Martin Waters: Yes, thanks Alex. Good question. And of course, a question we ask ourselves continuously. I’ll tell you on the, I’ll repeat what I said on the market size. So for the quarter that we just completed, the market declined at a very similar rate to the decline that we saw in Q2. So low to mid-single-digits decline. We held our share during that period. The way we see it is that we’ve seen receptivity to newness that we’ve brought into the business. And that shouldn’t be a surprise to anybody who’s followed the company for a long time. This category — our categories respond well to newness and we’ve seen that in beauty, we’ve seen it in PJs, we’ve seen it in co-bra’s, we’ve seen it in panties, we’ve seen it in novelty.
So when we get new product that resonates with the consumer, that’s the biggest single thing we can do. You asked about promotionality. Promotionality in the quarter was about the same as it was year-over-year. Our adjusted product margins were up slightly. And I will tell you that in November, we had a strong performance in November, that our margins were up slightly in November. So even though we appear to have been really quite promotional, we were more surgical and more targeted and I think the team did a really good job of managing the big moments very aggressively and preserving margin. We’ve also seen digital enhancements helping our position. So our digital business is now 35% of our total system. It was 30% last year. That’s coming from growth in our North American business with VS and PINK.
Many of the enhancements that Chris Rupp has been working on with her team. So lots and lots of digital enhancements, plus of course, the great performance from Adore Me weighing into help map with 5 points of our growth. And also, I’d be remiss if I didn’t mention store traffic. Store traffic, particularly in November, was strong for us and ahead of where mall traffic came in. So across the board, there are lots of things that are coming together to help that momentum. And perhaps most importantly, I should say, is the team. Under Greg’s leadership and Chris’s leadership and the entire leadership team, things are really starting to gel. We feel like we have the right people at the table and we’re making good choices and planning well for 2024.
Hope that helps.
Alex Straton: Yes, thanks a lot. Good luck.
Operator: Next, we’ll go to the line of Matthew Boss from JPMorgan. Please go ahead.
Matthew Boss: Great, thanks. So, Martin, what would be your best assessment, or maybe just an update on the health of the North America intimates category? Maybe what inning would you call your initiatives today? And then TJ, how best to think about the balance between driving top line relative to profitability given the elevated marketing and technology investments?
Martin Waters: All right, I think that’s three questions. I’ll take the first two. So how do I feel about the category? You know, it’s difficult to know. We were very surprised by the decline in the category that we saw in Q1 that we hadn’t seen that coming. You know, during good times and bad, the Intimates category has been very stable over the long run. So to see a high-single-digit decline in Q1 and then mid-single-digits in Q2 and Q3, it’s unusual. And I’ve talked a little bit about this at investor conference. Do we think that it’s structural, that somehow women are going to be wearing bras less often or replacing them less frequently, that there is a structural decline in the market. Have a hard time believing that, that’s so.
There is definitely some fashion trend around young women to not wear bras all the time. And there’s definitely a trend towards more sports bras and more lounge bras, less constructed bras. But none of those things I see as being structural threats to our business. I think we’re in a good position to take advantage of whatever the trends are in the market and to respond to them accordingly, whether it be with bralettes or with the rebirth of our sport business. I think innovation is the most important thing that will drive the category. And you know, as we’re the largest player in the category by some distance, it’s up to us to drive the market as a whole. And we used to do that in the old days, and we’re determined to do that in the new days.
What innings are we in, in terms of, you know, the health of the company and the rebuild of the company overall. Probably made innings, I would say. I think we’ve made good progress. We feel good about the foundational work that we’ve put in place in transforming the way in which we do business. I think we feel very good about our growth initiatives, our international business is on fire. The Adore Me business is fantastic and bodes incredibly well for the technology we can borrow from them and leverage from them. The team there are working incredibly well, so we feel really good about that. But there are so many things ahead of us. You know, we’ve only just begun the journey on personalization. We’re only just beginning to look at how AI can dramatically impact the way we go to market.
We’re only just beginning to look at how this new team and the new merchandising initiatives can show up and how the House of Victoria can come to life and how the store of the future and all the digital enhancements that we’re making can make a difference to the customer. So there’s a lot more to come for us. So I think probably my best assessment is mid-order. TJ, do you want to take the last question?
Tim Johnson: Yes, so from a top line perspective, Matt, I think, you’re building on Martin’s comments, I think, in terms of identifying the opportunities and executing against them. We are probably middle innings, as he mentioned. I think in terms of seeing the benefits start to flow through the P&L, which I think is where your question was going, I’d say from our perspective, third quarter is some of the early innings of that. So we’ve been working on a number of the initiatives throughout this year and investing in them, particularly around technology and some of the brand repositioning efforts and seeing an inflection point in third quarter in terms of growth and merchandise margin rate, seeing an inflection point in terms of the trend of the business in North America and seeing that continue on into the early holiday season, I think tells us that we’re on the right track.
