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What changed in Victoria's Secret & Co.'s 10-K — 2025 vs 2026

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Paragraph-level year-over-year comparison of Victoria's Secret & Co.'s 2025 and 2026 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2026 report.

+427 added−505 removedSource: 10-K (2025-03-21) vs 10-K (2024-03-22)

Top changes in Victoria's Secret & Co.'s 2026 10-K

427 paragraphs added · 505 removed · 317 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

53 edited+32 added−72 removed13 unchanged
Biggest changeThe following table provides the number of our company-operated Victoria's Secret and PINK, China joint venture and Adore Me retail stores in operation as of February 3, 2024 and January 28, 2023: February 3, 2024 January 28, 2023 Company-Operated: U.S. 808 812 Canada 23 25 831 837 China Joint Venture: Beauty & Accessories (a) 34 39 Full Assortment 36 33 70 72 Adore Me 6 6 Total 907 915 _______________ (a) Includes thirteen partner-operated stores. 2 Table of Contents The following table provides the changes in the number of our company-operated Victoria's Secret and PINK, China joint venture and Adore Me retail stores operated for the past three fiscal years: Beginning of Year Opened Closed Acquired (a) Reclassed to Joint Venture (b) End of Year 2023 (c) 915 21 (29) — — 907 2022 (c) 899 26 (24) 6 8 915 2021 933 7 (41) — — 899 _______________ (a) Relates to acquisition of Adore Me.
Biggest changeThe following table provides the changes in the number of our company-operated Victoria's Secret and PINK, China joint venture and Adore Me retail stores operated for the past three fiscal years: Beginning of Year Opened Closed Acquired (a) Reclassed to Joint Venture (b) End of Year 2024 (c) 907 24 (49) — — 882 2023 (c) 915 21 (29) — — 907 2022 (c) 899 26 (24) 6 8 915 _______________ (a) Relates to acquisition of Adore Me.
Certain product lines offer more frequent introductions of new merchandise, and the primary selling seasons, Fall and Holiday, will often showcase greater quantities of introductions of new merchandise. We strive to tailor our buying strategies to align with customer demand and trends across our core categories with agile and fast lead times.
Certain product lines offer more frequent introductions of new merchandise, and the primary selling seasons, Fall and Holiday, will often showcase greater quantities of new merchandise. We strive to tailor our buying strategies to align with customer demand and trends across our core categories with agile and fast lead times.
The systems include applications related to point-of-sale, e-commerce, merchandising, planning, sourcing, logistics, inventory management, data security and support systems including human resources and finance. Seasonal Business Our operations are seasonal in nature and consist of two principal selling seasons: Spring (the first and second quarters) and Fall (the third and fourth quarters).
Our systems include applications related to point-of-sale, e-commerce, merchandising, planning, sourcing, logistics, inventory management, data security and support systems including human resources and finance. Seasonal Business Our operations are seasonal in nature and consist of two principal selling seasons: Spring (the first and second quarters) and Fall (the third and fourth quarters).
Although the laws vary by jurisdiction, in general, trademarks remain valid and enforceable as long as the marks are used in connection with the related products and services and the required registration renewals are filed.
Although laws vary by jurisdiction, in general, trademarks remain valid and enforceable as long as the marks are used in connection with the related products and services and the required registration renewals are filed.
ITEM 1. BUSINESS. General Victoria's Secret & Co. (together with its subsidiaries unless the context otherwise requires, “we”, “us”, “our” or the “Company”) is a specialty retailer of women's intimate and other apparel and beauty products marketed under the Victoria's Secret, Victoria's Secret PINK (“PINK”) and Adore Me brand names.
ITEM 1. BUSINESS. General Victoria's Secret & Co. (together with its subsidiaries unless the context otherwise requires, “we”, “us”, “our” or the “Company”) is a specialty retailer of women's intimate and other apparel and beauty products marketed under the Victoria's Secret, PINK and Adore Me brand names.
Our policy is to maintain sufficient quantities of inventories on hand in our retail stores and distribution centers to enable us to offer customers an appropriate selection of current merchandise. We emphasize rapid turnover and mark down products as needed to keep merchandise fresh and current.
Our policy is to maintain sufficient quantities of inventories on hand in our retail stores and distribution centers to enable us to offer customers an appropriate selection of current merchandise. We emphasize rapid turnover and mark down products as needed to keep merchandise fresh and on-trend.
Our partners are generally responsible for providing the capital necessary to lease retail space, build out stores and/or develop websites, fund the operations of the business, and over the longer term, reinvest in the business.
Our partners are generally responsible for providing the capital necessary to lease retail space, build out stores and/or develop websites, fund the operations of their business, and over the longer term, reinvest in their business.
Revenue recognized under franchise and license arrangements generally consists of royalties earned and recognized upon the sale of merchandise by franchise and license partners to retail customers. Revenue is generally recognized under wholesale and sourcing arrangements at the time the title passes to the partner.
Revenue recognized under franchise and license arrangements generally consists of royalties earned and recognized upon the sale of merchandise by franchise and license partners to retail customers. Revenue is generally recognized under wholesale and sourcing arrangements at the time title of the product passes to the partner.
While there are no current regulatory matters that we expect to be material to our results of operations, financial position, or cash flows, there can be no assurance that existing or future laws, regulations and standards applicable to our operations or products will not lead to a material adverse impact on our results of operations, financial position or cash flows. 6 Table of Contents Intellectual Property Our trademarks and patents, which constitute our primary intellectual property, have been registered or are the subject of pending applications in the U.S.
While there are no current regulatory matters that we expect to be material to our results of operations, financial position, or cash flows, there can be no assurance that existing or future laws, regulations and standards applicable to our operations or products will not lead to a material adverse impact on our results of operations, financial position or cash flows. 5 Table of Contents Intellectual Property Our trademarks and patents, which constitute our primary intellectual property, have been registered or are the subject of pending applications in the U.S.
The Company also includes the merchandise sourcing and production function serving us and our international partners. We operate as a single segment designed to seamlessly serve customers worldwide through stores and online channels. On December 30, 2022, we completed our acquisition of AdoreMe, Inc. (“Adore Me”), a digitally-native intimates brand.
The Company also includes the merchandise sourcing and production function serving us and our international partners. We operate as a single segment designed to seamlessly serve customers worldwide through stores and digital channels. On December 30, 2022, we completed our acquisition of AdoreMe, Inc. (“Adore Me”), a digitally-native intimates brand.
Boyle joined L Brands in 2008 and previously served as Chief Operating Officer of PINK from 2016 to 2020, Chief Administrative Officer of PINK from 2015 to 2016 and Executive Vice President at PINK from 2012 to 2014; • Melinda McAfee, 53, has been our Chief Human Resources Officer and Chief Legal Officer since October 2022. Ms.
Boyle joined L Brands in 2008 and previously served as Chief Operating Officer of PINK from 2016 to 2020, Chief Administrative Officer of PINK from 2015 to 2016 and Executive Vice President at PINK from 2012 to 2014; and • Melinda McAfee, 54, has been our Chief Human Resources Officer and Chief Legal Officer since October 2022. Ms.
Copies of any of the above-referenced documents will also be made available, free of charge, upon written request to: Victoria's Secret & Co. Investor Relations Department Four Limited Parkway East Reynoldsburg, Ohio 43068 11 Table of Contents
Copies of any of the above-referenced documents will also be made available, free of charge, upon written request to: Victoria's Secret & Co. Investor Relations Department Four Limited Parkway East Reynoldsburg, Ohio 43068 8 Table of Contents
We believe there are numerous alternative suppliers for our merchandise and that the loss of any one vendor would not have a material adverse effect on our business. Design, Product Development and Sourcing Our product design and innovation is an important component of our strategy.
We believe there are numerous alternative suppliers for our merchandise and that the loss of any one vendor would not have a material adverse effect on our business. 4 Table of Contents Design, Product Development and Sourcing Our product design and innovation is an important component of our strategy.
For additional information, see Note 6 to the Consolidated and Combined Financial Statements included in Item 8. Financial Statements and Supplementary Data. Fiscal Year Our fiscal year ends on the Saturday nearest to January 31.
For additional information, see Note 5 to the Consolidated Financial Statements included in Item 8. Financial Statements and Supplementary Data. Fiscal Year Our fiscal year ends on the Saturday nearest to January 31.
We have approximately 910 stores in the United States (“U.S.”), Canada and China, as well as our own websites, www.VictoriasSecret.com, www.PINK.com and www.AdoreMe.com, and other digital channels worldwide. Additionally, we have more than 460 stores in nearly 70 countries operating under franchise, license and wholesale arrangements.
We have more than 880 stores in the United States (“U.S.”), Canada and China, as well as our own websites, www.VictoriasSecret.com, www.PINK.com, www.AdoreMe.com and www.DailyLook.com, and other digital channels worldwide. Additionally, we have more than 500 stores in nearly 70 countries operating under franchise, license and wholesale arrangements.
Additionally, we believe that our sourcing and production functions, which have a long and deep presence in key sourcing markets including those in the U.S. and Asia, allow us to partner with premier manufacturers to manufacture high-quality products quickly. 5 Table of Contents Our product development team works with four key design periods for the year: Spring, Summer, Fall and Holiday, that represent our selling seasons.
Additionally, our sourcing and production functions, which have a long and deep presence in key sourcing markets including those in the U.S. and Asia, allow us to partner with premier manufacturers to produce high-quality products quickly. Our product development team works with four key design periods for the year: Spring, Summer, Fall and Holiday, that represent our selling seasons.
As used herein, “2023” refers to the fifty-three-week period ended February 3, 2024 and “2022” and “2021” refer to the fifty-two-week periods ended January 28, 2023 and January 29, 2022, respectively. Historically, Adore Me's fiscal year ended on December 31.
As used herein, “2024” and “2022” refer to the fifty-two-week periods ended February 1, 2025 and January 28, 2023, respectively, and “2023” refers to the fifty-three-week period ended February 3, 2024. Historically, Adore Me's fiscal year ended on December 31.
We operated 837 physical locations as of the end of 2023, including a range of full assortment stores, Victoria’s Secret Lingerie stores, free-standing PINK stores and free-standing Adore Me stores.
We operated 812 physical locations as of the end of 2024, including a range of full assortment stores, Victoria’s Secret stores, free-standing PINK stores and free-standing Adore Me stores.
Other Information For additional information about our business, including our net sales and profits for the last three years and selling square footage, see Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. Competition The sale of women’s intimates, apparel, and personal and beauty care products is a highly competitive business.
Other Information For additional information about our business, including our net sales and operating income for the last three years and selling square footage, see Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. Competition The women’s intimates, apparel and beauty industry is highly competitive.
The Exchange Act requires us to file reports, proxy statements and other information with the U.S. Securities and Exchange Commission (“SEC”). The SEC maintains a website that contains reports, proxy statements and other information regarding issuers that file electronically with the SEC. These materials may be obtained electronically by accessing the SEC's website at www.sec.gov .
The SEC maintains a website that contains reports, proxy statements and other information regarding issuers that file electronically with the SEC. These materials may be obtained electronically by accessing the SEC's website at www.sec.gov .
For additional information, see Note 2 to the Consolidated and Combined Financial Statements included in Item 8. Financial Statements and Supplementary Data. (b) Relates to the China joint venture with Regina Miracle. For additional information, see Note 6 to the Consolidated and Combined Financial Statements included in Item 8. Financial Statements and Supplementary Data.
For additional information, see Note 2 to the Consolidated Financial Statements included in Item 8. Financial Statements and Supplementary Data. (b) Relates to the China joint venture with Regina Miracle. For additional information, see Note 5 to the Consolidated Financial Statements included in Item 8. Financial Statements and Supplementary Data. (c) Includes thirteen partner-operated China joint venture stores.
To support these values, we have established compliance processes and protocols which apply to all our associates and third parties participating in photo shoots, public relations events, fit sessions and other internal meetings where models are present. Our Global Ethics and Compliance team is responsible for the day-to-day administration and management of the model engagement and photo shoot compliance protocols.
To support these values, we have established compliance processes and protocols which apply to all of our associates and third parties participating in photo shoots, public relations events, fit sessions and other internal meetings where models are present.
We intend to continue to increase the number of locations under these types of arrangements as part of our international expansion. Additional Information Merchandise Vendors During 2023, we purchased merchandise from approximately 325 vendors located throughout the world, the largest of which accounted for approximately 11% of our purchases.
We plan to increase the number of locations under these types of arrangements as part of our international expansion strategy. Additional Information Merchandise Vendors During 2024, we purchased merchandise from approximately 335 vendors located throughout the world, the largest of which accounted for approximately 12% of our purchases by spend.
We prioritize frequent and fashionable product launches across product categories with a focus on fit, fabric, finish, and superior quality. Our merchant, design and sourcing teams have a long history of designing innovative products to meet our customers’ needs.
We prioritize frequent and fashionable product launches across product categories with a focus on superior fit, finish and quality. Our merchant, design and sourcing teams have a long history of designing innovative products to meet our customers’ needs. We believe our focus on product development differentiates our offering through masterful fit, broad ranges of sizes and comfortable and appealing silhouettes.
(c) Includes thirteen partner-operated China joint venture stores. Franchise, License and Wholesale Arrangements In addition to our company-operated stores, our products are sold at hundreds of partner locations and on partner websites in nearly 70 countries. We are focused on ensuring our partners have the commitment and capability to provide a quality customer experience and to grow our brands internationally.
Franchise, License and Wholesale Arrangements In addition to our retail stores, our Victoria's Secret and PINK products are sold at partner stores and on partner websites in nearly 70 countries. We are focused on ensuring our partners have the commitment and capability to provide a quality customer experience and to grow our brands internationally.
We are investing in our physical stores by refreshing existing stores and utilizing a store of the future concept that includes smaller, more flexible space in off-mall locations with a unique dual-brand layout to meet the needs of our customer and accommodate shifting consumer preferences for omni-channel shopping.
We are investing in our stores by refreshing existing stores in a store of the future concept that utilizes smaller, more flexible space and a unique dual-brand layout to meet the needs of our customer and accommodate shifting consumer preferences for omnichannel shopping. We continue to right-size our stores to optimize our physical retail footprint and enable omnichannel sales.
Our partners are also responsible for the day-to-day operations of the business, and must do so in accordance with our policies and standards, which are focused on ensuring a consistent customer experience around the world. Such arrangements can typically be terminated, upon delivery of notice, in the event of any breach of representations or warranties.
Our partners are responsible for the day-to-day operations of their business, and must do so in accordance with our policies and standards, which are focused on ensuring a consistent customer experience around the world.
Wholesale prices, which vary by product category, are generally based on a discount to the suggested retail price. Revenue is generally recognized under wholesale arrangements at the time the title passes to the partner.
Our wholesale arrangements with our partners typically have an initial term of five years, with an option to renew, subject to customary conditions. Wholesale prices, which vary by product category, are generally based on a discount to the suggested retail price. Revenue is generally recognized under wholesale arrangements at the time title of the product passes to the wholesale partner.
McAfee joined Victoria’s Secret & Co. in May 2021 and previously served as Chief Legal Officer from May 2021 to October 2022. Prior to May 2021, Ms.
McAfee joined Victoria’s Secret & Co. in May 2021 and previously served as Chief Legal Officer from May 2021 to October 2022. Prior to May 2021, Ms. McAfee served as Senior Vice President, General Counsel and Corporate Secretary of Express, Inc., from December 2018 to April 2021.
As of the end of 2023, we have 70 joint venture-operated stores in China as well as 463 partner-operated stores around the world, including locations across Asia, Europe, the Americas, the Middle East and Africa.
International net sales accounted for $760 million, or 12%, of our revenue in 2024. As of the end of 2024, we had 70 joint venture-operated stores in China as well as 505 partner-operated stores around the world, including locations across Asia, Europe, the Americas, the Middle East and Africa.
We offer a range of products including signature bras, panties, lingerie, casual sleepwear, athleisure and swim, as well as prestige fragrances and body care.
Our brands share a common purpose of supporting women in all they do. We offer a range of products including signature bras, panties, lingerie, casual sleepwear, apparel, sport and swim, as well as prestige fragrances and body care.
Real Estate Company-operated, China Joint Venture and Adore Me Retail Stores Our company-operated Victoria's Secret and PINK, China joint venture and Adore Me retail stores are located in shopping malls, lifestyle centers and off-mall locations in the U.S., Canada and China.
Due to the timing and availability of financial information of Adore Me, we consolidate Adore Me's financial information on an approximate one-month reporting lag. 1 Table of Contents Real Estate Retail Stores Our company-operated Victoria's Secret and PINK, China joint venture and Adore Me retail stores are located in shopping malls, lifestyle centers and off-mall locations in the U.S., Canada and China.
As a result of our acquisition of Adore Me on December 30, 2022, Adore Me's financial information is included in our consolidated financial statements. Due to the timing and availability of financial information of Adore Me, we consolidate Adore Me's financial information on an approximate one-month reporting lag.
As a result of our acquisition of Adore Me on December 30, 2022, Adore Me's financial information is included in our consolidated financial statements.
Responsibilities include, but are not limited to, executing certain compliance processes related to the Photo Shoot Procedures and Fit Session Protocol, training new and existing associates, and escalating allegations of misconduct for investigation by the appropriate teams. For photo shoots, all external crew is required to certify to the Victoria's Secret & Co.
Our Global Ethics and Compliance team is responsible for the day-to-day administration and management of the model engagement and photo shoot compliance protocols. Responsibilities include executing certain compliance processes related to our Photo Shoot Procedures and Fit Session Protocol, training new and existing associates and escalating allegations of misconduct for investigation by the appropriate teams.
Each brand has a marketing team focused on ensuring that we reach and engage with the customer. Our in-store sales force is also highly knowledgeable and we have regular in-store training to promote positive customer interactions through helpful and informed store associates. Information Systems Our management information systems consist of a full range of retail, financial and merchandising systems.
Each brand has a specialized marketing team focused on customer engagement, and our highly knowledgeable in-store associates receive ongoing training to ensure positive, informed interactions that enhance the shopping experience. Information Systems Our management information systems consist of various retail, financial and merchandising systems.
Founded in 2011 as an online lingerie startup, Adore Me is transforming the way customers shop with a pioneering home try-on commerce service, a series of innovation-driven products and a mission of making sustainable shopping accessible to all. Adore Me is sold online and in Adore Me's six retail stores. Victoria's Secret & Co.
Adore Me Adore Me is a direct-to-consumer lingerie and apparel brand that is focused on serving women of all sizes and budgets at all phases of life. Adore Me is transforming the way customers shop with a home try-on commerce service, a series of innovation-driven products and a mission of making sustainable shopping accessible to all.
Our franchise and license arrangements with our partners typically have an initial term of five to ten years, with an option to renew, subject to customary conditions. Revenue recognized under franchise and license arrangements generally consists of royalties earned and recognized upon sale of merchandise by franchise and license partners to retail customers, typically based on a percentage of sales.
Revenue recognized under franchise and license arrangements generally consists of royalties earned and recognized upon sale of merchandise by our franchise and license partners to retail customers, typically based on a percentage of sales. Royalty rates, which are generally low-double digits to low-teens, vary based on store format, local business conditions and various other factors.
International The international channel represents our stores and websites in China as well as royalty and wholesale sales related to the stores and websites operated by our franchise, license, wholesale and joint venture partners. International net sales accounted for $687 million, or 11%, of our revenue in 2023.
Our digital platform is designed to further support our physical presence and brand awareness and drive growth of omnichannel sales. International The international channel represents our stores and digital sites in China as well as royalty and wholesale sales related to the stores and digital sites operated by our franchise, license, wholesale and joint venture partners.
Additionally, we use third-party operated distribution centers located throughout North America to distribute our merchandise. We use a variety of shipping terms that result in the transfer of title of the merchandise at either the point of origin or point of destination.
Additionally, we use third-party operated distribution centers located throughout North America and Europe to distribute our merchandise. We also utilize a third-party operated distribution center in Mexico to support the distribution of merchandise for our Adore Me brand.
Johnson served as the Chief Financial Officer and Chief Administrative Officer of Big Lots, Inc. from August 2015 to August 2019 and Chief Financial Officer of Big Lots from August 2012 to August 2015; • Dein Boyle, 64, has been our Chief Operating Officer since 2020. Mr.
Sekella served as Vice President of Corporate Financial Planning and Analysis of Under Armour, Inc. from December 2019 to September 2022; 7 Table of Contents • Dein Boyle, 65, has been our Chief Operating Officer since 2020. Mr.
Anti-Harassment and Civility Policy and authorized compliance monitors are assigned to every photo shoot to provide oversight and ensure compliance with the Photo Shoot Procedures and Fit Session Protocol. Executive Officers of Registrant Our executive officers at the end of 2023 were as follows: • Martin Waters, 58, has been our Chief Executive Officer (“CEO”) since February 2021. Mr.
For photo shoots, external crew is required to certify to our Anti-Harassment and Civility Policy and authorized compliance monitors are assigned to every photo shoot to provide oversight and ensure compliance with the Photo Shoot Procedures and Fit Session Protocol.
The following table provides the number of our international stores operated by our partners by store type as of February 3, 2024 and January 28, 2023: February 3, 2024 January 28, 2023 Beauty and Accessories (a) 307 308 Full Assortment 156 135 Total 463 443 _______________ (a) Does not include the thirteen partner-operated China joint venture stores. 3 Table of Contents Our Competitive Strengths We believe the following competitive strengths contribute to our leading market position, differentiate us from our competitors and will drive future growth: Two Market Leading Brands with Global Brand Awareness and Resonance Our Victoria's Secret and PINK brands have a strong global presence and awareness among consumers, which we believe provides us with a competitive advantage.
The following table provides the number of our international stores operated by our partners by store type as of February 1, 2025 and February 3, 2024: February 1, 2025 February 3, 2024 Beauty and Accessories (a) 324 307 Full Assortment 181 156 Total 505 463 _______________ (a) Does not include the thirteen partner-operated China joint venture stores.
Digital The digital channel accounted for $2.015 billion, or 33%, of our revenue in 2023. This channel includes sales that are derived from our websites and mobile applications. Our digital presence, including social media, our websites and our mobile applications, allows us to get to know our customers better and communicate with them anytime and anywhere.
Additionally, we are investing in our people through field talent and leadership development to optimize the customer experience in stores. Digital The digital channel accounted for $2.042 billion, or 33%, of our revenue in 2024. This channel includes sales that are derived from our websites and mobile applications.
The management team is supported by well qualified leaders and is highly collaborative across our brands and channels. Distribution Channels Our distribution channels include digital, North American stores and international stores. We utilize these channels to reach our consumers in the digital and physical locations they frequent within their geographies.
We utilize these channels to reach our consumers in the physical and digital locations they frequent within their geographies. North American Stores The North American stores channel represents our physical retail locations in North America and accounted for $3.428 billion, or 55%, of our revenue in 2024.
In addition, we maintain an Ethics Hotline where associates may anonymously report potential instances of unethical conduct and potential violations of law or company policies 24 hours a day, 7 days a week.
Our Ethics Hotline allows associates to anonymously report potential violations of laws or company policies 24 hours a day, 7 days a week, ensuring a safe and open environment for speaking up. Our Code of Conduct, rooted in our values, defines the behaviors we expect and reinforces our commitment to integrity.
Victoria’s Secret The Victoria’s Secret brand offers a wide assortment of modern, fashion-inspired collections including signature bras, panties, lingerie, casual sleepwear, athleisure and swim, as well as prestige fragrances and body care across its global retail locations and its online e-commerce channel.
Victoria’s Secret The Victoria’s Secret brand is a global leader in intimate apparel, renowned for its innovative, fashion-inspired collections including signature bras, panties, lingerie, casual sleepwear, swim, lounge and sport, as well as award-winning prestige fragrances and body care. Victoria’s Secret is a timeless staple for sexy, glamorous and affordable luxury for women around the world.
Unis served as Executive Vice President and Global Head of Men's and Licensing Merchandise for Coach from 2010 to 2016. 10 Table of Contents Available Information We are subject to the reporting requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and its rules and regulations.
Available Information We are subject to the reporting requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and its rules and regulations. The Exchange Act requires us to file reports, proxy statements and other information with the U.S. Securities and Exchange Commission (“SEC”).
We believe we compete effectively in our core categories by leveraging our brand equity, unique scale and our high-quality innovative products. Our primary competitors include individual and chain specialty stores, department stores, mass merchandisers, online retailers and discount retailers. Additionally, we see a large and growing offering from private label intimates apparel created for retailers in addition to emerging brands.
We seek to differentiate ourselves from our competitors by leveraging our powerful brand equity, unmatched scale and commitment to high-quality, innovative products. Our competition comes from many sources, including specialty retailers, department stores, mass merchandisers, online retailers, discount retailers and an increasing number of private-label and emerging brands.
Our Brands Our business operates two market leading intimates and beauty brands, Victoria's Secret and PINK, that share a common purpose of supporting women in all they do, and Adore Me, a technology-led, digital first innovative intimates brand serving women of all sizes and budgets at all phases of life.
For additional information, see Note 2 to the Consolidated Financial Statements included in Item 8. Financial Statements and Supplementary Data. Our Brands Our business operates two market-leading intimate apparel brands, Victoria’s Secret and PINK, each complemented by an industry-leading beauty business. Adore Me, our technology-led, digital first intimates brand serves women of all sizes, budgets and lifestyles.
As of February 3, 2024, we employed approximately 30,000 associates, approximately 17,000 of whom were part-time. In addition, temporary associates are hired during peak periods, such as the holiday season. Approximately 73% of our associates work in our stores, 12% in distribution centers, with the remaining balance working in our home office and call center.
Through robust career development programs, mentorship and leadership training, we equip associates and leaders with the tools they need to grow, innovate and make an impact. 6 Table of Contents As of February 1, 2025, we employed approximately 31,000 associates, approximately 18,000 of whom were part-time. In addition, temporary associates are hired during peak periods, such as the holiday season.
Our digital customers engage in more transactions relative to non-digital customers. Within digital, we have taken a mobile-first approach to help drive sales. We have taken steps to modernize our digital platform, including the use of artificial intelligence-driven chatbots and geo-targeted digital marketing.
Our digital presence, including social media, our websites and our mobile applications, allows us to get to know our customers better and communicate with them anytime and anywhere. We continuously improve and modernize our digital platform, including through the use of artificial intelligence-driven chatbots and geo-targeted digital marketing.
Our strong relationships with our suppliers have allowed us to manufacture our products with cost efficiency without sacrificing quality. Our global supply base and flexibility are key competitive advantages and allow us to provide a broad product range, innovation and assortment to our customers.
Our global supply base and flexible sourcing strategy provide a key competitive advantage, allowing us to deliver a broad product range, ongoing innovation and a compelling assortment to our customers. This flexibility ensures we can navigate market dynamics while maintaining our commitment to delivering high-quality, trend-forward products.
Adore Me, a technology-led, digital first innovative intimates brand is focused on transforming the way customers shop with a pioneering home try-on commerce service and a series of innovation-driven products. While our history runs deep as a dominant player in intimates, our brands also provide compelling offerings in fragrance, beauty, apparel, loungewear, sleepwear, athletic attire and swimwear.
In addition to our core brands, we also have Adore Me, a technology-led, digital first innovative intimates and apparel brand. While our heritage is deeply rooted in intimate apparel, our brands also offer compelling assortments in adjacent product categories including fragrance, beauty, apparel, loungewear, sleepwear, sport and swimwear.
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For additional information, see Note 2 to the Consolidated and Combined Financial Statements included in Item 8. Financial Statements and Supplementary Data.
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PINK PINK is a lifestyle brand for young women providing fun, vibrant collections and heritage pieces, including apparel, loungewear, activewear, bras, panties, accessories, beauty and more. PINK's vibrant colors, playful designs and enduring commitment to community help customers feel supported, confident and stylish every day.
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Victoria’s Secret strives to provide the best products to help women express their confidence, sexiness and power, and uses its platform to celebrate the extraordinary diversity of women's experiences. PINK PINK is a fashion and lifestyle brand for young women providing on trend products including bras, panties, loungewear, knit tops, activewear, accessories and beauty.
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The following table provides the number of our company-operated Victoria's Secret and PINK, China joint venture and Adore Me retail stores in operation as of February 1, 2025 and February 3, 2024: February 1, 2025 February 3, 2024 Company-Operated: U.S. 782 808 Canada 24 23 806 831 China Joint Venture: Beauty & Accessories (a) 30 34 Full Assortment 40 36 70 70 Adore Me 6 6 Total 882 907 _______________ (a) Includes thirteen partner-operated stores.
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PINK uses its platform to create connection and community. PINK is sold across North America and internationally at Victoria’s Secret and PINK retail stores and online. Adore Me Adore Me is a direct-to-consumer lingerie and apparel brand that is focused on serving women of all sizes and budgets at all phases of life.
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These arrangements can typically be terminated by us, upon delivery of notice, in the event of any breach of representations or warranties. 2 Table of Contents Our franchise and license arrangements with our partners typically have an initial term of approximately ten years, with an option to renew, subject to customary conditions.
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Spin-Off On July 9, 2021, L Brands, Inc. (“L Brands” or the “Former Parent”) announced that its Board of Directors approved the previously announced separation of the Victoria's Secret business, including PINK, into an independent, publicly traded company (the “Separation”). Prior to the Separation, L Brands operated the Bath & Body Works, Victoria’s Secret and PINK retail brands.
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Our Competitive Strengths Market Leading Brands Driving Growth Our two flagship brands, Victoria's Secret and PINK, have a strong global presence and high awareness among consumers. Their combined market share in the intimates category remains robust, underscoring our leading position in the industry and providing a significant competitive advantage.
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On August 2, 2021 (the “Distribution Date”), after the New York Stock Exchange (“NYSE”) market closing, the Separation of the Victoria's Secret business was completed.
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This diversified portfolio allows us to serve customers across multiple lifestyle touchpoints, further strengthening our position as a leader in the industry.
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On August 3, 2021, Victoria's Secret & Co. became an independent, publicly traded company trading on the NYSE under the stock symbol “VSCO.” The Separation was achieved through the Former Parent’s distribution (the “Distribution”) of 100% of the shares of our common stock to holders of the Former Parent's common stock as of the close of business on the record date of July 22, 2021.
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Global Scale and Reach We have a powerful presence in the U.S. and worldwide, engaging customers through three key distribution channels. • North American Stores - With 812 stores across the U.S. and Canada, totaling 5.6 million square feet of selling space as of the end of 2024, our expansive store fleet delivers immersive brand experiences at premier shopping destinations throughout North America.
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The Former Parent's stockholders of record received one share of our common stock for every three shares of the Former Parent's common stock.
Added
Our dedicated sales associates and store managers bring our products to life with exceptional service and expertise. • Digital - Our digital ecosystem creates a seamless, personalized shopping experience across brands and platforms.
Removed
In connection with the Separation, we made a cash payment of approximately $976 million to the Former Parent on August 2, 2021 from the issuances of certain debt (discussed in Note 13 to the Consolidated and Combined Financial Statements included in Item 8. Financial Statements and Supplementary Data).
Added
We are constantly enhancing our websites, applications and social media with advanced digital marketing and personalization, omnichannel capabilities and real-time inventory connectivity to meet customers wherever they are. • International - We have 575 international stores spanning Asia, Europe, the Americas, the Middle East and Africa and international digital sites in nearly 70 countries as of the end of 2024.
Removed
The Former Parent retained no ownership interest in us following the Separation. 1 Table of Contents We entered into several agreements with the Former Parent that, among other things, effect the Separation and govern the relationship of the parties following the Separation, including a Separation and Distribution Agreement, a Tax Matters Agreement, an L Brands to VS Transition Services Agreement, a VS to L Brands Transition Services Agreement, an Employee Matters Agreement and a Domestic Transportation Services Agreement.
Added
We are focused on growing our business in existing markets and expanding globally with new stores and digital platforms in new markets. Our smaller footprint travel retail locations in airports provide valuable global exposure.
Removed
For additional information, see Note 3 to the Consolidated and Combined Financial Statements included in Item 8. Financial Statements and Supplementary Data.
Added
Agile, Responsive and Efficient Supply Chain Our sourcing and production strategy is built for speed, quality and cost efficiency. • Global Expertise - We have cultivated a strong sourcing presence in the U.S. and Asia, helping to drive innovation and speed-to-market across our product categories.
Removed
As a result of our strong brands and established retail presence, we have been able to lease high-traffic locations in most retail centers in which we operate.
Added
Our intimates and apparel are produced through an internationally outsourced platform, while our beauty manufacturing, which is largely centered in Ohio, provides agility and cutting-edge product development. • Flexibility & Adaptability - We leverage close supplier partnerships and a highly responsive supply chain to manage inventory dynamically and adapt to customer demand.
Removed
Royalty rates, which are generally low-double digits to low-teens, vary based on store format, local business conditions and various other factors. Our wholesale arrangements with our partners typically have an initial term of five years, with an option to renew, subject to customary conditions.
Added
Our agility allows us to respond in real time to shifts in customer preferences and quickly replenish strong selling products, maximizing sales and merchandise margin rate opportunities. 3 Table of Contents • Cost-Effective & High-Quality Production - Our strong relationships with suppliers enable us to manufacture products efficiently without sacrificing quality.
Removed
We believe our actions to evolve our positioning and promote inclusivity and diversity will allow us to attract new customers while also deepening our connection with existing ones.
Added
Experienced Leadership Driving Success Our highly skilled management team brings deep industry expertise and a collaborative approach across our brands and channels. With a strong understanding of the retail landscape and our business, they are focused on driving growth, innovation and operational excellence. Distribution Channels Our distribution channels include North American stores, digital websites and mobile applications and international stores.
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The Victoria’s Secret Global Fund for Women’s Cancers funds innovative research projects aimed at progressing treatments and cures for women’s cancers and investing in the next generation of women scientists who represent the diverse populations they serve.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeAlthough we generally contractually require these service providers to implement and maintain a standard of security (such as implementing reasonable measures), we cannot control third parties and cannot guarantee that a security breach will not occur in their systems. 21 Table of Contents Any significant cybersecurity compromise or breach, including with respect to customer, associate, third-party or company information, could have a material adverse effect on our reputation, results of operations, financial condition and cash flows.
Biggest changeAny significant cybersecurity compromise or breach, including with respect to customer, associate, third-party or company information, could have a material adverse effect on our reputation, results of operations, financial condition and cash flows. In the operation of our business, we collect, use, transmit and otherwise process a large volume of personal and other confidential, proprietary and sensitive information.
The risks associated with international markets are numerous and include difficulties in attracting customers due to a lack of customer familiarity with our brands and our lack of familiarity with local customer preferences. Any of these difficulties may lead to disruption in the overall timing or profitability of our international expansion efforts.
The risks associated with international markets are numerous and include difficulties in attracting customers due to a lack of customer familiarity with our brands and our lack of familiarity with local customer preferences. Any of these risks may lead to disruption in the overall timing or profitability of our international expansion efforts.
Further, our integration efforts could disrupt both companies’ existing operations and divert management attention and resources. If we experience difficulties with the integration process, the anticipated benefits of the acquisition, including anticipated sales and growth opportunities, may not be realized fully, or at all, and may take longer to realize than expected.
Further, integration efforts could disrupt both companies’ existing operations and divert management attention and resources. If we experience difficulties with the integration process, the anticipated benefits of the acquisition, including anticipated sales and growth opportunities, may not be realized fully, or at all, and may take longer to realize than expected.
For example, our partners may not have the business acumen or financial resources necessary to successfully operate stores in a manner consistent with our standards and may not hire and train qualified store managers and other personnel. Further, we have limited control as to whether our partners comply with federal and local law.
For example, our partners may not have the business acumen, experience or financial resources necessary to successfully operate stores in a manner consistent with our standards and may not hire and train qualified store managers and other personnel. Further, we have limited control as to whether our partners comply with federal and local law.
In addition, our Certificate of Incorporation authorizes us to issue, without the approval of our stockholders, one or more classes or series of preferred stock having such designations, powers, preferences and relative, participating, optional and other rights, and such qualifications, limitations or restrictions as our Board of Directors may determine.
In addition, our Certificate of Incorporation authorizes us to issue, without the approval of our stockholders, one or more classes or series of preferred stock having such designations, powers, preferences and relative, participating, optional and other rights, and such qualifications, limitations or restrictions as our Board may determine.
Any of these events could have a material adverse effect on our business, financial condition, prospects and results of operations. Turnover in company leadership or other key positions may have an adverse impact on our performance. We may experience changes in key leadership or key positions in the future.
Any of these events could have a material adverse effect on our business, financial condition, prospects and results of operations. Changes and turnover in company leadership or other key positions may have an adverse impact on our performance. We may experience changes in our leadership structure or key leadership positions in the future.
Our utilization of these delivery services is subject to risks, including increases in labor costs and fuel prices, which would increase our shipping costs, and associate strikes and inclement weather, which may impact our transportation providers’ ability to provide delivery services that adequately meet our shipping needs.
Our utilization of these delivery services is subject to risks, including increases in labor costs and fuel prices, which may increase our shipping costs, and associate strikes and inclement weather, which may impact our transportation providers’ ability to provide delivery services that adequately meet our shipping needs.
These and other factors may cause the market price and demand for our common stock to fluctuate substantially, which may limit or prevent stockholders from readily selling their shares of common stock and may otherwise negatively affect the liquidity of our common stock.
These and other factors may cause the market price and demand for our common stock to fluctuate, which may limit or prevent stockholders from readily selling their shares of our common stock and may otherwise negatively affect the liquidity of our common stock.
Our debt obligations could restrict our future business strategies and have significant consequences on our future operations, including: • Making it more difficult for us to meet our payment and other obligations under our outstanding debt; • Resulting in an event of default if we fail to comply with the financial and other restrictive covenants contained in our debt agreements, which could result in all of our debt becoming immediately due and payable; • Reducing the availability of our cash flow to fund working capital, capital expenditures, acquisitions and other general corporate purposes, and limiting our ability to obtain additional financing for these purposes; • Limiting our flexibility in planning for, or reacting to, and increasing our vulnerability to, changes in our business, the industry in which we operate and the general economy; and • Placing us at a competitive disadvantage compared to any of our competitors that have less debt or are less leveraged.
Our debt obligations could restrict our future business strategies and have significant consequences on our future operations, including: • Making it more difficult for us to meet our payment and other obligations under our outstanding debt; 20 Table of Contents • Resulting in an event of default if we fail to comply with the financial and other restrictive covenants contained in our debt agreements, which could result in all of our debt becoming immediately due and payable; • Reducing the availability of our cash flow to fund working capital, capital expenditures, acquisitions and other general corporate purposes, and limiting our ability to obtain additional financing for these purposes; • Limiting our flexibility in planning for, or reacting to, and increasing our vulnerability to, changes in our business, the industry in which we operate and the general economy; and • Placing us at a competitive disadvantage compared to any of our competitors that have less debt or are less leveraged.
The debt agreements contain certain affirmative and negative covenants, including maintenance of a consolidated coverage ratio, a consolidated total leverage ratio, a fixed charge coverage ratio, and a debt to earnings before interest, income taxes, depreciation, amortization and rent ratio.
The associated debt agreements contain certain affirmative and negative covenants, including maintenance of a consolidated coverage ratio, a consolidated total leverage ratio, a fixed charge coverage ratio, and a debt to earnings before interest, income taxes, depreciation, amortization and rent ratio.
Additionally, holders of our common stock may become subject to the prior dividend and liquidation rights of holders of any class or series of preferred stock that our Board of Directors may designate and issue without any action on the part of the holders of our common stock.
Additionally, holders of our common stock may become subject to the prior dividend and liquidation rights of holders of any class or series of preferred stock that our Board may designate and issue without any action on the part of the holders of our common stock.
Shareholder activism, which can take many forms and arise in a variety of situations, could result in substantial costs and divert management’s and our Board of Directors’ attention and resources away from our business.
Shareholder activism, which can take many forms and arise in a variety of situations, could result in substantial costs and divert management’s and our Board of Directors’ (“Board”) attention and resources away from our business.
If our marketing, advertising and promotional programs are unsuccessful, or if our competitors are more effective with their programs than we are, our revenue or results of operations may be adversely affected.
If our marketing, advertising and promotional programs and events are unsuccessful, or if our competitors are more effective with their programs than we are, our revenue or results of operations may be adversely affected.
Any decrease in sales or margins during this period could have a material adverse effect on our results of operations, financial condition and cash flows. Seasonal fluctuations also affect our cash and inventory levels, since we usually order merchandise in advance of peak selling periods and sometimes before new fashion trends are confirmed by customer purchases.
Any decrease in sales or margins during this period could have a material adverse effect on our results of operations, financial condition and cash flows. Seasonal fluctuations also affect our cash and inventory levels, since we usually order merchandise in advance of peak selling periods and sometimes before new fashion trends are confirmed by customer behavior.
Additionally, these types of problems could result in an actual or perceived breach of confidential customer, merchandise, financial, employee or other important information (including personal information), which could result in damage to our reputation, costly litigation, customer complaints, negative publicity, breach notification obligations, regulatory or administrative sanctions, inquiries, orders or investigations, indemnity obligations, damages for contract breach or penalties for violations of applicable laws or regulations.
Additionally, these types of problems could result in an actual or perceived breach of confidential customer, operational, financial, employee or other important information (including personal information), which could result in damage to our reputation, costly litigation, customer complaints, negative publicity, breach notification obligations, regulatory or administrative sanctions, inquiries, orders or investigations, indemnity obligations, damages for contract breach or penalties for violations of applicable laws or regulations.
Even if a product liability claim is unsuccessful or is not fully pursued, the negative publicity surrounding any assertions could adversely impact our reputation with existing and potential customers and the image of our brands. Our business could also suffer if our third-party vendors fail to comply with applicable laws, regulations or ethical standards.
Even if a product liability claim is unsuccessful or is not fully pursued, the negative publicity surrounding any assertions could adversely impact our reputation with existing and potential customers and the image of our brands. Our business could also suffer if our third-party vendors fail to comply with our guidelines and policies or applicable laws, regulations or ethical standards.
Sustained or repeated system disruptions that interrupt our ability to process orders and deliver products to our customers and stores, impact our customers’ ability to access our websites, or expose confidential customer, merchandise, financial or other important information (including personal information) could have a material adverse effect on our results of operations, financial condition and cash flows.
Sustained or repeated system disruptions that interrupt our ability to process orders and deliver products to our customers and stores, impact our customers’ ability to access our websites, or expose confidential customer, operational, financial or other important information (including personal information) could have a material adverse effect on our results of operations, financial condition and cash flows.
Any failure or perceived failure by us to comply with any applicable federal, state or similar foreign laws and regulations relating to data privacy and security could result in damage to our reputation, proceedings or litigation by governmental agencies or customers, including class action privacy litigation in certain jurisdictions, which could subject us to significant fines, sanctions, awards, penalties or judgments.
Any failure or perceived failure by us to comply with any applicable federal, state or similar foreign laws and regulations relating to data privacy and security could result in damage to our reputation, proceedings or litigation by governmental agencies or customers, including class action privacy litigation, which could subject us to significant fines, sanctions, awards, penalties or judgments.
These include provisions: • Providing the right to our Board of Directors to issue one or more classes or series of preferred stock without stockholder approval; • Authorizing a large number of shares of common stock that are not yet issued, which would allow our Board of Directors to issue shares to persons friendly to current management, thereby protecting the continuity of our management, or which could be used to dilute the stock ownership of persons seeking to obtain control of us; • Prohibiting stockholders from taking action by written consent; and • Establishing advance notice and other requirements for nominations of candidates for election to our Board of Directors or for proposing matters that can be acted on by stockholders at our annual stockholder meetings.
These include provisions: • Providing the right to our Board to issue one or more classes or series of preferred stock without stockholder approval; 21 Table of Contents • Authorizing a large number of shares of common stock that are not yet issued, which would allow our Board to issue shares to persons friendly to current management, thereby protecting the continuity of our Board and management, or which could be used to dilute the stock ownership of persons seeking to obtain control of us; • Prohibiting stockholders from taking action by written consent; and • Establishing advance notice and other requirements for nominations of candidates for election to our Board or for proposing matters that can be acted on by stockholders at our annual stockholder meetings.
We believe these provisions protect our stockholders from coercive or otherwise unfair takeover tactics by requiring potential acquirors to negotiate with our Board of Directors and by providing our Board of Directors with more time to assess any acquisition proposal. These provisions are not intended to make us immune from takeovers.
We believe these provisions protect our stockholders from coercive or otherwise unfair takeover tactics by requiring potential acquirors to negotiate with our Board and by providing our Board with more time to assess any acquisition proposal. These provisions are not intended to make us immune from takeovers.
Any significant cybersecurity compromise or breach, media reports about such an incident, whether accurate or not, or our failure to make adequate or timely disclosures to the public or law enforcement agencies following any such event, whether due to delayed discovery or a failure to follow existing protocols, could significantly damage our reputation with our customers, associates, investors and other third parties, cause the disclosure of personal, confidential, proprietary or sensitive customer, associate, third-party or company information, cause interruptions to our operations and distraction to our management, cause our customers to stop shopping with us and result in significant legal, regulatory and financial liabilities and lost revenues.
Any significant cybersecurity incident or breach, media reports about such an incident, whether accurate or not, or our failure to make adequate or timely disclosures to the public or governmental agencies following any such event, whether due to delayed discovery or a failure to follow existing protocols, could significantly damage our reputation with our customers, associates, investors and other third parties, cause the disclosure of personal, confidential, proprietary or sensitive customer, associate, third-party or company information, cause interruptions to our operations and distraction to our management, cause our customers to stop shopping with us and result in significant legal, regulatory and financial liabilities and lost revenues.
There can be no assurance we will be able to achieve our initiatives regarding opening new stores and rightsizing and remodeling existing stores, manage our growth effectively, successfully integrate new stores into our operations or operate our new, right-sized, remodeled and existing stores profitably.
There can be no assurance we will be able to achieve our initiatives regarding opening new stores and right-sizing and remodeling existing stores, manage our growth effectively, successfully integrate new stores into our operations or operate our new, right-sized, remodeled and existing stores profitably.
A rise in energy costs could adversely affect consumer spending and demand for our products and increase our operating costs, both of which could have a material adverse effect on our results of operations, financial condition and cash flows. Climate change and other sustainability-related matters, and related legal, regulatory and market responses to climate change, may adversely impact our business.
A rise in energy costs could adversely affect consumer spending and demand for our products and increase our operating costs, both of which could have a material adverse effect on our results of operations, financial condition and cash flows. 16 Table of Contents Climate change and other sustainability-related matters, and related legal, regulatory and market responses to climate change, may adversely impact our business.
In addition, if our controls are not effective, our ability to accurately and timely report our financial position could be impaired, which could result in late filings of our annual and quarterly reports under the Exchange Act, restatements of our financial statements, a decline in our stock price, or suspension or delisting of our common stock from the NYSE.
In addition, if our controls are not effective, our ability to prevent and detect fraud and accurately and timely report our financial position could be impaired, which could result in late filings of our annual and quarterly reports under the Exchange Act, restatements of our financial statements, a decline in our stock price, or suspension or delisting of our common stock from the NYSE.
Despite these measures, we may be vulnerable to targeted or random attacks on our systems that could lead to security breaches, phishing attacks, denial of service attacks, acts of vandalism, computer viruses, malware, ransomware, misplaced or lost data, programming and human errors or similar events.
We may be vulnerable to targeted or random attacks on our systems that could lead to security breaches, phishing attacks, denial of service attacks, acts of vandalism, computer viruses, malware, ransomware, misplaced or lost data, programming and human errors or similar events.
We cannot assess the likelihood that we will receive such claims or the outcome of any such claims, but if outcomes are negative, it could have a material adverse effect on our reputation, results of operations, financial condition and cash flows. 23 Table of Contents We may be impacted by changes in taxation, trade and other regulatory requirements.
We cannot assess the likelihood that we will receive such claims or the outcome of any such claims, but if outcomes are negative, it could have a material adverse effect on our reputation, results of operations, financial condition and cash flows. We may be impacted by changes in taxation, trade policy and other regulatory requirements.
Our success depends in part on management’s ability to effectively manage the life cycle of our brands and to anticipate and respond to changing fashion preferences and consumer demands and to translate market trends into appropriate, salable product offerings in a timely and effective manner.
Our success depends in part on our ability to effectively manage the life cycle of our brands and to anticipate and respond to changing fashion preferences and consumer demands and to translate market trends into attractive, salable product offerings in a timely and effective manner.
The violation of labor, environmental or other laws by our third-party vendors, or the divergence of a third-party vendor’s or partner’s labor or environmental practices from those generally accepted as ethical or appropriate, could disrupt the shipment of finished products to us or damage our reputation.
The violation of our guidelines and policies or labor, environmental or other laws by our third-party vendors, or the divergence of a third-party vendor’s or partner’s labor or environmental practices from those generally accepted as ethical or appropriate, could disrupt the shipment of finished products to us or damage our reputation.
If we are not successful in selling that inventory, we may have to sell the inventory at significantly reduced prices or may not be able to sell the inventory at all, which could have a material adverse effect on our results of operations, financial condition and cash flows. 14 Table of Contents If we fail to maintain effective internal controls, we may not be able to report our financial results accurately or timely or prevent or detect fraud, which could have a material adverse effect on our business or the market price of our securities.
If we are not successful in selling that inventory, we may have to sell the inventory at significantly reduced prices or may not be able to sell the inventory at all, which could have a material adverse effect on our results of operations, financial condition and cash flows. 10 Table of Contents If we fail to maintain effective internal controls, we may not be able to report our financial results accurately or timely or prevent or detect fraud, which could have a material adverse effect on our business or the market price of our common stock.
Damage to our reputation or loss of consumer confidence for any of these or other reasons could have a material adverse effect on our results of operations, financial condition and cash flows, as well as require additional resources to rebuild our reputation.
Damage to our reputation or loss of consumer confidence for any of these or other reasons could have a material adverse effect on our business, results of operations, and financial condition, as well as require additional resources to rebuild our reputation.
For example: • political instability, wars and geopolitical conflicts, environmental hazards or natural disasters, which could negatively affect international economies, financial markets, supply chain operations and business activity; • significant health hazards or pandemics, which could result in closed factories, reduced workforces, scarcity of raw materials, and scrutiny or embargoing of goods produced in affected areas; • imposition of new or retaliatory trade duties, sanctions or taxes and other charges on imports or exports; • evolving, new or complex legal and regulatory matters; • volatility in currency exchange rates and interest rates; • local business practice and political issues, including issues relating to compliance with domestic or international labor standards, which may result in adverse publicity or threatened or actual adverse consumer actions, including boycotts; • delays or disruptions in shipping and transportation and related pricing impacts; • disruption due to labor disputes; and • changing expectations regarding product safety due to new legislation or other factors.
For example: • political instability, wars and geopolitical conflicts, environmental hazards or natural disasters, which could negatively affect international economies, U.S. and global trade policy, financial markets, supply chain operations and business activity; • significant health hazards or pandemics, which could result in closed factories, reduced workforces, scarcity of raw materials, and scrutiny or embargoing of goods produced in affected areas; • imposition or threatened imposition of new or increased trade duties, sanctions, tariffs or taxes and other charges on imports or exports; • evolving, new or complex legal and regulatory matters; • volatility in currency exchange rates and interest rates; 15 Table of Contents • local business practice and political issues, including issues relating to compliance with domestic or international labor standards, which may result in adverse publicity or threatened or actual adverse consumer actions, including boycotts; • delays or disruptions in shipping and transportation and related pricing impacts; • disruption due to labor disputes; and • changing expectations regarding product safety due to new legislation or other factors.
There is increasing concern that a gradual rise in global average temperatures due to increased concentration of carbon dioxide and other greenhouse gases in the atmosphere will cause significant changes in weather patterns around the globe, an increase in the frequency, severity and duration of extreme weather conditions and natural disasters, and water scarcity and poor water quality.
There is increasing concern that a permanent rise in global average temperatures due to increased concentration of carbon dioxide and other greenhouse gases in the atmosphere has caused and will continue to cause significant changes in weather patterns around the globe, an increase in the frequency, severity and duration of extreme weather conditions and natural disasters, and water scarcity and poor water quality.
There can be no assurance as to the outcome of these examinations. Fluctuations in tax rates and duties, changes in tax legislation or regulation or adverse outcomes of these examinations could have a material adverse effect on our results of operations, financial condition and cash flows.
There can be no assurance as to the outcome of these examinations. Changes in tax legislation or regulation, including increases in tax rates, tariffs and duties, or adverse outcomes of tax examinations could have a material adverse effect on our results of operations, financial condition and cash flows.
We are subject to income tax in local, federal and foreign jurisdictions. In addition, our products are subject to import and excise duties and/or sales or value-added taxes in many jurisdictions. We are also subject to the examination of our tax returns and other tax matters by the IRS and other tax authorities and governmental bodies.
We are subject to income tax in local, federal and foreign jurisdictions. In addition, our products are subject to import and excise duties and sales or value-added taxes in many jurisdictions. We are also subject to the examination of our tax returns and other tax matters by the Internal Revenue Service (“IRS”) and other tax authorities and governmental bodies.
We are exposed to foreign currency exchange rate risk with respect to our sales, profits, assets and liabilities denominated in currencies other than the U.S. dollar. In addition, our royalty arrangements are calculated based on sales in local currency and, as such, we are exposed to foreign currency exchange rate fluctuations.
We are exposed to foreign currency exchange rate risk with respect to our sales, profits, assets and liabilities denominated in currencies other than the U.S. dollar. In addition, our royalty arrangements are calculated based on sales in local currency, which exposes us to foreign currency exchange rate fluctuations.
RISK FACTORS You should carefully consider each of the following risks and all of the other information contained in this Annual Report on Form 10-K. Some of these risks relate principally to our business and operations, to our outstanding indebtedness, or to ownership of our common stock, while others related principally to the Separation.
ITEM 1A. RISK FACTORS. RISK FACTORS You should carefully consider each of the following risks and all of the other information contained in this Annual Report on Form 10-K. Some of these risks we face relate principally to our business and operations, while others relate principally to our outstanding indebtedness or to ownership of our common stock.
There is increased uncertainty with respect to tax policy and trade relations between the U.S. and other countries. For example, the Organization for Economic Co-operation and Development (“OECD”) released an international tax framework for a global 15.0% minimum tax regime with effect beginning January 1, 2024.
There is increased uncertainty with respect to tax policy and trade relations between the U.S. and other countries. For example, the Organization for Economic Co-operation and Development (“OECD”) released an international tax framework for a global 15.0% minimum tax regime, the implementation of which commenced for some countries beginning January 1, 2024.
Ongoing geopolitical conflicts in Europe and the Middle East, as well as economic sanctions and other measures imposed in response thereto have created, and may continue to create, market disruption and volatility, supply chain disruptions, and instability in the geopolitical environment.
Ongoing geopolitical conflicts in Europe and the Middle East, uncertainty in the global trade environment, as well as economic sanctions and other measures imposed in response thereto have created, and may continue to create, market disruption and volatility, supply chain disruptions, inflationary pressures, and geopolitical instability.
The market price of our common stock has fluctuated significantly since the Separation, and may continue to fluctuate significantly due to a number of factors, many of which are beyond our control, including: • Fluctuations in our quarterly or annual earnings results or those of other companies in our industry; • Failures of our operating results to meet the estimates of securities analysts or the expectations of our stockholders, or changes by securities analysts in their estimates of our future earnings; • Announcements by us or our partners, suppliers or competitors; • Changes in market valuations or earnings of other companies in our industry; • Changes in laws or regulations which adversely affect our industry or us; • General economic, industry and stock market conditions; • Future significant sales of our common stock by our stockholders or the perception in the market of such sales; • Future issuances of our common stock by us; and • The other factors described in these “Risk Factors” and elsewhere in this Annual Report on Form 10-K.
The market price of our common stock has fluctuated significantly, and may continue to fluctuate significantly due to a number of factors, many of which are beyond our control, including: • Fluctuations in our quarterly or annual earnings results or those of other companies in our industry; • Failures of our operating results to meet the estimates of securities analysts or the expectations of our stockholders, or changes by securities analysts in their estimates of our future earnings; • Announcements by us or our competitors; • Changes in laws or regulations which adversely affect us; • General economic, industry and stock market conditions; • Sales of large blocks of our common stock; and • The other factors described in these “Risk Factors” and elsewhere in this Annual Report on Form 10-K.
We source materials and produce merchandise in international markets and in our domestic market. We distribute merchandise globally to our partners, stores and customers in international locations. Many of our imports and exports are subject to a variety of customs regulations and international trade arrangements, including existing or potential duties, tariffs or safeguard quotas.
We source materials and produce merchandise in international markets and in our domestic market. We distribute merchandise globally to our partners, stores and customers in nearly 70 countries. Many of our imports and exports are subject to a variety of customs regulations and international trade arrangements, including existing or potential increases in or new duties, tariffs or safeguard quotas.
As a result, the effects of climate change could have a material adverse effect on our results of operations, financial condition and cash flows. In many countries, governmental bodies are considering or enacting new or additional legislation and regulations to reduce or mitigate the potential impacts of climate change.
As a result, the effects of climate change could have a material adverse effect on our results of operations, financial condition and cash flows. In many jurisdictions, governments are considering or enacting new or additional legislation and regulations to reduce or mitigate the impacts of climate change.
Pursuant to our Bylaws, unless we consent in writing to the selection of an alternative forum, a state court located within the State of Delaware (or, if no state court located within the State of Delaware has jurisdiction, the federal court for the District of Delaware) shall be the sole and exclusive forum for (i) any derivative action or proceeding brought on our behalf; (ii) any action asserting a claim for or based on a breach of a fiduciary duty owed by any of our directors or officers or other employees or agents to us or to our stockholders, including a claim alleging the aiding and abetting of such a breach of fiduciary duty; (iii) any action asserting a claim against us or any of our directors or officers or other employees or agents arising pursuant to any provision of the Delaware General Corporation Law or our Certificate of Incorporation or Bylaws; (iv) any action asserting a claim related to or involving us that is governed by the internal affairs doctrine; or (v) any action asserting an “internal corporate claim” as that term is defined in Section 115 of the Delaware General Corporation Law.
Pursuant to our Bylaws, unless we consent in writing to the selection of an alternative forum, a state court located within the State of Delaware (or, if no state court located within the State of Delaware has jurisdiction, the federal court for the District of Delaware) shall be the sole and exclusive forum for: • any derivative action or proceeding brought on our behalf; • any action asserting a claim of breach of a fiduciary duty; • any action asserting a claim against us or any of our directors or officers or other employees or agents arising pursuant to any provision of the Delaware General Corporation Law or our Certificate of Incorporation or Bylaws; • any action asserting a claim related to or involving us that is governed by the internal affairs doctrine; or • any action asserting an “internal corporate claim” as that term is defined in Section 115 of the Delaware General Corporation Law.
Our revenue, results of operations, cash flows and future growth may be affected by negative local, regional, national or international political or economic trends or developments, including the effects of national and international security concerns such as war, terrorism or the threat thereof, to the extent such developments reduce consumers’ ability or willingness to spend.
Our revenue, results of operations, cash flows and future growth may be affected by negative local, regional, national or international political or economic trends or developments, including global trade policy, the effects of national and international security concerns such as war, terrorism or the threat thereof, to the extent such developments reduce consumers’ ability or willingness to make discretionary purchases.
Our licensees, franchisees, wholesalers, and joint venture partners could take actions or omissions that could harm our business or the image of our brands. We have global representation through independently owned stores operated by our third-party partners.
Our licensees, franchisees, wholesalers, and joint venture partners could take actions or omissions that could harm our business and reputation. We have global representation through independently owned stores operated by our third-party partners.
We purchase products from third-party vendors. Factors outside our control, such as production or shipping delays or quality problems, could disrupt merchandise deliveries and result in lost sales, cancellation charges or excessive markdowns. In addition, quality problems could result in product liability litigation or a widespread product recall that may negatively impact our reputation, sales and profitability.
Factors outside our control, such as production or shipping delays or quality problems, could disrupt merchandise deliveries and result in lost sales, cancellation charges or excessive markdowns. In addition, quality problems could result in product liability litigation or a widespread product recall that may negatively impact our reputation, sales and profitability.
The increased use of artificial intelligence, smartphones, tablets and other mobile devices may also heighten these and other operational risks. Despite the precautions we have taken, unanticipated problems or events may nevertheless cause failures in, or unauthorized access to, our and our third-party service providers’ and vendors’ information technology systems.
The increased use of artificial intelligence, smartphones, tablets and other mobile devices may also heighten these and other operational risks. Unanticipated or uncontrollable problems or events may cause failures in, or unauthorized access to, our and our third-party service providers’ and vendors’ information technology systems.
We are dependent on certain product categories, and a decline in consumer demand in these product categories could negatively affect our results of operations, financial condition and cash flows.
We are dependent on certain product categories, including bras and other intimates products, and a decline in consumer demand in these product categories could negatively affect our results of operations, financial condition and cash flows.
These events could adversely impact the cultivation of cotton, which is a key resource in the production of our products, disrupt the operation of our supply chain, increase our production costs, and impact the types of apparel products that consumers purchase. These events could also compound adverse economic conditions and impact consumer confidence and discretionary spending.
These events could adversely impact the cultivation of cotton, which is a key resource in the production of our products, disrupt the operation of our supply chain, increase our production costs, and impact consumer behavior. These events could also compound adverse economic conditions and reduce consumer confidence and discretionary spending.
The Company will continue to monitor law changes and regulations in jurisdictions in which we operate. We continue to monitor the geopolitical tensions between the U.S. and China as both countries have imposed tariffs on the importation of certain product categories into the respective country.
We will continue to monitor legal and regulatory changes in the many jurisdictions in which we operate. We also continue to monitor the geopolitical tensions between the U.S. and China as both countries have imposed tariffs on the importation of certain product categories into the respective country.
Our systems and facilities are also subject to compromise from internal threats, such as theft, misuse, unauthorized access or other improper actions by employees, third-party service providers and other third parties with otherwise legitimate access to our systems, website or facilities (which risks may be heightened as a result of remote or hybrid work policies and technologies that have continued following the COVID-19 pandemic).
Our systems and facilities are also subject to compromise from internal threats, such as theft, misuse, unauthorized access or other improper actions by employees, third-party service providers and other third parties with otherwise legitimate access to our systems, website or facilities. These risks may be heightened as a result of remote or hybrid work policies and technologies.
Changes in consumer behavior impact our sales and profitability, and we are unable to predict the extent to which consumer behavior may be impacted by negative macroeconomic conditions, or how those trends will impact our business, results of operations and financial condition.
We are unable to predict future economic conditions, the extent to which consumer behavior may be impacted by negative economic conditions, or how those trends will impact our business, results of operations and financial condition.
We cannot be sure as to when or whether such desirable locations will become available to us at reasonable costs and on satisfactory lease or other terms. Some of our store locations require significant upfront capital investment and have material lease commitments.
The market for prime retail real estate is competitive. We cannot be sure as to when or whether such desirable locations will become available to us at reasonable costs and on satisfactory lease or other terms. Some of our store locations require significant upfront capital investment and have material lease commitments.
Our ability to compete favorably in our highly competitive segment of the retail industry could impact our results. The retail industry is highly competitive, especially with respect to the intimates, apparel and beauty markets. We compete for sales with a broad range of other retailers, including individual and chain specialty stores, department stores and discount retailers.
The retail industry is highly competitive, especially with respect to the intimates, apparel and beauty markets. We compete for sales with a broad range of other retailers, including individual and chain specialty stores, department stores and discount retailers.
Additionally, organizations that provide information to investors on corporate governance and other matters have developed rating systems for evaluating companies on their approach to environmental, social and governance matters. Unfavorable ratings may also affect our reputation and the perception of our brands, which could have a negative impact on our financial performance and stock price.
Additionally, organizations that provide information to investors on corporate governance and other matters have developed rating systems for evaluating companies on their approach to environmental, social and governance matters. Unfavorable ratings may also affect our reputation and the perception of our brands.
Risks Relating to Our Business Adverse economic conditions have had and may continue to have an adverse effect on our business, results of operations and financial condition. Adverse economic conditions in the United States and globally has had and may continue to have an adverse effect on our business, results of operations, and financial condition.
Risks Relating to Our Business Our business is impacted by general economic conditions, and adverse economic conditions could have a material adverse effect on our business, results of operations and financial condition. Adverse economic conditions in the United States and globally has had and may continue to have an adverse effect on our business, results of operations, and financial condition.
Our business, prospects, results of operations, financial condition or cash flows could be materially and adversely affected by any of these risks, as well as additional risks not presently known to us or that we currently deem immaterial.
Our business, prospects, results of operations, financial condition or cash flows could be materially and adversely affected by any of these risks, as well as additional risks that are not described in this Annual Report because they are not presently known to us or we currently deem them immaterial.
We could also become subject to investigations by the NYSE, the SEC or other regulatory authorities, which could require additional financial and management resources.
We could also become subject to investigations by the New York Stock Exchange (“NYSE”), the SEC or other regulatory authorities, which could require additional financial and management resources.
Some of our competitors may have greater financial, marketing and other resources available to them. Trends across our product categories may favor our competitors, including the shift in customer preference to digital and omni-channel shopping.
Some of our competitors may have greater financial, marketing and other resources available to them or use their resources more effectively. Trends across our product categories may favor our competitors, including the shift in customer preference to digital and omnichannel shopping.
Your percentage ownership in the Company may be diluted due to issuances of equity by us for acquisitions, strategic investments, capital market transactions or otherwise, including equity awards that we may grant to our directors, officers, employees and other service providers. From time to time, we may grant equity awards to our employees under our employee compensation and benefits plans.
Your percentage ownership in the Company may be diluted due to issuances of common stock or other securities by us for acquisitions, strategic investments, capital market transactions or otherwise, including awards of common stock that we may grant to our directors, officers, employees and other service providers.
Inflationary pressures on the products we sell could impact our revenues and profitability, especially if we are unable to increase our retail prices to reflect increases in our costs. During fiscal years 2022 and 2023, we experienced levels of inflation that were higher than we have experienced in recent years, which impacted consumer confidence and spending patterns.
Inflationary pressures on the products we sell could impact our revenues and profitability, especially if we are unable to increase our retail prices to reflect increases in our costs. When levels of inflation are higher than typical, as we have experienced in recent years, consumer confidence and spending patterns are negatively impacted, which impacts our sales and profitability.
State laws are changing rapidly and there is discussion in Congress of a new comprehensive federal data privacy law to which we would become subject if it is enacted, which may add additional complexity, variation in requirements, restrictions and potential legal risk, require additional investment of resources in compliance programs, impact strategies and the availability of previously useful data and could result in increased compliance costs or changes in business practices and policies.
Changes to state or federal laws to which we are or become subject may add additional complexity, variation in requirements, restrictions and potential legal risk, require additional investment of resources in compliance programs, impact strategies and the availability of previously useful data and could result in increased compliance costs or changes in business practices and policies.
We must carry a significant amount of inventory, especially in the months preceding the holiday season selling period.
We typically accumulate a significant amount of inventory in the months preceding the holiday season selling period.
Our reputation could be jeopardized if we fail to maintain high standards for merchandise quality and corporate integrity. Any negative publicity, including information publicized through traditional or social media platforms, blogs, websites and other forums, may affect our reputation and brands and, consequently, reduce demand for our merchandise, even if such publicity is unverified or inaccurate.
Any negative publicity, including information publicized through traditional or social media platforms, blogs, websites and other forums, may affect our reputation and brands and, consequently, reduce demand for our merchandise, even if such publicity is unverified or inaccurate.
If we announce sustainability-related goals and targets, there can be no assurance that our stakeholders will agree with our strategies, and any perception, whether or not valid, that we have failed to achieve, or to act responsibly with respect to such matters or to comply with new or additional legal or regulatory requirements regarding climate change and other sustainability-related matters could result in adverse publicity and adversely affect our business and reputation. 20 Table of Contents Our ability to adequately protect our assets from loss and theft could have an adverse effect on our reputation, results of operations, financial condition and cash flows.
If we announce sustainability-related goals and targets, there can be no assurance that our stakeholders will agree with our strategies, and any perception, whether or not valid, that we have failed to achieve, or to act responsibly with respect to such matters or to comply with new or additional legal or regulatory requirements regarding climate change and other sustainability-related matters could result in adverse publicity and adversely affect our business and reputation.
There can be no assurance that we will be able to maintain our credit ratings, and any actual or anticipated changes or downgrades in our credit ratings, including any announcement that our ratings are under review for a downgrade, may have a negative impact on our liquidity, capital position and access to capital markets. 24 Table of Contents Risks Relating to Our Common Stock The price of our common stock has fluctuated significantly and may continue to fluctuate significantly.
There can be no assurance that we will be able to maintain our credit ratings, and any actual or anticipated changes or downgrades in our credit ratings, including any announcement that our ratings are under review for a downgrade, may have a negative impact on our liquidity, capital position and access to capital markets.
Sales volume and retail traffic may be adversely affected by factors that we cannot control, such as economic downturns or changes in consumer demographics in a particular area, consumer trends away from brick-and-mortar retail toward online shopping, competition from digital and other retailers and other retail areas where we do not have stores, significant health hazards or pandemics, the closing of other stores or the decline in popularity or safety in the shopping areas where our stores are located, and the deterioration in the financial condition of the operators or developers of the shopping areas in which our stores are located.
Sales volume and retail traffic may be adversely affected by factors that we cannot control, such as economic downturns or changes in consumer demographics in a particular area, consumer trends away from brick-and-mortar retail toward online shopping, competition from digital and other retailers and other retail areas where we do not have stores, significant health hazards or pandemics, the closing of other stores or the decline in popularity or safety in the shopping areas where our stores are located, and the deterioration in the financial condition of the operators or developers of the shopping areas in which our stores are located. 11 Table of Contents Part of our future growth is significantly dependent on our ability to operate stores in desirable locations with capital investment and lease costs providing the opportunity to earn a reasonable return.
Our common stock is and will be subordinate to all of our current and future indebtedness and any preferred stock, and effectively subordinate to all indebtedness and preferred equity claims against our subsidiaries. Shares of our common stock are common equity interests in us and, as such, will rank junior to all our current and future indebtedness and other liabilities.
Shares of our common stock are common equity interests in us and, as such, will rank junior to all our current and future indebtedness and other liabilities.
These risks could have a material adverse effect on our results of operations, financial condition and cash flows. Further, our results of operations and financial condition may be adversely affected by fluctuations in currency exchange rates.
These risks could have a material adverse effect on our results of operations, financial condition and cash flows. Our business is exposed to the risk of foreign currency exchange rate fluctuations that could impact our results of operations. Our results of operations and financial condition may be adversely affected by fluctuations in currency exchange rates.
In addition, from time to time, we make hardware, software and code modifications and upgrades to our information technology systems for point-of-sale, e-commerce, mobile applications, merchandising, planning, sourcing, logistics, inventory management and support systems including human resources and finance. Modifications involve replacing existing systems with successor systems, making changes to existing systems or acquiring new systems with new functionality.
In addition, from time to time, we make hardware, software and code modifications and upgrades to our information technology systems for point-of-sale, e-commerce, mobile applications, merchandise and financial planning, sourcing, logistics, inventory management and support systems, including human resources and finance.
Further, we may be unable to quickly and successfully adapt to rapid change resulting from advancements in AI and similar technology, or our competitors may have more success implementing and utilizing such technology than we do.
Further, we may be unable to quickly and successfully adapt to rapid change resulting from advancements in AI and similar technology, or our competitors may have more success implementing and utilizing such technology than we do. Any of these risks could have an adverse effect on our business, reputation and results of operations.
An economic downturn or a recession, or the perception that any of these events may occur, or continued or increased economic uncertainty may also lead to increased credit risk, higher borrowing costs or reduced availability of capital and credit markets, reduced liquidity, asset impairments and adverse impacts on our suppliers and the financial institutions with whom we transact. 13 Table of Contents Our sales are impacted by discretionary spending by consumers, which tend to be adversely impacted by unfavorable local, regional, national or global economic conditions.
An economic downturn or a recession, or the perception that any of these events may occur, or continued or increased economic uncertainty may also lead to increased credit risk, higher borrowing costs or reduced availability of capital and credit markets, reduced liquidity, asset impairments and adverse impacts on our suppliers and the financial institutions with whom we transact.
Risks include the difficulty in recreating our unique in-store experience through our direct channels; domestic or international resellers purchasing merchandise and reselling it outside our control; our ability to anticipate and implement innovations in technology and logistics in order to appeal to existing and potential customers who increasingly rely on multiple channels to meet their shopping needs; our ability to keep up with drastic shifts in customer demand, such as we saw with the COVID-19 pandemic; and the failure of and risks related to the systems that operate our digital infrastructure, websites and the related support systems, including computer viruses, theft of customer information, privacy concerns, telecommunication failures and electronic break-ins and similar disruptions. 16 Table of Contents Our failure to maintain efficient and uninterrupted order-taking and fulfillment operations could also have a material adverse effect on our business and results of operations.
Risks include the difficulty in recreating our unique in-store experience through our direct channels; domestic or international resellers purchasing merchandise and reselling it outside our control; our ability to anticipate and implement innovations in technology and logistics in order to appeal to existing and potential customers who increasingly rely on multiple channels to meet their shopping needs; our ability to keep up with shifts in customer preference and demand; and the failure of and risks related to the systems that operate our digital infrastructure, websites and the related support systems, including computer viruses, theft of customer information, privacy concerns, telecommunication failures, cybersecurity incidents and similar disruptions.
We believe that our trade names, trademarks and patents are important assets and an essential element of our strategy, especially with respect to innovative new products and maintaining the integrity of our brands. We have applied for or obtained registration of our trade names, trademarks and patents in the U.S. and in many foreign countries.
We believe that our intellectual property rights, including trade names, trademarks, copyrights, patents and proprietary information are important assets and an essential element of our strategy, especially with respect to innovative new products and maintaining the integrity of our brands. We routinely apply for and obtain registration of our intellectual property in the U.S. and in many foreign jurisdictions.
The regulatory environment related to data privacy and security is increasingly rigorous, with new and constantly changing requirements applicable to our business, and enforcement practices are likely to remain uncertain for the foreseeable future.
We are, and may increasingly become, subject to various laws, regulations and industry standards, as well as contractual obligations, relating to data privacy and security. The regulatory environment related to data privacy and security is increasingly rigorous, with new and constantly changing requirements applicable to our business, and enforcement practices are likely to remain uncertain for the foreseeable future.
We are self-insured for various types of insurable risks including associate medical benefits, workers’ compensation, property, general liability and automobile up to certain stop-loss limits. Claims are difficult to predict and may be volatile. Any adverse claims experience could have a material adverse effect on our results of operations, financial condition and cash flows.
We are self-insured for various types of insurable risks including associate medical benefits, workers’ compensation, property, general liability and automobile up to certain stop-loss limits. Claims are difficult to predict and may be volatile.
We are also subject to international laws, regulations and standards in many jurisdictions, which apply broadly to the collection, use, retention, security, disclosure, transfer and other processing of personal information, for example, the E.U. General Data Protection Regulation (“GDPR”). These evolving compliance and operational requirements impose costs related to organizational changes, implementing additional protection technologies, training associates and engaging consultants.
We are also subject to international laws, regulations and standards in many jurisdictions in which we operate, which apply broadly to the collection, use, retention, security, disclosure, transfer and other processing of personal information, for example, the E.U. General Data Protection Regulation (“GDPR”).
We cannot give assurance that our management will be able to manage these initiatives effectively or implement them successfully. If we fail to implement our strategic plan effectively, or if our competitors are more successful in implementing their strategic plans and initiatives than we are, our business and results of operation could be adversely affected.
If we fail to implement our strategic plan effectively, if we invest resources in initiatives that ultimately prove to be unsuccessful, or if our competitors are more successful in implementing their strategic plans and initiatives than we are, our business and results of operation could be adversely affected.
In addition to competing for sales, we compete for favorable site locations and lease terms. 18 Table of Contents Increased competition, combined with declines in mall or online website traffic, could result in price reductions, increased marketing expenditures and loss of pricing power and market share, any of which could have a material adverse effect on our results of operations, financial condition and cash flows.
Increased competition, combined with declines in mall or online website traffic, could result in reduced sales, increased promotional activity, increased marketing expenditures, and loss of pricing power and market share, any of which could have a material adverse effect on our results of operations, financial condition and cash flows.
In addition, our remediation efforts may not be successful, or may not be completed in a timely manner. The inability to implement, maintain and upgrade adequate safeguards could have a material adverse effect on our results of operations, financial condition and cash flows.
The inability to implement, maintain and upgrade adequate safeguards could have a material adverse effect on our results of operations, financial condition and cash flows.
Additionally, we are dependent upon the suitability of the lease spaces that we currently use. 15 Table of Contents These risks could have a material adverse effect on our ability to grow and our results of operations, financial condition and cash flows. Our ability to grow depends in part on new store openings and existing store remodels and right-sizing.
These risks could have a material adverse effect on our ability to grow and our results of operations, financial condition and cash flows. Our success depends in part on new store openings and existing store remodels and right-sizing.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeOur CISO has over 25 years of security experience in executive leadership, operations, incident response, and consulting in various industries including retail, technology and healthcare, as well as support of Federal government agencies and intelligence. Our CISO reports to our Chief Information Officer (“CIO”), who is also responsible for overseeing cybersecurity risks and communicating with the Board and Audit Committee.
Biggest changeManagement's Role in Managing Cybersecurity Risk Our Chief Information Security Officer (“CISO”) has primary responsibility for assessing, monitoring, and managing our cybersecurity risks. Our CISO has over 25 years of security experience in executive leadership, operations, incident response, and consulting in various industries including retail, technology and healthcare, as well as support of Federal government agencies and intelligence.
Protocols to notify our executive leadership team and Board of Directors are in place based on the severity of the incident. Third-party Risk In addition to our own systems, we use third-party service providers to store, transmit and process information on our behalf. Third-party risk management is embedded in our cybersecurity risk management function.
Protocols to notify our executive leadership team and Board are in place based on the severity of the incident. Third-party Risk In addition to our own systems, we use third-party service providers to store, transmit and process information on our behalf. Third-party risk management is embedded in our cybersecurity risk management function.
Risk Management & Strategy We maintain a robust cybersecurity risk management program designed to assess, identify and manage material risks from cybersecurity threats, which encompasses the following key components. 27 Table of Contents Risk Assessment We regularly conduct comprehensive cybersecurity risk assessments to identify vulnerabilities, threats and potential impacts on our business operations and stakeholders.
Risk Management & Strategy We maintain a robust cybersecurity risk management program designed to assess, identify and manage material risks from cybersecurity threats, which encompasses the following key components. Risk Assessment We regularly conduct comprehensive cybersecurity risk assessments to identify vulnerabilities, threats and potential impacts on our business operations and stakeholders.
Governance Our cybersecurity risk management processes are integrated into our overall enterprise risk management system. Our Board of Directors (the “Board”) understands the critical nature of managing risks associated with cybersecurity threats. The Board has established robust oversight mechanisms to provide effective oversight of risks associated with cybersecurity.
Governance Our cybersecurity risk management processes are integrated into our overall enterprise risk management system. Our Board understands the critical nature of managing risks associated with cybersecurity threats.
We have an Executive Risk Council, comprised of executive leadership across the business, which is briefed quarterly on the latest cybersecurity threats impacting our business, and the progress of recent and ongoing cybersecurity program efforts, incidents and risk assessments. The Executive Risk Council provides input as needed to strengthen our cybersecurity controls and risk management.
We report cybersecurity metrics quarterly to our technology leadership, including our CIO and CISO, and our Enterprise Risk Management team. We have an Executive Risk Council, comprised of executive leadership across the business, which is briefed quarterly on the latest cybersecurity threats impacting our business, and the progress of recent and ongoing cybersecurity program efforts, incidents and risk assessments.
We do not believe that any risks we have identified from cybersecurity threats, including as a result of any previous cybersecurity incidents, have materially affected or are reasonably likely to materially affect our business strategy, results of operations or financial condition. For additional information regarding cybersecurity risks we are subject to, refer to “Item 1A.
The Executive Risk Council provides input as needed to strengthen our cybersecurity controls and risk management. We do not believe that any risks we have identified from cybersecurity threats, including as a result of any previous cybersecurity incidents, have materially affected or are reasonably likely to materially affect our business strategy, results of operations or financial condition.
Board of Directors Oversight The Audit Committee has been delegated the primary responsibility for the Board's oversight of cybersecurity risks. Executive summaries of our internal risk assessments, program initiatives, regulatory compliance and incident summaries are shared with our Audit Committee on a semi-annual basis, with additional updates as needed.
Executive summaries of our internal risk assessments, program initiatives, regulatory compliance and incident summaries are shared with our Audit Committee on a semi-annual basis, with additional updates as needed. Our third-party assessment and audit results, which are performed on an annual basis, and associated remediation plans are also shared with our Audit Committee.
We have a structured process to identify and oversee material cybersecurity risks. We maintain a robust set of cybersecurity policies that set the standards and expectations for our associates, contractors and vendors to follow. We report cybersecurity metrics quarterly to our technology leadership, including our CIO and CISO, and our Enterprise Risk Management team.
Our CISO reports to our Chief Information Officer (“CIO”), who is also responsible for overseeing cybersecurity risks and communicating with the Board and Audit Committee. We have a structured process to identify and oversee material cybersecurity risks. We maintain a robust set of cybersecurity policies that set the standards and expectations for our associates, contractors and vendors to follow.
Our third-party assessment and audit results, which are performed on an annual basis, and associated remediation plans are also shared with our Audit Committee. Additionally, our Internal Audit function independently conducts periodic reviews of our cybersecurity controls and reports the results of those reviews to the Audit Committee.
Additionally, our Internal Audit function independently conducts periodic reviews of our cybersecurity controls and reports the results of those reviews to the Audit Committee. The Audit Committee reports to the Board on cybersecurity risk oversight at least annually.
Risk Factors” in this Annual Report on Form 10-K. 28 Table of Contents
For additional information regarding cybersecurity risks we are subject to, refer to “Item 1A. Risk Factors” in this Annual Report on Form 10-K.
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The Audit Committee reports to the Board on cybersecurity risk oversight at least annually. Management's Role in Managing Cybersecurity Risk Our Chief Information Security Officer (“CISO”) has primary responsibility for assessing, monitoring, and managing our cybersecurity risks.
Added
The Board has established robust oversight mechanisms to provide effective oversight of risks associated with cybersecurity. 23 Table of Contents Board of Directors Oversight The Audit Committee has been delegated the primary responsibility for the Board's oversight of cybersecurity risks.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeHowever, as of February 3, 2024, we continue to lease a store in the U.K., with a lease expiration in 2024, and a store in Ireland, with a lease expiration in 2036, which are sublet to and operated by the joint venture. 29 Table of Contents Other International As of February 3, 2024, we also have global representation through stores operated by our partners: • 320 beauty and accessories stores in 58 countries; and • 156 full assortment stores in 36 countries.
Biggest changeOther International As of February 1, 2025, we also have global representation through stores operated by our partners: • 337 beauty and accessories stores in 59 countries; and • 181 full assortment stores in 39 countries. We also operate technology and sourcing-related office facilities in various international locations.
The lease for this facility expires in 2026. China We lease offices in Shanghai, Shenzhen and Hong Kong within China. As of February 3, 2024, we operated 57 retail stores in leased facilities in China. These lease commitments consist of store leases with initial terms ranging from 3 to 15 years expiring on various dates between 2024 and 2032.
The lease for this facility expires in 2029. China We lease offices in Shanghai, Shenzhen and Hong Kong within China. As of February 1, 2025, we operated 57 retail stores in leased facilities in China. These lease commitments consist of store leases with initial terms ranging from 3 to 15 years expiring on various dates between 2025 and 2032.
Canada As of February 3, 2024, we operated 23 retail stores located in leased facilities, primarily in malls and shopping centers, throughout the Canadian provinces. These lease commitments consist of store leases with initial terms of 5 to 10 years expiring on various dates between 2024 and 2035.
Canada As of February 1, 2025, we operated 24 retail stores located in leased facilities, primarily in malls and shopping centers, throughout the Canadian provinces. These lease commitments consist of store leases with initial terms of 5 to 10 years expiring on various dates between 2025 and 2035.
The following table provides the location, use and size of our distribution, corporate and product development facilities as of February 3, 2024: Location Use Approximate Square Footage Columbus, Ohio area Distribution, shipping and corporate offices 2,945,000 New York Office, sourcing and product development/design 234,000 Mexico Distribution and shipping 185,000 New Jersey Distribution and shipping 126,000 Kettering, Ohio Call center 94,000 Hong Kong Office and sourcing 38,000 Various other locations Office and sourcing 216,000 United States Within the U.S., our business is principally conducted from office, distribution and shipping facilities located in the Columbus, Ohio, area.
The following table provides the location, use and size of our distribution, corporate and product development facilities as of February 1, 2025: Location Use Approximate Square Footage Columbus, Ohio area Distribution, shipping and corporate offices 2,945,000 New York Office, sourcing and product development/design 239,000 Mexico Distribution and shipping 185,000 Netherlands Distribution and shipping 153,000 New Jersey Distribution and shipping 126,000 Hong Kong Office and sourcing 38,000 Various other locations Office and sourcing 228,000 United States Within the U.S., our business is principally conducted from office, distribution and shipping facilities located in the Columbus, Ohio, area.
Typically, when space is leased for a retail store in a mall or shopping center, we supply all improvements, including interior walls, floors, ceilings, fixtures and decorations. The cost of improvements varies widely, depending on the design, size and location of the store.
The store leases expire at various dates between 2025 and 2037. 24 Table of Contents Typically, when space is leased for a retail store in a mall or shopping center, we supply all improvements, including interior walls, floors, ceilings, fixtures and decorations. The cost of improvements varies widely, depending on the design, size and location of the store.
We usually pay certain operating costs such as common area maintenance, utilities, insurance and taxes. For additional information, see Note 9 to the Consolidated and Combined Financial Statements included in Item 8. Financial Statements and Supplementary Data. International Mexico We lease an international distribution and shipping facility located in Mexico. This facility comprises approximately 0.2 million square feet.
We usually pay certain operating costs such as common area maintenance, utilities, insurance and taxes. For additional information, see Note 8 to the Consolidated Financial Statements included in Item 8. Financial Statements and Supplementary Data. International Mexico We lease an international distribution and shipping facility located in Mexico, which supports our Adore Me brand.
United Kingdom / Ireland As a result of our joint venture with Next PLC, we no longer operate any stores in the United Kingdom (“U.K.”) or Ireland.
United Kingdom / Ireland As a result of our joint venture with Next PLC, we no longer operate any stores in the United Kingdom (“U.K.”) or Ireland. However, as of February 1, 2025, we continue to lease a store in Ireland, with a lease expiration in 2036, which is sublet to and operated by the joint venture.
Additional facilities are located in New York, New Jersey and Kettering, Ohio. Our distribution and shipping facilities in the U.S. consist of three buildings located in the Columbus, Ohio, area and one leased building located in New Jersey. These buildings, including attached office space, comprise approximately 3.1 million square feet. The lease on the New Jersey facility expires in 2028.
These buildings, including attached office space, comprise approximately 3.1 million square feet. The lease on the New Jersey facility expires in 2028. As of February 1, 2025, we operated 788 retail stores located in leased facilities, primarily in shopping malls, lifestyle centers and off-mall locations, throughout the U.S.
As of February 3, 2024, we operated 814 retail stores located in leased facilities, primarily in malls and shopping centers, throughout the U.S. A substantial portion of these lease commitments consists of store leases generally with an initial term of 10 years. The store leases expire at various dates between 2024 and 2036.
A substantial portion of these lease commitments consists of store leases generally with an initial term of 10 years.
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We also operate technology and sourcing-related office facilities in various international locations.
Added
ITEM 2. PROPERTIES. We believe that our properties are adequate and suitable for our business as presently conducted.
Added
Additional facilities are located in New York and New Jersey. Our distribution and shipping facilities in the U.S. consist of three buildings located in the Columbus, Ohio, area, which support our Victoria's Secret and PINK brands, and one leased building located in New Jersey, which supports our Adore Me brand.
Added
This facility is operated by a third-party provider and comprises approximately 0.2 million square feet. The lease for this facility expires in 2026. Netherlands We lease an international distribution and shipping facility located in the Netherlands, which supports our Victoria's Secret and PINK brands. This facility is operated by a third-party provider and comprises approximately 0.2 million square feet.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeAlthough it is not possible to predict with certainty the eventual outcome of any litigation, in the opinion of management, our current legal proceedings are not expected to have a material adverse effect on our financial position or results of operations. ITEM 4. MINE SAFETY DISCLOSURES. Not applicable. 30 Table of Contents PART II
Biggest changeAlthough it is not possible to predict with certainty the eventual outcome of any litigation, in the opinion of management, our current legal proceedings are not expected to have a material adverse effect on our financial position or results of operations. ITEM 4. MINE SAFETY DISCLOSURES. Not applicable. 25 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeCOMPARISON OF YEARLY CHANGES IN CUMULATIVE TOTAL RETURN (a) AMONG VICTORIA'S SECRET & CO., THE S&P 500 INDEX AND THE S&P 500 CONSUMER DISCRETIONARY DISTRIBUTION & RETAIL INDEX _______________ (a) This table represents $100 invested in stock or in index at the closing price on August 3, 2021, including reinvestment of dividends. 31 Table of Contents The following table provides our repurchases of our common stock during the fourth quarter of 2023: Period Total Number of Shares Purchased (a) Average Price Paid per Share (b) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Number (or Approximate Dollar Value) of Shares that May Yet be Purchased Under the Plans or Programs (c) (in thousands) (in thousands) October 29, 2023 - November 25, 2023 (“November 2023”) 6 $ 17.77 — $ 125,000 November 26, 2023 - December 30, 2023 (“December 2023”) 25 25.67 — 125,000 December 31, 2023 - February 3, 2024 (“January 2024”) 22 24.99 — — Total 53 — ________________ (a) The total number of shares repurchased includes shares repurchased as part of publicly announced programs, with the remainder relating to shares repurchased in connection with tax withholding payments due upon vesting of employee restricted stock awards and the use of our common stock to pay the exercise price on employee stock options.
Biggest changeCOMPARISON OF YEARLY CHANGES IN CUMULATIVE TOTAL SHAREHOLDER RETURN (a) AMONG VICTORIA'S SECRET & CO., THE S&P 500 INDEX AND THE S&P 500 CONSUMER DISCRETIONARY DISTRIBUTION & RETAIL INDEX _______________ (a) This table represents $100 invested in stock or in index at the closing price on August 3, 2021, including reinvestment of dividends. 26 Table of Contents The following table provides our repurchases of our common stock during the fourth quarter of 2024: Period Total Number of Shares Purchased (a) Average Price Paid per Share (b) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Number (or Approximate Dollar Value) of Shares that May Yet be Purchased Under the Plans or Programs (c) (in thousands) (in thousands) November 3, 2024 - November 30, 2024 (“November 2024”) 6 $ 30.94 — $ 250,000 December 1, 2024 - January 4, 2025 (“December 2024”) 5 38.02 — 250,000 January 5, 2025 - February 1, 2025 (“January 2025”) 22 41.39 — 250,000 Total 33 — ________________ (a) For the fourth quarter of 2024, the total number of shares repurchased includes shares repurchased in connection with tax withholding payments due upon vesting of employee restricted stock awards and the use of our common stock to pay the exercise price on employee stock options.
The declaration and amount of any dividends to holders of our common stock will be at the discretion of our Board of Directors and will depend upon many factors, including our financial condition, earnings, cash flows, capital requirements of our business, covenants associated with our debt obligations, legal requirements, regulatory constraints, industry practice and any other factors the Board of Directors deems relevant.
The declaration and amount of any dividends to holders of our common stock will be at the discretion of our Board and will depend upon many factors, including our financial condition, earnings, cash flows, capital requirements of our business, covenants associated with our debt obligations, legal requirements, regulatory constraints, industry practice and any other factors the Board deems relevant.
The following graph shows the yearly changes, for the period from August 3, 2021 (the first day our common stock began trading on the NYSE) to February 3, 2024, in the value of $100 invested in our common stock compared to the Standard & Poor’s (“S&P”) 500 Composite Stock Price Index (“S&P 500 Index”) and the S&P 500 Consumer Discretionary Distribution & Retail Index, formerly known as the S&P 500 Retail Composite Index.
The following graph shows the yearly changes, for the period from August 3, 2021 (the first day our common stock began trading on the NYSE) to February 1, 2025, in the value of $100 invested in our common stock compared to the Standard & Poor’s (“S&P”) 500 Composite Stock Price Index (“S&P 500 Index”) and the S&P 500 Consumer Discretionary Distribution & Retail Index.
As of February 3, 2024, there were approximately 25,000 stockholders of record of our common stock. This number does not include beneficial or “street name” holders of our common stock whose shares are held by banks, brokers and other financial institutions which are aggregated into a single holder of record.
As of February 1, 2025, there were approximately 24,000 stockholders of record of our common stock. This number does not include beneficial or “street name” holders of our common stock whose shares are held by banks, brokers and other financial institutions, which are aggregated into a single holder of record.
Including active associates who participate in our stock purchase plan, associates who own shares through our sponsored retirement plans and others holding shares in broker accounts under street names, we estimate our stockholder base to be approximately 112,000. We have not paid any cash dividends since the Separation.
Including active associates who participate in our stock purchase plan, associates who own shares through our sponsored retirement plans and others holding shares in broker accounts under street names, we estimate our stockholder base to be approximately 158,000. We have not paid any cash dividends since becoming an independent, publicly traded company.
(b) The average price paid per share includes any broker commissions. (c) The share repurchase program announced on January 11, 2023 (the “January 2023 Share Repurchase Program”) authorized the purchase of up to $250 million of our common stock, subject to market conditions and other factors. The January 2023 Share Repurchase Program expired at the end of fiscal year 2023.
(b) The average price paid per share includes any broker commissions. (c) The share repurchase program announced on March 6, 2024 (the “March 2024 Share Repurchase Program”) authorized the purchase of up to $250 million of our common stock, subject to market conditions and other factors.
For additional share repurchase program information, see Note 18 to the Consolidated and Combined Financial Statements included in Item 8. Financial Statements and Supplementary Data. ITEM 6. RESERVED.
The March 2024 Share Repurchase Program is open-ended in term and will continue until exhausted. For additional share repurchase program information, see Note 17 to the Consolidated Financial Statements included in Item 8. Financial Statements and Supplementary Data. ITEM 6. RESERVED.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeThe following table represents store data for 2023: Stores at Stores at January 28, 2023 Opened Closed February 3, 2024 Company-Operated: U.S. 812 15 (19) 808 Canada 25 — (2) 23 Subtotal Company-Operated 837 15 (21) 831 China Joint Venture: Beauty & Accessories (a) 39 2 (7) 34 Full Assortment 33 4 (1) 36 Subtotal China Joint Venture 72 6 (8) 70 Partner-Operated: Beauty & Accessories 308 31 (32) 307 Full Assortment 135 33 (12) 156 Subtotal Partner-Operated 443 64 (44) 463 Adore Me 6 — — 6 Total 1,358 85 (73) 1,370 _______________ (a) Includes thirteen partner-operated stores at February 3, 2024. 38 Table of Contents The following table represents store data for 2022: Stores at Reclassed to Stores at January 29, 2022 Opened Closed Acquired (b) Joint Venture January 28, 2023 Company-Operated: U.S. 808 16 (12) — — 812 Canada 26 — (1) — — 25 Subtotal Company-Operated 834 16 (13) — — 837 China Joint Venture: Beauty & Accessories (a) 35 6 (10) — 8 39 Full Assortment 30 4 (1) — — 33 Subtotal China Joint Venture 65 10 (11) — 8 72 Partner-Operated: Beauty & Accessories 335 20 (39) — (8) 308 Full Assortment 128 21 (14) — 135 Subtotal Partner-Operated 463 41 (53) — (8) 443 Adore Me — — — 6 — 6 Total 1,362 67 (77) 6 — 1,358 _______________ (a) Includes thirteen partner-operated stores at January 28, 2023.
Biggest changeThe following table represents store data for 2024: Stores at Stores at February 3, 2024 Opened Closed February 1, 2025 Company-Operated: U.S. 808 16 (42) 782 Canada 23 1 — 24 Subtotal Company-Operated 831 17 (42) 806 China Joint Venture: Beauty & Accessories (a) 34 3 (7) 30 Full Assortment 36 4 — 40 Subtotal China Joint Venture 70 7 (7) 70 Partner-Operated: Beauty & Accessories 307 30 (13) 324 Full Assortment 156 30 (5) 181 Subtotal Partner-Operated 463 60 (18) 505 Adore Me 6 — — 6 Total 1,370 84 (67) 1,387 _______________ (a) Includes thirteen partner-operated stores at February 1, 2025. 33 Table of Contents The following table represents store data for 2023: Stores at Stores at January 28, 2023 Opened Closed February 3, 2024 Company-Operated: U.S. 812 15 (19) 808 Canada 25 — (2) 23 Subtotal Company-Operated 837 15 (21) 831 China Joint Venture: Beauty & Accessories (a) 39 2 (7) 34 Full Assortment 33 4 (1) 36 Subtotal China Joint Venture 72 6 (8) 70 Partner-Operated: Beauty & Accessories 308 31 (32) 307 Full Assortment 135 33 (12) 156 Subtotal Partner-Operated 443 64 (44) 463 Adore Me 6 — — 6 Total 1,358 85 (73) 1,370 _______________ (a) Includes thirteen partner-operated stores at February 3, 2024.
Financing Activities Net cash used for financing activities in 2023 was $291 million, consisting primarily of $615 million of repayments under the ABL Facility and $125 million of share repurchases, partially offset by borrowings of $465 million from the ABL Facility.
Net cash used for financing activities in 2023 was $291 million, consisting primarily of $615 million of repayments under the ABL Facility and $125 million of share repurchases, partially offset by borrowings of $465 million from the ABL Facility.
We use cash flows provided by our operating activities to fund our share repurchases. Once authorized by our Board of Directors, the timing and amount of any share repurchases are made at our discretion, taking into account a number of factors, including market conditions.
We use cash flows provided by our operating activities to fund any share repurchases. Once authorized by our Board of Directors, the timing and amount of any share repurchases are made at our discretion, taking into account a number of factors, including market conditions.
Revenue recognized under franchise and license arrangements generally consists of royalties earned and recognized upon sale of merchandise by franchise and license partners to retail customers. Revenue is generally recognized under wholesale and sourcing arrangements at the time the title of merchandise passes to the partner.
Revenue recognized under franchise and license arrangements generally consists of royalties earned and recognized upon sale of merchandise by franchise and license partners to retail customers. Revenue is generally recognized under wholesale and sourcing arrangements at the time title of the merchandise passes to the partner.
Our shipping and handling revenues are included in Net Sales with the related costs included in Costs of Goods Sold, Buying and Occupancy in our Consolidated and Combined Statements of Income. We also provide a reserve for projected merchandise returns based on historical experience and recent information. Net Sales exclude sales and other similar taxes collected from customers.
Our shipping and handling revenues are included in Net Sales with the related costs included in Costs of Goods Sold, Buying and Occupancy in our Consolidated Statements of Income. We also provide a reserve for projected merchandise returns based on historical experience and recent information. Net Sales exclude sales and other similar taxes collected from customers.
The declaration and amount of any dividends to holders of our common stock will be at the discretion of our Board of Directors and will depend upon many factors, including our financial condition, earnings, cash flows, capital requirements of our business, covenants associated with our debt obligations, legal requirements, regulatory constraints, industry practice and any other factors the Board of Directors deems relevant.
The declaration and amount of any dividends to holders of our common stock will be at the discretion of our Board and will depend upon many factors, including our financial condition, earnings, cash flows, capital requirements of our business, covenants associated with our debt obligations, legal requirements, regulatory constraints, industry practice and any other factors the Board deems relevant.
Our determination of the treatment of claims and contingencies in the Consolidated and Combined Financial Statements is based on management’s view of the expected outcome of the applicable claim or contingency. We consult with legal counsel on matters related to litigation and seek input from both internal and external experts with respect to matters in the ordinary course of business.
Our determination of the treatment of claims and contingencies in the Consolidated Financial Statements is based on management’s view of the expected outcome of the applicable claim or contingency. We consult with legal counsel on matters related to litigation and seek input from both internal and external experts with respect to matters in the ordinary course of business.
The following discussion and analysis of financial condition and results of operations are based upon our Consolidated and Combined Financial Statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) as codified in the Accounting Standards Codification (“ASC”).
The following discussion and analysis of financial condition and results of operations are based upon our Consolidated Financial Statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) as codified in the Accounting Standards Codification (“ASC”).
(c) In the first quarter of 2023, we recognized a pre-tax charge of $11 million ($8 million after-tax), $8 million included in general, administrative and store operating expense and $3 million included in buying and occupancy expense, related to restructuring activities to continue to reorganize and improve our organizational structure.
In the first quarter of 2023, we recognized a pre-tax charge of $11 million ($8 million after-tax), $8 million included in general, administrative and store operating expense and $3 million included in buying and occupancy expense, related to restructuring activities to reorganize and improve our organizational structure.
The loans under the Term Loan Facility are secured on a first-priority lien basis by certain assets of ours and guarantors that do not constitute priority collateral of the ABL Facility and on a second-priority lien basis by priority collateral of the ABL Facility, subject to customary exceptions.
The loans under the Term Loan Facility are secured on a first-priority lien basis by certain assets of ours and our subsidiary guarantors that do not constitute priority collateral under the ABL Facility and on a second-priority lien basis by priority collateral of the ABL Facility, subject to customary exceptions.
The remaining portion totaling $12 million is included in the “Other” category because it is not reasonably possible that the payments could change in the next 12 months due to audit settlements or resolution of uncertainties. For additional information, see Note 12 to the Consolidated and Combined Financial Statements in Item 8. Financial Statements and Supplementary Data.
The remaining portion totaling $14 million is included in the “Other” category because it is not reasonably possible that the payments could change in the next 12 months due to audit settlements or resolution of uncertainties. For additional information, see Note 11 to the Consolidated Financial Statements in Item 8. Financial Statements and Supplementary Data.
For additional information related to our 2023 financial performance, see “Results of Operations – 2023 Compared to 2022.” For a discussion of our financial condition and results of operations for 2022 compared to 2021, refer to “Part II, Item 7.
For additional information related to our 2024 financial performance, see “Results of Operations – 2024 Compared to 2023.” For a discussion of our financial condition and results of operations for 2023 compared to 2022, refer to “Part II, Item 7.
Therefore, the percentage change in comparable sales for 2023 was calculated on a 53-to-53-week basis and the percentage change in comparable sales for 2022 was calculated on a 52-to-52-week basis. Comparable sales attributable to our international stores are calculated on a constant currency basis.
Therefore, the percentage change in comparable sales for 2024 was calculated on a 52-to-52-week basis and the percentage change in comparable sales for 2023 was calculated on a 53-to-53-week basis. Comparable sales attributable to our international stores are calculated on a constant currency basis.
The authorization, which expired at the end of 2023, was utilized in 2023 to repurchase shares in the open market and under the accelerated share repurchase agreement described below. In February 2023, as part of the January 2023 Share Repurchase Program, we entered into an accelerated share repurchase agreement (“ASR Agreement”) with Goldman Sachs & Co.
The authorization, which expired at the end of 2023, was utilized in 2023 to repurchase shares in the open market and under the accelerated share repurchase agreement described below. 38 Table of Contents In February 2023, as part of the January 2023 Share Repurchase Program, we entered into an accelerated share repurchase agreement (“ASR Agreement”) with Goldman Sachs & Co.
If the likelihood of an adverse outcome is only reasonably possible (as opposed to probable) or if an estimate is not reasonably determinable, disclosure of a material claim or contingency is disclosed in the Notes to the Consolidated and Combined Financial Statements included in Item 8.
If the likelihood of an adverse outcome is only reasonably possible (as opposed to probable) or if an estimate is not reasonably determinable, disclosure of a material claim or contingency is disclosed in the Notes to the Consolidated Financial Statements included in Item 8. Financial Statements and Supplementary Data.
We repurchased the following shares of our common stock under the January 2023 Share Repurchase Program during 2023: Amount Authorized Shares Repurchased Amount Repurchased Average Stock Price (in millions) (in thousands) (in millions) January 2023 Share Repurchase Program $ 250 3,652 $ 125 $ 34.22 43 Table of Contents Shares repurchased under the January 2023 Share Repurchase Program were retired upon repurchase.
We repurchased the following shares of our common stock under the January 2023 Share Repurchase Program during 2023: Amount Authorized Shares Repurchased Amount Repurchased Average Stock Price (in millions) (in thousands) (in millions) January 2023 Share Repurchase Program $ 250 3,652 $ 125 $ 34.22 Shares repurchased under the January 2023 Share Repurchase Program were retired upon repurchase.
(e) Other liabilities also include future estimated payments associated with unrecognized tax benefits. The “Less Than 1 Year” category includes $20 million of these tax items because it is reasonably possible that the payments could change in the next 12 months due to audit settlements or resolution of uncertainties.
(d) Other liabilities also include future estimated payments associated with unrecognized tax benefits. The “Less Than 1 Year” category includes $31 million of these tax items because it is reasonably possible that the payments could change in the next 12 months due to audit settlements or resolution of uncertainties.
The financial covenants could, within specific predefined circumstances, limit our ability to incur additional indebtedness, make certain investments, pay dividends or repurchase shares. As of February 3, 2024, we were in compliance with all covenants under our long-term debt and borrowing facilities.
The financial covenants could, within specific predefined circumstances, limit our ability to incur additional indebtedness, make certain investments, pay dividends or repurchase shares. As of February 1, 2025, we were in compliance with all covenants under our long-term debt and borrowing facilities.
(b) Future lease obligations primarily represent minimum payments due under store lease agreements. For additional information, see Note 9 to the Consolidated and Combined Financial Statements included in Item 8. Financial Statements and Supplementary Data.
For additional information, see Note 12 to the Consolidated Financial Statements included in Item 8. Financial Statements and Supplementary Data. (b) Future lease obligations primarily represent minimum payments due under store lease agreements. For additional information, see Note 8 to the Consolidated Financial Statements included in Item 8. Financial Statements and Supplementary Data.
Revenue earned in connection with our credit card arrangements is primarily recognized based on credit card sales and usage and is included in Net Sales in the Consolidated and Combined Statements of Income. 50 Table of Contents We also recognize revenues associated with franchise, license, wholesale and sourcing arrangements.
Revenue earned in connection with our credit card arrangements is primarily recognized based on credit card sales and usage and is included in Net Sales in the Consolidated Statements of Income. We also recognize revenues associated with franchise, license, wholesale and sourcing arrangements.
The effect on deferred tax assets and liabilities of a change in income tax rates is recognized in our Consolidated and Combined Statement of Income in the period that includes the enactment date. The Company treats the global intangible low-taxed income provisions enacted as part of the U.S. Tax Cuts and Jobs Act as a current period expense.
The effect on deferred tax assets and liabilities of a change in income tax rates is recognized in our Consolidated Statement of Income in the period that includes the enactment date. We treat the global intangible low-taxed income provisions enacted as part of the U.S. Tax Cuts and Jobs Act as a current period expense.
Management's Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended January 28, 2023, filed with the SEC on March 17, 2023. 36 Table of Contents Non-GAAP Financial Information In addition to our results provided in accordance with GAAP above and throughout this Annual Report on Form 10-K, 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. in 2023 and 2022 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.
Management's Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended February 3, 2024, filed with the SEC on March 22, 2024. 31 Table of Contents Non-GAAP Financial Information In addition to our results provided in accordance with GAAP above and throughout this Annual Report on Form 10-K, 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. in 2024 and 2023 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.
Risks associated with the following factors, among others, could affect our results of operations and financial performance and cause actual results to differ materially from those expressed or implied in any forward-looking statements: • we may not realize all of the expected benefits of the spin-off from our Former Parent; • general economic conditions, inflation and changes in consumer confidence and consumer spending patterns; • market disruptions including pandemics or significant health hazards, severe weather conditions, natural disasters, terrorist activities, financial crises, political crises or other major events, or the prospect of these events; • our ability to successfully implement our strategic plan; • difficulties arising from turnover in company leadership or other key positions; • our ability to attract, develop and retain qualified associates and manage labor-related costs; • our dependence on traffic to our stores and the availability of suitable store locations on satisfactory terms; • our ability to successfully operate and expand internationally and related risks; • the operations and performance of our franchisees, licensees, wholesalers, and joint venture partners; • our ability to successfully operate and grow our direct channel business; • our ability to protect our reputation and the image and value of our brands; • our ability to attract customers with marketing, advertising and promotional programs; 32 Table of Contents • the highly competitive nature of the retail industry and the segments in which we operate; • consumer acceptance of our products and our ability to manage the life cycle of our brands, remain current with fashion trends, and develop and launch new merchandise, product lines and brands successfully; • our ability to realize the potential benefits and synergies sought with the acquisition of Adore Me; • our ability to incorporate artificial intelligence into our business operations successfully and ethically while managing associated risks; • our ability to source materials and produce, distribute and sell merchandise on a global basis, including risks related to: • political instability and geopolitical conflicts; • environmental hazards and natural disasters; • significant health hazards and pandemics; • delays or disruptions in shipping and transportation and related pricing impacts; and • disruption due to labor disputes; • our geographic concentration of production and distribution facilities in central Ohio and Southeast Asia; • the ability of our vendors to manufacture and deliver products in a timely manner, meet quality standards and comply with applicable laws and regulations; • fluctuations in freight, product input and energy costs; • our and our third-party service providers’ ability to implement and maintain information technology systems and to protect associated data and system availability; • our ability to maintain the security of customer, associate, third-party and company information; • stock price volatility; • shareholder activism matters; • our ability to maintain our credit rating; • our ability to comply with regulatory requirements; and • legal, tax, trade and other regulatory matters.
Risks associated with the following factors, among others, could affect our results of operations and financial performance and cause actual results to differ materially from those expressed or implied in any forward-looking statements: • general economic conditions, inflation and changes in consumer confidence and consumer spending patterns; • market disruptions including pandemics or significant health hazards, severe weather conditions, natural disasters, terrorist activities, financial crises, political crises or other major events, or the prospect of these events; • uncertainty in the global trade environment, including the imposition or threatened imposition of tariffs or other trade restrictions; • our ability to successfully implement our strategic plan; • difficulties arising from changes and turnover in company leadership or other key positions; • our ability to attract, develop and retain qualified associates and manage labor-related costs; • our dependence on traffic to our stores and the availability of suitable store locations on satisfactory terms; • our ability to successfully operate and expand internationally and related risks; • the operations and performance of our franchisees, licensees, wholesalers and joint venture partners; • our ability to successfully operate and grow our direct channel business; • our ability to protect our reputation and the image and value of our brands; 27 Table of Contents • our ability to attract customers with marketing, advertising and promotional programs; • the highly competitive nature of the retail industry and the segments in which we operate; • consumer acceptance of our products and our ability to manage the life cycle of our brands, remain current with fashion trends, and develop and launch new merchandise, product lines and brands successfully; • our ability to integrate acquired businesses and realize the benefits and synergies sought with such acquisitions; • our ability to incorporate artificial intelligence into our business operations successfully and ethically while effectively managing the associated risks; • our ability to source materials and produce, distribute and sell merchandise on a global basis, including risks related to: • political instability and geopolitical conflicts; • environmental hazards and natural disasters; • significant health hazards and pandemics; • delays or disruptions in shipping and transportation and related pricing impacts; • foreign currency exchange rate fluctuations; and • disruption due to labor disputes; • our geographic concentration of production and distribution facilities in central Ohio and Southeast Asia; • the ability of our vendors to manufacture and deliver products in a timely manner, meet quality standards and comply with applicable laws and regulations; • fluctuations in freight, product input and energy costs; • our and our third-party service providers’ ability to implement and maintain information technology systems and to protect associated data and system availability; • our ability to maintain the security of customer, associate, third-party and company information; • stock price volatility; • shareholder activism matters; • our ability to maintain our credit rating; • our ability to comply with regulatory requirements; and • legal, tax, trade and other regulatory matters.
March 2024 Share Repurchase Program In March 2024, subsequent to the end of fiscal year 2023, our Board of Directors approved a share repurchase program (“March 2024 Share Repurchase Program”), authorizing the repurchase of up to $250 million of our common stock, subject to market conditions and other factors, through open market, accelerated share repurchase or privately negotiated transactions, including pursuant to one or more Rule 10b5-1 trading plans.
March 2024 Share Repurchase Program In March 2024, our Board approved a share repurchase program (“March 2024 Share Repurchase Program”), authorizing the repurchase of up to $250 million of our common stock, subject to market conditions and other factors, through open market, accelerated share repurchase or privately negotiated transactions, including pursuant to one or more Rule 10b5-1 trading plans.
(b) For the period ended February 3, 2024, the availability under the ABL Facility was limited by our borrowing base of $587 million, less outstanding borrowings of $145 million and letters of credit of $19 million.
For the period ended February 3, 2024, the availability was limited by our borrowing base of $587 million, less outstanding borrowings of $145 million and letters of credit of $19 million.
Common Stock Share Repurchases & Treasury Stock Retirements Our Board of Directors determines share repurchase authorizations, giving consideration to our levels of profit and cash flows, capital requirements, current and forecasted liquidity, the restrictions placed upon us by our borrowing arrangements and the Tax Matters Agreement with our Former Parent, as well as financial and other conditions existing at the time.
Common Stock Share Repurchases & Treasury Stock Retirements Our Board determines share repurchase authorizations, giving consideration to our levels of profit and cash flows, capital requirements, current and forecasted liquidity, the restrictions placed upon us by our borrowing arrangements, as well as financial and other conditions existing at the time.
The availability under the ABL Facility is the lesser of (i) the borrowing base, determined primarily based on our eligible U.S. and Canadian credit card receivables, eligible accounts receivable, eligible inventory and eligible real property, and (ii) the aggregate commitment.
The availability under the ABL Facility is equal to the lesser of (i) the borrowing base, determined primarily based on our eligible U.S. and Canadian credit card receivables, eligible accounts receivable, eligible inventory and eligible real property, and (ii) the maximum aggregate commitment amount of $750 million.
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.
Net cash provided by our 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.
This standard will be effective for annual reporting periods beginning in fiscal year 2025 and for interim periods beginning in fiscal year 2026, with early adoption permitted. The updates required by this standard should be applied prospectively, but retroactive application is permitted.
This standard will be effective for annual reporting periods beginning in fiscal year 2027 and for interim periods beginning in fiscal year 2028, with early adoption permitted. The updates required by this standard should be applied prospectively, but retrospective application is permitted.
Prior to the amendment, interest on the loans under the ABL Facility was calculated by reference to (i) LIBOR or an alternative base rate and (ii) in the case of loans denominated in Canadian dollars, Canadian Dollar Offered Rate (“CDOR”) or a Canadian base rate, plus an interest rate margin based on average daily excess availability ranging from (x) in the case of LIBOR and CDOR loans, 1.50% to 2.00% and (y) in the case of alternate base rate loans and Canadian base rate loans, 0.50% to 1.00%.
Interest on the loans under the ABL Facility is calculated by reference to (i) Term SOFR or an alternative base rate and (ii) in the case of loans denominated in Canadian dollars, Canadian Dollar Offered Rate (“CDOR”) or a Canadian base rate, plus an interest rate margin based on average daily excess availability ranging from (x) in the case of CDOR loans, 1.50% to 2.00%, (y) in the case of alternate base rate loans and Canadian base rate loans, 0.50% to 1.00%, and (z) in the case of Term SOFR loans, 1.60% to 2.10%.
Segment Reporting In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosure , which is intended to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expense categories that are regularly provided to the chief operating decision maker and included in each reported measure of a segment’s profit or loss.
Recently Issued Accounting and Reporting Pronouncements Segment Reporting In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosure , which is intended to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expense categories that are regularly provided to the chief operating decision maker and included in each reported measure of a segment’s profit or loss.
Company-Operated Store Data The following table compares 2023 U.S. company-operated store data to the comparable period for 2022: 2023 2022 % Change Sales per Average Selling Square Foot (a) $ 588 $ 658 (11 %) Sales per Average Store (in thousands) (a) $ 4,038 $ 4,558 (11 %) Average Store Size (selling square feet) 6,837 6,918 (1 %) Total Selling Square Feet (in thousands) 5,565 5,617 (1 %) ________________ (a) Sales per average selling square foot and sales per average store, which are indicators of store productivity, are calculated based on store sales for the period divided by the average, including the beginning and end of period, of total square footage and store count, respectively.
Company-Operated Store Data The following table compares 2024 U.S. company-operated store data to 2023: 2024 2023 % Change Sales per Average Selling Square Foot (a)(b) $ 589 $ 588 — % Sales per Average Store (in thousands) (a)(b) $ 4,038 $ 4,038 — % Average Store Size (selling square feet) 6,880 6,837 1 % Total Selling Square Feet (in thousands) 5,421 5,565 (3 %) ________________ (a) Sales per average selling square foot and sales per average store, which are indicators of store productivity, are calculated based on store sales for the period divided by the average, including the beginning and end of period, of total square footage and store count, respectively.
Deferred tax assets and liabilities are measured using enacted income tax rates in effect for the year in which those temporary differences are expected to be recovered or settled.
Deferred tax assets are also recognized for realizable operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted income tax rates in effect for the year in which those temporary differences are expected to be recovered or settled.
Financial Statements and Supplementary Data. 37 Table of Contents (b) In 2023, we recognized $25 million ($19 million after-tax) included in general, administrative and store operating expense related to the acquisition of Adore Me. For additional information, see Note 2, “Acquisition” and Note 10, “Intangible Assets” included in Item 8. Financial Statements and Supplementary Data.
For additional information, see Note 2, “Acquisition” to the Consolidated Financial Statements included in Item 8. Financial Statements and Supplementary Data. (b) In both 2024 and 2023, we recognized amortization expense of $25 million ($19 million after-tax) included in general, administrative and store operating expense related to the acquisition of Adore Me.
The following table provides certain measures of liquidity and capital resources as of February 3, 2024 and January 28, 2023: February 3, 2024 January 28, 2023 Debt-to-capitalization Ratio (a) 73 % 77 % Net Cash Provided By Operating Activities to Capital Expenditures 152 % 266 % ________________ (a) Long-term debt divided by total capitalization.
The following table provides certain measures of liquidity and capital resources as of February 1, 2025 and February 3, 2024: February 1, 2025 February 3, 2024 Debt-to-capitalization Ratio (a) 60 % 73 % Net Cash Provided By Operating Activities to Capital Expenditures 239 % 152 % ________________ (a) Long-term debt divided by total capitalization.
A 10% increase or decrease in the inventory valuation adjustment would have impacted net income by approximately $2 million for 2023.
A 10% increase or decrease in the inventory valuation adjustment would have impacted net income by approximately $2 million for 2024. A 10% increase or decrease in the estimated physical inventory loss adjustment would have impacted net income by approximately $3 million for 2024.
Operating Income For 2023, operating income decreased $232 million, to $246 million, compared to operating income of $478 million in 2022, and the operating income rate (expressed as a percentage of net sales) decreased to 4.0% from 7.5%. The drivers of the operating income results are discussed in the following sections.
Operating Income For 2024, operating income increased $64 million, to $310 million, compared to operating income of $246 million in 2023, and the operating income rate (expressed as a percentage of net sales) increased to 5.0% from 4.0%. The drivers of the operating income results are discussed in the following sections.
We include our tax contingencies accrual, including accrued penalties and interest, in Other Long-term Liabilities on the Consolidated Balance Sheets unless the liability is expected to be paid within one year. Changes to the tax contingencies accrual, including accrued penalties and interest, are included in Provision for Income Taxes on the Consolidated and Combined Statements of Income.
We include our tax contingencies accrual, including accrued penalties and interest, in Other Long-term Liabilities on the Consolidated Balance Sheets unless the liability is expected to be paid within one year.
Under this method, taxes currently payable or refundable are accrued, and deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets are also recognized for realizable operating loss and tax credit carryforwards.
Income Taxes We account for income taxes under the asset and liability method. Under this method, taxes currently payable or refundable are accrued, and deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases.
Interest payments have been estimated based on the coupon rate for fixed rate obligations. For variable interest rate obligations under the Term Loan Facility, the interest payments have been estimated based on an interest rate of 8.89%, which was the interest rate as of February 3, 2024.
Interest payments have been estimated based on the coupon rate for fixed rate obligations. For variable interest rate obligations under the Term Loan Facility, the interest payments have been estimated based on an interest rate of 7.94%, which was the interest rate as of February 1, 2025.
Shareholders’ Equity 417 383 Total Capitalization $ 1,537 $ 1,654 Amounts Available Under the ABL Facility (b) $ 423 $ 259 ________________ (a) Amounts shown represent the fifty-three-week period ended February 3, 2024 and the fifty-two-week period ended January 28, 2023.
Shareholders’ Equity 640 417 Total Capitalization $ 1,613 $ 1,537 Amounts Available Under the ABL Facility (b) $ 533 $ 423 ________________ (a) Amounts shown represent the fifty-two-week period ended February 1, 2025 and the fifty-three-week period ended February 3, 2024.
Cash Flow The following table provides a summary of our cash flow activity for the fiscal years ended February 3, 2024 and January 28, 2023: 2023 2022 (in millions) Cash and Cash Equivalents, Beginning of Year $ 427 $ 490 Net Cash Provided by Operating Activities 389 437 Net Cash Used for Investing Activities (254) (555) Net Cash Provided by (Used for) Financing Activities (291) 58 Effects of Exchange Rate Changes on Cash and Cash Equivalents (1) (3) Net Decrease in Cash and Cash Equivalents (157) (63) Cash and Cash Equivalents, End of Year $ 270 $ 427 Operating Activities 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.
Cash Flow The following table provides a summary of our cash flow activity for the fiscal years ended February 1, 2025 and February 3, 2024: 2024 2023 (in millions) Cash and Cash Equivalents, Beginning of Year $ 270 $ 427 Net Cash Provided by Operating Activities 425 389 Net Cash Used for Investing Activities (153) (254) Net Cash Used for Financing Activities (315) (291) Effects of Exchange Rate Changes on Cash and Cash Equivalents — (1) Net Decrease in Cash and Cash Equivalents (43) (157) Cash and Cash Equivalents, End of Year $ 227 $ 270 37 Table of Contents Operating Activities Net cash provided by operating activities reflects net income adjusted for non-cash items, including depreciation and amortization, share-based compensation expense, equity method investment impairment charges, deferred tax expense and gain on sale of assets, as well as changes in working capital.
The obligation to pay principal and interest on the loans under the ABL Facility is jointly and severally guaranteed on a full and unconditional basis by certain of our wholly-owned domestic and Canadian subsidiaries.
Unused commitments under the ABL Facility accrue an unused commitment fee ranging from 0.25% to 0.30%. The obligation to pay principal and interest on the loans under the ABL Facility is jointly and severally guaranteed on a full and unconditional basis by certain of our wholly-owned domestic and Canadian subsidiaries.
We would use net cash flow provided by operating and financing activities to fund our dividends. 44 Table of Contents Long-term Debt and Borrowing Facilities The following table provides our outstanding Long-term Debt balance, net of unamortized debt issuance costs and discounts and any current portion, as of February 3, 2024 and January 28, 2023: February 3, 2024 January 28, 2023 (in millions) Senior Secured Debt with Subsidiary Guarantee $391 million Term Loan due August 2028 (“Term Loan Facility”) $ 385 $ 387 Asset-based Revolving Credit Facility due August 2026 (“ABL Facility”) 145 295 Total Senior Secured Debt with Subsidiary Guarantee 530 682 Senior Debt with Subsidiary Guarantee $600 million, 4.625% Fixed Interest Rate Notes due July 2029 (“2029 Notes”) 594 593 Total Senior Debt with Subsidiary Guarantee 594 593 Total 1,124 1,275 Current Debt (4) (4) Total Long-term Debt, Net of Current Portion $ 1,120 $ 1,271 Cash paid for interest was $87 million and $52 million in 2023 and 2022, respectively.
Long-term Debt and Borrowing Facilities The following table provides our outstanding Long-term Debt balance, net of unamortized debt issuance costs and discounts and any current portion, as of February 1, 2025 and February 3, 2024: February 1, 2025 February 3, 2024 (in millions) Senior Secured Debt with Subsidiary Guarantee $387 million Term Loan due August 2028 (“Term Loan Facility”) $ 382 $ 385 Asset-based Revolving Credit Facility due August 2026 (“ABL Facility”) — 145 Total Senior Secured Debt with Subsidiary Guarantee 382 530 Senior Debt with Subsidiary Guarantee $600 million, 4.625% Fixed Interest Rate Notes due July 2029 (“2029 Notes”) 595 594 Total Senior Debt with Subsidiary Guarantee 595 594 Total 977 1,124 Current Debt (4) (4) Total Long-term Debt, Net of Current Portion $ 973 $ 1,120 Cash paid for interest was $77 million and $87 million in 2024 and 2023, respectively.
Revenue Recognition We recognize revenue based on the amount we expect to receive when control of the goods or services is transferred to our customer. We recognize sales upon customer receipt of merchandise, which for direct channel revenues reflect an estimate of shipments that have not yet been received by our customer based on shipping terms and historical delivery times.
We recognize sales upon customer receipt of merchandise, which for direct channel revenues reflect an estimate of shipments that have not yet been received by our customer based on shipping terms and historical delivery times.
On August 2, 2021, we entered into a term loan B credit facility in an aggregate principal amount of $400 million, which will mature in August 2028. The discounts and issuance costs from the Term Loan Facility are being amortized through the maturity date and are included within Long-term Debt on the Consolidated Balance Sheets.
The issuance costs are being amortized through the maturity date and are included within Long-term Debt on the Consolidated Balance Sheets. 39 Table of Contents Credit Facilities We have a senior secured term loan B credit facility with an original principal amount of $400 million, which will mature in August 2028.
In 2023, we recognized the financial impact of purchase accounting items and additional acquisition-related costs, including recognition in gross profit of the fair value adjustment to acquired inventories as it is sold, recognition of changes in the estimated fair value of contingent consideration and Contingent Compensation Payments, as well as amortization of acquired intangible assets.
In both 2024 and 2023, we recognized the financial impact of purchase accounting items related to the acquisition, including recognition of changes in the estimated fair value of contingent consideration and Contingent Compensation Payments and amortization of acquired intangible assets.
We are currently evaluating the impact of these new rules. 47 Table of Contents Income Taxes In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures , which is intended to enhance the transparency and decision-usefulness of income tax disclosures, primarily by requiring enhanced disclosure for income taxes paid and the effective tax rate reconciliation.
We are currently evaluating the impact of adopting this standard on our disclosures. 41 Table of Contents Income Taxes In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures , which is intended to enhance the transparency and decision-usefulness of income tax disclosures, primarily by requiring enhanced disclosure for income taxes paid and the effective tax rate reconciliation.
We are estimating 2024 capital expenditures to be approximately $230 million. We expect that our capital expenditures will continue to be focused on our store capital program along with investments in technology related to our strategic initiatives to drive growth.
We expect that our capital expenditures will be focused on our store capital program along with investments in technology and logistics related to our strategic initiatives to drive growth and support productivity.
Provision for Income Taxes For 2023, the Company's effective tax rate was 21.4% compared to 19.0% in 2022. The 2023 rate differed from the Company's combined estimated federal and state statutory rate primarily due to foreign earnings taxed at a rate lower than our combined estimated federal and state statutory rate and due to the resolution of certain tax matters.
The difference between the Company's effective tax rate in 2023 and the combined estimated federal and state statutory rate was primarily due to foreign earnings taxed at a rate lower than our combined estimated federal and state statutory rate and the resolution of certain tax matters.
Prior to the amendment, interest under the Term Loan Facility was calculated by reference to LIBOR or an alternative base rate, plus an interest rate margin equal to (i) in the case of LIBOR loans, 3.25% and (ii) in the case of alternate base rate loans, 2.25%.
Interest on the loans under the Term Loan Facility is calculated by reference to the Term Secured Overnight Financing Rate (“Term SOFR”) or an alternative base rate, plus an interest rate margin (i) in the case of Term SOFR loans, ranging from 3.36% to 3.68% and (ii) in the case of alternate base rate loans, equal to 2.25%.
Reported Net Income Attributable to Victoria's Secret & Co. — GAAP $ 109 $ 348 Adore Me Acquisition-related Items (a) 50 15 Amortization of Intangible Assets (b) 25 — Restructuring Charges (c) 11 35 Occupancy-related Legal Matter (d) — 22 Happy Nation Restructuring Charge (e) — 16 Tax Effect of Adjusted Items (17) (20) Adjusted Net Income Attributable to Victoria's Secret & Co. $ 178 $ 416 Reconciliation of Reported to Adjusted Net Income Per Diluted Share Attributable to Victoria's Secret & Co.
Reported Net Income Attributable to Victoria's Secret & Co. — GAAP $ 165 $ 109 Adore Me Acquisition-related Items (a) 9 50 Amortization of Intangible Assets (b) 25 25 Equity Method Investment Impairment and Other Charges (c) 22 — Restructuring Charges (d) 13 11 Tax Effect of Adjusted Items (16) (17) Adjusted Net Income Attributable to Victoria's Secret & Co. $ 218 $ 178 Reconciliation of Reported to Adjusted Net Income Per Diluted Share Attributable to Victoria's Secret & Co.
(in millions, except per share amounts) 2023 2022 Reconciliation of Reported to Adjusted Operating Income Reported Operating Income — GAAP $ 246 $ 478 Adore Me Acquisition-related Items (a) 45 15 Amortization of Intangible Assets (b) 25 — Restructuring Charges (c) 11 35 Occupancy-related Legal Matter (d) — 22 Happy Nation Restructuring Charge (e) — 16 Adjusted Operating Income $ 327 $ 566 Reconciliation of Reported to Adjusted Net Income Attributable to Victoria's Secret & Co.
(in millions, except per share amounts) 2024 2023 Reconciliation of Reported to Adjusted Operating Income Reported Operating Income — GAAP $ 310 $ 246 Adore Me Acquisition-related Items (a) 4 45 Amortization of Intangible Assets (b) 25 25 Equity Method Investment Impairment and Other Charges (c) 22 — Restructuring Charges (d) 13 11 Adjusted Operating Income $ 373 $ 327 Reconciliation of Reported to Adjusted Net Income Attributable to Victoria's Secret & Co.
We cannot guarantee that we will pay a dividend in the future or continue to pay any dividends if and when we commence paying dividends.
Dividend Policy and Procedures We have not paid any cash dividends since becoming an independent, publicly traded company. We cannot guarantee that we will pay a dividend in the future or continue to pay any dividends if and when we commence paying dividends.
For additional information, see Note 16, “Commitments and Contingencies” included in Item 8. Financial Statements and Supplementary Data.
For additional information, see Note 5, “Restructuring Activities” to the Consolidated Financial Statements included in Item 8. Financial Statements and Supplementary Data.
We do not expect this standard to have a material impact on our results of operations, financial position or cash flows.
Financial Statements and Supplementary Data. The adoption of this standard did not have a material impact on our results of operations, financial position or cash flows.
Gift card breakage revenue is recognized in proportion, and over the same period, as actual gift card redemptions. We determine the gift card breakage rate based on historical redemption patterns. Gift card breakage is included in Net Sales in our Consolidated and Combined Statements of Income.
We determine the gift card breakage rate estimate based on historical redemption patterns and review the breakage rate periodically throughout the year. Gift card breakage is included in Net Sales in our Consolidated Statements of Income.
A 10% increase or decrease in the estimated physical inventory loss adjustment would have impacted net income by approximately $3 million for 2023. 48 Table of Contents Valuation of Long-lived Assets Long-lived Store Assets Long-lived store assets, which include leasehold improvements, store related assets and operating lease assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable.
Valuation of Long-lived Assets Long-lived Store Assets Long-lived store assets, which include leasehold improvements, store related assets and operating lease assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable.
Reported Net Income Per Diluted Share Attributable to Victoria's Secret & Co. — GAAP $ 1.39 $ 4.14 Adore Me Acquisition-related Items (a) 0.53 0.16 Amortization of Intangible Assets (b) 0.24 — Restructuring Charges (c) 0.11 0.31 Occupancy-related Legal Matter (d) — 0.19 Happy Nation Restructuring Charge (e) — 0.14 Adjusted Net Income Per Diluted Share Attributable to Victoria's Secret & Co. $ 2.27 $ 4.95 ________________ (a) In 2023, we recognized pre-tax charges of $50 million ($42 million after-tax) within net income, $29 million included in costs of goods sold, buying and occupancy expense, $16 million included in general, administrative and store operating expense and $5 million included in interest expense, related to the financial impact of purchase accounting items and professional service costs related to the acquisition of Adore Me.
Reported Net Income Per Diluted Share Attributable to Victoria's Secret & Co. — GAAP $ 2.05 $ 1.39 Adore Me Acquisition-related Items (a) 0.08 0.53 Amortization of Intangible Assets (b) 0.23 0.24 Equity Method Investment Impairment and Other Charges (c) 0.21 — Restructuring Charges (d) 0.13 0.11 Adjusted Net Income Per Diluted Share Attributable to Victoria's Secret & Co. $ 2.69 $ 2.27 ________________ (a) In 2024 and 2023, we recognized pre-tax expense of $9 million and $50 million ($6 million and $42 million after-tax, respectively) within net income related to the financial impact of purchase accounting items and professional service costs related to the acquisition of Adore Me.
(b) Results include consolidated joint venture direct sales in China. The following table compares 2023 comparable sales to 2022: 2023 2022 Comparable Sales (Stores and Direct) (a) (9 %) (8 %) Comparable Store Sales (a) (11 %) (7 %) ________________ (a) The percentage change in comparable sales represents direct and comparable store sales.
The following table compares 2024 comparable sales to 2023: 2024 2023 Comparable Sales (Stores and Direct) (a) 0 % (9 %) Comparable Store Sales (a) (2 %) (11 %) ________________ (a) The percentage change in comparable sales represents direct and comparable store sales.
Gross Profit For 2023, our gross profit decreased $16 million to $2.242 billion, and our gross profit rate (expressed as a percentage of net sales) increased to 36.3% from 35.6%.
Net sales in our international channel increased 11% compared to 2023. Gross profit in 2024 increased $42 million, to $2.284 billion, compared to 2023 and our gross profit rate (expressed as a percentage of net sales) increased to 36.7% from 36.3% compared to 2023.
The March 2024 Share Repurchase Program is open-ended in term, eligible to begin immediately and will continue until exhausted. January 2023 Share Repurchase Program In January 2023, our Board of Directors approved a share repurchase program (“January 2023 Share Repurchase Program”), authorizing the repurchase of up to $250 million of our common stock.
January 2023 Share Repurchase Program In January 2023, our Board approved a share repurchase program (“January 2023 Share Repurchase Program”), authorizing the repurchase of up to $250 million of our common stock.
Victoria’s Secret, PINK and Adore Me merchandise is sold online through e-commerce platforms, through retail stores located in the U.S., Canada and China, and through international stores and websites operated by partners under franchise, license, wholesale and joint venture arrangements.
Our merchandise is available through our digital channels, in retail stores across the U.S., Canada and China, and through international stores and websites and mobile applications operated by partners under franchise, license, wholesale and joint venture arrangements.
The general, administrative and store operating expense rate (expressed as a percentage of net sales) increased to 32.3% from 28.1% due to the inclusion of Adore Me general, administrative and store operating expenses beginning in 2023, strategic marketing investments including the Victoria’s Secret World Tour and deleverage driven by the decrease in sales compared to 2022.
The general, administrative and store operating expense rate (expressed as a percentage of net sales) decreased to 31.7% from 32.3% due to leverage driven by the increase in net sales compared to 2023 and the decrease in marketing expenses.
In the stores channel, our North America net sales decreased $429 million, or 11%, to $3.480 billion compared to 2022 driven by a decrease in traffic, average unit retail and conversion, partially offset by incremental net sales from the extra week in 2023.
In the direct channel, net sales increased $27 million, or 1%, to $2.042 billion compared to 2023 as increases in traffic and average unit retail were partially offset by the incremental net sales from the extra week in 2023 and a decrease in conversion.
For 2023, the decrease in gross profit dollars was primarily due to the decrease in merchandise margin dollars driven by the decrease in net sales and an increase in promotional activity, partially offset by a decrease in supply chain costs, reductions in costs of goods sold related to our supply chain initiative and incremental profit related to the extra week in 2023.
Gross Profit For 2024, our gross profit increased $42 million to $2.284 billion, and our gross profit rate (expressed as a percentage of net sales) increased to 36.7% from 36.3%. 35 Table of Contents For 2024, the increase in gross profit dollars was primarily due to the increase in net sales, reductions in costs of goods sold related to our supply chain initiative and a decrease in buying and occupancy expenses, partially offset by an increase in promotional activity and incremental gross profit recognized in 2023 as a result of the extra week last year.
The capital expenditures were primarily related to our store capital program and investments in technology related to our strategic initiatives to drive growth and technology investments relating to separation activities from our Former Parent.
The capital expenditures were primarily related to our store capital program and investments in technology related to our strategic initiatives to drive growth and technology investments. We are estimating 2025 capital expenditures to be approximately $240 million.
Credit Ratings The following table provides our credit ratings as of February 3, 2024: Moody’s S&P Corporate Ba3 BB- Senior Secured Debt with Subsidiary Guarantee Ba2 BB+ Senior Unsecured Debt with Subsidiary Guarantee B1 BB- Outlook Stable Stable 46 Table of Contents Contingent Liabilities and Contractual Obligations The following table provides our contractual obligations, aggregated by type, including the maturity profile as of February 3, 2024: Payments Due by Period Total Less Than 1 Year 1-3 Years 4-5 Years More than 5 Years Other (in millions) Long-term Debt (a) $ 1,478 $ 77 $ 294 $ 493 $ 614 $ — Future Lease Obligations (b) 2,125 361 630 420 714 — Purchase Obligations (c) 758 700 52 6 — — Cash Consideration Related to Acquisition (d) 108 108 — — — — Other Liabilities (e) 32 20 — — — 12 Total $ 4,501 $ 1,266 $ 976 $ 919 $ 1,328 $ 12 ________________ (a) Long-term debt obligations relate to our principal and interest payments for our outstanding debt.
Credit Ratings The following table provides our credit ratings as of February 1, 2025: Moody’s S&P Corporate Ba3 BB- Senior Secured Debt with Subsidiary Guarantee Ba2 BB+ Senior Unsecured Debt with Subsidiary Guarantee B1 BB- Outlook Negative (a) Negative (a) ________________ (a) Subsequent to February 1, 2025, Moody's and S&P both updated our outlook to Stable. 40 Table of Contents Contingent Liabilities and Contractual Obligations The following table provides our contractual obligations, aggregated by type, including the maturity profile as of February 1, 2025: Payments Due by Period Total Less Than 1 Year 1-3 Years 4-5 Years More than 5 Years Other (in millions) Long-term Debt (a) $ 1,225 $ 62 $ 124 $ 1,039 $ — $ — Future Lease Obligations (b) 2,290 394 643 465 788 — Purchase Obligations (c) 770 693 68 9 — — Other Liabilities (d) 45 31 — — — 14 Total $ 4,330 $ 1,180 $ 835 $ 1,513 $ 788 $ 14 ________________ (a) Long-term debt obligations relate to our principal and interest payments for our outstanding debt.
Net cash provided by operating activities in 2023 was $389 million, a decrease in net cash flows provided by operating activities of $48 million compared to 2022.
Net cash provided by operating activities in 2024 was $425 million, an increase in net cash provided by operating activities of $36 million compared to 2023.
Interest Expense For 2023, our interest expense increased $39 million to $99 million compared to 2022, primarily driven by the increase in our outstanding debt due to the borrowings from the ABL Facility during 2023 and a higher average borrowing rate for our Term Loan Facility and ABL Facility.
Interest Expense For 2024, our interest expense decreased $13 million to $86 million compared to 2023, primarily due to our lower average outstanding debt and lower average borrowing rate for our ABL Facility, partially offset by our higher average borrowing rate for our Term Loan Facility.
We expect to utilize our cash flows to continue to invest in our brands, talent and capabilities, and growth strategies as well as to repay our indebtedness over time. We believe that our available short-term and long-term capital resources are sufficient to fund our working capital and other cash flow requirements over the next 12 months.
We expect to utilize our cash flows to continue to invest in our brands, talent and capabilities, and growth strategies as well as to repay our indebtedness over time.
The ABL Facility allows for borrowings and letters of credit in U.S. dollars or Canadian dollars, and has aggregate commitments of $750 million and an expiration date of August 2026.
As of February 1, 2025, the interest rate on loans under the Term Loan Facility was 7.94%. We also have a senior secured asset-based revolving credit facility. The ABL Facility allows for borrowings and letters of credit in U.S. dollars or Canadian dollars and has aggregate commitments of $750 million and an expiration date of August 2026.
Working Capital and Capitalization Based upon our cash balances and net cash provided by our operating activities, along with the borrowing capacity under our ABL Facility, we believe we will be able to continue to meet our working capital needs. 41 Table of Contents The following table provides a summary of our working capital position and capitalization as of February 3, 2024 and January 28, 2023: February 3, 2024 January 28, 2023 (in millions) Net Cash Provided by Operating Activities (a) $ 389 $ 437 Capital Expenditures (a) 256 164 Working Capital (81) 158 Capitalization: Long-term Debt 1,120 1,271 Victoria's Secret & Co.
The following table provides a summary of our working capital position and capitalization as of February 1, 2025 and February 3, 2024: February 1, 2025 February 3, 2024 (in millions) Net Cash Provided by Operating Activities (a) $ 425 $ 389 Capital Expenditures (a) 178 256 Working Capital 66 (81) Capitalization: Long-term Debt 973 1,120 Victoria's Secret & Co.
(b) Results include consolidated joint venture sales in China, royalties associated with franchised stores and wholesale sales. 39 Table of Contents The following table provides a reconciliation of net sales from 2022 to 2023: (in millions) 2022 Net Sales $ 6,344 Sales Associated with Stores Included in the Comparable Stores Calculation (370) Sales Associated with New, Closed and Non-comparable Remodeled Stores, Net (a) (15) Direct Channels (a)(b) 239 Credit Card Programs (28) International Wholesale, Royalty and Sourcing 22 Foreign Currency Translation (10) 2023 Net Sales $ 6,182 ________________ (a) Results in 2023 include Adore Me sales.
Net Sales The following table provides net sales for 2024 in comparison to 2023: 2024 2023 % Change (in millions) Stores — North America $ 3,428 $ 3,480 (2 %) Direct 2,042 2,015 1 % International (a) 760 687 11 % Total Net Sales $ 6,230 $ 6,182 1 % ________________ (a) Results include consolidated joint venture sales in China, royalties associated with franchised stores and wholesale sales. 34 Table of Contents The following table provides a reconciliation of net sales from 2023 to 2024: (in millions) 2023 Net Sales $ 6,182 Sales Associated with Stores Included in the Comparable Stores Calculation (50) Sales Associated with New, Closed and Non-comparable Remodeled Stores, Net and Other 63 Direct Channels (a) 69 Extra Week in 2023 Due to Retail Calendar (80) Credit Card Programs (20) International Wholesale, Royalty and Sourcing 72 Foreign Currency Translation (6) 2024 Net Sales $ 6,230 ________________ (a) Results include consolidated joint venture direct sales in China.
The use of different assumptions or judgments in our assessment could materially increase or decrease the fair value of our store assets and, accordingly, could materially increase or decrease any related impairment charge. Sustained declines in our business performance could result in a material impairment charge in a future period.
Our fair value estimates incorporate significant assumptions and judgments including, but not limited to, estimated future cash flows, discount rates and market rental rates. The use of different assumptions or judgments in our assessment could materially increase or decrease the fair value of our store assets and, accordingly, could materially increase or decrease any related impairment charge.
(b) For additional information, see Note 2, “Acquisition” included in Item 8. Financial Statements and Supplementary Data. Results of Operations — 2023 Compared to 2022 The following information summarizes our results of operations for 2023 compared to 2022.
For additional information, see Note 2, “Acquisition” and Note 9, “Intangible Assets” to the Consolidated Financial Statements included in Item 8.
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 our operating activities is impacted by our net income and working capital changes.
FINANCIAL CONDITION Liquidity and Capital Resources 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 used for investing activities in 2022 was $555 million, consisting primarily of our $369 million cash payment, net of cash acquired, in connection with the Adore Me acquisition and capital expenditures of $164 million. The capital expenditures were primarily related to our store capital program, along with investments in technology, distribution and logistics to support our retail capabilities.
The capital expenditures were primarily related to our store capital program and investments in technology related to our strategic initiatives to drive growth. Net cash used for investing activities in 2023 was $254 million, consisting of capital expenditures of $256 million.
We had $19 million of outstanding letters of credit as of February 3, 2024 that further reduced our availability under the ABL Facility. As of February 3, 2024, our remaining availability under the ABL Facility was $423 million. Our long-term debt and borrowing facilities contain certain financial and other covenants, including, but not limited to, the maintenance of financial ratios.
Our long-term debt and borrowing facilities contain certain financial and other covenants, including, but not limited to, the maintenance of financial ratios.
When a decision has been made to dispose of property and equipment prior to the end of the previously estimated useful life, depreciation estimates are revised to reflect the use of the asset over the shortened estimated useful life.
When a decision has been made to dispose of property and equipment prior to the end of the previously estimated useful life, depreciation estimates are revised to reflect the use of the asset over the shortened estimated useful life. 42 Table of Contents Goodwill Goodwill is reviewed for impairment at the reporting unit level each year in the fourth quarter and may be reviewed more frequently if certain events occur or circumstances change.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeGiven the short-term nature and quality of investments in our portfolio, we do not believe there is any material risk to principal associated with increases or decreases in interest rates.
Biggest changeGiven the short-term nature and quality of investments in our portfolio, we do not believe there is any material risk to principal associated with increases or decreases in interest rates. 44 Table of Contents Our outstanding long-term debt as of February 1, 2025 consists of the 2029 Notes, which have a fixed interest rate, and the $387 million in outstanding borrowing under the Term Loan Facility, which has a variable interest rate based on Term SOFR.
Foreign Exchange Rate Risk We have operations and investments in unconsolidated entities in foreign countries which expose us to market risk associated with foreign currency exchange rate fluctuations. Our Canadian dollar and Chinese Yuan denominated earnings are subject to exchange rate risk as substantially all our merchandise sold in Canada and China is sourced through U.S. dollar transactions.
Foreign Exchange Rate Risk We have operations and investments in unconsolidated entities in foreign countries which expose us to market risk associated with foreign currency exchange rate fluctuations. Our Canadian dollar, Chinese Yuan and Euro denominated earnings are subject to exchange rate risk as substantially all our merchandise sold in Canada, China and Europe is sourced through U.S. dollar transactions.
Our exposure to interest rate changes is limited to the fair value of the debt issued as well as the interest we pay on the Term Loan Facility and the ABL Facility, which we believe would not have a material impact on our earnings or cash flows.
Our exposure to interest rate changes is limited to the fair value of the debt issued as well as the interest we pay on the Term Loan Facility, which we believe would not have a material impact on our earnings or cash flows.
We also periodically review the relative credit standing of franchise, license and wholesale partners and other entities to which we grant credit terms in the normal course of business. 52 Table of Contents
We also periodically review the relative credit standing of franchise, license and wholesale partners and other entities to which we grant credit terms in the normal course of business. 45 Table of Contents
The estimates presented are not necessarily indicative of the amounts that we could realize in a current market exchange. As of February 3, 2024, we believe that the carrying values of accounts receivable, accounts payable and accrued expenses approximate fair value because of their short maturity.
The estimates presented are not necessarily indicative of the amounts that we could realize in a current market exchange. As of February 1, 2025, we believe that the carrying values of accounts receivable, accounts payable and accrued expenses approximate fair value because of their short maturity.
Fair Value of Financial Instruments The following table provides a summary of the principal value and estimated fair value of our outstanding debt as of February 3, 2024 and January 28, 2023: February 3, 2024 January 28, 2023 (in millions) Principal Value $ 991 $ 995 Fair Value, Estimated (a) 897 894 ________________ (a) The estimated fair value of our publicly traded debt is based on reported transaction prices which are considered Level 2 inputs in accordance with ASC 820, Fair Value Measurement .
Fair Value of Financial Instruments The following table provides a summary of the principal value and estimated fair value of our outstanding debt as of February 1, 2025 and February 3, 2024: February 1, 2025 February 3, 2024 (in millions) Principal Value $ 987 $ 991 Fair Value, Estimated (a) 940 897 ________________ (a) The estimated fair value of our publicly traded debt is based on reported transaction prices which are considered Level 2 inputs in accordance with ASC 820, Fair Value Measurement .
The primary objective of our investment activities is the preservation of principal, the maintenance of liquidity and the maximization of interest income while minimizing risk. As of February 3, 2024, our investment portfolio is primarily comprised of bank deposits.
The primary objective of our investment activities is the preservation of principal, the maintenance of liquidity and the maximization of interest income while minimizing risk. As of February 1, 2025, our investment portfolio is primarily comprised of money market funds and bank deposits.
We monitor the relative credit standing of financial institutions with whom we transact and limit the amount of credit exposure with any one entity. As of February 3, 2024, our investment portfolio is primarily comprised of bank deposits.
Concentration of Credit Risk We maintain cash and cash equivalents with various major financial institutions. We monitor the relative credit standing of financial institutions with whom we transact and limit the amount of credit exposure with any one entity. As of February 1, 2025, our investment portfolio is primarily comprised of money market funds and bank deposits.
Removed
Our outstanding long-term debt as of February 3, 2024 consists of the 2029 Notes, which have a fixed interest rate, the $391 million in outstanding borrowing under the Term Loan Facility, which has a variable interest rate based on Term SOFR, and the $145 million in outstanding borrowing under the ABL Facility, which has a variable interest rate based on Term SOFR.
Removed
We further believe the principal value of the outstanding debt under the ABL Facility approximates its fair value as of February 3, 2024 based on the terms of the borrowings under the ABL Facility. 51 Table of Contents Concentration of Credit Risk We maintain cash and cash equivalents with various major financial institutions.

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