Good morning. My name is Melissa, and I will be your conference operator today. At this time, I'd like to welcome everyone to the Bath & Body Works second quarter 2026 earnings conference call. Please be advised that today's conference is being recorded. During the question-and-answer portion, you may ask a question from the phone by pressing star one. I'll now turn the call over to Luke Long, Vice President of Investor Relations. Luke, you may begin. Good morning, and welcome to Bath & Body Works' second quarter 2026 earnings conference call. Joining me on the call today are Daniel Heaf, Chief Executive Officer, and Tom Javitch, Interim Chief Financial Officer. In addition to this call and this morning's press release, we have posted a slide presentation on our website that summarizes the information in these prepared remarks and provides some related facts and figures regarding our operating performance and guidance. As a reminder, some of the comments today may include forward-looking statements related to future events and expectations. For factors that could cause the actual results to differ materially from these forward-looking statements, please refer to the risk factors in Bath & Body Works' 2025 Form 10-K. Today's call also contains certain Non-GAAP financial measures. Please refer to this morning's press release and supplemental materials for important disclosures regarding such measures, including reconciliations to the most comparable GAAP financial measure. With that, I'll turn the call over to Daniel. Thank you, Luke, and good morning, everyone. Today, I'll review our second quarter performance, provide an update on the progress we're making against our Consumer First Formula, and share how we're positioning the business for the second half of the year. Our second quarter results exceeded our expectations. Net sales declined 2.3%, ahead of our guidance range of down 5%- down 3%, and adjusted earnings per diluted share was $0.62, above our guidance range of $0.20- $0.25. Adjusted earnings per diluted share included a benefit from approximately $80 million of tariff refunds received in the quarter. Excluding this benefit, adjusted earnings per diluted share would have been $0.31, $0.06 Above the high end of our guidance range. While the underlying business remains pressured and our performance is not yet where we want it to be, we are where we expect it to be, and our teams are moving at pace to execute our strategy. Last quarter, we described early evidence that the Consumer First Formula was beginning to work. This quarter, that evidence is becoming more tangible and quantifiable, with sequential improvement in body care, a return to growth in digital, and accelerated growth in expanded distribution. These proof points strengthen our confidence that our actions are gaining traction, but they are not yet broad enough to signal an inflection in the overall business. Based on our second quarter performance and our outlook for the balance of the year, we are narrowing our full-year net sales guidance by raising the low end to down 4% while maintaining the high end at down 2.5%. We are also raising our adjusted earnings per diluted share guidance to $2.60-$2.80, reflecting our second quarter outperformance and latest view of the business. We have been clear since introducing the Consumer First Formula nine months ago that returning Bath & Body Works to sustainable growth is a multiyear transformation. 2026 remains an investment year. Building consideration and trust with new consumers requires sustained product innovation, continued investment in demand creation, and consistent execution. Our priority in the back half is to continue to strengthen the underlying drivers of sustainable growth while closely tracking leading indicators to validate our actions are working ahead of our goal of revenue growth in 2027. With that context, let me turn to the progress we are making against our four strategic priorities. First, creating disruptive and innovative products. As we set out last quarter, we are bringing greater focus and discipline to how we develop and bring product innovation to market. We are concentrating resources behind our hero categories and franchises, where our leading market position and attractive category growth give us the greatest right to win. During the quarter, we launched Fruit Fusion, a new body care franchise designed as a hydration routine. It pairs distinctive fragrances with new dermatologist-approved formulas designed to layer hydration throughout the routine. We also introduced more functional packaging. For example, our moisturizing body wash now includes a pump and more product at the same price, delivering better functionality and greater value at a time when consumers are often being asked to pay more for less. The launch exceeded our sales expectations and achieved a higher AUR than our core fragrant body care assortment and drove strong customer engagement with several forms selling out. Importantly, Fruit Fusion is designed as an enduring franchise rather than a seasonal collection, and we plan to build on its success through additional fragrances in September and form extensions in 2027. The commercial response to Fruit Fusion gives us greater confidence in an integrated model that brings differentiated products, cultural relevance, and coordinated demand creation together behind a focused launch. In the second half, consumers will see stronger innovation pipeline across our hero categories, combining proven franchises, modernized icons, and new platforms for future growth. Everyday Luxuries will demonstrate how we can scale a proven franchise. After restoring 10 of its top fragrances during the second half, the franchise performed ahead of our expectations and contributed to the sequential improvement in body care. In the second half, we will build on that momentum with higher fragrance loads, a new eau de parfum form, and five new fragrances. A Thousand Wishes will demonstrate how we are modernizing and extending our most iconic fragrances. In the second half, we will enhance fragrance performance, elevate packaging, and expand the franchise with a new fragrance flanker, A Thousand Wishes Granted, designed to recruit new consumers while staying true to what customers love about the original. In Q3, we will also introduce new franchise platforms across body care and home fragrance. For example, the Reserve Collection, which launched on Monday, brings a more elevated design-led proposition to home fragrance, including a new 4-wick candle and Fragrance Infused Liquidless Reed Diffusers. These new platforms will begin at a seed scale, and they are not expected to materially affect our near-term financial results. They are designed to build brand equity, test new consumer propositions, and establish the platforms that will scale over time. Consumer response will help determine where we invest and which we scale in 2027. Finally, greater focus also means being clear about where we choose not to compete. We continually evaluate our portfolio and assortment against our strategy and each category's financial contribution. As part of that ongoing discipline, we have decided to exit home care, which includes our laundry and kitchen products. The category represents less than 1% of our annual sales and creates disproportionate product and operating complexity without generating the productivity or incremental demand required to justify the cost. Second, reigniting the brand. Bath & Body Works has always been grounded in a simple belief: everybody deserves to feel good. Inspired by the optimism, warmth, and creativity of the American spirit, we create sensorial products and experiences for everybody, giving the brand a distinctive and broadly relevant place in consumers' lives. The enduring emotional connection is guiding how we shape our products, tell our stories, and show up in culture as we work to deepen consumer engagement and build stronger demand. To bring this brand promise to life more consistently, we are building a modern demand creation model that connects our most important product stories with relevant talent, creator content, and culture. We are encouraged by the early signs that these efforts are beginning to resonate. Strong net promoter scores, improving social sentiments, and growing awareness amongst non-consumers suggest that the brand is gaining cultural relevance and strengthening its opportunity to attract new consumers. Fruit Fusion provided our first example of this model in the second quarter. It was the first time Bath & Body Works teamed up with a celebrity at this scale with Hilary Duff serving as an ambassador and creative partner. As a longtime fan of Bath & Body Works with relevance across generations, she brought a genuine affinity for the brand to the partnership. We amplified the launch through coordinated creator-led campaign, another first for the brand. The campaign generated approximately 615 million impressions and contributed to over 50,000 new social followers, bringing Bath & Body Works into the cultural conversation with new audiences. Together with the strong commercial response, these results provide early evidence that greater cultural relevance and awareness can strengthen demand. The launch is also a repeatable playbook. We intend to continue to apply this demand creation model behind our most important product launches in the second half. One component of that playbook we are now scaling is creator activation. Creator interest in working with Bath & Body Works is strong, giving us an efficient way to tell our stories authentically. We have significantly expanded our creator network and expect to mobilize thousands of creators across a range of audience sizes to support our holiday campaigns. Looking ahead, consumers will see fewer, bigger, and more coordinated brand moments that bring together product innovation, talent, creator content, and seasonal storytelling. Third, winning in the marketplace. Across digital and expanded distribution, we continue to see some of the clearest signs of progress. Our owned digital business returned to growth in the quarter, improving 4 percentage points sequentially from Q1. We expected digital to be among the first areas where the Consumer First Formula would translate into measurable results. The return to growth, coupled with increases in new, existing, and reactivated digital customers, provide early evidence that stronger product storytelling, improved discovery, personalization, and demand creation are beginning to work and helping us reach consumers beyond our existing customer base. This progress is particularly meaningful because we have not grown our e-commerce business since 2021, leaving a significant opportunity to capture a greater share of the category growth over time. Expanded distribution was another area of measurable progress in the quarter. Amazon continues to scale quickly, with net sales more than tripling compared with the first quarter. We are now one of the largest candle brands on the platform. As more category spending shifts to Amazon over time, our presence allows us to meet consumers where they are already shopping and participate in that growth. The channel is attracting a higher mix of new-to-brand consumers who skew younger and more affluent while delivering a higher AUR than our own channels, reinforcing our confidence that Amazon can expand our reach and drive incremental growth. During the second quarter, we launched with Ulta Beauty across approximately 600 stores, creating new points of discovery for the brand within specialty beauty. While still early, the initial response has been encouraging and supports our belief that thoughtfully selected partnerships can help introduce Bath & Body Works to new consumers. Together, Amazon and Ulta expand discovery, broadening our reach and reinforcing a consistent brand experience across channels while maintaining the strength and distinctiveness of our owned channels. During the second quarter, we completed a merchandising reset across our full store fleet, the first in a series of improvements to the existing store experience. Clearer signage and more intuitive layouts organized by fragrance, form, and franchise are designed to make our assortment easier to understand and products easier to discover. Initial feedback from consumers and associates has been positive, and we will continue to evolve the store experience to improve new consumer acquisition, conversion, and store productivity. International remains an attractive asset-light opportunity to expand the reach of Bath & Body Works globally. Despite continued conflict in the Middle East, international retail sales increased 9% versus last year, and we are pleased with the early performance in Brazil, which opened in July. Finally, operating with speed and efficiency. Supporting all of this work is our continued focus on simplification, speed, and disciplined execution. Through Fuel for Growth and broader operational improvement, we are creating capacity to reinvest behind innovation, marketing, digital capabilities, and marketplace expansion while strengthening the long-term foundation of the business. Before I close, I want to thank our associates for their continued dedication to serving customers and advancing our strategy. The progress we are making is a reflection of their commitment and hard work. The second quarter provided evidence the Consumer First Formula is beginning to work, with progress in digital, encouraging early reads from product innovation, growth in expanded distribution, and continued improvement in several of our strategic indicators. As we move to the second half, we are focused on improving those outcomes while continuing to build the product, brand, and marketplace capabilities that will support durable growth. We are confident in our strategic direction and focused on disciplined execution, advancing these initiatives together and at sufficient scale to change the trajectory of the business and build momentum throughout 2027. With that, I'll turn the call over to Tom to review our financial results and outlook. Thank you, Daniel, and good morning, everyone. Today, I will review our second quarter results and provide an update on our outlook for the third quarter and fiscal 2026. Beginning with the second quarter, net sales were $1.5 billion, a decline of 2.3% versus last year, and above our guidance range of down 5% to down 3%. As Daniel discussed, underlying business performance remains pressured, but results exceeded our guidance and improved sequentially compared to Q1. We entered into our June semi-annual sale with lower levels of clearance inventory than last year. While this was healthy for the overall brand and business, it represented approximately one point of headwind to second quarter sales, with impacts across all categories. Body care declined mid-single digits. While performance improved sequentially from Q1, supported by strength in our Everyday Luxuries franchise and the Fruit Fusion launch, results remained below our expectations. We will continue to invest in product innovation while increasing focus on merchandising and marketing in this critical category. Home fragrance declined low single digits. Performance was driven by a strategic reduction in Halloween assortment, as well as less clearance product, as referenced previously, partially offset by strength in single-wick candles and Wallflower heaters. Soaps and sanitizers were flat in the quarter. Innovation remains a source of strength within the category. Our newer moisturizing and revitalizing soap formulas continue to perform well, and we continue to drive strong AUR performance in those forms. In U.S. and Canadian stores, net sales were $1.1 billion, a decrease of 5.4% versus last year. Store sales were pressured by a few factors during the quarter. The introduction of Free Shipping over $50 in the fourth quarter of 2025 drove some expected channel shift to direct, while the lower clearance inventory levels primarily impact stores. As a reminder, our semiannual sale is the largest portion of the quarter's revenue. Direct channel net sales were $275 million, an increase of 3% versus last year, benefiting from a reduction to our Free Shipping over $50 threshold and improved digital conversion supported by our ongoing investments in digital capabilities and customer engagement. International and other, inclusive of our expanded distribution wholesale revenues, net sales were $108 million, an increase of 24.9% to last year. International retail sales were up high single digits, in line with expectations, and international net sales were up low double digits, above expectations as product shipments increased across our regions. Our second quarter gross profit rate was 45.7%. Results included approximately $80 million of tariff refunds, which contributed approximately 530 basis points to merchandise margin. Excluding this benefit, gross profit rate would have been 40.4%, slightly better than expected and a decline of 90 basis points compared to the prior year, driven primarily from deleverage in Buying and Occupancy expenses on the decline in net sales. Mixed adjusted AUR was flat in the quarter. Adjusted SGA dollars were $467 million and adjusted SGA rate was 30.8%, better than expected due to incremental expense savings and discrete items. Bringing it all together, adjusted operating income was $225 million, or 14.8% of net sales, and adjusted earnings per diluted share was $0.62. Inventory ended the quarter down 10% versus last year. We ended the quarter with clean forward inventories, and our inventory is well-positioned to deliver in the back half. Moving to real estate. During the quarter, we opened 24 stores, primarily off mall, and closed 10 stores, primarily in malls. International partners opened 17 stores. We ended the quarter with 1,937 North American company-owned stores, with approximately 60% of our fleet in off-mall locations and 596 international locations. We continuously review our real estate fleet performance and have a highly profitable store portfolio with virtually all stores generating four-wall profits. Moving to full year guidance. Based on our second quarter performance and outlook for the balance of the year, we are narrowing our full year net sales guidance and raising our adjusted earnings per diluted share guidance. As we think about the balance of the year, the benefit of Q2 tariff refunds is being partially offset by forward tariff pressure and input cost inflation as of the end of the second quarter, representing an additional approximately $30 million or 40 basis points, as well as incremental investments representing approximately $35 million into the Consumer First Formula, primarily into marketing efforts. Our approach allows us to continue investing in the long-term transformation of the business while also improving near-term profitability. Turning to the assumptions in our guidance. We now expect net sales to be down 4%- 2.5%. This is an increase to the low end of our guidance while maintaining the high end of our prior guidance range. We now expect full-year adjusted gross profit rates to be approximately 43.3%. This includes the tariff refund benefit recognized in the second quarter and assumes the approved tariffs and input cost environment as of the end of the second quarter remain in place through the balance of the year. Adjusted SGA rate is now expected to be approximately 29.6%, driven by increased investments in the Consumer First Formula. We are tracking to exceed our 2026 full-year Fuel for Growth goal of $175 million by approximately $25 million, totaling approximately $200 million. This progress has been critical to funding our investments into the Consumer First Formula and delivering bottom-line results. Adjusted net non-operating expense is now expected to be approximately $217 million, reflecting the interest benefit of the early partial redemption of $250 million of our 2029 bonds. Adjusted tax rate is now expected to be approximately 26.8%, and weighted average diluted shares outstanding are expected to be approximately 203 million. Considering these inputs, we now expect full-year adjusted earnings per diluted share of $2.60- $2.80. Turning now to the third quarter. We expect third quarter net sales to be down 5%- 2.5%. Gross profit rate is expected to be approximately 40%, driven primarily by deleverage and buying and occupancy expenses on lower sales. SG&A rate is expected to be approximately 34.8%, reflecting net sales deleverage and increased investments in the Consumer First Formula, primarily marketing. We believe these investments will strengthen consumer engagement heading into the holiday season and support performance across both Q3 and Q4. Adjusted net non-operating expense is expected to be approximately $54 million. Adjusted tax rate is expected to be approximately 26%, and weighted average diluted shares outstanding are expected to be approximately 203 million. Considering these inputs, we are forecasting third-quarter adjusted earnings per diluted share of $0.07- $0.12. Now for a quick update on capital allocation. We remain a strong cash flow-generating business. Year-to-date capital expenditures total $98 million, and we expect capital expenditures of approximately $240 million for fiscal 2026, down from prior guidance, reflecting savings in real estate and other projects. We returned $40 million to shareholders through dividends during the quarter. We now expect free cash flow of approximately $650 million, up from our prior guide of $600 million, reflecting higher earnings expectations and lower capital expenditures. On August 19th, we redeemed $250 million of our 2029 notes, of which the interest savings are reflected in our updated net non-operating expense outlook. In closing, our second quarter performance exceeded expectations and reflected disciplined execution across the business. While we have significant work ahead to return Bath & Body Works to durable growth, we remain focused on strengthening the foundation of the business, supporting the actions outlined through the Consumer First Formula, and returning the business to durable growth. We are encouraged by the progress we are seeing and remain committed to balancing disciplined investment with strong financial management. With that, I'll turn over to the operator for questions. Thank you. If you'd like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. To allow for as many questions as possible, we ask that you each keep to one question and one follow-up. Thank you. Our first question comes from the line of Paul Lejuez with Citi. Please proceed with your question. Hey, thanks, guys. Sales are down 2.3% in Q2 and comparison ease in the third quarter. I am curious with the investments that you are making and the benefits of the Consumer First Formula building, why you would not expect Q3 to be a bit better than what you guided, just also considering the comparisons. Is there anything working the other way that is acting as an offset to some of the benefits that you are seeing as you think about that third quarter sales guide? Good morning, Paul. Thanks for the question. Look, I am really pleased with the team's execution and focus on our strategic priorities in the second Q. As I said in the prepared remarks, we are seeing more tangible evidence this quarter that the strategy that we laid out nine months ago is working. Sequential improvement in body care, stronger AUR on our innovative product. Tom mentioned the moisturizing and revitalizing hand soap, but that is true on Fruit Fusion also. A return to growth in digital after many years of declining performance, improved brand discovery and sales acceleration across our expanded distribution marketplace partnerships. The progress that we are seeing is real and it is quantifiable, but that progress at this point is not yet large enough to change the whole trajectory of the business. That is what we are focused on, and that is what we must change in the back half. At the same time, working against us, as you asked, the store traffic remains pressured and body care, while a significant improvement, helped by Fruit Fusion and Everyday Luxuries, is still performing below its potential. Also remember in November when we set out the strategy, we said that the core had become too reliant on promotional activity. Promotions, as I will emphasize, will remain an important way for us to create excitement and deliver compelling value to consumers, but we are not planning on becoming incrementally more promotional to drive the top line in the back half. Net net, I would say, transforming a business the size of Bath & Body Works takes time. We laid out the strategy in November of last year. We are delivering against that strategy, and we are exactly where we expected to be at this stage. Q2 gave us greater confidence and more tangible evidence that we are on the right track, but we want to see these proof points become broader, more consistent and more durable before we really build them into our outlook. I would add, in terms of the guidance itself, the high end of the range is very consistent with our year-to-date trends. We are assuming current consumer and macro environment continues, and we believe a prudent approach is appropriate. We want to stay disciplined on managing the business as we continue to execute the Consumer First Formula. Importantly, our agile model allows us to chase upside, so we believe we are positioned to capture opportunities as they appear. Thanks. Just want to follow up on the tariff refund. You are spending some of that benefit. Can you just talk a little bit more about how you are spending that money, what the consumer might see? Yeah, sure. We did receive approximately $80 million in Q2, which is the substantial majority of what was outstanding. In our guidance for the second half, we are covering forward tariff and input cost pressures of approximately $30 million based on what we knew as of the end of Q2. That specifically assumed Canada tariffs remain at 50% for the balance of the year. As a reminder, we do have production in Canada, primarily in candles, that represents approximately 3% of our total cost of goods. We also have a large Canada retail business, so there is exposure to retaliatory tariffs if applied to our categories, and we are still evaluating this as new information is being released in real time. I will say we are continuing to work hard to mitigate those risks through sourcing, assortment and pricing opportunities. In addition to the forward tariffs, we have increased investment into the Consumer First Formula of about $35 million. That is primarily marketing to accelerate our transformation. The majority of that investment, about 70%, is pointed to Q3, ahead of our holiday peak season, which should support both Q3 and Q4. We do view the highest upside to the business as investing in product and brand, areas that need more consistent, elevated support, and we believe over time, will create the most durable and consistent growth. Thank you. Our next question comes from the line of Ike Boruchow with Wells Fargo. Please proceed with your question. Hey, good morning, everyone. Daniel, I wanted to ask you, basically, you had a lot of innovation that hit in July. What are the key learnings from specifically the Fruit Fusion launch, the campaign with Hilary Duff? It's very different than what you guys have done in the past. Just kind of curious early learnings and how do you kind of use that to inform your decisions go forward? Yeah. Good morning, Ike. Thanks for the question. As I said, Fruit Fusion is off to a strong start. It exceeded our sales expectations in the quarter. As you might have seen, several forms sold out and our supply chains are working hard to make sure that we replenish that inventory. The way I think about it is Fruit Fusion stands for more than just a single product launch, and I think that's what you're poking at, Ike. Fruit Fusion is really the Consumer First Formula in action. It demonstrates a repeatable go-to-market playbook that we're going to use time and time again, as we go through the back half. It starts with product. We did what we said we were going to do in November. We took trend-right fragrances and real skincare benefits, and we gave more value to the consumer. We then built a bigger story around it, in this instance, of Fruit Fusion with Hilary Duff, but improved social creators, and then coordinated execution across our own channels, stores and digital, and on Amazon. This is the playbook. Create products that people want, tell stories that people remember, and make it easier to discover and buy. That's the sort of playbook that we're going to be running from here on in. The other important point about Fruit Fusion, which is a big learning and I think a return to what Bath & Body Works used to do so well, is franchise management. We are seeding these new franchises because we believe that they can be durable drivers of growth over time. Fruit Fusion isn't in this floor set and out the next. We are really getting back to that disciplined franchise management that the business was known for. We're adding two new fragrances to Fruit Fusion in Q3. We have new additional forms in 2027. We will continue to support it through marketing investment because we believe that the franchises give consumers reasons to return, and it allows us to extend ideas across multiple forms, and then it creates value beyond the initial launch. Net-net, we're pleased with that first outing of the Consumer First Formula. Sales beat our expectations. It's a go-to-market playbook and franchises will be a source of durable growth over time, and we're launching and seeding more in the back half of the year. Got it. No, that's super helpful. If I can add one more, Daniel, I don't expect you to guide next year, but I do want to ask, I think you said in the prepared remarks you expect revenue growth in 2027 based on the improvements you're seeing. Any chance you could elaborate on that timing? Is there more specificity there? Is there something that you're kind of waiting to see? Just kind of curious if you can elaborate a little bit more on that comment that you gave earlier. Yeah. I'm obviously not surprised you're going to ask that question, Ike. Look, I'm going to go back to what I always say. Everybody at Bath & Body Works is working with incredible focus and urgency to return us back to growth as soon as possible. We believe that the Consumer First Formula is the strategy to do that, and we are seeing better growth or more tangible results from that strategy, and we demonstrated that in the quarter. But as I said, we're not seeing that at the moment at a broad enough level and at a consistent enough level to be able to put it into our guidance. Our North Star is growth in 2027. That is the strategic North Star. But we're not giving financial guidance for 2027 on this quarter. We'll do that in future quarters, but know that we are working to that mandate and no one is more anxious to return to growth as soon as possible. We feel encouraged by the moves that we've made, and yeah, we're on it. Thank you. Our next question comes from the line of Lorraine Hutchinson with Bank of America. Please proceed with your question. Thank you. Good morning. Can you talk about key learnings from Amazon and Ulta? How do you ensure that it is not cannibalizing your own stores, these new sales? Good morning, Lorraine. Alternative Distribution is a key pillar of the Consumer First Formula. We are really pleased with the progress, both on Amazon and Ulta, but more importantly, what we learned in the quarter. We are exceptionally good at understanding the business in real time and reading and reacting. We launched on Amazon in Q1 in February, as you will recall, and the business, as I said in my prepared remarks, tripled in the quarter. We have a really experienced team in place managing this channel, and we have been methodical about learning it, including the customer behavior, pricing, AUR dynamics, and we have seen really strong sales growth as we increased our marketing investment, while it continued to deliver attractive margins. We also, as I mentioned, in the question from Ike, we simultaneously launched Fruit Fusion on Amazon as well as in our own channels, and that demonstrated how Alternative Distribution and Amazon can support a major product introduction. Remember, it is only roughly about 10% of our assortment is available on Amazon. It is not the full expression of our brand. If you want the full Bath & Body Works experience, you want all of our seasonal products, you want our collabs, our own channels are still the places to go and get that. With regards to Ulta, it is early. Ulta is an absolutely best-in-class specialty beauty retailer. It is exactly the kind of strategic partner we need as we expand our presence, and the early response has been really encouraging. We have seen strong consumer reaction to trial size and to gifting. That is what we expected. It is a channel where we are introducing the consumer to Bath & Body Works. More to say there, but we have exciting plans with Ulta as we move into the holiday period. What I would say at the end of the day is that we're not expanding our distribution to just add more doors. We're really going after new consumers, and each partnership has a distinctive strategic need. Amazon is about convenience, and Ulta is about trial and discovery within a specialty beauty environment. The question that you asked, really, and the question we get a lot is about cannibalization. We have a lot of data under the hood on this subject. We monitor the impact of expanded distribution on our own channels on a daily, weekly, monthly basis. On everything that we are seeing to date, we have not observed any cannibalization in our own stores, or website. But rest assured, this is not something that we assume, it's something that we must continue to prove quarter in and quarter out. I would add in terms of our guidance, we're more or less tracking in line with expectations and expect the businesses to continue to build into the second half. Thanks. Switching gears, now that we're a few quarters into Free Shipping over $50, can you talk about the impact you've seen from both the sales and the margin perspective from this change? Yeah, sure. I would say in terms of revenue, as expected, there is more consumers choosing Free Shipping over $50 versus options like BOPUS. We are seeing some expected shift out of stores into digital, and that's very much in line with our expectations. In terms of the economics, it was planned for the loss of the shipping revenue, and that is also very much in line with what we think, and it's a modest headwind to merch margin, and we should have that fully lapped as we go into Q4. Maybe I'll just jump in here. Maybe we can talk a little bit about digital because we've said since the very first earnings call I was on that digital is a huge opportunity for Bath & Body Works. We've seen material growth from competitors and in the categories across e-commerce, and we have not fully participated in that. This quarter, it is a return to growth for the first time in a long time for Bath & Body Works. There's no doubt, Lorraine, that the Free Shipping over $50 is a driver, but it's absolutely not the only driver. We saw improvement in conversion, search visibility, product storytelling, merchandising, and personalization. I think it's important to remember that as well, that digital is not just a place to transact, it's a place to tell the story of our brand. I think a better digital experience will, over time, drive traffic and conversion across all of our channels. We're really pleased with the progress that we're making in digital. One quarter doesn't make a digital turnaround. We remain dissatisfied as always, but it's definite evidence that the improvements that we've made over the last year are beginning to work. We have a really, really strong digital team in place. We have a roadmap of improvements through the back half and well into 2027, and we're going to continue to deliver on them. Thank you. Our next question comes from the line of Simeon Siegel with Guggenheim Securities. Please proceed with your question. Great. Thanks. Hey, everyone, morning. Hope you had a nice summer. Daniel, maybe just to follow up on that a little bit. You did call out digital as being one of the first areas of focus. You said it would be the first to turn. It did. Talk to us about how sustainable you think that is. It sounds like you think it is. Any other changes digital we should see from here? I am also curious, based on the learnings, how similar do you think, as you diagnose the store dynamic, how similar is that going to track versus the changes you made to digital? Obviously, the nuance will be different, but maybe the confidence you have in the stores from that. If you can elaborate a little bit more separately, if you can elaborate a little bit more on the underlying profitability drivers built into the new full-year guide, excluding tariffs, just trying to think through how you are thinking about long-term gross margin and EBIT margin opportunity. Thanks, guys. Great. Yeah, thanks, Simeon. I hope you had a good summer also. Look, I am really bullish on the digital opportunity for this business. I think we have taken important steps over the first year to improve the overall experience. One quarter of a return to growth and mid-single digit growth. We are not taking victory laps over here, just so you know. I think that underneath that, the improvement in new consumers, the improvement in existing consumers, and the improvement in reactivated consumers gives us more confidence than the mid-single digit for a single quarter sort of portrays. We have a strong roadmap of continued improvements ahead. So, we feel really good about where we are going, and it is certainly my expectation that we continue to see growth in digital in the back half and through 2027. Maybe now turning Tom to the points on margin. Yeah. In terms of full year guidance, I will start there. Gross profit is projected down slightly, and that is driven primarily by deleverage in B&O on lower sales. Within merchandise margin, I think there are a few important themes that I could hit on. One, AUR was flat in the first half of the year, and we are assuming about flat promotional environment in the second half of the year. Second, there is investment into product and transformation that will be a modest headwind to merchandise margin. Third, our wholesale businesses, international and expanded distribution, are growing faster than the total. They do carry a lower merchandise margin rate, but they are accretive in OI rate in dollars. Finally is the tariff and inflation environment, of which I spoke about a little bit earlier in the call. In terms of SGA, there is deleverage on the sales decline. All of the dollar growth in SGA right now is pointed into marketing. Our Fuel for Growth efforts have offset all other investments, merit inflation, et cetera. I just want to come back to your question on stores, because I think there's an important strategic point here. What does digital teach us here? It teaches us that when we change the complete proposition, we add new product, we add new marketing, and we improve the total proposition, which is, I think, what you see today if you go on our website, we drive growth. We are improving stores at the same time. We've completed the largest merchandizing project, remerchandising project in a decade in Bath & Body Works, and the response has been good. We have more to do in our store experience in the back half to make sure that consumers can really feel that change 10 feet out from the lease line and on the lease line. We're very aware that stores remain under pressure, and we don't expect it to just improve by putting new product in there. We have got to do more to earn a visit, and we have strong plans in the back half to get after that. Thank you. Our next question comes from the line of Matthew Boss with JPMorgan. Please proceed with your question. Great. Thanks. Daniel, if you break down the box by category, help us to bridge in your forecast for moderating revenues that you are anticipating for the third quarter. Have you seen any change in behavior near term, or what is driving the embedded sequential softening? Tom, what do you see as the right operating margin multi-year, given the changes that you are making and implementing to the model? What is the baseline revenue growth needed to achieve annual operating margin expansion on an annual basis? Matt, look, I think I would point back to our six strategic indicators. Those are the proof points that we are using to guide our strategic progress. We are looking for new to brand consumers, AUR on product innovation, sequential improvement in body care, digital growth from expanded distribution and savings and Fuel for Growth. Those are all things that we are tracking to make sure that the strategy is on track. I do not expect any change in behavior. What we are working hard to achieve as a team is to make the things that we are doing broader and more consistent as we go through the back half. We would like to see our digital growth continue. We would like to see body care continue to grow. We absolutely have to do more to attract a new consumer, and we have to do more to reduce the pressure that we are seeing in store traffic. We have proven that we can do that in digital. It is now a question of making sure that we are attacking that in the back half of the year, and we have got plans to do it. Yeah. I will speak to the long-term model. I would say right now we are most focused on delivering the second half, so we are not guiding beyond this year. But in general, we should be able to get margin expansion with positive sales growth in line with market growth, let us say, up mid-single digits and with improved brand health that would allow us to realize AUR growth over time. Thank you. Our next question comes from the line of Adrienne Yih with Barclays. Please proceed with your question. Great. Thank you very much. I will just say that the DTC e-commerce, the website is so much cleaner, so much easier to shop, so I can totally see why the messaging there comes through. I guess my first question is, how much of the product offering, as you envision it is online and in stores, including SKU reduction and new launches? So where are we in that journey of what you would be satisfied with as the full and correct presentation? Secondly, we often see this kind of inflection in, whether it is REDprice selling or DTC, where you learn what is working there, and then you kind of translate it into the stores, but it is much more difficult to show that offering very clearly. As you go through the stores, how many stores are in this cleaner format, and how many can you touch before the end of the year? Thank you. Yeah. A lot in there. Let me start on the assortment. The most important point is that we have an incredible innovation pipeline that goes all the way through the back half. We said that we had a stronger pipeline of innovation in Q2. We just saw Fruit Fusion, but we have more coming in body care, home fragrance, and across our categories. So I feel good about the product pipeline. As it pertains to SKU reduction, I will go back to what I have always said, which is two things. Firstly, we are focused on our hero categories, and the hero categories are where we are seeing growth in the marketplace, and we believe that we have an authority to win. SKU reductions to a certain extent, and the exit from laundry was both because it didn't reach a commercial threshold for us, but also because we want to focus our resources behind the places that we have the right to win. We're not chasing a SKU reduction number. What we're trying to get to is growth in our core categories, growth in the business overall, and a cleaner environment in our stores. It's not like we're not targeting a number, and I'd say we broadly are where we expect to be in terms of our overall SKU rationalization program. When it comes to store presentation, I'm very pleased with what the team did with the remerchandising project in the second half. As you noted in your question, rolling out that change across 1,900 stores is no mean feat, and the team executed it well, and consumer response has been good, and conversion is up in our stores. That said, we do have more to do, as I said previously, to earn the visit, is the way I think about it. And I think you're right, that we need to do more to alert existing, new, lapsed consumers of the change that's taking place in Bath & Body Works. That is both through marketing, and we're seeing good early reads on the increased investment that we put into the business in July. But also we need to do more at the lease line, more to engage consumers, more within mall marketing. And that is something that we're focused on in the back half. It will start, as it always does, by testing and learning. We'll be testing, eventing, and lease line disruption in hundreds of stores. And when we get a positive result, we'll roll it out to thousands of stores. That's how this business has always operated, and we have a strong operating muscle in that regard. Thank you. Our next question comes from the line of Alex Straton with Morgan Stanley. Please proceed with your question. Great. Thanks so much for taking the question. Just drilling down on the North America store business a little bit more, it seems like there were some possibly one-time headwinds in the quarter. I am just wondering how much of those dynamics remain a drag into the back half. Maybe, Daniel, what is the clearest KPI you are focused on today to understand if that part of the business is actually inflecting? Just as a follow-up, maybe as you are thinking about investing in the store experience, do you have any updated views on just the North America store fleet in general, like how big it should be from here? Yeah. Great. As we noted, store traffic was pressured in the second Q. That is both a Bath & Body Works problem and a macro problem. We do not expect the macro environment to improve, and that is obviously not built into our outlook. We do see our categories continue to grow, so we are not using the macro as an excuse. We believe we have to compete to win in our categories, and we believe we have to earn a right to a visit. We are not looking at softer mall traffic as a reason why we shouldn't return to growth. We believe that there are a lot of levers that we can pull to address the traffic softness that we saw in Q2, and I answered some of that in the back half. I would say, we continue to be focused on the six strategic indicators of progress that I outlined in a previous question. I would also say, obviously, we are focused on the retail equation. The number one thing that we are talking about right now as a management team, and really working on, is making sure that we reverse that traffic softness that we saw in the second quarter. We understand the problem. We have a list of initiatives against it, and we are looking forward to activating those in the coming weeks. I might add, in terms of our overall fleet, we have a very profitable fleet. Virtually all stores are profitable, and we view our store base as a competitive advantage and an important component of our overall marketplace strategy. We actively manage our real estate portfolio, opening new stores in new convenient venues, closing stores in declining or vulnerable malls, and remodeling stores in critical centers. We will continue to study performance and optimize capital deployment and footage to meet the needs of the business over time. Thank you. Our final question this morning comes from the line of Kate McShane with Goldman Sachs. Please proceed with your question. Good morning. Thanks for taking our question. You said the June semiannual sale was impacted by having lower levels of clearance. Can you just talk about how you see the role of the semiannual sale going forward? Yeah. Thanks, Kate. It absolutely was. Tom mentioned in his prepared remarks that we deliberately went into SAS with a little bit less distressed inventory. That's because we're buying our seasonal business correctly. We aren't looking to buy large amounts of inventory that we can flush through in semiannual sale. There are certain things, certain franchises, certain long-term drivers of growth that we want to protect. That was a point of headwind in the second quarter. That said, SAS, January sale, promotions, markdowns are a very important driver of our business. We are not looking to pull them away from the business and from the consumer, but we don't intend to be increasingly promotional in the back half of the year versus the LY. My macro is, you can't promote a business back to health. We're using that lever less, and we're using brand marketing and product as the things that we are leaning on to drive growth in the back half. Thank you. Ladies and gentlemen, that concludes our question-and-answer session. I will turn the floor back to Mr. Long for final comments. Thank you for joining today's call. A replay will be available for 90 days on our website. Thank you for your interest in Bath & Body Works. Thank you. This concludes today's conference call. You may disconnect your lines at this time. Thank you for your participation.