Bath & Body Works, Inc.

Good morning. My name is Madison, and I will be your conference operator today. At this time, I would like to welcome everyone to the Bath and Body Works first quarter 2022 earnings conference call. Please be advised that today's conference is being recorded. During the question and answer portion, you may ask a question from the phone by pressing star 1. I would now like to turn the call over to Ms. Wendy Arlen, Chief Financial Officer at Bath and Body Works. Wendy, you may begin.

Thank you. Good morning and welcome to Bath and Body Works first quarter earnings conference call for the period ended April 30th, 2022. 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, our executive chair of the board and interim CEO, Sarah Nash, and brand president, Julie Rosen. All results we discuss in the call today are adjusted results and exclude the significant items as described in our press release. All results we discuss today represent the continuing operations of the Bath and Body Works business as the spun-off Victoria's Secret business has been classified as discontinued operations. I'll now turn the call over to Sarah.

Thanks, Wendy, and thank you, everyone, for joining the call today. I am delighted to be here speaking with all of you and serving as the company's interim CEO. Bath & Body Works is an incredible company with a customer-first focus along with strong product innovation and development capabilities that includes a mostly North American and highly agile supply chain. Our business is very strong. Our execution is excellent. and our strategy of delivering affordable luxuries to our customers is more relevant than ever. We have built on the past two years of extraordinary growth with strong momentum as we entered fiscal 2022. We are pleased to have delivered better than expected sales and earnings results in the quarter. Looking ahead in 2022, we are continuing to plan prudently and use our agility to chase winners. We are accelerating investments in the business to drive our long-term growth, while at the same time, our team continues to successfully navigate the inflationary environment. Long-term, we continue to see exceptional opportunities to capitalize on Bath & Body Works' existing strengths and extend the brand's global potential. Since taking on the role of executive chair and earlier this month stepping into the interim CEO role, I have been spending time gaining even deeper knowledge of our team and our capabilities. This is a strong organization. and one that operates with tremendous speed, making us nimble and allowing us to deliver products relevant for our customer. We look forward to speaking with you today about initiatives we have underway or are accelerating, all designed to ensure we continue to advance our customer-centric culture, increase our data analytics across the business, and with our 60 million customers and leverage our store and digital capabilities to transform Bath & Body Works to be a true omnichannel business. Our opportunities are great, and we aim to capitalize on them. Our vertically integrated and approximately 85% North America-based supply chain has been a key differentiator for us. It has enabled Bath and Body Works to successfully navigate a dynamic environment and present full and abundant product assortments to our customers with speed and agility. It gives us the flexibility to chase into the upside as well as manage any downside. And you'll hear from Julie Rosen, our brand president, about an example of a successful chase to the upside with our butterfly launch from the first quarter. On a broader level, our ability to leverage our relationships with the world's preeminent fragrance houses, our manufacturing partners, and our raw materials suppliers, along with our world-class logistics, enables us to achieve best-in-class innovation and manufacturing. And this allows us to deliver to our customers what they want, fashion, trends, and newness in fragrance, forms, and packaging that bring them to delight at an accessible price. We remain highly focused on innovation, and our product pipeline is full. We have an ability to develop and launch products within 12 to 14 months. which is also best in class for an innovator in the scented personal care sector. With our pipeline, we are launching new fragrances and products every four to six weeks and expect to maintain this pace going forward. Importantly, we are also focused on new business opportunities in the acceleration of new product lines for personal care and home, leveraging our stores and digital presence to test and launch these new lines. In addition to hair and face, men's is a big priority. This business delivered close to 400 million in net sales in 2021, and we expect can more than double its size over time. We continue to lead the market in many of our categories with multiple number one product forms. the beauty, personal care, and home fragrance markets continue to be strong and growing. Our growth strategies will continue to leverage and expand on our fragrance-first leadership, and we also plan to explore expansion into other related categories, as well as dive deeper into looking into new geographic markets. In short, and as I said at the start, Bath and Body Works has exceptional opportunities to leverage our existing strengths and extend the brand's global potential. Before I turn the call over to Wendy and Julie to speak about our first quarter performance, I'd also like to take this opportunity to touch briefly on our approach to environmental, social, and governance matters. all of which are also core to the company and how we operate. We have always been deeply committed to delivering high-quality products. The company has had a long-standing commitment not to test on animals and this continues. In addition, we have always included ingredients that are important to our customers. Building on that strong foundation, we are now reformulating several products to exclude ingredients such as parabens, sulfates, and dyes. This will be an ongoing focus for us and customers will see more and more mention of these changes on product labels and in our marketing as we continue to evolve. We completed a restage in aromatherapy at the end of February with a new packaging and formulation made without parabens, sulfates, or artificial dyes, without compromising our fragrance authority. The packaging is now in Better for the Earth or PCR materials. We have also begun the process of reformulating fragrant body care. Select fragrances and forms launched with new formulation in the first quarter and we will continue to expand in the second quarter. By the end of 2022, we expect 35% of our assortment to be reformulated in this effort. Beyond the products themselves, we are also continuing to migrate to PCR packaging for soaps, sanitizers, body care, and aromatherapy with the target to expand to 45% of our assortment by year end. As we migrate to PCR packaging, our bottles will be made with 50% Better for Earth materials with the goal to eventually get to 100%. We will also continue to focus on diversity and inclusion. Our DE&I efforts are broad and start at the top. Earlier this year, the Board of Directors amended the charter of the Nominating and Governance Committee to include a commitment to have at least 50% of the board be diverse and to provide that the initial pool of candidates for any board vacancy will consist of at least one woman and one person of color. With the recent appointment of two new board members, Four of our directors are women. Four of our directors are people of color. And one of our directors is a member of the LGBTQIA plus community. We're applying the same commitment and action to our hiring throughout the organization. And we are making sure that associates, particularly our diverse associates, feel welcome heard, and invested in. We now have eight inclusion resource groups that cultivate an inclusive environment, provide professional development, shape the culture of our company, and actively encourage community volunteerism. I want to thank our associates who work so hard to create the best possible experience for our customers. I have been consistently impressed by the terrific talent we have within the company. We have a fantastic balance of long tenured associates as well as new associates that bring fresh perspective to the business. It is thanks to our dedicated and committed team that following on the last two years of extraordinary growth, the company started the year continuing our momentum and achieving better than expected sales and earnings results. Wendy?