Jonna Kim

Jonna Kim from TD Cowen asked about the current mix of apparel in PINK, its projected trend over time, and the current lead times for apparel production, including opportunities for further expediting.

Answer

CEO Hillary Super stated that PINK apparel mix is now above 40% (up from mid-30s), aiming for 50-60% of the total PINK business, and was the leading category in Q3 with higher AURs and lower discount rates. She mentioned the LoveShackFancy collaboration was done in 26 weeks and that the company continues to seek opportunities to shorten timelines and gain agility, including making T-shirts in LA and quickly producing core iconic items in under 26 weeks. She described the optimization of PINK apparel go-to-market as being in the 'early to mid-inning.'

Jonna Kim asked about the current mix of apparel in PINK's business, its projected trend over time, and the current lead time for apparel production. She also inquired about further opportunities to expedite lead times.

Answer

CEO Hillary Super stated that PINK apparel mix is now above 40% (up from mid-30s), with a target of 50-60% of the total PINK business, and was the leading category in Q3 with higher AUR and lower discount rates. She mentioned the LoveShackFancy collaboration was done in 26 weeks and that the company continues to seek opportunities to shorten timelines and gain agility, utilizing various methods for quicker production, indicating they are in the early to mid-innings of optimizing PINK apparel go-to-market strategy.

Jonna Kim from TD Cowen asked about the performance of the swim category and requested details on the current size and growth potential of the Beauty business.

Answer

CEO Hillary Super reported that swim was a growth category for both the Victoria's Secret and PINK brands, with particular strength in PINK's iconic swim and the Frankie's Bikinis collaboration. She stated that the Beauty business is very significant, representing about 25% of total sales, and has considerable runway for innovation, expansion, and driving customer loyalty.

Jonna Kim asked for more details on the strong customer acquisition across both brands, including customer demographics and potential share gains from higher-income cohorts, and inquired about strategies for retaining these newly acquired customers.

Answer

President and Executive Creative Director Jen Foyle confirmed a stronger customer file with accelerating acquisition and winning retention. She noted that while specific strategies are proprietary, they involve talent, influencer programs, community engagement, and leveraging brand platforms, emphasizing that product quality and tactical amplification are key to success.

Jonna Kim asked for more details on the new customer acquisition across both brands, including demographics like higher-income cohorts and from whom the company is gaining market share. She also inquired about strategies for retaining customers acquired in the last two quarters.

Answer

President and Executive Creative Director Jen Foyle stated that both brands' customer files are stronger than ever, with accelerating acquisition and retention. She emphasized that retention strategies are proprietary but involve leveraging powerful brand platforms, influencer programs, and community engagement. She highlighted that the company is entertaining Gen Z across all brands and seeing momentum in all age groups, not experiencing a pullback from the Gen Z consumer.

Jonna Kim from TD Cowen inquired about the performance of the digital channel versus physical stores during the quarter and quarter-to-date. She also asked about the company's pricing strategy for mitigating the impact of tariffs, particularly the balance between raising prices and running promotions.

Answer

President and Executive Creative Director Jennifer Foyle noted that the company saw an uptick in the digital channel and leaned in there during a quarter with tumultuous traffic patterns. Regarding tariffs, she stated the team worked hard to mitigate risk through production, merchandising, and planning, ensuring cost of goods are in line and that they are well-positioned to compete for back-to-school.

Jonna Kim asked about the strategy to accelerate sales in the Aerie intimates business and the plans for growing the OFFLINE activewear brand.

Answer

President Jen Foyle stated that while the intimates market is challenged, Aerie is holding share and seeing growth in undies, driven by fabric innovation like SMOOTHEZ. For OFFLINE, she highlighted strong market share gains in sports bras and leggings, which are key new customer acquisition drivers and support the brand's continued expansion.

Jonna Kim asked about the monthly sales cadence during the second quarter, how consumer health has been trending, and for any initial color on the company's plans for the holiday season.

Answer

Mike Mathias, CFO, detailed that May and June were the stronger months in Q2, with a moderation in July that was consistent with broader industry trends. He noted that performance reaccelerated in August. The Q3 guidance accounts for a potential moderation in the period between the Back-to-School and holiday peaks.

Jonna Kim inquired about the competitive dynamics within the fragrance and body mist category, particularly with new entrants, and which categories require more work to shorten lead times.

Answer

CEO Daniel Heaf acknowledged the competitive sector, stating Bath & Body Works has a 'perception problem' where clean formulations are not effectively communicated, leading to underperformance in marketing and packaging. He mentioned launching new forms, vessels, and formulations, which take longer. CFO Eva Boratto added that digital growth in these categories outpaces the market, and their digital strategies are key to attracting new consumers. Daniel Heaf emphasized competing in the full marketplace, including Amazon and other wholesale partners.

Jonna Kim asked about the competitive dynamics within the fragrance and body mist category, particularly with new entrants, and which categories require more work to shorten lead times.

Answer

CEO Daniel Heaf acknowledged the competitive, growing sector where Bath & Body Works is a market leader. He stated that the company has 'perception problems' as its clean, fantastic formulations are not consistently communicated or presented in elevated packaging. He noted that new forms, vessels, and formulations are in development, which take longer, and the company is working with partners to bring innovation to market in the second half of 2026. CFO Eva Boratto added that digital growth is outpacing the market, and the company's digital strategies are key to attracting new consumers.

Jonna Kim inquired about the performance mix of fragrance and body care, CEO Daniel Heaf's plans for the beauty category, and details on the Disney partnership's launch and future cadence.

Answer

CFO Eva Boratto stated the company was disappointed with Body Care performance, which was down low-single digits due to a lack of newness around Mother's Day. CEO Daniel Heaf positioned the Disney collaboration as a key growth driver, noting the new multi-year agreement turns it into a durable, profitable lever for the company, with more such partnerships planned for the future.

Jonna Kim asked about the company's pricing strategy amid potential competitor price hikes due to tariffs. She also inquired about key learnings from the Disney partnership regarding the attraction and retention of new customers.

Answer

CFO Eva Boratto responded that the company will remain flexible on pricing, noting customers are value-seeking and that Q1 mix-adjusted AURs were up low-single-digits. CEO Daniel Heaf added that the Disney collaboration validated their growth model of using emotive stories to drive traffic. He emphasized the opportunity to attract new, younger consumers, who then become part of the 'remarkably sticky' loyalty program ecosystem.

Jonna Kim inquired about the factors contributing to J.Jill's sales improvements in June and July, and sought clarification on the projected annualized tariff impact for the next fiscal year, considering mitigation efforts. She also asked about expected promotional levels in the second half compared to the previous year.

Answer

Mark Webb (Executive VP, CFO, and COO, J.Jill) attributed Q2 improvements to clearance activities and strong customer response to the July summer sale, which helped clear inventory. He estimated the annualized tariff impact to be around $20 million, noting ongoing efforts to mitigate this through vendor negotiations, on-order adjustments, and strategic pricing. Mary Ellen Coyne (CEO and President, J.Jill) and Mark Webb stated that promotional levels in the second half would depend on customer receptivity to strategic price increases, with guidance reflecting a range of outcomes.

Jonna Kim asked about the strategy for introducing product 'newness' in the second half given tariff pressures and the current inventory position for the fall and holiday seasons. She also requested color on customer ticket and traffic trends during the quarter.

Answer

President & CEO Mary Ellen Coyne explained that significant product newness will not be seen until 2026 as the line is bought through year-end. EVP, CFO & COO Mark Webb added that Q3 inventory buys have been reduced to align with demand. He noted Q1 was choppy, with weather impacting store traffic and the OMS cutover affecting online conversion, while April saw a broader demand pullback impacting both traffic and average unit retail (AUR).

Jonna Kim from TD Cowen asked about the outlook for marketing spend in the second half of the year compared to the first half, and if there were any changes planned for the holiday season marketing campaigns.

Answer

CEO Amanda Baldwin expressed confidence in the current marketing spend levels and plans for the second half, noting that holiday is an important period for the brand. COO & CFO Catherine Dunleavy elaborated that investments are aligned with the company's three strategic priorities and are focused on long-term brand building, not just short-term sales, with an expectation to see leverage from these investments over time.

Jonna Kim of TD Cowen asked for more color on the most significant changes to the sales force and marketing strategy following the restructuring. Additionally, she inquired about any tangible results or changes already being observed in clinic attrition rates due to these new initiatives.

Answer

CEO Bret Christensen detailed that the primary sales force change was a shift from a 'maintenance' focus to a 'growth' focus. This involved creating smaller territories, implementing growth-based compensation plans, consolidating leadership for clearer messaging, and revamping recruiting and training. Regarding attrition, he stated that a fully staffed sales team is critical and that the company is focused on strengthening its value proposition to make its offering 'stickier' and improve retention, though tangible results are not yet evident.

Jonna Kim from TD Cowen asked for an update on the company's inventory position ahead of the holiday season and for color on recent trends in customer traffic, conversion, and ticket size.

Answer

CEO Ciaran Long acknowledged that inventory ended Q2 lighter than desired (down 13% YoY) due to sourcing shifts and tariff management. He expressed confidence that in-stock levels would be back to desired levels by the end of Q3. Regarding KPIs, Long stated that underlying demand remains strong, though metrics were somewhat impacted by a temporary pullback in promotions and newness, which was part of their tariff mitigation strategy.

Jonna Kim of TD Cowen asked about the expected mix of international versus U.S. business within the company's 2030 long-term financial targets. She also inquired about any changes to the marketing strategy and its focus between weight loss and core offerings.

Answer

CFO Yemi Okupe explained that while international expansion is a key growth lever, the company does not have a specific target mix, as it also sees immense opportunity in the U.S. through new specialties and capabilities. He stated that marketing spend will continue to target a one-year payback period, with investments being made across both core offerings and multi-condition campaigns as the company iterates on its strategy.

Jonna Kim requested more color on the expected moderation of monthly revenue per subscriber and the growth opportunity for the oral weight loss medication.

Answer

CFO Yemi Okupe explained that monthly revenue per subscriber will face headwinds from the transition of semaglutide users but see tailwinds from branded partnerships and premium product adoption. He noted the oral weight loss offering has seen robust growth (over 300% YoY) due to its attractive price point and less restrictive eligibility requirements.

Jonna Kim inquired about the company's overall pricing strategy, including any plans to lower prices in 2025, and asked about the strategy to enhance cross-selling among its GLP-1 users.

Answer

CFO Yemi Okupe explained that as the company unlocks efficiencies, it constantly evaluates passing value to consumers, whether through direct price tests or creative offerings like multi-condition bundles. Regarding cross-selling, he noted that adoption of multiple specialties has been largely organic to date. The focus for 2025 will be on improving the user experience to reduce friction and make it easier for subscribers to opt into multiple treatments.

Jonna Kim from TD Cowen inquired about the marketing investment strategy for the upcoming year, how it might differ from the last, and the allocation of spending. She also asked about consumer resilience and any signs of softness in the physician-dispensed channel.

Answer

Executive Michel Brousset stated that marketing investment will continue to accelerate as a percentage of sales. He detailed that Milk Makeup's strategy is broadening from organic and influencer marketing to include larger paid campaigns to support the Ulta Beauty launch. For Obagi Medical, the focus is on direct-to-consumer advertising to drive traffic to physicians. Brousset noted the physician-dispensed channel remains strong, growing at 8%, and is benefiting from premiumization and the convergence of beauty and wellness.