Bath & Body Works, Inc.

Good morning. My name is Melissa and I will be your conference operator today. At this time, I'd like to welcome everyone to the Bath and Body Works second quarter 2025 earnings conference call. Please be advised that today's conference is being recorded. During the question and answer portion, you may ask a question from the phone by pressing star 1. I'll now turn the call over to Luke Long, Vice President of Investor Relations. Luke, you may begin.

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

Hello, everyone, and thank you for joining us. I'm excited to be here on my 105th day as CEO of Bath & Body Works. Q2 was a packed quarter where I focused on three things. Firstly, deeply immersing myself in the business. Secondly, driving forward three no-regret moves. And finally, shaping our long-term vision. At the same time, our team navigated the quarter with focus, and we delivered solid results. We ended the quarter with revenue and adjusted earnings at the high end of our guidance range. And given our strong first-half results and confidence in our outlook, we are raising the low end of our full-year adjusted earnings per share guidance. This quarter, our customers remained cautious and value-seeking, and we continue to see more intentional purchasing behavior. Consumers are prioritizing purchases that support personal well-being and convenience while spending selectively. Regardless of the macro environment, we are well positioned to serve consumers with affordable, high-quality products that bring joy to their lives. And I believe there is even more opportunity ahead. Over the past 105 days, I've focused on understanding where our biggest opportunities lie to accelerate growth. I've had the privilege of connecting with associates at Beauty Park, our distribution centers, and our stores across the United States. I've spoken with many of our shareholders. I've traveled internationally where I've engaged with our partners in key markets such as Dubai, Malaysia, and the UK. And of course, I've spoken with our customers. It was important for me to collect direct insights from our most critical stakeholders, and I will continue doing this going forward. What stands out most from my time on the ground is the tremendous upside potential across the entire value chain. From product innovation and merchandising to alternative distribution and storytelling across both our physical stores and digital platforms. When I joined, I spoke to many of you about my philosophy. We will accelerate growth by putting the consumer at the center of everything we do. That commitment remains unchanged, but we must continue to evolve with our consumers, positioning ourselves as a global leader in home fragrance and personal care. To be clear, Bath & Body Works has a very strong foundation, an iconic brand, over 1,900 North American stores, more than 530 international stores, 39 million active loyalty members, knowledgeable and passionate store associates, and a predominantly US-based vertically integrated supply chain. In recent years, we've invested heavily to strengthen this foundation, from building a loyalty program and enhancing our technology to expanding into new categories. These moves have made us stronger, but we have not yet delivered the consistent, durable, and profitable growth we expect of ourselves. The reality is clear to me. We have grown spend and increased retention with existing customers. We have not achieved the new customer growth we aspire to, and we are not connecting deeply enough with the younger consumers who are driving growth in our industry. There is also an opportunity to drive market share growth in our core categories and reduce our reliance on promotions. We are confident in the steps we must take to unlock growth potential. To meet the opportunity, we are taking swift action in the short term while actively shaping our long-term strategy. This is about performing and transforming simultaneously. it's about making strategic moves that resonate both with current and future customers. I'm confident we can achieve this while not only maintaining, but expanding our operating margins. Looking at Q2, we made progress with improvements to our semi-annual sale, and we launched successful collections like Summerween, where we highlighted Halloween-themed products during the late summer period. And as we build, a durable, consistent, long-term growth model, we were pleased to announce that we have entered into a multi-year partnership with Disney. This builds on the successful momentum of Disney Princesses and our recently announced Disney Villains collaboration, which Eva will share more about. From a process perspective, I'm pushing our marketing, digital, and merchandising teams to work in a more integrated and omnichannel way to deepen brand connection by telling powerful and emotional stories, delivering innovative products, and engaging consumers across all touchpoints. And this is just the beginning. Early in my tenure, I laid out three no-regret moves to act on now while we shape our vision and strategy for the future. Firstly, elevating our own digital platforms. The consumer experience and revenue growth of our digital business are not where they need to be, and we're making rapid progress to address these now. Our focus is on elevating our digital platform to meet the expectations of today's consumers, delivering more experiential, frictionless, and convenient way to shop. Improving our digital platform is expected to drive stronger results both online and in stores. Starting this September, you will see meaningful improvements across our digital platforms, including enhanced functionality, better product imagery, and copy, and richer and more emotional storytelling. You can see examples of these improvements on our slide presentation. Over time, we believe these digital improvements will boost brand equity and direct channel sales. We are amplifying our efficacy message by more clearly communicating claims and modernizing packaging to better reflect the key product attributes, such as efficacy, safety, and emotional benefits. These will help us connect more meaningfully with consumers and reinforce the value of our products. Our formulas are of exceptional quality, but our packaging doesn't emphasize it. we will evolve our packaging to more consistently educate the consumer and build awareness of the numerous benefits of our products, especially to younger and ingredient-conscious consumers. For example, starting this fall, we are answering in-store and online messages of our aromatherapy line to focus on stress relief and sleep. Also, our body lotion and body cream packaging will highlight 48-hour hydration, And over time, we'll be updating our labeling to more prominently signal that our products are dermatologist tested. We're also introducing consistent elevated messaging across all of our stores to reinforce trust in every product we offer. Thirdly, we are focused on putting our product in the path of the consumer. Because to attract new consumers, we must meet them where they are. That means strategically and thoughtfully exploring new forms of distribution beyond the own channels we currently sell through. Our recent entry into college bookstores is a fantastic example and one we are excited about. As back-to-school season kicks off, we're in more than 600 campus stores with access to 7 million young consumers. This push into alternative distribution is the first time We have distributed products at this scale outside of our stores, and we believe it provides an exciting avenue to reach and engage new, younger consumers and is the perfect environment to drive brand discovery. These no-regret initiatives will place us in the path of even more consumers, and they will accelerate our growth over time. However, the opportunity ahead extends well beyond these three moves with potential upside to how we innovate and execute and how we reach and connect with consumers. For example, we see opportunities in how we manage and merchandise our assortment, how we leverage our store footprint to further enhance brand storytelling, how we maximize the potential of our supply chain and beauty park, and how we drive growth across international markets. Looking at our store experience and our assortment, many consumers tell us that when they walk into our stores, the assortment feels overwhelming. We also tend to lead with discounts and promotions instead of highlighting product benefits. We believe we have an opportunity to focus our assortment and spotlight product attributes alongside price and value as compelling purchase drivers. Our stores also provide us with an opportunity to amplify bigger, bolder marketing messages. For example, we've moved our store base to predominantly off mall locations, and we've gained tens of thousands of feet of window space. Historically underutilized, these windows are now being used to activate and tell rich brand storytelling that draw in new consumers. Turning to our supply chain. Our strategic partners at Beauty Park and our relationships with leading global fragrance houses provides us with unmatched speed and quality. We are focused on better leveraging these strengths to accelerate our innovation cycle and reinforce our position as a category leader. And finally, we have tremendous untapped opportunity to reach and connect with more consumers internationally. We are thoughtfully evaluating these and other opportunities and integrating them into our long-term strategy. Before I hand off to Eva, I want to take a moment to thank our team for the hard work, dedication, and focus on delivering for our customers and our company. Change is already underway at Bath & Body Works. We understand the challenges and our opportunities. which is exactly why we've moved quickly on our no-regret moves, and we are building a strategy to perform and transform in parallel. With razor-sharp priorities, disciplined execution, and a strong team, we are determined to return Bath & Body Works to durable revenue and profitable growth. We look forward to sharing more on our long-term vision in the coming quarters And now I'll hand it over to Eva.