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 Victoria's Secret & Co.'s second quarter 2026 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 Kevin Wynk, Global Controller at Victoria's Secret & Co. Kevin, you may begin.

Thanks, Amanda. Good morning and welcome to Victoria's Secret & Co.'s second quarter earnings conference call for the period ended August 1st, 2026. Joining me on the call today is Chief Executive Officer Hillary Super, Chief Financial and Operating Officer Scott Sekella, and Chief Marketing and Customer Officer Elizabeth Preis. We are available today for approximately 30 minutes to answer any 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 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. With that, I'll turn the call over to Hillary.

Good morning and thank you for joining us. Q2 was another strong quarter for Victoria's Secret. Net sales increased 10% year over year near the high end of our guidance and operating income and earnings per share exceeded the high end of our guidance. This marked our fifth consecutive quarter of positive comps, giving us further confidence in the progress we are making. The bigger story is what sits underneath those results. When I joined Victoria's Secret two years ago, I saw iconic brands with deep emotional connection but significant untapped potential. Today, we are attracting more customers, winning market share, and strengthening the value proposition for both brands. Product, brand identity, storytelling, and execution are all working together. We have made meaningful progress, but we are not done. As part of the Path to Potential strategy, we are working to build Victoria's Secret and Pink into two distinct, world-class growth brands, supported by a powerhouse beauty business. This quarter, we continued to make tangible progress towards that goal. The strength in the quarter was broad-based, with continued growth across Victoria's Secret, Pink, and Beauty, and across channels. We also delivered continued momentum in our international business. Our customer file continues to grow, increasing mid-single digits versus last year and marking our fourth consecutive quarter of growth. Growth spanned both brands and channels, as well as all age and income groups, led by strong new customer acquisition and improving retention. At the same time, we continued to improve the quality of our sales. Regular price selling increased in the low double digits, accompanied by strong unit and AUR growth. Within that broad-based performance, two areas stood out, bras and pink. Both are central to our path to potential strategy, and both are showing that our work is gaining traction. Our bra business grew in the mid-teens, driven by strength in core franchises and by new innovation, contributing to both VS and pink's performance. Pink delivered another quarter of growth with strength in bras, panties, and apparel. Beauty also continued to grow, delivering its 12th consecutive quarter of sales growth. Importantly, we are not standing still and are continuing to learn and adjust quickly. Semi-annual sale is a good example. We have made a deliberate decision to reduce our reliance on promotion and increase regular price selling. As a part of that shift, we entered the period with less sale inventory. Initial demand and sell-through exceeded our expectations, demonstrating that the event continues to resonate. but as the sale progressed, lower inventory pressured the June top line. That gives us a clear opportunity going forward. June has historically been a sale-heavy month, but we increasingly see it as buy now, wear now fashion window. We'll continue to use semi-annual sale to clear seasonal inventory while bringing more newness, innovation, and seasonal fashion into the month. We saw the potential of that approach in July. When growth returned to double digits, as customers responded to new bra innovation across both VS and Pink. Altogether, Q2 reinforced that our past potential strategy is working. We are entering Q3 with a larger customer file, strong brand relevance, and a full brand and marketing calendar ahead. I will now walk through the progress we made against each of our past potential pillars, supercharging our bra authority, recommitting to Pink, fueling growth and beauty, and evolving our brand projection and go-to-market strategy. I'll start with bras, where we have firmly reestablished the category as our number one growth driver. Bras are the foundation of Victoria's Secret. They're where our authority begins, often the starting point of her relationship with us, and an important driver of the business. This quarter, our bra business grew in the mid-teens. That strength was a major contributor to the VS brand, which also grew in the mid-teens during the quarter, with bras driving approximately half of its growth. What is encouraging is how broad-based the growth is. We are growing both new and existing broad customers with particularly strong new customer growth among 18 to 24-year-olds. That strength also spans the assortment, from wardrobe staples to more fashion-driven styles. That includes functional and seasonally relevant solutions like strapless, as well as lacy, where bright colors, fabrication, and styling give her another way to make intimates part of her overall look.