Financial Data and Key Metrics Changes - The company reported a consolidated net sales decrease of 3.4%, which was better than expected, with organic net sales declining by 10.8% [27] - Gross profit margin decreased by 200 basis points to 46.9%, primarily due to higher tariffs and unfavorable inventory obsolescence impacts [29] - Adjusted EPS was reported at $1.71, with a year-to-date free cash flow of $29 million despite $58 million in tariff-related cash outflows [32] Business Line Data and Key Metrics Changes - Home and outdoor net sales declined by 6.7%, while beauty and wellness net sales decreased by 0.5%, with organic beauty and wellness sales down by 13.9% [28] - Olive & June outperformed expectations with nearly $38 million in sales, contributing positively to the beauty and wellness segment [17] - Organic direct-to-consumer revenue increased by 21% [19] Market Data and Key Metrics Changes - International sales fell by 8.1%, reflecting challenges in the global market [17] - The company noted a bifurcated economy, with high-income households showing robust spending while lower and middle-income consumers were more cautious due to inflation [5] Company Strategy and Development Direction - The company is focused on investing in brand loyalty, innovation, and talent to restore growth [5][6] - Four strategic priorities were outlined: re-energizing brands and people, adapting structure to center on consumers, strengthening the portfolio for predictable growth, and improving asset efficiency [9] - The company plans to maximize operational efficiency and balance sheet health while investing in long-term growth opportunities [14] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about product innovation and upcoming launches, emphasizing the need to adapt to consumer preferences [6][10] - The company anticipates continued margin pressure due to consumer trade-down behavior and a more promotional environment [37] - Management expects to see improvements in revenue and operating leverage as they shift focus from cost reduction to revenue growth [44][68] Other Important Information - The company is navigating tariff impacts, with a full-year expected impact of $50 million to $55 million on gross profit [25] - Inventory is projected to be between $475 million and $490 million at year-end, including estimated tariff-related costs [34] - The company is evaluating its brand portfolio for potential optimization and divestiture opportunities [82][86] Q&A Session Summary Question: What is the status of declining categories and turnaround efforts? - Management is encouraged by growth in brands like Osprey and Olive & June but acknowledges the need for improvement in declining categories [40] Question: Is this year's earnings guidance the bottom for earnings power? - Management indicated a focus on growth and innovation, suggesting that the current guidance may serve as a base for future growth [42][43] Question: How is the company approaching consumer-centric innovation? - Management emphasized the need to invest in underperforming brands and ensure they are set up for success [49][51] Question: What is the outlook for category demand and potential improvements? - Management believes that brands with strong propositions will continue to perform well, even in challenging times, and expects improvements in demand as the economy stabilizes [60][61] Question: How does the company plan to manage leverage and portfolio optimization? - Management is focused on tightening the balance sheet and improving operational efficiency while considering portfolio evaluations for long-term value [82][86]

CAPITAL MARKETS DAY JACOB AARUP-ANDERSEN GROUP CEO BUILDING A RESILIENT, STRUCTURALLY GROWING WORLD-CLASS BREWER Disclaimer FORWARD-LOOKING STATEMENTS This presentation contains forward-looking statements, including statements about the Group's sales, revenues, earnings, spending, margins, cash flow, inventory, products, actions, plans, strategies, objectives and guidance with respect to the Group's future operating results. Forward-looking statements include, without limitation, any statement that may pred ...

Financial Data and Key Metrics Changes - The company reported net sales of $1.4 billion, an increase of 2.9% compared to the prior year, marking the strongest underlying sales performance since 2021 [28] - Earnings per diluted share were $0.49, exceeding the high end of the guidance range [17] - Gross profit rate was 45.4%, an increase of 160 basis points year-over-year, driven by a 100 basis point improvement in merchandise margin [30][31] Business Line Data and Key Metrics Changes - Body care grew low single digits, driven by the success of the Disney Princess line and the expansion of the everyday luxuries line [21] - Home fragrance also grew low single digits, supported by single wick candles and wallflowers [21] - Soaps and sanitizers grew mid single digits, driven by on-the-go assortments [21] Market Data and Key Metrics Changes - International retail sales grew approximately 10% this quarter, representing about 5% of total net sales [27][30] - U.S. and Canadian store net sales totaled $1.1 billion, an increase of 4.3% versus the prior year [29] Company Strategy and Development Direction - The company aims to transform Bath and Body Works to accelerate growth and deepen customer connections, focusing on consumer-centric strategies [9][10] - Plans include enhancing digital capabilities, improving packaging, exploring new distribution forms, and expanding internationally [12][14] - The strategy will prioritize fewer, bolder initiatives to drive consistent and repeatable growth [53] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to absorb current tariff levels and maintain guidance for the year [33][34] - The company is optimistic about the innovation pipeline for the second half of the year, including new product launches and collaborations [50][75] - Management emphasized the importance of emotional connections with consumers and the need for compelling storytelling in marketing [61][92] Other Important Information - The loyalty program has approximately 39 million active members, up 4% from the prior year, driving increased customer engagement [23][24] - The company plans to maintain capital expenditures of $250 million to $270 million, focusing on real estate and technology [37] Q&A Session Summary Question: What attracted you to Bath and Body Works? - The CEO highlighted the emotional connection of the brand and its strong foundation, including a large number of stores and loyal customers [44] Question: Can you elaborate on the go-forward top line commentary? - Management noted that Disney was a key driver of growth and expressed confidence in upcoming product launches [48] Question: What are the building blocks of opportunity for growth? - The CEO mentioned focusing on fewer priorities and leveraging existing investments to drive growth [55] Question: How do you view pricing strategy in light of tariffs? - Management stated they will remain agile and responsive to customer needs while maintaining value [103] Question: What is the strategy for international expansion? - The CEO emphasized a selective approach to international markets, focusing on understanding local consumer needs [105] Question: How do you plan to enhance marketing efforts? - Management indicated a shift towards emotional storytelling and less reliance on price promotions [61]