Victoria's Secret & Co.
For the period ended Aug 1, 2026. Filed Sep 4, 2026.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Aug 1, 2026 · Filed Sep 4, 2026
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 2026-05-02; filed 2026-06-05.
0001856437-26-000013
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-08-01; filed 2026-09-04.
0001856437-26-000021
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 113 previous paragraphs and 142 current paragraphs.
58 unchanged; 49 reworded; 25 added; 6 removed; 0 previous and 10 current paragraphs rearranged.
Tables are not compared: 12 previous and 15 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 (25)
Current report
During the second quarter of 2026, we received cash of $148 million for IEEPA tariff refund recoveries, which included $4 million of interest. We recorded $140 million of pre-tax income in the 2026 Consolidated Statements of Income, which included $135 million as a reduction of costs of goods sold, net of related costs and other items, $4 million of interest income in Other Income and $1 million as a reduction to General, Administrative and Store Operating Expenses. We also recorded $1 million as a reduction to Property and Equipment, Net in the August 1, 2026 Consolidated Balance Sheet.
Current report
As of August 1, 2026, we did not record a receivable related to any potential future IEEPA tariff refunds as the amount and timing of any future recoveries remains uncertain. The IEEPA tariff refunds received in the second quarter of 2026 represents over 95% of total IEEPA tariffs paid by us.
Current report
Security Incident Involving Information Technology Systems
Current report
As previously disclosed, we estimate the May 2025 security incident involving our information technology systems negatively impacted net sales in the second quarter of 2025 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
(a)In the second quarter of 2026, we recognized pre-tax income of $140 million ($105 million after-tax), $135 million included in costs of goods sold, $4 million included in other income and $1 million included in general, administrative and store operating expense, related to IEEPA tariff refund recoveries, including interest received, net of related costs and other items.
Current report
Second Quarter of 2026 Compared to Second Quarter of 2025
Current report
Net sales in the second quarter of 2026 increased $152 million, or 10%, to $1.611 billion compared to $1.459 billion in the second quarter of 2025.
Current report
In the stores channel, our North America net sales increased $73 million, or 9%, to $898 million compared to the second quarter of 2025 as increases in average unit retail and traffic were partially offset by a decrease in units per transaction. Conversion was approximately flat compared to the second quarter of 2025.
Current report
Results of Operations
Current report
Year-to-Date 2026 Compared to Year-to-Date 2025
Current report
Operating Income
Current report
For year-to-date 2026, operating income increased $272 million, to $333 million, compared to operating income of $61 million year-to-date 2025, and the operating income rate (expressed as a percentage of net sales) increased to 10.5% from 2.2%. 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 2026 in comparison to year-to-date 2025:
Current report
The following table compares year-to-date 2026 comparable sales to year-to-date 2025:
Current report
Net sales year-to-date 2026 increased $358 million, or 13%, to $3.170 billion compared to $2.812 billion year-to-date 2025.
Current report
In the stores channel, our North America net sales increased $154 million, or 10%, to $1.700 billion, compared to year-to-date 2025 as increases in average unit retail and traffic were partially offset by a decrease in units per transaction. Conversion was flat compared to year-to-date 2025.
Current report
In the direct channel, net sales increased $69 million, or 8%, to $909 million compared to year-to-date 2025 as increases in traffic and average unit retail were partially offset by decreases in conversion and units per order. Additionally, we estimate the website closure due to the May 2025 security incident negatively impacted net sales year-to-date 2025 by approximately $20 million.
Current report
The following table provides a reconciliation of net sales from year-to-date 2025 to year-to-date 2026:
Current report
Gross Profit
Current report
For year-to-date 2026, our gross profit increased $351 million compared to year-to-date 2025 to $1.344 billion, and our gross profit rate (expressed as a percentage of net sales) increased to 42.4% from 35.3%.
Current report
The gross profit rate increase compared to year-to-date 2025 was primarily driven by IEEPA tariff refund recoveries, leverage in buying and occupancy expenses as a result of the increase in net sales, an increase in regular-priced selling and a decrease in promotional activity.
Current report
For year-to-date 2026, our general, administrative and store operating expenses increased $79 million, or 8%, to $1.011 billion compared to year-to-date 2025. The increase in general, administrative and store operating expenses compared to year-to-date 2025 was primarily due to increases in store selling and marketing expenses and an increase in incentive compensation expenses associated with our improved results.
Current report
Interest Expense
Current report
Provision for Income Taxes
Removed paragraphs (6)
Previous report
Proxy Contest
Previous report
Subsequent to the end of the first quarter of 2026, BBRC and its Chairman Brett Blundy initiated a proxy contest seeking to withhold votes against directors nominated for re-election at our upcoming 2026 Annual Meeting of Shareholders. We expect to incur additional professional and legal fees associated with the proxy contest in the second quarter of 2026.
Previous report
First Quarter of 2026 Compared to First Quarter of 2025
Previous report
Net sales in the first quarter of 2026 increased $207 million, or 15%, to $1.560 billion compared to $1.353 billion in the first quarter of 2025.
Previous report
In the stores channel, our North America net sales increased $82 million, or 11%, to $803 million compared to the first quarter of 2025 driven by increases in traffic and average unit retail, while units per transaction and conversion remained flat.
Previous report
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.
Reworded paragraphs (49)
Previous wording
Net sales in the first quarter of 2026 increased 15%, to $1.560 billion, compared to the first quarter of 2025. In North America, net sales increased 11% in the stores channel and increased 8% in the direct channel compared to the first quarter of 2025. Traffic and average unit retail increased in our stores and direct channels compared to the first quarter of 2025. Net sales in our international channel increased 45% compared to the first quarter of 2025.
Current wording
Net sales in the second quarter of 2026 increased 10%, to $1.611 billion, compared to the second quarter of 2025. In North America, net sales increased 9% in the stores channel and increased 8% in the direct channel compared to the second quarter of 2025. Traffic and average unit retail increased in our stores and direct channels compared to the second quarter of 2025. Additionally, we estimate the website closure due to the security incident involving our information technology systems in May 2025 negatively impacted net sales in the second quarter of 2025 by approximately $20 million. Net sales in our international channel increased 20% compared to the second quarter of 2025.
Previous wording
Our operating income in the first quarter of 2026 increased $56 million, to $76 million, compared to the first quarter of 2025 and our operating income rate (expressed as a percentage of net sales) increased to 4.9% from 1.5% in the first quarter of 2025. The increase in operating income compared to the first quarter of 2025 was primarily driven by an increase in net sales and improved merchandise margins.
Current wording
Our operating income in the second quarter of 2026 increased $216 million, to $257 million, compared to the second quarter of 2025 and our operating income rate (expressed as a percentage of net sales) increased to 15.9% from 2.8% in the second quarter of 2025. The increase in operating income compared to the second quarter of 2025 was primarily driven by an increase in net sales, a $135 million benefit from the recognition of IEEPA tariff refund recoveries in costs of goods sold and improved merchandise margins.
Previous wording
For additional information related to our first quarter of 2026 financial performance, see “Results of Operations.”
Current wording
For additional information related to our second quarter of 2026 financial performance, see “Results of Operations.”
Previous wording
Beginning in February 2025, the U.S. administration imposed tariffs on a broad range of imported goods under the International Emergency Economic Powers Act (“IEEPA”). On February 20, 2026, the U.S. Supreme Court ruled tariffs imposed under the IEEPA were not authorized, and on March 4, 2026, the U.S. Court of International Trade directed U.S. Customs and Border Protection (“CBP”) to refund amounts previously collected, including applicable interest. The CBP has established a phased administrative process for submitting refund claims for certain IEEPA tariffs. We are in the process of requesting refunds for the IEEPA tariffs paid, however, the amount and timing of recoveries remain uncertain. As a result, as of May 2, 2026, we did not record a receivable related to potential IEEPA tariff refunds.
Current wording
Beginning in February 2025, the U.S. administration imposed tariffs on a broad range of imported goods under the IEEPA. On February 20, 2026, the U.S. Supreme Court ruled tariffs imposed under the IEEPA were not authorized, and on March 4, 2026, the U.S. Court of International Trade directed CBP to refund amounts previously collected, including applicable interest. The CBP established a phased administrative process for submitting refund claims for certain IEEPA tariffs.
Previous wording
Following the Supreme Court’s decision relating to the IEEPA tariffs, the U.S. administration announced a new 10% global tariff under Section 122 of the Trade Act of 1974, subject to certain exceptions. We estimate tariffs, net of mitigation efforts, negatively impacted operating income by approximately $85 million in fiscal year 2025. We estimate tariffs, net of mitigation efforts, negatively impacted operating income by an incremental approximately $14 million in the first quarter of 2026 compared to the first quarter of 2025. It is unclear at this time what impact these decisions will have on our future results of operations, including the amount of refunds for the IEEPA tariffs previously paid, any changes in tariff levels or the imposition of new tariffs through other means. We continue to identify and execute mitigation strategies as the tariff environment evolves.
Current wording
Following the Supreme Court’s decision relating to the IEEPA tariffs, the U.S. administration announced a new 10% global tariff under Section 122 of the Trade Act of 1974, subject to certain exceptions, which commenced on February 24, 2026 and expired on July 24, 2026. In July 2026, the U.S. administration imposed new tariffs ranging from 10% to 12.5% under Section 301 of the Trade Act of 1974, effective July 24, 2026. It is unclear at this time what impact tariffs will have on our future results of operations, including any changes in tariff levels or the imposition of new tariffs or other trade policies. We continue to identify and execute mitigation strategies as the tariff environment evolves.
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 in the first quarter of 2025 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 in the second quarter and year-to-date 2025 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 the first quarter of 2026 and 2025, we recognized pre-tax net expense of $4 million and $6 million ($3 million and $4 million after-tax, respectively), $2 million and $2 million included in buying and occupancy expense and $2 million and $4 million included in general, administrative and store operating expense, related to activities to continue to restructure our executive leadership team and organizational structure, as well as other one-time items.
Current wording
(b)In the second quarter of 2026 and 2025, we recognized pre-tax net expense of $3 million and $8 million ($2 million and $6 million after-tax, respectively), $2 million and $8 million included in general, administrative and store operating expense and $1 million and less than $1 million included in costs of goods sold, buying and occupancy expense, related to activities to continue to restructure our executive leadership team and organizational structure, as well as other one-time items. Year-to-date 2026 and 2025, we recognized pre-tax net expense of $7 million and $13 million ($5 million and $10 million after-tax, respectively), $4 million and $11 million included in general, administrative and store operating expense and $3 million and $2 million included in costs of goods sold, buying and occupancy expense, related to activities to continue to restructure our executive leadership team and organizational structure, as well as other one-time items.
Previous wording
(b)In the first quarter of 2025, we recognized amortization expense of $6 million ($5 million after-tax) included in general, administrative and store operating expense, related to our definite-lived intangible assets.
Current wording
(c)In the second quarter and year-to-date 2025, we recognized amortization expense of $6 million and $13 million ($5 million and $9 million after-tax, respectively) included in general, administrative and store operating expense, related to our definite-lived intangible assets.
Previous wording
The following table compares U.S. company-operated store data for the first quarter of 2026 to the first quarter of 2025:
Current wording
The following table compares U.S. company-operated store data for the second quarter of 2026 to the second quarter of 2025 and year-to-date 2026 to year-to-date 2025:
Previous wording
The following table represents store data for first quarter of 2025:
Current wording
The following table represents store data for year-to-date 2026:
Previous wording
(a)Includes five partner-operated stores as of May 2, 2026.
Current wording
(a)Includes three partner-operated stores as of August 1, 2026.
Previous wording
The following table represents store data for the first quarter of 2026:
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
For the first quarter of 2026, our operating income increased $56 million, to $76 million, compared to operating income of $20 million in the first quarter of 2025, and the operating income rate (expressed as a percentage of net sales) increased to 4.9% from 1.5%. The drivers of our operating income results are discussed in the following sections.
Current wording
For the second quarter of 2026, our operating income increased $216 million, to $257 million, compared to operating income of $41 million in the second quarter of 2025, and the operating income rate (expressed as a percentage of net sales) increased to 15.9% from 2.8%. 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 2026 in comparison to the first quarter of 2025:
Current wording
The following table provides net sales for the second quarter of 2026 in comparison to the second quarter of 2025:
Previous 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. Prior to the third quarter of 2025, direct sales in the European Union are reported in our Direct channel. Direct sales in the European Union reported in the International channel were $17 million in the first quarter of 2026.
Current wording
(a)Results include consolidated China Joint Venture sales, royalties associated with franchise partners’ sales, wholesale sales, and beginning in the third quarter of 2025 direct sales in the European Union. Prior to the third quarter of 2025, direct sales in the European Union are reported in our Direct channel. Direct sales in the European Union reported in the International channel were $22 million in the second quarter of 2026.
Previous wording
The following table compares the first quarter of 2026 comparable sales to the first quarter of 2025:
Current wording
The following table compares the second quarter of 2026 comparable sales to the second quarter of 2025:
Previous wording
In the direct channel, net sales increased $36 million, or 8%, to $469 million compared to the first quarter of 2025 as increases in traffic and average unit retail were partially offset by decreases in conversion and units per order.
Current wording
In the direct channel, net sales increased $33 million, or 8%, to $439 million compared to the second quarter of 2025 as increases in traffic and average unit retail were partially offset by decreases in conversion and units per order. Additionally, we estimate the website closure due to the May 2025 security incident negatively impacted net sales in the second quarter of 2025 by approximately $20 million.
Previous wording
In the international channel, net sales increased $89 million, or 45%, to $288 million compared to the first quarter of 2025. The increase in net sales in the first quarter of 2026 compared to the first quarter of 2025 was primarily 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.
Current wording
In the international channel, net sales increased $46 million, or 20%, to $274 million compared to the second quarter of 2025. The increase in net sales in the second quarter of 2026 compared to the second quarter of 2025 was primarily driven by increases in net sales in China and royalties earned associated with franchise sales in many countries outside of North America, partially offset by a decrease in sourcing sales to our partners.
Previous wording
Net sales in the direct and international channels in the first quarter of 2026 compared to the first quarter of 2025 were also impacted by a $17 million 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 wording
Net sales in the direct and international channels in the second quarter of 2026 compared to the second quarter of 2025 were also impacted by a $22 million 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
The following table provides a reconciliation of net sales from the first quarter of 2025 to the first quarter of 2026:
Current wording
The following table provides a reconciliation of net sales from the second quarter of 2025 to the second quarter of 2026:
Previous wording
(a)Results include net sales for all direct channels operated by the Company (in North America and International) and the direct sales in China operated by our consolidated joint venture.
Current wording
(a)Results include net sales for all direct channels operated by the Company (in North America and International) and the direct sales in China operated by our consolidated China Joint Venture.
Previous wording
For the first quarter of 2026, our gross profit increased $111 million compared to the first quarter of 2025 to $585 million, and our gross profit rate (expressed as a percentage of net sales) increased to 37.5% from 35.1%.
Current wording
For the second quarter of 2026, our gross profit increased $240 million compared to the second quarter of 2025 to $759 million, and our gross profit rate (expressed as a percentage of net sales) increased to 47.1% from 35.6%.
Previous wording
The gross profit rate increase compared to the first quarter of 2025 was primarily driven by leverage in buying and occupancy expenses as a result of the increase in net sales, a decrease in promotional activity and an increase in regular-priced selling, partially offset by an increase in net tariff costs.
Current wording
The gross profit rate increase compared to the second quarter of 2025 was primarily driven by IEEPA tariff refund recoveries, leverage in buying and occupancy expenses as a result of the increase in net sales, an increase in regular-priced selling and a decrease in promotional activity.
Previous wording
For the first quarter of 2026, our general, administrative and store operating expenses increased $55 million, or 12%, to $509 million compared to the first quarter of 2025. The increase in general, administrative and store operating expenses compared to the first quarter of 2025 was primarily due to increases in store selling expenses, incentive compensation expenses associated with our improved results and marketing expenses.
Current wording
For the second quarter of 2026, our general, administrative and store operating expenses increased $24 million, or 5%, to $502 million compared to the second quarter of 2025. The increase in general, administrative and store operating expenses compared to the second quarter of 2025 was primarily due to increases in store selling and marketing expenses.
Previous wording
The general, administrative and store operating expense rate (expressed as a percentage of net sales) decreased to 32.6% from 33.6% compared to the first quarter of 2025 primarily due to leverage as a result of the increase in net sales.
Current wording
The general, administrative and store operating expense rate (expressed as a percentage of net sales) decreased to 31.2% from 32.8% compared to the second quarter of 2025 primarily due to leverage as a result of the increase in net sales.
Previous wording
For the first quarter of 2026, our interest expense decreased $2 million to $15 million compared to the first quarter of 2025 primarily due to our lower average outstanding debt under our ABL Facility and Term Loan Facility and lower average borrowing rate for our Term Loan Facility.
Current wording
For the second quarter of 2026, our interest expense decreased $3 million to $15 million compared to the second quarter of 2025 primarily due to our lower average outstanding debt under our ABL Facility and Term Loan Facility and a lower average borrowing rate for our Term Loan Facility.
Previous wording
(a)The percentage change in comparable sales represents comparable store and direct 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.
Current wording
(a)Comparable sales results for year-to-date 2026 and 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
The increase in gross profit dollars compared to the first quarter of 2025 was due to the increase in merchandise margin dollars which was driven by an increase in net sales, a decrease in promotional activity and an increase in regular-priced selling, partially offset by a $14 million increase in net tariff costs. The increase in gross profit dollars was also partially offset by an increase in buying and occupancy expenses primarily driven by increases in incentive compensation expenses associated with our improved results and fulfillment costs associated with our net sales increase.
Current wording
The increase in gross profit dollars compared to year-to-date 2025 was primarily due to the increase in merchandise margin dollars which was driven by an increase in net sales, a $135 million benefit from the recognition of IEEPA tariff refund recoveries, an increase in regular-priced selling and a decrease in promotional activity. The increase in gross profit dollars was also partially offset by an increase in buying and occupancy expenses primarily driven by increases in fulfillment costs associated with our net sales increase and incentive compensation expenses associated with our improved results.
Previous wording
For the first quarter of 2026, our effective tax rate was 11.7% compared to 50.9% in the first quarter of 2025. The first quarter of 2026 rate differed from our combined estimated federal and state statutory rate primarily due to the recognition of excess tax benefits related to share-based compensation awards that vested in the period. The first quarter of 2025 rate differed from our combined estimated federal and state statutory rate primarily due to additional tax expense from share-based compensation awards that vested in the period.
Current wording
For year-to-date 2026, our effective tax rate was 21.5% compared to 30.5% year-to-date 2025. The year-to-date 2026 rate differed from our combined estimated federal and state statutory rate primarily due to the recognition of excess tax benefits related to share-based compensation awards that vested in the period. The year-to-date 2025 rate differed from our combined estimated federal and state statutory rate primarily due to additional tax expense related to share-based compensation awards that vested in the period.
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 season.
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 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 season.
Previous wording
(a)The May 2, 2026 and May 3, 2025 amounts represent thirteen-week periods and the January 31, 2026 amounts represent a fifty-two-week period.
Current wording
(a)The August 1, 2026 and August 2, 2025 amounts represent twenty-six-week periods and the January 31, 2026 amounts represent a fifty-two-week period.
Previous wording
(b)For the reporting period ended May 2, 2026, the availability under the ABL Facility was limited by our borrowing base of $717 million, less outstanding borrowings of $15 million and letters of credit of $17 million. For the reporting period ended January 31, 2026, the availability was limited by our borrowing base of $606 million, less letters of credit of $17 million. 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.
Current wording
(b)For the reporting period ended August 1, 2026, the availability under the ABL Facility was limited by our borrowing base of $666 million, less letters of credit of $17 million. For the reporting period ended January 31, 2026, the availability was limited by our borrowing base of $606 million, less letters of credit of $17 million. 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.
Previous wording
The following table provides a summary of our cash flow activity for the first quarter of 2026 and 2025:
Current wording
The following table provides a summary of our cash flow activity for year-to-date 2026 and 2025:
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 2026 was $137 million, a decrease in net cash flows used for operating activities of $13 million compared to the first quarter of 2025. The decrease in net cash flows used for operating activities in the first quarter of 2026 was primarily driven by an increase in net income of $54 million, net of the non-cash items noted above, partially offset by higher net operating cash outflows associated with working capital changes of $38 million. The most significant working capital driver resulting in the increase in net operating cash outflows in the first quarter of 2026 compared to the first quarter of 2025 is related to the timing of payments for 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 increased average unit costs driven by tariffs.
Current wording
Net cash provided by 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 2026 was $265 million, an increase in net cash flows provided by operating activities of $259 million compared to year-to-date 2025. The increase in net cash flows provided by operating activities year-to-date 2026 was primarily driven by an increase in net income of $224 million, net of the non-cash items noted above, and lower net operating cash outflows associated with working capital changes of $45 million. The most significant driver resulting in the increase in net cash flows provided by operating activities year-to-date 2026 was the $148 million of IEEPA tariff refund recoveries, which included $4 million of interest received, in year-to-date 2026. The most significant working capital driver resulting in the increase in net operating cash flows year-to-date 2026 compared to year-to-date 2025 was related to the timing of payments for the increase in inventory levels. The increase in inventory levels was primarily related to supporting our net sales growth.
Previous wording
Net cash used for investing activities in the first quarter of 2026 was $54 million, consisting solely of capital expenditures. The capital expenditures were primarily related to our store capital program and the customer experience, along with investments in technology and logistics to support our strategic initiatives to drive growth and operating efficiencies.
Current wording
Net cash used for investing activities was $128 million and $111 million for year-to-date 2026 and 2025, respectively, consisting solely of capital expenditures for both periods. The capital expenditures were primarily related to our store capital program and improving the customer experience, along with investments in technology and logistics to support our strategic initiatives to drive growth and operating efficiencies.
Previous wording
We estimate capital expenditures in the range of $220 million to $240 million in fiscal year 2026. We expect that our capital expenditures will be focused on investing in our store capital program and the customer experience, along with investments in technology and logistics to support our strategic initiatives to drive growth and operating efficiencies.
Current wording
We estimate capital expenditures in the range of $220 million to $240 million in fiscal year 2026. We expect that our capital expenditures will be focused on investing in our store capital program and improving the customer experience, along with investments in technology and logistics to support our strategic initiatives to drive growth and operating efficiencies.
Previous wording
Net cash used for financing activities in the first quarter of 2026 was $121 million, consisting primarily of $100 million of share repurchases, $40 million of repayments under the ABL Facility and $28 million of payments for taxes on share-based compensation awards issued, partially offset by borrowings of $55 million under the ABL Facility.
Current wording
Net cash used for financing activities year-to-date 2026 was $136 million, consisting primarily of $100 million of share repurchases, $55 million of repayments under the ABL Facility and $30 million of payments for taxes on share-based compensation awards issued, partially offset by borrowings of $55 million under the ABL Facility.
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
Our Board determines share repurchase authorizations, giving consideration to our levels of profit and cash flows, capital requirements, current and forecasted liquidity, and restrictions placed upon us by our borrowing arrangements, as well as financial and other conditions existing at the time. We use cash flows generated from operating activities to fund any share repurchases. Once authorized by our Board, the timing and amount of any share repurchases are made at our discretion, taking into account a number of factors, including market conditions.
Current wording
Our Board determines share repurchase authorizations, giving consideration to our levels of profit and cash flows, capital requirements, current and forecasted liquidity, and restrictions placed upon us by our borrowing arrangements, as well as financial and other conditions existing at the time. We use cash flows generated from operating activities to fund our share repurchases. Once authorized by our Board, the timing and amount of any share repurchases are made at our discretion, taking into account a number of factors, including market conditions.
Showing the first 40 of 49 pairs. Open the source sections for the rest.
Rearranged current paragraphs (10)
Current report — wording carried from elsewhere
(a)Comparable sales results for the second quarter of 2026 and 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 comparable store and direct 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.
Current report — wording carried from elsewhere
The increase in gross profit dollars compared to the second quarter of 2025 was due to the increase in merchandise margin dollars which was driven by an increase in net sales, a $135 million benefit from the recognition of IEEPA tariff refund recoveries, an increase in regular-priced selling and a decrease in promotional activity. The increase in gross profit dollars was also partially offset by an increase in buying and occupancy expenses primarily driven by an increase in fulfillment costs associated with our net sales increase.
Current report — wording carried from elsewhere
For the second quarter of 2026, our effective tax rate was 24.1% compared to 25.7% in the second quarter of 2025. The second quarter of 2026 rate differed from our combined estimated federal and state statutory rate primarily due to the recognition of excess tax benefits related to share-based compensation awards that vested in the period. The second quarter of 2025 rate was consistent with our combined estimated federal and state statutory rate.
Current report — wording carried from elsewhere
(a)Results include consolidated China Joint Venture sales, royalties associated with franchise partners’ sales, wholesale sales, and beginning in the third quarter of 2025 direct sales in the European Union. Prior to the third quarter of 2025, direct sales in the European Union are reported in our Direct channel. Direct sales in the European Union reported in the International channel were $39 million year-to-date 2026.
Current report — wording carried from elsewhere
In the international channel, net sales increased $135 million, or 32%, to $561 million compared to year-to-date 2025. The increase in net sales year-to-date 2026 compared to year-to-date 2025 was primarily 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 report — wording carried from elsewhere
Net sales in the direct and international channels year-to-date 2026 compared to year-to-date 2025 were also impacted by a $39 million 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 — wording carried from elsewhere
(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 China Joint Venture.
Current report — wording carried from elsewhere
General, Administrative and Store Operating Expenses
Current report — wording carried from elsewhere
The general, administrative and store operating expense rate (expressed as a percentage of net sales) decreased to 31.9% from 33.2% compared to year-to-date 2025 primarily due to leverage as a result of the increase in net sales.
Current report — wording carried from elsewhere
For year-to-date 2026, our interest expense decreased $5 million to $30 million compared to year-to-date 2025 primarily due to our lower average outstanding debt under our ABL Facility and Term Loan Facility and a lower average borrowing rate for our Term Loan Facility.