Bath & Body Works, Inc.
For the period ended May 2, 2026. Filed May 27, 2026.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
May 2, 2026 · Filed May 27, 2026
BBWI$21.36-3.3%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-11-01; filed 2025-11-20.
0000701985-25-000035
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-05-02; filed 2026-05-27.
0000701985-26-000014
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 138 previous paragraphs and 109 current paragraphs.
47 unchanged; 46 reworded; 16 added; 37 removed; 8 previous and 0 current paragraphs rearranged.
Tables are not compared: 18 previous and 14 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (16)
Current report
Consumer First Formula
Current report
Macroeconomic Factors
Current report
During the first quarter, the conflict between U.S. and Iran escalated and expanded to include much of the Middle East region. This has led to transportation restrictions in the region, resulting in volatility in global energy markets, commodities pricing, transportation costs and foreign currency exchange rates. These recent events have increased global economic uncertainty and may affect consumer demand in certain markets and contribute to higher global inflation and input costs.
Current report
IEEPA Tariff Refunds
Current report
In February 2026, the U.S. Supreme Court issued a decision invalidating tariffs imposed under the International Emergency Economic Powers Act (“IEEPA”). In March 2026, the U.S. Court of International Trade ordered U.S. Customs and Border Protection (“CBP”) to liquidate all non-final entries without regard to IEEPA duties. Additionally, in April 2026, CBP launched Phase 1 of the new Consolidated Administration and Processing of Entries tool in the Automated Commercial Environment portal, creating a process for submitting IEEPA refund claims.
Current report
As of May 2, 2026, we had not recognized the effect of any potential refunds as the timing and amount of any potential refunds for previously collected tariffs was uncertain and may be subject to further legal and regulatory developments.
Current report
(a)In the first quarter of 2026, we recognized an $88 million pre-tax gain ($66 million after tax) as a reduction to General, Administrative and Store Operating Expenses, related to cash proceeds received, net of legal fees, for favorable settlements of payment card interchange fee litigation.
Current report
(b)In the first quarter of 2026, we recognized aggregate pre-tax costs of $8 million ($6 million after tax), primarily included in General, Administrative and Store Operating Expenses, resulting from business transformation activities in connection with the Consumer First Formula.
Current report
(c)In the first quarter of 2026, we recognized an $8 million pre-tax loss ($6 million after tax) in Other Income, Net, related to the repurchase and early extinguishment of outstanding debt. For additional information, see Note 7, “Long-term Debt and Borrowing Facility” included in Part 1, Item 1. Financial Statements.
Current report
(e)In the first quarter of 2026, we recognized a $62 million tax benefit associated with the resolution of certain tax matters. For additional information, see Note 6, “Income Taxes” included in Part 1, Item 1. Financial Statements.
Current report
First Quarter of 2026 Compared to the First Quarter of 2025
Current report
(b)Results include royalties associated with franchised stores, as well as international and domestic wholesale sales.
Current report
For the first quarter of 2026, our total General, Administrative and Store Operating Expenses were $356 million, which decreased $81 million compared to the first quarter of 2025, and the rate (expressed as a percentage of Net Sales) was 25.9%, which decreased from 30.7% in the first quarter of 2025. Our General, Administrative and Store Operating Expenses and rate both decreased primarily driven by an $88 million pre-tax gain, recorded as a reduction to Selling Expenses, related to cash proceeds received, net of legal fees, for favorable settlements of payment card interchange fee litigation. The first quarter of 2026 rate also reflects deleverage due to the Net Sales decline.
Current report
In 2026, we continue to expect to invest approximately $270 million in capital expenditures, focused on high return real estate, Consumer First Formula investments, largely related to product assortment, and logistics and fulfillment upgrades.
Current report
Net cash used for financing activities during the first quarter of 2026 was $335 million, primarily consisting of $289 million for the early extinguishment of the outstanding 2027 Notes and dividend payments of $0.20 per share, or $40 million.
Current report
We did not repurchase any shares of our common stock during the first quarter of 2026.
Removed paragraphs (37)
Previous report
Our third quarter results were below expectations and the trends we experienced at the end of the third quarter have continued into the fourth quarter. We believe that macro consumer sentiment is weighing on our consumers’ purchase intent and that the holiday season is shaping up to be highly competitive. While the consumer environment is challenging, we continue to underperform in the sector and are focused on addressing the issues that we can control to return to growth. Guided by feedback and insights from consumers, we performed a disciplined, end-to-end review of every aspect of our business: product, brand, digital, stores, operations and talent. As a result of our comprehensive review, we are announcing a holistic growth plan to revitalize the business across brand, product and marketplace. We are committed to taking actions we believe are necessary to position the business for sustainable long-term growth.
Previous report
Transformation Plan
Previous report
•Create Disruptive and Innovative Product: We will focus on reestablishing product leadership by creating innovative offerings focused on our core categories of body care, home fragrance, soaps and sanitizers.
Previous report
•Reignite the Brand: We will work to reclaim our position as a cultural leader through bolder, more targeted brand moments and deeper creator advocacy.
Previous report
•Win in the Marketplace: We plan to acquire new consumers by meeting them where they are. We will continue to enhance our digital and in-store experiences, while expanding into new wholesale channels and marketplaces.
Previous report
•Operate with Speed and Efficiency: We will work to transform Bath & Body Works to be a faster and more efficient organization. We have plans to deliver $250 million in cost savings over the next two years. These savings will be used to invest in revenue-generating initiatives across product and brand.
Previous report
Tariffs
Previous report
We continue to monitor the impact of tariffs on shifting trading policies and related market disruptions and believe our vertically integrated, predominantly U.S. based supply chain positions us well to compete in the current environment. We believe we have the ability to mitigate incremental costs over time through strategic sourcing, operational efficiencies and other targeted initiatives. Continued changes in trade policies and disruptions could have substantial impacts on the global economy and may magnify the impact of the risks to our business described in our Annual Report on Form 10-K.
Previous report
(a)In the second quarter of 2025, we recognized pre-tax costs of $15 million (after-tax costs of $14 million) due to the transition of certain members of the leadership team, primarily related to severance benefits.
Previous report
(b)In the third quarter of 2025, we recognized a pre-tax gain of $8 million (after-tax gain of $6 million) related to the sale of a non-core asset.
Previous report
(c)In the second quarter of 2024, we sold our investments in Easton Town Center and Easton Gateway, resulting in an aggregate pre-tax gain of $39 million (after-tax gain of $25 million). For additional information, see Note 1, “Description of Business and Basis of Presentation” included in Part I, Item 1. Financial Statements.
Previous report
Third Quarter of 2025 Compared to the Third Quarter of 2024
Previous report
For the third quarter of 2025, our total General, Administrative and Store Operating Expenses were $497 million, which increased $15 million compared to the third quarter of 2024, and the rate (expressed as a percentage of Net Sales) was 31.2%, which increased from 30.0% in the third quarter of 2024. The main driver in these results were Selling Expenses, which increased primarily due to higher payroll related costs, driven by new stores and investments in wages, and higher healthcare costs.
Previous report
The General, Administrative and Store Operating Expense rate increased primarily due to the higher Selling Expenses and deleverage on lower Net Sales.
Previous report
Results of Operations
Previous report
Year-to-Date 2025 Compared to Year-to-Date 2024
Previous report
For year-to-date 2025, Operating Income was $527 million, which decreased $61 million compared to year-to-date 2024, and the Operating Income rate (expressed as a percentage of Net Sales) was 11.5%, which decreased from 13.0% year-to-date 2024. The drivers of the year-to-date Operating Income results are discussed in the following sections.
Previous report
Net Sales
Previous report
The following table provides Net Sales for year-to-date 2025 in comparison to year-to-date 2024:
Previous report
For year-to-date 2025, total Net Sales were $4.567 billion and increased $47 million, or 1.1%, compared to year-to-date 2024. Stores Net Sales increased $104 million, or 3.0%, primarily driven by an increase in transactions due to new store growth and an increase in BOPIS fulfilled orders. Direct Net Sales decreased $64 million, or 7.3%, driven by a decline in fulfilled orders, which was primarily due to our customers continuing to select our BOPIS option, partially offset by an increase in average order size. International Net Sales increased $7 million, or 3.5%, compared to year-to-date 2024.
Previous report
Gross Profit
Previous report
For year-to-date 2025, our Gross Profit was $1.945 billion, which increased $12 million compared to year-to-date 2024, and our Gross Profit rate (expressed as a percentage of Net Sales) was 42.6%, which decreased from 42.8% year-to-date 2024. Gross Profit dollars increased due to the higher Net Sales and lower Buying and Occupancy Expenses, which benefited from exiting a third-party fulfillment center in the first quarter, partially offset by a decline in the merchandise margin rate, primarily driven by tariffs.
Previous report
The Gross Profit rate decreased due to the lower merchandise margin rate, partially offset by the decline in Buying and Occupancy Expenses.
Previous report
For year-to-date 2025, our total General, Administrative and Store Operating Expenses were $1.418 billion, which increased $73 million compared to year-to-date 2024, and the rate (expressed as a percentage of Net Sales) was 31.0%, which increased from 29.8% year-to-date 2024. Selling Expenses increased primarily due to higher payroll related costs, mainly driven by investments in wages and new stores, and higher healthcare costs. General and Administrative Expenses increased primarily due to $15 million of costs related to the transition of certain members of the leadership team, primarily related to severance benefits, as well as associate wages.
Previous report
The General, Administrative and Store Operating Expense rate increased primarily due to the increase in payroll related costs, leadership transition costs and higher healthcare costs, as well as incremental investments in marketing.
Previous report
Other Income and Expenses
Previous report
Interest Expense
Previous report
Other Income, Net
Previous report
For year-to-date 2025, our Other Income, Net was $25 million, compared to $65 million for year-to-date 2024. In year-to-date 2025, Other Income, Net included an $8 million pre-tax gain on the sale of a non-core asset. In year-to-date 2024, Other Income, Net included an aggregate $39 million pre-tax gain on sales of certain Easton investments and the recognition of a $3 million pre-tax loss on extinguishment of outstanding notes. The remaining decrease is primarily due to lower interest income on invested cash in year-to-date 2025.
Previous report
Provision for Income Taxes
Previous report
We are committed to driving sustainable, long-term, profitable growth through strategic investments in the business. To support this, we are currently planning for capital expenditures of approximately $240 million in 2025, with a focus on real estate and technology.
Previous report
Net cash used for financing activities for year-to-date 2024 was $710 million, primarily consisting of $349 million for share repurchases, $202 million for open market debt repurchases, dividend payments of $0.60 per share, or $134 million and $16 million of tax payments related to share-based awards.
Previous report
The January 2024 Program had $139 million of remaining authority as of February 1, 2025 and $191 million as of November 2, 2024. There were share repurchases of $1 million as of February 1, 2025 and November 2, 2024 reflected in Accounts Payable on the Consolidated Balance Sheets.
Previous report
The following table provides details of the outstanding principal amounts of senior notes repurchased and extinguished during year-to-date and full year of 2024:
Previous report
In May 2025, we entered into an amendment and restatement (“Amendment”) of the ABL Facility. The Amendment removed the interest rate credit spread adjustment of 0.10%, extended the expiration date from August 2026 to May 2030 and included certain other technical amendments.
Previous report
(c)Includes amounts due to non-Guarantor subsidiaries of $48 million as of November 1, 2025.
Previous report
In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-09, Improvements to Income Tax Disclosures, which requires enhanced income tax disclosures, primarily related to standardization and disaggregation of rate reconciliation categories and income taxes paid by jurisdiction. This standard is effective for fiscal years beginning after December 15, 2024, with early adoption permitted, and may be applied either prospectively or retrospectively. We are currently evaluating the impact of adopting this standard on our disclosures.
Reworded paragraphs (46)
Previous wording
In the third quarter of 2025, total Net Sales were $1.594 billion, which decreased $16 million, or 1.0%, compared to the third quarter of 2024. Total North American Net Sales decreased $20 million, primarily due to the decrease in average dollar sales, partially offset by a modest increase in transactions, and International Net Sales increased $4 million. Our third quarter Operating Income was $161 million, which decreased $57 million, or 26.1%, compared to the third quarter of 2024, and our Operating Income rate (expressed as a percentage of Net Sales) decreased to 10.1% from 13.5%. The Operating Income results were due to declines in both the Gross Profit rate and Net Sales, as well as an increase in General, Administrative and Store Operating Expenses.
Current wording
In the first quarter of 2026, total Net Sales were $1,378 million, which decreased $46 million, or 3.2%, compared to the first quarter of 2025. Total North American Net Sales decreased $52 million, primarily due to decrease in transactions, partially offset by an increase in average dollar sales, and International and Other Net Sales increased $6 million. Our first quarter Operating Income was $231 million, which increased $22 million, or 10.4%, compared to the first quarter of 2025, and our Operating Income rate (expressed as a percentage of Net Sales) increased to 16.8% from 14.7%. The Operating Income results were primarily due to lower General, Administrative and Store Operating Expenses as a result of an $88 million pre-tax gain related to settlements of payment card interchange fee litigation, partially offset by declines in both Net Sales and the Gross Profit rate.
Previous wording
For additional information related to our third quarter 2025 financial performance, see “Results of Operations.”
Current wording
For additional information related to our first quarter 2026 financial performance, see “Results of Operations.”
Previous wording
Our transformation plan, The Consumer First Formula, invests behind our four largest revenue driving opportunities to attract new, younger customers to the brand and unlock our next era of growth:
Current wording
In 2025, we launched the Consumer First Formula, our multi-year, comprehensive transformation plan to revitalize Bath & Body Works across brand, product and marketplace. The Consumer First Formula invests behind our largest revenue driving opportunities to try to attract new, younger consumers to the brand, which we expect will help us unlock our next era of sustainable growth. Early consumer response is consistent with our roadmap, and we expect the impact to build through the year and become more visible to consumers and in our financials as we move throughout the remainder of 2026 and into 2027.
Previous wording
In addition to our results provided in accordance with GAAP above and throughout this Quarterly Report on Form 10-Q, provided below are non-GAAP measures that presents Operating Income, Net Income and Net Income Per Diluted Share for the third quarters of and year-to-date 2025 and 2024 on an adjusted basis to remove certain items. We believe that these items are not indicative of our operations due to their size and nature.
Current wording
In addition to our results provided in accordance with GAAP above and throughout this Quarterly Report on Form 10-Q, provided below are non-GAAP measures that present Operating Income, Net Income and Net Income per Diluted Share for the first quarter of 2026 on an adjusted basis, which removes certain items. We believe that these items are not indicative of our operations due to their size and nature. We did not make any adjustments to our reported results in the first quarter of 2025.
Previous wording
We use adjusted financial information as key performance measures for the purpose of evaluating performance internally. These non-GAAP measures are not intended to replace the presentation of our financial results in accordance with GAAP. Instead, we believe that the presentation of adjusted financial information provides additional information to investors to facilitate the comparison of past and present operations. Further, our definitions of adjusted financial information may differ from similarly titled measures used by other companies.
Current wording
We use adjusted financial information as key performance measures for the purpose of evaluating performance internally. These non-GAAP measures are not intended to replace the presentation of our financial results in accordance with GAAP. Instead, we believe that the presentation of adjusted financial information provides additional information to investors to facilitate the comparison of past and present operations. Further, our definitions of adjusted financial information may differ from similarly titled measures used by other companies. The table below reconciles our GAAP financial measures to our non-GAAP financial measures:
Previous wording
(d)In the second quarter of 2024, we recognized a $44 million tax benefit related to the release of a valuation allowance on a deferred tax asset.
Current wording
(d)In the first quarter of 2026, we recognized a $3 million pre-tax gain ($3 million after tax) in Other Income, Net, related to the sale of a non-core asset.
Previous wording
The following table compares Company-operated U.S. store data for the third quarters of and year-to-date 2025 and 2024:
Current wording
The following table compares Company-operated store data for the first quarters of 2026 and 2025:
Previous wording
The following table represents Company-operated store activity for year-to-date 2025:
Current wording
The following table represents Company-operated store activity for the first quarter of 2026:
Previous wording
The following table represents Partner-operated store activity for year-to-date 2025:
Current wording
The following table represents Partner-operated store activity for the first quarter of 2026:
Previous wording
The following table provides Net Sales for the third quarter of 2025 in comparison to the third quarter of 2024:
Current wording
The following table provides Net Sales for the first quarter of 2026 in comparison to the first quarter of 2025:
Previous wording
(a)Results include fulfilled buy online pick up in store (“BOPIS”) orders.
Current wording
(a)Results include fulfilled buy online pick up in store orders.
Previous wording
For the third quarter of 2025, total Net Sales were $1.594 billion and decreased $16 million, or 1.0%, compared to the third quarter of 2024. Direct Net Sales decreased $22 million, or 7.0%, driven by a decline in fulfilled orders, which was primarily due to our customers continuing to select our BOPIS option (which are recognized as Store Net Sales), partially offset by an increase in average order size. Stores Net Sales increased $2 million, or 0.2%, driven by an increase in transactions due to new store growth and an increase in BOPIS fulfilled orders, mostly offset by a decrease in average dollar sales. International Net Sales increased $4 million, or 6.1%, compared to the third quarter of 2024.
Current wording
For the first quarter of 2026, total Net Sales were $1,378 million and decreased $46 million, or 3.2%, compared to the first quarter of 2025. Stores Net Sales decreased $48 million, or 4.3%, driven by a decrease in transactions partially offset by an increase in average dollar sales. Direct Net Sales decreased $4 million, or 1.5%, primarily driven by lower shipping and handling revenue partially offset by an increase in orders and average order size. International and Other Net Sales increased $6 million, or 9.0%, compared to the first quarter of 2025.
Previous wording
For the third quarter of 2025, our Gross Profit was $658 million, which decreased $42 million compared to the third quarter of 2024, and our Gross Profit rate (expressed as a percentage of Net Sales) was 41.3%, which decreased from 43.5% in the third quarter of 2024. Gross Profit dollars decreased due to a decline in the merchandise margin rate, driven by tariffs and increased promotional activity to clear seasonal inventory, and the decline in Net Sales, partially offset by a decline in Buying and Occupancy Expenses, which benefited from exiting a third-party fulfillment center in the first quarter.
Current wording
For the first quarter of 2026, our Gross Profit was $587 million, which decreased $59 million compared to the first quarter of 2025, and our Gross Profit rate (expressed as a percentage of Net Sales) was 42.6%, which decreased from 45.4% in the first quarter of 2025. Gross Profit dollars decreased due to a decline in the merchandise margin rate, primarily driven by tariffs, inflation and crude oil impacts as well as category mix, and the decline in Net Sales.
Previous wording
The Gross Profit rate decreased due to the lower merchandise margin rate, partially offset by the decline in Buying and Occupancy Expenses.
Current wording
The Gross Profit rate decreased primarily due to the lower merchandise margin rate and Buying and Occupancy Expenses deleverage on lower Net Sales.
Previous wording
The following table provides detail for our General, Administrative and Store Operating Expenses for the third quarter of 2025 compared to the third quarter of 2024:
Current wording
The following table provides detail for our General, Administrative and Store Operating Expenses for the first quarter of 2026 compared to the first quarter of 2025:
Previous wording
The following table provides the average daily borrowings and average borrowing rates for the third quarters of 2025 and 2024:
Current wording
The following table provides the average daily borrowings and average borrowing rates for the first quarters of 2026 and 2025:
Previous wording
For the third quarter of 2025, our Interest Expense was $68 million, compared to $77 million in the third quarter of 2024. The decrease was due to lower average daily borrowings and borrowing rate, which were driven by the early extinguishment of outstanding notes in the fourth quarter of fiscal year 2024.
Current wording
For the first quarter of 2026, our Interest Expense was $69 million, compared to $71 million in the first quarter of 2025. The decrease was due to lower average daily borrowings and borrowing rate, which were driven by the early extinguishment of the outstanding 2027 Notes in the first quarter of fiscal year 2026.
Previous wording
For the third quarter of 2025, our Other Income, Net was $10 million, compared to $4 million in the third quarter of 2024. The increase was primarily due to an $8 million pre-tax gain on the sale of a non-core asset in the third quarter of 2025.
Current wording
For the first quarter of 2026, our Other Income, Net was $4 million, compared to $8 million in the first quarter of 2025. The decrease is primarily due to an $8 million pre-tax loss related to the early extinguishment of the outstanding 2027 Notes partially offset by a $3 million pre-tax gain related to the sale of a non-core asset recognized in the first quarter of 2026.
Previous wording
For the third quarter of 2025, our effective tax rate was 25.3% compared to 26.7% in the third quarter of 2024. The 2025 third quarter rate was consistent with our combined estimated federal and state statutory rates. The 2024 third quarter rate was higher than our combined estimated federal and state statutory rates primarily due to accrued interest expense related to unrecognized tax benefits.
Current wording
For the first quarter of 2026, our effective tax rate was (10.1%) compared to 28.4% in the first quarter of 2025. The 2026 first quarter rate was lower than our combined estimated federal and state statutory rates primarily due to the resolution of certain tax matters. The 2025 first quarter rate was higher than our combined estimated federal and state statutory rates primarily due to accrued interest expense related to unrecognized tax benefits.
Previous wording
Liquidity, or access to cash, is an important factor in determining our financial stability. We are committed to maintaining adequate liquidity. Cash generated from our operating activities provides the primary resources to support current operations, growth initiatives, seasonal funding requirements, future common stock and debt repurchases and capital expenditures. Our cash provided from operations is impacted by our net income and working capital changes. Our net income is impacted by, among other things, sales volume, seasonal sales patterns, success of new product introductions and product and market expansions, profit margins, income taxes and inflationary pressures. Typically, our sales are highest during the fourth quarter of the fiscal year due to seasonal and holiday-related sales patterns. Generally, our need for working capital peaks during the summer and fall months as inventory builds in anticipation of the holiday period. Our cash and cash equivalents held by foreign subsidiaries were $44 million as of November 1, 2025.
Current wording
Liquidity, or access to cash, is an important factor in determining our financial stability. We are committed to maintaining adequate liquidity. Cash generated from our operating activities provides the primary resources to support current operations, growth initiatives, seasonal funding requirements, future common stock and debt repurchases and capital expenditures. Our cash provided from operations is impacted by our net income and working capital changes. Our net income is impacted by, among other things, sales volume, seasonal sales patterns, success of new product introductions and product and market expansions, profit margins, income taxes and inflationary pressures. Typically, our sales are highest during the fourth quarter of the fiscal year due to seasonal and holiday-related sales patterns. Generally, our need for working capital peaks during the summer and fall months as inventory builds in anticipation of the holiday period. Our cash and cash equivalents held by foreign subsidiaries were $226 million as of May 2, 2026.
Previous wording
We repurchased 11.450 million shares of our common stock for $343 million during year-to-date 2025. We may, from time to time, repurchase, or otherwise retire, additional shares of our common stock or debt, as applicable.
Current wording
During the first quarter of 2026, we repurchased and extinguished $284 million principal amount of our outstanding senior notes for a repurchase price of $289 million. We may, from time to time, repurchase, or otherwise retire, additional debt or shares of our common stock, as applicable.
Previous wording
The following table provides a summary of our cash flow activity during year-to-date 2025 and 2024:
Current wording
The following table provides a summary of our cash flow activity during the first quarters of 2026 and 2025:
Previous wording
Net cash used for operating activities for year-to-date 2024 was $69 million, including net income of $345 million. Net income included depreciation of $211 million, impacts to deferred income taxes of $103 million, an aggregate pre-tax gain on sales of certain Easton investments of $39 million, and share-based compensation expense of $31 million. Other changes in assets and liabilities represent items that had a current period cash flow impact, such as changes in working capital. The most significant items in working capital were the seasonal changes in Inventories (and related increases in Accounts Payable) as we build our inventory levels in anticipation of the holiday season, and Income Taxes Payable, due to seasonal tax payments.
Current wording
Net cash provided by operating activities for the first quarter of 2026 was $244 million, including net income of $183 million. Net income included $88 million received related to settlements of payment card interchange fee litigation, a $62 million tax benefit related to the resolution of certain tax matters, depreciation expense of $61 million, share-based compensation expense of $8 million and loss on extinguishment of debt of $8 million. Other changes in assets and liabilities represent items that had a current period cash flow impact, such as changes in working capital. The most significant items in working capital were the seasonal changes in Inventories and Accounts Receivable.
Previous wording
Net cash provided by operating activities for year-to-date 2025 was $225 million, including net income of $246 million. Net income included depreciation of $191 million and share-based compensation expense of $25 million. Other changes in assets and liabilities represent items that had a current period cash flow impact, such as changes in working capital. The most significant items in working capital were the seasonal changes in Inventories (and related increases in Accounts Payable) as we build out inventory levels in anticipation of the holiday season, which generates a substantial portion of our operating cash flow for the year, and Income Taxes Payable, due to seasonal tax payments. In addition, Accounts Payable, Accrued Expenses and Other provided a cash flow benefit due to our efforts to improve working capital.
Current wording
Net cash provided by operating activities in the first quarter of 2025 was $188 million, including net income of $105 million. Net income included depreciation expense of $64 million and share-based compensation expense of $10 million. Other changes in assets and liabilities represent items that had a current period cash flow impact, such as changes in working capital. The most significant items in working capital were the seasonal changes in Inventories and Accounts Receivable.
Previous wording
Net cash used for investing activities for year-to-date 2025 was $167 million, primarily related to capital expenditures of $174 million partially offset by cash proceeds of $9 million related to the sale of a non-core asset. The capital expenditures included approximately $105 million related to new off-mall stores and remodels of existing stores, approximately $35 million for various technology projects primarily to support the growth and profitability of our business and approximately $15 million related to distribution and logistics capabilities.
Current wording
Net cash used for investing activities for the first quarter of 2026 was $42 million, primarily related to capital expenditures of $49 million partially offset by cash proceeds of $8 million related to the sale of a non-core asset. The capital expenditures included approximately $30 million related to new off-mall stores and remodels of existing stores, approximately $10 million for various technology projects primarily to support the growth and profitability of our business and approximately $10 million related to supply chain and logistics capabilities.
Previous wording
Net cash used for investing activities for year-to-date 2024 was $114 million primarily related to capital expenditures of $166 million, partially offset by aggregate cash proceeds, net of fees, of $40 million related to the sales of certain Easton investments. The capital expenditures included approximately $115 million related to new, primarily off-mall, stores and remodels of existing stores, approximately $30 million for various technology projects primarily to support the growth and profitability of our business and approximately $20 million related to distribution and logistics capabilities.
Current wording
Net cash used for investing activities in the first quarter of 2025 was $39 million, primarily related to capital expenditures. The capital expenditures included approximately $25 million related to new off-mall stores and remodels of existing stores and approximately $10 million for various technology projects primarily to support the growth and profitability of our business.
Previous wording
Net cash used for financing activities during year-to-date 2025 was $497 million, primarily consisting of $344 million for share repurchases and dividend payments of $0.60 per share, or $126 million.
Current wording
Net cash used for financing activities in the first quarter of 2025 was $188 million, primarily consisting of $136 million for share repurchases and dividend payments of $0.20 per share, or $43 million.
Previous wording
Under the authority of our Board of Directors, we repurchased shares of our common stock under the following repurchase programs during year-to-date 2025 and 2024:
Current wording
Under the authority of our Board of Directors, we repurchased shares of our common stock under the following repurchase programs during the first quarter of 2025:
Previous wording
On February 27, 2025, we cancelled the remaining $121 million authorization available under the January 2024 Program and began repurchasing shares under the January 2025 Program. There were no share repurchases reflected in Accounts Payable on the November 1, 2025 Consolidated Balance Sheet. The January 2025 Program had $174 million of remaining authority as of November 1, 2025.
Current wording
On February 27, 2025, we cancelled the remaining $121 million authorization available under the January 2024 Program and began repurchasing shares under the January 2025 Program. The January 2025 Program had $117 million of remaining authority as of May 2, 2026.
Previous wording
We paid the following dividends during the first, second and third quarters of 2025 and 2024:
Current wording
We paid the following dividends during the first quarters of 2026 and 2025:
Previous wording
In November 2025, we declared our fourth quarter 2025 ordinary dividend of $0.20 per share payable on December 5, 2025 to shareholders of record at the close of business on November 21, 2025.
Current wording
In May 2026, we declared our second quarter 2026 ordinary dividend of $0.20 per share payable on June 19, 2026 to shareholders of record at the close of business on June 5, 2026.
Previous wording
The following table provides our outstanding Long-term Debt balances, net of unamortized debt issuance costs and discounts, as of November 1, 2025, February 1, 2025 and November 2, 2024:
Current wording
The following table provides our outstanding debt balances, net of unamortized debt issuance costs and discounts, as of May 2, 2026, January 31, 2026 and May 3, 2025:
Previous wording
Cash paid for interest was $181 million and $217 million for year-to-date 2025 and 2024, respectively.
Current wording
Cash paid for interest was $82 million and $77 million for the first quarters of 2026 and 2025, respectively.
Previous wording
We did not repurchase any outstanding senior notes during the third quarter of 2024. For year-to-date 2024, we repurchased in the open market and extinguished $200 million principal amounts of our outstanding senior notes. The aggregate repurchase price for these notes was $202 million, resulting in a pre-tax loss of $3 million, including the write-off of unamortized issuance costs. This loss is included in Other Income, Net in the year-to-date 2024 Consolidated Statement of Income.
Current wording
During the first quarter of 2026, we completed a make-whole call to repurchase the remaining $284 million principal amounts of our outstanding 2027 Notes. The repurchase price for these notes was $289 million, resulting in a pre-tax loss of $8 million, net of the write-off of unamortized discounts and issuance costs. This loss is included in Other Income, Net in the first quarter of 2026 Consolidated Statement of Income.
Previous wording
We did not repurchase any outstanding senior notes during the third quarter of and year-to-date 2025.
Current wording
We did not repurchase any outstanding senior notes during the first quarter of 2025.
Previous wording
We and certain of our 100% owned subsidiaries guarantee and pledge collateral to secure the ABL Facility. The ABL Facility, which allows borrowings and letters of credit in U.S. and Canadian dollars, has aggregate commitments of $750 million.
Current wording
We and certain of our 100% owned subsidiaries guarantee and pledge collateral to secure the ABL Facility. The ABL Facility, which allows borrowings and letters of credit in U.S. and Canadian dollars, has aggregate commitments of $750 million and an expiration date in May 2030.
Previous wording
Availability under the ABL Facility is the lesser of (i) the borrowing base, determined primarily based on our eligible U.S. and Canadian credit card receivables, accounts receivable, inventory and eligible real property, or (ii) the aggregate commitment. If at any time the outstanding amount under the ABL Facility exceeds the lesser of (i) the borrowing base and (ii) the aggregate commitment, we are required to repay the outstanding amounts under the ABL Facility to the extent of such excess. As of November 1, 2025, our borrowing base was in excess of the aggregate commitments of $750 million, and we had no borrowings outstanding under the ABL Facility.
Current wording
Availability under the ABL Facility is the lesser of (i) the borrowing base, determined primarily based on our eligible U.S. and Canadian credit card receivables, accounts receivable, inventory and eligible real property, or (ii) the aggregate commitment. If at any time the outstanding amount under the ABL Facility exceeds the lesser of (i) the borrowing base and (ii) the aggregate commitment, we are required to repay the outstanding amounts under the ABL Facility to the extent of such excess. As of May 2, 2026, our borrowing base was $554 million, and we had no borrowings outstanding under the ABL Facility.
Previous wording
The ABL Facility supports our letter of credit program. We had $9 million of outstanding letters of credit as of November 1, 2025 that reduced our availability under the ABL Facility. As of November 1, 2025, our availability under the ABL Facility was $741 million.
Current wording
The ABL Facility supports our letter of credit program. We had $9 million of outstanding letters of credit as of May 2, 2026 that reduced our availability under the ABL Facility. As of May 2, 2026, our availability under the ABL Facility was $544 million.
Previous wording
Certain of our subsidiaries, which are listed on Exhibit 22 to this Quarterly Report on Form 10-Q, have guaranteed our obligations under the 2027 Notes, 2028 Notes, 2029 Notes, 2030 Notes, 2035 Notes and 2036 Notes (collectively, the “Notes”).
Current wording
Certain of our subsidiaries, which are listed on Exhibit 22 to this Quarterly Report on Form 10-Q, have guaranteed our obligations under the 2028 Notes, 2029 Notes, 2030 Notes, 2035 Notes and 2036 Notes (collectively, the “Notes”).
Previous wording
(a)Includes amounts due from non-Guarantor subsidiaries of $607 million and $572 million as of November 1, 2025 and February 1, 2025, respectively.
Current wording
(a)Includes amounts due from non-Guarantor subsidiaries of $617 million and $596 million as of May 2, 2026 and January 31, 2026, respectively.
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Rearranged previous paragraphs (8)
Previous report — wording carried elsewhere
The table below reconciles our GAAP financial measures to our non-GAAP financial measures:
Previous report — wording carried elsewhere
(a)Results include fulfilled BOPIS orders.
Previous report — wording carried elsewhere
General, Administrative and Store Operating Expenses
Previous report — wording carried elsewhere
The following table provides detail for our General, Administrative and Store Operating Expenses for year-to-date 2025 compared to year-to-date 2024:
Previous report — wording carried elsewhere
The following table provides the average daily borrowings and average borrowing rates for year-to-date 2025 and 2024:
Previous report — wording carried elsewhere
For year-to-date 2025, our Interest Expense was $208 million, compared to $236 million for year-to-date 2024. The decrease was due to lower average daily borrowings and borrowing rate, which were driven by the early extinguishment of outstanding notes in fiscal year 2024.
Previous report — wording carried elsewhere
For year-to-date 2025, our effective tax rate was 28.5% compared to 17.2% for year-to-date 2024. The 2025 year-to-date rate was higher than our combined estimated federal and state statutory rates largely due to accrued interest expense related to unrecognized tax benefits. The 2024 year-to-date rate was lower than our combined estimated federal and state statutory rates primarily due to the sales of Easton investments during the period, which resulted in the release of a valuation allowance on a deferred tax asset.
Previous report — wording carried elsewhere
In November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses, which requires disclosures of disaggregated information about certain prescribed expense categories within relevant income statement expense captions.