, Chinese New Year, anything that we should be thinking about?

Speaker #5: And then a follow-up, Scott, just on the margins, I think you had guided some slight leverage in the fourth quarter. And we saw some slight deleverage even though the revenue was significantly better.

Speaker #5: Can you kind of walk us through what exactly happened on the cost line and why there wasn't some better flow-through there? Just kind of curious if that was incentive comp or something else, some pull-forward of investment.

Ike Boruchow: Just kinda curious if that was incentive comp or something else, some pull forward of investment. Thank you.

Scott Sekella: Yeah. Quarter to date, no real shifts like in or out of the quarter. Quarter to date, we've got the momentum coming off of, you know, Valentine's Day, super strong set that dropped in January. That momentum, as I said, carried into the Valentine's Day period. Valentine's Day week, the traffic was just phenomenal. You know, February is the lowest comp month, particularly of the year, but also the quarter. I think as things started to turn in that March, April timeframe. For the quarter, we expect March and April to kinda be below what we're seeing in February, but still result in that 10% to 13% guide.

Speaker #5: Thank you.

Speaker #3: Yeah. So quarter to date, no real shifts in or out of the quarter. So quarter to date, we've got the momentum coming off of Valentine's Day, super strong.

Speaker #3: The set that dropped in January—that momentum, as I said, carried into the Valentine's Day period. And Valentine's Day week, the traffic was just phenomenal.

Speaker #3: So February is the lowest comp month, particularly of the year, but also the quarter. And I think as things started to turn in that March, April timeframe, so for the quarter, we expect March and April to kind of be below what we're seeing in February, but still resolved in that 10 to 13 percent guide.

Scott Sekella: There's a little bit of shift between April and March, but that's all in Q1 as Easter shifts from April to March this year, so it doesn't impact in or out of the quarter. In terms of the margin, gross margin grew. The adjusted gross margin rate grew year-over-year. Obviously, we had the tariff headwinds, we leveraged on buying and occupancy, we had more favorable promos and pricing than we initially thought because as the quarter progressed, even though it's a promotional period, we found opportunities to continue to pull back. From an SG&A perspective, we did invest a little bit more in marketing to drive some of those outside pay sales, we had higher incentive comp given the outperformance.

Speaker #3: There's a little bit of shift between April and March, but that's all in Q1 as Easter shifts from April to March this year. So it doesn't impact in or out of the quarter.

Speaker #3: In terms of the margin, so gross margin grew, the adjusted gross margin rate grew year over year. Obviously, we had the tariff headwinds, but then we leveraged on buying and occupancy. And then we had more favorable promos and pricing than we initially thought, because as the quarter progressed—even though it's a promotional period—we found opportunities to continue to pull back.

Speaker #3: From an SG&A perspective, we did invest a little bit more in marketing. To drive some of those outside pay sales. But then we had higher incentive comp given the outperformance.

Scott Sekella: that was sort of the cost drag, if you will, from an SG&A perspective.

Speaker #3: So that was sort of the cost drag, if you will, from an SG&A perspective.

Ike Boruchow: Got it. Thanks, guys.

[Operator]: Thank you. Our next question comes from Dana Telsey with Telsey Advisory Group. Your line is open.

Operator: Thank you. Our next question comes from Dana Telsey with Telsey Advisory Group. Your line is open.

Speaker #5: Got it. Thanks, Scott.

Speaker #1: Thank you. Our next question comes from Dana Telsey with Telsey Adversary Group. Your line is open.

Dana Telsey: Hi. Congratulations, everyone. Hillary Super, you mentioned a pop-up for PINK in Soho happening sometime. What are the markers that you need to see that would make PINK a standalone concept for you? Given the success of the fashion show in 2025, what learnings or hindsights that you're thinking about for 2066 that could make it even more impactful? Thank you.

Speaker #7: Hi. Congratulations, everyone. Hillary, you mentioned a pop-up for pink in SoHo happening sometime. What are the markers that you need to see that would make pink a standalone concept for you?

Speaker #7: And then given the success of the fashion show in 2025, what learnings or hindsight that you're thinking about for '26 that could make it even more impactful?

Hillary Super: Hi, Dana. Thanks. Okay, PINK standalone. We're doing a long-term pop-up in Soho in the bull's eye of the traffic pattern in that area, so we're very excited about that. You know, it's gonna be a little bit of a laboratory for us as we start to build out some of these additional categories that Marni was asking about. You know, we're gonna be looking at the KPIs of, you know, traffic, conversion, store productivity, all of those things. Also it is a brand building and marketing moment and a customer connection moment. What's very interesting about this modern 20-year-old is that, you know, she is living and sort of beginning her connection with a brand in a digital world.

Speaker #7: Thank you.

Speaker #4: Hi, Dana. Thanks. Okay. Pink standalone. We're doing a long-term pop-up in SoHo in the bull's eye of the traffic pattern in that area. So we're very excited about that.

Speaker #4: It's going to be a little bit of a laboratory for us as we start to build out some of these additional categories that Marnie was asking about.

Speaker #4: We're going to be looking at the KPIs of traffic, conversion, store productivity, all of those things. But also it is a brand building and marketing moment.

Speaker #4: And a customer connection moment. And what's very interesting about this modern 20-year-old is that she is living and sort of beginning her connection with a brand in a digital world.

Hillary Super: Everything is happening off of her phone. She is seeking out in real-life experiences. You know, they refer to her as a lonely generation. She is looking for that third space. We are seeing a higher penetration of store sales for the PINK brand. We are looking to create that special space and learn about that. Do I think that we would have a very significant PINK standalone strategy that comes out of it? Probably not. We like the side-by-side format, but I do think that there will be specific locations, whether they're college towns, et cetera, where, you know, there are particularly high levels of young customers where we may wanna experiment with this.

Speaker #4: Everything is happening off of her phone, but then she is seeking out in real-life experiences. They refer to her as the lonely generation. She is looking for that third space.

Speaker #4: And we are seeing a higher penetration of store sales for the PINK brand. So we are looking to create that special space and learn about that.

Speaker #4: Do I think that we would have a very significant pink standalone strategy that comes out of it? Probably not. We like the side-by-side format, but I do think that there will be specific locations, whether they're college towns etc., where there are particularly high levels of young customers where we may want to experiment with this.

Hillary Super: It's a first step towards that, I think we're gonna learn a lot, I think we're gonna have a lot of fun in the meantime. Was there a second question?

Speaker #4: And so, it's a first step towards that. And I think we're going to learn a lot, and I think we're going to have a lot of fun in the meantime.

Scott Sekella: Fashion Show earnings.

Hillary Super: Oh, Fashion Show earnings. We learned a lot with the Fashion Show. Overall, we were very, very pleased and saw much higher returns on our investment than we did a year prior. Part of that came from the very specific planning of the pre, during and post, sort of media activation strategy. We learned that we could do more. I think we learned that the global approach to talent was an extremely important piece of its success globally. We learned that having a distinctly PINK section was particularly disruptive in a positive way for the PINK business. I think we really have an appetite to pull, you know, to move beyond a singular event a year. It's really an unlock to thinking about how we might be in conversation with our customer in a more evergreen way.

Speaker #4: Was our second question? Oh, fashion show learning. We learned a lot with the fashion show. Overall, we were very, very pleased, and saw much higher returns on our investment than we did a year prior.

Speaker #4: Part of that came from the very specific planning of the pre-, during-, and post- sort of media activation strategy. We learned that we could do more.

Speaker #4: I think we learned that the global approach to talent was an extremely important piece of its success globally. We learned that having a distinctly PINK section was particularly disruptive in a positive way for the PINK business.

Speaker #4: And I think we really have an appetite to pull, to move beyond a singular event a year. And it's really an unlock to thinking about how we might be in conversation with our customer in a more evergreen way.

Hillary Super: Those are all things that we're thinking about as we enter 2026 and beyond.

Speaker #4: And so those are all things that we're thinking about as we enter '26 and beyond.

Mauricio Serna: Thank you.

Operator: Thank you. We have time for one more question. Our last question comes from Adrienne Yih with Barclays. Your line is open.

Speaker #7: Thank you.

Speaker #1: Thank you. We have time for one more question. Our last question comes from Adrian Yee with Barclays. Your line is open.

Adrienne Yih: Great. Thank you so much, and great to see the progress Hillary's got and the whole team. I guess I'll start with, it seems like, you know, we've both been on this journey of kind of elevating the business and getting back to your historical strength, and this seems like really kind of an acceleration in that journey. When you're, when you kind of are getting feedback from customers and the new customers, are they recognizing now how highly complex bras are to make, well-fitted bras? Are they understanding the quality and the investments that you're making there? It was really nice to see the bras returning, the bra segment returning to growth. I think if you can talk about kind of the cadence of launches and the feedback that you're getting in that particular category.

Speaker #8: Great. Thank you so much. And great to see the progress, Hillary Scott, and the whole team. I guess I'll start with it seems like we've been on this journey of kind of elevating the business and getting back to your historical strength.

Speaker #8: And this seems like really kind of an acceleration in that journey. When you kind of are getting feedback from customers and the new customers, are they recognizing now how highly complex bras are to make, well-fitted bras?

Speaker #8: Are they understanding the quality and the investments that you're making there? It was really nice to see the bras returning—the bra segment returning—to growth.

Speaker #8: I think if you can talk about kind of the cadence of launches and the feedback that you're getting in that particular category. And then secondarily, I have to ask this: Middle East, I know you do franchises there.

Adrienne Yih: Secondarily, have to ask this, Middle East. I know you do franchises there. We're calculating maybe 2% of exposure there, if you can talk about any disruption there. Thank you.

Speaker #8: We're calculating maybe 2% of exposure there, if you can talk about any disruption there. Thank you.

Hillary Super: Sure. I'll start and then I'll pass to Scott on the Middle East question. With bras, I think that we are in the very early stages of re-educating and re-engaging with our customer on our authority and expertise in bras. The amount of time, energy, resources we expend to fit and perfect bras. The culture that we have in stores around bra fitting and that, you know, it's a very personal, very emotional experience and one that I think our teams do very, very well and build long-term connections around. Thirdly, I would say middle funnel marketing, with influencers, testimonials about bras, their love for bras has also been really impactful and I think something that's been missing. We haven't had that authoritative voice for years.

Speaker #3: Sure. I'll start and then I'll pass to Scott on the Middle East question. So with bras, I think that we are in the very early stages of re-educating and re-engaging with our customer on our authority and expertise in bras.

Speaker #3: The amount of time, energy, resources we expend to fit and perfect bras. The culture that we have in stores around bra fitting and that it's a very personal, very emotional

Speaker #1: Experience , and one that I think our do very , very well and build long term connections around . And so and then thirdly , I would say mid middle funnel marketing with influencers , testimonials about bras , their love for bras has also been really impactful .

Speaker #1: And I think something that's been missing . So we haven't had that authoritative voice for years . And I think bringing that voice back while being able to strike a code , a sorry strike , a balance of emotion with with authority , has been the real key because it is an emotional purchase .

Hillary Super: I think bringing that voice back while being able to strike a balance of emotion with authority has been the real key because it is an emotional purchase. It's a technical fit purchase, but also an emotional purchase, and I think we're doing a very good job threading that line. In terms of cadence of launches, we have a robust cadence of launches, events, and milestones this year in both brands. Something that we're investing more resources and energy around. Really, we've learned that we must be always on in bras in some way, shape, or form. That is our intention this year and we're excited with what's to come.

Speaker #1: It's it's a technical purchase , but also an emotional , emotional purchase . And I think we're doing a very good job threading .

Speaker #1: Threading that line in terms of cadence of launches. We have a robust cadence of launches, events, and milestones this year in both brands, and it's something that we are investing more resources and energy around.

Speaker #1: And really , we've learned that we must be always on in bras in some way , shape or form . And so that is our intention this year .

Scott Sekella: Adrienne, in terms of Middle East, we're obviously staying very close to the situation and monitoring the developments and how long this may last. There's two areas right now that we're paying close attention to. One is just shipments to North America. We are experiencing some delays, but not material that are gonna have a broader impact on the business that way. As you said, we've got franchise partners in the Middle East. There are a handful of store closures right now. This is where our business model helps mitigate some risk because even though there's store closures, the impact to us is the royalty rate as that product sells to the end consumer. The impact is a bit less than if it were our own stores.

Speaker #1: And we're excited with what's to come .

Speaker #2: Adrian , in terms of Middle East , we're obviously staying very close to the situation and monitoring the developments and how long this may last .

Speaker #2: But there's two areas right now that we're we're paying close attention to . One is just shipments to North America . We are experiencing some delays , but not material that are going to have a broader impact on the business .

Speaker #2: That way . And then , as you said , we've . Got franchise partners in the Middle East . There are a handful of store closures right now .

Speaker #2: This is where our business model helps mitigate some risk , because even though there's store closures , the impact to us is the royalty rate is that product sells to the end consumer .

Speaker #2: So the impact is a is a bit less than if it were our own stores .

Adrienne Yih: Is it fair to assume it's no sourcing there? No sourcing exposure?

Speaker #3: And is it fair to assume it's no sourcing there , no sourcing exposure .

Scott Sekella: No real sourcing exposure, no.

Adrienne Yih: Okay. Thank you very much. Best of luck. Great results.

Speaker #2: No real sourcing exposure, no.

Hillary Super: Thank you.

Scott Sekella: Thanks, Adrienne.

Speaker #3: Okay. Thank you very much. Best of luck. Great results.

Operator: Thank you all for participating in the Victoria's Secret & Co.'s Q4 and fiscal 2025 earnings conference call. That concludes today's conference. Please disconnect at this time and enjoy the rest of your day.

Speaker #2: Thank you . Thanks , Adrian .

Speaker #4: Thank you all for participating in the Victoria's Secret & Co company's fourth quarter and fiscal 2025 earnings conference call . That concludes today's conference .

Q4 2025 Victoria's Secret & Co Earnings Call

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