Victoria's Secret & Co.

Good morning. My name is Amanda, and I will be your conference operator today. At this time, I'd like to welcome everyone to the Victoria's Secret & Company's first quarter 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 Mr. Kevin Wink, Head of Investor Relations at Victoria's Secret & Company, Kevin, you may begin.

Thank you, Amanda. Good morning, and welcome to Victoria Seeker and Company's first quarter earnings conference call for the period ended May 3, 2025. As a matter of formality, I would like to remind you that any forward-looking statements we may make today are subject to our safe harbor statements found in our SEC filings and in our press releases. Joining me on the call today is CEO Hilary Super and CFO Scott Ficala. We are available today for approximately 30 minutes to answer any questions. Certain results we discussed on the call today are adjusted results and exclude the impact of certain items described in our press release and our SEC filings. Reconciliations of these and other non-GAAP measures to the most comparable GAAP measures are included in our press release, our SEC filings, and the investor presentation posted on the investor section of our website. Thanks. And now I'll turn the call over to Hillary.

Good morning. I appreciate you all being here. We're pleased to kick off the summer on a strong note with solid first quarter results that reflect continued progress against our strategic priorities. Our teams delivered a quarter marked by disciplined execution, a continued focus on innovation, and a deep commitment to serving our customers across all channels, which drove top and bottom line results, exceeding our guidance and broad-based strengths across both our brands. We're excited by the momentum we're building in a challenging market environment and encouraged by what lies ahead. We have lots to share today, including Q1 performance, key strategic hires, and our balance of the year expectations. But first, I want to provide an update on a recent security incident. When we identified the incident on May 24th, we immediately initiated our pre-established response protocol and third-party experts were engaged alongside our own security team. As a precaution, we took some internal systems and our e-commerce site offline. Throughout, we continue to serve customers in our Victoria's Secret and Pink stores. Our site went back online Thursday, May 29th, and all of our critical systems are fully operational. We're now well into the recovery phase, which includes finalizing our investigation. While I won't share further details while that work is ongoing, I do want to take a moment to recognize the extraordinary efforts of our associates. Their quick, decisive action, collaboration, and resilience in the face of disruption was nothing short of inspiring. I've told you before how proud I am to be leading this business and working with this incredible team. I also want to thank our customers and partners for their understanding and support. Now let's discuss Q1. I'm pleased to share we built momentum month over month and ended the quarter strong. While we are still in the early stages of our past potential strategy, In Q1, we made progress across the four initiatives I outlined on our last earnings call. As a reminder, these are recommit to pink, supercharge bras, fuel growth in lifestyle categories, and modernize our brand projection and go-to-market strategy. This progress was reflected in both net sales and operating income exceeding guidance. Net sales for the quarter were flat and total comparable sales were down 1% compared to last year. As we shared on our Q4 call in March, the February macroeconomic environment presented headwinds as consumer sentiment softened and inflation concerns heightened. I'm pleased to share that our teams responded with agility, making impactful adjustments to assortment and marketing that, combined with softening headwinds, helped drive results that were mostly above expectations. What did we do? We increased our percentage of newness by pulling forward March and April floor sets in VF chasing into exciting fashion apparel for pink, and accelerating our new mist collection launch for beauty. We reshot portions of our creative content with an eye towards sexier and more joyful brand expressions and worked across channels to highlight it. The launch of our Lacy Panty franchise exemplified this work, and I'm happy to report that we saw outsized returns with triple-digit prompts in this franchise during its launch. We also rebalanced our marketing funnels. strategically leveraging events, activations, and PR to amplify brand love and began testing new paid search strategies that we continued to expand upon. Our quick response delivered strong results for the balance of the quarter. This reflects our disciplined approach in a dynamic environment and our continued commitment to strengthening the brand, leaning into emotional storytelling, and making agile business decisions when we see an opportunity. This is the DS&Co mindset that I am so proud of. We have shown the team's capabilities to approach each season with a growth mindset, knowing we are never penciled down and can always learn and iterate on the business. We saw broad-based strengths across both brands and made progress on our strategic priority of fueling growth in lifestyle categories led by Pink Apparel, Beauty, and VSX. Pink Apparel delivered its third consecutive quarter of positive comps and significant margin and AUR expansion, driven by improved product, high-emotion storytelling, and customer engagement. These efforts brought us closer to our goal of reestablishing the brand's magic and market position. The cross-functional team has done a great job reading and reacting not only to sales and consumer insights, but also chasing into fashion ideas they are seeing out in the world. The result has been a more balanced assortment with a wider range of categories, sensibilities, and end-uses, It is resonating with our customer and driving a higher basket size versus last year. The team has successfully continued to grow our pink icon business and introduce new categories such as skirts, dresses, and denim, which our customer is loving. I am pleased that some of these ideas were created on the faster timelines that we have discussed on previous calls. We continue to push ourselves to be more agile in our product creation process, and it is starting to pay off. Our pink break event drove significant traffic and conversion across both stores and digital, as well as increased penetration of Gen Z customers. We generated a fun, upbeat shopping environment with DJs and embroidery stations while leveraging daily deals and limited edition drops to drive repeat visits. Similarly, our pink Wednesday drops are driving a significant increase in repeat visitors each week. Our beauty business was a standout, achieving our seventh consecutive quarter of growth. Driven by Bombshell's 15th anniversary, including an engaging New York City pop-up that resonated with a loyal consumer base that has made Bombshell America's number one selling program. Customer favorites like the Mist Collection continue to drive traffic and brand love. But we're most excited about what's next. We launched Body Care in the final week of Q1 and have seen a strong response from customers. Especially encouraging is the enthusiasm for new formats like our oils and to new scent trends showing her willingness to experiment with us, a good indicator as we have an exciting launch plan for the back half of the year. VSX has delivered its fifth consecutive quarter of double-digit growth, reflecting continued progress against our strategic priority of supercharging bras and reinforcing our leadership as the bra authority. A key driver of this performance has been our relentless focus on product innovation and advanced fabric technologies, all while delivering style and fashion. Our fabrics are engineered for maximum performance and versatility, offering breathability and anti-shear technology to ensure comfort and coverage. Notably, with the inclusion of proprietary raw materials, such as Lycra's adaptive fibers and our X-React technology, dynamically adjusting to the wearer's shape and sweat levels, providing a custom fit and cooling effect throughout wear. Our products also feature innovative technologies such as patented turbo wick liners for accelerated moisture wicking and injection molded pads for added shape and comfort. Bottom line, our sports bras are amazing and our customer agrees. VSX bras were up 20% in the quarter, driven by continued standout success of the knockout front clothes, which is now our number two sports bra. Its proprietary bra-within-a-bra technology, with exclusive patented design, gives her the confidence of a perfect fit and support, seamless comfort, and the freedom to move without distraction. We are also seeing significant integration of VSX into our off-duty bra wardrobes. The Featherweight Max is a standout in everyday wear with design-patented laser-cut perforations for targeted airflow. This is exciting, as it shows that we've been listening to the customer and delivering the versatility that she craves. This focus on comfort and innovation also extends to the broader intimates category, where performance of wireless outpaces total core bras driven by both basics and fashion. Our So Obsessed Wireless Bra is a standout, driving 30% year-over-year growth boosted by expanded in-store visuals and deep resonance with the millennial customer. With our expert combination of comfort, performance, and style, we aren't surprised to see that So Obsessed had more customers purchasing two or more at one time than other bra styles. As multi-use bras increasingly gain traction, we are continuing our efforts with new comfort and movement technologies to deliver content and experiences that create emotional connections with our customers. This will be reflected in our new always-on bra creative approach, which will highlight the full range of offerings rather than singular campaigns. By doing so, we'll continue to meet customer needs across core performance and lifestyle categories, driving deeper connections and sustained growth. On-the-channel performance. In stores, we outpace mall traffic in March and April while being less promotional than last year. Our stores continue to be a strategic advantage. They are the backdrop for emotional storytelling and meaningful experiences, and we're seeing an encouraging response to our ongoing customer engagement work. In fact, we launched a pilot last year in order to further our focus on bra fitting and service. I'm happy to share that that pilot has been successful, and we are expanding that test with the goal of improving customer experience and driving higher store performance. We are also pleased with the continued outperformance of our store in the future concept, which we anticipate will represent 25% of our fleet by the end of this year. In digital, we are beginning to bring some of that excitement and energy of the stores to our online experience. We see opportunities to sell more full-price products and let our flow of newness and brand relevance drive the purchase cycle. We continue to outperform digitally within Pink, indicating we are serving our digitally native customer well. Finally, we continue to be pleased with the strength of our international business, which saw growth in nearly all categories across all channels and all regions. I recently had the privilege of spending time with our partner Next Management Team and touring several of their UK stores. I was impressed by their execution and the outstanding job they are doing running both physical and digital spaces. We continue to partner with our regional experts to share best practices and deepen our understanding of the global customer so we can continue the impressive growth we've seen internationally. To close on Q1, we exceeded expectations by reading and reacting with an urgency to win. I'm pleased with our progress and proud of the way we achieved our results. We are focused on delighting her with emotional product and content she connects with and operating with excellence. What matters is that we embrace early challenges with agility, identify the opportunity, and beat top line and bottom line expectations. Our results for the quarter reflect the strength of our strategy and the commitment of our team. We are excited to build on that momentum to accelerate progress against our past potential strategy, and I remain confident in our direction. I'd like to talk for a moment about the team we are building to deliver that strategic plan. On the last earnings call, I shared our decision to move to brand president model and hire a chief marketing officer. We've invested in world-class leaders with proven track records of results. That begins with our brand president. Ann Stevenson has been named president of Victoria's Secret, Allie Dillon president of Pink, and Amy Kucerec president of Beauty. Ann is a seasoned leader and a true expert in the intimates category with over 25 years of experience in product strategy, brand development, and merchandising. As our chief merchandising officer, she has consistently demonstrated her ability to drive innovation and deliver results. With her deep understanding of Victoria's Secret brand and an unwavering commitment to its growth, Anne has played a key role in shaping our future vision, and I'm proud to have her at the helm. Allie joins us from Alex Mill, where she served as president, overseeing strategy, product, operations, and growth. With over two decades in merchandising and brand development, including leadership roles at Gap Inc. and J.Crew, Allie's apparel expertise and knowledge of modern product development models positions her as the right person to lead Pink's next chapter of growth. Amy is a deeply strategic merchant leader with a proven track record in product innovation and business transformation. Previously Chief Merchandising Officer at Kendra Scott, Amy excels in finding white space, innovating business models, and elevating product and partnerships. These experiences make her well-suited to think differently about beauty's mature and successful business and push it further. In addition, Elizabeth Price has joined us as Chief Marketing Officer. She will lead brand marketing across the enterprise to deepen customer connections with our iconic brands. Elizabeth joins VS&Co as a respected marketing strategist with more than 25 years of experience in fashion, beauty, and lifestyle. She has celebrated for her unparalleled acumen in crafting culturally relevant customer experiences informed by data and driven by creative storytelling. Finally, Adam Selman has been appointed Senior Vice President and Executive Creative Director, reporting to Elizabeth. Adam is a multi-hyphenate creative who operates at the crossroads of commerce and culture. He has built his own labels and has had notable careers creating custom looks for celebrities like Beyonce and Katy Perry, as well as designing Rihanna's looks for the Victoria's Secret fashion show performances. Adam is the ideal expert to steward our brand into their next chapter. These brand and product leaders join our existing team of highly skilled and tenured operational leaders. With their combined expertise, I have full confidence in our ability to drive sustained growth. Looking ahead to the remainder of the year, our success will be driven by focused execution. Scott will discuss our outlook shortly, but I'm pleased to say we are maintaining our forecasted net sales range of $6.2 billion to $6.3 billion for fiscal year 2025. This reflects our belief that we're well-positioned to navigate a complex, challenging market environment. We will clarify, differentiate, and elevate our brand identities and projections by redefining pink to meet the next generation where she is and ushering in a new era of sexy for BS. Deliver product newness and innovation to meet customers' evolving preferences by delivering innovative launches, increasing our fashion relevancy, and continuing to shorten product creation timelines. Evaluate our entire marketing funnel for both optimization and brand differentiation, focusing on efficient, targeted investments to drive conversion and maximize return on marketing spend with a sharpened focus on acquisition. Use the power of our global footprint to create best-in-class experiences that resonate across all markets. We will meet customers where they are while ensuring physical and digital touch points that reinforce the high standard of quality, service, and innovation that define our brands. Finally, we will continue to engage with cultural moments, delivering entertaining, inspiring experiences that captivate both new and existing customers, reinforcing our position as the original entertainment brand. In closing, I'm confident in what 2025 and beyond holds for VS&Co. While we anticipate some continued uncertainty in the macro environment, we remain pleased with the strong performance of our core business and our strategy to drive long-term, sustainable growth. With our talented team, we are poised to execute on our strategy, delivering the high-emotion fashion and brand stories that resonate with our customers. And, most importantly, we are stepping into a new era of sexy. Thank you all for your continued support. I'll now hand it over to Scott.