Q: What are you learning about the quality of newer customer cohorts, including initial AUR, repeat purchases, or cross-category purchasing? A: (Elizabeth Price, Chief Marketing and Customer Officer) We are very happy with our customer file, marking the 4th straight quarter of customer growth and new customer acquisition outpacing the total file. We are using our full network of owned and paid channels to keep customers engaged. As a result, we are bringing more customers back, they are returning faster, and they are spending more when they return.

Q: As you think about the bra category where you are gaining significant share, how do you think about product introductions and pricing for Pink versus Victoria's Secret? Also, is there an opportunity for more Pink standalone stores, and what is the sustainable level of marketing investment? A: (Hillary Super, CEO) Our innovation engine is fully in gear. In July, we launched two innovationsone in Pink and one in VSgrounded in customer feedback. On the VS side, we married the balcony frame with Flex Factor technology, and on the Pink side, we launched our first new frame in over two years, which was 100% incremental. We have a full pipeline of technical and fashion innovation. Regarding stores, the SoHo Pink store is a laboratory for experimentation, and we are actively thinking about selective opportunities for more Pink standalones. On marketing, we are currently at 7% of sales and see an opportunity to drive that to high single-digits over the next couple of years.

Q: On the 9% comps in Q2, which accelerated on a two-year stack, could you speak to the cadence or July exit rate trends and elaborate on August momentum or confidence in raising back-half guidance despite tougher comparisons? A: (Hillary Super, CEO) July was incredibly strong, grounded in bra innovation across both brands. As we entered August, the VS and Pink business was largely consistent, and we saw beauty really accelerate. We have been working on four key things in beauty: our innovation pipeline (e.g., Strawberry Bizou and Shimmer integration), tapping into our archive and the nostalgia trend with "bring back fragrances," brand integration making scent part of big brand moments, and enhancing our channel experience for beauty in stores and digitally.

Q: Can you speak to North America and international top-line performance relative to internal plans in Q2, and have you seen acceleration in both regions as you cited in August? A: (Scott Skela, CFO) In Q2, we saw a mixed shift internationally with less sell-in to franchise partners, which are low-margin sales, contributing to strong flow-through. However, in the back half of Q2, international growth accelerated beyond what we had been seeing. We are lapping that in the back half, so I expect international growth to moderate a bit, but for the full year, we still forecast approximately 20% growth.

Q: The company has historically not made money in Q3, but based on your outlook, there is scope for positive operating profit. What is helping to drive that and support a more profitable business going forward despite investments? A: (Scott Skela, CFO) What is driving that is the continued strength of regular price core product sell-through. In Q2, total units were up low single-digits, but regular price units were up high single-digits. Going into Q3, we see units on AUR accelerating to mid-to-high single-digit growth. That strong flow-through is enabling us to turn profitable in Q3 despite investing more into marketing to support the fashion show and Angels Among Us.

Q: You shared that the customer file continues to grow across all segments. Could you provide more color on how new customers are performing post-acquisitionare they one-and-done or showing long-term value? A: (Elizabeth Price, Chief Marketing and Customer Officer) We are very encouraged that these customers are not one-and-done. Through our network, we are able to bring more of them back with a very strategic approach. We have tens of millions of customers and over 100 million followers across social platforms, which allows us a rich data set to market and re-market efficiently. Our app growth was up 30% last quarter on top of double-digit growth from last year.

Q: Can you speak to why back-half margin expansion flows off from the front half, including the puts and takes around gross margin and SG&A? A: (Scott Skela, CFO) In Q3, the growth forecast of 7-9% is slightly below Q1 and Q2 due to tougher comps, so leverage on B&O is less. In Q4, given the heavy promotional nature of that quarter, we don't plan promos to be down as muchwe are planning them flat to slightly down, which is a deterrent on margin expansion in the back half.

Q: Digital traffic outpaced storeswhat is your view on the role of stores, is the current fleet size right, and what are the learnings from the store of the future design? A: (Hillary Super, CEO) Digital did outpace, but our stores are outpacing the mall, making them an important competitive tool. With bras at the heart of our business, our industry-leading service and bra fitting in a personal space is unmatched. Gen Z wants a store experience even more than other groups. Store of the future continues to be more productive, and we are tweaking it based on learnings, particularly in beauty and "pinkifying" the Pink side of the business. We see opportunity to selectively grow our footprint globally and in North America.

Q: How should we think about the semiannual sale strategy going forward, and how will the increased marketing investment manifest in sales? A: (Scott Skela, CFO & Hillary Super, CEO) The semiannual sale still plays a key role in clearing units, but it is less of an event as we go forward. We see an opportunity to add newness in the back part of the event rather than having the event be the hero. We are seeing higher AURs

For the complete transcript of the earnings call, please refer to the full earnings call transcript .