Victoria's Secret & Co. (VSXY) Earnings Call Transcript & Summary

Good morning, good morning, good morning. We're all here. We are all sitting comfortably. Good morning Jim. Well, first of all, a big welcome to everybody. Welcome to our 2023 Annual Investor Conference. And I'm guessing for most of you here in the room, this is the first time you will be visiting our offices here at 55 Water Street. So welcome to the offices. We moved into this space in February 2022 from larger offices uptown. And this office is home to about 500 people in our organization across most of the disciplines of the company but primarily in creative, in design and in beauty. I will make our investors very nervous, unless I start by reminding you of our safe harbor statement, which is -- and I have to read this. To kick us up, let me start with the usual formality, which is that I have to remind you that any forward-looking statements we may make today are subject to our safe harbor statements, which can be found in our SEC filings. So with that behind me, let me start by introducing you to the diverse and talented and experienced management team that are here with us today. Now this is my leadership team, and most of these people are in the room today. Guys, do you mind standing up and wave me your hands. Here we go. So look around the room. This is the management team. They are here to welcome you. They're here to host you. They're also here to answer your questions. So please feel free to chat to them, to reach out to them, to ask them whatever it is that you want to. We believe in radical transparency to the extent that we can answer your questions, we absolutely will. So whether it's this morning, in the coffee break or at lunch break or on the store tour, please take advantage of chatting to our people. And of course, you'll be hearing from Greg and Chris in detail. You'll also be hearing from Arun about International and Morgan will be speaking today. And of course, TJ will be bringing up the rear with me. So that's the 6 of us that make up this morning's presentation. I thought I might just start by grounding us in a few facts about the company, which hopefully will be a reminder for those of you that are very familiar with us and maybe just a starter for those that are new to the company. So VS&Co is a $6.2 billion organization with $700 million of EBITDA on a trailing 12 basis. About 35% of our business comes from our digital channels, which is a result of the 500 million people that come to our site every year. And of those 500 million visits to the site, 85% are driven from mobile devices. We are the #1 lingerie brand in North America. We have 20% market share. We have 25 million customers that we can identify and of those 18 million are now in our loyalty program. An incredibly strong followership inside the company purchasing with us but also following us around the world and with 85 million followers on Instagram, we're the second most followed brand on the planet. So pretty strong there. And we are, of course, a global business with a presence in 65 countries, 1,350 stores. And that business is growing at an incredible clip of around 20%. And to dimension what that means for our total [indiscernible] is about 23% of our retail sales come from our international business. [indiscernible] by the numbers, if I take the sort of the softer side of who we are and what this company about, this is a company for women, run essentially by women. I think 87%, 88% of our associates are female. Over 80% of our Board is female. We have 60% of our leadership roles run by women, and I'm happy to see it, I'm delighted and proud to say that we've achieved 100% pay equity not just in terms of gender, but also in terms of ethnicity [indiscernible] those identities. So very strong from that point of view. We are on the ESG journey, we made our first public report 2022, second in 2023, we have another more fulsome report coming in April 2024. So we're very much on that journey. And we're a company that believes in giving. We've given $10 million to women's cancers. We've taken a position on breast cancer for the first time in our history. We've given away over 700,000 items to women in need. And the combination of all of that is, I think, what makes this a great place to work. So our approval rating from our 25,000-or-so associates is very high. And we have -- I'm pleased to say over 85% of our associates say that they're proud to work for VS&Co. So this is a good company. It's a good place to be, and I hope you feel that energy when you're with us today. So let's get into strategy. I think a good place to start the conversation about our strategy for 2024 and beyond is to look back. So those of you that were with us in Chicago a year ago, will have seen this slide and the next slide. And these are the slides where I mentioned at the time what our overall ambition or goal is, and that is to be the world's leading fashion retailer of intimate apparel. We talked at that meeting about there being kind of 6 keys to unlocking the potential of the brands of Victoria's and PINK. One was profitable growth from our core. The second was about strategic investments in other companies that could be additive. We talked about creating a market collection to broaden our reach and broaden our customer appeal. We talked about international growth. We talked about establishing partnerships with companies like Amazon. And we also talked about the award-winning culture. And we framed that up in terms of the 3 pillars of our strategy, being strengthening the core, igniting growth and transforming the foundation of the company. That ring bell, not at me, if you remember that, that's what we talked about. And as we've been giving updates to investors throughout the year, we talk about those 3 pillars. Further, we talked about there being 9 important initiatives that each of the members of the management team would be most focused on. I'll try and move around so those of you can see that. And then, of course, since our investor meeting in Chicago, we announced the acquisition of the Adore Me team, fantastic addition to our family. I am delighted to welcome Morgan. You'll hear more from Morgan later today. And the Adore Me initiative runs across all 3 of our strategic pillars. So that's what we said a year ago, I think it probably makes sense for me to give you an update, if you like a school report on how we're doing against each of those 3 pillars. So let me unpack them one at a time, and I'll start in order of the least importance to our overall company. And the first of those would be transforming the foundation. Quite a lot to unpack here, so bear with me. But at the meeting a year ago, TJ identified $250 million of cost opportunity. I hope that number rings a bell. Many of you ask us on a regular basis, $250 million. We're delighted to say that $80 million of that $250 million that was over a 3-year period has been realized in the current year. So we're bang on track with where we expected to be in terms of taking costs out of the system. That's essentially human capital, some in stores a little bit in cost of goods. So feel good about where we are on that. Second thing we talked about was getting faster in our supply chain, responding to a more normalized environment. And Dean Boyle and Chris Callieri done a terrific job of shortening -- the speed to market or increasing our speed to market, shortening our lead times and building a program of how product will get to market throughout the next year or 2. So really good progress there. Also good progress on supply chain, Christine Vellani and her team doing a really good job of getting us back to the agility that we used to have, where we don't overcommit at the start of the season, we give ourselves chase dollars. And most importantly, we don't let inventory get ahead of us so that we have to end up in a markdown mode. So very, very good management of inventory across that period of time. If I think about what comes next, we continue to focus on our efficient operating model. And the biggest chunk of that will be in cost of goods. So if I refer back to the $250 million identified of the balance, let's call it, $170 million, the majority of that is in cost of goods. And we have identified a path to be able to deliver that, thanks to really good work in the team. So while I would say the most important thing in our supply chain is innovation, second most important is quality. Cost of goods does matter, and we felt that we were overpaying and we've done something about that, to bring that into line and you'll start to see that flowing through the account as we move through the next couple of years. Another important initiative is about establishing our talent on a global basis. So as you all know, not all jobs in our company need to be performed in high-cost offices in North America. So we've extended our -- expanded our footprint in Bangalore significantly. And with the acquisition of Adore Me, we have partnership with an incredible office of engineers in Bucharest where I was a month or so ago. So thinking about where is the best place around the planet that we can get the work done in the most efficient way. Also thinking about our global footprint. In the old days, everything came through Columbus, Ohio. All merchandise came from Asia into Columbus and out from there. It doesn't make sense. We need to put inventory closer to customer. So in our road map, we have a way of getting inventory closer to our customers on the West Coast of the United States. And in support of our international business, and Arun will talk about this a bit, we'll have a DC and we'll have distribution coming in Europe to support markets that are closer to serve from that destination. And also continuing to evolve the base of supply so that our vendor base matches best-in-class sources around the world. So an enormous amount has been achieved in terms of transforming the foundation. And I would say that all of that alongside the work of separating ourselves from BBW, which is substantially complete, substantially on time, maybe slightly ahead of time and definitely within budget. So overall, for that pillar of how you're getting on with transforming this company and modernizing this company, we feel really good about where we are. We give ourselves kind of a green on that. On the second of the 3 pillars, ignite growth, we also have some really good stories to tell. We're going to talk about international and the great work that's been done. But that business in all parts is now profitable and is showing growth in all areas. We see potential to double the size of that business during the life of this plan. So really good progress there. Secondly, our partnership with Amazon. Remember, we tiptoed into the partnership with Amazon to just play it very gently and very carefully. We feel thrilled with that partnership. It's working extremely well for us. They have been great partners to us, and we see a lot of growth. And now the growth that we are seeing is ahead of schedule. As it is in our curated marketplace. So that's bringing third-party merchandise into our system for customers to enjoy where we get to customer groups where we're currently underweight or we get to categories of merchandise where we're currently underweight. Again, that is ahead of plan. And finally, and incredibly importantly, you'll hear more from Morgan about this. The inclusion of Adore Me in our system is a very big deal for us. It's accretive in terms of sales in terms of operating profit, in terms of cash flow. Most important of all is the capability that it brings to our company. You'll hear more about that today. So in terms of igniting growth, we feel really good about where we are. So on the first 2 of the 3 pillars, really, really good work. The reality is we all know the performance of the company. And so there must be something that's not going to plan. It can't all be a green status. And the harsh reality is that the most important aspect of the work that we had to do in 2023, which was strengthening the core of the company, by which I mean our sales for Victoria's Secret and PINK in North America are not where we need them to be. And despite everybody's best endeavors in this room and some really, really good initiatives, particularly around the launch of loyalty, which as I said earlier, has got to 18 million followers already, around some of the good launches that we've had, the Icon bra were spectacular, Featherweight Max, really, really good. We've had some great fragrance launches like Bare Rose, some really good initiatives within the business. But in the end, in the end, not enough to carry the day. And so the challenges of operating in a market that's been shrinking mid-single-digit decline in the intimates market, the reality of operating in a consumer environment where sales are going backwards for most people where the customer has less money, where the customer is skewing to a lower value item have all been very challenging. We also see a blurring of categories that traditional intimates retailers don't behave in the way that they did. There are more people coming into our space than they were adding a different dimension to the way in which we go to market. And of course, a couple of things within our own control that we feel very, very bad about. The end of 2022, we looked at the PINK business and said, this is bad. This has got away from us. We are not proud of how the PINK brand is showing up and how it's not meeting the needs of the original customer that was intended to attack. So the bottom line of all of that, and I as the leader of the company, take 100% accountability for it is we've been insufficiently differentiated in this difficult market in order to get paid through sales and through margin. That's what we're going to face into. It's all well and good having a really good progress in growth. It's all well and good, getting our costs and our capabilities under control. If we don't address the reality of trade in our home market, we're going to be struggling. So with that in mind, how do we think about what our overarching strategy should be for the balance of '23 and into 2024. The way I think about it is that the ambition of being the world's leading fashion retailer of intimate apparel is unchanged. We think that is our calling. That's why we exist as a company, and we believe that we will get to that place. So no change there. No real change in terms of the 3 areas of work. What is changing though is that not all 3 of those areas are born equally, our resources and our investment in time and energy needs to distort to not just strengthening the core, which sounds kind of defensive but accelerating our core, actively aggressively looking for growth in our core markets. So the biggest area of focus, and it's represented as the biggest area on this chart is accelerating our core and Greg and Chris are going to focus on that during their time this morning. The other thing I would say is that we're going to try and think less about the work of the company in silos. This is the work of growth. This is the work of transforming the foundation. I think of it all as 1 system. Because in reality, our core business benefits from the growth initiatives. Our core business benefits from the foundational changes that we're making. So we are thinking about it in a virtuous circle and a flywheel where all areas are contributing. But the big takeaway would be, this is the area where we're going to lean in most and we're going to put most of our collective energy. So what should we talk about today? Well, I kind of teed it up there. There are sort of 5 big areas. I call them the big 5 just because it's easy for me to remember. But the truth is that the 5 things are brand, customer, product, go-to-market and customer experiences. That is what will define whether we're successful in our core. That's the whole enchilada. That is the business of the business. So most of our energy today will be talking about the big 5 with Greg and Chris coming up here to do a double act shortly. We'll then take a little break for coffee. And then we're going to hear from Arun about international. We're going to hear from Morgan about Adore Me and how Adore Me is integrating into VS&Co. And then TJ will bring us home with the financials and talking about the enablers. I'll summarize, and then we'll do Q&A. And of course, there is a store tour later today, for those of you that can make it. I've seen the store. It's really good. It's an articulation of Store of the Future in a way that wasn't built from the ground up. So it's a cost-efficient way of applying the best of Store of the Future to an existing model, which is interesting in of itself. More important in the here and now in terms of getting confidence for the balance of this year, we've accelerated or pulled forward merchandise into that store to show you what holiday will look like come November. So it's kind of baked out in order to give you a presentation that will give you a better sense of how our merchandise shows up, and we think it looks really spectacular, and we've had some great results from that too in the last couple of days. So before I hand the stage over to Greg and Chris, I did just want to talk about 1 additional, very important thing, and that is the World Tour. I probably had more questions about the World Tour from investors, from analysts, from media, from family, from friends, from everybody and all about, how are you feeling about the World Tour. So I remind people, particularly inside our company, the 3 objectives that we set out for ourselves in the World Tour. Objective number one, create a media frenzy, have the whole world talking about Victoria's Secret again because we're a global iconic brand and everybody should be talking about us. So number one. Number two, be relevant in popular culture. Get back to having a point of view about fashion, get back to having a point of view about what drives popular culture, at least be in the conversation about that. The third objective is to create assets. The asset could be a 20-minute video that will play in all 1,350 stores around the world to demonstrate that we're new and now and current and we've got great talent. It's also a library of thousands of video clips and edits and products that we can use not just during the month of September, but for months and months and months to come. So how do we do against that? Well, there are some stats on the page. We had 17 billion media impressions from September through today when we announced the World Tour, 17 billion. I was talking to a friend who works in media at the weekend, he asked me the same question. And I said -- well, he said, there's been a lot of media coverage, it has been tons. So I said, "Yes, we've had 17 billion media impressions." He said, "No, you mean 1.7 billion." So I said, "I don't think so. I think I mean 17 -- I'm pretty sure I mean 17 billion because I've seen it going up from 14 billion, 15 billion, 16 billion, 17 billion." So he kind of looked around and he got on his phone and started texting people and he came back and said, "Oh, my good news, you are absolutely right. That is unbelievable." So in terms of being visible about who this company is very, very clearly a big hit, social impressions, 800 million. Everybody was talking about what it was that we wanted to do. Cultural relevance, 14.5 million engagements. And I'll get to the sentiment in a second. The actual event and a handful of you were at the event in early September in New York City was really, really cool. We had the world's influencers, the best -- in our opinion, the best models in the world, all in 1 room, it was a big deal. It was like rolling back to the best years of Victoria's Secret in 2014, '15, '16. So what's the sentiment overall? I bet everybody in this room has read a negative post or a negative review, right? And if you do the jobs that we do, that's our lives every day. This is a polarizing brand. Not everybody loves us, [indiscernible]. Not everybody is in support of the way that we go to market. But I was really encouraged by the fact that our sentiment independently monitored is 80%, 8-0. Just to unpack that a little bit more for you. In the period prior to -- post to announcing the show and prior to the release on Amazon, we were 84%, incredibly high. So a lot of very positive energy about, Oh goody, the show is coming back. At the time when the show actually started to air, and we don't know how many people have seen it, because that's not 1 of our key metrics. But at the time when the show actually aired, September 26, 27, 28, through that week, we slipped to 63% post. But -- I mean, if it was an exam grading you got 63%, you probably take it. And then immediately after that week, went back up to being in the 80s. So the aggregate in total is 80%. Now I'll just unpack that a little bit more for you in the center. Depending on where you spend your life on social media, you might see different levels of affirmation. You may see different levels of positivity. It ranges from about 70% to about 90%, depending on where you spend your life. Importantly, in these 2 charts here, the people who are in the viewer demographics, and I mean the view not of the film, the view of all the content that we're creating is overwhelmingly female. That's important. 93% female. It's overwhelmingly young, 17% -- 70% between 18 and 24, 94% under 34 years of age. That's who we want to be talking to. The good news is we're over-indexing with Gen Zs. And just for fun, I'll show you that the scroll -- the TikTok that's rolling there in the corner, which is Emrata and a post that she did that hit, I want to say 4 -- 11.5 million views, 1.4 million total engagements was the most productive post in the history of Victoria's Secret by some distance. So there is advocacy for this brand. There is followership for this brand. There is a relevance to this brand. We're back in the conversation about popular culture. And I'm going to finish off with a 90-second clip that just gives you a sense for those of you that may not have seen it of what the world was all about. So please, guys, if you would roll the tape and then I'll invite Greg and Chris to come and join me up here. [Presentation]

I just love that video. I think it speaks to the power of this brand. And I think that the idea that to wrap your head around 17 billion brand impressions. We're a brand when we say something, people are listening. Chris and I are really excited to be up here together today. We are going to tag team this a bit. So I'm going to kick us off and talk about our brand positioning, where we're going as a brand, how we're thinking about the Victoria's Secret brand and the PINK brand.

And then I am going to talk about all of the things we've been learning about our customers. We've got a lot of great insights and it's driving a lot of our actions.

Great. And then I'm going to bring it into sort of the core of what we do, product. It's the reason that we're here. It's the main event of the conversation, and I'll bring that home, talk about how we're thinking about this -- making this shift from not just strengthening our core but really accelerating it, returning to the place of growth. And then bring it into the next, which is that's good but making it great is shifting how we bring it to market, how does -- how do we connect with our customers, which is everything from how we flow product to the marketing that we create around it.

And finally, we'll talk about how all of that culminates in customer experiences in our digital as well as in our physical store.

All right. So excited to talk about this. So I'm going to kick us off with brand. So lots of work has gone into being clear about not just what the Victoria's Secret brand is, not just what the PINK brand is, but how they connect with each other. How do they complement each other. And I love this image because the way that it talks about it is -- this on-ramp that they are 2 distinct brands. And as I talk about each one, I'll go into more detail on each one, they have a distinct point of view. They have a distinct customer target, but there's a connectivity between them. And when we're at our best, PINK serves as that on-ramp into the Victoria's Secret world. So VS. So I'm going to just make 1 -- there's sort of 1 simple bold statement here that Victoria's Secret is a brand for women. Victoria's Secret is a brand for women. Martin referenced that, it's such an important simple statement. So that has been one of the biggest focuses of just how do we think about the filter of the brand. Going from -- if you think about sort of where we were as a brand to where we're going, this idea of going from a pressure brand, where it's like sort of these unrealistic expectations of what it means to be a woman, and these ideals that are really hard to actually to achieve to actually celebrating women being a release brand, actually making people feel good about themselves. So at the core, that's the shift. 3 words that are up here that I think summarize this, and you'll hear this over and over, confidence, sexiness and power, confidence, sexiness and power. The word sexy is up here deliberately. You'll hear me talk about it. We love that word. It's an ownable word for us. We don't want to shy away from it but sexiness can be inclusive. Sexiness can celebrate the diverse experiences of our customer and that's what we're focused on in that shift. So that's Victoria's Secret. As the saying goes, video says, I think it expresses this 10,000 words. So I'm going to just play a video that we'll say better than I do, how we're thinking about the brand. [Presentation]

Sexiness, confidence and power. I think that that's what's articulated there. Now let's talk about the PINK brand. So very clear, Victoria's Secret is a brand for women, sexiness confidence and power. PINK, we thought about in this complementary way. It's the on-ramp into the brand. PINK conversely is a brand for young women. It's a fashion and lifestyle brand for young women. And honestly, I think we've -- Martin spoke about this with regards to the product and the apparel. But I think we also -- and we lost focus on that. There's a vignette over here, which I'll talk about more but I think it gives you a sense, and there's a great video we're going to show about the resetting of the PINK brand. So tons of work has gone into reimagining what the PINK brand means. It's about on-trend products that support the simple act of getting to know yourself. This customer, Gen Z customer, she's in this vulnerable moment in her life, and our brand is a support to her. It's young women figuring out who they are and expressing it however they want. So there's a video that I'm going to show. One caveat I'm going to make with this video is that it's a beautiful beginning of an articulation of an evolution of the brand. We're much more at the beginning stages of this. So while in the VS video that I showed is content that's been created over the last 1.5 years, it's much richer. And I think it gives you a real sense of where the brand is. The PINK brand is newer in the redefining. So with that, take the video away. [Presentation]

Not bad for work that's been underway for not that long. So just a reminder, again, the thinking about the 2 brands as being distinct but complementary. Really, really important that PINK is the on-ramp into the Victoria's Secret world, really, really important. And one of the most important things, and it says it up here, and you'll hear us talk about the customer over and over and over because everything that we've been focused in the -- in redefining our brand positioning, everything that we've been focused on in product, in go-to-market and obviously, in the customer experience has the customer in mind. And so one of the things I'll say, and welcome Chris on stage, is that I think that we know our customer better than ever and Chris is going to talk about that today for us.

Thank you, Greg. All right. So I'd like to share some of the things that we've been learning about our customers. So who is our customer? Let's start with how many of them there are. So of the 130 million U.S. women, age 18+, who bought apparel in the past 12 months, 34 million of them have bought PINK or Victoria's Secret products. She makes 2 to 3 trips to the store per year. She spends $165. Our best customers shop all categories. Here's something that we've learned. When we look at the behavior of our customer base, and we look at the behaviors by decile of how they spend. It's really interesting to see how customers come into our ecosystem. When you look at that last decile, customers are starting out with some mist or some panties, primarily somebody that came to shop us in the mall environment, and then we watch how she walks up the ladder of buying more and more from us. And when you get to the top couple of deciles, she is buying everything we have to offer, sure panties and fragrances but also bras, multiple bras per year, and she loves our apparel. And she loves our apparel, and she loves our marketplace apparel. She loves everything that we do. So, what we're learning about is how customers walk up that loyalty ladder to purchase more. We are doing really well with Gen Z customers. Gen Z customer market share is growing, and we over-index in it, which means that as those customers continue to shop with us, we've got the beginnings of a great loyal customer over a long period of time. And I'll also mention another place where our business has seen success, which is in digital, where we are also growing market share in intimates. And when you think about loyalty, 18 million members for a program that we launched in June. This is a brand that customers love. So what's on her mind right now? We all know this. She has economic concerns, and we're watching very carefully how that affects her spending habits. And her broad choices are changing. She has a lot more choices today than ever before, and she's going for comfort a lot more often than she used to. Sports bras are a really important part of an assortment that brings comfort to customers. And also, the lines between categories are getting blurred. I don't know what's a course it? Is it a bra? Is it a top? Is it innerwear? Is it outerwear? It's really blurry and her body is changing. Customers in the United States are getting larger. Sizes 36, 38 and 40 bands are all growing in market share. And sizes 28 through 34 are declining. Finally, social is increasingly important to shopping. We talk here about the percentage of customers that are shopping in our stores, 68% and the percentage that are shopping in digital, 48%. This isn't where they purchase, this is where they shop, so there's overlap. But increasingly, customers are starting their shopping journey in social, on TikTok, Instagram. So we know that we need to tell our story in those places and make sure she knows about our brand. So we know the customer better than we have ever before. And what do we know about her behaviors. And this is an exciting study that we've done over the past year that I want to share with you. So when we look at her behavior in intimate specifically, we look at all of the consumers in the United States and think about how to classify their behaviors into segments. And so we had a lot of different options for how we could segment their behaviors. And what we look for in doing that is what is differentiating about the groups of customers that we put into these segments. And what is a way that we differentiate their behaviors in a way that aligns with our brand and the products that we have to offer. And we looked and looked at this data, and we found some really interesting things. So, the way we ended up deciding to segment behaviors is based primarily on 2 things. One is what she prioritizes to feel sexy, and the second is how she likes to express her personal style with her intimates purchase. And we found great differentiating behaviors across these segments. So, now we know the percentages that are in each of these segments but we're not going to tell that secret sauce. But what I will tell you is about their behaviors so that you can go on the journey with us about how this affects all the other decisions that we make. We've got 6 segments here, starting with the fearless fashionista. She's bold, trendy. She's an experimenter. She's sexy, and she is a shopaholic. The next one, the modern minimalist. She's very different. She's serious and refined. She likes basics and staples. She's understated but she is brand driven. She is a brand loyalist. To put together fashionista, she's confident, she's a leader. She's value-driven. She's intentional, and she is stylish. The intricate idealist, she's lighthearted and youthful, compassionate, feminine and detail seeking. It's very different customers. And then because we've recognized that these 4 are really our targets. There's 2 more that we decided are not primary targets, but I'd like to tell you just a little bit about them. One is the reserve realist. She's casual and practical. She's ease driven. She's brand agnostic. She's disengaged because she doesn't like to shop for this category. It's a need for her, not a want. And finally, you've got the tried-and-true traditionalist. She's avoidant. She likes to buy products for their functionality. She's a habitual, traditional and cost driven. You can see why some of these words just don't align with where we're headed with our customers. So the next thing I wanted to share about this is that once we got done doing all of this analysis, we put together all of the data we got, hundreds of pages of data on these customers. We summarized it into what is actually a smaller book of data that everybody in the company is looking at to understand these customers and to make decisions. So this has become a little bit of a hand book that you see around the office. I want to tell you too about 2 of these segments in a little bit more detail so that you can see the kind of information that we've got on these customers. So I'll start with the fearless fashionista. She is a socially confident individual who values self-expression and self-care. Now I'm going to read some stats. So I'm just going to get my piece of paper out. So 85% of this segment really wants to feel sexy. Her definition of sexy, not our definition of sexy. She wants to feel sexy. 79% have a strong personal style, 78% prefer colors and patterns over neutrals, 62% say the reason that they are shopping today is to treat herself, 37% say her definition of sexy. You're going to be surprised by this, matching bra and panties. That's how she feels about sexy. That makes her feel great. Of course, it's in bold colors and she's treating herself. This is how she thinks about shopping in our category. This customer has bought 9.7 bras in the past 2 years. She loves the category. She over-indexes in social media use and African-Americans over index in this group. Now let's compare that with the modern minimalist. The modern minimalist is a serious and hard-working individual who values loyalty, family and making a positive impact on the world. 74% said the reason they bought something today, it's because the old one was worn out. Her purchase behavior is entirely different than the fearless fashionista. 69% say they just want to focus on the basics, 66% plan their purchases in advance in this category. 59% say their style is casual, 52% buy all from the same brand. 47% say what they think of as sexy, any guesses, matching bra and underwear. There's an overlap. She spends $47 per bra, $47. 21% shop at the mall monthly. She's coming back over and over again. And Hispanic and Asian customers over-index in this group. So you can see that we've been learning a lot. I'm just giving you a tiny sampling here. It's a lot to digest. But when you really think about the differences in their needs and behaviors, there really is a different way we have to speak to them. We can't have 1 message for all. And when I think about that, we used to think about things like we have a Victoria's Secret brand. We have a PINK brand. And when we send out e-mails, we'll send out an e-mail every day to both customers. So if you're a customer of both, you get 2 e-mails a day, and they all have the same content. Because we know it's launching, we know what the new products are. We know what the sale is. It was the same. It's not the same anymore. Because now that we've gotten to know these customers, we're starting to create a different approach to content and marketing. So it's not a campaign for the launch of the Icon bra. It's not just 1 campaign. It's many campaigns. Because we're reaching many different people with many different needs. So when we talk to the fearless fashionista, we're showing her bright colors. And we're talking about it's time to treat yourself. When we're talking to the modern minimalist, we're talking about the neutral colors in the assortment, and we're asking if it's time for a replacement. Those are very different ways of reaching very different customers. And I think even when you go out to Atlantic Terminal today, you'll see how elements of our assortment are appealing to different aspects of our customer population. So we're very excited about what we've been doing here. And when I talk about how we've revised our approach to e-mail marketing as an example, we are, of course, seeing that we are distributing fewer e-mails, and we're getting more attributed revenue to the e-mail channel because we're demonstrating how we know our customers. Thank you, and back to Greg.

All right. Thanks, Chris. All right. So brand, our biggest asset, redefining that customer. We know her better than ever in a very pointed way. Now I'm going to talk about product and how it actually comes together. So this is sort of the core of the core of the core of what we do in accelerating the core. I'm going to go through insights that really were important in informing how we developed our product strategy. So 5 key insights. I want to go through these one by one because over there they synthesized lots and lots of data and lots and lots of information. So number one, we're the dominant player in a fragmented market. We know that. We're 20% share, largest intimates brand and the largest intimates retailer and the market is shifting. So how do we address that? Point one. Two, is although customer -- the customer account is declining, our bra customers buy most of their bras from us. So our existing bra customers spend 3/4 of their total bras spend at VS. That's great. They're very loyal, so concentration there. Third, brands that have a more significant apparel and sport presence are generating growth in the intimates market. That's really, really important. You're going to hear this over and over today sport, reference that a lot, a big shift that's happening in the market. Within -- some facts, within the $134 billion women's apparel market in the U.S., intimates is the largest decline, and within intimates brands that are winning have more of a significant apparel presence, so really important insight. Fourth over here is, so we know from history that when we played in other categories, when we played in the swim and apparel markets, other categories that our customer loved us more. And it wasn't just about those categories, it was about what happened when they bought those categories, how it made them buy other things, how it made them buy our core. So interesting insight here is -- and I think we've talked about this over time is that when we exited the swim business, for example, we actually didn't lose the customer. She stayed with us. But what we did lose is the trip that she made to buy swimming apparel and the spend on core. And to quantify that even deeper, for every -- again, in the swim category for every $2 of swim that she bought that we lost, we also lost $1 of core. That's a big deal. That's a big deal. So we're shifting. We'll talk about that, how we think about widening our aperture, broadening our view into how our brand can play with our customers' categories. And lastly, Chris mentioned this, martin mentioned this, it's really, really important point. Customers are looking for pieces that serve multiple purposes. The separation of church and state doesn't exist anymore. Is it a bra top? Is it a corset? Is it something I wear to dinner? Is it a sport bra or is it a bra that I wear every day? There's this real merging that's happening in the categories. That is a huge opportunity for us, and it's really informed our strategy. So with that, 3 key product strategies. Number 1 is defining our brand pillars. So we had these 2 great brands. They have great brand positioning. We've talked about what that brand positioning is. Ultimately, they are made up of building blocks, and I'm going to break that down between the Victoria's Secret brand and the PINK brands and what those building blocks are. Ultimately, what is they going to do for us? It's going to create clarity for our customer. It's going to create a distinct point of view between the collections so that when a customer walks into the store, she's not overwhelmed. She understands easily how to navigate through each of the components of the brand, and she's going to be happy. It's going to be easier for her to shop. Chris will talk about this in the end when you talk about the customer experience and how you actually bring this to life. So brand pillars. Second is reinvigorating our core. It's 70% of our volume. It's a distortion of our time is going to go there. Getting this right is everything. It is a make and break of us being able to not just go from strengthening our core to actually accelerating it. So, huge distortion of time there. And then lastly, is refocusing and expanding our category lens, thinking about life beyond bras and panties, thinking about life beyond bras and panties and fragrance. There's this whole other world out there that is -- that will work really nicely in a complementary way for us. So I'm going to jump into pillars first. So over on the right-hand side of the room, my right-hand side of the room is a setup. I encourage you at the break to go [indiscernible] and kind of navigate the pillars as they've been brought to life for the Victoria's Secret brand and to the left for the PINK brand. I'm going to break them down and they're articulated up here on the screen, and I'm going to kind of talk through how we're thinking about the segmentation, the pillars. These loosely connect to the personas that Chris talked about. They are not one-for-one, but they loosely connect to those -- to that persona. It speaks to the breadth of our brand. When you think about the video that I showed the range of us talking to a mother and daughter tenderly on Mother's Day to having a fashion show all within the same brand and all makes sense together. It's because we actually have the subtlety that's around us. So I'm going to break it down and make it -- hopefully will make sense to you. So Sexy, it's our -- it's kind of the identity of our brand. It's the thing that first comes to mind. I talked about that as a word that we love. But here's the thing is the definition of Sexy is evolving. And the most important thing that we've talked about, and you'll see it up here, you'll see it over there, is that it's not just Sexy, it's sexy on her terms, sexy on her terms. This is where we have the most engaged customer. It's where we have the most dominant market share in terms of bra frames and some kind of subcategories of bras, but we have a huge opportunity to innovate and to evolve that. So big focus in Sexy. Dream. So this is the most romantic expression of the brand. And interesting thing here, most of this -- that part of the assortment is based in lace. Lace bras, they're downturn as customers want things that are comfortable, they're not as interested in that category. So we have this huge opportunity to think about comfort and to think about glamor, and think about this creating an unmet need and create -- and driving the market, filling in white space. So big focus in Dream as we think about the evolution there. It's also a space when you think about the fashion component of Dream, we're showing mostly based when you think about this extension into other categories, a lot of it will live into this world of dream. Body. So Body is our most universal. It's our most loved. It's our biggest collection. It's the broadest, it's the most inclusive, and it needs an update. It needs to be elevated. It needs to have a new technology infused in it. And here's the great news is that we've gotten after that really quickly. This coming spring, spring '24 right around the corner, we will be resetting our Body pillar with a whole new phase, a whole new technology, new frames that have been infused. So really exciting. The companion to that is this -- the idea of sort of underpinning dressing as the surrounding, [indiscernible] out lounge sleepwear as a companion to Body will also happen then. Signature. So this is our most iconic branded part of the assortment. It's also probably the most under-leveraged component. I've spent a lot of time visiting our stores around the world. Arun is going to talk about the importance of our global growth, our international growth. This segment is really, really critical for that -- in that world, in particular, there's huge demand for our brand. There's huge demand to wear our brand. There's huge demand for the iconic [ stage ], and we're going to build that out and make it a bigger part of the assortment. And then lastly, Sport. You're going to hear Sport over and over and over today because it's really, really, really important. So this is Sport as thinking about it as a segment within Victoria's Secret, it's also important in PINK. We'll talk about it. We'll talk about it as a stand-alone category as well. So it is the biggest opportunity. There's a shift that's happened. The sport bra has become an everyday bra. It's not just for people who are going to the Olympics. It's for people who live in Olympic lifestyle, and that's our customer. The way that we're thinking about it in the Victoria's Secret brand is positioned under the kind of the moniker of VSX. So thinking about it almost as a companion sub-brand within the Victoria's Secret House, which I think gives it a much more distinct point of view than just having it blend into the rest of the assortment. Here's just the fact. So we lost this market. We had it. We were -- at one point in time, we had a 16% share in sport bras. Today, it's 4%. It went from 16% to 4%. It was about a $0.5 billion business at its peak, it's not that today. Huge opportunity in sport. PINK. So the PINK house, so this referenced earlier, we're newer in the journey here. So we are -- the pillars of the PINK brand are more recent for us. It's more recently segmented and defined. So I'll break it down again over on the left. I invite you after the break to go to check this out. So The Code is -- this is kind of the foundation of the brand. It's the heritage. It's where campus classics lived and it's the huge -- the biggest opportunity for us to modernize and redefine. You'll see new logo treatment still embracing our logo but life beyond the kind of the collegiate block that we really overly embraced. The Player. So this is PINK's participation in the sport world. It's more of an active spin. It's kind of where fashion and active collide. So big opportunity in the Player. The Base, super interesting category as a pillar. The Base is all about sort of the second layer. And when you think about a shift that's happening in Gen Z and they're wearing -- how they're wearing bras, that category has become almost a replacement to an everyday bra. It's become a replacement to a structured bra. And so thinking about that as a big separate category is really important. So the third category, the Base. And then the last is what we call The Wink. So this is actually probably the newest part of PINK. So this is PINK having a kind of a girlie side, a more feminine side. Chris talked about that. That's really important for this customer. So it's kind of pretty with an attitude. So that's the evolution of the Victoria's Secret pillars, the PINK pillars, those will inform how we think about building out the product. Step 1. Step 2 is reinvigorating the core. So just a reminder, we lead the market with dominant incidence share. We are the #1 fragrance in the U.S. So the good thing about this is actually we come out at a place of strength. And we have a responsibility to amplify this. So reinvigorating our core, focused on driving innovation and launches always leading with bras and complementing with panties and fragrance. So that's the kind of heart -- in the heart of this. Maniacal focus on newness. I'm going to go through this in detail because it's -- it's more than 70% of what we do, which is broad brush stroke, huge focus on newness and a huge focusing on editing. A huge focus on getting rid of the tail, the periphery, the things that don't drive the big volumes, which will make room for bestsellers to show in. We'll also add seasonal fashion pinnacle product, which is kind of lost. Collaborations will also be important to amplify the core. And ultimately, what's the goal? The goal is to drive a motion over promotion by updating our core, making it more relevant and driving more full-price selling. All right. So bras, it's the core of the core, as I like to think about it. Given the power of our brand, you've heard this a little bit, we win with launches. We win when we do launches really well. Two examples I'll bring up in Icon. It was us getting behind a launch in a really powerful and confident way and the customer responded. Love Cloud, a launch from a bit -- from a while ago, similar. When we got behind it, we stood behind it. We were confident on customer responded and it planted the seed for new best sellers. We are focused on that. So we are focused -- the focus will be on innovating new concepts, amplifying and accelerating our launches. So expect that to hear that from us. It also -- this is, by the way, well is mirrored by our shift in our go-to-market strategy. I'm going to give you, -- it's ultimately us thinking about bras for the future and out of the future. Some examples of things, 3 things that come -- that I'll talk about, maintaining our dominance in body by updating and relaunching with new technology coming down -- coming into stores this spring. In the Dream world, blending technology with comfort and fashion focus further down the road, and in the PINK world, are really important where everywhere bra, we will innovate there and relaunch coming soon. We will also edit to amplify the kind of -- the sort of frame rationalization is really important and using the pillars as a construct to think about that implication is super important. Focus is on making bigger and making room for new. And then lastly, expanding our range with pinnacle layer to drive emotion and fashion. That's bras. Okay? It's the core of the core of the core. Panties is a perfect complement to bras, driving match backs. You can see them on the models here. Super important, being focused on balance, a balance between good, better, best in our assortment architecture and expanding the range of everyday programs across pillars to broaden our reach. Fragrance, Beauty. It's a really interesting category to talk about for a second. Beauty, I think, is a very interesting proof point around what happens when you get a complementary category right. Well, first of all, you can scale it to $1 billion, which we've done in Beauty, but it's bigger than that. Our customer who buys Beauty, she loves us more. She buys more from us. She visits us more. Stat on that, Beauty customers make 3.3 purchases per year compared to 2.3 for customers who don't buy Beauty. So when you have those things that are beyond the bras and panties, it's like magic for our brand. It ignites our -- it ignites the emotion within our brand. The current -- just to talk a little bit deeper about the Beauty business, the current Beauty business is actually quite strong. We're focused on continuing that momentum. Elevating Beauty is a perfect complement to intimates, and integrating it more into the brand. And you'll see a little bit of that when you walk around the pillars in VS. You can start seeing how the fragrances start dovetailing really nicely into the subparts of the Victoria's Secret brand and PINK similar thing where the focus is more on daily body care and body mist. So that's our core. 70 -- More than 70% of our volume, maniacally focused on that innovation, launches, it's what drives our business. Next, let's talk about life beyond bras, panties and fragrance is kind of exciting. So this idea of widening our category lens is really, really critical from winning in intimates to serving the style needs of all women, really, really important. That's like a very, very important shift for us. It's the idea of going from only playing in the $14.4 billion intimates market to thinking about a bigger swimming pool to swim in. Doing it with discipline, thinking about it in a very structured way, and I'll talk about that today. Here's some context. So on average -- and so this is on average in the U.S. market, our addressable market, women shop for lingerie 3x a year versus apparel, they shop for 21x a year. That's a big difference. So the shift from 3 to 21, I like that math. Second thing we know from our own history, I referenced this earlier but just a reminder, when we were in the apparel and sport world, we -- our customer visited 2.6x a year if they weren't visiting and buying those categories. And when they were, they were buying it, they were visiting us much more frequently, 6.6x a year. It drove incremental trips and it drove a halo to our core. So this category has power beyond the volume that it drives on its own. It has this complement. So it's -- by expanding this lens, we reinforce our positioning as a lifestyle brand. It's creating a deeper connection with our customer. And that's about haloing our core, creating those natural adjacencies, driving trips and building baskets and ultimately, making this shift from relying on promotion to relying on a motion to drive our business, which results in higher full price selling. All right. I'll unpack each one. It's a bit repetitive on the sport thing because it's so huge for us. So I'm going to talk about it from a category lens. So I talked about it first from a sub-brand lens, VSX the player, the 2 kind of building blocks of how we're going after it within the 2 respective brands. There's a shift that's happened. Sport bra is no longer for the playing field is for everyday life. We - she wears sports bras more than -- for more than working out, 25% of customers prefer sports bras to regular bras, which is up 7 points to last year. That's massive. And that's like a structural shift that's happening in the market. And for us not having a smaller share there is a place of vulnerability. And so we're hyper focused on doing it in the 2 zones. Our biggest new opportunity here is in VS, it's VSX. They are the tagline, the filter that we're thinking about it is where sexy meets tech, where sexy meets tech. It's a differentiated point of view for us to enter into -- to reemerge into that market. And in the PINK world, it's under the moniker of the player. It's more light tech in fashion with a focus on set selling and get a sense of that in the mannequins and how we're thinking about that. Reminder, it was a $0.5 billion business, we went from 4% share in sport bras, from 16% to 4% huge, huge opportunity. Swim is also an opportunity. I think the -- what it did in the past, where it was a reminder to love us in the spring and summer, it built out a lifestyle. We are focused on that. So it won't just be swim, it will also be the complements. Apparel and sleep similar. This is also about building these out -- these categories out, driving trips, building baskets, huge opportunity here. And then lastly, leveraging our market collection to fill in the gaps in our own assortment. So using it for 3, we've -- this has been a great business for us. Martin referenced it, it's more than $100 million this year. It's about reinforcing our broad dominant, leapfrogging into adjacent categories and really outfitting the customer head to toe. The customer who shops here love us even more. So you get that theme. She's highly engaged. She spends 3x more from us. She makes 3 more trips per year than the customer who is not buying a third party. So when we add these extra ingredients and she responds another proof point for thinking about where we're headed. Lastly, I'm going to close out before -- and we'll talk about the customer experience in a second on how we're shifting how we go to market. So 3 things here. Number 1 is thinking like a product-led entertainment brand and delivering brand heat at scale. What does that mean? That's about richer storytelling, that's more connected to contemporary culture. Richer storytelling it's more connected to contemporary culture, Martin referenced that really important for us. Second is just shifting how we deliver products to customers. So going from this world of seasonal floor sets to a world of big, big, big product launches that are backed up with frequent drops and connection points with customers through drops and collaborations. And then lastly is evolving the content that we tell and just creating richer and richer content. What does it mean -- just to talk a little bit about this idea of what does it mean to be a product-led entertainment brand. It's about deepening our connection with our customer. It's about shifting and how we tell product stories, how we launch with power. Think about this as very, very, very loud launches. So doing -- taking what we do and just putting a megaphone in front of it. We'll do this within our own channels and in our outside channels through Amazon, driving sales and creating brand heat. Flow, I talked about this, the shift -- it's a balance of core, core plus, launches drops with frequency branded co-labs. And then lastly, just closing this out, this is the content that we'll do it. So this idea of -- on a sliding scale of things that are massive like we did with the tour, that grown 17 billion brand impressions to big launches, returnable franchises that connect deeper with customer and then drops that are frequent, all kind of connecting with the customer at all times. All right. I'm going to pass it to Chris, who's going to bring it home and talk about how it all comes to life to the customer.

Thank you, Greg. Okay. So we've talked about how we know our customer better than ever. And we've talked about how that customer insight is leading in our brand strategy, product strategy, go-to-market strategy and let's not forget our customer experience. And what's important about this customer experience is that we make it personalized for her. So our experience -- think about this slide as telling you what our job is to do. We will unlock a new set of behaviors, those of a product-led entertainment company. And those behaviors, our behaviors are we must excite her, we must know her, we must serve her and we must connect her. Greg has already talked about how we're going to excite her. That's an important part of her shopping experience. But also, we need to know her. And I don't just mean by segment. That's an interesting place to start, and it's going to generate a lot of our content and experiences. But what she really wants, what our research shows leads to purchase intent is when we show that we get her specifically. So we know that we've got work to do to make our experiences very personal and individual. And in doing that, then continue to provide an amazing service level in our stores, make sure digital shopping provides the same level of service that she's always received in our stores. And finally, when we get to the end of that purchase, let's make sure we're signing her up for the loyalty program. We want to stay connected to her because we want to be able to go back to her over and over again and help her choose the very next thing that she needs to buy. So before I get started and telling you what we're about to do, I'd like to spend a few minutes talking about this slide, which is the 1 that I showed last year at our Investor Day and for a few of you that I've talked to this morning, you may remember that I was about 6 weeks in to my experience here at Victoria's Secret last year for Investor Day. So now I've been here over a year and I want to share some of the progress we've made in each of those areas. So we said that we were going to meet our customers where they are. And how have we been doing that? Well, we've been working on digital integrations with Commission Junction and TikTok and Google and Meta and a lot more because those integrations that we do give us better access to data that tells us what's working so we can get the cost of acquiring customers down, and we can focus on driving more conversion with really targeting customers that are interested in our products. That's been a win. We also said we would leverage data to know our customers even better. So I've already talked about 1 way that we're doing that. But here's another way. Let's go back to that e-mail example. Well, I told you how we were creating the content but we also have a partner now, Movable Ink and Movable Ink uses AI to take the content and match it to the customer. So our personalization in e-mail is far better today. The next thing we talked about is to be inclusive, authentic and helpful in how we support the customer shopping experience. And I told you that the customer's body is changing. It's important that we recognize that we need to offer expanded sizes, and we've been doing that. We've also launched a new, we'll call it, store events, Fit Fridays. So you come in on a Friday, and it really is a great experience to get a fitting from a sales associate in 1 of our stores on Fit Fridays. We said we would offer more convenient shopping options to support our customers' busy lifestyle, and we are just a few moments away from launching our pilot of same-day shipping and that's going to be in a store on the West Coast. Here's what it means, a customer that comes to our digital site to shop is suddenly going to have the option when she gets to the end of her shopping experience of having the products ship in a couple of hours out of that store to her home. And finally, we talked about expanding loyalty to give our customers reasons to return again and again. And you've heard it a few times today. We're really proud of it. we launched our program in June, and we have 18 million members. So let's talk a little bit about the loyalty program. I said we have 18 million members, but there's a couple of more data points I think you'd like to have. One is that 75% of our sales are attached to a loyalty member post the pilot. So when a customer comes into a store, there's a prompt on the register that's asking the sales associate to get the customer signed up for our loyalty program. And it's a highly effective place to do that. And when you think about things like, hey, there are customers that we've lost over the years in terms of she was at once signed up for us, and she isn't now. We're winning her back through this program. So that all of this information that we have about how customers shop, we can use that to guide her up what I like to refer to as the loyalty ladder. We know where she starts shopping. We know what behaviors lead the future purchase, we know what to put in front of her in our customer relationship management programs. So we've had a significant increase in personal shopping data, and that is going to go on and on. And we'll use that data to make sure we're bringing her highly personalized experiences. And there's 1 other thing that I want to talk about that's coming soon. If you remember, when I was talking about the segments, 1 of the things I shared was that there was a reserved realist, and she does not like to shop. We've got an answer for that. I'm so delighted Martin mentioned that we acquired the company, Adore Me in the past year, and they have some outstanding technology and programs that they're using to reach these types of customers. The Home Try-On customer is a customer that doesn't like to shop. So that reserve realist customer is going to have an option for no shop-in shopping. A box can show up at her home every month. It's very easy to select the items you like and ship the box back for what you don't like. Now I'm going to give you 1 other piece of data. How big could this be? Well, we don't know. But we do know how much interest we're getting in this. We did a survey -- statistically significant survey across our customer base to ask who would be interested in trying this type of box. 32% of our customers in this survey said they would be really interested in trying this. That's a huge number. So these things really excite us about this program and Morgan will come up later because he's the expert to tell you more about this program. So we have been working on our digital capabilities. I'll roll back in time a little bit to a year ago when I started, Martin asked me to assess where I thought we were in our digital journey. So of course, I used some tools to try and figure that out, Gartner studies and all those kinds of things. We really thought we were about 4 out of 10 in terms of our digital capabilities. In other words, not really even at the halfway mark. However, we knew what we needed to do to improve that. And so we've been working on a number of digital capabilities that are advancing our overall capabilities for reaching her. And let me talk about those for just a minute. One is that the first thing we had to do is get more capacity to write more code, to get more things done. And so we have expanded our team in Bangalore by hundreds of people. And that was a decision we made in January, and it's something that we executed on over the last several months. And as of June, we're producing code and programs out of those offices in Bangalore. So we have got expanded capacity to get the work done. I talked about the use of AI. I want to talk for just a minute about digital navigation. One of the things I love to do in figuring out what a great digital experience would be is to go to the stores and watch the interaction between the sales associate and the customer. Because we're an expert at serving her in the store, we've been doing it for decades and doing it very well. And how do you really mimic that in a digital environment? Well, one of the things we saw that was happening is a customer would walk in the store and say, "I really love the bra that I've got. I'd really love -- help in figuring out which one that is." And the sales associate would say, "Well, just show me your strap." She pulls out her strap and the sales associate would say, "Oh, that's Body by Victoria. Let me take you right on over here." How easy is that? All right. But what happens in digital because somebody can't help you that way. And so the first thing I thought was, "Oh, I've got a great idea. I want to take a picture of every strap, and the customers can pick, which strap they have got. That's a terrible idea. Nobody could do that. But wait, technology can solve for that. So what we did do was we created a version of visual search where a customer can take a picture of any bra, our bras or anyone's bras, and they put that picture into our website. And we return pictures of everything that we've got that looks like that bra. So now she's got a little personal shopping experience of the bras that she was looking for today. And that's an example of how we're making shopping easier. So there's other features here we've launched. I want to get to the way we think about serving her in digital and the features that are to come. So this is a model for how we think about what we do for the customer. When she comes in, she needs to find what she's looking for, she needs a great fit, 80% of women out there are wearing the wrong size bra. She wants it fast, and she expects it to be fun. So how are we going to expand on the programs we've built to deliver on those things? So for find, I've talked about Home Try-On, improved navigation and wayfinding. One of the things that I want to talk about is richer content to help her decide. We're having a lot of fun taking all of that content from World Tour and embedding it in her shopping experiences because that's a great way of helping her to see how this product is worn and used. When we talk about fit, 1 thing that I don't have up here is, last year, we launched something called wear and fit, which is a digital fit tool. You can scan your body and it will help you with sizing. It's available in our app. 15,000 women have used this to find the right size for them. We're going to continue to build on how to help her get a better fit. And another thing we're going to do is personalization in the app. We haven't done personalization in our app yet. Well, why not? Well, because we had 2 different code bases for the PINK and the VS app. We had to get it all together. We had a lot of foundational work now is when the fund comes because now we can start building these integrated experiences. Fast, she expects convenience. We talked about shipping convenience. But 1 of the most boring things that's on that piece of paper is site speed, boy, that's boring. Why does it matter? Because when you're at 3 to 4 seconds to render your pages, customers are popping out of the experience just like they would if you didn't take their drink order fast enough in a restaurant. So we have just completed a project server-side rendering. It means that we have dramatically improved the speed of our pages, and that's just launched in the last couple of weeks. We're really excited about not just its impact on the shopping experience but Google uses it for your search engine ranking. And so it's also going to help us find more customers. And finally, fun. I talked about some of the content that's come out of the World Tour that we're using to help make our shopping experience is fun. But also behind-the-scenes look at all of the things that happened at the World Tour, how the models chose their wings, all kinds of fun content because we have brand loyalists that really love to hear what is happening with the models and the wings. So let's get on to talk about stores for a minute. We have 830 stores which, in my mind, is like a little warehouse in 830 of the most important neighborhoods. When you think about that, how can we use that store inventory to serve customers in a way that they've got very convenient fulfillment. It's a whole other view of how we can leverage that real estate in stores. In addition to the fact that any digitally native company would kill to have this acquisition method, especially when we were realizing that, that tenth decile often finds us at the store in the mall. We also have 20,000 passionate and engaged sales associates, 95% of whom are women. And we have a signature broad fit experience by a knowledgeable sales force. Those words on that piece of paper are so dry compared to what actually happens when you go to a store. The most important thing that we can do, it's not the expertise. It's the empathy because when she comes in for an experience of finding the right size bra, it is a very vulnerable and intimate shopping experience. When we meet her in the dressing room to serve her needs, she's incredibly vulnerable in that moment. And if we do a great job, we walk out with an emotional connection with someone. This is not a transactional purchase. And finally, it's really exciting the work that we've done on Store of the Future. I think the overall look and feel of the store has changed and that is really beautiful. You'll see some wonderful things today at Atlantic Terminal. But the other thing is that we've opened it up so it's much easier to cross-shop across the brands. And that's what's leading to the lift that we're getting in those environments. So I know we have an unmatched omnichannel opportunity. So a few more things about the things we've been doing in stores, I won't spend much time on this because you get to see it for yourself. But we are getting a lift out of the Store of the Future program. We have made store navigation easier. I invite you to come look at the wall where we show all of the bras we carry. This is a tool sales associate to use all the time to help customers pick the right bra for them. And if a sales associate can't get to a customer or she prefers to do it herself, it's a great self-help tool. I don't want to forget to mention Crave. Crave is in 163 stores that's this digitally assisted fitting rooms. You've got a picture of it here. Customers that don't want someone coming in and out of their fitting room are loving this tool. So our stores are also a place where we're going to deliver against find, fit, fast and fun. And we've talked about many of the things that we're going to be doing. One of the things that I want to mention is fast checkout because this is becoming really important in the store environment. So we're thinking more along the lines of what mobile registers can do to help assist in a situation where the line backs up. We also know that one of the reasons the line backs up is because returns are too complicated at the register. So we're going to simplify returns. It will cut down the size of the line. We'll be able to use mobile POS, and we'll have much faster line to serve customers in stores. One other thing that I'll mention because it's just too much of a hot topic to miss. Operational simplification through AI. We've all been hearing about AI and the power of it. What we'd really like to do is to bring that to bear to simplify the work of a sales associate in store so that she has more time for customers. And we've got a thousand ideas about how we're going to be able to do that. But not having to have the sales associate do so much of the operational work, the research, what's the planogram supposed to look like, how do I look at my sales for this week or last week? Where is the opportunities in all of that, bringing the power of AI to that is going to make her job much easier to do. So when we think about experiences. There's just a couple of key elements that we're doing foundationally. One is customer insights. You've heard it a lot today, but it's really important that we base all of our work on the data that tells us what she's looking for. So what are we going to do with that data, though? Because if you can't store it at the right place, if you can't create and organize data estate, you can't end up using that data well later. But we have been moving to Snowflake. We've been stitching the data together. We've been investing in new data sources, and we've been asking her preferences, so we know her specifically. We're leveraging a data partnership with Epsilon PeopleCloud, and we're going to be able to target her very specifically in performance media channels. So when you put all of that together, now you have the right information to build world-class omnichannel customer experiences. And so when our customers are done shopping with us, and they leave, if we want them to feel that they were welcomed and they are welcomed back that they are seeing and understood and that they are cared for, and our very best customers, those top 2 deciles, we're prioritizing them because they spend the most money. So here's an example. We just launched a new best customer program in our customer service unit. We know who they are when they contact us, they get our best agent they go to the front of the line and if they have an urgent need, they get free 2-day shipping on their products. They are very happy with that experience. And we're going to find lots more ways in all of our experiences that we take the best care of these customers. And so this is our job, excite her, know her, serve her, connect her. That's what we're here to do. Thank you. All right. Now I get to announce a 10-minute break. And I'm sure you're grateful for that. Restrooms are on both floors and refreshments are backup stairs, so please just be back in 10 minutes. [Break]

All right. Thank you. Folks, another 30 seconds just to get back in their seats. Okay, so I hope you guys are having a good morning so far. I'm going to be up here for about 15 minutes. I've been with the company about 7.5 years and the last 3 years I've been leading International. And I want to leave you with 3 key things to take away. First and foremost, that the international business is healthy, it's growing and it's profitable. That's thing number one. Second, that the opportunity in the U.S. is obviously big. It's our home market, our most important market, but the opportunity outside the U.S. is even bigger. The third thing I want to leave you with is that we have a robust plan on how we're going to capitalize on that opportunity, those 3 things. Let me begin with saying that you heard Martin speak earlier about the 3 pillars of our strategy, and igniting growth is where I'm focused on, and the international business is, in fact, igniting growth for VS&Co. Our brand resonates globally. I can't tell you the number of times I've been on trips around the world and no matter it's in a hotel at a check-in or just run into somebody on the street and the -- are you sitting on a plane next to somebody and they ask you what you do and you tell them, work for Victoria's Secret, almost always generates an emotional response, and usually a positive one. We just recently had our partner conference. This is when we pull our partners from around the world, franchise partners, travel retail partners. They come in once a year and we share with them how the business is doing. We share with them how product is progressing, where the brand is heading. And I hope you had an opportunity during the break to take a look at Sexy, Dream, Body, Signatures, VSX and all of the different pillars in PINK. We recently had our partner conference about 10 days ago in Columbus, Ohio, and the partners were absolutely blown away by what they saw and where the brand is heading. So super, super excited by the direction that we're going in. And we have a very strong partner base. Many of our partners are tenured. They've been with us 7 years, 9 years, 12 years. So they have established the brand around the world for us and have a robust business. We have a diverse operating model to reach our customers. So we have joint ventures in the U.K. where we have a minority JV. We're a minority partner. We have a majority JV in China. We have a digital business where we ship to customers around the world from the U.S. with the dot-com business. At the same time, we also have franchise partners around the world, as I just spoke about. We have a travel retail business, where we work with travel retail partners, so all the stores you see, the airports, train stations, cruise ships, those stores as well. So we can reach the customer where she is. And we have strong performance year-to-date. This is the proof before I talk about what the plan is going forward. You can see that 3 years in a row, we've been growing our retail sales 11%, growth '22 over '21, 16% growth over '22 and '23. That's our goal. If you look at that $1.5 billion of retail sales, which we aim to achieve this year, about half of that comes from franchise business. So our franchise partners around the world execute the brand, they deliver half their top line. China, which is a majority-owned joint venture with Regina Miracle, which gives us enormous capabilities in product development, speed to market, agility, and be able to -- being able to respond to our customers' needs in a very sharp and focused way. So I'll speak more to that in a bit. Travel Retail, I just spoke about superbly profitable business for us. It's a wholesale model. And on top of that, we've stacked a retail franchise. So the store looks and feels like any other store in the world at the same time behind the scenes, it's a wholesale operating model, growing for us, profitable. We have fewer stores than we had in 2019. We have higher sales than we had in 2019, and we're much more profitable. The U.K. business turned around our joint venture with Next, where we have a 49% partner, Next is in the driving seat that business is back to the path of growth, and it is a profitable business for us. And then finally, the international digital business, which is our shipping goods to customers around the world from the U.S., and that's a profitable growing business for us. But most importantly, that's 1 of the businesses that we're going to turbocharge particularly in Europe, and I'll speak to that in a bit as well. We had said last year at the investor conference, that the opportunity outside is big. And our bold goal is to double the business. So you saw the $1.2 billion, $1.3 billion, $1.5 billion. We're at the halfway mark, we have to build another $1.5 billion in retail sales over the course of the remainder of this year and the next 4 years. We're about 20% plus of VS&Co retail sales, if you took retail dollars, and you heard Martin mentioned at the start that it's about 23%, so a little bit north of that 20%. I'm sure you've all heard that company that put brown sugar water and a red can and centered around the world. And you've also heard of a company that says, "Just do it, " which my son often misinterprets, I've told him Just Do It, it doesn't mean just do everything. But you can see very clearly that the best global brands get a majority of their sales and profits from outside their home markets. And that's our goal. That's where we want to get to. Finally, we have to measure our performance in terms of market shares -- because markets are growing around the world, and we've dimensioned all the key markets and we set very clear market share goals, market by market. How are we going to get there? And today, we have around 1% market share. If you took all the markets outside the U.S., added them up and if you took our sales. So it just gives you a sense of the size of the opportunity, just growing 1%, 2%, 3% market share represents a big number for us, and that's 1 of our key goals. And of course, digital is super important. We used to penetrate in the mid-teens, then we got a 20%, we got to 25%. We think digital will become increasingly important and be about 30% of our business going forward. So how does this $1.5 billion going to happen? Where is it going to come from? Why is this believable? First and foremost, the growth is going to be -- sorry, dry throat. So stores. Stores are super important. They're a key part of the business. And we have about 515 stores right now. We will end this year at about 550. So we would have built 70 stores this year -- by the end of this year. Last year, we built 35, next year and the year after and the year after, we have planned to build about 100 stores each, and we have the pipeline to do that. So you can do the math simply with store growth being a key component. What's also important is that we grow comp sales. So we pitched comp sales growth at low single-digit levels as we expand on top of the number of stores that we grow. This is largely with existing partners in existing markets. There's a whole lot of white space out there. We don't have a partner in Northern Europe. We're looking for one in Western Europe. And I haven't spoken to digital yet. So if you put all these things together, you can just build out the picture on what the growth opportunity is. The other thing we've done internationally is initially, we made the same mistakes. We had very large stores, and they were dark and mysterious but we've gone about to building smaller stores. So we have stores that go from 1,000 square foot in the VSBA format, which only sell beauty and accessories, which is what you see at the airports, all the way to 15,000 square foot, and I'll share an example of that store towards the end of my presentation. The main point here is we have to build stores that are easy to shop, easy to build, easy to operate and have great unit economics. And that's where we decide what kind of store fits best in this market, who's the customer, what size do we need to go with. And of course, they're all in Store of the Future format. So they're much, much more bright and fun to shop. The digital opportunity is huge, particularly in China, where we're growing rapidly 100% year-on-year growth in the digital space, right? So we think there's tremendous opportunity for us to capitalize on that. Second is in Europe. Today, we ship -- a customer in Germany, orders product and it takes us a week to 10 days to get the product to her. It's very difficult to return, as you can imagine. So even with all that, the $115 million you saw in the previous slide, which is our digital sales internationally, just shipping out of the U.S., I think there's a 4, 5, 6x multiple to that if we could position our DC and our delivery and improve the customer experience and put the product closer to the customer. So I'll be speaking to that in a bit as well. And then, of course, in marketplaces, super important. Curated marketplaces, I mean, you heard about how we're doing marketplace on our own platform in the U.S. But if you think of Europe, there's Zalando, there's Auto, there's so many players. In China, it's Tmall and now it's TikTok. So I'll talk to that in a bit as well. This is an example of 1 of our newer stores in the center of Turin. It's 10,200 square foot gross space 6,200 selling. This is an example of a great execution, speaking to the space we're in, the heritage of the building and doing an outstanding job building a great customer experience. Our growth plan is also balanced. It's not lopsided in any 1 part of the world. If you think of Europe, we have partners in Southern Europe, so Italy, France, Spain, Portugal, we have 1 partner. We have another partner in Eastern Europe that are doing all of the Eastern bloc countries. We are now actively searching for partners for the Scandinavian belt for Benelux and also for the DACH countries. So it's just imagine all of that white space where we could build stores. In addition to that, we're putting a distribution center close to Amsterdam in Europe. So think of where she's getting the product from today when she orders online, tomorrow, she's going to get it in 2 days or 3 days across much of Western Europe with the help of that DC. And it will be easier for her to return product. So simply that act alone, I think, is going to give us an enormous lift in digital sales. Europe itself is a $23 billion market. We have less than 1% market share. So that's where we think there's enormous opportunity for us to grow. Second, of course, is China, where we had a joint venture with Regina Miracle. They've been a supplier partner for Victoria's Secret for over 2 decades. They have enormous capabilities in innovation, product development. And we're able to turn product from initiation and design to finish product in less than 60 days, we're able to replenish products sometimes inside of a week, and that's super important in China's fast-moving digital space. We're also leveraging the power of social commerce. I'm sure you guys have heard of TikTok. 3 years ago, it wasn't a big factor. Tmall was the thing. Today, TikTok for us is bigger than Tmall. So I don't know if you heard of a guy called Austin Lee, Li Jiaqi Xi his Chinese name. He does live streaming last year, 11/11, 1 person did $1.5 billion in sales. We're working with him. He can help us sell 50,000 bras inside of 30 minutes. So the power to design product, source product, test it, scale it and sell it through live streaming at scale. That's how we're getting that 100% plus growth in China on digital. In addition to that, of course, this is a huge market, $21 billion. So it's about the same size as the U.S. It's very, very fragmented. We're moving up the ladder. We're gaining share. The market hasn't been growing rapidly in the last 12, 18 months for obvious reasons, there was COVID and this and that but we are gaining share, and our business is growing at that rate. And thirdly, the rest of the world, $6 billion in Americas outside of the U.S., $16 billion in the rest of Asia, and we're just getting started. In markets that we've been present for 10 years or more, for example, in the Middle East, we have market shares as high as 20%, high teens, mid-teens. So we think this is very, very doable on the back of what I just described. Three enablers that will allow us to grow. Three areas that we're focusing on. First and foremost, very simple, go where the customer is and market like local. You got to show up everywhere she expects it to be. Online, in-stores and connected as an omnichannel experience to get the optimized route to market. Second is an integrated digital strategy. So we've talked about the importance of marketplaces, the importance of the dot-com site, the importance of positioning product closer to the customer and then connecting it up with the store experience. And finally, this is a great example in that picture. This is localization of marketing. So we have a global brand that needs to be projected around the world. At the same time, we need to speak to the nuances of local culture. The Middle East is a conservative market, it's a modest market. Therefore, we have to do photography. We have to create content. And sometimes we have to tailor that experience to that customer. So this is something that we're doing more and more of in order to sharpen the experience and land the brand where it needs to with that customer. Second is supply chain. So you heard Martin speak about this earlier. In the old days, all the product came from all the suppliers into the U.S. and went all the way back out. Initially, we began 3 years ago by putting a distribution center in China, in Shanghai. So obviously, that supports the China business. 1.5 years ago, DC in the U.K., so now that's supports the U.K. market. The DC goes up in -- goes live early part of next year, close to Amsterdam in Europe, and that will support all of our businesses in Europe. So Europe is an important growth area. About $0.5 billion of top line has to come out of Europe. Digital -- it will support the digital business. It will support our franchise partners. It will also support our travel retail partners. And so that is coming up soon. After that, we're looking at -- and by the way, that will also extend to supporting the Middle East as we go forward. So this is a crawl walk run. In the next 12 to 18 months, we'll have full capabilities on board. And then finally, a DC in Southeast Asia is next on the cards to support that $16 billion opportunity I talked about in Southeast Asia. Finally, fleet of the future. Design and execution flexibility. So here's what I mean by this is we have the BA format, the beauty and accessories, somewhere between 700 and 1,000 square foot. Those stores are extremely profitable, great way to enter the brand. As you heard, she buys fragrance and panties first, then she graduates to bras, then she buys the whole shop. So it's a great way for us to seed the brand and also from market intensification purposes. Then we've got the 3,000 to 5,000 square foot format, which is the sweet spot for international because rentals are higher, leases are shorter, and you need unit economics that work well. So you can't just take the U.S. box and supplant it and put it outside. So good unit economics. I'm a huge, huge believer in that. Every store has to make money. Every store has to generate high teens, double-digit 4 wall. That's what we're looking for. And then, of course, scale to grow. We were at 500 -- just under 500 stores 2 years ago. We will be at 550 by the end of this year, 900-plus stores by 2027. We will have more stores outside the U.S. than inside the U.S. And so that's how important this is. I'm going to leave you with a video. This video is of our remodel store in Dubai, and Store of the Future format. It's about 12,500 selling square foot. This is the #1 store in the world. This will do north of $40 million. Let's roll the video, please. [Presentation]

So with that, I'd like to welcome my friend Morgan, who I met, I think it's been almost a year now with the VS&Co family. Superbly intelligent, smart and very, very impressive person. I'd like to welcome aboard to share his story about Adore Me. Thank you so much.

Thank you, Arun. I'm blushing. My name is Morgan Hermand-Waiche. I'm the Founder and CEO of Adore Me and today, I'm going to tell you a little bit tiny bit about me, a lot more about Adore Me and even more so about the whole supercharge that we are in the process and that we look forward to him bringing to Victoria's Secret. About me in a minute, I'm the unique hybrid of sciences and business. Science, because on my mother family side, I come from a history of scientists and doctors that led me to a triple major in math, physics and computer science. And on my father side, a history of retail businesses that led me to a few years at McKinsey and symbolically, I actually started Adore Me from my years on the Harvard Business School Campus. So no wonder Adore Me came to become a very unique hybrid of being an incredible brand that I'm going to tell you about phenomenal values that I'm going to share with you soon and a real tech powerhouse. Actually, the joke has been running at Adore Me for many years that we are not really a fashion company, but we are a software company that happens to sell fashion. Starting with Adore Me, so these are our main values: inclusivity, affordability, digital experience and sustainability. On inclusivity from the very beginning, we have catered to every single 77 sizes back in 2013, way before this was a conversation. And inclusivity doesn't stop at the size level. It's a matter of genre, taste, colorways, bringing a real complete inclusive experience of everyone whatever their taste, whatever their shape. Affordability is another access of inclusivity. We are a mass market brand with an average price of $33 for a matching sets at the top and the bottom to compare to Victoria's Secret, this is about 40% less. So we address a very wide market. Digital, we have various digital experiences that we invented under way, and that I'll share more with you soon. And about 81 million visits last year, which gives us a real voice on The Online Lingerie Community with Victoria's Secret one of the [ lever ]. And sustainability, we actually are taking social corporate responsibility at our very heart, and we were the very first company to be certified B Corp in the United States. So Adore Me in metrics and figures. Adore Me last year, about $250 million in sales, growing 20% year-on-year. We've been growing for actually several years in similar pace. What's interesting is not the revenue, but the profitability. Adore Me has been profitable since 2017, way before being profitable was actually fashionable even more so in the world of digital native brand. To build on that, we actually build a business with very minimal capital. We raised in the history of the company, around $36 million, which makes us a much more nimble and efficient company than any of our peers that generally raised several hundreds of million for ultimately still not a profitability reached today. The revenue itself is interesting. It's made of 40% of nonstandard size, so we really walked the talk on inclusivity. And it's not just plus or smaller size. It's really every niche, full busted is one, for instance. Our customer is young, living fully the Gen Z and millennial. 2/3 of the revenue is recurring, which is very interesting also, and I'll tell you a little more about our business model. But essentially, 3, we have ala carte, we have subscription and we have Home Try-On, and I'll tell you about all of those. And finally, we have an operating platform that we leverage in every way for operational leverage, which is proprietary. Talking about this more specifically, what you see here is a matrix of block. Each block represent hundreds of thousands of lineups codes. We've developed to reinvent the whole fashion value chain, from design to merchandising, supply chain, customer engagement, user interface and the likes, pretty much everywhere we've put our nose to build something that didn't exist and that helped out smart competition. Couple of underlying to that, almost half of our team is made of tech people, engineers, data scientists, developers, which is really unique for a fashion company. Proprietary e-commerce platform, AI and machine learning has been at the core of everything we do since 2016, and we roll out over 14 updates and software deploys daily, which is really in terms of example, for instance, when we look at a few of those blocks that I expanded. The technology is not always where it seems to be, but it creates superior customer experience. An example is in size inclusivity. Lingerie is a very complex category. 77 sizes, lead times are extremely long, call it, 6 months on average, many shapes, many colors. And so to navigate that maze, we have put technology at the core of it to actually build an engine that enabled us to date, given the high number of SKUs to virtually never had any write-off. Similarly, if I take the example of marketing, it's interesting. We started of chasing online, and then we figured we want to go beyond that. We are diversified. But off-line advertising is complicated because you can't really measure it. We built back in 2015, 2016, a machine learning that would help us connecting with the channel TV logs to actually measure the return on marketing spend on television at the spot level. And doing so, we will run the very first digitally native brand to actually scale up significantly with linear TV. Home Try-On is something I'm going to tell you in detail more soon. But overall, it's the magic of creating an experience when you can try the product before paying anything online. And sustainability because we have the whole suite of software ready, we actually leverage new technologies to plug at every part of the chain and measure pretty much almost real-time life cycle carbon footprint, which is pretty exciting. But what is even more exciting is everything that we can bring to the Victoria's Secret ecosystem, generating incremental revenue. And I'm going to talk about 3 of them. The first is the membership, the second is the home try-on and the third is AI. Starting with membership. This is something that we've been doing at Adore Me for some time. And we saw from the beginning that building retention at the core of the experience was the key to unlock a stronger unit economics. And through subscription, we give customers who are ready to shop a reason to shop. And so subscriber every month, gets a new drop of products that they can shop from discounts and those products specific to their subscription. And ultimately, it creates pretty strong engagement. The figures are on the screen. We see over 100 increase -- over 100% increase in traffic, almost 3x conversion. And this is during the very first week when the drop happens and over the year, 70% more orders per customer. And so we look forward to supercharge Victoria's Secret membership with that. The second piece, which is building up on top of the membership is really home try-on. Membership was about building retention. home try-on is the next big evolution in which category, the very name of which is intimate is best suited for an experience where online you can finally try the product before purchasing it. In store that was easy online, it was very hard to do. And the way it works is really we let customers compose a box of product. They can hand pick which one or they can ask us to cater for those products. More often than not, they'll ask us to cater. They need advice, they want that guidance even if they have a few things they really want to try. We ship that box of products, call it 3, 4, 5, up to 7 products at the customer's home. They get to try the product. They keep what they like, ship back what they dislike and ultimately, only at the very end, pay for what they keep. This magic from a customer standpoint give us tremendous amount of congratulations and happiness. Every day, we receive notes from customers who either live far away from malls or do not have time to shop because they work or have kids or just -- sometimes just don't really know what to purchase. And they need more guidance and they want to touch and feel the product, the convenience that this brings is incredible, and we see it in the emotions of the comments. But from a company standpoint, it is actually a mass to orchestrate. You need to be a master of curation at Netflix. You need to be extremely strong on logistics to handle the volume of return at Amazon. And you need to be extremely strong on billing because charging only at the end creates a whole lot of problem that don't happen when you charge at the beginning. And so this is an effort worth doing because what we see is that a home try-on customer brings on average, almost 3x more revenue than a regular customer. home try-on customer not only purchase what's in the box, but upsells from what we gave or from what they thought to purchase in the beginning. And the cherry on the cake is we can run that business model with a similar profitability level to any other business model we've run in the past. So if I keep increasing this in the next level, it's about drilling it out to the Victoria's Secret scale. And what's really, really compelling here is that we are not talking about the future. We're talking about doing this pretty much imminently in Q4. We are going to start with about 5,000 box per week to cater home try-on experience for Victoria's Secret as early as in the coming few months. And we surveyed the Victoria's Secret customer. 32% of them say they are very interested in that type of experience. Imagine, what is going to be to put the product in their hands when they know the brand, they love it, and we bring that level of convenience. What's really compelling to me is that Victoria's Secret is 1 of the greatest physical retailer in the world. And combined with the power of home try-on, imagine, just think of it for a second. It brings the most comprehensive level fashion service in the world. We can find the customer anywhere she is, in store at home. She tries, she buys, ship it back, she bring it back. It's a level of convenience and of service that no other fashion company offers today. Moving into even more service to the customer, talking about AI. So first, a buzz here. Now that we've created the greatest retailer in the world, we're going to supercharge it with AI. But let's go back 15 years in time when the iPhone came. At the time, we felt many, many categories could be disrupted by that new innovation. And today, with AI and generative AI, we feel the exact same way. And we are super excited to actually already be a leader in AI and generative AI. Adore Me started to work using AI back in 2015, 2016, leveraging a first machine model learning for TV advertisement. AI is at the core of the home try-on experience where we have all the data from customers that we put into some AI model to get to that curation of the product. We made our first API call to GPT 3, the ancestor of ChatGPT right when it was released back in 2021. And if you don't take my word for it, just take your phone and Google right now, Adore Me generative AI, you'll see a laundry list of things we already do with artificial intelligence. So now if we look at what is really exciting even more so is to bring that to the whole ecosystem of Victoria's Secret. And I've put on the page here, 3 examples are things that we are going to do. The first -- and again, this is not about the future. This is already running live on Adore Me for half of our traffic, the personalized feed For You. It's a TikTok feed inside the app that brings product entertainment, recommendation, very vivid, very live, and that basically generates about 17% more purchase per session. This is incredible. We look forward to do more of that, of course. The second thing is we are taking that level of personalization, and we move it from digital to the product itself, how cool it could be to personalize a product that receive home a few days later with a name, a happy birthday, happy anything mentioned but not only the words and the name but also the whole pattern on the product. That could be generated by AI. You want some cupcakes, you want jungle pattern and whatever you want, you can create it. And in a few days, you get it delivered at home because it's made in our warehouse leveraging a sustainable printer. All of that for the price of any other bra. Imagine, the PR impact, imaging the customer passion around this. And then the last one is generative AI Shopping Assistant. Everyone dream about a perfect generative AI shipping assistant like in a store. We have it. We're going to roll it out in the coming few months. It is something that's going to take customer reviews, customer purchase pattern, customer intent and start suggestions such as it looks like you're looking for a strapless and generally by black. May I suggest you a few products and engage with the customer, a dream come true. And so what we look forward is to leave into a new era with Victoria's Secret, and it's not that we look forward to the future. The future is already here. It's just not evenly distributed, and we look forward to bringing it to the whole ecosystem. So Adore Me with that merger is really going on a new orbit of growth, and we look forward to put Victoria's Secret in a new era on the tech side. So on this, I'll let TJ tell us more about the financials.

Thank you, Morgan. Super exciting. And hopefully, everybody got a really good feel for the excitement that we've had for a long, long time around the acquisition of Adore Me. So Morgan, Blake, Ron, John, I know [ Roman ] and Bogdan. I'm sure the whole team is listening and can feel the energy in the room around how Adore Me is going to positively impact the VS business for years to come. So thank you. Thank you for that. So I'm going to take us through and kind of try to summarize everything that you heard today and what do we think it means for the future? But before I do that, I do think it's appropriate for us to kind of acknowledge where we are, as Martin mentioned earlier, acknowledge where we are in the present. And the present is, if we do a little bit of a look back over the last 3.5 years, the business has absorbed a lot. There was COVID, there was post COVID. There was supply chain. There was a macro environment. Now we've got an intimate market that's difficult. The business has absorbed a lot. And our customers have absorbed a lot along the way. So it's been a challenge for us in this marketplace. However, as you can see on the screen here, in different difficult economic environments or just different environments in general that are challenging for business, we're still very large in size and scale. Over $6 billion in different types of climates, generating EBITDA dollars north of $600 million, $700 million, $800 million and operating cash flow, high-generative cash flow model that we can make decisions on in terms of how best to invest it. So not on the screen here, but lining up to our guidance, a little over $6 billion of revenue expected this year. EBITDA on the high side, around $600 million, operating cash flow that's attached to that of about $400 million. We've chosen to continue to lean in and invest that operating cash flow, and I'm going to talk about that in a little bit, but we are operating the business for -- with the long term in mind. So that's a bit of a look back quickly. Where are we currently? For those of you who might not have had the opportunity to see last night, we put out a press release not only announcing today and some of the highlights that you've already heard from us, but also summarizing where we are in the current -- in the third quarter, where are we and how are we performing? And what we did was narrow up the range a little bit, a little bit more towards the better side of sales, the better side of operating income because those are the results that we're seeing. We're a little over 10 weeks into the quarter. And I'm happy to share that August, as we talked about on our earnings call, was our best month of the year. September was better. October, we're a week and half into it, and we've got big plans to finish the quarter strong. October will be our best month of the year. So there is a build happening in our North America business, which is key. You heard a lot about the core today. Alongside of that, you heard Arun and Morgan just now, our international business is ahead of plan. Our Adore Me business is performing as we expected it to when we purchased the business. So those elements are working, and we're starting to see the build in North America, which is what needs to happen to unlock the long-term potential of the business. So in addition to the third quarter, we left the fourth quarter alone. We left the full year alone. And the confidence around that is really some of the things that you heard earlier today that we expected those items to positively impact our business as we rolled them out. One of my favorite is Chris' Slide 51, which you don't have a reason to remember 51, but it had a half a dozen things on there that just happened in the last few weeks that positively impacted digital experience. Those things add up quickly to drive better results and builds in North America, which we're super excited about. So that's where we are in the current. So no surprises there. Again, loyalty, branding, digital, product launches, very excited for you to see the store this afternoon. We saw it yesterday, looks great. Back you and your team did a wonderful job along with visual and just a number of different parts of the business, holidays in full force in the middle of October at Atlantic Terminal. So with all of that in mind, we've got the look back, we've got the current. You've heard a lot today. What do we think all of that means for the longer-term potential of the business is where I'm going to finish with my comments here. So our goal, our goal is to double the operating margin rate in the next 3 years. We've guided to this year at 5% to 6%. We think in the next 3 years, we can double the operating margin rate. How are we going to go about doing that. Mid-single-digit sales expectation, increased sales in the mid-single digits, half coming from North America, half coming from all the work that's being done in the core and all the work that's to come in the core and the other half coming in the growth initiatives of international, Adore Me and other things. But international and Adore Me primarily. So mid-single digits. That's slightly different than what we told you a year ago. We were leaning in more to the growth pillar, and we didn't have a high expectations on the core. Now we recognize, we understand a little bit better. We know our customer a little bit better, and we think the expectation ought to be that North America contributes equally with international and the growth pillar. Additionally, within North America, the digital business should lead and the stores will grow as well. So digital will be leading North America. Stores are expected to grow. The fun part about doing these presentations sometimes is we've had -- I won't tell you what version we're on, but this is not the first version of the presentation. And we learn a lot along the way. So 1 of my favorite stats, I've just learned today, I hope everyone picked up on was at the end of the 3-year plan or in 2027, we will have more stores internationally than we have domestically. That's a big, big statement and a big, big opportunity. Think about what Martin talked about early on, where he showed digital is about 35% of our business. If you play that out over the next 3 or 4 years, digital is approaching 40% of our business by the time we exit this point, and the business is changing, and it's evolving, and we think it's for the good. And a lot of it is being driven by, again, customer insights, customer data and market insights, which is great. Outside of sales, how are we going to look from a margin perspective, 2 things. Gross margin, we think, grows faster than sales. So the rate is going up. We see no reason why the rate shouldn't be in the 39% to 40% range by the time we exit this plan or by the time we end this 3-year period. How are we going to get there? Two ways. Chris Callieri over here, Dean right here, they're leading our cost of goods sold initiatives along with Anne and her team from a merchandising perspective. We know there's opportunity to deliver the same amount of quality, innovation and do it at a lower cost. That's step 1. Step 2, we think we need probably about a 1% or 2% increase in North America sales to leverage buying and occupancy costs. Not sure when the last time was we leveraged buying and occupancy cost in North America. So that's in front of us from a gross margin perspective and why we think the margin dollars grow faster than sales. From an expense standpoint, hopefully -- I won't ask for a show of hands but hopefully, over the last handful of quarters, we've demonstrated that we're serious about taking cost out of the business. Over the last 6 quarters, anyway, our base cost in North America in PINK and VS, when you put them together, are down year-over-year. Again, 6 quarters in a row, those cost levels are down. So there's a developing culture of discipline around cost and how do we become more efficient. So I've got sales mid-single. I got gross margin growing faster, sales growing slower. I create this wedge where the profit or the operating income grows at a pretty healthy rate of about 20% or more over the 3-year period. Again, please understand this likely won't be linear. There will be things that happen sooner than others. There will be fits and starts along the way, but it's our expectation. We believe that a brand of our size and scale with global reach ought to be able to grow in the mid-single-digit range from a top line perspective, restoring and accelerating growth in North America to catch up with international and the rest of the world. So doubling the operating margin rate over the next 3-year period is the goal. Important to note, we've talked a lot about 2023. We're not talking about 2024 or 2025. I'm not giving you guidance on any one of those 3 years in the future. We'll do that in March when it's appropriate and our plans are finalized. But what I'm trying to help you understand is a longer-term look over a 3-year period, what do we think the business profile ought to look like. Going a little bit deeper, just for a second. Sales growth, $1.2 billion, growing from $6.2 billion to $7.4 billion, that's the mid-single-digit number. Where is it going to come from? Talked about it being evenly split. But going just 1 level lower, intimates market share, we believe we should be growing the intimates market share over this 3-year period. How are you going to get there? Product and innovation from Anne and her team, customer insights that help and accelerate that product innovation, customer experience in the store from Becky and her team. It's not just about building a better product. There's a collective effort around accelerating the core and growing market share in the intimates category. Not to mention, I think Greg said sport 47 times. So we're going to grow the sport bra business as well. So that's wonderful. A lot going on to help us feel confident that intimate market share growth ought to be the expectation for this business. Category adjacencies, acknowledging that it's easier for a customer to shop as more frequently if we can help or round out her shopping journey in other categories that, candidly, we have some experience in, and we walked away from. So reintroducing that from our perspective, makes all the sense in the world. Category adjacencies drive the core. The customer experience initiatives from a digital standpoint, as Chris mentioned, are really just getting started. Although the work has been happening, the customer is just starting to experience it, and we're starting to see it show up in our results here in the third quarter. Loyalty membership I don't know what our expectations should have been, but 18 million people in 4 months seems like a lot. And 75% of our sales in a 4-month period seems like a lot also, and being able to communicate specifically to that customer differently and more efficiently and maybe even in a different way, promotionally, maybe more for certain customers, maybe less for others, that's all in front of us as opportunity to expand the business. And then I think from the second half around growth, again, I won't do it justice like Arun and Morgan did, so I won't try. But just hopefully, we've generated the confidence in us in international Adore Me now that they're putting up results that you should feel good about that element of the growth algorithm. From an operating margin standpoint, how are we going to get there? Again, 5% to 6% is the guidance for this year. We actually think there's more opportunity on the margin side because we've been working on the expense side, and we're seeing that in results. So as we move forward in the 3-year period, the combination of cost of goods and leveraging buying and occupancy is important. So gross margin structurally should we be at 39% or 40%, yes, that's what we believe in this plan. Similar from an expense standpoint, should we be in the high 20s? Yes. That's what we're working towards in this plan, and we've got quarters of actual experience doing that, that hopefully gets you confident. It does get to low double digits. And important, the last column on this slide here, we don't want to walk away from to Martin's point, being transparent. The last time we were together, we gave you a vision of mid-teens. We're not talking about mid-teens in this 3-year plan. It doesn't mean that we don't believe that it shouldn't be the goal of the company, it just means 3 years is about as far out as we think we can see or about as far out as we strategize and we think to double the operating margin rate in a 3-year period is a pretty heroic effort. Understand we've been there, but still there's a lot going on with the customer and a lot going on in the environment, and there is a lot of work that needs to be done in order to achieve just these numbers. So please don't walk away thinking we're walking away from the vision of mid-teens, just means in this 3-year period, we think it's a double. Similar, where is that operating margin rate expansion is going to come from? We think it's fairly evenly split between the 3 priorities, 3 strategic priorities that we've talked about as a business. So accelerating the core gives you a couple of points. Ignite growth based on the dollar revenue growth and the high flow-through, particularly in our international business, gives you a couple of points of leverage. And then the third piece is just delivering upon the balance of to transform the foundation savings goal that we set a year ago for you. So fairly evenly split between the 3 strategic priorities. And there's some total of it, if you remember back to the prior slide, this is a high cash-generative business. Operating cash flow, even in this year, which is arguably not our best year, is about $400 million. Again, we've chosen to reinvest that in the business and I'll talk about investments in a moment, but a high cash flow model, healthy balance sheet. You got 2 big assets -- as a retailer, you have 2 big assets; one is real estate and the other is inventory was referred to earlier. We've done a wonderful job managing inventory in an uncertain environment. You haven't heard us talk about coming in off of an inventory number. We've delivered on the inventory numbers that we said we were going to deliver. From a real estate perspective, very healthy fleet. I'll touch on that in a moment. But 96%, 97% of our stores are cash flow positive and make money. And then ultimately, with the cash that's left over, what do you do with that? I'll touch on that in a moment as well. From a CapEx perspective, we think about 4% to 4.5% of sales is a reasonable expectation for where this business should be longer term. We'll be a little less in that this year. We might be a little more than that in certain years in the future depending on what's going on. But what that affords us the opportunity to do or why we think that's appropriate is we do believe, as you heard earlier today, that real estate or stores are a part of differentiation amongst the competition, particularly the digital competitors who would love to have the store base that we have and the point of distribution that we have. So we want to continue the Store of the Future program. We're going to talk about that. From a technology standpoint, again, the amount of work and time and effort on the part of the team to separate us VS&Co from former parent L Brands has been significant, particularly on the technology side. A couple of things I want you to know. We're almost done. That's great. We'll be done in the 3-year period, and it's gonna to be done under budget. So wonderful work from a technology standpoint, which now frees us up to do more and more inside the business and accelerating the core now that we have that behind us. And you heard Arun talk about earlier today, Dean and Chris have some logistics and supply chain investments that we're going to be making to really again shore up that core but also accelerate the growth internationally. So on real estate, store of the future, let's talk about Store of the Future for a moment because last time we were together in October last year in Chicago, we had store of the future stores open for about a moment. And we didn't know as much as we know today. So what do we know today? We want to talk about store of the future and updating the fleet, how it's impacted productivity and also what that means for potentially diversifying our store base a little bit further as we move forward in this 3-year view. I'd be remiss if I didn't mention that the real estate team, the store design and construction team that does provide some level of support to Arun and his partners around the world, although they are primarily responsible for building out the stores, we do support them from a design standpoint. So that's important to note. So that there is the continuity of look and feel across the world. So where are we on the fleet currently? We've got about 830 stores. I think you've heard that number a couple of times today, a little over 7 million square feet on a gross basis. About 80% of our stores are in malls. And by the end of this year, about 10% of our store fleet will be in the Store of the Future format. So how are we doing with that? The Store of the Future format. We like green. We like green. So I got 3 green dots up here, and I got 1 yellow, but I think we're all pretty confident that's going to turn into green. So diversifying the fleet, our existing fleet going in and remodeling stores in location. So the store you see, if you go on the store tour this afternoon is a store that is remodeled in location, was not downsized we went in with the new Store of the Future format. That's what we're talking about here on the first bullet. So by the end of this year, we'll have about 30 of those stores completed. Based on the ones that have been completed to date and what we know we're seeing sales increases in the low double digits, pretty meaningful result. Again, the store size is not changing, so the productivity is also going up in the low double digits and the stores are more profitable, feels like a pretty good do. The cost of the new -- of the store remodel is starting to come down based on things we've learned along the way. That feels like a good do. The returns around the Store of the Future are actually 2 to 3x our weighted average cost of capital. So like Store of the Future a lot. Similarly, as we've learned more about the Big pillars and the VS fillers, we think it makes sense to put a lot more stores together. So not having a VS stand-alone and a PINK stand-alone in the same mall. When we do that, sales kind of sort of hover around flat, maybe down slightly, but productivity per foot goes up 30% or 40%. Profit per foot goes up by a similar amount, it's a good new for the business. New stores, as we've opened new stores, we've been more successful with premium outlet centers based on the high traffic that's generated in and around our store. To date, we're probably a little more on the yellow side in power strip centers. If anybody has operated retailers and Power strip centers, sometimes it's a slower build. That's what we believe is going to happen. So we have every expectation that year 2 in the power center will be an outsized growth rate. So a lot of green on the screen here. We like Store of the Future, supports the real estate capital that we think makes sense for the long-term health of the brand. What does the fleet look like by the end of the 3-year period? Again, we do think this means there's probably a lower store count. As we've learned more about the business and how the brands operate together, and you heard about the on-ramp from PINK, to VS, we think it makes sense to have more and more stores combined and less and less stores freestanding. So what that means is, actually, the store count and the square footage number will go down over this 3-year period. But this metric here in the middle called venue count really means we won't be leaving venues. We'll just be putting stores together to be more productive. So we think that's a good do as well. From a technology standpoint, I kind of touched on it. Murali is right over here. You can ask him all your technology questions around VS&Co, but finalizing the business separation is a big, big deal -- you heard Chris talk about the customer experience and digital initiatives that we're investing in. From a technology standpoint, Morgan talk a little bit about AI as well from an Adore Me perspective, there's overlap with what we will do from an AI perspective in the VS and PINK brands as well. So we're providing for that capital there. But what I want you to walk away with is most of the technology capital, we're going to be focusing in on accelerating that core. So that's super important. Similarly, we're going to be doing the same thing from a supply chain standpoint. So you've heard already a mention of an international distribution center coming online next year from a third-party perspective. We will likely have West Coast operations as well from a distribution center. So again, getting closer to the customer and supporting that accelerating the core initiative. And when we put it all together and just if we talk about capital allocation and financial strategy in totality, we think the best place, the best dollar we can invest right now is reinvesting in the business. We've got proven activity that we're accomplishing, particularly from a real estate perspective, particularly from a technology perspective, we want to lean in and invest in our business first for growth, from a liquidity and leverage standpoint, we see no reason why based on our current forecast in 2023, we could have the opportunity of actually paying down or paying off our ABL. We were left with 2 pieces of fixed debt, the largest of which is at a little over 4% interest rate. So that feels like a good do in this environment. And then the other is a floating rate. But overall, about $1 billion of fixed debt, again, fixed leverage point, a little less than 2x, we feel is appropriate for a brand and a business of our size. Having said all of that, we normally do this and we have some cash left over. What would we do with that cash? That's really a management and Board decision. Our preference to date has been share repurchase. We have not -- do not have a dividend in place, but those conversations are more in front of us after we get through the holiday season and actually after we start to see some of the accelerating in the core of the business, so we can make better decisions about allocation of capital. So with that, I'm going to ask Martin to come back on stage with me as he does -- again, I just -- I want to overemphasize the point here because I know we spent a lot of time last year talking about an operating margin goal. We are talking about a low double-digit operating margin rate in this 3-year period, I'll underline 3-year period. The future vision, we've not walked away from the future vision that this business ought to perform in the mid-teens from an operating margin rate. It's just in this 3-year window that we're focused in on, we think, doubling the rate is a pretty monumental accomplishment. Boss?

Thank you, Stay with me.

I will. I will.

Quick time check. So our plan is to be out of here at 12:05, so we've got about 20, 25 minutes left to play. I'd like to give at least 20 minutes for Q&A. TJ and I will stay on the stage, but we've got all of the leadership team in the room to answer question. So whether they like it or not, they're all ready. So I'm not going to give you a boring repeat of everything you've heard. You don't need that, but I do want to make 7 points of summary very quickly. Number one, brand and customer. It's about a customer-centric approach to our brand driven by data and insight, leading to customer segmentation and personalization, number one. Number two, moving from a focus around winning at intimates to thinking about our category lens in a broader sense that introduces more categories and more trips or more reasons to shop at Victoria's, plus the very important segmentation of what was frankly an overwhelming and extremely complicated assortment into 5 pillars of Victoria and 4 pillars within PINK. Number three, go to market. It's about entertainment-led marketing, all coming from the benefit of customer insights that Chris talked about. Number four, new customer experiences. I really like the idea of the 4 Fs. I think that gives us real clarity about where we invest our dollars and who we -- who those investments are pointing at. And there's room for opportunity in digital, as Chris said, and we're winning there. We are gaining share in digital and that's only going to grow in stores and in the combination of the two. And then on the bottom row, [indiscernible] presentations from Arun and from Morgan around just how exciting the growth opportunity is in international to double and the 2 for 1 opportunity we have with Adore Me as a stand-alone growing company, but also so much technology to leverage and incubate into the future. And then finally, TJ bringing it home with what I think is a really credible financial plan that has significant stretch in it. We all believe we can do better, but I think it's grounded in the reality of where we are right now. And hopefully, you've seen all of that and got the benefit of seeing a pretty energized and pretty credible management team who believe in the direction we're taking the company. So I hope that helps by way of summary, if you take nothing else away from today, it would be those 7 points. So we have ladies with microphones in hand, ready to take your questions.

I see the first one right in front of us. If you can be super sharp with the mics because we may need to go to some of our management.

It's Lorraine Hutchinson from BofA. I would love some help just bridging where we are today on sales to get to the mid-single-digit growth next year. Obviously, this year, the industry took a step back. In your expectations do you have that growing again, the overall sector? Is it all market share? And I guess, if it's growing, what would change that trajectory from this year into next year?

Yes, I don't think it's reasonable for us to assume market growth in our plan. So we're not projecting the market's going to grow or not. My belief is that things will normalize that there was probably an overtrade coming out of COVID, and there's a bit of an under-trade. And my guess is that it will normalize. Is there something structural about our Intimates market that says this is going to go out. I don't believe that to be so. We're most focused on the stuff that's within our control. And that means focusing on the big 5. If we really hit truly being different on each of those big 5 that Greg and Chris talked about, we will win. And so that's really where the focus goes. TJ anything to add to that?

No, I think that's all right. And I think that we recognize that not everything will go in a straight line, and we're not necessarily giving guidance for next year at mid-singles. But we do think as we move through the holiday season, what's embedded in our fourth quarter shows improvement. We think we see steady improvement as we move into next year. Again, there's product-led and really customer-led initiatives that we're seeing work in our business today.

Mauricio Serna from UBS. So a couple of questions. First, following up on that question about the industry growth. I understand that the 3-year plan is not linear, but how mindful is the plan maybe about a potential recession over the next 6 to 12 months because that flows into 2024, I guess. And then on the Amazon initiative, could you share with us around -- could you share with us about how much you're generating in sales with Amazon?

Yes, I'll take the second question first. I can't remember whether Chris or Greg mentioned this, but our partnership in Amazon will be north of $100 million in the next 12 months to give you some sort of size and dimension to broadly similar in size to our go-to-market endeavors. What's the potential for that much, much bigger than that. As it relates to forecasting recession or that is not our bag at all -- I don't want to even comment on it because there are so many people in this room who are better qualified to comment than not. What I will say is that I read a lot -- and I read the same stuff that you do. And whenever people talk about student debt and student loan repayments, which is the brand that they talk about as being most impacted. It's always us. So the market out there, the belief out there is that times are going to be really tough in the back half and into next year and that probably, we're going to be more impacted than others because we target a relatively young consumer in Gen Z and young millennials. And nothing I can do about that. We just got to focus on smashing the big 5 that impact North America and building for a future where capability enables growth and where international Adore Me enable growth. There will be some Future S in the bus on the way to stores you can answer that for you, I'm sure.

Simeon from BMO. Great job today. So 2 quick ones on the frequency of shop and the basket size or the purchase side from the $165, how has that changed pre-COVID, IntraCOVID now, so just historical. And then also, when you think about the loyalty customer, any metrics in terms of what they -- how you think about them in terms of frequency and purchase size and just how they differ from non loyalty.