Good morning, my name is Matthew, and I will be your conference operator today. At this time, I would like to welcome everyone to the L Brands Third Quarter 2017 Earnings Conference Call. I will now turn the call over to Ms. Amie Preston, Chief Investor Relations Officer for L Brands. Please go ahead.

Thanks, Matthew. Good morning, everyone, and welcome to L Brands third quarter earnings conference call for the period ending Saturday, October 28, 2017. As you know, we released detailed commentary last night, which is available on our website. As a matter of formality, I need to remind you that any forward-looking statements we may make today are subject to our safe harbor statement found in our SEC filings. Our third quarter earnings release, additional commentary and earnings presentation are all available on our website, lb.com. Stuart Burgdoerfer, EVP and CFO; Dein Boyle, COO of PINK; Jan Singer, CEO of Victoria's Secret Lingerie; Greg Unis, CEO of Victoria's Secret Beauty; Nick Coe, CEO of Bath & Body Works; and Martin Waters, CEO of International, are all joining us today. Thanks. And now I'll turn the call over to Stuart.

Thanks, Amie, and good morning, everyone. It was good to see so many of you at our investor meeting in Columbus a couple of weeks ago. As we preannounced before that meeting, our third quarter earnings per share result of $0.30 was at the high end of our guidance for between $0.25 and $0.30 per share. Importantly, performance improved throughout the third quarter. Looking forward to the remainder of 2017, our forecast assumes a continuation of improved comparable sales growth and operating income results in the business. We have strong brands that lead their categories with close connections to our customers. Our stores have high sales productivity and 99% of our stores are cash flow positive. Our digital business continues to be strong with both go forward Victoria's Secret and Bath and Body Works delivering double-digit growth in the quarter. We have confidence in our upcoming product launches and are focused on execution, staying close to our customers and leveraging our speed and agility capabilities to read, react and chase. We will also continue to manage inventory, expenses and capital spending with discipline. As a reminder, our comp guidance for November is roughly flat, as we are anniversary-ing aggressive promotion in the Victoria's Secret business last year. We will not be commenting on November business to date this morning as we still have over half of the month ahead of us. With that, I'll turn the discussion over to Dein.

Thanks, Stuart. Good morning, everybody. I met many of you in Columbus recently to share the PINK brand strategy and outlook for holiday. We are pleased with our Q3 performance. The business continues to have momentum driven by our core categories of bras and panties. The brand remains focused on rigorous execution of our cost strategies, which include enhanced customer engagement programs, continuos evolution of our speed-to-market practices and disciplined approach to inventory management. As we approach the key holiday selling season, we have distorted focus to execution to ensure the best experience for our visitors, and initial results validate our assortment distortions. Thanks. And I'll turn it over to Jan.

Thanks, Dein. Thank you, everybody. Again, great to meet a lot of you at Investor Day. I remain very optimistic and very energized by the progress we're making at Victoria's Secret Lingerie. We're on the same offense. Obviously, a very sustainable construct, 3 frameworks. Knowing her, it starts with the customer, and knowing her deeply through the thousands of associates we have reaching millions of customers in-store as well as digital and direct through data analytics and our customer service center. We are also focused on building great product and assortments that offer choices of sexy and an edited assortment to amplify the results. And third, we're here to serve her where she wants and when she wants at the moment of truth, whether that's stores or online. To be loyal to her with authentic engagements is always our opportunity in serving her, all powered by a high-performing team that has come together as recent as last week when our CMO joined the team. The progress for Q3, we are focused and continue to be focused, on the core of the business, our best act, which is bras. And bras balancing our portfolio with choices of sexy: unlined, lightly lined and push-up are all in the portfolio. The strength of the core is constructing bras with benefits, balanced with fashion and emotional content. And that's working for us. In Q3, we launched Illusion. Illusion is a constructed bra that comes in 3 choices. It has an IP around its benefit of sexy smoothing and it has high emotional content. The bra exceeded [indiscernible] launch and continued to sustain at a higher rate than our previously constructed bra launches. It's working, and we will stay on that offense. In addition, in the bra category, Dream Angels, a very important portfolio for us, has been up double digit on 3 constructed bras as well: romance, lace, embellishment all working. We are going to continue to offer her choices in the bra category. In panties, as we discussed, we're resetting. But there are 3 books of business, the [ 5-4 ] business, the [ 3-4 ] matchback business and single ticket. [ 5 4 ] has been tracking up for the last 6 weeks, and we're very excited to see the progress on this reset already happening. Easier to navigate, better content and our pipeline is full going into spring. We are constructing the matchback business and the single ticket, and we'll learn more about that as we head into holiday. Sleep, 2 choices for us. One we've been testing for 6 months in the mix and match and one that we do every year called packaged goods. Mix and match is an incremental business. It has rolled to the chains, and it is working. We are excited that she can make her own solutions of sleepwear. She's attaching it to bras in the box as well as panties, and we are seeing a high penetration of new customers. In addition in sleep, we have a sexy sleep business, which is 100% on trend with sleepwear being worn on the street, lingerie. It's been up double digits for us in the last quarter, and we see that continuing as we head into holiday and spring. Sport, growth driver for us, up double digits as well. The base business is also growing and it's a new customer. The anchor to that in Q3 was the launch of the Angel Max Bra. The Angel Max Bra was launched with strong and in the first single day, did more than our best sport bra launch did in 1 full week. We continue to see that build. It's attaching to tights, multiple tights and tops, a very simple sport construct, a new customer, and we're excited to see that business continue to grow. In the spirit of serving her where she wants to shop, we've integrated the digital business into the brand, as you heard Mr. [ Wexner ] talk about. We are having a more emotional connection with her through that offense in edited assortment and offering, simplified navigation. And the results are strong. In addition, our loyalty program, Angel Card, has been reactivated and reengaged, and we're seeing momentum in that space. We are leveraging marketing investments previously made around things like the show in the spirit of connecting with her. And we're developing a deeper authentic engagement through our social channels so she's converting through digital. Focus go forward, win at holiday, heads are down on that, bringing the momentum into spring and making sure as it is that our pipeline is full for '18 as well as '19 in innovation. With that, I'll turn it over to Greg Unis.

Thank you, Jan. Good morning, everyone. I'm going to share some high-level thoughts about third quarter performance in beauty. In Q3, we are pleased with the progress we made to establish a strong foundation and are beginning to build a dynamic business. Since spring, we've experienced positive sequential growth. Our best-selling fragrances are up year-over-year. During the quarter, in September, we launched Love, our new iconic fragrance. It is the #1 prestige fragrance launch in Victoria's Secret's history and we were very pleased with the results. We layered in fashion and newness in our Mist Collection, lip and accessories, which our customer responded very well to. By focusing on assortment and reducing lead times, we've significantly increased our agility. Overall, I'm confident we are headed in the right direction with positive sequential growth headed into the holiday season. This holiday, we're focused on winning the season. We've developed a thoughtfully conceived balanced assortment of gifting, fragrance, mist and accessories that hits multiple price points, introduces new gift categories and is seamlessly integrated with the total Victoria's Secret brand. On the PINK beauty side, we have significant growth opportunity ahead and will deliver excitement and newness across gifting, seasonal fashion and stocking stuffers. In closing, we are headed in the right direction, seeing positive sequential growth in the business. We're building upon what's working, making big bigger, leaning into speed and agility, and always continuously testing and learning from new ideas. Ultimately, our main focus is on building a healthy business to set us up for accelerated growth in the future. Thank you for joining this morning. And I will now hand it over to Nick Coe.

Thanks, Greg. Just really a couple of headlines on Q3, and I really like to reiterate what we talked about at the investor meeting, which was we really saw a nice improvement as we went through the quarter. As the quarter progressed, our business got better. And that improvement in performance was predominantly based on us rebalancing the mix from being, well, rebalancing the mix to a more overtly seasonal products and concepts. As you know earlier in the season, we were heavily focused on relaunching some of our body care businesses. And as a result, I think we really missed some of the seasonal favorites that she was expecting from us. And we were able to correct that in the month of October, saw a very nice trajectory change. And that trajectory change really proves 3 things about the business. First of all, one is that we have tremendous agility and our ability to chase into the right products to meet customers' preferences is a really important part of our business model. Secondly, it proves just how sensitive the brand is to seasonality, and that's a good thing as we think about trying to continue to drive traffic at all times of the year. And thirdly, the customer has a very, very deep loyalty to some very specific returning fragrances, returning concepts and returning franchises as we go into the seasonal periods, which again is good from our ability to control our own destiny, control our own traffic. Us being able to correct that before we got into holiday leaves us feeling cautiously optimistic about the Christmas season. And I think hopefully, as you've seen in the stores, we're starting very clearly for a very seasonal look as it relates to Christmas, a very festive feeling and the store environment really starts to scream Christmas right now. So we should be in a very good shape. Thank you. And I'll return -- hand now over to Martin.

Thanks, Nick. Good morning, everybody. Third quarter revenue in the International segment increased by 11%, driven by growth in sales in both Victoria's Secret and Bath & Body Works. Bath & Body Works in particular had a very strong quarter with solid growth in all categories in all regions of the world. Our Victoria's Secret full assortment business benefited from significant new store growth. However, the base business continued to see negative comps, similar to those experienced in North America. U.K. business continues to be tough, and we're very focused on getting that business back on track. The Victoria's beauty business gained traction in the quarter as newness started to be delivered during October. As you know, our primary focus is China, and we're investing meaningfully in people, infrastructure, real estate with a conviction that China has enormous long-term potential. And of course, we're excited for the fashion show, which takes place in Shanghai in a few days' time. Amie?

Great. Thanks, Martin. That concludes our prepared comments. And at this time, we'd be happy to take any questions you might have. [Operator Instructions] And I'll turn it back over to Matthew.

[Operator Instructions] Your first question comes from the line of Kimberly Greenberger with Morgan Stanley.

My question is on gross margin. I wanted to know, Stuart, if you could quantify the shrink impact to gross margin in the quarter and any strategies you have to address shrink. And then, secondarily, in gross margin, maybe Nick could address the merchandise margin line at BBW, the drivers there and how he's feeling about that going forward.

Thanks, Kimberly. We'll start with Stuart.

So the shrink impact in the third quarter, which was driven by Victoria's Secret, was about $12 million. And so that's a significant amount. And absent that effect, the margin rate would have been up in that part of the business. And it's a complex subject, Kimberly, as you and our listeners would appreciate. And our store teams are focused on it, first and foremost, providing a great experience for our customers, but also managing that part of the business. And we're making, we believe, some appropriate improvements in how we manage that aspect of the business. But what we're most focused on is how to best serve our customers, but it had a meaningful effect in the quarter as we trued up our shrink rate.

Nick?

Hey, Kimberly. Yes, so as I mentioned, in Q3, that was almost a tale of two cities. The first part of the season was not as good as the second part. And we were slightly more promotional in August and September and not as promotional as we got into October. And so obviously, that had an impact on gross margin. Your question in terms of how do we feel about margin rate as a go forward, I would say pretty good as we've seen a shift in our business in the latter part of October that led us to be less, slightly less promotional. And if I think about our plans going into holiday, we're planning it at about flat to last year, which was -- well, obviously, planning it about flat to last year. Now the caveat, obviously, with that would be holidays. In a normal season, holiday's a long time frame, and we'll see how the environment does. And obviously, with our read and react capabilities, our agility to follow the customer, that may change. But at this juncture, we're planning about flat.

Your next question comes from the line of Paul Trussell with Deutsche Bank.

This is Gabby Carbone on for Paul. So you managed SG&A nicely this corner. Could you quantify the impact of a decision to increase investment in direct to mail? And then any other puts and takes that we should be thinking about? And then should we be expecting a larger impact from the increase of the investment during holiday, just given the more promotional nature of that quarter?

So with respect to SG&A, we are certainly working to invest appropriately in our marketing activity and also in our store payroll activity in our businesses. We work to strike the right balance, obviously, to make those investments, to drive top line growth and drive profit dollars. But in response to your question, we are making what we believe are appropriate investments, particularly -- year-on-year, particularly at Victoria's Secret, in marketing and store payroll that we believe will contribute to a good sales result and a good profit result.

Your next question comes from the line of Brian Tunick with Royal Bank of Canada.

I was hoping that Jan and Nick could maybe talk about how you're flowing new product introductions or maybe the launch calendar for holiday this year versus holiday last year.

Thanks, Brian. Let's start with Nick.

Hey, Brian. So on a macro level, we're going to be flowing more newness than we flowed last year. That will come in 2 -- from 2 points of view. The first point of view being we've continued to evolve the brand and are looking at -- and getting into newer categories, and that obviously creates newness. The other point of view on the newness that we're flowing is as we look at things that we are famous for during that time frame, they look dramatically different this year than they did last year. And so that sort of adds to the newness. As it relates to the calendar, there are some minor changes in the calendar -- or flow calendar for us, some minor changes, that are really about trying to maximize different time frames of the month, but nothing demonstrable that would make you think differently about -- thinking about our business.

Great. Thanks, Nick. Jan?

Yes, so we will continue to flow newness as planned. We will distort things that she wants most at that time frame. We talked earlier about the casual sleep and pajama business as an example, and we will have sport always on. So we have stepped up our game with things that we have speed and agility on, specifically around things like sport and casual and sexy sleep. And we will react to that as we see going into December and into January.

Your next question comes from the line of Susan Anderson with B. Riley FBR.

This is Luke Hatton on for Susan. I was just wondering, in the transcript you indicated that you're still seeing some impact from mix shift in terms of constructed versus unconstructed bras. I was just wondering if you had any more detail on how we should be thinking about that balance going forward.

Thank you -- it's Luke, right, for Susan? So thank you for the question. I think it is about the journey of getting us into that balance and we're finding our footing in constructed bras. As you read in the script, constructed bras were up this quarter. We continue to see the momentum in that space, and we have healthy margins on that business. That's a really important book for us, and we will continue to build bras with benefits balanced with fashion. And when we do that, we do get paid for that work.

Your next question comes from the line of Paul Lejuez with Citi.

Can you talk about the impact of China versus the U.K. on the weaker International margins? And just how should we be thinking about the drag from China specifically? If you have any early thoughts on that, Stuart, for next year.

Yes, as it relates to the investment, Paul, in China and the near-term operating losses and kind of cutting to the thrust of your question, we would expect -- and we'll give more guidance, obviously, in February as it relates to 2018 -- but we would expect that the loss in China will be meaningfully lower in 2018 than we believe it'll be in '17. And that there'll be a steady progression to a profitable business over time. Obviously, you appreciate the opportunity there. But again, I think to the thrust of your question, the amount of loss in '18 will be meaningfully lower than the amount in '17.

U.K.

With respect to the U.K., as Martin has outlined for you, and he's with us here this morning, as we've outlined, there's a lot going on in the U.K. as it relates to the environment. We certainly believe there are opportunities to improve the execution of our business, and Martin and team are focused on that. And we believe that the U.K. is an important market for us and will be a healthy profit market for us over time.

Your next question comes from the line of Lindsay Drucker Mann with Goldman Sachs.

I wanted to drill into the outlook for November, which anticipates a sequential acceleration on a 2-year basis because you're going up against a really tough comparison. And maybe just getting specifically into Victoria's Lingerie. Jan, if you could talk about some of the initiatives or specific reasons you feel confident that you can sort of go up against really challenging comparisons from the prior year, which was obviously of low quality, but still drove a pretty big top line number.

Lindsay, thank you for the question. I think, first and foremost, it comes back to 2 things: customer at the center and building great product and having the right assortment. So I feel really confident about the assortment of the product that we have coming in. I feel it completely resonates with who she is today, giving her those choices. Again, the balance in the portfolio at the core of bras feels right. And flanking that with adjacencies, like the sleep business we talked about, like sexy sleep, is a great combination. We're seeing, again, attachment to the core when she buys those adjacencies, and we're able to read and react on those adjacencies quite quickly. So I feel quite confident in the insight to the product that we built and our agility in that space.

Thanks, Jan. Greg, do you have anything you want to add about November?

Sure. Lindsay, you were able to spend time with us in our stores a couple of weeks ago, and I think it gave you a good sense of what's to come and how we're thinking about the holiday season. So that's a pretty good indication of where we are. And if you think about where we were a year ago with product and where we are today with product, we're in a very different place, and we're feeling very good about things as a result.

And for PINK, we continue to execute against a comprehensive game plan, offering a compelling assortment as well as a fully articulated marketing and customer engagement program. We're highly focused on giving her the best experience because as you know, this time of year, we get a lot of -- often new visitors that come into our stores as well as our digital store. And so our focus is to give them the best experience possible. As I articulated earlier, our initial results resonate; we've made distortions, and we're quite happy with the traction we're getting.

Your next question comes from the line of Anna Andreeva with Oppenheimer.

We had a follow-up on gross margin guide for the fourth quarter. Can you just help us understand what are the driving factors for the decline? Should we think the merchandise margin is expected to be down for the quarter? And then, secondly, to Jan, at Victoria's Secret, you've been testing various marketing and promotional events, some of the couponing is coming back to the brand. Can you maybe talk about some of the learnings there? Where have you seen the biggest attachment rate thus far?

Thanks, Anna. We'll go to Stuart first.

So on the gross margin guide for the fourth quarter, I guess the first thing I would say is it's an estimate and it's our best view of an estimate. But the reason I start with that is, at the end of the day, guys, what we're driving for is margin dollars, healthy sales growth, profitable sales growth. And in the major parts of our business, as you've heard this morning from the team, we're not expecting to be more promotional at this point in the fourth quarter than we were a year ago. So in terms of the promotional aspects that would have affect gross margin, not expecting meaningfully more promotion in 2017 than we had in the fourth quarter 2016. And in some cases, we would expect to have less promotion. But we'll see as we manage through the quarter, as Nick described in terms of how we run the business. So -- and we enter the quarter with inventories in great shape. And we believe that we've got good, compelling product ideas. So the gross margin year-on-year change is not that significant. And directionally, it's down slightly. Some of that's affected a bit by the other segment some mix dynamic going on with the other segment. But again, in the major businesses, pretty steady in terms of year-on-year promotion.

Okay. So Anna, you asked about our promotional activity. I mean, first and foremost, our job is to protect the core and strengthen the core of the business. We feel good about that and the margins are strong there. We have brand-accretive promotions, which enable us to do 3 things. Number one, introduce the new customer to the store and the new product. I feel good about that. Number two, we are reengaging with customers we haven't seen in about 12 months. That feels also very strong. We've had great success there. And we will always surprise and delight an existing customer. Things like giving her a lip product when she tries on an Illusion bra, feels good for both of us and the customer. That is what we're talking about when we are talking about promotions. We are doing both direct mail and digital. Direct mail has a very strong flow-through for us. She's spending time with that piece and she's coming in. The direct mail is echoing events that are happening in the store. And the only time they deviate is when I talk about those 3 customer experiences.

Your next question comes from the line of the William Reuter with Bank of America.

My question is on the competitive environment. I read a lot of articles about smaller competitors coming into the intimate space. I'm wondering if you guys are seeing much of a change in the environment and whether you believe that any of these competitors are changing your pricing power at all.

Thanks. William, we'll start with Jan.

Thanks, William. I think 2 things about this. Number one, we all love competition. It makes us stronger. I think that's always great to see the landscape and we're well aware of it. I track it pretty closely on intimates and apparel as it relates to our customer. What I love about our business is with 1,000 stores and a strong digital flagship store, we are able to offer choices for her. Coming into the store and being fit for a bra is a unique experience with, I think we have 5 bra associates per store that have over -- average tenure of 10 years. So having that engagement, having been a person that did that for 3 months 8 hours a day, 6 days a week, there's nothing that can replace that engagement with the customer. And I welcome the landscape to continue to evolve, so it helps us raise our game. I feel good about that. Dein?

In PINK, while we're aware of competitors and their aspirations, we don't let that become a distraction. We are focused on executing our strategies and we are quite pleased and confident with our strategies.

Your next question comes from the line of Chethan Mallela with Barclays.

So one of the challenges that you've cited for Victoria's Secret in recent periods has been this weaker store traffic related to the exit from swim and your pull-back in some of the promotional activity. As you're lapping some of those actions, are you seeing traffic trends start to stabilize? And just in general, it would be helpful to understand how you're thinking about brick-and-mortar traffic trends across all the banners in the holiday period.

Okay. We'll start with Jan.

Okay. So Chethan, thank you for the question. Actually, we've seen our traffic improve, especially over the third quarter and sometimes outpacing the mall. In fact, we track both our freestanding stores and our shared stores. And again, when we have great product and we bring her a product that is emotionally resonating with her, she shows up. So I feel very good about the trajectory of that traffic. And again, the key adjacency is balance with the core is what's bringing that momentum into the box.

Thanks, Jan. Nick?

So I think we've seen nice trajectory in traffic recently as we've been able to get into very seasonally relevant products, and how we try to partner that with the right promotional activity has been working well for us. I don't see that changing as we go into holiday, especially as the assortment continues to get more and more seasonal as we go through the season. But once again, holidays is a very volatile period. And we obviously reserve the right, to a certain degree, to sit back from that and see what -- just how is the customer behaving and is there something different, incremental or change that we want to do that could change the course of that traffic, if it was to go into a negative place. But I see the trend we've got now. I would like to hope that, that maintains itself as we go through holiday.

Your next question comes from the line of Jamie Merriman with Bernstein.

My question is about Bath & Body Works. You've seen very solid growth in the direct channel over the last few quarters, just wondering if you can talk about how you think about the margin in that business compared to stores and how you manage across the 2 channels.

Great. Thanks, Jamie. We'll go to Nick.

Sorry, could you -- what was the -- would you mind repeating the question for me, please?

Sure. So you've delivered really strong growth in the direct channel for BBW over the last few quarters. I was just wondering if you can remind us about how the margins for that direct business compare to stores and how you manage across the 2 channels.

Yes, how we manage across the 2 channels is probably the most important part, which is we really do want it to be a comparable product, comparable product pricing and promotional behavior so that no matter where the customer is interacting with a branch, she gets the same product at the same price, the same promotion. And obviously, that has been working for us for the last number of years as we've been able to maintain growth in both bricks-and-mortar as well as growth in the online channel and very healthy growth in the online channel. At the end of the day, the operating income is fundamentally the same. We don't see a -- in terms of how we manage the business. It just nets itself out, that they're very similar. So there isn't a major difference between the 2 of them.

Your next question comes from the line of Oliver Chen with Cowen and Company.

Our question was about the target for direct mail ahead. Could you articulate a factor that the program needs most going forward and the big opportunity there? And help us just contrast it with prior versions, some of the points around what you're thinking about the consumer and how do you balance traffic versus margin and making sure that your brands stay very elevated.

Hey, Oliver, thank you. I think the thing that's the biggest difference for us year-on-year around direct mail is really about customer segmentation, being able to really get deep into the file, understand who's in, who's out, how we pivot the file towards the one who's going to emotionally and actively engage and connect with product. Getting that fidelity going is, as you know, the new landscape of marketing. So the big difference is no blunt instrument. I think Greg would agree with that as well. It's high fidelity. It's absolutely about engagement and it's meeting her where she's going to react. That was the first part of your question. I didn't quite track on the second. Sorry, Oliver.

I think that helps us understand, just contrasting this to prior versions of the program and the key differences about how this is going to work now versus how you pursued direct mail in the past.

Well, again, I think in the past there was a lot of past that's catalog direct mail and different kinds of direct mail. But essentially, what I can talk about go forward is the high fidelity and emotional engagement and the segmentation. That's what's the difference is.

Okay, and just to follow up on panties. On the panty frontier, are you feeling like you're very familiar with what needs to be done and it's temporary and it's a quick fix? I just wanted a characterization.

Yes, absolutely. We've been deep into this since I've arrived. We've dissected the business. I think we have a very good architecture go forward. You're starting to see some of the results of that in the [ 5-4 ] business. Yes, we know the 3 books of business are all important, and we have a speed model against the most important side of that. So yes, super clear, very confident going into holiday and go forward in '18.

Your next question comes from the line of Roxanne Meyer with MKM Partners.

Congrats on the progress so far in constructed bras and the positive comps there. It's great to see double-digit growth in some of your key bra styles. Putting that into context, I guess, I've got 3 questions for Jan. In thinking about the negative low single-digits for lingerie overall, is it just the unconstructed bralettes at this point that are an offset? Or are there other items as well? When do you anniversary the heavy investments made in the bralette category? And what does your flat to low single-digit comp guidance for the fourth quarter assume about lingerie performance overall?

Yes, I mean, thank you, Roxanne for the question. Thank you also for the support on the progress. It is about the balance of the portfolio. And when you build great bras, again, with benefits and emotional content, those take time and we have to fill that pipeline. I think the pipeline is now full. And so you'll start to see those roll more often. As those roll and she votes yes on those, it helps us rightsize the portfolio. Again, also going with choices of push-ups, lightly lined and unlined in the right balance is important. And we see that kind of rightsizing itself as we roll through this rest of this year into '18. And we think that you'll see the consumer roll with that.

Your last question comes from the line of Kara Szafraniec with Northcoast Research.

I had a question on the beauty promotion. I know in the script you guys called out a lower beauty promotional environment this quarter. Just wondering if you could give us some color on what drove that decision and should we continue to see a lower promotional environment in beauty going forward?

Thanks, Kara. We'll go to Greg.

Yes, if you think about where we were a year ago with product and where we are today with product, that's really the driving force for this. You saw the product at the investor walk-through, I think it was evident. We're being much more thoughtful and pointed on how we encourage our customer to shop with us and using less sort of overarching blunt instruments and more pointed brand-accretive promotions to drive the business. And we see that as our path forward.

Great. Thanks, Greg. Thanks, Kara. And thanks, everyone, for joining us today. We hope you all have a happy Thanksgiving, and thank you for your interest in L Brands.

This concludes today's conference call. You may now disconnect.