Hey, good morning, everyone. Thanks for joining us. We're very pleased to be joined this morning by Bath & Body Works CFO, Eva Boratto. Bath & Body Works is a market leader in home fragrance, body care, and soaps and sanitizers businesses. We're one of the only vertically integrated retailers we cover, which gives them some key advantages with speed and also cost control, which we'll dive into shortly. So if you don't have any questions, you should see a chat box at the bottom of your screen. You can just log in questions at the end of the session here. So, Eva, I just wanted to first start with your top-line outlook. You're expecting a return to sales growth in the second half, two of the big drivers there being a pretty big step up in marketing, which you started in December, as well as some major new product launches. Can you give us an update on the impact you're seeing from those thus far and how those initiatives and other drivers layer onto that sales outlook as we get into the second half? Sure. Thanks, Warren. And before I jump in, hi to everyone out there in virtual land. And Warren, thanks for hosting us today. So I'm excited to talk about our top line, right? As we came out of earnings, we're pleased that we were able to narrow the range of our sales by increasing the midpoint and maintaining the high end of our guidance range. And the four key elements of our return to growth strategy remain intact. So just to get into those, and our return to growth strategy, first, I'll speak to candles and sanitizers. We expect those to continue to normalize, but at a moderating rate. Second, growth from our core categories, supported by newness and seasonal storytelling. Think about it, our outperformance in the first quarter was driven by that newness. So our new product strategies have proven successful. I'll start with Everyday Luxuries. It was a limited launch. About a third of our stores assigned fragrance in this category outperformed the shops during that period. And we gained a new customer, a slightly younger and more diverse customer. Bridgerton, our first collab in a long time in recent history. Over the launch period, that represents 4% of the shop. It exceeded our expectations and really resonated with our core customer. And Warren, in your intro remarks, you spoke to our integrated model. Bridgerton's a great example of that, as well as Everyday Luxuries, given the performance we have, the ability to chase and drive further sales as we look throughout the year. Now, let's go to our adjacencies, our third core element. We continue to roll out our adjacencies, and they're all in different stages of rollout: our men's, hair, lip, laundry. So I'll start with laundry. At the end of the quarter, we were in about 300 stores. We've been testing different assortments, how to display in the store, what's the right size of the assortment in the store. And we're pleased that we will roll laundry out to the full fleet in the fall. Lip, we've had great success with lip. Our new lip fixture, it was in about 1,000 stores at the end of first quarter. And we've seen consistent performance that we're able to double our lip sales with that fixture. And we expect, again, rollout to nearly all North American stores by July. Men's continues to be one of our fastest-growing categories, benefiting from the new forms that we introduced last year, as well as newness into the core, i.e., fragrances and what have you. It continues to perform really well. I would say awareness among men continues to be low. So an area we're going after with our marketing investments. And finally, hair. We were in the full fleet early in the year. We put hair in our best-selling fragrances, and it resonates with our customer. We brought, of the hair customers, about 14% are new to brand. And we recently launched travel size, and we think is a great way for new customers to try the product. And finally, more loyal and engaged customers driven by our marketing, our full-funnel marketing investment, enhancing our loyalty capabilities and personalized digital experiences. So there, that's some of the things that we're working on, Warren. A lot going on, but we're super excited. Thanks. That's really good color. I just wanted to double-click on one element there. One of the things that struck me about your business recently is the newness. Everyone likes talking about newness, and it really seems like you've achieved something here. It's really been an effective sales driver for you the last several quarters. Can you just talk about how the processes around newness have changed, to enable this higher frequency you're seeing? And is there any way to conceptualize, you know, how much more newness is being sort in the assortment today? Yeah. I'd say innovation has always been a core tenet of the company, and that has not changed. You know, we have been increasing our innovation over the years, and I think it shows up in the adjacencies that I just spoke to: men's, lip, laundry, haircare. And what's unique to us is our vertically integrated model with Beauty Park enables us to test and learn and expand our assortment quickly. And I'll point back to Everyday Luxuries, right? A third of our stores are able to roll it out to the full fleet based on the strong performance that we saw. So, the team we win with our newness. It was an outperformance for the quarter. So that innovation is core to what we do and focus on each and every day. Got it. And you just talked about how Beauty Park allows you to test and learn. I think one of the things that sets Bath & Body Works apart is it also allows you to read and react at a speed that other retailers can't. Mm-hmm. So how quickly can you react if something isn't working? And can you maybe just walk us through an example of a time recently that, you know, if something in your product or collection wasn't working, how that read and react capability kicked in? Yeah, sure. Warren, I'll, I'll focus on the positive areas first, where we've been able to read and react and respond quickly. It's Bridgerton and Everyday Luxuries. So we were able to, what I'll refer to as chase additional, additional units given the customer response we were, we were driving and seeing. At Everyday Luxuries, we did our limited launch and able to get ourselves by fall into a position that we can be confident in launching in the full fleet of stores. And I will say an underpinning tenet of this company is not to disappoint customers, to making sure, based on the demand, that we have the confidence that we will be able to provide the product in a consistent manner for, for our customers. On products where the takeoff isn't as quick, given our capability, we're able to, I'll say, not build toward our full sales expectation because we can pivot and look at a low end of the range and a high end of the range. Thus, if you have something that doesn't perform as expected, and every company has that, you don't have as much inventory there because it's because of our ability to pivot. Thanks. That's really useful color. And then, if we can just pivot to promotions and, and some of the new tools you've gained since you've launched your loyalty program, with ramp up to 80% sales penetration in less than two years, can you just talk about how that's changed your approach and capabilities with promotions? What's changed? What's still to come? And what are your expectations around promotional culture for the year? Yeah. I think, so there's a few pieces to that question, right? I think personalization is a key element and part of our return to growth in the back half of the year. And we're on track with our personalized marketing, which enables us to capture data from the loyalty program. I would say a couple of examples I would give is, one, we've used machine learning algorithms to predict when a one-tripper, one-trip customer is about to make their second purchase or about to drop off, and using this personalized data to engage them in a very targeted way to drive another trip. I'd say we're in the early innings, but the results are promising. Another example is use of clickstream data, customer value filters. Again, we were able to test these areas, learn as we go, and then scale with, with effective tactics. In regards to promotional pressures this year, I'd say we expect promotion, as we look forward in the year, to be pretty comparable. We've spoken that AURs have flat in Q2 with modest expansion for, for the year. And we'll, we'll use our promotional tools to drive traffic, to engage, to, to engage the customer and drive ultimate performance. Great. Let me briefly switch to AUR for a second. In 1 Q, it was just a touch lighter than guided. The quarter before, it was a couple points better. I know it's hard to be too precise here because there's just a lot of factors that feed into AUR. I think your latest thinking is for some improvement in the second half. How should we think about the biggest headwinds and tailwinds to AUR, as we think about the second half of the year playing out? Yeah. Warren, I'm gonna go back and speak to Q1 in the context to talk about our confidence in the, in the back half of the year. As you look at Q1, I, I would break the quarter into two halves, right? As a reminder, we were pressured at the start of the quarter. We spoke to a floor set, and our marketing didn't resonate, didn't drive the call to action as we expected. We pivoted quickly. But we, we did continue to use our, our agile promotion model into, into the early part of March. As you think about how March progressed with our new floor set and the newness that came in, right, between that time and the end of the quarter, we were able to achieve flat AURs in the back half of the quarter. So that gives us confidence around our customer engagement when we bring the product newness that, that they're expecting. I would also say we continue to see customers carefully manage their basket, and that their spending, which pressures our, our basket, that's been no better, no worse, but that's what we're, we're seeing. In the back half, we do expect modest increases. And I'd say it's a function of our good, better, best pricing strategy. The new products, the newness that you heard Julie and Gina talk about on our earnings call enables us to take, to take price. We continue to test for opportunities where, where we can, where we can do, where we can do better. And, I, I would just provide one other broader context data point. Relative to pre-pandemic levels, AURs remain elevated, double, double digits. Got it. Okay. So AUR is gonna be one component of, of the merch margin in the second half. So if I just zoom out, you know, you're lapping some mid-teens merch margin comp starting in the third quarter. You're getting some supply, still some expansion in the second half, something along the lines of 30-50 basis points. Can you just parse out for us, other than AURs, some of the other moving pieces that are driving that merch margin outlook as, as we get into the second half of the year? Yeah. So overall, as you look at margin, I'll level it up to gross margin. I know you specifically spoke to merch margin. We continue, for the full year and Q2, to expect about 50 basis points of margin expansion. We, in Q2, we start to wrap the improvements we drove last year. And additionally, we expect international sales to improve throughout the back half of the year, Q2 forward. So relative to Q1 expansion, that is an offset there. We're also lapping our reformulations we did last year in our body care and soaps and sanitizers product. I would think about body care annualizing in the back part of Q3, as well as soaps and sanitizers in Q4. So that investment we made, we have the impact this year. I'd say they're the key drivers. I'll wrap it up with B&O. We do expect B&O deleverage, given our real estate investments. Got it. And your latest guidance, I think the latest long-term guidance you've given implies there's still some margin opportunity, relative to, I think the latest goal is 45% gross, 20% EBIT. Is that still your latest thinking in terms of the margin structure that the business can maintain here? And can you walk us through the multi-year path from here to there? Yeah. Warren, it continues to be our North Star. We think we're confident in our ability to achieve it over time. Gross margins of 45%, SG&A rate of 25%. I'd say, if you think about leveraging your cost to leverage B&O, you need 2%-3% sales growth, SG&A 2.5%-3.5%. So, growing the top line is a critical component of those. But we'll always look to drive efficiencies, cost improvements, as we've done over the long history of the company. But I'll speak to our $250 million program over the past two years, last year and this year, to drive savings, to also enable us to deliver on those goals. Okay. Yeah. So that was actually the next question I had was just on that cost savings plan. So it was originally $250 million last year. I think that came in a little bit faster than expected. You know, you added on another $100 million. You're almost halfway through that in the first quarter. How should we think about cost efficiencies as a driver of margin going forward? You know, could this be a normalized component of the algorithm as we look ahead? Yeah. I, I think, Warren, so if we go all the way back to last year, the initial program targeted $200 million of cost improvement, expecting to deliver $100 million last year and $100 million this year. We exceeded that goal, delivered $150 million last year, and increased the goal by $50 million to deliver an incremental $100 million this year. You know, that's 60/40 gross margin. It's things like value engineering, transportation costs, efficiencies in our fulfillment centers, be able to exit a fulfillment center. On the SG&A side, managing better, managing our store labor with, with traffic, optimizing, optimizing that without sacrificing customer experience, improving our indirect procurement capability are a couple of the areas that, that I would highlight. And, and I think as you think about cost, you, you can never say you're done. You have to think about it as ongoing opportunities to improve the overall underpinnings of the business. So I don't have more to announce here today, but we will always continue to look for opportunities and are focused on delivering on our commitment this year. Got it. And, maybe if we could just shift to the store opportunity, you know, one thing that stands out about your story, there's a very healthy new store component of the algorithm the last couple of years. Can you just give an update there? Where are you building these new stores that are still driving such solid returns? And, how much runway do you see from here? Yeah. So, but overall, we're really pleased with, with the performance of our store fleet, right, with their profitability, with their positive cash flow. And, we, we do still see opportunity, and we, we view the stores as a critical element of our omnichannel experience. Sitting here today, our fleet is more skewed to off-mall than on-mall locations. Regarding if you think about our long term, we think the right algorithm is two-thirds off-mall, one-third on-mall. So we'll continue to, to migrate more of our stores to off-mall locations. As I think about square footage growth this year, I would think about it as pretty comparable to, to last year in that 3.5%-4% growth. Okay. In terms of location, you know, follow the people, follow if you think about our customers, we wanna target a Hispanic customer. As you think about certain geographies there, where we're penetrated, our real estate team just does a tremendous job evaluating what are the right areas, regions, and locations to enter into. Got it. And as you approach that 2/3 goal, 2/3 off-mall goal over time, can you talk about how much of that is gonna be a shift from existing, existing mall locations? How much is gonna be Greenfield? I think today it's, it's about 50/50. So, you know, as I think about the progression, you know, is there, is that a net number or, sorry, is the, is there a big net opportunity? How much closure is, closures are embedded in that algorithm? Yeah. I think more to come longer term, certainly as we think about the closures, think about them as our DNS mall locations. And there's still, you know, there's still a number of those to close. I would think about it over the coming years. I'm focused around the square footage growth. But I think as you look here in the near term, that 3.5%-4% is the right metric to use. Got it. Then maybe we'll shift to a higher level question. What's your assessment of the overall health of your core consumer? Maybe you could just add a category lens to that. You know, which categories do you think are most, most discretionary? Which are more stable if we're in a value-seeking environment, consumer environment here? Yeah. On the consumer, we've talked about for a number of quarters now around we see our consumer seeking value, right? I would say that hasn't changed materially to one end or another from a positive or a negative. That's what we expect as you look at our outlook. In terms of our category, I wouldn't say we're seeing discerning pressure in one category versus another based on consumer behaviors. We aren't seeing within our shop, we aren't seeing a trade down. I've used this example a lot. We don't see a customer putting a three-wick candle back just to get a one-wick, a single-wick candle, right? But we do see them managing their basket size. So putting a product back, which is where we're focused on how do we drive more trips, how do we drive engagement through our loyalty program, right? We have 37 million active loyalty users. Engaging them to bring them in for more trips, redeem their rewards, right, that they've earned are opportunities for us to continue to drive the customer. I think we can just double-click on loyalty. You know, you're at 37 million new members. And as we talked about before, 80% penetration, even though it's only launched less than two years ago. Can you talk about what you're most excited about in terms of the loyalty program looking forward? You know, I think you've kind of done a really good job of, at step one of, increasing the penetration and the usage of the loyalty program. But now as you roll out the capabilities and start looking to drive engagement, change the processes, what are you most excited about? Yeah. So, Warren, I would put it into two buckets of where we're focused and are super excited, right? As we grow our customership, bring new customers to the brand, there's opportunities to convert those to loyalty members. I think this is evidenced by we cited a stat that 40% of our new loyalty members were new to brand in the first quarter. So we have a proven track record. Then you wanna deepen your engagement, right? Quantity and quality. So we decile out our active loyalty members. We know active members spend materially more in the shop than those that are in your lower deciles. So we'll look for opportunities to keep moving our members up on that activation and engagement. And I think we'll do that. You'll see more loyalty exclusive opportunities. Julie likes to say our they wanna be in the know. They wanna have early access. They get the right product. They get the candle that they wanted on Candle Day. So more loyalty exclusive early access events along with point accelerators. It's a way to drive engagement, a way to bring them back to the store. We introduced that in Q4, and we think it's a critical aspect to engaging those customers. Thanks, Eva. And then maybe we'll just shift to international. How different is the behavior there at, for the international consumer? How different is the brand positioning? And if we look at the last results, you know, obviously the conflict in the Middle East had a huge impact. Is there a way to parse out the impact there? Is there a way to look at kind of what the at-retail sales trends look like excluding the Middle East? Sure. So, a few pieces. So I'm gonna take your second set of questions first, and then we'll come back to the, the consumer, Warren. As you look at our international, retail system-wide retail sales, i.e., the end market sales, for the quarter, our total portfolio was flat in Q1. And that was a slight improvement from the decline that we experienced in Q4. Now, when you, when you piece apart regions, those areas not affected by the, the war in the Middle East, they continue to grow a very healthy mid-teens, in those regions. So as, as we look at, as we look at the health of our brand outside of the U.S., that's a key data point that says our brand resonates, people want our, our products, and there's tremendous opportunity. We opened our, our first standalone store in London in the first quarter. We also, in Q2, opened our first store in South Korea in the Shinsegae mall. And we're super excited to expand markets and continue to penetrate our markets. And we see ourselves opening at least 35 net new stores internationally this year. And we're in the index of the top 10 markets today. So there's tremendous opportunity. Going back to the consumer, I'll speak, you know, I'd say customers are pressured. You see outside of the U.S. inflationary pressures as well. So I wouldn't really call out any discernible differences of our international customers versus our U.S. Got it. That's very, very helpful. And, can we just talk a little bit about the new categories? First, how did you, you know, kind of calibrate these were the correct categories or, or these were the right categories to pilot? And you've had a few months in stores for some of the new categories like laundry and hair. Can you talk a little bit about what you're learning about the purchase behavior there, how much the core customers are spending back versus new customers? Yeah. I'd say how we determine these categories, you know, we have an unbelievable merchandising team that is outstanding what is going on in the marketplace worldwide, right? What are trends with consumers? What fits with our brand? What is a natural expansion to our brand? What are our customers asking us for? Right? So there are all factors that play in. And we also, as we bring categories, new categories in, we test like we did with laundry, using that as an example. So just to highlight a few key areas of data as background, men's continues to be one of our fastest growing categories introduced. You know, we expanded the portfolio last year with grooming and antiperspirant deodorant, as well as expanding the fragrances in our core collection. We're super excited about this category. It's women continue to be the larger shoppers, women shopping for men. So we see a real opportunity of gaining awareness among men. And that's where we're investing marketing dollars. You saw some of our influencers, back during the NFL season, during the NBA, driving that awareness. We believe there's considerable opportunity remaining. Hair we rolled out to the fleet, and in our best-selling core fragrances. This was an opportunity to enable our customers to continue to use their favorite fragrance in just another part of their daily routine. Performance to date, we've brought in about 14% new customers. I think I said that earlier. And now we have trial size. So it's been enabled new customers to, it's a great way for new customers to enter the brand. And finally, I'll say on laundry, we're pleased with all of the testing we've done with the optimization of the portfolio, what's the right fragrances to put into the stores. And, you know, we're confident in our inventory position that gave us the confidence to accelerate our rollout to the full U.S. fleet in late fall of this year. So there's some of the highlights, Warren, that I would bring. Great. And, just as a reminder, if anyone has any questions, feel free to type them in the chat, chat box. So we'll go to a couple of audience questions here. The first one, just to follow up on your earlier comment that the second half outlook embeds some normalization in candles and sanitizers. How much further normalization might you see from here? And can you talk about the plan for managing the floor space as some of these new categories come online? So I guess the floor space of candles and sanitizers. Yeah. Sure. So, as we look at candles and sanitizers, as I said before, we don't expect it to return to growth. We do expect the declines to moderate. As you look at the last three quarters of performance, Q3 to Q4, we did see moderation, excuse me. And Q1 was comparable with that we experienced in Q4. As you look at the floor space, you know, we highlighted on the earnings call that we did right-size our single-wick portfolio. We had two versions of our single-wick, a more recently introduced Tumbler, as well as an older, I'll say more dated Mason Jar. What we did was we right-sized that, removing the Mason Jar from the portfolio while still maintaining the active breadth that our customers expect from us. What that really enables us to do is to free up that shelf space to hire more productive categories. Think about the new adjacencies that we're bringing in. So while it may cause a little more pressure in the near term, we believe it's the right decision for driving growth over the long term. That's perfect. Another question that came in is on a couple of components of the cost structure here. Freight and labor, there were some big investments in labor early last year. What are you seeing in terms of wage pressures with embedded in the guidance? So the question there is on both freight and labor, pressures in the same path. Yeah. I would say, on both of those, I would consider this year our expectations is it's a more normal year, from a wage rate pressure. Think about it more in line with normal merit type of cycle. Certainly, in different pockets through regulation, you could have some hourly rate pressures. We watch those where we manage those. But overall, I would think about it as a more normal year for us. And then on transportation, again, you saw outperform in terms of transportation costs throughout the back part of last year. We also overdelivered on transportation benefits in the first quarter. And it's, you know, I'd say it's embedded in our run rate. Got it. And I think we just have time for one more question. This question is on the technology investments. So, you've made some heavy technology investments in the last year. What are the capabilities gained? How should we think about the technology investments this year versus last year? And how do you measure your returns on those investments? Yeah. Thanks for, thanks for that question. Overall, as you think about total technology investment, I would think about 2024 pretty comparable to the 2023 levels, which was a step up given we were investing in, in separation. We've now pivoted from investing in separation to investing in, I'll, I'll bucket them into two key areas: value-creating capabilities to improve our omnichannel experience, whether that's data and analytics, whether that's personalization, whether that's, point of sale to, to create better integration of our data to service that customer in a, in a meaningful omnichannel way, as well as, foundational back office systems that we need to invest in to modernize that, that technology. So they're the two key areas. We always look to measure returns. Some of these are fundamental capabilities that you need in, in this decade and, and going forward. But where there is the opportunity to measure, we are. We look to really prioritize to drive the highest returning items first to help us fund the journey, if you will. Perfect. That's all the time we have. That sounds like a perfect stopping point. Thanks, Eva, for all the great insights. Have a nice day, everyone. Thank you. Thanks, everyone. Have a great day.