Good morning. My name is Danielle, and I will be your conference operator today. At this time, I would like to welcome everyone to the Bath & Body Works Third Quarter 2022 Earnings Conference Call. Please be advised that today's conference is being recorded. [Operator Instructions] I will now turn the call over to Ms. Wendy Arlin, Chief Financial Officer at Bath & Body Works. Wendy, you may begin.

Thank you, Danielle. Good morning, and welcome to Bath & Body Works Third Quarter Earnings Conference Call for the period ended October 29, 2022. As a matter of formality, any forward-looking statements we may make today are subject to our safe harbor statement found in our SEC filings and in our press releases. Joining me on the call today are Executive Chair of the Board and Interim CEO, Sarah Nash; and Brand President, Julie Rosen. All of the results we discuss today are adjusted and exclude the charges related to the early extinguishment of debt in 2021. Additionally, the results represent results from continuing operations and exclude the discontinued operations related to Victoria's Secret. I will now turn the call over to Sarah.

Thanks, Wendy, and thank you, everyone, for joining the call today. Let's start with our third quarter results. We are pleased to have delivered EPS of $0.40, double the high end of our guidance range. Given the strong bottom line results, we are raising our full year EPS guidance to $3 to $3.20 from our prior guidance range of $2.70 to $3. Our sales for the quarter were at the high end of our expectations and reflected our team's closeness to our customer, our focus on innovation and newness and our success in leveraging our vertically-integrated supply chain to chase key winners. Our nationwide launch of our loyalty program has been a great success. We achieved industry-leading speed in customer adoption in our program with over 21 million members enrolled to date. Loyalty members now make up more than 1/3 of our overall customer base and loyalty sales represent about 2/3 of our total U.S. sales since launch. We are excited about the potential of this program as our loyalty customers spend more, visit us more and have significantly higher retention rates than those not in the program. We continue to take rigorous actions to improve profitability, including proactively revisiting our promotions and pricing plans as well as product costing to improve merchandise margins. Additionally, we are actively working with our vendor base to streamline operations to combat inflationary pressures and improve product cost without compromising our focus on quality. We have also implemented several expense reduction actions during the quarter, including optimization of corporate overhead and store selling expenses. We will continue our focus in this area given the challenging business environment. Before I turn it back to Wendy, I'd like to share my perspective on our recent CEO announcement and the company's overall positioning. Our Board was very thoughtful as we conducted the search for our next CEO. We were delighted that we found in Gina, the global omnichannel personal care company leader that we were looking for. Gina brings more than 30 years of experience, including leadership roles at global companies such as. Unilever, Alberto-Culver Company and the Estee Lauder Companies. She has deep expertise in sales, marketing, brand building and business development and strategy along with strong operational experience and a demonstrated track record of delivering successful business outcomes. The Board is confident Gina is the right leader to drive the company's next chapter of growth across our channels and categories globally while delivering enhanced value for shareholders. During my time as interim CEO, I have been impressed by the talent and dedication of the Bath & Body Works team. I'd like to thank the company's management team and all our associates for their commitment to driving innovation and agility and to enhancing our customers' experience. I am confident that Bath & Body Works will continue to capitalize on our tremendous potential to expand our brand globally. Wendy?

Thank you, Sarah. I will be providing financial highlights, but I encourage you to review our slides, posted remarks and press release, which each contain additional details. For the third quarter, as Sarah said, we reported EPS of $0.40. These better-than-expected results compared to our guidance of $0.10 to $0.20 per share were driven primarily by a better margin rate due principally to category mix and transportation expense favorability, together with SG&A expense favorability. In U.S. and Canada stores, third quarter sales were $1.18 billion, a decrease of $60 million or 5% compared to last year. Sales were up $306 million or 35% compared to 2019. Third quarter direct sales were $345 million, a decrease of $24 million or 6% compared to 2021. Customers continue to choose our omni focused option of buy online, pick up in store or BOPIS. We ended the third quarter with BOPIS availability in more than 1,280 stores. Our international business sales for the third quarter were $81 million, an increased 10% compared to last year. Our international business continues to perform consistent with expectations. Our third quarter recognized revenues were negatively impacted by timing shifts related to product shipments. Now to guidance for the remainder of the year. For the fourth quarter of 2022, we expect sales to decrease between mid-single digits to low double digits compared to 2021 sales of 3.027 billion. We are forecasting fourth quarter EPS to be between $1.45 and $1.65 per share. For the full year, we are forecasting sales to be down mid-single digits compared to $7.9 billion in 2021. Our full year guidance contemplates inflationary costs, totaling $220 million to $230 million and the estimated revenue deferral impact from the loyalty program rollout of approximately $40 million. Now on to the balance sheet. Total inventories ended the quarter up 10% compared to last year, better than expectations. Finished goods retail units were up 7% compared to last year, in line with expectations. The difference between dollar growth and unit growth is due primarily to inflationary pressures and product costs, partially offset by lower component inventory compared to last year. The finished good unit increase relates to categories that were very lean last year, particularly soaps and body care. We are confident that our inventory is well positioned to support a strong holiday season. We believe our guidance reflects a disciplined expense and inventory management approach in light of the dynamic operating environment. At the same time, we continue to be strategic about the investments we make to support the growth of the business, including investments in products, technology and omni capabilities. I will now turn the call over to Julie.

Thank you, Wendy. For the third quarter, we saw customers responding well to our iconic fall sense in multiple forms of fragrances and packaging. Our top fragrances such as Leeds, Pumpkin Pecan waffles and sweater weather in multiple categories in forms continues to be a unique point of differentiation for the brand. Our men's business continued to significantly outpace the shop as we test new forms and merchandising ideas to further fuel this growing business, including through the launch of leather and brandy and coffee and whiskey. In the fourth quarter, we launched AfterDark, a new single fragrance for the men's business. Soap also continued to perform well, outpacing the shop as we continue to expand our new formulation that is made without parabens, sulfate or dyes. Our relaunch of Jel soap has been performing very well. and we see opportunities for meaningful growth through this forum. As expected, we continue to see a shift out of our sanitizer business, which accelerated during the pandemic. Body Care also outpaced the shop in the third quarter, buying fragrance kit had a strong quarter that was bolstered by our new fragrance Fall And Bloom that met the customer mindset during this time of year. As part of our effort to focus on customers and deliver on innovation and newness, we start aluminum vessels and soaps this past quarter, and expect to begin testing cartons that will enable our customers to refill their soap containers in 2023. In men's, we introduced antiperspirant deadodarant, which is already in 650 stores and will roll to the balance of chain in spring of 2023. We also recently launched a test of mask [indiscernible], our new line of face and hair care products and dietary supplements, online and in 11 stores. We're in the early stages of this launch, and we are listening and learning. This is always an exciting time of year we have a mix of returning holiday favorites and new giftable offerings. As an affordable luxury brand, we have gifts at all price points. As we further expand our loyalty program and introduce compelling new product assortment, we are confident that we will continue to deepen our relationships with our existing customers and attract new customers to our brand. With that, I'll turn it back to you, Wendy.

Thanks, Julie. That concludes our prepared comments. At this time, we'd be happy to take any questions you may have. [Operator Instructions] Today, we are going to go to about 9:45. Danielle, I'll turn it over to you.

[Operator Instructions] Our first question comes from Jay Sole with UBS.

Great. Could you just talk about how the sales trended through the quarter? And what you're seeing here in November, a lot of other companies have talked about a big slowdown in traffic in the last 2 weeks of October and beginning of November. Can you just talk about what you've seen and sort of what's implied to the guidance for 4Q?

Sure. Thanks, Jay. Yes. So as we look back on Q3, what we saw during the course of the quarter was that the customer really did respond to promotion. On the days that we were incrementally promotional year-over-year where we had sharp price points or compelling deals, those days outperformed. And on the days that we were flat last year or less promotional, those days under formed. So for us, the story of the quarter was really promotion and meeting the customer where their mindset at is, clearly, the customer is very price sensitive. And we saw that. We had planned for it, and we're planning for that in 4Q as well. So in terms of November, our guidance is -- incorporates what we're seeing month to date, and we are prepared to be very sharp and have deals that resonate with our customers during the all-important fourth quarter.

Our next question comes from Korinne Wolfmeyer with Piper Sandler.

Congrats on the quarter. So I'd just like to ask a little bit on what you're seeing in terms of input costs? I mean that's been a pretty hot topic this quarter for a lot of players, especially within the fragrance category. Can you just talk about any kind of challenges or headwinds you're seeing that and how you're combating that?

Sure. Thanks, Korinne, for your question. Yes. As we've talked about in the last several calls, input costs, in particular, in raw materials for us continue to be a challenge. The markets are volatile. They continue to be very elevated in pricing compared to prepandemic. And so it continues to be a pressure point for us, almost -- just over 50% of our inflation pressures that we've quantified our raw materials. And it just does continue to be a pressure point. We have seen a little bit of green shoots in candle wax, but I would describe it as modest and our other input costs continue to be challenged. Now that being said, we're working with our suppliers to mitigate those price increases. We're looking at opportunities to be smart and how the product cost out, and we're looking for value engineering opportunities as well to mitigate those prices, but the raw materials do continue to be a pressure point for us in our business.

Our next question comes from Olivia Tong with Raymond James.

I wanted to ask you about the loyalty members that are making up 1/3 of your base now? If you could give any insight in terms of whether you think the your certain income level, the how much more they're buying? It looks like if they're a third of your member base in 2/3 of sales, it's obviously quite a big differential between their purchasing levels versus the other 2/3s. And then I just had -- if I could sneak one more in, just around SG&A performance this quarter and how that influences your thoughts on the pace of improvement into fiscal '23. Because you talked about a handful of expenses last quarter that were higher in second half. So just kind of curious what came in better than expected? Because I imagine that wage inflation, some of the home expenses, those came in, in line with where you had anticipated.

Great. Thanks, Olivia. We will go to Julie for loyalty and then I'll take SG&A.

Yes. So for our loyalty program, we are absolutely thrilled with the program. We're pleased with enrollment and engagement, evidenced by our 65% total company sales. I think it's important to remember, as Sarah mentioned, that our loyalty customer has a higher retention rate, higher spend, makes more ship and shop more cross-category and more than non-loyalty members. One thing that's very exciting about our loyalty program is that we have exceptional mass rates on member data collection. And this is really going to enable us to help identify trends and changes in customer behavior and the data will help us enhance the effectiveness of our marketing. It will also help us create a more meaningful personalized experience that foster brand connection and capture share of wallet. And we have plans in the future to continue to evolve the program to further drive membership and spend.

Thanks, Julie. On the SG&A, so a couple of comments on SG&A. Our SG&A rate has increased compared to last year, which, of course, I know you saw in the numbers. And so [indiscernible], as we talked about in prior calls, I break down the rate increase compared to LY. About 2/3 of it was home office and about 1/3 of it was in our store selling cost structure. And maybe to start with stores. We made a very planned and thoughtful investment in our store associates as we went into this time period. We did increase wage rates for our store associates, including a premium for the fall season. What we've discovered is that investment has been very successful. Our stores are fully staffed. We had success recruiting. So we're very confident that, that investment will pay off as we go into Q4 because we have great store associates hired and we are ready to go. In terms of the other increase year-over-year, it is home office. As I've talked about, we continue to make investments there as well. So we're in the process of investing in technology to separate from Victoria's Secret. We've also invested in our home office folks as well. In terms of the favorability to beginning of quarter, I would say 2 things are driving it. Number one, as we emphasized in our prepared remarks, we continue to try to manage expenses thoughtfully and frugally during this quarter, we are being very thoughtful about where we spend our money, just given the macro environment out there. So we did see some expense favorably across the board. The other thing that did come in favorable this quarter is our technology spend was favorable to plan. We're just seeing a little bit of ramp-up, the ramp-up in terms of the work on separation occurred a little bit slower than what we expected, but that's going well, but it did result in some expense favorability compared to beginning of quarter expectations.

Our next question comes from Ike Boruchow.

This is Jesse Sobelson on for Ike. We were just curious for an update on the profitability algorithm with your business. Is it realistic to assume the company could return to its low to mid-20s margin goal next fiscal year?

Thanks, Jess, for your question. So I would tell you a couple of things. Number one is you will definitely hear from us in terms of guidance for next year in February. We are thoughtfully thinking about our plans for next year. In terms of things that we're focused on that will impact how we think about our long-range planning, 2 major things come to mind, actually 3. Number one, as I answered earlier, inflation and cost pressures still do exist in our business. We're working to mitigate those, but those still exist as we turn the calendar into 2023. Number 2 is we do want to be thoughtful on our promotional approach, as we go into 2023. As we said, the customer is extremely price sensitive right now, and we want to be mindful of that and thoughtful with how we price our products in this tough environment. And the third point is we are investing in technology. Right now, we're focused on separation. But as we look beyond separation, we see a lot of ways that we can improve our customer experience, and we're thinking about how do we want to do that and what investments we make there. So more to come when we talk to you in February. And we -- right now, we are focused on winning at Christmas. So we will work as hard as we can to deliver successful Q4. Thank you.

Our next question comes from Paul Lejuez.

I just want to go back to the loyalty program for a second. I'm curious if what you're seeing is when you have a customer, are you seeing that customer actually spend more than they did previously? Or is it more that the folks that are signing up just happen to be your higher-spending customer? I'm kind of curious if you have any data that might show that once you get somebody kind of over that line that they increased their spending anything you could provide there?

Sure. Yes. So what we see -- so as a reminder, we've just launched in the U.S. -- nationwide in August. But prior to that we were running a test and a test for a meaningful amount of time. And what our test showed was that on a decile-adjusted basis, loyalty customers spend more and visit us more often. So in other words, it wasn't just looking at the customers that love us and come all the time. I mean if you decile adjust it and look at levels of spend, the program was effective in test in terms of getting customers to spend more money and visit us more often. So we're very early in the nationwide rollout, but we are very optimistic about the future benefits of this program. We are seeing such high levels of engagement, as Julie indicated. So we do get excited when we think about the loyalty program and what it can do for this business in the future.

Any quantification of the list?

So right, we have seen a list. Like I said, it's very early. We just launched in August. So more to come, but we have seen positive results from the program.

Our next question comes from Jonna Kim with Cowen.

Congrats on the quarter. Just wanted to get a little bit more color around your newer categories. It seems like the men's category is doing well and you launched Moxy, which is focused on skin care and hair care. Curious on your strategies going forward and just would love more your thoughts around some marketing initiatives you have around the holiday season around these categories.

Great. We will go to Julie.

Yes. So as far as the men's business goes, I know we have said before on these calls that we believe that we can more than double our Men's business. Based on our market data, we continue to increase market share at an accelerated rate, and we are absolutely thrilled with those results. Men's continues to significantly outpace our shop. We launched Leather and Brandy in coffee and whiskey this quarter. They absolutely exceeded our expectations. The men's business also continues to be our fastest growing category in the total body care. And we continue to test new forms and merchandising ideas to fuel the business. So for instance, as we mentioned, we have been testing Antiperspirant deodorant in about 650 stores and we are thrilled to be rolling this out to all stores in spring. Just as on aside, Antiperspirant deodorant is the #1 form in the men's market. And we know in order to double this business to grow market share, we're going to have to own this form. So we've also been doing a lot of tests in men's. We have some expanded shop-in-shop tests. We have some tests that are just marketing tests. So we are testing not only in products but merchandising and placement. And the goal of these tests is to raise awareness with our current customers as well as to gain new customers so we are very bullish and excited about this business and think it's a great opportunity. As far as MOXY goes, I would say that the assortment is still flowing on site. And again, as we mentioned, it's only in 11 stores. So we are right now at a just learning and listening. So more to come on that.

She asked us about marketing initiatives holiday, anything on holiday approach.

Yes, you will see marketing initiatives around men's. It's incredibly important business for us, particularly in the fourth quarter because we sell a lot of gifts. We sell gifts at multiple price points. We will have gift sets in men's. And we also launched for the first time this Q4, our first single fragrance launch in men's After Dark. So we're very, very excited about that. You will see some MOXY marketing, but this is our most important quarter of the year, and we are really buckling down and focusing first and foremost on delivering our core business and learning and listening from MOXY.

Yes. And Jonna, the only other thing I would add as we go into Q4 is we are really excited about our gifting [ at for men ]. So we know gifting is a huge part of Q4, and we have really been thoughtful about our price points on gifting and showing a guess everybody at every price point. So we think we're well positioned to win in the gifting time of the year.

And just to say, keeping to adding on. But gifting did outperform the shop in Q3 as well. So it really bodes well for Q4. And we offer gifts at a range of price points and quite frankly, we believe -- all of our products are gifts here at BBW. So we are excited about that.

Our next question comes from Lorraine Corrine Hutchinson with Bank of America.

I just wanted to follow up on Paul's question about the loyalty program. From the other end, the cost side. I know there was a margin impact this quarter as you deferred some revenue and profits. But as you think forward, does the cost of the loyalty program change the earnings algorithm or margin targets in any meaningful way?

Yes. Thanks for your question, Lorraine. So the program does have a cost as you can imagine. So the program design has a reward aspect to it, where when a customer hits $100 threshold, they earn a reward. The program also has a birthday component to it and a welcome offer component to it. So those elements of the program do at cost, it is under a point which is good, and we think it's margin accretive in terms of dollars because we -- as I said earlier, we know those customers spend more and visit us more often. We do see future opportunity in addition, though, to reduce CRM and direct mail in the future to partially offset the cost of this program. So at the end of the day, we feel that although there is a cost, this program is definitely accretive to the business. The other thing I would say is as we look in the future down the road is we know that we have great data in this program. As Julie mentioned earlier, we full match on this data, and we know that once we have the data, we'll be able to deliver better personalized and individual marketing, which we believe will be much more effective as we really learn to use that data effectively.

Our next question comes from Alexandra Straton with Morgan Stanley.

Congrats on a great quarter. I think some of the script last night mentioned that you all adjusted the pricing architecture for the consumer being more price sensitive. Perhaps you could just elaborate on what you did and how you're thinking about that heading into holiday? And then just one other one for me is on inventory. You had a great decel this quarter from last quarter's levels. but it sounds like you expect that to tick up a little bit next quarter. Could you just talk to us about what's driving that uptick.

Great. Yes. Thanks, Alex, for your questions. So I think I'll do them in reverse. We'll start with inventory, and then I'll mention a few things on pricing and then hand it over to Julie to talk additionally about pricing. So on inventory, so first of all, we're very pleased with where we are with inventory. We think that we are well positioned to support a strong Q4. As we mentioned in the last call, we entered the season clean, which is extremely important for us. So we are confident in our inventory position. what our inventory consists of, and you saw it in our remarks a little bit, is we have finished goods, of course, that are available for sale. In addition, we also own componentry that is not yet made, things like pumps or soap, et cetera, et cetera. The biggest driver in terms of Q -- that benefited the Q3 dollar number is that our components were down substantially, mostly because we had in-transit inventory that we were lapping. So if you think about the supply chain challenges a year ago, we had a lot of our componentry that was in transit. So when we reported the dollars this third quarter, we were lapping an elevated in-transit number, which drove the percentage down to the 10%. The guide for Q4 is more normalized assumption on componentry, which is taking our guide up to the mid-teens. So it's not so much a phenomenon of inventory creeping up. It's more just the componentry and what we're anniversarying. In terms of where we're focused on year-end is we have a very -- we are maniacally focused on ending the season clean. We have a goal, as we saw in our prepared remarks to end with units flat year-over-year. We will focus our efforts on selling as much as we can during the all-important holiday time period. And then, of course, we have our semiannual sale that we will use to end the season clean. So we are definitely focused on prioritizing clean inventories. We know that if we end the season clean, it will enable us to start 2023 on a very solid footing. In terms of pricing, as you saw in our remarks, we were more promotional in Q3 year-over-year, and we're planning to be similarly more promotional in Q4 as we look forward. We saw -- as I said earlier, we saw that the customer is extremely price sensitive right now. And we have made our plans to meet the customer where their mindset is in both -- we did that in Q3, and we're planning that in Q4. Julie?

So from a pricing and promo related question, as we enter this holiday season, we are absolutely confident in our strategy to read and react with agility and speed. Our operating model really enables us to effectively manage pricing and promotions to meet the customer minds that and drive profitability. So we are taking a very strategic lens to our pricing architecture Currently, as we've all been saying, the customer is very price sensitive to higher prices. So we are slowly and methodically raising prices in a way that don't impact our customers very dramatically. Such as reevaluating some of our everyday deals and also increasing prices in our better-for-you formulas. So we continue to use really our robust testing agenda to see where we can raise prices and help to build the basket.

Our next question comes from Warren Cheng with Evercore ISI.

I wanted to ask about the 4Q seasonality of your business and whether that's changed since 2019. So if I run the 4Q sales guidance through my model, it's a slight decel on a 1-year trend, but it's a pretty significant decel if I look at it on a 3-year stack and assume that 2018 and 2019 are more representative of normal seasonality. So just wanted to ask if there's any change in that seasonality versus prepandemic or anything unusual about this year that you would call out?

I would call nothing unusual about this year. I mean, what's unusual is if you -- our growth during pandemic was accelerated. And extremely strong. And over the last 2 years, did vary dramatically as stores during certain periods or reopened, and we were lapping restrictions, et cetera, et cetera. So I think if you go back and look at our business prepandemic versus now, the seasonality is generally consistent.

Our next question comes from Matthew Boss with JPMorgan.

Great. So Wendy, a number of moving parts in this year's P&L. I guess, is there a way to help quantify the costs that you see as more onetime or more contained to this year? If we think about CEO transition, separation costs versus maybe the IT investments in SG&A, and we have the elevated transportation and the loyalty deferral. Again, I'm just trying to see if there's any way you can help to provide maybe as it relates -- as we think about opportunity into next year versus costs or investments that you see as more ongoing? Any help would be great.

Sure. Well, I wish I had perfect visibility to the next year, but I'll try and help you out as much as I can. So you heard my conversation a few minutes ago on raw materials. I'm just kind of working my way down the P&L. Raw materials, like I said, they continue to be challenging, and it's a volatile market. And as I said, we'll continue to try and mitigate those costs as best we can. Transportation, we are seeing some favorability in transportation. I'm optimistic that, that will continue into 2023. But TBD on that, but we are seeing some signs that transportation is peaking and potentially will abate in 2023. You mentioned IT. So you have quantified the IT investments. The thing as we look forward to IT spend, we are currently focused on separation. That work will continue this year into next, with [indiscernible] being separated from Victoria's in 2023. We are working on a road map beyond separation. So right now, we're spending money on separation. We will not spend that money again once we're done. But we really want to be thoughtful about our technology spend. We see a lot of areas of opportunity where we can make investments in the customer experience or an omni capabilities or in our loyalty program or in POS at stores. I mean we see many areas in the business where we can use technology to improve our customer experience. So we're working on road maps and thinking about that currently. And so when we get to February, we'll give a little bit more color on how we're thinking about spending money and technology, but that will be an area we want to continue to invest because at the end of the day, we want to continue to…

Our next question comes from Janet Kloppenburg with JJK Research Associates.

And congratulations on the progress. A couple of quick questions. Last year in the fourth quarter, the semiannual sale, I believe, did not meet your expectations. Perhaps you could talk about what's embedded in guidance this year and what some of the opportunities might be year-over-year in terms of promotions and content, et cetera. And just on the men's business, nice rollout. I noticed that perhaps the Cologne ASP is higher on average versus women's. And I wondered if you could talk about that opportunity.

Thanks, Janet. Julie.

Yes. As far as the sale goes this year, it will not be quite as long as last year. We have tightened that up. We know that our customer response to newness. So we have a different flow strategy this year to throughout January, be dropping in small drops of newness to offset sales. We also are committed to having clean units at the end of the year. So we are highly cognizant of what we bought for sale and using our agile supply chain to ensure that we're not overbought and that we end clean. So I think we're very confident that our sale will be short, sweet and get us to clean inventory. The men's cologne is slightly higher than the women's. It's definitely something that we're looking at. And I would say that both of those forms have been performing incredibly well for us, and we do not promote them. They are so comfortable. The designs are just so beautiful that our customer comes back season after season to get the new one and almost keep them. They're very counter-proud. So we'll continue to look at that. But our single-fragrance launches have just been such a great success for us over the last few quarters, which is why we launched After Dark for men in Q4.

Packaging is beautiful, really beautiful, Julie.

Thank you.

Danielle, I think we have time for one more question.

Our final question comes from Marni Shapiro with Retail Tracker.

Congratulations on a great quarter and the launch of MOXY. I actually wanted to ask you a little bit about MOXY. I guess, how long has it been in development what costs were associated with it? And is that embedded -- it's obviously been going? And how should we think about that going forward? And specifically, what are you doing about marketing this brand will it be pushed through? I know it's tiny, but will it be pushed for the marketing cost be pushed through BBW? Or are you thinking as a separate entity? Like could it be sold third-party? Just where your bigger picture head about this? And then what do the finances look like?

Okay. Yes, I'll take the question on the finances, and then I'll turn it over to Julie on the MOXY launch and rollout. So Marni, this company has a long history of innovation and product development, not just in MOXY, but you've seen it in our ongoing assortment. So Product development is always built into our margin structure. We spend money on it every quarter, not just in MOXY, but in the balance of the assortment as well. So we know that the key to success is not just newness in something like MOXY, but you'll continue even in 2023 to see new and exciting things coming out of our core business. So all embedded in our existing cost structure. Julie?

Yes. Marni, one thing to say about MOXY is this is our first foray in a very long time into what we call above the neck. So the Bath & Body Works has always been below the neck. So we are really learning a lot about face and hair and supplements. We will be delivering body in MOXY in the new year. So right now, the strategy is to focus on our channels, stores and website. That is not to say that won't change in the future. We are open to all different ways of growth. We just want to case ourselves. I know I've said it 3x now, but we really do want to be in a listening and learning mode, so that we do this in a very thoughtful way. You will see more marketing of MOXY after Christmas. But too important this quarter. We don't want to take our eye off ball and get distracted by the new thing. One other thing to say is we have our own Instagram account for MOXY, and we're trying some different things there. And I think that we will continue to learn and refine. So there are so many opportunities for these brands and ways to go out and attract new customers. And we will be really starting to focus on them come January.

That's great. It was the Instagram account that caught my eye that maybe wonder that this is bigger than just a little launch into BBW. Best of luck for the holiday season, guys.

Thank you, Marni, and thank you, everybody, for your continuing interest in Bath & Body Works. Thank you.

That concludes today's conference. Thank you all for participating. You may disconnect at this time.