Bath & Body Works, Inc. (NYSE:BBWI) Q2 2023 Earnings Conference Call August 23, 2023 9:00 AM ET

Company Participants

Heather Hollander - Vice President, Investor Relations

Gina Boswell - Chief Executive Officer

Julie Rosen - President, Retail

Eva Boratto - Chief Financial Officer

Conference Call Participants

Kate McShane - Goldman Sachs

Alex Straton - Morgan Stanley

Ike Boruchow - Wells Fargo

Dana Telsey - the Telsey Group

Matthew Boss - JPMorgan

Lorraine Hutchinson - Bank of America

Adrienne Yih - Barclays

Olivia Tong - Raymond James

Operator

Good morning. My name is Ted, and I will be your conference operator today. At this time, I would like to welcome everyone to the Bath & Body Works Second Quarter 2023 Earnings Conference Call. Please be advised that today’s conference is being recorded. [Operator Instructions]

I will now turn the call over to Ms. Heather Hollander, Vice President, Investor Relations at Bath & Body Works. Heather, you may begin.

Heather Hollander

Thank you. Good morning. And welcome to Bath & Body Works’ second quarter 2023 earnings conference call.

Today’s call may contain forward-looking statements related to future events and expectations. Please refer to this morning’s press release and the risk factors in Bath & Body Works’ 2022 Form 10-K for factors that could cause the actual results to differ materially from these forward-looking statements.

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.

Joining me on the call today are Gina Boswell, Chief Executive Officer; Julie Rosen, President, Retail; and Eva Boratto, Chief Financial Officer.

I will now turn the call over to Gina.

Gina Boswell

Thank you, Heather, and good morning, everyone. Thank you for joining us today. Before I discuss our performance and progress in the quarter, I’d like to thank our teams for consistently delivering terrific service to our customers, remaining agile in a dynamic environment and executing on our strategic initiatives.

We are also very pleased to have welcomed Eva Boratto as Bath & Body Works new CFO at the beginning of this month. She is a seasoned executive with over three decades of financial, operational and retail experience, and she’s already hit the ground running. You will, of course, hear from Eva on today’s call.

Now moving on to our second quarter results. Net sales were in line with our expectations, declining 3.6% compared to the prior year. Adjusted diluted earnings per share of $0.40 were better than planned, with the majority of the outperformance driven by the benefits of our cost optimization initiative, increased average unit retail or AUR and improved merchandise margin. In fact, year-over-year merchandise margin rate increased modestly for the first time in nine quarters.