Bath & Body Works, Inc.

Good morning. My name is Cedric, and I will be your conference operator today. At this time, I would like to welcome everyone to the Bath & Body Works second quarter 2021 earnings conference call. Please be advised that today's conference is being recorded. All parties will remain in a listen-only mode until the question and answer portion of today's conference. To ask a question from the phone, please press star then 1. I would now like to turn today's call over to Ms. Wendy Arlen, Chief Financial Officer at Bath & Body Works. Wendy, you may begin.

Thank you. Good morning and welcome to Bath and Body Works second quarter earnings conference call for the period ending July 31st, 2021. I'm excited to be with you today on my first earnings call as the Bath and Body Works CFO. As a matter of formality, I need to remind you that any forward-looking statements we may make today are subject to our safe harbor statement found in our SEC filings and in our press releases. Joining me on the call today are CEO Andrew Meslow and SVP of Investor Relations, Amy Preston. All results we discuss on the call today are adjusted results and exclude the 2020 special items described in our press release. Our second quarter results include the Victoria's Secret business. Consistent with our previously disclosed intention to reduce debt by up to $500 million, This morning, we announced a tender offer to purchase $500 million of our 2023, 2025, and 2027 outstanding notes, which commences today. Thank you, and now I'll turn the call over to Andrew.

Thanks, Wendy, and good morning, everyone. Welcome to our first earnings call as a standalone public company. We are thrilled to have reached this milestone and to launch Bath & Body Works as a standalone company. Innovation remains at the foundation of Bath & Body Works, and with our leadership positions across key product categories, strong performance across channels, and a highly loyal and growing customer base, we are poised to continue our track record of industry-leading growth and profitability. On behalf of the management team and the board, I'd like to extend our sincere appreciation to all the associates who have worked so hard on the successful spinoff of Victoria's Secret. I am grateful to all of our associates for their contributions to the success of our business as we look forward to capturing the opportunities ahead and we wish the Victoria's Secret business and associates well as they embark on their journey as a standalone public company. Turning to our second quarter performance, we delivered record results and we could not have done so without the continued hard work and commitment of all of our associates and partners. We'd like to express our deep appreciation for their dedication and efforts. We reported record second quarter earnings of $1.34 per share compared to adjusted earnings of $0.25 per share last year. These bottom line results were driven by continued strong sales and better than expected margin rates at both Bath & Body Works and Victoria's Secret. At Bath & Body Works, we continue to deliver record results. with sales growth of 54% compared to 2019. All categories achieved solid growth, and strong sales demand continued to allow us to pull back on promotional activity versus 2019. The Bath and Body Works segment operating income in the second quarter was $431 million, an increase of 135%, or $247 million, compared to 2019, and an increase of 24%, or $82 million compared to last year. Our operating income rate for the quarter of 25.3 increased 870 basis points compared to 2019, driven by merchandise margin rate expansion and leverage in both buying and occupancy and SG&A on the high sales growth. We expect that the remainder of 2021 will not be easy as the world, the retail environment, and our business continue to evolve and as we lap extraordinary 2020 results. We are optimistic about our fall and holiday product assortment and our continued ability to execute against our plans in stores and online. Risks related to COVID do persist, and we will continue to operate both of our channels in a safe manner for our customers and our associates. With continued smart and disciplined management of the business, I know we can proactively accelerate to our next phase of growth. Thank you very much, and I'll turn it over to Amy Preston.