Victorias Secret Co
For the period ended May 3, 2025. Filed Jun 12, 2025.
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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 3, 2025 · Filed Jun 12, 2025
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What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-11-02; filed 2024-12-09.
0001856437-24-000033
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-05-03; filed 2025-06-12.
0001856437-25-000030
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 132 previous paragraphs and 109 current paragraphs.
41 unchanged; 45 reworded; 23 added; 42 removed; 4 previous and 0 current paragraphs rearranged.
Tables are not compared: 15 previous and 11 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 (23)
Current report
Our operating results are generally impacted by economic changes and, therefore, we monitor the retail environment using, among other things, certain key industry performance indicators including competitor performance and mall traffic data. These can provide insight into consumer spending patterns and shopping behavior in the current retail environment and assist us in assessing our performance as well as the potential impact of industry trends on our future operating results. Additionally, we evaluate a number of key performance indicators including comparable sales, gross profit, operating income and other performance metrics such as sales per average selling square foot in assessing our performance.
Current report
Victoria’s Secret & Co. operates globally recognized brands that specialize in women’s intimate, apparel, personal care and beauty products:
Current report
•Victoria’s Secret – A world-leading lingerie brand with a rich heritage of serving women worldwide.
Current report
•PINK – A vibrant fashion and lifestyle brand designated for young women, built on a strong foundation in intimates.
Current report
•Adore Me – A technology-driven, digital first brand that offers innovative, inclusive intimates for women of all sizes, budgets and lifestyles.
Current report
Together, these brands are united by a commitment to supporting women—helping them express confidence, sexiness and strength while fostering connection and community.
Current report
Net sales in the first quarter of 2025 were $1.353 billion or flat compared to the first quarter of 2024. In North America, net sales decreased 1% in the stores channel and 3% in the direct channel compared to the first quarter of 2024. In the stores channel, an increase in average unit retail (which we define as the average price per unit purchased) was offset by decreases in traffic and conversion (which we define as the percentage of customers who visit our stores and make a purchase) compared to the first quarter of 2024. In the direct channel, an increase in conversion (which we define as the percentage of customers who visit our digital sites and make a purchase) was offset by a decrease in traffic, while average unit retail remained flat compared to the first quarter of 2024. Net sales in our international channel increased 9% compared to the first quarter of 2024.
Current report
Operating income in the first quarter of 2025 decreased $6 million, to $20 million, compared to the first quarter of 2024 and our operating income rate (expressed as a percentage of net sales) was 1.5% compared to 1.9% in the first quarter of 2024. The decrease in operating income compared to the first quarter of 2024 was primarily driven by the decrease in merchandise margin dollars due to an increase in transportation costs, partially offset by the strategic shift in marketing spend from the first quarter to the second quarter.
Current report
We continue to focus on our strategic priorities: 1) Recommit to PINK; 2) Supercharge Bras; 3) Fuel Growth in Lifestyle Categories; and 4) Evolve Our Brand Projection & Go-To-Market Strategy. We are dedicated to continuous growth and operational excellence, focusing on execution of our strategic plan to drive long-term, sustainable value for our stockholders.
Current report
Tariffs and Macro Environment
Current report
We face some near-term headwinds and ongoing uncertainty in the macro environment, which we will manage aggressively. At this time, the overall impact on our business related to the newly imposed U.S. tariffs on imports from other countries, as well as additional threatened tariffs and any retaliatory measures by impacted exporting countries remains uncertain and depends on multiple factors.
Current report
Security Incident Involving Information Technology Systems
Current report
As previously announced, on May 24, 2025, subsequent to the end of the first quarter, we detected a security incident involving our information technology systems. We immediately enacted our response protocols to contain and eradicate unauthorized network access, and third-party experts were engaged. All critical systems are restored and fully operational. We continue to assess the full scope and impact of the incident. This incident has not caused a material disruption to our operations to date and we do not believe it will have a material impact to our fiscal year 2025. The investigation remains ongoing and we have incurred, and may continue to incur, expenses and other financial impacts related to this incident, which could negatively impact our future financial results.
Current report
(b)In the first quarter of 2025, we recognized pre-tax charges of $6 million ($4 million after-tax), $4 million included in general, administrative and store operating expense and $2 million included in buying and occupancy expense, related to activities to restructure our executive leadership team and other one-time expenses.
Current report
First Quarter of 2025 Compared to First Quarter of 2024
Current report
Operating Income
Current report
Net sales in the first quarter of 2025 were $1.353 billion, or flat compared to $1.359 billion in the first quarter of 2024.
Current report
The decrease in gross profit dollars was due to the decrease in merchandise margin dollars primarily driven by an increase in transportation costs and tariff-related order adjustments. The decrease in gross profit dollars was partially offset by a decrease in buying and occupancy expenses primarily driven by disciplined expense management initiatives and a decrease in rent expenses.
Current report
The gross profit rate decrease compared to the first quarter of 2024 was primarily driven by increased transportation costs and tariff-related order adjustments.
Current report
Provision for Income Taxes
Current report
Issuance of Notes
Current report
In July 2021, we issued $600 million of 4.625% notes due in July 2029 in a transaction exempt from registration under the Securities Act of 1933, as amended. The obligation to pay principal and interest on the 2029 Notes is jointly and severally guaranteed on a full and unconditional basis by certain of our wholly-owned subsidiaries. The issuance costs are being amortized through the maturity date and are included within Long-term Debt on the Consolidated Balance Sheets.
Current report
On May 21, 2025, subsequent to the end of the first quarter of 2025, we amended our ABL Facility. The amendment, among other things, (1) extends the maturity date of the ABL Facility to the earlier of (a) five years after the closing date of the amendment and (b) the date that is 91 days prior to the scheduled maturity date of certain outstanding material indebtedness with a principal balance exceeding $50 million to the extent that certain availability and financial covenant thresholds are not met on such date, (2) provides for a seasonal increase of the advance rate of eligible inventory in the borrowing base from 90.0% of the net orderly liquidation value of eligible inventory to 92.5% for a period of three consecutive fiscal months each year during our high season, (3) reduces the availability threshold for triggering the delivery of certain reporting deliverables, cash dominion and certain payment conditions, (4) reduces the applicable interest rate on borrowings under the ABL Facility (a) in the case of loans bearing interest based on Term SOFR or Term CORRA, to 1.50% to 1.75%, (b) in the case of alternate base rate loans and Canadian base rate loans, to 0.50% to 0.75% and (c) by removing the credit spread adjustment on SOFR-based borrowings and (5) replaces CDOR with Term CORRA with respect to Canadian borrowings.
Removed paragraphs (42)
Previous report
Victoria’s Secret is an iconic global brand of women’s intimate and other apparel, personal care and beauty products. We sell our products through three brands: Victoria’s Secret, PINK and Adore Me. Victoria’s Secret is a market leading global lingerie brand with a history of serving women across the globe. PINK is a fashion and lifestyle brand for young women built around a strong intimates core. We also sell beauty products under both the Victoria’s Secret and PINK brands. Adore Me is a technology-led, digital first innovative intimates brand serving women of all sizes and budgets at all phases of life. Together, Victoria’s Secret, PINK and Adore Me strive to provide the best products to help women express their confidence, sexiness and power and use our platform to create connection and community while celebrating the extraordinary diversity of women's experiences.
Previous report
In the third quarter of 2024, our net sales increased $82 million, or 7%, to $1.347 billion compared to $1.265 billion in the third quarter of 2023 and comparable sales increased 3% in the third quarter of 2024. Our North American store sales increased by 2%, or $15 million, to $738 million compared to $723 million in the third quarter of 2023, as an increase in traffic was partially offset by decreases in conversion (which we define as the percentage of customers who visit our stores and make a purchase) and average unit retail (which we define as the average price per unit purchased) compared to the third quarter of 2023. Our direct channel sales increased by 7%, or $29 million, to $411 million compared to $382 million in the third quarter of 2023, as an increase in traffic was partially offset by a decrease in average unit retail compared to the third quarter of 2023. Our operating loss improved $20 million, to $47 million, compared to an operating loss of $67 million in the third quarter of 2023, and our operating loss rate (expressed as a percentage of net sales) was (3.5%) compared to (5.3%) in the third quarter of 2023. The decrease in operating loss in the third quarter of 2024 compared to the third quarter of 2023 was primarily driven by the increase in net sales and reductions in costs related to our supply chain initiative, partially offset by the increase in promotional activity and general, administrative and store operating expenses.
Previous report
We continue to focus on our strategic priorities: 1) Accelerate Our Core; 2) Ignite Growth; and 3) Transform the Foundation. We are committed to optimizing our performance by focusing on what is within our control, and we are confident in our strategic direction and remain committed to delivering long-term sustainable value for our stockholders.
Previous report
Financial Impacts of the Adore Me Acquisition
Previous report
In the third quarter and year-to-date 2024 and 2023, we recognized the financial impact of purchase accounting items, including recognition of changes in the estimated fair value of contingent consideration and Contingent Compensation Payments and amortization of acquired intangible assets. In addition, in both the third quarter and year-to-date 2023, we recognized the financial impact of additional acquisition-related costs and recognition in gross profit of the fair value adjustment to acquired inventories that were sold in the respective period. For additional information, see Note 2, “Acquisition.”
Previous report
(c)In the third quarter of 2024, we recognized a pre-tax charge of $13 million ($11 million after-tax) in general, administrative and store operating expense related to the appointment of a new CEO and the elimination of two executive officer roles to streamline our executive leadership team. In the first quarter of 2023, we recognized a pre-tax charge of $11 million ($8 million after-tax), $8 million in general, administrative and store operating expense and $3 million in buying and occupancy expense, related to restructuring activities to reorganize and improve our organizational structure. For additional information, see Note 4, “Restructuring Activities” included in Item 1. Financial Statements.
Previous report
Third Quarter of 2024 Compared to Third Quarter of 2023
Previous report
Operating Loss
Previous report
Net sales in the third quarter of 2024 increased $82 million, or 7%, to $1.347 billion compared to $1.265 billion in the third quarter of 2023.
Previous report
The increase in gross profit dollars was primarily due to the increase in merchandise margin dollars driven by the increase in net sales and reductions in costs of goods sold related to our supply chain initiative, partially offset by the increase in promotional activity and an increase in transportation costs. Additionally, the increase in gross profit dollars compared to the third quarter of 2023 was driven by the recognition in gross profit of $7 million in the third quarter of 2023 related to the fair value step-up adjustment on the acquired inventory from Adore Me.
Previous report
The gross profit rate increase was driven by reductions in costs of goods sold related to our supply chain initiative and the expense recorded in the third quarter of 2023 as noted above, partially offset by increased promotional activity and increased transportation costs. Additionally, the gross profit rate increase was due to leverage in buying and occupancy expenses in the quarter as a result of the increase in net sales compared to the third quarter of 2023.
Previous report
Provision (Benefit) for Income Taxes
Previous report
Results of Operations
Previous report
Year-to-Date 2024 Compared to Year-to-Date 2023
Previous report
Operating Income (Loss)
Previous report
For year-to-date 2024, operating income increased $55 million, to $42 million, compared to an operating loss of $13 million year-to-date 2023, and the operating income (loss) rate (expressed as a percentage of net sales) increased to 1.0% from (0.3%). The drivers of the operating income (loss) results are discussed in the following sections.
Previous report
Net Sales
Previous report
The following table provides net sales for year-to-date 2024 in comparison to year-to-date 2023:
Previous report
The following table provides a reconciliation of net sales from year-to-date 2023 to year-to-date 2024:
Previous report
The following table compares year-to-date 2024 comparable sales to year-to-date 2023:
Previous report
Net sales year-to-date 2024 increased $25 million, or 1%, to $4.124 billion compared to $4.099 billion year-to-date 2023.
Previous report
In the stores channel, our North America net sales decreased $59 million, or 3%, to $2.267 billion, compared to year-to-date 2023 as an increase in traffic was more than offset by decreases in conversion and average unit retail.
Previous report
In the direct channel, net sales increased $9 million, or 1%, to $1.290 billion, as an increase in traffic was partially offset by decreases in conversion and average unit retail compared to year-to-date 2023.
Previous report
Gross Profit
Previous report
For year-to-date 2024, our gross profit increased $55 million to $1.471 billion, and our gross profit rate (expressed as a percentage of net sales) increased to 35.7% from 34.6%.
Previous report
The increase in gross profit dollars was primarily due to the increase in net sales, reductions in costs of goods sold related to our supply chain initiative and a decrease in buying and occupancy expenses, partially offset by an increase in promotional activity. Additionally, the increase in gross profit dollars compared to year-to-date 2023 was driven by the recognition in gross profit of $22 million year-to-date 2023 related to the fair value step-up adjustment on the acquired inventory from Adore Me.
Previous report
The gross profit rate increase was primarily driven by reductions in costs of goods sold related to our supply chain initiative and the expense recorded year-to-date 2023 as noted above, partially offset by increased promotional activity. Additionally, the gross profit rate increase was due to leverage in buying and occupancy expenses as a result of the increase in net sales and a decrease in buying and occupancy expenses compared to year-to-date 2023.
Previous report
For year-to-date 2024, our general, administrative and store operating expenses remained flat at $1.429 billion as a decrease in marketing expenses and charges related to Adore Me purchase accounting items were offset by an increase in wage rates, an increase in certain other administrative expenses and an increase in the restructuring charges year-to-date 2024 compared to year-to-date 2023.
Previous report
The general, administrative and store operating expense rate (expressed as a percentage of net sales) decreased slightly to 34.7% from 34.9% due to leverage as a result of the increase in sales compared to year-to-date 2023.
Previous report
Interest Expense
Previous report
Provision (Benefit) for Income Taxes
Previous report
For year-to-date 2024, the Company’s effective tax rate was (7.8%) compared to 20.6% year-to-date 2023. The year-to-date 2024 rate differed from the Company’s combined estimated federal and state statutory rate primarily due toadditional tax expense from the vesting of share-based compensation awards. The year-to-date 2023 rate differed from the Company’s combined estimated federal and state statutory rate primarily due to non-deductible liabilities related to contingent consideration and Contingent Compensation Payments under the terms of the Merger Agreement.
Previous report
March 2024 Share Repurchase Program
Previous report
January 2023 Share Repurchase Program
Previous report
In January 2023, our Board of Directors approved the January 2023 Share Repurchase Program, authorizing the repurchase of up to $250 million of our common stock. The authorization, which expired at the end of fiscal year 2023, was utilized in fiscal year 2023 to repurchase shares in the open market and under the accelerated share repurchase agreement described below.
Previous report
In February 2023, as part of the January 2023 Share Repurchase Program, we entered into the ASR Agreement with Goldman Sachs to repurchase $125 million of our common stock. In February 2023, we made an initial payment of $125 million to Goldman Sachs and received an initial delivery of 2.4 million shares of our common stock. As a result of the initial share delivery, there was an additional $1 million increase in Treasury Stock, which reflected the excise tax liability recorded related to the share repurchase in accordance with the Inflation Reduction Act of 2022.
Previous report
In May 2023, upon final settlement of the ASR Agreement, we received an additional 1.3 million shares of our common stock from Goldman Sachs. The final number of shares received was based on the volume-weighted average price of our common stock during the term of the ASR Agreement, less a discount and subject to adjustments pursuant to the terms of the ASR Agreement.
Previous report
We repurchased the following shares of our common stock under the January 2023 Share Repurchase Program during year-to-date 2023:
Previous report
Shares repurchased under the January 2023 Share Repurchase Program were retired upon repurchase. As a result, we retired the 3.7 million shares repurchased in connection with the settlement of the ASR Agreement year-to-date 2023. The retirement resulted in a reduction of $126 million in Treasury Stock, less than $1 million in the par value of Common Stock, $9 million in Paid-in Capital and $117 million in Retained Earnings year-to-date 2023.
Previous report
Due to seasonal and holiday-related sales patterns, borrowings under the ABL Facility typically peak in the third quarter as inventory builds in anticipation of the holiday period. Subsequent to the end of the third quarter of 2024 and as of December 9, 2024, borrowings of $130 million remained outstanding under the ABL Facility and are expected to continue to decrease through the fourth quarter.
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Reworded paragraphs (45)
Previous wording
The following discussion and analysis of financial condition and results of operations are based upon our Consolidated Financial Statements, which have been prepared in accordance with GAAP. The following information should be read in conjunction with our financial statements and the related notes included in Item 1. Financial Statements.
Current wording
The following discussion and analysis of financial condition and results of operations are based upon our Consolidated Financial Statements, which have been prepared in accordance with GAAP. The following information should be read in conjunction with our financial statements and the related notes included in Item 1. Financial Statements. References to “we,” “us,” “our,” or the “Company” mean Victoria’s Secret & Co. together with its subsidiaries.
Previous wording
Victoria’s Secret, PINK and Adore Me merchandise is sold online through e-commerce platforms, through retail stores located in the U.S., Canada and China, and through international stores and websites operated by partners under franchise, license, wholesale and joint venture arrangements. We have a presence in nearly 70 countries and we believe we benefit from global brand awareness, a wide and compelling product assortment and a powerful, deep connection with our customers.
Current wording
Our merchandise is available through our digital channels, in retail stores across the U.S., Canada and China, and through international stores, websites and mobile applications operated by partners under franchise, license, wholesale and joint venture arrangements. With a presence in nearly 70 countries, we benefit from strong global brand recognition, a compelling product assortment and a deep, lasting connection with our customers.
Previous wording
For additional information related to our third quarter of 2024 financial performance, see “Results of Operations.”
Current wording
For additional information related to our first quarter of 2025 financial performance, see “Results of Operations.”
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 financial measures that present operating income (loss), net income (loss) attributable to Victoria's Secret & Co. and net income (loss) per diluted share attributable to Victoria's Secret & Co. on an adjusted basis, which remove certain non-recurring, infrequent or unusual items that we believe are not indicative of the results of our ongoing operations due to their size and nature. The intangible asset amortization excluded from these non-GAAP financial measures is excluded because the amortization, unlike the related revenue, is not affected by operations of any particular period unless an intangible asset becomes impaired or the estimated useful life of an intangible asset is revised. We use adjusted financial information as key performance measures of our results of operations for the purpose of evaluating performance internally. These non-GAAP measurements 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 definition of non-GAAP financial measures may differ from similarly titled measures used by other companies. The table below reconciles the most directly comparable GAAP financial measure to each non-GAAP financial measure.
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 financial measures that present operating income, net income (loss) attributable to Victoria's Secret & Co. and net income (loss) per diluted share attributable to Victoria's Secret & Co. on an adjusted basis, which remove certain non-recurring, infrequent or unusual items that we believe are not indicative of the results of our ongoing operations due to their size and nature. The intangible asset amortization excluded from these non-GAAP financial measures is excluded because the amortization, unlike the related revenue, is not affected by operations of any particular period unless an intangible asset becomes impaired or the estimated useful life of an intangible asset is revised. We use adjusted financial information as key performance measures of our results of operations for the purpose of evaluating performance internally. These non-GAAP measurements 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 definition of non-GAAP financial measures may differ from similarly titled measures used by other companies. The table below reconciles the most directly comparable GAAP financial measure to each non-GAAP financial measure.
Previous wording
(b)In both the third quarter of 2024 and 2023, we recognized amortization expense of $6 million ($5 million after-tax) in general, administrative and store operating expense related to the acquisition of Adore Me. In both year-to-date 2024 and 2023, we recognized amortization expense of $19 million ($14 million after-tax) in general, administrative and store operating expense related to the acquisition of Adore Me. For additional information, see Note 2, “Acquisition” and Note 7, “Long-Lived Assets” included in Item 1. Financial Statements.
Current wording
(a)In both the first quarter of 2025 and 2024, we recognized amortization expense of $6 million ($5 million after-tax) in general, administrative and store operating expense, related to our definite-lived intangible assets. For additional information, see Note 2, “Acquisition” and Note 7, “Long-Lived Assets” included in Item 1. Financial Statements.
Previous wording
(a)In the third quarter of 2024 and 2023, we recognized pre-tax expense of $1 million and $2 million ($1 million and $1 million after-tax, respectively) within net loss related to the financial impact of purchase accounting items related to the acquisition of Adore Me. These items include income of less than $1 million and $6 million, respectively, included in general, administrative and store operating expense and interest expense of $2 million and $1 million, respectively. Additionally, expense of $7 million is in costs of goods sold, buying and occupancy expense in the third quarter of 2023. Year-to-date 2024 and 2023, we recognized pre-tax expense of $4 million and $30 million ($5 million and $24 million after-tax, respectively) within net loss related to the financial impact of purchase accounting items and professional service costs related to the acquisition of Adore Me. These items include expense of $1 million and $5 million, respectively, in general, administrative and store operating expense and interest expense of $4 million and $3 million, respectively. Additionally, expense of $22 million is in costs of goods sold, buying and occupancy expense year-to-date 2023. For additional information, see Note 2, “Acquisition” included in Item 1. Financial Statements.
Current wording
(c)In the first quarter of 2024, we recognized pre-tax expense of $8 million ($8 million after-tax), $7 million included in general, administrative and store operating expense and $1 million included in interest expense, related to the financial impact of purchase accounting items related to the acquisition of Adore Me. For additional information, see Note 2, “Acquisition” included in Item 1. Financial Statements.
Previous wording
The following table compares U.S. company-operated store data for the third quarter of 2024 to the third quarter of 2023 and year-to-date 2024 to year-to-date 2023:
Current wording
The following table compares U.S. company-operated store data for the first quarter of 2025 to the first quarter of 2024:
Previous wording
The following table represents store data for year-to-date 2024:
Current wording
The following table represents store data for the first quarter of 2025:
Previous wording
The following table represents store data for year-to-date 2023:
Current wording
The following table represents store data for the first quarter of 2024:
Previous wording
For the third quarter of 2024, our operating loss improved $20 million, to $47 million, compared to an operating loss of $67 million in the third quarter of 2023, and the operating loss rate (expressed as a percentage of net sales) improved to (3.5%) from (5.3%). The drivers of the operating loss results are discussed in the following sections.
Current wording
For the first quarter of 2025, our operating income decreased by $6 million, to $20 million, compared to operating income of $26 million in the first quarter of 2024, and the operating income rate (expressed as a percentage of net sales) decreased to 1.5% from 1.9%. The drivers of our operating income results are discussed in the following sections.
Previous wording
The following table provides net sales for the third quarter of 2024 in comparison to the third quarter of 2023:
Current wording
The following table provides net sales for the first quarter of 2025 in comparison to the first quarter of 2024:
Previous wording
(a)Results include consolidated joint venture direct sales in China.
Current wording
(a)Results include consolidated joint venture sales in China, royalties associated with franchised stores and wholesale sales.
Previous wording
The following table provides a reconciliation of net sales from the third quarter of 2023 to the third quarter of 2024:
Current wording
The following table provides a reconciliation of net sales from the first quarter of 2024 to the first quarter of 2025:
Previous wording
The following table compares the third quarter of 2024 comparable sales to the third quarter of 2023:
Current wording
The following table compares the first quarter of 2025 comparable sales to the first quarter of 2024:
Previous wording
In the stores channel, our North America net sales increased $15 million, or 2%, to $738 million compared to the third quarter of 2023 as an increase in traffic was partially offset by decreases in conversion and average unit retail.
Current wording
In the stores channel, our North America net sales decreased $8 million, or 1%, to $721 million compared to the first quarter of 2024 as an increase in average unit retail was offset by decreases in traffic and conversion.
Previous wording
In the direct channel, net sales increased $29 million, or 7%, to $411 million, as an increase in traffic was partially offset by a decrease in average unit retail compared to the third quarter of 2023.
Current wording
In the direct channel, net sales decreased $16 million, or 3%, to $433 million compared to the first quarter of 2024 as an increase in conversion was offset by a decrease in traffic. Average unit retail was flat compared to the first quarter of 2024.
Previous wording
In the international channel, net sales increased $38 million, or 24%, to $198 million compared to the third quarter of 2023. Increases in net sales in the third quarter of 2024 compared to the third quarter of 2023 were driven by increases in sourcing sales to our partners, net sales in China and royalties earned associated with franchise sales in many countries outside of North America.
Current wording
In the international channel, net sales increased $18 million, or 9%, to $199 million compared to the first quarter of 2024. Increases in net sales in the first quarter of 2025 compared to the first quarter of 2024 were driven by increases in net sales in China, sourcing sales to our partners and royalties earned associated with franchise sales in many countries outside of North America.
Previous wording
For the third quarter of 2024, our gross profit increased by $41 million compared to the third quarter of 2023 to $468 million, and our gross profit rate (expressed as a percentage of net sales) increased to 34.8% from 33.8%.
Current wording
For the first quarter of 2025, our gross profit decreased by $27 million compared to the first quarter of 2024 to $474 million, and our gross profit rate (expressed as a percentage of net sales) decreased to 35.1% from 36.9%.
Previous wording
For the third quarter of 2024, our general, administrative and store operating expenses increased $21 million, or 4%, to $515 million compared to the third quarter of 2023. The increase in general, administrative and store operating expenses compared to the third quarter of 2023 was due to a restructuring charge of $13 million in the third quarter of 2024 and increases in wage rates, charges related to Adore Me purchase accounting items and certain other administrative expenses, partially offset by a decrease in marketing expenses.
Current wording
For the first quarter of 2025, our general, administrative and store operating expenses decreased $21 million, or 4%, to $454 million compared to the first quarter of 2024. The decrease in general, administrative and store operating expenses compared to the first quarter of 2024 was due to a strategic shift in marketing spend from the first quarter to the second quarter, disciplined expense management initiatives and a decrease in charges related to Adore Me purchase accounting items, partially offset by an increase in expenses related to activities to restructure our executive leadership team.
Previous wording
The general, administrative and store operating expense rate (expressed as a percentage of net sales) decreased to 38.2% from 39.1% primarily due to leverage as a result of the increase in net sales compared to the third quarter of 2023.
Current wording
The general, administrative and store operating expense rate (expressed as a percentage of net sales) decreased to 33.6% from 34.9% compared to the first quarter of 2024 primarily due to the strategic shift in marketing spend and disciplined expense management initiatives.
Previous wording
For the third quarter of 2024, our interest expense decreased $4 million to $22 million compared to the third quarter of 2023 primarily due to our lower average outstanding debt and lower average borrowing rates for our ABL Facility and Term Loan Facility.
Current wording
For the first quarter of 2025, our interest expense decreased $5 million to $17 million compared to the first quarter of 2024 primarily due to our lower average outstanding debt and lower average borrowing rates for our ABL Facility and Term Loan Facility.
Previous wording
For the third quarter of 2024, the Company’s effective tax rate was 21.3% compared to 24.1% in the third quarter of 2023. Both rates differed from the Company’s combined estimated federal and state statutory rate primarily due to foreign earnings taxed at a lower rate than the Company’s combined federal and state statutory rate.
Current wording
For the first quarter of 2025, the Company’s effective tax rate was 50.9% compared to 151.1% in the first quarter of 2024. The difference between the Company’s effective tax rate for both years and the combined estimated federal and state statutory rate was primarily due to additional tax expense from share-based compensation awards that vested in the periods.
Previous wording
(a)The November 2, 2024 and October 28, 2023 amounts represent thirty-nine-week periods and the February 3, 2024 amounts represent a fifty-three-week period.
Current wording
(a)The May 3, 2025 and May 4, 2024 amounts represent thirteen-week periods and the February 1, 2025 amounts represent a fifty-two-week period.
Previous wording
(b)For the reporting period ended November 2, 2024, the availability under the ABL Facility was limited to the maximum aggregate commitment amount of $750 million, less outstanding borrowings of $440 million and letters of credit of $19 million. For the reporting period ended February 3, 2024, the availability was limited by our borrowing base of $587 million, less outstanding borrowings of $145 million and letters of credit of $19 million. For the reporting period ended October 28, 2023, the availability under the ABL Facility was limited to the maximum aggregate commitment amount of $750 million, less outstanding borrowings of $555 million and letters of credit of $19 million.
Current wording
(b)For the reporting period ended May 3, 2025, the availability under the ABL Facility was limited by our borrowing base of $631 million, less outstanding borrowings of $105 million and letters of credit of $17 million. For the reporting period ended February 1, 2025, the availability was limited by our borrowing base of $550 million, less letters of credit of $17 million. For the reporting period ended May 4, 2024, the availability under the ABL Facility was limited by our borrowing base of $646 million, less outstanding borrowings of $145 million and letters of credit of $19 million.
Previous wording
The following table provides a summary of our cash flow activity for year-to-date 2024 and 2023:
Current wording
The following table provides a summary of our cash flow activity for the first quarter of 2025 and 2024:
Previous wording
Net cash used for operating activities reflects net loss adjusted for non-cash items, including depreciation and amortization, share-based compensation expense, gain on sale of assets and deferred tax expense, as well as changes in working capital. Net cash used for operating activities year-to-date 2024 was $249 million, an increase in net cash flows used for operating activities of $49 million compared to year-to-date 2023. The increase in net cash flows used for operating activities in year-to-date 2024 was primarily driven by higher net operating cash outflows associated with working capital changes of $38 million, a decrease in depreciation and amortization of long-lived assets of $24 million and the $22 million amortization of the fair value adjustment on the acquired inventory from Adore Me year-to-date 2023, partially offset by a decrease in net loss of $43 million compared to year-to-date 2023. The most significant working capital driver resulting in the increase in net operating cash outflows year-to-date 2024 compared to year-to-date 2023 is related to the higher seasonal increase in inventory levels driven by the earlier receipt of holiday shipments compared to year-to-date 2023. The increase in net operating cash outflows year-to-date 2024 compared to year-to-date 2023 is partially offset by the payment of the occupancy-related legal matter year-to-date 2023 and income taxes paid of $45 million year-to-date 2024 compared to $65 million paid year-to-date 2023.
Current wording
Net cash used for operating activities reflects net income (loss) adjusted for non-cash items, including depreciation and amortization, share-based compensation expense and deferred tax expense, as well as changes in working capital. Net cash used for operating activities in the first quarter of 2025 was $150 million, an increase in net cash flows used for operating activities of $34 million compared to the first quarter of 2024. The increase in net cash flows used for operating activities in the first quarter of 2025 was primarily driven by higher net operating cash outflows associated with working capital changes of $35 million, partially offset by an increase in net income of $6 million compared to the first quarter of 2024. The most significant working capital driver resulting in the increase in net operating cash outflows in the first quarter of 2025 compared to the first quarter of 2024 is related to the increase in inventory levels. The increase in inventory levels is primarily related to continued growth in the international channel and our European distribution center, as well as supporting the growth of our lifestyle categories for sport and apparel. The increase in net operating cash outflows is also due to the related timing of payments for inventory.
Previous wording
Net cash used for investing activities year-to-date 2024 was $133 million, consisting primarily of $150 million of capital expenditures, partially offset by $16 million of proceeds on the sale of certain non-store corporate-related assets. The capital expenditures were primarily related to our store capital program and investments in technology related to our strategic initiatives to drive growth.
Current wording
Net cash used for investing activities in the first quarter of 2025 was $43 million, consisting solely of capital expenditures. The capital expenditures were primarily related to our store capital program and investments in technology and logistics related to our strategic initiatives to drive growth and support productivity.
Previous wording
Net cash used for investing activities year-to-date 2023 was $223 million, consisting primarily of capital expenditures of $224 million. The capital expenditures were primarily related to our store capital program and investments in technology related to our strategic initiatives to drive growth and technology investments relating to separation activities from Bath & Body Works, Inc.
Current wording
Net cash used for investing activities in the first quarter of 2024 was $39 million, consisting solely of capital expenditures. The capital expenditures were primarily related to our store capital program and investments in technology related to our strategic initiatives to drive growth.
Previous wording
We are estimating capital expenditures to be approximately $190 million for fiscal year 2024. We expect that our capital expenditures will continue to be focused on our store capital program along with investments in technology related to our strategic initiatives to drive growth.
Current wording
We are estimating capital expenditures to be approximately $220 million for fiscal year 2025. We expect that our capital expenditures will continue to be focused on our store capital program along with investments in technology and logistics related to our strategic initiatives to drive growth and support productivity.
Previous wording
Net cash provided by financing activities year-to-date 2023 was $122 million, consisting primarily of borrowings of $405 million under the ABL Facility, partially offset by $145 million of repayments under the ABL Facility and $125 million of share repurchases.
Current wording
Net cash provided by financing activities in the first quarter of 2025 was $106 million, consisting primarily of borrowings of $160 million under the ABL Facility, partially offset by $55 million of repayments under the ABL Facility.
Previous wording
Net cash provided by financing activities year-to-date 2024 was $272 million, consisting primarily of borrowings of $460 million under the ABL Facility, partially offset by $165 million of repayments under the ABL Facility and a $16 million payment for contingent consideration related to the acquisition of Adore Me.
Current wording
Net cash used for financing activities in the first quarter of 2024 was $10 million, consisting primarily of a $16 million payment for contingent consideration related to the acquisition of Adore Me and offsetting borrowings and repayments of $90 million under the ABL Facility.
Previous wording
Common Stock Share Repurchases & Treasury Stock Retirements
Current wording
Common Stock Share Repurchases
Previous wording
Our Board of Directors determines share repurchase authorizations, giving consideration to our levels of profit and cash flows, capital requirements, current and forecasted liquidity, and restrictions placed upon us by our borrowing arrangements, as well as financial and other conditions existing at the time. We use cash flows generated from operating activities to fund any share repurchases. Once authorized by our Board of Directors, the timing and amount of any share repurchases are made at our discretion, taking into account a number of factors, including market conditions.
Current wording
Our Board determines share repurchase authorizations, giving consideration to our levels of profit and cash flows, capital requirements, current and forecasted liquidity, and restrictions placed upon us by our borrowing arrangements, as well as financial and other conditions existing at the time. We use cash flows generated from operating activities to fund any share repurchases. Once authorized by our Board, the timing and amount of any share repurchases are made at our discretion, taking into account a number of factors, including market conditions.
Previous wording
In March 2024, our Board of Directors approved the March 2024 Share Repurchase Program, authorizing the repurchase of up to $250 million of our common stock, subject to market conditions and other factors, through open market, accelerated share repurchase or privately negotiated transactions, including pursuant to one or more Rule 10b5-1 trading plans. The March 2024 Share Repurchase Program is open-ended in term and will continue until exhausted.
Current wording
In March 2024, our Board approved the March 2024 Share Repurchase Program, authorizing the repurchase of up to $250 million of our common stock, subject to market conditions and other factors, through open market, accelerated share repurchase or privately negotiated transactions, including pursuant to one or more Rule 10b5-1 trading plans. The March 2024 Share Repurchase Program is open-ended in term and will continue until exhausted.
Previous wording
We did not repurchase any shares of our common stock under the March 2024 Share Repurchase Program during the third quarter or year-to-date 2024. As of November 2, 2024, we were authorized to repurchase up to $250 million of our common stock under the March 2024 Share Repurchase Program.
Current wording
We have not repurchased any shares of our common stock under the March 2024 Share Repurchase Program. As of May 3, 2025, we were authorized to repurchase up to $250 million of our common stock under the March 2024 Share Repurchase Program.
Previous wording
We have not paid any cash dividends since becoming an independent, publicly traded company. We cannot guarantee that we will pay a dividend in the future or continue to pay any dividends if and when we commence paying dividends. The declaration and amount of any dividends to holders of our common stock will be at the discretion of our Board of Directors and will depend upon many factors, including our financial condition, earnings, cash flows, capital requirements of our business, covenants associated with our debt obligations, legal requirements, regulatory constraints, industry practice and any other factors the Board of Directors deems relevant. We would use cash flow generated from operating and financing activities to fund our dividends.
Current wording
We have not paid any cash dividends since becoming an independent, publicly traded company. We cannot guarantee that we will pay a dividend in the future or continue to pay any dividends if and when we commence paying dividends. The declaration and amount of any dividends to holders of our common stock will be at the discretion of our Board and will depend upon many factors, including our financial condition, earnings, cash flows, capital requirements of our business, covenants associated with our debt obligations, legal requirements, regulatory constraints, industry practice and any other factors the Board deems relevant. We would use cash flow generated from operating and financing activities to fund our dividends.
Previous wording
Cash paid for interest was $49 million and $54 million for year-to-date 2024 and 2023, respectively.
Current wording
Cash paid for interest was $8 million and $12 million for the first quarter of 2025 and 2024, respectively.
Previous wording
We have a senior secured term loan B credit facility in an aggregate principal amount of $400 million, which will mature in August 2028. We are required to make quarterly principal payments on the Term Loan Facility in an amount equal to 0.25% of the original principal amount of $400 million. We made principal payments for the Term Loan Facility of $1 million during both the third quarter of 2024 and 2023 and $3 million during both year-to-date 2024 and 2023.
Current wording
We have a senior secured term loan B credit facility with an original principal amount of $400 million, which will mature in August 2028. The discounts and issuance costs from the Term Loan Facility are being amortized through the maturity date and are included within Long-term Debt on the Consolidated Balance Sheets. We are required to make quarterly principal payments on the Term Loan Facility in an amount equal to 0.25% of the original principal amount of $400 million. We made principal payments for the Term Loan Facility of $1 million during both the first quarter of 2025 and 2024.
Previous wording
Interest on the loans under the Term Loan Facility is calculated by reference to Term SOFR or an alternative base rate, plus an interest rate margin (i) in the case of Term SOFR loans, ranging from 3.36% to 3.68% and (ii) in the case of alternate base rate loans, equal to 2.25%. The obligation to pay principal and interest on the loans under the Term Loan Facility is jointly and severally guaranteed on a full and unconditional basis by certain of our wholly-owned domestic subsidiaries. The loans under the Term Loan Facility are secured on a first-priority lien basis by certain assets of ours and our subsidiary guarantors that do not constitute priority collateral under the ABL Facility and on a second-priority lien basis by priority collateral under the ABL Facility, subject to customary exceptions. As of November 2, 2024, the interest rate on the loans under the Term Loan Facility was 8.46%.
Current wording
Interest on the loans under the Term Loan Facility is calculated by reference to Term SOFR or an alternative base rate, plus an interest rate margin (i) in the case of Term SOFR loans, ranging from 3.36% to 3.68% and (ii) in the case of alternate base rate loans, equal to 2.25%. The obligation to pay principal and interest on the loans under the Term Loan Facility is jointly and severally guaranteed on a full and unconditional basis by certain of our wholly-owned domestic subsidiaries. The loans under the Term Loan Facility are secured on a first-priority lien basis by certain assets of ours and our subsidiary guarantors that do not constitute priority collateral under the ABL Facility and on a second-priority lien basis by priority collateral under the ABL Facility, subject to customary exceptions. As of May 3, 2025, the interest rate on the loans under the Term Loan Facility was 7.81%.
Previous wording
We also have a senior secured asset-based revolving credit facility. The ABL Facility allows for borrowings and letters of credit in U.S. dollars or Canadian dollars and has aggregate commitments of $750 million and an expiration date of August 2026. The availability under the ABL Facility is equal to the lesser of (i) the borrowing base, determined primarily based on our eligible U.S. and Canadian credit card receivables, eligible accounts receivable, eligible inventory and eligible real property, and (ii) the maximum aggregate commitment amount of $750 million. Interest on the loans under the ABL Facility is calculated by reference to (i) Term SOFR or an alternative base rate and (ii) in the case of loans denominated in Canadian dollars, CDOR or a Canadian base rate, plus an interest rate margin based on average daily excess availability ranging from (x) in the case of CDOR loans, 1.50% to 2.00%, (y) in the case of alternate base rate loans and Canadian base rate loans, 0.50% to 1.00%, and (z) in the case of Term SOFR loans, 1.60% to 2.10%. Unused commitments under the ABL Facility accrue an unused commitment fee ranging from 0.25% to 0.30%. The obligation to pay principal and interest on the loans under the ABL Facility is jointly and severally guaranteed on a full and unconditional basis by certain of our wholly-owned domestic and Canadian subsidiaries. The loans under the ABL Facility are secured on a first-priority lien basis by our eligible U.S. and Canadian credit card receivables, eligible accounts receivable, eligible inventory and eligible real property and on a second-priority lien basis on substantially all other assets of ours, subject to customary exceptions.
Current wording
We also have a senior secured asset-based revolving credit facility. The ABL Facility allows for borrowings and letters of credit in U.S. dollars or Canadian dollars and has aggregate commitments of $750 million and, as of May 3, 2025, an expiration date of August 2026. The availability under the ABL Facility is equal to the lesser of (i) the borrowing base, determined primarily based on our eligible U.S. and Canadian credit card receivables, eligible accounts receivable, eligible inventory and eligible real property, and (ii) the maximum aggregate commitment amount of $750 million. Prior to the amendment of the ABL Facility as described below, interest on the loans under the ABL Facility was calculated by reference to (i) Term SOFR or an alternative base rate and (ii) in the case of loans denominated in Canadian dollars, CDOR or a Canadian base rate, plus an interest rate margin based on average daily excess availability ranging from (x) in the case of CDOR loans, 1.50% to 2.00%, (y) in the case of alternate base rate loans and Canadian base rate loans, 0.50% to 1.00%, and (z) in the case of Term SOFR loans, 1.60% to 2.10%. Unused commitments under the ABL Facility accrue an unused commitment fee ranging from 0.25% to 0.30%. The obligation to pay principal and interest on the loans under the ABL Facility is jointly and severally guaranteed on a full and unconditional basis by certain of our wholly-owned domestic and Canadian subsidiaries. The loans under the ABL Facility are secured on a first-priority lien basis by our eligible U.S. and Canadian credit card receivables, eligible accounts receivable, eligible inventory and eligible real property and on a second-priority lien basis on substantially all other assets of ours, subject to customary exceptions.
Showing the first 40 of 45 pairs. Open the source sections for the rest.
Rearranged previous paragraphs (4)
Previous report — wording carried elsewhere
(a)The percentage change in comparable sales represents direct and comparable store sales. The percentage change in comparable store sales represents the change in sales at comparable stores only and excludes the change in sales from our direct channels. The change in comparable sales provides an indication of period over period growth (decline). A store is typically included in the calculation of comparable sales when it has been open 12 months or more and it has not had a change in selling square footage of 20% or more. Closed stores are excluded from the comparable sales calculation if they have been closed for four consecutive days or more. Upon re-opening, the stores are included in the calculation. Additionally, stores are excluded if total selling square footage in the mall changes by 20% or more through the opening or closing of a second store. The percentage change in comparable sales is calculated on a comparable calendar period as opposed to a fiscal basis. Comparable sales attributable to our international stores are calculated on a constant currency basis.
Previous report — wording carried elsewhere
In the international channel, net sales increased $75 million, or 15%, to $567 million compared to year-to-date 2023. Increases in net sales year-to-date 2024 compared to year-to-date 2023 were driven by increases in sourcing sales to our partners, net sales in China, royalties earned associated with franchise sales in many countries outside of North America and our wholesale arrangements.
Previous report — wording carried elsewhere
General, Administrative and Store Operating Expenses
Previous report — wording carried elsewhere
For year-to-date 2024, our interest expense decreased $6 million to $66 million compared to year-to-date 2023 primarily due to our lower average outstanding debt, partially offset by higher average borrowing rates for our ABL Facility and Term Loan Facility.