Bath & Body Works(US:BBWI)2022-08-18 14:11Financial Data and Key Metrics Changes - The company reported earnings of $0.52 per share for Q2 2022, exceeding the guidance of $0.40 to $0.42 per share, driven by improved sales and expense management [7][14] - Total sales in US and Canadian stores were $1.16 billion, a decrease of 6% compared to the previous year but up 31% compared to 2019 [14] - Direct sales were $367 million, down 10% year-over-year but up 106% compared to 2019 [14] - Total inventories increased by 33% compared to last year, with finished goods units up 13% [16] Business Line Data and Key Metrics Changes - The launch of the Poppy fragrance was the most successful single launch in July, indicating strong customer engagement with new products [8][18] - The company successfully launched its Halloween collection early, which drove traffic and sales both in-store and online [8][22] - The men's product line continues to outperform, with plans to expand offerings significantly [20][21] Market Data and Key Metrics Changes - International business sales for the quarter were $90 million, an increase of 35% compared to last year [14] - The company ended the quarter with BOPIS (Buy Online, Pick Up In Store) available in over 1,200 stores, which is 500 more than the previous quarter [14] Company Strategy and Development Direction - The company is focusing on enhancing customer experience and streamlining operations to drive future growth and profitability [10][12] - Organizational changes include the elimination of 130 roles to improve efficiency and effectiveness [11][12] - The company is investing in its loyalty program, which is expected to enhance customer retention and spending [9][10] Management's Comments on Operating Environment and Future Outlook - Management acknowledged inflationary pressures and is actively working on expense management while maintaining quality [10][12] - The outlook for the third quarter anticipates a sales decrease in the mid to high single digits compared to the prior year [15] - The company expects full-year earnings per share to be between $2.70 and $3, factoring in inflationary costs and revenue deferrals from the loyalty program [16] Other Important Information - The company is committed to becoming a truly omni-channel retailer, integrating various aspects of customer experience under a unified strategy [11][12] - The loyalty program is expected to significantly increase customer engagement, with a base of approximately 60 million customers [9][54] Q&A Session Summary Question: Concerns about SG&A pressures - Management noted that about two-thirds of SG&A expenses are related to store selling, with planned increases in wages impacting future rates [26][27] Question: Gross margin pressures - Management indicated that the gross margin decline is primarily due to the impact of the loyalty program and expected sales performance [30][31] Question: Breakdown of sales growth - The company reported that AUR (Average Unit Retail) is approximately 20% higher than pre-pandemic levels, with unit growth contributing to overall sales increases [36][37] Question: Traffic trends and customer response - Management observed a deceleration in store traffic during June, which improved in July due to new product launches [56][58] Question: Promotional strategy compared to 2019 - The company plans to be more promotional than last year but still less than pre-pandemic levels, focusing on maintaining AUR [71][72] Question: BOPIS capabilities - Management expressed excitement about BOPIS, noting positive customer feedback and its potential to enhance in-store sales [75][76]