Victoria’s Secret & (US:VSCO)2024-08-29 15:17Financial Data and Key Metrics Changes - Sales for Q2 2024 were $1.4 billion, a decrease of 1% compared to the previous year, but at the better end of expectations for the quarter [3][4] - Adjusted gross margin dollar growth and 80 basis points of adjusted gross margin rate expansion year-over-year were achieved [9] - Adjusted operating income for 2024 is now expected to be about $275 million to $300 million, up from prior guidance of $250 million to $275 million [14] Business Line Data and Key Metrics Changes - The beauty business continues to be the best-performing category with year-over-year growth for the fourth consecutive quarter [7] - PINK's sales trend improved overall, particularly in apparel during the PINK Friday back to campus event [8] - VS sport showed consistent growth with new product introductions, including the Featherweight Max front-close bra [3][10] Market Data and Key Metrics Changes - Victoria's Secret and PINK maintained a combined market share of 20% in the North American intimates category [6] - Digital market share increased in both bras and panties, along with an overall increase in sports bra market share for the second consecutive quarter [6] - The overall intimates market in North America showed a slight softening in sales trends during Q2 compared to Q1 [6] Company Strategy and Development Direction - The company is focused on transforming its foundation with a $250 million three-year goal, on track to exceed that goal [9] - Key actions include launching new collections and enhancing customer engagement through events like the return of the Victoria's Secret Fashion Show [10][11] - The company aims to leverage its market position in intimates and deliver on multiple initiatives to drive long-term growth [12] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about improving business trends in North America and positive early customer feedback on fall assortments [12] - The retail environment remains challenging, but improving product acceptance and disciplined inventory management are key focuses [9][12] - The company anticipates a modest improvement in sales for the back half of the year, with a forecast of sales down approximately 1% compared to fiscal 2023 [13] Other Important Information - The company announced the appointment of Hillary Super as the next CEO effective September 9 [14] - The return of the Victoria's Secret Fashion Show is expected to generate excitement and drive customer engagement [11][12] Q&A Session Summary Question: Expectations for International Segment - Management remains excited about the International business, particularly in travel retail and franchise partners, with some softness noted in China due to economic pressures [17] Question: Promotional Environment and Gross Margin Outlook - The promotional environment is expected to continue, with management prepared to be more promotional if necessary [19] - Gross margins are guided to be up in Q3, but may see a slight decline in Q4 due to the impact of an extra selling week last year [21] Question: Drivers of SG&A Cost Control - Cost control was achieved through various measures, including monitoring travel, headcount, and store payroll [33][34] Question: Growth Drivers for PINK Segment - PINK has seen positive trends in tees, tanks, and dresses, with strong customer response to new products [28][29] Question: Adore Me Growth Drivers - Adore Me's growth is driven by the Daily Look business, which has seen outsized growth, contributing to overall high-single digit growth [61][62]