Good morning. My name is Donna, and I will be your conference operator today. At this time, I would like to welcome everyone to the Bath & Body Works First Quarter 2024 Earnings Conference Call. Please be advised that today's conference is being recorded. [Operator Instructions] I will now turn the call over to Mike McGuire, Interim Head of Investor Relations. Mike, you may begin.

Good morning, and welcome to Bath & Body Works' first quarter 2024 earnings conference call. Joining me on the call today are Gina Boswell, Chief Executive Officer; Julie Rosen, President, Retail; and Eva Boratto, Chief Financial Officer. In addition to this call and this morning's press release, we have posted a slide presentation on our website that summarizes the information in these prepared remarks in addition to providing some related facts and figures regarding our operating performance and guidance. Today's call may contain certain forward-looking statements related to future events and expectations. For factors that could cause the actual results to differ materially from these forward-looking statements, please refer to this morning's press release as well as the risk factors in Bath & Body Works' 2023 Form 10-K and our quarterly report on Form 10-Q, which will be filed at the end of today. Today's call contains certain non-GAAP financial measures. Please refer to this morning's press release and supplemental materials for important disclosures regarding such measures, including reconciliations to the most comparable GAAP financial measure. As you know, fiscal 2023 was a 53 week year. To provide the best sense of the health of the business, all category sales results, market share data, loyalty metrics and selling metrics discussed during the call are on a comparable calendar basis, which is 13 weeks ended May 4, 2024 versus the 13 weeks ended May 6, 2023. All other results discussed are on a reported basis, which is the 13 weeks ended May 4, 2024 versus the 13 weeks ended April 29, 2023. With that, I'll now turn the call over to Gina.

Thank you, Mike, and good morning, everyone. We appreciate you all joining us. Today, we are pleased to report better than expected Q1 sales and earnings performance. Through strong execution, we continued our progress against our strategic priorities, managing our profitability and at the same time, building toward our anticipated return to sales growth in the second half. Before I get into the details, let me first say that our Q1 outperformance would not be possible without the tireless dedication of our exceptional team who consistently delivers tremendous service to our customers while remaining nimble in a dynamic environment to deliver our goals. Jumping into results. We were pleased to deliver net sales of $1.4 billion in the first quarter, down 0.9% from the prior year, which was above the high end of our guidance. First quarter earnings per diluted share of $0.38 was up 15% from the prior year's adjusted EPS, which was above our guidance. With our better-than-expected results in the first quarter, we've narrowed our full year guidance ranges for both the top- and bottom-lines, raising the midpoint while maintaining the high end for each. Keeping in mind that it's still early in the year and we remain in a dynamic consumer spending environment, we are taking a prudent approach to our guidance. Eva will share more details later. Now shifting back to the quarter, let me provide some color on what drove our Q1 performance. Of course, it starts with the customer and their favorable response to the level of newness and innovation we brought to them with compelling product introductions and new marketing activities that build the brand. We continue to grow our newer adjacencies such as men's, hair, lip and laundry, and we are excited to see all of these contributing more to the…

Thank you, Gina. I too want to thank our teams for their exceptional work and for continuing to deliver a special experience to our customers. We are pleased with our first quarter performance as a result of their efforts and we're well positioned for a strong summer. As Gina touched on briefly, newness drove our success in the first quarter. In March, we announced a year-long partnership with Netflix to bring storytelling to life through the power of fragrance. Through the partnership, we aim to transform the viewing experience for millions of Netflix fans by allowing the power of fragrance to help transport them into their favorite stories and scenes. And we started with Bridgerton, one of the most popular programs on Netflix. The response was terrific. The collection resonated with our core customer, and over the launch period, Bridgerton products represented 4% of the shop. This response exceeded our expectations and our agile model allowed us to chase into strong selling fragrances and forms. Turning to our category performance, Body Care sales grew low-single digits in the quarter, outperforming the shop as we maintained unit share in the category. Fine fragrance mist, men's, travel and lip were particular highlights. During the quarter, we had a limited launch of our Everyday Luxuries collection of fine fragrance mist, with success spurred on by the organic virality of the product. As the sprays went viral on social media, demand increased with fine fragrance mist outperforming the shop during that period. The demand was driven by a slightly younger and more diverse set of customers. As I said, this a limited test launch in about one-third of our US stores. Given the success, you will see us relaunch this line across the full North American fleet in the fall. The men's business continues…

Thank you, Julie. Good morning, everyone. Before I review our first quarter fiscal results and fiscal 2024 guidance, I will provide an update on capital allocation. Our top priority remains driving sustainable long-term profitable growth through investments in the business. To support this, we continue to plan for $300 million to $325 million in capital projects during the year. And our priorities remain investment in brick and mortar stores and technology. In the first quarter, our total capital investment was $46 million. After investments in the business, our expectation for full year free cash flow generation remains between $675 million and $775 million, and we'll put that towards our priorities of dividends, share repurchases and debt deleveraging. During the quarter, we paid out $45 million in dividends. Subsequently, a few weeks ago, we announced a quarterly dividend of $0.20 per share payable later this month. We expect to continue our annual dividend of $0.80 per share with the intention to increase the dividend over time with sustained earnings growth. During the quarter, we repurchased 2.2 million shares of common stock for $99 million at an average price of $45.61 per share. Our full year guidance continues to include the expectation to repurchase approximately $300 million of shares opportunistically throughout fiscal 2024. We also remain committed to our goal of reducing our leverage ratio to approximately 2.5 times growth adjusted debt-to-EBITDAR. In the first quarter, we repurchased $109 million principal amount of senior notes and our ratio held steady at 2.8 times on a four-quarter trailing basis. Now moving to the income statement. In the first quarter, we reported earnings per diluted share of $0.38, exceeding our guidance of $0.28 to $0.33 per diluted share. Our outperformance in the quarter was driven by better-than-expected net sales and to a lesser extent…

Thank you, Eva. In closing, I'd like to emphasize again how pleased we are with our better-than-expected start to the year, a convincing step toward our anticipated return to top-line growth in the back half of the year. We are effectively executing on our strategic initiatives and creating more efficiencies in our business, which is allowing us to further reduce our debt and continue to return cash to shareholders. We continue to be excited about the opportunities ahead. I'll now turn the call over to the operator for questions.

Thank you. [Operator Instructions] Our first question is coming from Simeon Siegel of BMO Capital Markets. Please go ahead.

Thanks. Hey, everyone. Good morning. Nice job.

Good morning.

Sorry. Thank you. So, reflecting on your marketing campaign, the new product categories, the collaborations, just how are you thinking about the benefits you're seeing from these initiatives? Is it incremental customers? Is it incremental visits? Is it better pricing? Just I mean, how are you thinking about what you're learning through these initiatives? And then, a little bit more nuanced, you held B&O on the sales decline. You're guiding for deleverage going forward. Just what's the right way to think about the leverage point now? And I guess, I understand you're making investments in real estate, but I also wonder if you're lowering leverage points as you move off-mall. So, any color there would be helpful as well. Thank you.

Thank you, Simeon. Nice to hear from you. I'll take the first part and ask that Eva speak to the B&O leverage. As far as the marketing and the new products and colabs, we have been investing in a full funnel approach and it's certainly driving top-of-brand awareness. You heard Julie mention the 800 million impressions from Bridgerton, so -- and the Everyday Luxuries that had all those viral impressions. So, whether it's colabs, whether it's the new media activities that we're engaging in, this is all inserting us into the cultural conversations that are most relevant for customers today, and we're monitoring reach as well as other key equity metrics. So, it's really exciting to see that it's working. It's working for us to gain more customers more often with more love, we like to say. So, it's still early in the journey, but we like what we see and we've got more excitement in store for our customers as we enter the fall.

So thanks, Gina. Turning to the B&O, what I would say, Simeon, is, overall, we're really pleased with the progress we continue to make on driving overall gross margin improvements and you saw that in Q1. And as you look at B&O, I would continue to say to leverage B&O, it's about 2% to 3% sales growth. Rents per square foot off-mall are slightly lower. Q1, we were able to leverage flat B&O and we had some really great execution there in our operations and our fulfillment center. So, we'll continue to push ahead and drive improvements.

Thank you. We're ready for our next question.

Thank you. The next question is coming from Alex Straton of Morgan Stanley. Please go ahead.

Perfect. Thanks for taking my questions. Just a couple here. First, on the Middle East-driven pressure, can you talk to us about your assumptions on how that evolves in the second quarter as well as your ability to offset that all -- at all? And if you could provide how much that represents as a percentage of international that would also be helpful. And then maybe taking a look forward, looking at the first quarter outcome, the second quarter guidance, full year guidance, it seems like you're embedding that gross margin would fall in the back half compared to expansion in the front half. So, can you just talk to us about the assumptions there? Thanks a lot.

Great. Thank you. I will start, and then I think Eva will chime in. I just want to zoom out for a second on international. As you pointed out, this is directly affected by the war in the Middle East. If you remove the regions affected by the war, it's quite a healthy growing business with system-wide retail sales in the teens in the first quarter. So, we've got the near-term pressure in the Middle East, but all else is on track. And so, some of the offsets that we can speak to have to do with the opening of 35 net new stores in international. We mentioned not only the store -- the free first standing store in London, but also South Korea and also in existing markets our partners are expanding, for example, in Mexico as well as other markets in Q2. So, the big picture on the international is that the Middle East pressure has not changed our long-term international expansion plans. And then beyond that -- so I expect that, that will be the ability to offset. And we are expecting, I think, as Eva mentioned in her remarks, that even in the markets affected that that is moderating quarter by quarter.

Yeah. Thanks, Gina. And I'll add a few things, Alex. There's many parts to your question here. As you look at our guidance that we provided today, in Q1, international did underperform our expectations. Our guidance assumes a wide range of scenarios from the low to the high. And I would say at the mid and the high, you expect international to -- we expect international to improve beginning in Q2, and there are expectations in the guidance. In terms of gross margin for the year, we're expecting gross margin for the year comparable with 2023. I would remind you we began driving merch margin improvements of Q2 of last year and continued throughout 2024. So that -- those improvements continue, but obviously we're wrapping them as we get to the mid-year. Merch margin improved about 50 basis points for the year and that's offset by B&O deleverage, given our investments in real estate.

Thank you. We're ready for our next question.

Thank you. The next question is coming from Paul Lejuez of Citi. Please go ahead.

Hi, thank you. This is [Kelly] (ph) on for Paul. Just curious on the AURs coming in at down 1% versus guidance. Given when you reported the fourth quarter, we already sort of knew about some of the product misses early in the quarter. Just curious how AUR kind of played out relative to plan in the back half of the quarter? I know you said flat, but were you expecting kind of more of a pullback on promos as we got into March, April? That's my first question. And secondly, just curious how your pure product costs trended ex transportation savings in 1Q. So, just your raw materials, how they turn it on an absolute basis and relative to expectations and whether you saw a benefit to merch margins and just how we're thinking about product cost for the rest of the year? Thanks.

Thank you. Thank you, Kelly. So, as it relates to AUR, AUR was under pressure in the very first start of the quarter. It was something that we actually foreshadowed in our last earnings call. You recall we had a floor set in February that wasn't resonating. So that's when we quickly pivoted and we pulled on the strategic promotion lever to build traffic. As we move through the quarter, we had strong floorsets with newness and that enabled us to achieve flat AUR in the back part of the quarter. So, we exited with flat AUR. So, other than the first part of Q1, we were no more promotional than we were last year and we're back on plan to our AUR flat expectations. And then the reminder here is on the full year guide is to expand AUR modestly for the full year. And then, for product cost, I'll ask Eva to chime in.

Yeah. Thanks for the question. I'd say overall AUCs were essentially flat in the quarter as we expected.

Thank you. We're ready for our next question.

Thank you. The next question is coming from Matthew Boss with JPMorgan. Please go ahead.

Great, thanks. It's Amanda Douglas on for Matt. So, Gina, could you elaborate on the drivers of 1Q's net sales outperformance versus your initial plan maybe as we think about by category? And just any changes in traffic or consumer behavior as you've progressed into May? And then Eva, just could you elaborate on the cost savings that you've identified within cost of goods sold to support your improved gross margin outlook on the year?

Okay. That's a three-part question. We'll start with Julie on the category.

Yeah. Hi, there. So, Body Care was low-single digits to the prior year and that was really driven by new and growing categories such as men's and lip, along with the performance in fine fragrance mist, including our Everyday Luxuries. Home Fragrance was down mid-single digits, while growing unit share, and this was really driven by continuing candle normalization. So, candles declined, and that was largely due to the narrowing of the assortment of the single-wick candles, which continued to decline, but we did maintain our market leadership. Our decline in candles was consistent with Q4 and we did grow unit share in wallflowers. From a Soap & Sanitizer perspective, the business was down low-single digits, in line with shop. And soaps actually were slightly above shop, and that was driven by the performance of our refills, which make up about less than 10% of our soap business. And we love our refills. It's a really great environmentally friendly way for our customer to partake in our soap business. And finally, sanitizers declined, and that was really driven by our decision to exit the full-sized form due to continued normalization in the category. Pocketbacs really performed quite nicely in the quarter, growing versus the same period last year and we really innovated here by introducing our moisturizing pocketbac.

Great. Thanks, Julie. I'll start with your cost savings question and come back to the traffic. Overall, we are really pleased with how we're executing on the cost side of the equation. We've had a two-year plan to deliver $250 million in annual cost savings, and we're tracking well with the incremental $100 million in this year. It is skewed a little more toward gross margin about 60% of the savings. That's a little more skewed to gross margin than SG&A than last quarter. And the key drivers are transportation, sourcing, exit of one of our fulfillment centers that's enabling us to be more efficient. The remaining 40% in SG&A, it's efficiencies in our store operations, home office and indirect spend. So, again, we're really pleased with the progress that we're making there. Now coming back to traffic, overall traffic was flat for the quarter. As I think we said previously, transactions were up driven by conversion. While we target an overall omni experience, I'll say our traffic was a little stronger in stores and this was largely in the second half of the quarter. So, overall, we continue to execute against the business. And as Julie said, the newness really delivered for us in the quarter.

Thank you. We're ready for our next question please.

The next question is coming from Lorraine Hutchinson of Bank of America. Please go ahead.

Thank you. Good morning. I wanted to dig into the moving pieces behind your outlook on AUR for the back half. Are you raising ticket to ensure you're paid for some of the new formulation investments? Or do you plan to give some of that value back to the customer through price or promotion?

Yeah. Hi, Lorraine. I'll take that question. It's Julie. We really continue to balance the need to keep engagement and traffic strong with our desire to increase our pricing, right? So, we use our very agile operating model. It really allows us to increase or decrease promotional levels in a meaningful way and test for the best outcomes. We did not take widespread ticket increases in Q1 of '24, but we are lapping some increases from '23. And we did take selective pricing actions in certain product launches like Bridgerton and Everyday Luxuries due to the elevated packaging and storytelling that came from these forms where we know we can get paid. Thank you.

And I'll also add that this is still materially up from the pre-pandemic, so our AUR increases relative to 2019 are quite healthy. So, thank you for the question. We're ready for our next.

The next question is coming from Kate McShane of Goldman Sachs. Please go ahead.

Hi, good morning. Thanks for taking our question. We wondered if you could comment at all about occasion buying versus buying during a more shoulder period, which I think the second quarter is for you just with the events of Easter and Mother's Day and the like in Q1, there are not quite -- not a few -- as many occasions in Q2. So, could you maybe talk to us a little bit about, again, how you view Q2 playing out given that dynamic and how we should think about it?

Yeah. Hi, Kate. Q2 actually, we had a great gifting business. Our gift sets were up 6% in the quarter. And for Q2, we have three great gifting periods, right? We have Valentine's Day, we have Easter, and then we have the beginning of Mother's Day. The other big portion, as I think you all know, of Q2 for us is our Semi-Annual Sale. So, those are the things that really drive our Q2 and we were very pleased with Valentine's Day, Easter, and the beginning of Mother's Day, as I said, with gift sets being up 6%.

Next question, please.

The next question is coming from Ike Boruchow of Wells Fargo. Please go ahead.

Hey, thanks. Good morning. Eva, I have two for you. Again, I don't mean to beat a dead horse on the AUR, but my question is, which I think has been asked a couple of different ways, when you guys gave guidance on the last call, I believe you had guided AUR flat and it came in a touch worse. I know you guys are saying that it improved on the exit of the quarter, but it just seems like something wasn't to the degree that you'd hoped it was on the upside. So, just trying to understand if you could parse that out. And then a quick follow-up on the model, Eva. I know there's like 200 basis points benefit from the calendar in the first quarter. Could you kind of walk us through the next three quarters? I feel like it's a little wacky depending on the retailer in terms of like what benefits to expect I think in 2Q and 3Q, and then how big is the headwind coming in the calendar in 4Q? Thanks.

Yeah. Thanks for the question, Ike. I'll start with your -- the second question first on the calendar shift. As we said, first quarter benefited by 200 basis points. Q2, there is a negligible calendar impact to us. Q3, we would expect another positive calendar shift comparable I'd say to the level in Q1. And in the fourth quarter those benefits obviously would reverse. In terms of the AUR at the risk of being redundant, right, as we said on our last quarter, we started out soft and we leveraged AUR, I'll say in the first half of the quarter to use our agile promotion model to drive traffic and conversion while also balancing our margin rate. And as we progress through the quarter and our March floorset was strong, we were able to pull back and that was Gina's comment around exiting the quarter at flattish. So, again, the AUR you're right, it is pressured from our guidance, but as we look at the overall quality of our quarter at the results that we drove, we believe we made the right decisions to drive the business forward.

And if I may add, we're always doing that up or down to meet the customer where they're at. So, I have been relatively still new to this model of agility where you can actually almost measure the elasticities within weeks. If we guide to flat and we feel the need to use promotion as a strategic lever to get that so long as the quality of everything else is intact, including by the way our gross margin, we can optimize the top-line. So, I just want to make sure that we're clear that when we guide to flat, we can sometimes be up as we were in the fourth quarter and we can sometimes be down, but the important point is that we're trying to get a good quality view and meeting the most customers where they're at. Thank you for the question. We're ready for our next.

Thank you. The next question is coming from Olivia Tong of Raymond James. Please go ahead.

Great. Thank you. I wanted to better understand a few things, one of them being your view on the retail competition and how that might be impacting you. We've obviously heard a lot of comments from Ulta, some more in terms of the activity in Amazon and [off-price]within these categories. I know they're not direct competitors, but just thinking through how that may be impacting your business? And then, apologies for another question on AUR, but if you could potentially give us a little bit of color on what you saw in May, and then just talking about the second half initiatives that could drive the improvement that you're expecting? Thank you.

Hi, there. It's Julie. I'll take the competition questions. So, we participate in very attractive market segments, right? The competition is always top of mind for us. We think that they're always right on our doorstep. It's why we're really focused on offering innovative products that perform well against the high standards of our customers. So, innovation is literally our lifeblood. It sets us apart from the competition. We know that they don't stand still and we work really hard as a team to stay ahead. I would say that two competitive advantages really help us do this. One is our vertically integrated model. It really enables us to act with speed. We were able to react to Bridgerton, to best scents, best fragrances, get back into them. We can do this more quickly than anybody else out there. And the second competitive advantage is our unique immersive selling environment, that is found in our best-in-class stores. We are really able to tell transportive stories, which is a competitive advantage for us that you don't see at the Targets or the Ultas of the world. And as a fragrance-first company, the quality of our fragrances and our work with the top fragrance houses in the world really help us deliver products that our customer needs across many different forms, whether it's body wash, a candle, a wallflower or a lip product. So, we have a constant eye on the competition.

Great. And I'll pick up on your question regarding what we've seen so far in May. The trends that we've seen so far are contemplated in our guidance outlook that we provided today both sales and AUR.

Thank you. We're ready for our next question.

Thank you. The next question is coming from Dana Telsey of Telsey Advisory Group. Please go ahead.

Good morning. Just one more thing on AUR. As you think about the different categories of merchandise and as we go through the year, are you expecting any differences to how the categories AURs are as we go from 1Q to 2Q to 3Q to 4Q and what you're seeing? And then, on the direct business versus the retail stores business, any difference in pricing that we should be aware of? And then, Julie, just in terms of the new categories out there, what are you most excited about as we go through the balance of the year given the increased laundry? Anything we should be watching for in terms of the newness? Thank you.

So, I'll start with the AUR category differences. We look at it in total, as you know, we do different ticket increases and then we have promotions throughout the year. So, no noticeable or planned differences as we move through the year. There'll be more surprise and delights, and those would be opportunities for us to move AUR up in those instances. But in general, we're trying to build really compelling baskets as well with cross category opportunities. In terms of direct versus stores, we try very hard to be an omnichannel player, meaning no specific advantage to direct or stores because what we really want to incent is dual shopping, because those are the most valuable excited about. And in terms of excitement about newness, Julie, if you want to comment on that? There's lots to be excited about.

Hi, Dana. It's nice to hear your voice. There is a lot to be excited about, and me and my team are very pleased with our new adjacencies. So, as we look to return to growth, we have four key elements and they're all important to our strategy. You heard Gina say new adjacencies is one of them. So, we continue to be excited about men's. It's our fastest growing category in Body Care. We're really benefiting from forms we introduced last year in APDO and grooming as well as newness in the core collection, which is really driving a lot of that growth. And we are seeing a slightly younger customer in men's. From a lip perspective, so lip sales in stores that have our new lip fixture doubled and we are on track to really complete that rollout to nearly all North American stores by July. We have a great routine that we're introducing customers to through this fixture. It's a routine of scrub, mask and tint, and it is resonating with customers. And we're seeing a younger customer sort of linger out the fixture and play and then go and purchase. From a hair perspective, another exciting category, we rolled hair to the full fleet earlier this year. And we're continuing to learn. We are learning that our core best-selling fragrances that we're famous for are really resonating with our customer. We continue to test fragrances and we'll continue to optimize our assortment. We've also seen that 14% of those customers are new to brand. And we're very excited, because we just launched our travel-sized shampoo and conditioner this month, and customers were asking for that because it's a great way for them to gain trial into a new category. And of course, laundry, which I know is everybody's favorite. We ended Q1 with laundry in about 300 stores, and we are thrilled to announce that we will be rolling it to all US stores by late fall. We've been testing and tinkering with different assortments in different stores to ensure that we continue to optimize and right size. But just quickly above and beyond, we have other things that we are delivering that are innovative and new and exciting besides just the adjacencies. Just for summer this last month, we delivered fresh and compelling new scents. We have our new Summer Glow collection. We also delivered our expanded SPF assortment with a higher level of protection, which our customers were asking for and we're very excited about that. And then, we haven't spent a lot of time talking about Bridgerton, but that was very exciting for us as our first partnership with Netflix and you should expect to see more partnerships as the year progressed.

Yeah. And if I could just add, and I know that was described, but you can hear the passion in Julie's voice, I think what we try to think about in the newness category is its core and more. And we speak about growing the core, which these partnerships and collaborations do just that and then the more on the adjacencies is also critical. Both of these, these are two of the four levers, which we will rely on to inflect in the back half of the growth. And so -- that's why we're so excited about it, because it is truly driving the inflection point at the mid and high point of our guidance. Thank you. Next question?

Our next question is coming from Jonna Kim of TD Cowen. Please go ahead.

Thanks for taking my question. Just wanted to get more color on your expectations for the Home Fragrance category and your business in the back half, if anything has changed since last quarter there? And also your increasing marketing spend and talked about full-funnel marketing, but how are you measuring ROI and how are you allocating your spend across different channels in the back half? Thank you so much.

Yeah, thanks for the question. I'll start in terms of our overall expectations for the back half of the year. As you look at the guidance that we provided today, our assumptions behind the inflection point and returning to growth in the back half of the year remain consistent, the four elements that we outlined. And they're: moderating normalization of candles and sanitizers, they don't need to return to growth; growth from our core categories supported by newness and seasonal storytelling, which I think Julie just hit on quite a bit; reaching more of our consumers with our adjacencies men's, hair, lip and laundry; and finally, driving more loyal and engaged customers through the marketing investment that we're making and the capabilities both what we're doing on loyalty as well as personalization and digital experience.

Yes. And then, on the question about marketing spend, which we commented earlier and how that is driving the customership increases as well as the exciting engagement and the deepening of engagement, we are measuring ROI through a number of tools that people often use, which is the marketing model where we can actually attribute a dollar spend and what that drives to the top-line. But we're also using the technology as well to do some targeting and tools. Like for example, we have a targeting model now that uses machine learning algorithms and it can predict when a one trip customer can make their second purchase based on purchase behavior and the social engagement and the segmentation. And then, these customers are then targeted with personalized offers. So, there's early innings here and really promising results. So, I think of marketing hand in glove with technology so that we can actually optimize and get the highest bang for our buck with respect to those investments. So, you should expect more of that in the back half. I think we have time for one more question, please.

Thank you. Our final question today is coming from Korinne Wolfmeyer of Piper Sandler. Please go ahead.

Hey, good morning. Thanks for taking the question. First, could you just clarify the commentary on returning to growth in the back half? I assume that's assuming the high end of your guidance range. And how are you thinking about returning to growth from like Q3 and Q4 and kind of like the cadence there? And then separately, on some of the new product launches, could you talk a little bit about now that you have some of the more like loyalty membership data, how much of that new product uptake in sales is coming from customers maybe newer to those products versus customers who are now starting to replenish those products? Thanks.

Thanks. This is Eva. Korinne, I'll take the first part -- your first question first. Our return to growth is at the mid and the high point and the high end of our guidance on a 52 comparable week basis. And as you look at the cadence Q3, Q4, we would expect to return to growth in Q3.

Yeah. And as far as customers are concerned with the new categories, from a lip perspective, we're seeing a younger more diverse customer. And as I mentioned from a hair perspective, 14% of those customers are new to brand, as well as men's, we're seeing some new customers and slightly younger coming to us for men's. That being said, as I said in my script, we still think we have huge opportunity to attract more men to the brand and you see us investing in more marketing and in more media to attract them.

And I'll also add that in this first quarter, the 43% of loyalty enrollees were new customers. And so getting them in the program, getting them the kind of offers to really take the entire portfolio, there's so much data capture where we can use clickstream data to really recommend products and things like that. So, we expect new customers, existing customers and reactivated customers alike to really benefit from the loyalty program. Thank you.

Thank you. At this time, I would like to turn the floor back over to Mr. McGuire for closing comments.

Thank you, Donna. A replay of this call will be available for 90 days on our website. Thank you for joining today, and of course, thank you for your interest in Bath & Body Works. Have a good day.

Thank you.

Ladies and gentlemen, this concludes today's event. You may disconnect your lines and log off the webcast at this time, and enjoy the rest of your day.