Victoria's Secret & Co. Price & Performance (VSCO)

Good morning and welcome to Victoria's Secret and Company's fourth quarter earnings conference call For the period ended February 1, 2025. As a matter of formality, I would like to remind you that 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 is CEO, Hillary Super CFO, Scott Saqela and retiring and former CFO, Tim Johnson. We are available today for up to forty five minutes to answer any questions. Certain results we discuss on the call today are adjusted results. And exclude the impact of certain items described in our press release, and our SEC filings. Reconciliations of these and other non GAAP measures to the most comparable GAAP measures are included in our press release our SEC filings and the investor presentation posted on the Investors section of our website. Thanks. And now I'll turn the call over to Scott. Thanks, Kevin. Good morning, everyone. Before we turn the call over to Hillary, I wanted to take a moment to say hello and how excited I am to be here. I joined Versus and Co about a month ago and I want to thank the team for the warm welcome.

Joining during the year end financial close cycle certainly makes the first days on the job I'm grateful for the opportunity to work alongside Hillary our leadership team and our passionate associates and for the opportunity to support our customers, our brands and our company. I'm excited about our future and I look forward to meeting and working with you all. That's all for now. I'll go ahead and turn the call over to Hillary. Thanks, Scott. Good morning, everyone, and thank you for joining us. During the last call, I shared insights from my first ninety days as well as my excitement and optimism for our future. I'm happy to be back together today to continue that conversation. First, I want to talk about our Q4 results and outlook for 2025 Then I'll share details on our strategies for growth that we believe will unlock the full potential of our brands.

But before I discuss Q4, I want to take a moment to thank TJ for his support during my first several months and for staying on with us to ensure a smooth transition with Scott. Thank you for your partnership TJ and the role you played in helping drive the results we'll talk about Speaking of results, I'm pleased to say they were strong in Q4. With sales up to last year across V S, We won in the big moments and with a focus on execution, our teams drove healthy margins controlled costs and managed inventory very well leading to Q4 operating income and EPS that exceeded our expectations. Sales growth was driven by broad based strength across our business, with sales up in all three brands in all channels In North America, Versus and Pink both had positive year over year sales growth in stores and digital. We were able to achieve this growth with fewer promotional days and offerings than last year. Which is especially encouraging as we continue to test and learn our way to lower promotional activity in the business. From a merchandise perspective for Versus, our giftable holiday product departments driven by sleep and beauty across both brands were big winners, with casual sleep as our top performing category.

We were excited to see that products that are quintessentially Versus heritage, Stripe and Logo all performed well which I view as an indication of strong brand health.

We also had success with shimmer and shine products.

Pink apparel had a significant trend change at the beginning of the fall season and its strong performance continued in Q4. Along with sleep, apparel drove the business during holiday. As you know, we've been working to evolve pink product positioning and we're starting to see some positive signs of customer acceptance. Both our modern reinventions of iconic heritage pieces and our most feminine styles featuring sparkle and shine were top performers this holiday. As I mentioned, our beauty business was a standout in the fourth quarter as we pushed the boundaries of accessible luxury with higher AUR items that were must have gifts of the season. With compelling products and strategic promotional activity, our basket sizes and traffic were up to last year with traffic outperforming them all.

Supported by our best in mall store experience, and dozens of digital enhancements, we had solid conversion on those increased traffic levels with strong product acceptance. Third party data shows that North American intimates market declined slightly this an encouraging sign of our growing strength and momentum.

Our studies again this quarter showed that Gen Z is feeling much more positively about our brands. A testament to our focused efforts to engage her.

It's exciting to see that she's not only noticing us, but connecting with what we stand for. Outside of North America, our international business continued its strong driven by growth with our franchise and travel retail partners, along with strong performance in our joint ventures in China and The UK. Our brand is strong around the world and our global partners and vendors are not only partners, but incredible advocates.

After my first holiday season with the business, I remain optimistic about what to ahead for Versus and Co, including what we're focused on for Q1. Across every brand within our business, Spring is anchored by our icons. In February, we reimagined our very sexy collection. Expanding the iconic franchise to connect with more women. With a broadened range of lift levels, we're offering a more personalized fit, delivering sexy for everybody. Our teams are always listening and responding to customer feedback. As evidenced by the new lightly lined Demi which was designed for women who love glamour but prefer prefer a more natural lift. And we continue to have momentum in sport and swim. Both categories in which our authority and expertise in broad fit and innovation give us the competitive edge. In what is a highly competitive market, we have leveraged our best at broad positioning to be the authority for on trend sexy swim that she feels incredible wearing. We are excited about the newness in swim this spring, which includes styles from Pink by Frankie's. One of our strategic collaborations that has over indexed with the Gen Z customer.

In our most recent drop, the collaboration also drove almost triple the average acquisition rate versus the core pink business.

A promising indicator as we build our go forward collab strategy. Doubling down on pink apparel, we are excited about the ongoing improvement in product execution. We continue to build on the momentum with modern takes on pink icons plus we've added a new layer of lifestyle outfitting that is resonating with customers. As we are seeing with early spring, our fashion content is becoming more compelling with every four set and I'm looking forward to the continued progress within the pink business. Turning to beauty, our icon is Bombshell. America's number one fragrance.

In March, we will be celebrating Bombshell's fifteenth anniversary by unveiling a bottle redesign and delivering activations we know will engage and excite our loyalists. I'm pleased by our movement back into major cultural moments alongside Globalstar. Consumer by meeting her in the moments and spaces that matter. Victoria's Secret Victoria's played a prominent role in Charlie XCX's performance that closed out the Grammys, Tate MacRae and brought our products in her newest music video and we recently partnered with Tiana Taylor on an exclusive product edit. Of these moments resonated deeply with consumers and drove significant social media engagement. As we transition from holiday season to spring twenty twenty five, we recognize there are challenges. [indiscernible] consumer confidence of volatile economy and unseasonal weather impacting mall While we're actively managing today's headwinds, we're also building for the future. With a strong foundation and globally recognized brands, we're positioned to navigate the present while unlocking the full potential of BS and Co for the long term. And now I'd like to talk about how we plan to realize that potential. First, I think it's important to acknowledge that we are building from a position of strength as the largest intimate apparel company in the world.

North America, we have approximately 20% market share 25,000,000 active customers and 38,000,000 loyalty members. We have the second largest brand following in the world on social media with 88,000,000 followers on Instagram alone. Our growth plan, which we are calling path to potential, will ensure we put the best of who we are back at the center of how we work.

We are playing offense, leaning into our core strengths, and unlocking new opportunities. Our objective is clear, drive value for all stakeholders by supercharging our two distinct compelling growth brands Victoria's Secret and Pink complemented by a powerhouse beauty business and a strong digital first Adoremi brands.

Our path to potential is built around four key strategies that will allow us to accelerate growth differentiate our brands and reinforce our authority in the market. First, we are recommitting to Pink and winning the next generation of consumers. Pink has long been a brand with deep emotional connections to young women. Today, we are focused on reestablishing the brand's magic, and market position.

We will deepen our relationship with the customer, understanding her like never before, meeting her where she is in the way she wants.

We are working to reclaim our position as a full lifestyle brand. Anchored in intimate, but extending into more apparel, accessories and beauty. We must clarify and elevate the brand by sharpening our identity, thinking and operating as a social first brand and treating Pink as the high potential growth engine that it is.

Our second strategy is supercharging bras and reasserting our authority. We will lean on our industry leading bra experience to drive innovation first product development, ensuring we lead the We will also expand our bra assortment to serve a wider range of customer needs.

And we will strengthen our marketing voice and channel experience to serve her better.

Our third strategy is fueling growth in lifestyle categories. Beauty, sport and swim.

We have a powerhouse beauty business and strong life [indiscernible] by leaning into our beauty authority authority, building on our industry leading fragrance business and expanding into new opportunities, which include Beauty and Pink, We will reclaim key adjacencies by applying our expertise in broad innovation, quality and fit to revitalize our sport and swim businesses.

Our fourth focus is on an evolve is on evolving our brand projection and go to market strategy.

As culture, technology and shopping behaviors shift, so must our go to market strategy. By staying true to our brand DNA, while adapting how we We will deepen connections with existing customers and attract new customers, Welch, strengthening loyalty and driving long term growth.

Victoria's Secret and Pink in everything from product to marketing to experience. Today, the lines between the two brands are blurred. Moving forward, we will ensure that each brand is distinct but that they complement one another in a single ecosystem. We will elevate Victoria's Secret as sexy, glamorous accessible luxury while modernizing Pink's brand identity and evolving the way we communicate with the customer. By becoming more agile and culturally connected, we will create real time moments that resonate with our customers and keep us at the center of the [indiscernible] Centric best in class omnichannel experience to engage with her on her terms. And as I've emphasized, we see significant growth potential internationally and these strategies transcend our global footprint. To ensure that our strategy is not just aspirational, it's actionable, sustainable and built to drive results, we are focused on three critical enablers. First, a customer centric performance culture. By deeply understanding our customers, how they shop, what they value and what inspires their loyalty we create stronger connections drive repeat engagement A culture centered on the customer empowers associates to innovate and deliver experiences that not only meet expectations, but exceed them turning transactions into lasting relationships.

To accelerate the customer impact, drive results and gain share, we are moving to a leadership structure presidents leading product facing functions for Victoria's Secret, Pink and Beauty. This change will ensure we have the leadership focus clarity and expertise needed to accelerate growth. Are also currently searching for a CMO to evolve our global go to market strategy helped build deeper customer connections elevate storytelling and drive more data driven marketing optimized across the full funnel.

The second enabler is an evolved product development process. We are moving beyond a broad centric approach.

Implementing multiple tracks, tailored to each category making our teams [indiscernible] more agile and more innovative, not just in broad development, but in apparel as well.

Our third enabler is an efficient operating model. We are focused on doing fewer things better. Investing where it matters most on our customers and streamlining cost and non customer facing areas.

In closing, we face some near term headwinds and ongoing uncertainty in the macro we will manage aggressively as we also do the work I just outlined to unlock the full potential of our brands and business. I'm confident and energized because we have clear strategies for growth, we are moving swiftly to a leadership structure to execute with focus and impact and we are positioning ourselves for long term sustainable growth. This is our moment to build the future for Versus and Co, stronger, more innovative, more connected to the customer than ever, and I'm confident in our plan Our team and the opportunities ahead. Thank you. That concludes our prepared comments. And at this time, we'd be happy to take any questions you might have.

To participate in this portion of the call. Our first question, we will go to the line of Matthew Boss from JPMorgan.

Great, thanks.

So Hillary, maybe could you elaborate on drivers of the gradual improvement that you embedded through the year? Do you see as transitory within some of your near term trends And maybe if you could speak to the product pipeline for the back half of the year at both Versus and Sure thing. I'm not going to speak too specifically about product launch cover. But I would say embedded in our forecast is number one, first foremost, getting teams in place and getting leaders in place. And so I would say a major, major driver of the improvement will be through marketing. Through marketing through the full funnel and the differentiation of the two brands. So I would say that is a major driver The second is incremental improvement in both Pink and the Victoria's Secret Victoria's as we play our learnings forward. And then third is a number of tentpole moments that we have planned, really beginning in the August timeframe. So you will see us pace those out across the back half of the year. And really, in the front half of the year, we are a little more quiet in terms of our marketing, building out that muscle, getting ready for the back half and you'll start to see those types of moments really accelerate in the back half.

As well as product launches and some fun collaborations. Great. September, and you've made some changes very quickly [indiscernible] over what horizon you just mentioned August, over what horizon do you think that you will have your full imprint on kind of the product? And then secondarily, couple of things that you had said, I think on the October meet and greet, Was that [indiscernible] So if you can talk about some efforts on that front my last quick one is, it's clear that you're pulling back on promotions. That sometimes leads to a slowdown or some sluggishness in inventory [indiscernible] and how you the margins before you get that acceleration in sales? Thank you very much. Sure. First question around full imprint. It will be iterative. I don't envision a big curtain up moment for each brand. You will see incremental improvement each month would say the impact on the first half of the year is really on optimization. It's on narrowing focus, maximizing the big ideas, neutralizing some of the things that we're more worried about actually focusing a little bit more on the lower funnel and marketing And then we are buying fall as we speak So I've had more involvement in that.

And we'll have more increasing involvement in future seasons after that. But I would say based on [indiscernible] '26 will be the season that I would have been here through the entire process. Second question around inventory. The lead time, yes. Production lead times. Production lead times. I would say we're in pretty good shape. There are places where we have [indiscernible] agility, underwear being a big area around that. I would say some of the pink apparel areas we've been able to make real headway with. And then I would say the new leadership structure is really designed to enable us to pull a into specific categories. So that's a big piece of this work. We actually have a tiger team devoted who have stepped out of their roles for a short period of time to really engineer this new process. So I would say we have a little bit of one foot in the old world and a little bit of one foot in the new world, but we're making progress on the areas where we see we need to be much more agile. And in terms of promotions, we have just started that work and I think it's a delicate balance The brand, the product, the story has to be very strong in order for us to be able to do that.

And we were able to start proving that out in full box promo in mid December that we were up against from last year. And we were also able to reduce the amount of days in other events across the quarter. We give up a little bit of top line I think we probably gave up a little, but we're really pleased that we were able to take that out of our base. And we're looking for opportunities going forward to do that as well. I would say the most recent traffic and weather patterns have made that a little bit more difficult to do. But we will continue to be relentless and looking for those opportunities as we move through the year.

Fantastic. Best of luck and thank you. Hey, everyone. Good morning, Scott, welcome. TJ, it's been great working with you. Thanks. Best of luck on your next chapter. Hillary, thanks for the path to potential detail. Any way to quantify the line opportunity within those various pillars? Just maybe thinking about you're viewing the various opportunities across brands, categories and regions maybe in quantitative detail? And then just given the comment about expanding beyond Bronsonric, could you share how much of the Opera opportunity as you see it to grow is rooted in recapturing lost revenue in each segment? Versus expecting maybe the go forward company revenues composition to look different than the past? Okay. There were a lot of questions in there.

Let me see if I can take a crack at that. So we have we are we are at the beginning of our LRP work.

So this is the beginning of the strategy rollout. So, I do not have exact numbers. We will plan to share that in the back half of the year, but I will there is a tremendous amount of opportunity in Pink. And that is where my eyes are set right now. That is where I'm spending a lot of time thinking about how we invest in that business, how we resource that business, how we talk about that business and pull it apart from BS. So that would be my first I would say in the intimates category, knowing that it is it is a category that has been struggling in the overall market. Our goal there is really to defend in the short term, as we build our innovation pipeline on a longer term view. And then the lifestyle categories, are they're really they're just very strong for us. And if you look back to history in these categories, they were a very significant amount of volume in the past and we feel very confident that we can recapture a lot of that. And I think That will help our customer file. It will help us with acquisition. It will help us with attracting younger customers.

And so there's a lot to like about the lifestyle piece of this. And I put a lot of focus on that as we move That's great. Thank you. And then just one quick follow-up. Any meaningful divergence in regions or customer demographic profiles in Jan and Feb that you guys have seen? Yes. In terms of it's Scott Simeon.

Hey, in terms of regions, yes, I mean, the warmer weather regions were definitely several points above the colder weather regions. So that speaks to the weather impacts from back half of Jan through Feb and as we did see weeks that were warmer than all regions were elevating off that trend. So definitely from a region perspective, we saw difference. [indiscernible] Was wondering if you could talk about the opportunity that you see in creating some of these separate [indiscernible] for product lines in terms of your strategy and how this interplays in the opportunity with particular categories that are have been historically very important for the company like [indiscernible] And then also if you could also just comment on Valentine's Day and anything that was working during that timeframe that would also be very helpful too. Thank you so much. Sure. Multiple tracks.

I think this is essential. We are [indiscernible] fifty two ish week calendar really anchored in the lead times around We have made progress on having an Chase calendars to really supplement that in key categories, but I fundamentally believe that apparel should not be on a fifty two week calendar. And so we're looking to drastically reduce that through raw material strategy, partnering with our vendors, different ways of working in our product development process, And the goal would be in things like I'll just use, pink apparel as an example.

We should be going like twenty six weeks for that. And that will be a big shift and a big unlock ring decision making closer to customer. And I'm very excited about potential of what that will add to our business. And you mentioned swim and sport. Both very technical, both have nuances in the product development process that are very different from other categories. And so [indiscernible] speed and a little bit more about the technical product engineering piece of it. And so having experts dedicated to that on different tracks should really one, enable much better product execution and number two, should enable agility in the places where we need it the most. Valentine's Day. I'll take that opportunity to just talk a little bit about January into February in general. So definitely saw a macro shift in the environment as it relates to traffic sort of mid January into mid February. We know what the macro factors are there. We know We know it was weather. We know it's consumer confidence. We know that in our business, we see a big uptick in cash and debit purchases coming from tax returns were delayed this year.

We see in our regional selling that warm weather climates did considerably better than the cold weather climates. That being said, there's an opportunity to really look in the mirror as well and make sure that we are playing forward every single learning possible. And so when I think about that sort of mid January to mid February timing, would say there are a couple of things we could have done better. One is that we pulled marketing spend into Q3 for the fashion show. And I think one of the hindsights coming out of the fashion show is that that halo in terms of traffic was about eight to ten weeks. So in hindsight, I think we pulled back a little too too far on marketing and we should have had some other event, whether it was around sport or Valentine's Day in January to really drive that heat and awareness and traffic. So that would be the first. Second is that we didn't buy the Valentine's Day big enough. So we blew through sleep, which was was one of the big drivers of holiday. We blew through it in a couple of weeks and basically sold out by the time we got to the February.

So I think that's a big one. And then the third is really thinking about launch strategies in bras and that's something we've done for many, many, many years And I think in the new environment, one of the things we're learning is that when we go hard against one thing, it isn't always necessarily lifting everything. And so we need find a way to talk about a launch in a powerful way and also talk about all the other bra offerings that we have at the same time. And that will be a new thing for us that we're working to implement very quickly. So that would be my diagnosis of the three weeks. And I would just add that three weeks doesn't make a quarter and it doesn't make a year. And we're working tirelessly to make that up as we move forward into the balance of the year. Great. Thank you, Hillary. Best of luck.

Thank you. Our next question comes from Jonah Kim with TD Thank you for taking my question. Just thinking about the guys for the year. What could potentially drive upside or downside to your guide as you look forward? And then just a follow-up on the Store of the Future formats. Sort of what are you seeing at this point with your concepts that have been live and what are you baking in terms of potential list from those concepts as you continue to roll out? Thank you so much. Joanna, can you repeat the first part? We think we think we heard something about guide. We think we caught this for the future, the second part. Yes, sorry. [indiscernible] yes, there's potential upside and downside to your guide for the full year, like what the fact factors that could potentially drive upside or downside to your current year guide?

Yes. John, it's Scott. So the guide for the year, we've already talked about Q1 and some of the near term headwinds we're facing. We do see the guide improving throughout the year.

Especially around a lot of the product and In terms of cost and whatnot, right now we're faced with some higher transportation costs both in ocean and air in the first part of the year. We do expect to start lapping that in the back half of the year. In the back half of the year right now though is where we've got the impact of the tariffs plan that we called out. So we've got 10% assumed on China for the balance of the year and that's going to be worth about $10,000,000 to $20,000,000 And so those are the sort of bigger inputs influencing the guide for the year. So when you think about that gradual improvement is where we see the year going. In terms of Store of the Future, the early results are quite positive. We are ramping that throughout the year. We've got more full and partial store of the futures in the works this year than last year. By year end, we should have about 95% of our top 100 door converted and we look to continue that into the out years as the earlier Yes. Joanne, if I could, just wanted to additional thought on the guide because I think it's Victoria's.

We've seen some of the sell side and this morning. And just to just to clarify, if you look at our guide for the year, at $6,200,000,000 to $6,300,000,000 you're looking at really flattish to maybe up $100,000,000 or up one or two points for the year. We gave you the guide for Q1, which was essentially down two to down four. So where I'm going, Joanna, is the balance of the year in our guide, we're really saying upload single digits plus one to plus two or three. So not necessarily the same trend that we saw in fall. But definitely improvement from spring. So we think that's something that's attainable for the business for the reasons that Hillary just mentioned around product and marketing. Changes that you should expect going forward And then similarly from an OI perspective, we're guiding OI essentially flat to down close to $50,000,000 year over year.

The bulk of that decrease is guided to in the first quarter. So you are seeing OI or operating income improvement in Q2 through Q4. So I want to make sure that that's well understood. This is not a significant hockey stick in the back half of the year or anything like that. It's really an expectation that over time we'll return back to that plus one, plus two here in North America. Which again clearly we were trending much stronger than that. In the fall season.

Got it. Thank you.

Thank you. Our next question comes from Alex Straton with Morgan Stanley. Alex, your line is open.

Perfect. Thanks for taking the question.

Maybe first for Hillary, it's clear you're super focused on pink more so than the other banners and other parts of the business. Can you just elaborate on what's telling you that that's the right banner to focus on compared to Victoria's Victoria's? And then just second question either for Scott or Hillary. Can you dive into the biggest like category pain points at Victoria's and Pink right now? And sort of plans to improve those in twenty twenty five. Thanks a lot.

I'll take that. I'll just start by saying, I wouldn't categorize that I'm much more focused on pink than BS. I think there are two different trajectories in their business. So first on the pink side. When you really dig in and look at the history of Pink, what it used to be, what it is today, is just enormous opportunity. When you look at the market landscape, there is enormous opportunity. And when you look at some of the decisions independent of themselves that were made over time, it's a little bit of a death by 1,000 paper cuts. And so when I stand back and look at that, I see opportunity. And I see opportunity in apparel specifically, And you can get at that faster.

And so there's a lot of work to do with Pink. There's a lot of scrubbing of the total brand position. There's a carving out of this brand that needs to happen. There's a reimagining of it to make it as magical to this generation as it once was to a previous generation. And I that is within our grasp.

So I'm passionate about that. At the same time, I'm so passionate about Victoria's Secret and I believe there is tremendous opportunity there. Think Victoria's Secret is farther along in its product development and sort of product resonance path.

I think the work in Versus is about supercharging the life [indiscernible] And I think it's about sort of brand, voice, how we go to market, how we utilize full funnel, a little bit more slanted to marketing where Pink is work across the entire business. So I hope that that clarifies that.

In terms of categories, what's working, what's What's working and driving the business right now, it is lifestyle categories. That is driving the business right now where we're seeing the growth. We're seeing it in sport. We're seeing it in swim. We're seeing it in accessories. We're seeing it in pink apparel, So that is where we are seeing strength right now. I would say that in bras as an example, very sexy is good. But as I just mentioned in the last question, I think the unlock for us is making sure that when we launch It lists All those. And that's the work that we have to do in that area.

Thanks so much. Good luck.

Thank you. Our next question comes from from Mauricio Serna with UBS. Mauricio, your line is open.

Great. Good morning. Thanks for taking my questions. Maybe one thing that I wanted to get a little bit more detail. I remember like from Investor Day from a couple of years ago, you still have around $40,000,000 of savings that I think we're should materialize in 2025. I was just wondering if that's the case and where should we see that? And then maybe could you elaborate a little bit on two things? On the marketing, you said you want to do like more marketing to show like to differentiate like one brand of pink from Victoria's Secret, could you just talk a little bit more about like what are some initiatives on that side? And then lastly, on any product launches that you've already done like not talking about anything that's coming, but anything that you've already done, that you would highlight across again both brands that you think is worth noting? Thank you so much. Yes, I'll take the first part Mauricio. I think on the savings goal, you're referring to the $250,000,000 transform Foundation goal that the company set back in October of twenty twenty two is when we first introduced it. We saw about $90,000,000 of savings in 2023 that we communicated.

I would suggest to you that the company saw closer to almost $200,000,000 of cost savings in 2024 and we think largely completed that three year goal in here in the first two years. Now having said that, we're confident there are opportunities to continue to be more efficient in the model go forward. And we are confident that the leverage point still remains in that 1% to 2% range or said differently, we need a 1% to 2% growth number in North America sales to generate leverage in the model. Think if you take a look at how the year progressed in 2024, we're confident we saw gross margin or average unit cost reductions that saved money and showed up in our margin rate. Performance for the year. And then from an SG and A standpoint, I hope it's not lost on the group that SG and A dollars on a fifty two week basis were actually down year over year even though sales were up and incentive compensation was up for the year. So there was a lot of good work that's already been done by the team. Having said that, we think there's opportunity going forward. I think your other two questions, if we caught them right, were around marketing.

And product launches that have already been completed and if there's any dialogue on those Sure. I'll take that. Yes. So in marketing, I would say the focus for the two brands is a little bit different. So in Versus, we already have very, very high awareness. So the goal is really consideration. We are doing very, very well with our existing and reactivated highest retention rates in many, many years.

Highest spend, highest margin per customer, higher retention rates, so much good going on there, we're a little slow on acquisition. And so that's about consideration for Versus. And as we double down on sexy, glamorous, accessible luxury, that doesn't change. But I think what is sexy in 2025 is something different different than what it was a few years ago and how do we evolve with culture and connect with the consumer and make her see us in a different light to introduce new consumers to this brand. That is the goal in BS. I would say in addition to that, we have an opportunity to rebalance the spend across the funnel, focus more in the mid to lower funnel and be much more thoughtful about when we're spending in the upper funnel, so we can we can reach more consumers. In Tank, it's different. It's more about awareness. We have not been aggressively marketing pink. We need to evolve our look and feel there. And when we feel the look and feel is right, when we feel we have the right partnership strategies, when we feel we have the right collaboration strategies, which we are aggressively working we will turn that on and it's just a different tactic for that brand.

And then you have to stand back and say, okay, we have an ecosystem of our loyalty program, of our store real estate, how do we leverage the two together for the power of the entire enterprise? And so you have have to have your foot one foot in the brands and the special needs of the brand and then the other foot and how do you optimize the entire file and that's the work ahead of us. [indiscernible] Product launches. Q4 is not really a time for product launches. [indiscernible] I would say that Sport is probably the most recent place where we launched. We relaunched [indiscernible] BSSX in a big way in October, very successful We followed up with a relaunch of the knockout bra in January, also very successful. I think our positioning on differentiator and something that we plan to lean into and we're having a lot of success there.

Great. And just one quick follow-up. I don't know if you mentioned this. In your guidance, how should we think about the promotional activity? Like, is it like is it going to be like more promotional versus last year or flat or slightly lower? Just wanted to get a sense of Yes, Marissa, it's Scott. For the year, we're planning promos to be down. So Hillary touched on it. It's more about some of the big box promos that we'll be pulling back on. We still will be promoting especially in the traffic driving categories, but throughout the year, we do expect to less promotions to be a sort of a tailwind on ghost margin. Thank you. Our next question comes from Ike Boruchow with Wells Fargo.

Ike, your line is open. Good morning, everyone. This is Juliana on for Ike.

Just a quick question on international. Wondering if we could get some more color on what's going on there with the shift we saw from 3Q to 4Q. And maybe any growth expectations for 1Q and the rest of the year possible? Thank you.

I think Julian, I'll start and everybody else can kind of jump in. I think from our perspective, another successful fourth quarter and holiday season for the international team. We think we in the prepared comments, we commented on really double digit growth from a retail perspective. Around the world with really all markets participating particularly [indiscernible] joint venture with The UK partners at Next And then our China business also was was very solid during the fourth quarter even though we had some transfer of volume or some forward of volume into Q3, because of the calendar shift on single stays. So we feel like around the world, business performed quite well. In international, I think it's important to note that we had new countries come online particularly in Vietnam and Argentina would be two dimension. In 2024 and there are more planned for 2025. I think additionally as we turn the page and come into 2025, we'll start to see as the year goes on positive benefit from our European distribution center that the teams have been working on It's a third party distribution center in The Netherlands that will particularly help support not just growth in and around the European countries, but also our digital business.

So we'll be able to be much, much faster to customer from a digital perspective satisfying those orders from The Netherlands area versus satisfying those from back here in Columbus. So a lot to like about the digital opportunity in international, but just the international opportunity in general. As we move into 2025, we'll continue to expand the number of countries that we have a physical footprint in countries like Serbia, Slovenia, Slovakia and others that are on tap for the New Year And additionally, as I mentioned, just the opportunity to be closer to customer with product, we think is a big, big win as we go forward.

And Scott, the only thing I would add is beyond the new country growth, the other thing that's exciting is we are comping mid single digits as well. So it's both the whitespace new opportunity growth, but positive comps as well.

Great. Thank you so much.

Thank you. Our next question comes from Brook Roach with Goldman Good morning and thank you for taking our question.

Hoping you could speak to the size of your sport and swim businesses today.

Well as the growth opportunity that you see this year and medium term as you establish those larger businesses? And then for Scott, if there's been a lot of discussion about marketing today on the call, I was hoping that you could contextualize your expectations for SG and A for the year and how that [indiscernible] [indiscernible] trend as a percent of sales as we move throughout the rest of the year?

Sure. I will start with Sport and Swim. Relative to the total BS and Co business, relatively small still growing quite nicely across all of last year and into this year. So definitely see it as a big growth opportunity. It's A small part of the potential of even if we just look back to what it used to be, it is not even close to what it used to be.

So feel like there's a long runway there, and a real expertise that we have in this category that we can draw on. And I think early reads in spring are looking very, very good. So the momentum continues and we plan to build on it.

And from a marketing SG and A perspective, marketing is largely going to be flat year on year. So it's really more about how and where and when we spend that will be different year on year, but the actual dollars will be largely flattish. From a total SG and A perspective, with this guide, TJ kind of alluded, we need one to two points of growth particularly in North America to leverage. So this guy has a with a slight deleverage on SG and A driven by some of the the wage increases and whatnot that incurred. But as we get in that plus one, two A. Great. Thanks so much. Best of luck going forward.

Thank you. Our next question comes from Marni Shapiro with The Retail Tracker. Marni, your line is open.

Thanks guys and congratulations some of the progress at PINK. That Valentine's Day set.

I think was the best I've seen in five years, maybe longer than that event. It's fantastic. So want to dig in just a little bit on PINK. You gave a pretty clear indication of goal is marketing wise on Versus with sexy, glamorous, luxe, I'm curious What like those three words are for pink?

If you're not there yet and you're still working on it, that's okay. But I'm curious what you're thinking about it today. Because that shopper, that young girl is different today. Than that young girl was when this brand was born. And then just also curious, we've talked a lot about marketing here. You talked a lot about the success of the fashion show and the halo it gave. Should we assume that the fashion show is going to be a thing in 2025? And what should the marketing look like across the quarters? Will it be a little less lumpy then this year than it was last year? Are you spying on me, Marni?

Obviously. I've been talking about those three words quite a bit. The reality is, is I think we need to go and do a lot of studies about this consumer before we nail those three words So we're in the process of putting together a research plan to really reconnect with this customer before landing it. Certainly, we have ideas around this. We know what has been the heart of this brand. We We have a good idea of where we're going, but I think we need to study this customer very carefully before putting that line in the sand. You asked about the fashion show.

So yes, the fashion show, I'm glad you asked about that actually because it's a really great story.

I think all in all, the fashion show was a huge success. We noted it improved brand sentiment, especially with our target younger audiences, We saw continued strength in our retained and reactivated customer file. We sustained positive traffic and it looks like it's about eight to ten weeks of tailwinds coming off of the fashion show at the most [indiscernible] But I think we needed to follow it up with something in that sort of late December into January time period and that was the opportunity. So to answer your question, yes, we should see marketing be more leveled out. There will be a a spike with the fashion show, but it won't be to the same degree. So the show will be back though in 2025? We are still working through that. There will be some activation of some sort that is significant So there'll be more to share in in future earnings calls.

Excellent. Thank you, guys.

Thank you. That is all the time we have for questions. Kevin, I'll hand the call back to you. Okay, great. Thanks, Amanda.

Concludes our call this morning. Thank you for your interest in and Go. Thanks everyone. Have a great day.

Thank you all for participating in the Victoria's Secret and Company's Victoria's Quarter twenty twenty four Earnings Call. That concludes today's conference. Please disconnect at this time and enjoy the rest of your day.