Good morning. My name is Cedric, and I will be your conference operator today. At this time, I'd like to welcome everyone to the Victoria's Secret & Company's third quarter 2021 earnings conference call. Please be advised that today's conference is being recorded. All parties will remain in the listen-only mode until the question and answer session of today's call. At that time, to ask a question, please press star then one on your phone and record your name at the prompt. I would now like to turn today's call over to Mr. Jason Ware, Vice President of Investor Relations at Victoria's Secret & Company. Jason, you may begin. Thanks, Cedric. Good morning and welcome to Victoria's Secret & Co's third quarter earnings conference call for the period ending October 30, 2021. As a matter of formality, I need to remind you that any forward-looking statements we may make today are subject to our safe harbor statement found in our SEC filings and in our press releases. Joining me on the call today are CEO Martin Waters, CFO Tim Johnson, and EVP Finance Brad Kramer. We are available today for up to 45 minutes to answer any questions. All of the results we discuss on the call today are adjusted results and exclude the special items described in our press release. Thanks, and now I'll turn the call over to Martin. Thanks, Kevin Wynk, and good morning, everybody. We're very pleased with our third quarter performance, which saw us achieve growth in all core categories. Our work to deepen our connection with the customer while improving our operational fundamentals is gaining traction, and the customer is responding positively to our brand transformation. We continue to improve our merchandise assortment and expand our already strong file. I'm so proud of the commitment and resilience demonstrated by our teams who delivered these results in obviously challenging circumstances, and in doing so, are demonstrating the power of a happy and healthy culture. Turning to our third quarter performance, we delivered sales, margin, and operating income growth on top of solid results last year, and that in spite of significant supply chain headwinds this year. We reported third quarter earnings of $0.81 per share, ahead of our previous guidance of $0.60-$0.70. The per share result was similar to last year's adjusted earnings per share of $0.82, as the impact of operating income dollar growth was offset by the interest costs associated with the debt from our public company spin-off from our brands. Sales growth of 7%, combined with significant growth in merchandise margin rate and disciplined expense management drove these results. Compared to 2019, sales actually decreased 9%, and that's reflecting the net closure of about 260 company-operated stores since the third quarter of 2019. However, comparable sales increased by 4% compared to 2019. Operating income in the third quarter was $108 million, which is an increase of nearly $11 million or 11% compared to last year, and an increase of $204 million compared to 2019. As shared in our written commentary, we believe the supply chain pressures will significantly impact our results in the fourth quarter. Operating income for the fourth quarter is expected to be in the range of $295 million-$335 million, which is down from last year's result of $388 million, driven by those same supply chain headwinds that we're estimating $100 million of cost from those and lapping one-time rent abatements last year, which were about $65 million. Thank you. That concludes our prepared remarks, and at this time, we'd be more than happy to take any questions that you might have. As a quick reminder, if you'd like to ask a question, please press star then one. One moment for the first question. Our first question comes from Lorraine Hutchinson with Bank of America. Your line is open. You had some new launches this quarter, and I just wanted to see if you could give a little bit more detail around the reaction to new launches, what you're hearing from customers, and then if you could give us a forward look into how robust the pipeline for newness is over the coming quarters. Thank you. Yeah. Thanks, Lorraine. Thanks for the question. As you heard me say, Lorraine, we had growth in all major categories, which is terrific, and actually margin growth ahead of sales in those categories. The good news is that it was driven by newness. Particular strength in the Infinity Flex bra, which came in at our number five bra frame, which given a relatively cautious buy, was an incredible result, and we'll be building on that in 2022. That was really good. We were thrilled with the response to the Maternity bra, which had among the highest likes and ratings of any of our social media posts through the year, and actually was our number four bra frame on the days that it was featured. From a standing start of never having been in that business, we saw a huge jump. There were other sort of pockets of newness that were less significant to the dial moving, but were very strategically significant, like the inclusion of a Mastectomy bra, which we bought 12,000 units and sold out in five days. All across the franchise in Victoria, we saw good growth and particular strength in the bra category. Within PINK, the Varsity Tee was very strong, as was our intimates business. It's worth noting that our logo shop had its record year, which obviously underlines the strength of the brand. Really pleased about that. Within the beauty business, there's continued strength in Bombshell, obviously the core of our business, but maybe a couple of other call-outs. Natural beauty in the daily body care line got to 5.5% of sales from a standing start, which was incredible. Really beautiful product. In the Tease franchise, we added two new flavors in Crème Cloud and Candy Noir that were both really big hits. Right across the board, newness is driving the business. You'll remember, Lorraine, from the old days when this business is at its best, we have a lot of newness, and it's genuine innovation. You asked about the pipeline for new product. I'm less focused on what's new for Q4 and more focused on what's new in the next 18 months. We need a much longer time horizon to newness than we've had in the last couple of years. Looking at our bra pipeline, we need at least two new bra frames per year, and I can see those. We need to engage and leverage the power of our collective to generate more newness. You may have seen that Hailey Bieber collab on a silk line as an example of leveraging that group. Lots of newness. Right now, the focus is on getting the merchandise here rather than inventing new. We have 10 weeks left in the all-important fourth quarter, and we're ready for action. Thanks for the question, Lorraine. Thank you. Thanks, Lorraine. Next question, please. Our next question comes from Ike Boruchow with Wells Fargo. Your line is open. Hey, good morning, everyone. Wanted to focus on the direct business. You know, this was the second quarter in a row of year-over-year declines. Can you kind of walk us through what's going on in that channel? How much of this is just kinda right-sizing promotional activity and better full price selling? Then, you know, just when I look at the model, Q4 has a pretty robust compare, as does Q1. Should we kinda assume that you're gonna continue to have you know year-over-year declines in that channel until we start to lap that maybe in the second quarter of next year? Just trying to understand how that channel, the puts and takes of the channel right now. Yeah, thanks, Ike. You talk about decline, but remember, we're comparing against a very odd year where stores were not open. I don't quite see it that way. The way I look at it is that our digital business in Q3 was up 23% on a two-year basis, which is broadly similar, slightly behind, but broadly similar with the increase that we saw in Q2. Actually, the digital business was tracking pretty well. The real story is that stores came back. A significant part of our competitive advantage is having 850 points of physical distribution. Our most valuable customer is the customer that shops across both channels at the same time. My focus is less about the absolute participation of the digital business and more about the overall health of the system. That said, within digital, we had literally hundreds of upgrades to our user experience, and they're on the front end, but also in the back end in terms of omni-channel capability, ship from store, buy online, pick up in store, order from store, deliver from the web. We also stood up our new automated DC, which is truly robotic and state-of-the-art. We've been stress testing the digital system, and we just pumped through 2,200 orders per minute successfully. To dimension that, our peak hours would be about 30,000 orders per hour being processed. In our stress test, we did 99,000 orders in an hour. While there is still more work to do on our digital capability, and there always will be, I'm really pleased with the progress that the team has made. As it relates to the fourth quarter, we don't really know. I mean, what I would like to see, as I said, is stores continuing to roar back. We're at our healthiest when both channels are working really hard. As it relates to the 2022 guidance, we're just not in a position to say. You know, 10 weeks left in the quarter, full focus on that. We will give you guidance for 2022 when we come back in January, February period. For now, it's all about the fourth quarter. Thanks, Ike. Thanks, Martin. Thanks, Ike. Next question, please. Our next question comes from Matthew Boss with JP Morgan. Your line is open. Maybe you're on mute, Matt. Matt, you may be on mute. He's gone for coffee. Ted, you can go to the next question. We'll try to pick up Matt later. Okay. Our next question comes from Roxanne Meyer with MKM Partners. Your line is open. Great. Thanks. Good morning, and congratulations on a strong quarter. My question is, first on the sales metrics. You know, would you be willing to provide color on your AUR versus your basket size? Second, I'm just curious. I know you mentioned Hailey Bieber as part of the collective. Can you talk about the impact that the collective is having so far and the consumer response? Thanks a lot. Great. Thanks, Roxanne. Let's do that in reverse order. As it relates to the collective. Good morning, Roxanne. Nice to hear from you. We are thrilled with the response to the collective. You know, the repositioning of the brand continues to gain great momentum, and that shows up in our sales. It shows up in the health of the file, shows up in our social media likes and followership, 71 million followers on Instagram, and some really strong responses. We just did a Facebook Live event a couple of days ago. It was a terrific success. 20 million followers on Facebook, 10 million on Instagram. you know, there's real power in social media, and having the likes of Stella McCartney and Bella Hadid and Hailey Bieber and Valentina and Megan Rapinoe, Naomi Osaka, you know, all of these great names who advocate for women in some way, shape, or form is obviously positive for us. you don't need to take my word for that. I can tell you last night, looking at our brand tracker, the response to all things collective is 95% positive. That is an incredibly strong rating when, as you know, athletes and famous people that are not universally appreciated by everybody. we feel really good about the diversity that we have across that mix, and we feel really good about working with those partners in different ways. It isn't necessarily about merchandise in the case of Hailey. It could be about imagery in the case of Paloma. It could be about shapewear line in the case of Priyanka there. It could be about advocacy for breast cancer in the case of Linda. We have a wide variety of ways in which we can partner with these incredible women. I can tell you that the collective will grow. There will be more people included, and we will grow this family in a really strong and inclusive way. Brad, do you wanna pick up the financial question that Roxanne has? Yeah. Hi, Roxanne, this is Brad. Just in terms of a couple of the retail metrics in the third quarter, we have made significant progress over the last five quarters in terms of driving AUR expansion, and we saw those themes continue into the third quarter. We believe, in part, that's driven by the strength of the assortment and the health of the brand. The two call-outs would be that AUR expansion and margin rate expansion in Q3 is driven by a mix, a higher mix into full price selling and a pullback in promotional activity within the quarter. We also saw balanced growth on basket size across both channels and on a year-over-year basis growth expansion of that basket. Very healthy indicators looking at the metrics of the quarter. Thanks, Brad. Forgive me, I inadvertently referred to Stella McCartney as Linda McCartney. I'm showing my age there using her mom's name. Forgive me for that, Stella. Next question, please. The next question comes from Simeon Siegel with BMO Capital Markets. Your line is open. Thanks. Hey, good morning, everyone. Congrats on the ongoing progress. Just to follow up on that briefly on a different way of thinking about it, any way to break out the 1%-2% of supply chain sales pressure between the lost units versus maybe kind of the offset that you have from being able to raise prices because of scarcity? Just basically trying to think as we go forward, how you see the balance of units versus AUR as supply chain does ultimately reopen. Maybe as a follow-up to that, how are you buying inventory at this point into next year? Thanks, guys. Yeah. Well, I'll start with some color around supply chain, and maybe won't directly answer your question, Simeon, but I'll give a sense of what's going on in supply chain, which will hopefully be of use to everybody. As it relates to the fourth quarter and the back half of the year, we ordered in the order of round numbers, 200 million units of stuff, and 90 million of those 200 million are delayed. That's 45% of our purchase requirements for the fall season delayed, and the delays are between 2-9 weeks, and in some cases, we won't get the merchandise at all. All of our plans are being reworked. 90% of our merchandise will come in by air, and that doesn't make it super quick because air in the old days, meaning a year ago, used to be 2 days, it's now more like 9 days. In addition to that, we have 100 vessels at anchor right now that are not coming ashore. All of that winds up to $150 million worth of cost pressure, $50 million of which we recorded in the third quarter, $100 million of which will be in the fourth quarter. It's a really big thing. I don't buy the scarcity equals more equals faster selling. We don't see that happening at all. You know, if I look at a category like PJs right now, 25% of our PJs are late. Today, we have 30% less PJs in our system than we had a year ago. That is clearly bad for business. It impacts the customer in that she doesn't see the array of newness that she's used to seeing at this time of year. Now, that'll put pressure on November. We hope that December will be better, and we're expecting that December will be better, and we think that there's some upside in January as well. The biggest issue, frankly, and you alluded to it a little bit in your question, is the lack of ability to chase. Normally, we would buy a season at 55% bought, 45% chase. We can't do that now. You gotta place all of your bets. The same will be true for the spring season in that it's just not safe to leave orders on the table, money on the table, and chase to it later. More buying forward, longer lead times, less agility in our supply chain, more reworking of our plans on a daily basis to respond to what we have. With all of that said, customer doesn't care. She doesn't come into our shops and say, "Oh, I see that they've got some delays." Our job is to just make the best out of the assortment that we've got, and that's what we're doing on a day-to-day basis. I hope that gives you more color on the question. If there's anything I missed, please jump back in. No, that's great. Thanks a lot, guys. Best of luck for holiday. Cool. Thanks, Simeon. Next question. The next question comes from Matthew Boss with JP Morgan. Your line is open. Great. Thanks. Just had some technical difficulties there, to start off the queue. Congrats on a really nice quarter. Great. Thank you. Martin or TJ, on the multi-year mid-single-digit revenue target, thanks for all the color on the fourth quarter, and my sense is that, you know, maybe there's a little lumpiness as we start the year with supply chain and lapping stimulus. But as we think about that multi-year mid-single-digit annual run rate, is there any change in your confidence? I mean, I think that's where you see the category growing. Seems like there's opportunity relative to the category potentially on a market share perspective. But if you could just kind of walk us through that annual target, is that an annual step up that we need to hit that target? Or was that a mid-single digit target that you planned on hitting each year if there weren't any of these kind of one-time transitory items? Thanks, Matt, and welcome back. As you know, this call is all about the third quarter, looking backwards and staring forward into the fourth quarter. We're not spending a lot of time on our multi-year analysis, but I can answer your question, which is we believe in the target of mid-single-digit growth per year on the basis that that just keeps pace with market growth. We are not guiding to growth in market share. We're just saying if the categories we operate in, and they're good categories, as you know, if the categories that we operate in are growing at mid-single-digit, then we should do same. Is there reason to believe we could do better than that? There is. Equally, the competitive environment has changed beyond all recognition during the four years of our execution missteps. We don't have the God-given right to assume the market shares that we had in the old days. The landscape has changed. I think we'll do incredibly well if we keep pace with the current market, and we have reason to believe we might do better, but we're not guiding to that. Hope that helps, Matt. Great. Best of luck. Thanks, Matt. Next question. This question comes from Susan Anderson with B. Riley. Your line is open. Hi, good morning. Alec Legg on for Susan. Nice job on the quarter. Yeah, my question is just related to, on the website you have the Brands We Love section, which is essentially a third-party marketplace, and it carries some high-heat brands such as UGG. How big is that for the overall business, and thoughts on the direction of that going forward? Well, that's a great question. I love that question. I think that there is very high strategic significance in the idea of aggregating other people's content. I think it's a very big idea for us, one that we haven't leveraged previously. If you attended our analyst call that we had just before the time of the spin, I talked about one of the four pillars of the brand going forward being aggregation, and it speaks to exactly this. There are three reasons why I think it's a good idea. Number one, if it gets us, it meaning the idea of other people's content, if it gets us to categories or segments where we're currently underweight, that's a good idea. If it gets us to customer groups where we're currently underweight, that's a good idea. If the brand adds to the halo of our overarching Victoria's Secret positioning, it's a good idea. Among those three parts of the rationale, there are several places we could go. For example, extended sizes on the small end and the big end. A beautiful example launched this week is MINDD bras. A fantastic product where five sizes of bra in the category of double D and above get you to something like 38 different sizes, a bra. That's an incredible innovation, a really wonderful product at an accessible price point. Why wouldn't we partner with them to do something good? You should expect to see more in that area, including rethinking the way that we badge it, including rethinking the way that we assort, and edit what's in that collection to finesse it more so that it isn't just a collection of interesting stuff, it actually has real purpose, and that it aligns to our strategic purpose around advocating for women and uplifting and championing women, creating lifelong relationships with women and the power of advocacy and all of that. You asked how big it is. It's currently less than $100 million, but I think there is significant growth there for us in the years ahead. We've created a specific department led by Patti Cazzato to get after that opportunity. Thanks for the question. I appreciate it. That's very helpful. Thank you. Great. Thank you. Next question. Next question comes from Kimberly Greenberger with Morgan Stanley. Your line is open. Hi. Great. This is Alex Straton in for Kimberly Greenberger. I just have a quick question on your cash levels. It looks like you ended the quarter with over $300 million in cash already. Do you have any plans for how to use that? How much leverage is the business comfortable carrying? Just trying to get a sense for the use of cash flow, if you have any plans for that in the near term. Thanks for the question. Absolutely. We're very pleased with where we ended the third quarter. Very strong cash position at $330 million, as you mentioned. As we look out over the fourth quarter, if you were to take our guidance and kind of roll that out, that has us at a cash balance at the end of the year, probably in the range of $700 million-$750 million, with arguably light leverage in the business. We feel like we have significant dry powder going into 2022. As we've talked about before, you know, kind of the run rate of the business is EBITDA on a $1.2 billion basis. We have a lot of flexibility on different ways that we can go. Having said that, investing back into the business, to grow our core business or look into emerging businesses, as Mark just mentioned, and growing relationships there, we think there's a number of different ways that we could grow our internal business, and that normally is the best return opportunity for shareholders and for the company. Having said that, we'll have so much cash on hand and availability that we will definitely be looking at capital allocation opportunities with our Board of Directors. We've stated on a number of occasions we wanna make sure we get through holiday where we generate the majority of our cash and have a comprehensive view of 2022 that we can share with you strategically, and capital allocation will be a part of that. Look forward to our communication, you know, end of February, beginning of March when we give fourth quarter earnings and start to talk about 2022. Great. Thank you. Thanks, Alex. Next question. The next question comes from Adrienne Yih with Barclays. Your line is open. Yeah. Let me add congratulations on the progress. The store, the product looks great. Let's get more of it. Martin, I guess my first question is to talk about the five consecutive quarters of average unit retail increase. You know, clearly we're seeing lots of promos, but we're also seeing, you know, oh, after initial retail, wondering what's happening with the initial retail side of things. I imagine, I think that the consumer is responding to whatever you're doing. Two other quick questions, kind of more on the payroll side of things. What is your current average hourly rate? What's your ability to staff managerial and associate levels within the stores? Is there any type of long-term technology that you are investing in, either in the stores or DCs to increase automation and productivity? Thank you very much. Why don't I take the last two? There were multiple questions there. I'll take the last two because I couldn't get the direction of the first. On the last two, our hourly rate for associates differs across the geographies of the United States. It isn't reasonable to call out a single number. When you do, if I do call out a single number, people who are under that level say, "Oh, that's not what I'm getting." People that are over say, "I'm getting much more than that." It isn't really a meaningful number. What I will tell you is that there has been a modest increase in the rate that we're paying in our stores. Right now we have 25,000 people in our associate population. At peak, we're probably looking to get to about 30,000 people. We're well on the way to getting to peak for the December period. We've not found too much of an obstacle in getting the people that we want. That's partly due to the health of the brand and the happy and healthy culture that we've created, that people want to work for us. We have moved wages a little bit, but not in a particularly meaningful way. As it relates to DCs, actually our wage rates are up in a more meaningful way in the warehouses, very meaningful increases as that's a very, very competitive environment here in central Ohio where the majority of our DC operations are. Yes, as I mentioned earlier, we do have a fully automated DC up and running that will deliver about a third of our direct-to-consumer, maybe 40% of our direct-to-consumer, merchandise for this holiday period. It's the result of a $150 million investment over a couple of year period. It's very, very impressive. If you're ever in Columbus, Ohio, I'd love to show you around. Brad or Jason, do you wanna take the other questions? TJ? Yeah, I think if I understood your question right, this is TJ. It was focused on, I think you mentioned five consecutive quarters of average unit retail increase and kinda how we're feeling about that relative to promotion, et cetera. I think the short answer is, I think we feel very good about how our mix of selling transpired during the third quarter and how we're positioned for fourth quarter. As Martin mentioned earlier, regular price selling was actually up a little bit, and promotional and red line selling was actually down a little bit. I think that was maybe a little different than what we were hearing back from investors during the quarter. I think what we were hearing was there was a feeling we were being more promotional, and I think, you know, the numbers and the margin rate performance in the quarter don't bear that out. I think what you were feeling from a promotional standpoint was better execution in terms of the messaging being clear and being very bold when we have something to say from a promotional standpoint. You know, the performance by business was a little bit different, so a little stronger regular price selling in lingerie as an example, as Martin mentioned, particularly around bras and the launches. Overall, we're pleased with kinda how regular price versus promo activity is trending in the business. We look into fourth quarter, it's important that everybody understand, as we've talked about multiple times now already, the timing of when we receive deliveries, the glide path to holiday and the glide path to January and exiting the quarter, depending on when deliveries actually hit stores, we will need to be flexible with our pricing. As you think about the messaging you're seeing from us, just keep that in mind, and kind of pivot back and look at our margin guidance and know that we've tried to take that into account. Fantastic. Best of luck for holiday. Thank you. Thanks, Adrienne. Next question. The next question comes from Marni Shapiro with The Retail Tracker. Your line is open. Hey, everybody. Congratulations. Stores look great. Martin, you guys have done a really fantastic job of not just expanding sizes, but changing your marketing to speak to this customer. I'm curious if you could talk a little bit about growth in this category in bras and panties. Are you seeing that outpace your regular size business? Could you also talk about the growth in the customer file, in particular on that size? Morning, Marni. Thank you for the question. Thank you for the congratulations. We appreciate it. As I mentioned, we are seeing our strongest growth coming out of intimates, and that's important because we're a bra company. Bras is the best growing part of the business. It's coming from all sizes, to be honest. We are seeing some pickup from the extended sizes, but the growth isn't exclusively in that area, it's in all areas. I'll somewhat get to your question about the file by telling you that in the last quarter, Q3, about 46% of our customers that we can see and recognize were new to the business. That's a lot. 46% of our customers were new to the business. That shows that we're speaking to a new community. Mm-hmm. As you know, speaking to millennials and Gen Z is our target rather than necessarily winning back consumers. I fuss less about how big or how small the customer is, whether she's old or she's young, you know, whether she's been in our stores or not, and just fuss about making the best possible impression we can. Every interaction we have with the customer either polishes or tarnishes the brand. I'd like that ratio to be 100 to 0. You know, it clearly hasn't been in our history, and so we've just got to set ourselves straight in that regard. What else can I tell you about the customer file? Well, the file after, I think 4 years, if they don't kick me out, 4 years of decline, several years of decline, we saw an uptick in Q2, and we saw a strong uptick in Q3. Net 400,000 new customers came to the file. That reflects growth of several million new customers and the usual attrition of us retiring, people who haven't purchased with us for a year or so. Net growth in the file is a very strong and positive indicator. For obvious reasons, Marni, I don't know how big or how small those customers are. As I said, I don't really care. I think we just need to reflect the customer base at large in everything that we do in our workforce and the way that we show up with imageries, with the mannequins that we have in stores. You know, every aspect of our business needs to reflect current culture, relevant culture, and the shape and the nature of our customer base, and we're getting much better in that regard, and I think the customer is noticing. That's outstanding. Are you seeing the customers come in digitally or in stores or a mixture of both? It's a mixture of both. As I said, our favorite customer is she who shops in stores and online together. They're the ones that we really want to attract. As we think about building capability into 2022, building that omni focus will be important to us so that we encourage the customer to shop in both channels. You know, nothing gives me greater pleasure than somebody coming into our stores, having a wonderful customer experience, buying nothing, and then ordering online. Yeah. Perfectly lovely. It's a great thing to do. We have three Store of the Future coming, as you know. Mm-hmm. If nobody's asked me about them, I'll tell you. The first one opens tomorrow. Tomorrow, I will be in Chicago for the opening. Actually, I think it opens on Saturday. I'll be there for the pre-opening tomorrow. That's exciting because there are some aspects of that representation, that new presentation that speak to the idea of having an omnichannel customer. Then we got a couple more opening in January, and I'm pretty sure that they will lead to some further developments and changes and enhancements in the fleet-wide during 2022 and 2023. Thanks for the encouragement, Marni. We appreciate it. Best of luck. Thanks, guys. Thanks, Marni. Next question, please. Next question comes from Janet Kloppenburg with JJK Research Associates. Your line is open. Hi, Martin. How are you? Congratulations on a good quarter. Thank you, Janet. I just wanted to get back to the supply chain pressures. First question is, you know, is there any chance that some of these delayed shipments of holiday products come in too late and that forces some markdowns or higher than expected markdowns in the post-season? Just wondering about that. Also just wondering about your outlook for the supply chain pressure in the first quarter. How do you see that unfolding? Can it improve, or do you think it could continue to be as difficult? Thank you. Great. Thanks, Janet. I got three questions there. The first one, there is some merchandise that's at risk of not getting here, and we got in front of that by canceling. Of the, I mentioned earlier, 200 million units of something that is on its way to us, that number was 210 million units back in August. We looked at what was in danger of that that was kinda seasonally biased and that was in danger of not coming and canceled it. About 10 million units canceled. Anything that is really seasonal that needs to sell before December 25, we're confident that it will come in time. We feel in good shape on that. We do think that we will have higher carryovers of merchandise like PJs and robes and slippers and other things into January than we've had in previous years. We're kind of okay about that because we know that last year we left money on the table in January. It'll be interesting to see how our full price selling matures during that period. To your second question, I don't feel overly stressed about markdowns. I do think the stores will be more full of inventory in December and mid-December, late December, than the customer is used to seeing. We just got to hold our nerve and let it play out. I think, you know, you've been following this game for a long time, as I have. The skill is in how you play your cards on a day-to-day basis. We have a stand-up meeting every morning to look at during December what happened the previous day, and we'll adjust accordingly. I'm not overly concerned about markdowns, but, you know, we'll be on the lookout. As it relates to The last one. The first quarter, we're deliberately not guiding, as I've said a lot. No question there will be supply chain pressure in the first quarter. No question, 'cause we're already moving stuff out of boats to airplanes. We're not dimensioning it for you today because our focus is where our focus is. Yes, there will be pressure into 2022, no doubt. Same for everybody. Do you expect it could improve, Martin, or you're not sure? I'm an optimist by nature, so you know, I'm the guy who's gonna go, "Don't worry, it's all gonna be better." I mean, the reality is this is long lead time stuff, right? So we already know what's coming February, we already know that some of it's impacted. So my reality check against my optimism says expect it to be about the same until further notice. Thanks so much, and best of luck. You're welcome very much. Thank you. Thanks, Janet. I think we have time for one more question. All right, our final question comes from Oliver Chen with Cowen. Your line is open. Hi, this is Joan on for Oliver. Thanks for taking our question. Just curious about the store refresh as you progress during the year and next year. Are you seeing, you know, any improvement in comp sales from refresh? And also, are you seeing improvement in the market where those refreshed stores are in terms of e-comm sales? Any color will be helpful. I'm gonna answer that with a not really, on the basis that we improved every store in the chain. We didn't have a holdout group where we said, "Oh, let's keep these stores looking terrible and see what the difference is." You know, we decided it was strategically important to make a refresh everywhere, right across our fleet. Every store has been touched at some level or another. And again, in terms of where we invest our energy, I've not been particularly fussed about saying, "Can you tell me if where we put the extra paint paid off better than where it didn't?" It kind of doesn't matter. What I am focused on is the ROI that's in our future related to Store of the Future, and that will reveal itself during the first quarter. What I am fussed about is the ROI as it relates to new real estate. We'll be putting down at least 10 new stores in 2022 that get after a different kind of real estate that we've not been in previously or not been heavily penetrated in previously, which is off-mall locations, which, as you probably know, are growing, and we're underrepresented. When we get those stores open, I think the first one opens in May, June, and then we have, as I said, at least 10 opening. Those will be very important for us to see how they play out because they could offer us indicators for what our CapEx will look like in 2023 and 2024 and beyond. Not much to say about the refresh. Lots to say about Store of the Future and new stores as we get into 2022. Hope that helped. Thank you. Welcome. Okay. Thanks, everyone. That concludes our call this morning. Thanks for your continuing interest in Victoria's Secret & Co. Thanks everybody.