My name is Sue, and I will be your conference operator today. At this time, I'd like to welcome everyone to the Victoria's Secret & Co.'s First Quarter 2023 Earnings Conference Call. Please be advised that today's conference is being recorded. All parties will remain in a listen-only mode until the question and answer session of today's call. I would now like to turn the call over to Mr. Kevin Wynk, Vice President of External Financial Reporting and Investor Relations at Victoria's Secret & Co. Kevin, you may begin. Thank you, Sue. Good morning, and welcome to Victoria's Secret & Co.'s first quarter earnings conference call for the period ending April 29, 2023. As a matter of formality, I would like 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 is CEO Martin Waters and CFO Tim Johnson. We are available today for up to 45 minutes to answer any questions. Certain results we discuss on the call today are adjusted results and exclude the impact of certain items described in our press release and our SEC filings. Reconciliations of these and other non-GAAP measures to the most comparable GAAP measures are included in our press release, our SEC filings, and the investor presentation posted on the investor section of our website. Thanks, now I'll turn the call over to Martin. Thanks, Kevin. Good morning, everyone. As we've shared consistently inside and outside of the business, we're laser-focused on the three pillars of our long-term strategy. Number 1, to strengthen the core, Number 2, to ignite growth, and Number 3, to Transform the Foundation of our company. We have defined and are delivering initiatives in each pillar that we believe will steadily provide profitable growth into the future. Before we dive right into the quarter, I want to share my appreciation for the hard work and dedication of our associates and partners around the world. I'm especially thankful for the team's continued commitment and for all they're doing as we push forward with our strategy. We entered the year clear about the pressure customers across the world are feeling and prepared for the challenging macro environment. As anticipated, the first quarter overall continued to be volatile and difficult for our customer. Sales performance was particularly challenged in our core categories, where external market data indicates that the overall stores and digital intimates market as a whole in North America was down mid to high single digits compared to last year. As the quarter progressed, our business in North America became increasingly more challenging, and while we ended the quarter with sales in line with our original expectations, we were more promotional than planned, and we continue to pursue our share of consumer spending. As a result, the quarter ended at the lower end of our adjusted operating income guidance. On a positive note for the quarter, inventory levels at Victoria's Secret and PINK ended the quarter down low double digits compared to last year, and we're prudently positioned as we move forward. Our international business continued its stellar growth around the globe, with China a particular bright spot. Adore Me met our expectations during the first quarter as part of Victoria's Secret & Co.. Turning to the numbers for a few minutes. In the first quarter, our adjusted operating income was $55 million, and adjusted earnings per diluted share was $0.28. Overall, sales declined 5% in the quarter compared to last year, which was in line with our expectation. Adore Me represented about 5 percentage points of sales growth in the first quarter. After a solid fourth quarter, sales trends softened throughout the first quarter, particularly in North America stores, where traffic finished below last year. In contrast, traffic online was flat compared to the first quarter last year. Conversion rates and average unit retail in both channels were lower than last year, but remained above pre-pandemic levels. From a merchandising perspective, we remain the leader in domestic market share for the intimates category. On a rolling 12-month basis, our domestic market share in bras was relatively flat to last year, while in contrast, our market share in the panties category was down year-over-year. Again, from a categories perspective, starting with Victoria's Secret, our casual sleep and beauty businesses continue to be our best performing categories, both in stores and online, followed by bras. Within PINK, casual sleep and intimates outperformed apparel, which had another difficult quarter. We estimate that the previously identified apparel challenges in PINK negatively impacted the first quarter sales by approximately 2-3 points. As I said earlier, our international business continued its stellar performance, with reported sales up 19% for the first quarter compared to last year, and total international system-wide retail sales were up in the mid-teens as well. The business continues to experience momentum and provide profitable growth across stores and digital around the globe. In particular, our China business experienced outsized growth in digital and strength in our stores as they lapped COVID-related restrictions last year. We achieved profitability in our China business for the first quarter and continue to leverage the strength and capability of our excellent partner, Regina Miracle. We continue to be optimistic about sales, profit and store growth opportunities for all of our partners around the world. Aside from the financials, over the last 90 days, we've executed several key actions in support of our strategy and positioning for the long term, including:... We're relentlessly focused on Best of Bra strategy and delivering newness, innovation, solutions, and inclusivity to our customers, and recently launched our Solutions Bra campaign, focused on a comprehensive collection of product solutions to cover a broad range of outfitting needs. Enhancing Victoria's Secret and PINK customer experience with the pilot of our new customer multi-tender loyalty program in February, with a full rollout to all of our customers planned for later this week. We launched our newest Heavenly campaign with a new look and feel, featuring the return of the beloved brand icon, Adriana Lima. We're about to kick off a test of having Adore Me products on vs.com and continue to leverage Adore Me's expertise and technology to improve the customer experience by developing our launch plans for try on at home and membership services for the Victoria's Secret and PINK customer in the third and fourth quarter, respectively. We took actions to advance the transformation of our foundation by further reorganizing and streamlining our organizational structure with a focus on efficiencies to yield profitable growth. We continue to make progress on our ESG journey and published our 2022 ESG report in April. I can't overstate how excited we are about the World Tour coming later this fall. It will be an epic reimagining of our iconic fashion show, celebrating women from around the world, an ultimate expression of our brand transformation. Looking forward to the balance of the year, with the difficult environment we experienced in the first quarter, now continuing into the second quarter, we've updated our financial outlook for the second quarter and the balance of the year. We expect sales in the second quarter to decrease in the mid-single digit range compared to last year, consistent with the first quarter results. We're forecasting adjusted operating income to be in the range of $35 million-$65 million. We expect inventory levels in our core Victoria's Secret and PINK business at the end of the second quarter of 2023 to be down mid-teens compared to last year. For the full year, we're now assuming current sales trends in North America will continue throughout the second quarter, with moderate improvement in the second half of the year as we anniversary stop the sales trends and as we begin to benefit from our new growth strategies and new customer experience initiatives, which are being rolled out this year. Our forecast assumes sales overall will be flat to down mid-single digits compared to last year, with the Victoria's Secret and PINK business down mid to high single digits for 52 weeks, approximately 4 to 5 points of growth from Adore Me, which is new to our results in 2023, and approximately 1 to 2 points of growth due to the 53rd week in fiscal 2023. At this level of sales, we now expect our adjusted operating income rate for the full year 2023 to be approximately 5%-6%. While we believe our customers will continue to be cautious for the balance of the year, we remain steadfast and focused on the three pillars of our long-term strategy. We're executing initiatives in each pillar to position us for sustainable growth over the long term. To highlight a few: under strengthen the core, new customer experiences include bra launches and innovation, reimagining our merchandise positioning and strategy for PINK, a full company rollout of our new loyalty program, new customer experience initiatives in our digital technology, further expansion of the successful Store of the Future format, and of course, the world tour coming later this fall. Within igniting growth, our international business has momentum, with partner expansion plans for more than 100 new stores and several new markets planned over the next 2 years. We also plan to leverage Adore Me's technology on our scale platforms, starting in the 3rd quarter and continuing through the fall season. We're continuing to expand our channels of distribution, for example, Amazon, to meet customers where they are. Finally, under Transform the Foundation, in the 1st quarter, we took additional measures to reorganize our home office and organizational structure for efficiency and continue to take steps to drive operating margin expansion by modernizing the operating model. These initiatives with future benefit are well underway, and we remain committed to the total $250 million opportunity identified at our October Investor Day. We've begun to realize the benefits related to these initiatives in 2023, with more than two-thirds of the total savings expected to be realized in 2024 and 2025. Of course, we recognize that neither our brand evolution nor our strategy will return their full potential overnight. They are a journey. We also believe they are a clear path to growth through the current turbulent environment and into the future. Our focus as leaders and as a company is on ensuring we continue to be future-facing and become more and more culturally relevant in this shifting consumer environment. We understand there could be volatility in our results this year. However, we remain committed to delivering our long-term financial targets and returning value to shareholders. Thank you, and that concludes our prepared comments. At this time, we'd be more than happy to take any questions that you might have. Thank you. At this time, if you would like to ask a question, please ensure that your phone is unmuted, press * one, and record your name clearly when prompted. If you would need to withdraw your request, press * two. Again, to ask a question, that is * one. One moment for our first question. Our first question is from Simeon Siegel with BMO Capital Markets. You may go ahead. Thanks. Hey, guys. Good morning. Martin, with inventory now cleaner, if the environment doesn't improve, could you just speak to how you'd plan to think through balancing revenue goals versus margin goals because you don't need to clear? TJ, what was the impact of Adore Me to gross margins? What should it add for the rest of the year? Just what's the implied fixed cost deleverage and gross and SG&A embedded in the 2Q and full-year top-line guidance? Thanks, guys. Morning, Simeon. Yeah, as I mentioned in my pre-prepared remarks, our inventory positioning is prudent. We are being cautious in our outlook. We approach the fall system, the fall season about 50% bought, about 50% open, so we have agility to chase into the things that are working. Obviously, the intent is to switch from being as promotional as we have been and to be more focused on newness, particularly excited about new bra launches, 2 within sport in the second quarter, big bra launch in the fall season in the non-fall category, and of course, in the non-sport category. We've got the relaunch of PINK as well as many other initiatives I talked about in my pre-prepared remarks. That said, if we continue to see market share pressure, particularly in the panties environment, we will promote as hard as we need to in order to ensure we get our fair share. As you know, as well as anybody, it's a balancing act, and we review it on a day-to-day basis. We're very thoughtful about our plans, and we are agile and able to pivot if need be. The main thing to say, Simeon, is that we're being prudent and cautious in our outlook. Thank you. TJ? I think the second part of your question, Simeon, from a gross margin perspective, you are spot on. Adore Me does operate at a higher gross margin than the Victoria's Secret & Co. company. I think we've commented before in the, probably the low 50s to mid-50s, depending on the quarter or time of year. Relative to the big company, Victoria's Secret & Co. in total, that would have had a positive impact on gross margins in the first quarter of about 20 or 30 basis points. Not overly material, but certainly we appreciate the health of that sale and the health of that business. I think taking a big step back from a gross margin perspective, gross margin rate in first quarter was down about 10 basis points in the VS and PINK side of the business, because of some of the benefits from supply chain, et cetera. Selling margin was actually up in the quarter for VS and PINK, the gross margin rate for VS and PINK was down slightly for the quarter, really because of the B&O deleverage in the first quarter. From an expense standpoint, difficult to speak to a fixed hurdle rate, given the level of sales that we're talking about and the different impacts. I guess I would answer the question slightly differently. Simeon, actually, from a dollars perspective, SG&A dollars, similar to first quarter for VS and PINK, we are forecasting SG&A dollars down year-over-year. That is down in second quarter, down in first quarter compared to the prior year. You may recall that throughout last year, each of the four quarters, from an expense standpoint, were down in the range of $30 million-$40 million a quarter, year-on-year. Multiyear, good management of the cost structure from a VS and PINK perspective. No reason to expect that that won't continue through the balance of the year. Last point I would make on cost, and then open it up to the next question, would be: we continue to make progress on our Transform the Foundation initiatives around cost, both from an expense standpoint and a margin standpoint. Expenses in the first and second quarter are positively impacted by those initiatives. We're confident as we move into the fourth quarter and holiday season, we'll start to see the margin side of that or the lower cost of goods impact that the team is working on. Everything is moving along as planned from a cost perspective. Hope that helps. Thanks. Perfect. Thanks, guys. Have a nice summer, and best luck to you. Thank you. The next question is from Alex Straton with Morgan Stanley. You may go ahead. Great. Thanks so much for taking the question. I just have a, have a couple for you. The first is kind of in relation to the top line. I'm just wondering, how do you think about the divergence between the North America and international performance? Are you doing something different internationally on a micro level there, or is there something else driving that difference? Then secondly, on Adore Me and the technology that you guys are benefiting from, can you just remind us what capabilities they bring with them and kind of what that unlocks for Victoria's Secret? Thank you. Yep, I'll take that one. Alex, thank you for that. So the divergence in performance between international, which was very strong, mid-teen system-wide sales growth, versus North America, I think is a number of things. One, I will point to the outstanding execution of our partners around the world who are literally, you know, truly world-class, and performing in a very strong way. Secondly, there are some easier compares to last year, where COVID was on a slightly more delayed impact than in North America. I think the economic impact that our customer is feeling, where, you know, a large number of our customers that have a household income in North America below $100,000 a year is more acute than it is elsewhere in the world, where our positioning is at a more premium level. There are a number of factors there, but overall, I would say that very strong execution in international. I will just point out China, where we are doing something different, to your point. Our partner, Regina Miracle, has built capability for us to be able to read and react and also develop products specifically for the China market, which is working extremely well, and developing influencer strategies that work really well online and in digital forums. We're developing a different model for China that's definitely delivering benefits, and we plan to expand that throughout Asia region. Lots of optimism in international. As it relates to Adore Me, we often say that in buying Adore Me, we bought two companies. One, we bought a company that is growing and profitable and pointing at the value sector of the market where we don't have Victoria's Secret and PINK pointing. That's a very good rationale for the purchase of the company. The second is it's a technology company, and there are many, many synergies that Adore Me can bring to our larger platform in Victoria's Secret and PINK. We've decided to focus on three for the first year, just three, even though we've identified many, many more. These are, number one, selling Adore Me products on the vs.com system, and that will begin later this month, in the month of June. We're excited about that. We'll be testing it. If you don't see it on your screen, it's because you're not in a test cell. That's number one. Number two is borrowing the excellent capability they have on the try-on-at-home system, which will launch in for Victoria's Secret and PINK, again, on a test basis during Q3, and then beginning to develop member services, which Adore Me have perfected over many years with great technology, including AI, that will be launched throughout the fourth season as part of our loyalty program. A lot going on at Adore Me. We continue to be very pleased with that acquisition. The management team is fantastic, and integration is going very well so far. Thanks for the question, Alex. Great. Good luck. Thank you. The next question is from Matthew Boss with JPMorgan. You may go ahead. Great, thanks. Two-part question. Maybe first, Martin, could you elaborate on the cadence of traffic that you saw in the quarter? Have you seen any change in trends so far in May against the easier comparisons? Secondly, could you elaborate on the balancing act that you mentioned between promotion and market share? I guess, what are you watching on the competitive front to dictate your potential actions? Thanks, Matt. I'll go to TJ on the traffic, but I'll take the wider point about the balancing act. You know, our intention is to be a high emotional content, added value, premium retailer. Our intent is to go to market with outstanding newness that cuts through and that minimizes our requirement for promotion. You know, that's the game that we play, and we know that that works, particularly in the bra category, where our big bra launches, like Love Cloud and innovations to the Solutions launch to a lesser extent, they really cut through. We saw growth in market share in the non-sport bra category over the last 12 months. That works for us. It's a little harder for us to pull that trick off in a category like panties, where it's more of a generic category. Even though we have a very strong position at over 26% market share in that category, we are under pressure from the marketplaces, particularly Amazon, Walmart, Target, who are selling that item at a commodity price. It's harder for us to compete just on the basis of newness and quality and innovation. You know, we end up being drawn into a promotional battle in some of those areas. Similarly, in the sleepwear category, you know, our intent is to lead with the best quality product, which we're confident that we have. When it comes to the fall season, it's a very aggressive marketplace, and we have to make sure we get that balance right. That's the sort of thing that I'm talking about. Our intention is to do both. We're monitoring market share in each of the subcategories very closely. Sport, as you know, is an area where we've been under penetrating. Previous management decided not to focus on that category, and we walked a ton of market share. We are determined to get back into that business. We have a very exciting launch in Q2, in fact, two launches in Q2 that will start to put some runs on the board in that arena. TJ, do you want to take the traffic? I think from a traffic perspective, Matt, as we commented in our prepared remarks, we were very pleased with traffic during the fourth quarter, particularly at store level. During the holiday time period, when there was significant opportunity with the customer, and it was a very, very promotional environment, we were able to cut through, and store traffic was very strong. It was one of our brighter points, if you recall. Once we moved through semiannual sale in January, really end of January, going into February, is when we started to see, traffic at store level start to slow, and we started to lag the mall from a traffic perspective as we went into March and April. We do think there's some level of connectedness between store traffic and the challenge in terms of the intimates market, where it was relatively flat domestically, and intimates market, including bras and panties, was relatively flat in the fourth quarter, and we saw a dip to being roughly down high single digits in first quarter. We do believe, to Martin's point, particularly in panties, and to a certain extent in bras, that's the biggest part of our business. We have to assume that that's what drives traffic to our stores, when the overall market was challenged. We think there's a connectedness between that and store-level traffic. We're working to do our best. As Martin mentioned, there are a number of things planned for second quarter around newness and launches, particularly in the bra category. as we move into the balance of the year... As we talked about in our prepared remarks, there's probably a half a dozen things that are new and different that were not pre-present in our business in first quarter that we think can have a positive impact. We recognize that, you know, near term, the spring is gonna be a challenge. Thank you. The next question is from Lorraine Hutchinson with Bank of America. You may go ahead. Thanks. Good morning. Martin, I was hoping you could give us a state of the union on the intimates business in North America. Have you been able to diagnose why there was such a big trend change in the first quarter? How are your competitors reacting to this? Is it simply promotions, or is anybody launching any interesting newness to try to compete and take share? Good question, Lorraine. Good morning. I don't think that we have a single silver bullet answer for why the market turned so dramatically between Q4 and Q1, but we see it in the numbers across the board with high single-digit decrease in the market. You know, there's some belief that women are wearing outer tops that don't require bras. To some extent, there may be some element of that. There may also be a belief that during COVID, our categories were particularly strong, and now the cycle has moved a little bit, and with spending pressured, as we know that it is for all of our consumers, there are other things to spend on, including beauty and outerwear and holidays and vacation, and going out, and food and beverage, and all of those things. You know, there's no single reason or structural reason why the category overall is down, but we're confident that it is. We have to do as much as we can to get traffic into the stores with that difficult environment. Where I go to do that is innovation. Let's provide reasons for the customer to believe that it's worth spending money on our category rather than on other categories, and that's where we're maniacally focused. That, and using technology to our advantage to try and increase customer spend and increase loyalty. The launch of the loyalty program tomorrow, as it happens, is part of that, and the testing of try on at home is part of that, where we really try and leverage our best customers to get the highest possible return that we can. I wish I had a better answer for you, Lorraine, but I don't right now. Thank you. Thank you. The next question is from Ike Boruchow with Wells Fargo. You may go ahead. Hey, good morning. Two questions from me on the overall market. Again, I know you guys probably don't have the crystal ball to know exactly the answer here, but, you know, we've always kind of known or thought that, you know, the intimates or underwear, those type of categories are more resilient when the macro slows. People still need to buy bras and underwear. Do you know why, or any thoughts on why the trend change from flat to down high single digits? It just seems a bit extreme and kind of counterintuitive to what, you know, we've kind of thought over the, you know, over the years. Just within the categories, what exactly is it that you think is driving the share loss in panties versus bras, which seems to be, you know, executing a little bit better? Thanks. Yeah. Hi, Ike. It's kind of the same question that Lorraine answered, so I won't repeat everything that I said in response to Lorraine's question. I might just add that, you know, if the category is under pressure and if the consumer is feeling less affluent, and we know both of those things to be true, it logics that she will skew to a lower price environment. As we track who is gaining share or who is doing best or losing the least share, it tends to be at the lower end of the market. Volume overall is down, but dollars are down more than units. Clearly, that doesn't play to our advantage when we're an added value, high emotional content player. We've got to find strategies to overcome that. You know, it behooves us to find ways to cut through that and to be more differentiated than we've ever been previously. I will tell you, as I said earlier, that in the non-sports bra category, that's working for us, and we've gained some share, albeit in a market that's down. Panties has been the most challenged, and I go back to what I just said, that in a market like panties, it's easier to default to a generic and a low price when the economic environment is tough. That doesn't mean we're waving the white flag and saying there can be no innovation and no quality improvements and no emotional content. There can be, and we'll get after it. The other area where we can do better, frankly, is in our matchback business. Making sure that we always have at least one choice, ideally two choices of coverage in a matchback to the bra. We know that if we don't have that matchback panty in store, it can impact our bra business. That's, you know, that's a, that's a nightmare for us. Being maniacally focused on making sure the matchback business is as strong as it can be, both online and in stores, is really important. We weren't at the strongest we've ever been during the last quarter, so there's definitely room for improvement there, Ike. Thank you. Thank you. The next question is from Mauricio Serna with UBS. You may go ahead. Great. Good morning, and thanks for taking my question. I just wanted to get a little bit more detail on what were the puts and takes on gross margin, if I think about it from the promotional and the freight, you know, how much did higher promotions affected the gross margin and versus the freight contribution to the expansion, and how are you thinking about that for the second quarter? Maybe just a second, a follow-up on the AURs. I think you mentioned on your prepared remarks that those were up versus pre-pandemic levels. Could you give us a little more detail of how higher are these versus pre-pandemic? Thank you. Yeah, I'll take the first one. On the margin perspective, Mauricio, from a supply chain and freight perspective, as we called out in our prior guidance, I think we had estimated a potential benefit to the quarter of around about $60 million. Everything from our perspective came in or around that number very closely, so that was a tailwind, an expected tailwind that we've been looking forward to for many, many months now. Partially offsetting that was increased promotions year-over-year, as we mentioned in our prepared comments. I would just remind that, you know, first quarter, a year ago, retailers like us were talking about price ups. first quarter last year was not a very promotional quarter for our business or in retail, so the increase in promotions we saw this year was kind of more to the trend that we saw in the back half of the year. If I think about selling margin in total, Mauricio, selling margin for the VS and PINK brands was up year-over-year, with the supply chain benefits being only partially offset by higher promotions. From selling margin to gross margin is really where you see the impact or the pressure from buying and occupancy deleverage on the lower sales. I would think about a selling margin up, buying and occupancy deleverage, getting us to roughly a flat gross margin rate for the quarter. That was first quarter. As we think about second quarter, the supply chain benefit will be less. We did not experience as big of a challenge in the second quarter a year ago, so the benefit will be less. The promotional levels year-over-year will be, I'll say, similar to slightly up, not as dilutive as what we experienced in first quarter, but the B&O deleverage is roughly the same and real. In the second quarter, you know, almost the entirety of the gross margin challenge and our guidance relative to the prior year is B&O deleverage. Hopefully that helps. Selling margin up in Q1, offset by B&O deleverage. Selling margin in Q2, relatively flat, or up slightly. The decline in gross margin is all about the buying and occupancy deleverage. I think from an AUR perspective, Martin- I don't wanna give you the precise numbers, obviously, Mauricio, but let's take the bra category. bras are, AURs last year were very meaningfully ahead of 2019, like, think 30% ahead of where we were, and 25%-30% ahead of where we were in 2019. We gave back high single digits this year versus last year. Where we are right now versus 2019, we're still meaningfully ahead, over 20% ahead. Similar pattern to Intimates overall, but not as pronounced, meaning that we are still meaningfully ahead of 2019, but we gave back a little bit, mid-single digits, relative to last year. Hope that helps! Great. Thank you very much. Thank you. The next question is from Adrienne Yih with Barclays. You may go ahead. Great, thank you very much. Just on that last comment, Martin, so, you know, given that the AURs are still significantly higher, what is your level of confidence that that level continues to be sticky going forward? TJ, for the relaunch of the fashion show, well, I guess but for both of you, Martin, can you talk about that? How is it different? TJ, can you talk about is that incremental to advertising spend in the back half, or is it redirected spend from elsewhere? Thank you very much. I'll take some comments about the fashion show, TJ, and then feel free to piggyback. What's our confidence level in maintaining AURs or increasing AURs? You know, as I said, high-end bras, where it's a high emotional content, where it's highly technical, where we're selling better bras than anybody else, you know, that's the reason to believe. We have access to the best innovation. We have access to the best vendors. We have access to the best design. You know, we should feel very confident in that arena. Less so in panties, because it's more of a generic category. Similarly, on sleepwear, we would feel that we have some advantage. I'll also talk a little bit about beauty, where we've seen some success, even in this difficult environment. Our beauty business posted positive comps for Victoria's Secret, with EDP particularly strong, Bombshell and Bare fragrances being particularly strong. The Heavenly campaign, where we brought Adriana Lima back into the family, another reason to believe why we can bring AURs up over time. Those are the three categories where I feel most confident. It'll be bras, sleepwear, and beauty. As it relates to the fashion show, boy, there's a lot going on. We announced that we are reinventing the fashion show. We're calling it the Victoria's Secret World Tour. In that small announcement, it wasn't a big deal, just a relatively minor announcement. We had over 2.8 billion media impressions, there is an enormous amount of excitement and interest about what the fashion show will be. The way I like to think about it is that it moves from being a single event in North America to being a global entertainment show that unites fashion and art and culture. It brings together the ultimate expression of our transformation. It really brings to life our ongoing commitment to rising women up and championing their voices and experiences, and bringing a different perspective to womanhood around the world. It's kind of a celebration of everything that's iconic in our heritage, in our past, but also a refreshing and modern take on the way in which we will do that. We'll have more to say about that as the year goes on, but suffice to say, we're very excited about the impact that it can have for our brand positioning overall. An early test that we've done suggests that it is going to resonate very well with Gen Z consumers, particularly, and our primary target is Gen Zs and millennials. TJ? I think the last part of the question, Adrienne, from a cost perspective, we were careful to maintain what we felt was an appropriate marketing budget for the year to drive the core business, you know, throughout the year. From a Victoria's Secret World Tour perspective, in large part, the costs, as we talked about on our last call, will be incremental to the prior year, and predominantly in fall. Very little to no impact from a cost perspective included in our Q2 guidance, but certainly embedded in our fall. The majority of the Victoria's Secret World Tour would be incremental relative to the prior year to preserve the marketing budget to drive the balance a year. Great. Thank you very much, and best of luck. Thank you. Thank you. Our next question is from Jonna Kim with TD Cowen. You may go ahead. Thanks for taking my question. Just curious on the progress with PINK apparel, you know, what's being done now, and when do you expect to see some improvement in terms of the merchandise? You've commented this a little bit before, but any color for the color on different spending patterns by various income levels, that you're seeing, that'll be helpful. Thank you so much. Yeah, I'm happy to take that. you know, the PINK business required a complete overhaul. We talked about, on the last call, about the fact that we identified that back in November. you know, the level of the change that's required in that brand is really pretty significant in the non-intimates category. The intimates business for PINK has been relatively strong and continues to be so. We don't imagine a whole lot of reinvention in the intimates area, other than getting into the sport business within PINK, which has been a meaningful gap for us in intimates. It's mainly focused on apparel. Within apparel, sleepwear, casual sleepwear, and PINK has been strong. We're, we're good there. We feel like we've got that well positioned. It's really the outerwear, so think hoodies and T-shirts and bottoms, and fashion, where we have been over-reliant on a logo business and a particular articulation of a logo business, and that needs to be dramatically refreshed. When will the impact be? It's really the fall season. The very end of Q2 is the first drop of new merchandise. We have seen some early results of some of the product that we put out there that's encouraging. We haven't built a big turnaround into the guidance that we've put forward, to be honest. We are very, very focused on it. We have marketing campaigns to support the relaunch for the fall season, and we're optimistic that the new product will cut through. Expect to see and hear more from us during the fall season about PINK. PINK Beauty has also been relaunched, and we're seeing positive indications around that as well. With regard to spending patterns, no big surprises in the customer who is most economically challenged, has the hardest time spending in a discretionary category. The customer that's most economically challenged has the hardest time, you know, spending at the higher AUR levels. That's a challenge for us, particularly in North America, where a very large portion of our share comes from people who are in that demographic and that income pool, less so in international, where our positioning is more premium. Hope that helps. Got it. Thank you. Thank you. Our last question is from Marni Shapiro with Retail Tracker. You may go ahead. Hey, guys. I'm actually very much looking forward to a PINK relaunch. Martin, can we dive in a little bit to the sports area? The sport area, you've talked about it, you know, in relation to PINK and VS. We've all, many of us on this call, have been through your launches in sport before, only to see it pulled and relaunched. The same with Swim. I guess, could you talk us through a little bit, why is it different this time? What are you doing differently? Because I've long felt there's... You guys should be in this business. You own bra, how do you not own sport bra? Can you just talk a little bit about what's different? What are you doing different to make it work this time? Yeah. Thanks, Marni. Good morning. Good morning. for the question. You and I have lived through the demise of sport within Victoria's Secret and PINK. You know, at the peak, market share in 2016, we had 19% share of the sport bra market. Today, we have less than 4% share of the sport bra market. It was not an area of focus for the company. When the company did think about being in the sport business, it went first to apparel and leggings and last to bras, and that's completely the wrong way around. We need to be in the sport bra business. Now, if that comes with leggings and other tops as well, that's great. The primary focus is bras. The place that we want to win is bras. you know, 90% of our focus in sport needs to be in sport bras and making sure we have innovative solutions and launches in that arena that are different than other things that are available on the market. We know who the best vendors are. We work with them on a regular basis. We need to prioritize it. Will it be a, you know, an instant turnaround? No. We've spent years ignoring that category and training the customer to go elsewhere for that, for that product that we know has a very significant share of her bra wardrobe. We've got to get after it, and it's not a flash in the pan, you know, in and out if it doesn't work. We have to stick to it, we have to stay with it, and we have to take a multi-year approach to building back a position where we can be dominant, we can be proud of the products that we stand for. We'll do that in both PINK and Victoria's Secret. Victoria's Secret will be more added value. PINK will be more competitively priced. Good. More to come, Marni. Could I just ask a quick follow-up as well on the Solutions Bra that you launched? It didn't feel like the marketing push behind that was the same of, as what you did with, say, Love Cloud. As we think about the back half of the year and bra launches that you're going to put forth, should they look more like Love Cloud or more like Solutions? What's the plan behind getting it out there? Great question. I would say not all bra launches are born equally. You know, Love Cloud was a very significant launch for us. It had very broad impact. The sales expectation was significantly higher than we had for Solutions. Mm-hmm. Solutions category is just, you know, smaller. Mm-hmm. Solutions speaks more to us being a specialist and us providing things that other people who sell in our category can't provide. It was strategically very important for us to be dominant in that, but it didn't deserve, I use that term, advisedly, it didn't deserve the level of expenditure that we would have for Love Cloud. I will tell you, without giving too much away competitively, that what we have planned for the fall season is a fashion launch that is bigger than Solutions, therefore, the marketing that supports that will be more like what you saw with Love Cloud and less like what you saw with Solutions. I hope that helps, Marni. Yeah. Thank you for bringing up the rear with the last question. Kevin? Yep. That concludes our call this morning. Thank you all for your continuing interest in Victoria's Secret & Co.. We appreciate your time. Thanks, everybody. Thank you. That does conclude today's conference. Thank you all for participating. You may disconnect at this time.