Victoria’s Secret & (US:VSCO)2023-08-31 14:49Financial Data and Key Metrics Changes - In Q2 2023, adjusted operating income was $49 million, and adjusted earnings per diluted share was $0.24, both near the midpoint of guidance range [7] - Overall sales declined 6% compared to last year, which was near the low end of guidance range [7] - Adjusted operating income rates are expected to be in the range of 5% to 6% for the full year 2023 [50] Business Line Data and Key Metrics Changes - The beauty business continues to be the best-performing category, followed by bras, sleepwear, and panties [21] - Adore Me sales contributed approximately 4 percentage points to total sales growth for Victoria's Secret & Co. in the quarter [20] - Sales trends for the intimates market in North America decreased in the mid-single digits compared to last year [8] Market Data and Key Metrics Changes - International business experienced growth of 26% in Q2 2023, with total international system-wide sales up in the low teens [9] - The company entered four new countries and opened nine new digital sites in the past 12 months [9] - Digital share increased slightly while store share decreased slightly on a rolling 12-month basis [8] Company Strategy and Development Direction - The company is focused on three pillars: strengthening the core, igniting growth, and transforming the foundation [18] - Plans include opening 25 to 35 net new stores in the fall season and leveraging Adore Me's expertise to enhance customer experience [9][28] - The Victoria's Secret World Tour is expected to be the largest marketing investment in over five years [51] Management's Comments on Operating Environment and Future Outlook - Management noted that the macro environment continues to pressure the customer base and core intimates categories [19] - There are early signs of recovery in sales trends, particularly in August, which were better than previous months [49] - Management remains optimistic about improving sales trends in the back half of the year, driven by new initiatives and marketing efforts [30][49] Other Important Information - The company launched a new multi-tender loyalty program, gaining over 16 million members in three months, accounting for over 70% of weekly sales [24][82] - The Featherweight Max sports bra and the Seamless Air Sports Bra have shown strong early performance [64] - The company is seeing positive trends in digital capabilities and customer experience enhancements [78] Q&A Session All Questions and Answers Question: Can you elaborate on the three pillars and initiatives to strengthen the core? - Management expressed confidence in the brand's repositioning journey and emphasized the importance of innovation in bras and panties [32][35] Question: What factors caused the accelerating August trend? - Management noted improvements in product offerings and marketing initiatives, particularly in beauty and new merchandise [63] Question: What are the expectations for promotionality in the fall season? - Management expects promotionality to remain flat year-over-year but is optimistic about the impact of full-price initiatives [67] Question: How is the international strategy performing? - Management highlighted strong performance in international markets, particularly in China, and noted the success of partnerships [71] Question: What is the growth driver behind the beauty segment? - The strength in beauty performance is attributed to successful product launches and its natural adjacency to lingerie [105] Question: How is the PINK brand performing and what are the expectations for back-to-school? - Management indicated early positive signs for new PINK merchandise and strong performance in August, which is seen as a proxy for back-to-school [120]