Bath & Body Works, Inc. · NYSE:BBWI
Bath & Body Works — Q2 2024 Earnings Presentation
36 slides from Bath & Body Works's earnings presentation, Aug 28, 2024
Slide 1: Q2 2024 Results & 2024 Guidance
Revision 1 Q2 2024 RESULTS & 2024 GUIDANCE August 28, 2024 1
Slide 2: Q2 Earnings Call Participants
Q2 EARNINGS CALL PARTICIPANTS GINA BOSWELL JULIE ROSEN EVA BORATTO LUKE LONG Chief Executive Officer & President, Retail Chief Financial Officer VP Investor Relations Director 2
Slide 3: Forward-Looking Statements
Forward-Looking Statements Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995 We caution that any forward-looking statements (as such term is defined in the Private Securities Litigation Reform Act of 1995) contained in this presentation or made by our company or our ma
Slide 4: Taking actions to drive growth in our core portfolio
Taking actions to drive growth in our core portfolio, extend our reach to new adjacencies and markets, use our agile model to adapt to a dynamic environment, and optimize our business to reduce costs and expand margin 44
Slide 5: Q2 2024 Financial Results
Q2 2024 Financial Results Net sales results driven by Adjusted EPS outperformance Delivered net sales in line semi-annual sale (SAS) performance driven by continued improvements with guidance and and more value-conscious in merchandise margin and adjusted EPS exceeded consumer due to choppier solid
Slide 6: Five key strategies
1. ELEVATING THE BRAND & PRODUCT Fortifying our operating 2. EXTENDING foundation OUR REACH while building a 3. ENGAGING platform for growth WITH CUSTOMERS through our five 4. ENABLING key strategies SEAMLESS OMNI-CHANNEL 5. ENHANCING OPERATIONAL EXCELLENCE 66
Slide 7: Elevate the Brand & Product
ELEVATE The Brand & Product Bringing the power of fragrance to elevate staple categories through exceptional product quality We work with the world's top fragrance houses, to bring customers the affordable luxuries they come to expect Innovating across portfolio and leveraging vertically integrated
Slide 8: Elevating the Brand: Innovation
ELEVATING THE BRAND INNOVATION Recently launched Everyday Luxuries collection and Stranger Things Part 2 collaboration in all North American stores EVERYDAY LUXURIES STRANGER THINGS (PART 2) 88
Slide 9: Extend Our Reach
EXTEND Our Reach Growing new categories, opening new store locations, and expanding internationally Men’s, Hair, Lip and Laundry performing well, particularly with existing customers, but taking time to build brand awareness and attract greater number of “new to brand” customers North American real
Slide 10: Accelerating International Growth
EXTENDING OUR REACH ACCELERATING INTERNATIONAL GROWTH Our partners opened the first stand-alone store in London and the first shop-in-shop in South Korea; both are performing above expectations WESTFIELD MALL, LONDON SHINSEGAE, SOUTH KOREA 10
Slide 11: Engage with Customers
ENGAGE with Customers Our Net Promoter Score, one way we measure customer engagement and satisfaction, is consistently in the top quartile of retailers measured Advancing loyalty program and technology roadmap remains on-track Over 37M active loyalty members at the end of Q2, up 8% compared to prior
Slide 12: Strong Loyalty Program
ENGAGING WITH CUSTOMERS STRONG LOYALTY PROGRAM Over 37M Over 80% Active1 loyalty members as of Of year-to-date U.S. sales the end of Q2 2024 driven by loyalty members + 8% to Q2 LY + 6 pts to Q2 YTD LY 1 - Active members of our loyalty program represent loyalty program members who have purchased at
Slide 13: Seamless Omnichannel
ENABLE Seamless Omnichannel Mobile App TikTok Shop Putting in place the foundational tools and systems needed to support future growth Recently upgraded our mobile app Launching a BBW TikTok shop in Q3 Launching our Generative AI fragrance finder, Gingham Genius, in Q4 13
Slide 14: AI Fragrance Finder
ENGAGING WITH CUSTOMERS FRAGRANCE FINDER AI Fragrance Finder to launch in Q4, providing customers with personalized experience leveraging large language models (LLMs) and the power of our data 14
Slide 15: Enhance Operational Excellence
ENHANCE Operational Excellence Increasing our 2024 cost savings guidance to $130 million from $100 million The two-year program, that started in 2023, is now expected to deliver $280 million in run rate savings, up from the initial plan of $200 million 15
Slide 16: 2H 2024 Actions We Are Taking
2H 2024 Actions We Are Taking Focused on executing with precision Executing with precision Demonstrating our strong Key launches in 2H will be and continuing to bring value proposition across supported with newness to customers our product assortment integrated marketing 16 16
Slide 17: Strong Business Model
Strong Business Model Leader in Attractive Spaces Healthy Margins High-margin business #1 in Home Fragrance 17% Operating Margins2 model and cash flow and Soaps & Sanitizers, #2 in Body Care1 generation position us to invest in our 5 key strategies, which we expect will drive our return to growth St
Slide 18: Q2 2024 North American Category Performance
Q2 2024 North American Category Performance Maintained Overall Unit Market Share YTD Body Care Home Fragrance Soaps & Sanitizers • Body Care results impacted by • Candles continued to decline • Sanitizers significantly SAS performance from last year; macro impacted by exit of full-size normalization
Slide 19: Customers Responding Favorably to Innovation
Customers Responding Favorably to Innovation MEN’S LIP LAUNDRY HAIR Men’s continues to be one of Expanded Lip assortment to Laundry rolling out to all U.S. Hair continued to drive new our fastest nearly all NA stores, Lip sales stores by end of September, customers to the category growing categories
Slide 20: Generating Excitement in Our Core Categories
"Prestige-inspired" Everyday Stranger Things Part 2 and Building on the success with Luxuries rolling out to all other to-come brand on-trend fragrances, like stores in Q3 following collaborations are fueling Vanilla and Milk successful Q1 test in 600 excitement & buzz with stores customers Generati
Slide 21: Value-based product offerings
Value-based product offerings like soap refills and small size product, like Travel, both grew nicely in the quarter 21
Slide 22: America's Most Loved Candle Brand
America's America’sMost Loved Most Candle Loved Brand Candle Brandprovides tremendous provides tremendous quality for the quality money; for the marketing money, toto marketing reassert product reassert product attributes attributes 22
Slide 23: Q2 2024 Financial Results
Q2 2024 Financial Results Key Highlights $ in millions, except earnings per share • Net sales were $1.5 billion and declined 2.1% compared to the prior year. • Net sales declined primarily driven by semi-annual GUIDANCE sales performance and a more value conscious METRIC ACTUALS LY (JUNE 4, 20241) c
Slide 24: Q2 2024 Net Sales by Channel
Q2 2024 Net Sales by Channel 75% 19% 6% Stores – U.S. Direct – U.S. International & Canada & Canada $1.1B $297M $89M Approximately 55% of North BOPIS net sales are recognized as store net sales, and International system-wide American fleet in off-mall we delivered ~60% growth in demand year-over-yea
Slide 25: Store Count and Company-Operated Selling Square Feet
Store Count and Company-Operated Selling Square Feet Q2 2024 Actuals Total Company-Operated Stores Stores Selling Sq. Ft. (000’s) Opened/ 2/3/2024 Opened Closed 8/3/2024 2/3/2024 Closed 8/3/2024 Remodels Bath & Body Works U.S. 1,739 40 (18) 1,761 4,916 114 (41) 4,989 Bath & Body Works Canada 111 - -
Slide 26: FY 2024 Guidance
FY 2024 Guidance Key Highlights $ in millions, except earnings per share • Net sales results to range between down 4% GUIDANCE GUIDANCE to down 2% year-over-year. METRIC (August 28, 20241) (June 4, 2024) • The 53rd week in 2023, represents a headwind of approximately 100 basis points to our 2024 gro
Slide 27: Q3 2024 Guidance
Q3 2024 Guidance $ in millions, except earnings per share Key Highlights • We expect third quarter net sales range of GUIDANCE METRIC (August 28, 2024) flat to up 2.5% versus the prior year. We expect the third quarter will benefit by Net Sales Flat – Up 2.5% approximately 200 basis points from the
Slide 28: Capital Allocation Highlights & Outlook
Capital Allocation Highlights & Outlook $101M $249M $90M YTD capital expenditures YTD stock repurchases YTD dividend payments ~$250M $400M 2.7X forecasted FY'24 capital forecasted FY'24 share TTM Gross Adjusted Debt-to- expenditures repurchases EBITDAR $675-$775M forecasted adjusted FY'24 Free Cash
Slide 29: Q&A
Q&A 30
Slide 30: Appendix
APPENDIX Other Financial Information 31
Slide 31: 2024 Calendar Shift
2024 Calendar Shift Q1 Q2 Q3 Q4 Full Year Vs. LY (Reported) (Reported) (Guidance) (Implied) (Guidance) Net Sales (0.9%) (2.1%) 0% - 2.5% (9%) - (5%) (4%) – (2%) Reported / Guidance Calendar Shift +200 bps 0 bps ~+200 bps ~ (500) bps ~ (100) bps Net Sales (2.9%) (2.1%) (2%) - +0.5% (4%) – Flat (3%) –
Slide 32: Debt Maturities
Debt Maturities as of August 3, 2024 33
Slide 33: Adjusted Financial Information – Q2 2024 & YTD
Adjusted Financial Information – Q2 2024 & YTD $ in millions, except per share amounts 34
Slide 34: Adjusted Forecasted Financial Information – FY24
Adjusted Forecasted Financial Information – FY24 $ in millions, except per share amounts 35
Slide 35: Adjusted Forecasted Financial Information – FY24
Adjusted Forecasted Financial Information – FY24 $ in millions 36
Slide 36: Q2 2024 v Q2 2023 General, Administrative and Store Operating Expense Summary
Q2 2024 v Q2 2023 General, Administrative and Store Operating Expense Summary $ in millions 37