I think the challenge has been and will continue to be seeing the North America business continue to build into the fourth quarter, build into spring season. I think we’ve demonstrated a willingness and an ability to hold cost, and we’ve got new cost initiatives coming online here just in the fourth quarter around cost of goods that Chris and Dean and their teams have been working on. So I feel like we are right where we want to be in terms of that inflection point and seeing the flow through happen in the business as we start to see improvements in North America business. So, again, some of these initiatives are just now starting to show up in the top line and sort of flow through in the P&L, although we’ve been working on them for months.
Matthew Boss: Thanks, Ivy.
Operator: Next we’ll go to the line of Alex Shaw from Bank of America. Please go ahead.
Alex Shaw: Hi, thanks for taking my question. On your strategic focus in reclaiming the sports bra category, can you talk about how the category did in the quarter versus the market? Have there been other notable launches since the featherweight max? What is your sports bra launch calendar like, compared to your core bra launch calendar? And then just lastly, in your view, what differentiates or is most attractive about a VS sports bra versus a pure offering? Thank you.
Martin Waters: Oh, thanks for the question Alex. You know, this is a very sore subject with me. Because as the team here for me just about every day banging the table on sport. We need to be better at sport, you know one of the missteps of the Victoria’s business back in 2016, ‘17 and beyond was not participating in the sports bra market. We had back in 2015, we had 16% share of the sports bra market. Today we have 3.5% share of the sports bra market. So we’re not really in the top 10. And we’ve got to rebuild. We have got to be right at the top of that list. And that will be a multi-year endeavor. The very first meaningful change that we made was the launch of the featherweight max as you mentioned and it was very successful.
The next phase is to expand that color multipliers, line expansions and we’ll be facing into that in January and pulling forward as much sport as we can for the new year, new you momentum that there is in the market. So some more newness coming in January, but honestly the big relaunch of sport for us will be later in the year and that’s just because it takes time to make a really good product. We’re not looking to compete with tubes and with unstructured sports bralettes. That’s not where we will win. We will win by leveraging technology with the best vendors in the world. So you asked the question, why would we be good at it? Or I’m paraphrasing slightly, but what gives us confidence that we can be good at that? Well, bras is a technical product.
It’s a particularly technical product when there’s excessive movement required, and that’s what sports bras are for. We know more about bras than anybody else on the planet. We have better and longer relationships with the best manufacturers in the world. They have the access to the best technology, and they’ll give it to us first. We have access to the best raw materials. You put all of that together with our design capability. It’s a category where we should be the best. And we know we can do it because we’ve done it in our history. So for us, it’s a full court press to get after sport in the broadest sense, starting with sports spars. But I wish I could wave a magic wand and happen more quickly. It will be through the balance of 2024. And we’re taking a long-term view of the opportunity rather than just rushing to newness for the sake of newness.
So that’s probably not the answer that everybody wants, because we don’t like to click our fingers and see us be aggressive in sports bars quickly, but it will take some time to get back to full strength in that business. Hope that helps.
Alex Shaw: Very helpful. Thank you.
Operator: Next we’ll go to Irwin Boruchow from Wells Fargo. Please go ahead.
Irwin Boruchow: Hey, everyone, I’m okay. I guess two questions for TJ, or Martin actually. Just first, when we think about the improvement in comps, both digitally and in-store, and let’s take out the extra week of 4Q, when you take out Adore Me, your digital comps are down roughly high-singles, the store, the download low-doubles. Which of those channels would you expect to improve the fastest or improve the most as you guys continue to work on improving the business? Is there a reason why one channel would outperform the other? And then the second question would be, TJ, on the $250 million of COGS benefits that you have spoken to at the analyst day, can you remind us the timing of that? When will those start to flow in to the P&L? Do those start to benefit you into next year? Is there anything at this point you can talk about next year on margin as it pertains to those cost savings? Thank you very much.
Martin Waters: Good morning, Ike. You sounded surprised that the question came to you. I’m happy to take the first, and TJ, I’ll take the second. So, you know, as it relates to the difference between the two channels, and two channels is kind of an old-fashioned way of thinking about it as there are more channels emerging all the time, but let’s take it as digital and stores, you know, historically we were in a very strong position in digital we got there early. However, over the last four or five years, other people developed capabilities in digital that we didn’t have. And when this management team took over, one of the first things we identified is that we were not world-class in digital experiences. Other people were further ahead of us.
We had to catch up. Also, as you know, most of the new competition that has come to market in the last five years is digital. There aren’t many new store entrants, but there are loads of digital entrants. So the focus for us has been in the digital arena for those two reasons, stronger competition and our offering was substandard and underweight. So in building new capability our biggest area of focus is that digital channel. And we’ve been adding things like fewer clicks to get to product, removing category landing pages, visual search, shoppable video, barcode scanning, I don’t know, non-crawlable text, enhanced linking capabilities, you know, all that kind of stuff using AI-powered personalization, those sorts of things we’re getting into.
