Victoria's Secret & Co.
For the period ended Aug 2, 2025. Filed Sep 5, 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.
Aug 2, 2025 · Filed Sep 5, 2025
VSXY$108.05+1.6%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-05-03; filed 2025-06-12.
0001856437-25-000030
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-08-02; filed 2025-09-05.
0001856437-25-000039
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 109 previous paragraphs and 136 current paragraphs.
56 unchanged; 48 reworded; 26 added; 5 removed; 0 previous and 6 current paragraphs rearranged.
Tables are not compared: 11 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 (26)
Current report
Net sales in the second quarter of 2025 increased 3%, to $1.459 billion, compared to the second quarter of 2024 despite our U.S. e-commerce website being closed to customers for four days due to a security incident involving our information technology systems, as further described below. In North America, net sales increased 3% in the stores channel and decreased 5% in the direct channel compared to the second quarter of 2024. Comparable sales (stores and direct), which excludes the impact from the security incident, and comparable store sales only both increased 4% compared to the second quarter of 2024. In the stores channel, the increase was driven by Victoria’s Secret and PINK increases in average transaction value and conversion, while traffic remained flat compared to the second quarter of 2024. On a comparable basis, traffic in the stores channel increased compared to the second quarter of 2024. In the direct channel, a Victoria’s Secret and PINK increase in average transaction value was offset by a decrease in conversion, while traffic remained flat compared to the second quarter of 2024. Net sales in our international channel increased 22% compared to the second quarter of 2024.
Current report
We conducted an investigation to ascertain the full scope and impact of the incident. This incident did not cause a material disruption to our operations or material adverse impact to our financial results. We estimate the security incident negatively impacted net sales by approximately $20 million and operating income by approximately $14 million, which does not consider the impact of any potential insurance recoveries in future periods. We maintain cybersecurity insurance and the claim process for potential insurance recoveries related to this incident is ongoing.
Current report
Second Quarter of 2025 Compared to Second Quarter of 2024
Current report
Net sales in the second quarter of 2025 increased $42 million, or 3%, to $1.459 billion compared to $1.417 billion in the second quarter of 2024.
Current report
In the stores channel, our North America net sales increased $25 million, or 3%, to $825 million compared to the second quarter of 2024 driven by an increase in average transaction value due to an increase in units per transaction, while average unit retail remained flat. The increase in net sales in our stores channel was also driven by an increase in conversion, while traffic remained flat compared to the second quarter of 2024. On a comparable basis, traffic in the stores channel increased compared to the second quarter of 2024.
Current report
In the direct channel, net sales decreased $24 million, or 5%, to $406 million compared to the second quarter of 2024. We estimate the website closure due to the security incident negatively impacted net sales in the second quarter of 2025 by approximately $20 million. Excluding the impact from the security incident, net sales in our direct channel were approximately flat. An increase in average transaction value due to increases in average unit retail and units per order was offset by a decrease in conversion, while traffic remained flat compared to the second quarter of 2024.
Current report
The increase in gross profit dollars compared to the second quarter of 2024 was due to the increase in merchandise margin dollars primarily driven by an increase in net sales and a decrease in promotional activity, partially offset by an increase in tariff costs and transportation costs. The increase in gross profit dollars compared to the second quarter of 2024 was partially offset by an increase in buying and occupancy expenses driven by a $6 million gain on sale of certain non-store corporate-related assets in the second quarter of 2024 and an increase in incentive compensation expenses in the second quarter of 2025, slightly offset by a decrease in rent expenses.
Current report
The gross profit rate increase compared to the second quarter of 2024 was primarily driven by a decrease in promotional activity and leverage in buying and occupancy expenses as a result of the increase in net sales, partially offset by an increase in tariff costs and transportation costs.
Current report
For the second quarter of 2025, our effective tax rate was 25.7% compared to 22.4% in the second quarter of 2024. The second quarter of 2025 rate was consistent with our combined estimated federal and state statutory rate. The second quarter of 2024 rate differed from our combined estimated federal and state statutory rate primarily due to foreign earnings taxed at a lower rate than our combined estimated federal and state statutory rate.
Current report
Results of Operations
Current report
Year-to-Date 2025 Compared to Year-to-Date 2024
Current report
Operating Income
Current report
For year-to-date 2025, operating income decreased $28 million, to $61 million, compared to operating income of $89 million year-to-date 2024, and the operating income rate (expressed as a percentage of net sales) decreased to 2.2% from 3.2%. The drivers of the operating income results are discussed in the following sections.
Current report
Net Sales
Current report
The following table provides net sales for year-to-date 2025 in comparison to year-to-date 2024:
Current report
The following table provides a reconciliation of net sales from year-to-date 2024 to year-to-date 2025:
Current report
The following table compares year-to-date 2025 comparable sales to year-to-date 2024:
Current report
Net sales year-to-date 2025 increased $35 million, or 1%, to $2.812 billion compared to $2.777 billion year-to-date 2024.
Current report
In the stores channel, our North America net sales increased $17 million, or 1%, to $1.546 billion, compared to year-to-date 2024 as increases in average unit retail and units per transaction were partially offset by a decrease in traffic. Conversion was flat compared to year-to-date 2024. On a comparable basis, traffic in the stores channel increased compared to year-to-date 2024.
Current report
In the direct channel, net sales decreased $39 million, or 4%, to $840 million compared to year-to-date 2024. We estimate the website closure due to the security incident negatively impacted net sales year-to-date 2025 by approximately $20 million. Excluding the impact from the security incident, increases in units per order, average unit retail and conversion were offset by a decrease in traffic compared to year-to-date 2024.
Current report
Gross Profit
Current report
For year-to-date 2025, our gross profit decreased $10 million compared to year-to-date 2024 to $993 million, and our gross profit rate (expressed as a percentage of net sales) decreased to 35.3% from 36.1%.
Current report
For year-to-date 2025, our general, administrative and store operating expenses increased $18 million, or 2%, to $932 million compared to year-to-date 2024. The increase in general, administrative and store operating expenses compared to year-to-date 2024 was primarily driven by increases in store selling expenses, expenses related to activities to restructure our executive leadership team and incentive compensation expenses, partially offset by a decrease in marketing expenses.
Current report
The general, administrative and store operating expense rate (expressed as a percentage of net sales) increased to 33.2% from 32.9% compared to year-to-date 2024 primarily due to increases in store selling expenses and expenses related to activities to restructure our executive leadership team, partially offset by a decrease in marketing expenses.
Current report
Interest Expense
Current report
Provision for Income Taxes
Removed paragraphs (5)
Previous 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.
Previous report
First Quarter of 2025 Compared to First Quarter of 2024
Previous 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.
Previous report
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 report
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.
Reworded paragraphs (48)
Previous wording
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 wording
Our operating results are generally impacted by economic changes. Accordingly, we monitor the retail environment using certain key industry performance indicators including competitor performance and mall traffic data. These metrics 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 internal 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. Specifically to evaluate our net sales, we utilize traffic, conversion (which we define as the percentage of customers who visit our stores and digital sites and make a purchase), units per transaction, average unit retail (which we define as the average price per unit purchased) and average transaction value (which we define as units per transaction multiplied by average unit retail).
Previous wording
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 wording
Operating income in the second quarter of 2025 decreased $21 million, to $41 million, compared to the second quarter of 2024 and our operating income rate (expressed as a percentage of net sales) was 2.8% compared to 4.4% in the second quarter of 2024. The decrease in operating income compared to the second quarter of 2024 was primarily driven by an increase in tariff costs and transportation costs, an increase in incentive compensation expenses, an increase in store selling expenses and a strategic shift in marketing spend from the first quarter to the second quarter, partially offset by an increase in merchandise margin dollars primarily due to an increase in net sales.
Previous wording
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 wording
We continue to focus on our strategic priorities: Supercharge Bras; Recommit to PINK; Fuel Growth in Lifestyle Categories; and Evolve Our Brand Projection & Go-To-Market Strategy. We are maintaining our disciplined approach, focusing on operational excellence, strategic capital allocation and continued investment in the capabilities that differentiate us in the marketplace. We remain committed to delivering value for our shareholders while building the foundation for sustained, long-term profitable growth.
Previous wording
For additional information related to our first quarter of 2025 financial performance, see “Results of Operations.”
Current wording
For additional information related to our second quarter of 2025 and year-to-date 2025 financial performance, see “Results of Operations.”
Previous wording
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 wording
We face near-term headwinds and ongoing uncertainty in the macro environment, which we have and will continue to manage aggressively. U.S. tariffs on imports from other countries, as well as additional threatened tariffs and any retaliatory measures by impacted exporting countries remains uncertain. We continue to identify and execute mitigation strategies as the tariff environment evolves.
Previous wording
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 wording
As previously disclosed, on May 24, 2025, we detected a security incident involving our information technology systems. We immediately enacted our response protocols and the incident has been resolved. All systems are restored and fully operational.
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, 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 attributable to Victoria’s Secret & Co. and net income 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
(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.
Current wording
(a)In both the second 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. In both year-to-date 2025 and 2024, we recognized amortization expense of $13 million ($9 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
(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 wording
(b)In the second quarter of 2025, we recognized pre-tax charges of $8 million ($6 million after-tax), $8 million included in general, administrative and store operating expense and less than $1 million included in buying and occupancy expense, related to activities to continue to restructure our executive leadership team and other one-time expenses. Year-to-date 2025, we recognized pre-tax charges of $13 million ($10 million after-tax), $11 million included in general, administrative and store operating expense and $2 million included in buying and occupancy expense, related to activities to continue to restructure our executive leadership team and other one-time expenses.
Previous 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.
Current wording
(c)In the second quarter of 2024, we recognized pre-tax income of $5 million (income of $5 million after-tax), income of $6 million included in general, administrative and store operating expense and interest expense of $1 million, related to the financial impact of purchase accounting items related to the acquisition of Adore Me. Year-to-date 2024, we recognized pre-tax expense of $3 million ($3 million after-tax), expense of $1 million included in general, administrative and store operating expense and interest expense of $2 million, 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 first quarter of 2025 to the first quarter of 2024:
Current wording
The following table compares U.S. company-operated store data for the second quarter of 2025 to the second quarter of 2024 and year-to-date 2025 to year-to-date 2024:
Previous wording
The following table represents store data for the first quarter of 2025:
Current wording
The following table represents store data for year-to-date 2025:
Previous wording
(a)Includes twelve partner-operated stores as of May 3, 2025.
Current wording
(a)Includes nine partner-operated stores as of August 2, 2025.
Previous wording
The following table represents store data for the first quarter of 2024:
Current wording
The following table represents store data for year-to-date 2024:
Previous 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.
Current wording
For the second quarter of 2025, our operating income decreased by $21 million, to $41 million, compared to operating income of $62 million in the second quarter of 2024, and the operating income rate (expressed as a percentage of net sales) decreased to 2.8% from 4.4%. The drivers of our operating income results are discussed in the following sections.
Previous wording
The following table provides net sales for the first quarter of 2025 in comparison to the first quarter of 2024:
Current wording
The following table provides net sales for the second quarter of 2025 in comparison to the second quarter of 2024:
Previous wording
The following table provides a reconciliation of net sales from the first quarter of 2024 to the first quarter of 2025:
Current wording
The following table provides a reconciliation of net sales from the second quarter of 2024 to the second quarter of 2025:
Previous wording
The following table compares the first quarter of 2025 comparable sales to the first quarter of 2024:
Current wording
The following table compares the second quarter of 2025 comparable sales to the second quarter of 2024:
Previous 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.
Current wording
In the international channel, net sales increased $41 million, or 22%, to $228 million compared to the second quarter of 2024. Increases in net sales in the second quarter of 2025 compared to the second quarter of 2024 were driven by increases in net sales in China, sourcing sales to our partners, our wholesale arrangements and royalties earned associated with franchise sales in many countries outside of North America.
Previous 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%.
Current wording
For the second quarter of 2025, our gross profit increased $18 million compared to the second quarter of 2024 to $519 million, and our gross profit rate (expressed as a percentage of net sales) increased to 35.6% from 35.4%.
Previous 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.
Current wording
For the second quarter of 2025, our general, administrative and store operating expenses increased $39 million, or 9%, to $478 million compared to the second quarter of 2024. The increase in general, administrative and store operating expenses compared to the second quarter of 2024 was primarily due to an increase in store selling expenses, a strategic shift in marketing spend from the first quarter to the second quarter and an increase in incentive compensation expenses. The increase in general, administrative and store operating expenses compared to the second quarter of 2024 was also due to increases in charges related to Adore Me purchase accounting items and expenses related to activities to continue 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 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.
Current wording
The general, administrative and store operating expense rate (expressed as a percentage of net sales) increased to 32.8% from 31.0% compared to the second quarter of 2024 primarily due to an increase in store selling expenses, strategic shift in marketing expenses and an increase in incentive compensation expenses.
Previous 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.
Current wording
For the second quarter of 2025, our interest expense decreased $3 million to $18 million compared to the second 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
(a)Results include consolidated joint venture sales in China, royalties associated with franchised stores and wholesale sales.
Current wording
(a)Results include consolidated joint venture direct sales in China.
Previous wording
(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.
Current wording
(a)Comparable sales results for year-to-date 2025 exclude the impact from lost sales from our direct channels during the period of time the direct channels were closed as a result of the May 2025 security incident involving our information technology systems. 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 and direct channels 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 wording
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 wording
The decrease in gross profit dollars compared to year-to-date 2024 was primarily due to the decrease in merchandise margin dollars primarily driven by an increase in transportation costs and tariff costs, partially offset by an increase in net sales and a decrease in promotional activity. Buying and occupancy expenses remained flat compared to year-to-date 2024 as a decrease in rent expenses was offset by a $6 million gain on sale of certain non-store corporate-related assets in the second quarter of 2024 and an increase in incentive compensation expenses.
Previous wording
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 wording
The gross profit rate decrease compared to year-to-date 2024 was primarily driven by an increase in transportation costs and tariff costs, partially offset by leverage in buying and occupancy expenses as a result of the increase in net sales.
Previous 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.
Current wording
For year-to-date 2025, our effective tax rate was 30.5% compared to 35.9% year-to-date 2024. The difference between our 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
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 and capital expenditures. Net cash provided by (used for) operating activities is impacted by our net income (loss) and working capital changes. Our net income (loss) is impacted by, among other things, sales volume, seasonal sales patterns, success of new product introductions, profit margins and income taxes. Historically, sales are higher 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.
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 and capital expenditures. Net cash provided by (used for) operating activities 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, profit margins and income taxes. Historically, sales are higher 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.
Previous 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.
Current wording
(a)The August 2, 2025 and August 3, 2024 amounts represent twenty-six-week periods and the February 1, 2025 amounts represent a fifty-two-week period.
Previous 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.
Current wording
(b)For the reporting period ended August 2, 2025, the availability under the ABL Facility was limited by our borrowing base of $616 million, less outstanding borrowings of $75 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 August 3, 2024, the availability under the ABL Facility was limited by our borrowing base of $647 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 the first quarter of 2025 and 2024:
Current wording
The following table provides a summary of our cash flow activity for year-to-date 2025 and 2024:
Previous 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.
Current wording
Net cash provided by (used for) operating activities reflects net income 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 provided by operating activities year-to-date 2025 was $6 million, an increase in net cash flows provided by operating activities of $7 million compared to year-to-date 2024. The increase in net cash flows provided by operating activities in year-to-date 2025 was primarily driven by lower net operating cash outflows associated with working capital changes of $17 million, partially offset by a decrease in net income of $9 million compared to year-to-date 2024. The most significant working capital driver resulting in the increase in net operating cash inflows year-to-date 2025 compared to year-to-date 2024 is related to the increase in inventory levels and the related timing of payments for inventory. The increase in inventory levels is primarily related to continued growth in the international channel and our European distribution center, as well as increased average unit costs driven by tariff costs and the growth of our lifestyle categories for sport and apparel.
Previous 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.
Current wording
Net cash used for investing activities year-to-date 2025 was $111 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 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.
Current wording
Net cash used for investing activities year-to-date 2024 was $83 million, consisting of $99 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.
Previous 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.
Current wording
We are estimating capital expenditures to be approximately $200 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 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.
Current wording
Net cash provided by financing activities year-to-date 2025 was $67 million, consisting primarily of borrowings of $245 million under the ABL Facility, partially offset by $170 million of repayments under the ABL Facility.
Previous 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.
Current wording
Net cash used for financing activities year-to-date 2024 was $17 million, consisting primarily of a $16 million payment for contingent consideration related to the acquisition of Adore Me and offsetting borrowings and repayments of $145 million under the ABL Facility.
Previous wording
Cash paid for interest was $8 million and $12 million for the first quarter of 2025 and 2024, respectively.
Current wording
Cash paid for interest was $31 million and $38 million for year-to-date 2025 and 2024, respectively.
Previous 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.
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 second quarter of 2025 and 2024 and $2 million during both year-to-date 2025 and 2024.
Showing the first 40 of 48 pairs. Open the source sections for the rest.
Rearranged current paragraphs (6)
Current report — wording carried from elsewhere
(a)Comparable sales results for the second quarter of 2025 exclude the impact from lost sales from our direct channels during the period of time the direct channels were closed as a result of the May 2025 security incident involving our information technology systems. 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 and direct channels 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.
Current report — wording carried from elsewhere
In the international channel, net sales increased $57 million, or 16%, to $426 million compared to year-to-date 2024. Increases in net sales year-to-date 2025 compared to year-to-date 2024 were driven by increases in net sales in China, sourcing sales to our partners, royalties earned associated with franchise sales in many countries outside of North America and our wholesale arrangements.
Current report — wording carried from elsewhere
General, Administrative and Store Operating Expenses
Current report — wording carried from elsewhere
For year-to-date 2025, our interest expense decreased $8 million to $35 million compared to year-to-date 2024 primarily due to our lower average outstanding debt and lower average borrowing rates for our ABL Facility and Term Loan Facility.
Current report — wording carried from elsewhere
Prior to the amendment of the ABL Facility, 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%.
Current report — wording carried from elsewhere
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.