Victoria's Secret & Co.
For the period ended Nov 1, 2025. Filed Dec 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.
Nov 1, 2025 · Filed Dec 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 2025-08-02; filed 2025-09-05.
0001856437-25-000039
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-11-01; filed 2025-12-05.
0001856437-25-000045
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 136 previous paragraphs and 141 current paragraphs.
70 unchanged; 58 reworded; 13 added; 5 removed; 3 previous and 0 current paragraphs rearranged.
Tables are not compared: 14 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 (13)
Current report
Our operating loss in the third quarter of 2025 improved $28 million, to $19 million, compared to the third quarter of 2024 and our operating loss rate (expressed as a percentage of net sales) improved to (1.3%) from (3.5%) in the third quarter of 2024. The improvement in operating loss compared to the third quarter of 2024 was primarily driven by an increase in net sales and gross profit, partially offset by increases in tariff costs, marketing expenses, store selling expenses and incentive compensation expenses.
Current report
Third Quarter of 2025 Compared to Third Quarter of 2024
Current report
Operating Loss
Current report
(a)Results include net sales for all direct channels operated by the Company (in North America and International) and the direct channel in China operated by our consolidated joint venture.
Current report
In the direct channel, net sales increased $18 million, or 4%, to $429 million compared to the third quarter of 2024 as an increase in traffic and an increase in average transaction value due to increases in units per order and average unit retail were partially offset by a decrease in conversion. The increase in net sales in our direct channel was partially offset by a shift in the reporting of net sales to the international channel due to a change of fulfillment location whereby direct sales to customers in the European Union are now fulfilled by our distribution center in Europe as opposed to our distribution center in the Columbus, Ohio area.
Current report
In the international channel, net sales increased $67 million, or 34%, to $265 million compared to the third quarter of 2024. Increases in net sales in the third quarter of 2025 compared to the third quarter of 2024 were primarily driven by increases in net sales in China and sourcing sales to our partners. The increase in net sales in the third quarter of 2025 compared to the third quarter of 2024 was also due to a shift in the reporting of net sales to the international channel due to a change of fulfillment location whereby direct sales to customers in the European Union are now fulfilled by our distribution center in Europe as opposed to our distribution center in the Columbus, Ohio area.
Current report
The general, administrative and store operating expense rate (expressed as a percentage of net sales) decreased to 37.7% from 38.2% compared to the third quarter of 2024 primarily due to leverage as a result of the increase in net sales.
Current report
Benefit for Income Taxes
Current report
(a)Results include consolidated joint venture sales in China, royalties associated with franchise partners sales, wholesale sales, and beginning in the third quarter of 2025 direct sales in the European Union. Direct sales in the European Union were $12 million in the third quarter of 2025. Prior to the third quarter of 2025, direct sales in the European Union are reported in our Direct channel.
Current report
(a)Results include net sales for all direct channels operated by the Company (in North America and International) and the direct channel in China operated by our consolidated joint venture.
Current 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 2025 and as of December 4, 2025, borrowings of $210 million remained outstanding under the ABL Facility and are expected to continue to decrease through the fourth quarter.
Current report
Internal-Use Software
Current report
In September 2025, the FASB issued ASU 2025-06, Targeted Improvements to the Accounting for Internal-Use Software, which is intended to modernize the accounting for internal-use software costs, primarily by removing references to project stages from capitalization criteria and further clarifying the threshold entities apply to begin capitalizing costs. This standard will be effective for interim and annual reporting periods beginning in fiscal year 2028, with early adoption permitted. This standard may be applied prospectively, retrospectively or using a modified transition approach. We are currently evaluating the impacts of adopting this standard on our consolidated financial statements and related disclosures.
Removed paragraphs (5)
Previous report
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 report
Second Quarter of 2025 Compared to Second Quarter of 2024
Previous report
Operating Income
Previous 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.
Previous report
Provision for Income Taxes
Reworded paragraphs (58)
Previous 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).
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. To evaluate our net sales, we utilize traffic, conversion (which we define as the percentage of customers who visit our stores or 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
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.
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 approximately 70 countries, we benefit from strong global brand recognition, a compelling product assortment and a deep, lasting connection with our customers.
Previous wording
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 wording
Net sales in the third quarter of 2025 increased 9%, to $1.472 billion, compared to the third quarter of 2024. In North America, net sales increased 5% in the stores channel and increased 4% in the direct channel compared to the third 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 third quarter of 2024. On a comparable basis, traffic in the stores channel increased compared to the third quarter of 2024. In the direct channel, Victoria’s Secret and PINK increases in traffic and average transaction value were partially offset by a decrease in conversion compared to the third quarter of 2024. Net sales in our international channel increased 34% compared to the third quarter of 2024.
Previous 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.
Current wording
We continue to focus on the key priorities of our Path to Potential strategic plan: Supercharge our Bra Authority; Recommit to PINK; Fuel Growth in Beauty; 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 second quarter of 2025 and year-to-date 2025 financial performance, see “Results of Operations.”
Current wording
For additional information related to our third quarter of 2025 and year-to-date 2025 financial performance, see “Results of Operations.”
Previous 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.
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 estimate tariffs, net of mitigation efforts, negatively impacted operating income (loss) by approximately $15 million and $25 million in the third quarter of 2025 and year-to-date 2025, respectively. We continue to identify and execute mitigation strategies as the tariff environment evolves.
Previous 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.
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 were restored and fully operational in the second quarter of 2025.
Previous wording
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 wording
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 the second quarter and year-to-date 2025 net sales by approximately $20 million and operating income (loss) 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.
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 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.
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 (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.
Previous 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.
Current wording
(a)In both the third 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 $19 million ($14 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 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.
Current wording
(b)In the third quarter of 2025, we recognized pre-tax charges of $7 million ($6 million after-tax), $6 million included in general, administrative and store operating expense and $1 million included in buying and occupancy expense, related to activities to continue to restructure our executive leadership team and organizational structure, as well as income related to a one-time item. Year-to-date 2025, we recognized pre-tax charges of $20 million ($16 million after-tax), $17 million included in general, administrative and store operating expense and $3 million included in buying and occupancy expense, related to activities to continue to restructure our executive leadership team and organizational structure, as well as net expense related to other one-time items. In the third quarter and year-to-date 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 restructure our executive leadership team.
Previous 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.
Current wording
(c)In the third quarter and year-to-date 2025, we recognized pre-tax expense of $6 million ($5 million after-tax) included in general, administrative and store operating expense related to the financial impact of purchase accounting items and professional service costs related to the acquisition of Adore Me. In the third quarter of 2024, we recognized pre-tax expense of $1 million ($1 million after-tax), income of less than $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. Year-to-date 2024, we recognized pre-tax expense of $4 million ($5 million after-tax), expense of $1 million included in general, administrative and store operating expense and interest expense of $4 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 second quarter of 2025 to the second quarter of 2024 and year-to-date 2025 to year-to-date 2024:
Current wording
The following table compares U.S. company-operated store data for the third quarter of 2025 to the third quarter of 2024 and year-to-date 2025 to year-to-date 2024:
Previous wording
(a)Includes nine partner-operated stores as of August 2, 2025.
Current wording
(a)Includes seven partner-operated stores as of November 1, 2025.
Previous wording
(a)Includes fourteen partner-operated stores as of August 3, 2024.
Current wording
(a)Includes twelve partner-operated stores as of November 2, 2024.
Previous 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.
Current wording
For the third quarter of 2025, our operating loss improved $28 million, to $19 million, compared to an operating loss of $47 million in the third quarter of 2024, and the operating loss rate (expressed as a percentage of net sales) improved to (1.3%) from (3.5%). The drivers of our operating loss results are discussed in the following sections.
Previous wording
The following table provides net sales for the second quarter of 2025 in comparison to the second quarter of 2024:
Current wording
The following table provides net sales for the third quarter of 2025 in comparison to the third 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 franchise partners sales, wholesale sales, and beginning in the third quarter of 2025 direct sales in the European Union. Direct sales in the European Union were $12 million in the third quarter of 2025. Prior to the third quarter of 2025, direct sales in the European Union are reported in our Direct channel.
Previous wording
The following table provides a reconciliation of net sales from the second quarter of 2024 to the second quarter of 2025:
Current wording
The following table provides a reconciliation of net sales from the third quarter of 2024 to the third quarter of 2025:
Previous wording
The following table compares the second quarter of 2025 comparable sales to the second quarter of 2024:
Current wording
The following table compares the third quarter of 2025 comparable sales to the third quarter of 2024:
Previous wording
(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 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. Individual stores are excluded from the comparable sales calculation if they have been closed for four consecutive days or more and direct channels are excluded from the comparable sales calculation if they have been closed for 24 consecutive hours 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
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 wording
Net sales in the third quarter of 2025 increased $125 million, or 9%, to $1.472 billion compared to $1.347 billion in the third quarter of 2024.
Previous wording
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 wording
In the stores channel, our North America net sales increased $40 million, or 5%, to $778 million compared to the third quarter of 2024 driven by an increase in average transaction value due to increases in average unit retail and units per transaction. The increase in net sales in our stores channel was also driven by an increase in conversion, while overall traffic remained flat compared to the third quarter of 2024. On a comparable basis, traffic in the stores channel increased compared to the third quarter of 2024.
Previous 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%.
Current wording
For the third quarter of 2025, our gross profit increased $68 million compared to the third quarter of 2024 to $536 million, and our gross profit rate (expressed as a percentage of net sales) increased to 36.4% from 34.8%.
Previous wording
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 wording
The increase in gross profit dollars compared to the third 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. Buying and occupancy expenses were approximately flat compared to the third quarter of 2024 as a decrease in rent expenses was offset by increases in incentive compensation expenses and expenses related to activities to continue to restructure our executive leadership team and organizational structure.
Previous wording
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 wording
The gross profit rate increase compared to the third quarter of 2024 was primarily driven by leverage in buying and occupancy expenses as a result of the increase in net sales and a decrease in promotional activity, partially offset by an increase in tariff costs.
Previous 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.
Current wording
For the third quarter of 2025, our general, administrative and store operating expenses increased $40 million, or 8%, to $555 million compared to the third quarter of 2024. The increase in general, administrative and store operating expenses compared to the third quarter of 2024 was primarily due to increases in marketing expenses, store selling expenses and incentive compensation expenses. The increase in general, administrative and store operating expenses compared to the third quarter of 2024 was also due to an increase in charges related to Adore Me purchase accounting items and professional service costs, partially offset by a decrease in expenses related to activities to continue to restructure our executive leadership team and organizational structure.
Previous 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.
Current wording
For the third quarter of 2025, our interest expense decreased $4 million to $18 million compared to the third 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 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 wording
For the third quarter of 2025, our effective tax rate was 16.0% compared to 21.3% in the third quarter of 2024. The third quarter of 2025 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 and a change in geographical mix of earnings. The third 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.
Previous wording
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 wording
For year-to-date 2025, operating income remained flat at $42 million compared to year-to-date 2024, and the operating income rate (expressed as a percentage of net sales) remained flat at 1.0%. The drivers of the operating income results are discussed in the following sections.
Previous 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.
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. Individual stores are excluded from the comparable sales calculation if they have been closed for four consecutive days or more and direct channels are excluded from the comparable sales calculation if they have been closed for 24 consecutive hours 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
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 wording
Net sales year-to-date 2025 increased $160 million, or 4%, to $4.284 billion compared to $4.124 billion year-to-date 2024.
Previous wording
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 wording
In the stores channel, our North America net sales increased $58 million, or 3%, to $2.325 billion, compared to year-to-date 2024 as an increase in average transaction value due to increases in average unit retail and units per transaction was 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.
Previous wording
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 wording
In the direct channel, net sales decreased $22 million, or 2%, to $1.268 billion compared to year-to-date 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, increases in traffic, units per order and average unit retail were offset by a decrease in conversion compared to year-to-date 2024. The decrease in net sales in our direct channel was also due to a shift in the reporting of net sales to the international channel due to a change of fulfillment location whereby direct sales to customers in the European Union are now fulfilled by our distribution center in Europe as opposed to our distribution center in the Columbus, Ohio area.
Previous wording
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 wording
In the international channel, net sales increased $124 million, or 22%, to $691 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. The increase in net sales year-to-date 2025 compared to year-to-date 2024 was also due to a shift in the reporting of net sales to the international channel due to a change of fulfillment location whereby direct sales to customers in the European Union are now fulfilled by our distribution center in Europe as opposed to our distribution center in the Columbus, Ohio area.
Previous wording
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 wording
For year-to-date 2025, our gross profit increased $58 million compared to year-to-date 2024 to $1.529 billion, and our gross profit rate (expressed as a percentage of net sales) remained flat at 35.7%.
Previous 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.
Current wording
The increase in gross profit dollars compared to year-to-date 2024 was primarily 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. Buying and occupancy expenses were approximately flat compared to year-to-date 2024 as a decrease in rent expenses was offset by an increase in incentive compensation expenses, a $6 million gain on sale of certain non-store corporate-related assets in the second quarter of 2024 and an increase in expenses related to activities to restructure our executive leadership team and organizational structure.
Previous 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.
Current wording
The gross profit rate remained flat compared to year-to-date 2024 primarily driven by leverage in buying and occupancy expenses as a result of the increase in net sales and a decrease in promotional activity, offset by an increase in tariff costs.
Previous wording
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 wording
For year-to-date 2025, our general, administrative and store operating expenses increased $58 million, or 4%, to $1.487 billion 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, incentive compensation expenses and marketing expenses. The increase in general, administrative and store operating expenses compared to year-to-date 2024 was also due to increases in charges related to Adore Me purchase accounting items and professional service costs and expenses related to activities to continue to restructure our executive leadership team and organizational structure.
Previous 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.
Current wording
The general, administrative and store operating expense rate (expressed as a percentage of net sales) remained flat at 34.7% compared to year-to-date 2024 primarily due to leverage as a result of the increase in net sales, offset by an increase in expenses noted above.
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Rearranged previous paragraphs (3)
Previous report — wording carried elsewhere
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 report — wording carried elsewhere
(a)Results include consolidated joint venture direct sales in China.
Previous report — wording carried elsewhere
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.