Part I [Item 1. Financial Statements](index=3&type=section&id=Item%201%2E%20Financial%20Statements) Presents unaudited consolidated financial statements for Q2 and YTD 2025/2024, covering income, balance sheets, cash flows, and related notes [Consolidated Statements of Income](index=3&type=section&id=Consolidated%20Statements%20of%20Income) Details the company's net sales, gross profit, operating income, and net income for Q2 and YTD 2025/2024 Consolidated Statements of Income (in millions) | Metric (in millions) | Second Quarter 2025 | Second Quarter 2024 | Year-to-Date 2025 | Year-to-Date 2024 | | :--------------------------------- | :------------------ | :------------------ | :---------------- | :---------------- | | Net Sales | $1,459 | $1,417 | $2,812 | $2,777 | | Gross Profit | $519 | $501 | $993 | $1,003 | | Operating Income | $41 | $62 | $61 | $89 | | Net Income Attributable to VSCO | $16 | $32 | $14 | $28 | | Net Income Per Diluted Share | $0.20 | $0.40 | $0.18 | $0.35 | - Net Sales increased by **3%** in Q2 2025 YoY and **1%** YTD 2025 YoY. Operating Income decreased by **$21 million** (**33.9%**) in Q2 2025 YoY and **$28 million** (**31.5%**) YTD 2025 YoY. Net Income Attributable to Victoria's Secret & Co. decreased by **50%** in Q2 2025 YoY and **50%** YTD 2025 YoY[13](index=13&type=chunk) [Consolidated Statements of Comprehensive Income](index=3&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) Presents the company's net income, foreign currency translation, and total comprehensive income for Q2 and YTD 2025/2024 Consolidated Statements of Comprehensive Income (in millions) | Metric (in millions) | Second Quarter 2025 | Second Quarter 2024 | Year-to-Date 2025 | Year-to-Date 2024 | | :--------------------------------- | :------------------ | :------------------ | :---------------- | :---------------- | | Net Income | $18 | $32 | $21 | $30 | | Foreign Currency Translation | $1 | — | $2 | ($1) | | Total Comprehensive Income | $19 | $32 | $23 | $29 | | Comprehensive Income Attributable to VSCO | $17 | $32 | $17 | $28 | - Comprehensive Income Attributable to Victoria's Secret & Co. decreased by **$15 million** (**46.9%**) in Q2 2025 YoY and **$11 million** (**39.3%**) YTD 2025 YoY[15](index=15&type=chunk) [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) Outlines the company's assets, liabilities, and equity as of August 2, 2025, February 1, 2025, and August 3, 2024 Consolidated Balance Sheets (in millions) | Metric (in millions) | August 2, 2025 | February 1, 2025 | August 3, 2024 | | :--------------------------------- | :------------- | :--------------- | :------------- | | Total Current Assets | $1,539 | $1,441 | $1,488 | | Total Assets | $4,755 | $4,532 | $4,635 | | Total Current Liabilities | $1,345 | $1,375 | $1,494 | | Total Liabilities | $4,045 | $3,868 | $4,141 | | Total Equity | $710 | $664 | $494 | - Total Assets increased by **$120 million** (**2.6%**) from August 3, 2024, to August 2, 2025. Total Equity increased by **$216 million** (**43.7%**) over the same period[17](index=17&type=chunk) [Consolidated Statements of Equity](index=5&type=section&id=Consolidated%20Statements%20of%20Equity) Shows changes in total equity, Victoria's Secret & Co. equity, and noncontrolling interest over specified periods Consolidated Statements of Equity (in millions) | Metric (in millions) | Balance, May 3, 2025 | Balance, August 2, 2025 | Balance, May 4, 2024 | Balance, August 3, 2024 | | :--------------------------------- | :------------------- | :---------------------- | :------------------- | :---------------------- | | Total Victoria's Secret & Co. Equity | $645 | $680 | $423 | $472 | | Noncontrolling Interest | $28 | $30 | $22 | $22 | | Total Equity | $673 | $710 | $445 | $494 | - Total Equity increased by **$37 million** (**5.5%**) from May 3, 2025, to August 2, 2025, and by **$216 million** (**43.7%**) from August 3, 2024, to August 2, 2025[19](index=19&type=chunk)[20](index=20&type=chunk) [Consolidated Statements of Cash Flows](index=7&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Summarizes cash flows from operating, investing, and financing activities for YTD 2025 and YTD 2024 Consolidated Statements of Cash Flows (in millions) | Metric (in millions) | Year-to-Date 2025 | Year-to-Date 2024 | | :--------------------------------- | :---------------- | :---------------- | | Net Cash Provided by (Used for) Operating Activities | $6 | ($1) | | Net Cash Used for Investing Activities | ($111) | ($83) | | Net Cash Provided by (Used for) Financing Activities | $67 | ($17) | | Net Decrease in Cash and Cash Equivalents | ($39) | ($101) | | Cash and Cash Equivalents, End of Period | $188 | $169 | - Net cash provided by operating activities improved significantly, moving from a **$1 million** use in YTD 2024 to a **$6 million** provision in YTD 2025. Net cash used for investing activities increased by **$28 million** (**33.7%**) YTD 2025 YoY, primarily due to higher capital expenditures. Net cash provided by financing activities saw a substantial positive shift, from a **$17 million** use in YTD 2024 to a **$67 million** provision in YTD 2025, driven by ABL Facility borrowings[26](index=26&type=chunk) [Notes to Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Provides detailed explanations of the company's accounting policies, acquisitions, revenue recognition, and financial instruments [1. Description of Business, Basis of Presentation and Summary of Significant Accounting Policies](index=8&type=section&id=1%2E%20Description%20of%20Business%2C%20Basis%20of%20Presentation%20and%20Summary%20of%20Significant%20Accounting%20Policies) Describes the company's business, basis of financial presentation, and key accounting policies - Victoria's Secret & Co. is a specialty retailer of women's intimate and other apparel and beauty products under the Victoria's Secret, PINK, and Adore Me brands. It operates approximately **860** stores in the U.S., Canada, and China, along with digital channels, and has about **520** stores in nearly **70** countries through franchise, license, and wholesale arrangements. The company operates as a single segment[29](index=29&type=chunk) - The company made executive leadership changes in Q1 and Q2 2025 and Q3 2024 as part of restructuring activities[30](index=30&type=chunk) - The company consolidates a **51%** owned joint venture in China and uses the equity method for other unconsolidated entities where it has significant influence[31](index=31&type=chunk)[37](index=37&type=chunk) Equity Method Investments Carrying Values (in millions) | Date | Carrying Value (in millions) | | :--------------- | :--------------------------- | | August 2, 2025 | $46 | | February 1, 2025 | $47 | | August 3, 2024 | $62 | Supplier Finance Program Obligations (in millions) | Date | Accounts Payable (in millions) | | :--------------- | :----------------------------- | | August 2, 2025 | $204 | | February 1, 2025 | $181 | | August 3, 2024 | $213 | [2. Acquisition](index=10&type=section&id=2%2E%20Acquisition) Details the acquisition of AdoreMe, Inc., including purchase price, contingent consideration, and financial impact - The company acquired **100%** of AdoreMe, Inc. on December 30, 2022, for an upfront cash payment of **$391 million**, with potential additional cash consideration of **$80 million** to **$300 million** based on strategic objectives and financial goals over two years[45](index=45&type=chunk) - During fiscal year 2024, the company made **$200 million** in payments, including a **$100 million** fixed payment and **$100 million** for strategic objectives. **$16 million** was classified as financing cash outflow and **$4 million** as operating cash outflow (Contingent Compensation Payments) in Q1 2024[46](index=46&type=chunk) - As of August 2, 2025, management believes no further contingent payment is required, though former Adore Me shareholders submitted a claim for **$11 million**, which will be presented to a neutral accountant[47](index=47&type=chunk) Financial Impact of Purchase Accounting Items (in millions) | Income Statement Line Item | Second Quarter 2025 | Second Quarter 2024 | Year-to-Date 2025 | Year-to-Date 2024 | | :------------------------------------- | :------------------ | :------------------ | :---------------- | :---------------- | | General, Administrative and Store Operating Expenses | $6 | — | $13 | $14 | | Interest Expense | — | $1 | — | $2 | [3. Revenue Recognition](index=10&type=section&id=3%2E%20Revenue%20Recognition) Explains the company's revenue recognition policies and disaggregates net sales by channel Accounts Receivable, Net from Revenue-Generating Activities (in millions) | Date | Amount | | :--------------- | :----- | | August 2, 2025 | $134 | | February 1, 2025 | $112 | | August 3, 2024 | $122 | Deferred Revenue (in millions) | Date | Amount | | :--------------- | :----- | | August 2, 2025 | $240 | | February 1, 2025 | $269 | | August 3, 2024 | $284 | - The company recognized **$91 million** as revenue year-to-date 2025 from amounts recorded as deferred revenue at the beginning of the year[51](index=51&type=chunk) Disaggregation of Net Sales (in millions) | Channel | Second Quarter 2025 | Second Quarter 2024 | Year-to-Date 2025 | Year-to-Date 2024 | | :------------------------- | :------------------ | :------------------ | :---------------- | :---------------- | | Stores – North America | $825 | $800 | $1,546 | $1,529 | | Direct | $406 | $430 | $840 | $879 | | International | $228 | $187 | $426 | $369 | | **Total Net Sales** | **$1,459** | **$1,417** | **$2,812** | **$2,777** | - Net Sales from credit card arrangements were **$18 million** in Q2 2025 (up from **$17 million** in Q2 2024) and **$34 million** in YTD 2025 (flat compared to YTD 2024)[54](index=54&type=chunk) [4. Restructuring Activities](index=11&type=section&id=4%2E%20Restructuring%20Activities) Outlines strategic leadership appointments and restructuring actions, including related expenses - In Q1 and Q2 2025, the company implemented strategic leadership appointments and restructuring actions, incurring severance, relocation, and other expenses[55](index=55&type=chunk) - In Q3 2024, the company made executive leadership changes, including appointing a new CEO and eliminating two executive officer roles, incurring related expenses[56](index=56&type=chunk) [5. Net Income Per Share and Shareholders' Equity](index=11&type=section&id=5%2E%20Net%20Income%20Per%20Share%20and%20Shareholders%27%20Equity) Presents net income per share calculations and details changes in shareholders' equity Weighted-Average Shares for EPS Calculation (in millions) | Metric | Second Quarter 2025 | Second Quarter 2024 | Year-to-Date 2025 | Year-to-Date 2024 | | :----------------- | :------------------ | :------------------ | :---------------- | :---------------- | | Basic Shares | 80 | 78 | 80 | 78 | | Effect of Dilutive Awards | 2 | 2 | 2 | 1 | | Diluted Shares | 82 | 80 | 82 | 79 | - In May 2025, the Board approved a limited-duration shareholder rights plan (Rights Plan) to protect shareholder interests, expiring May 18, 2026[60](index=60&type=chunk) - In March 2024, the Board authorized a share repurchase program of up to **$250 million**, which remains open-ended. No shares have been repurchased under this program as of August 2, 2025[61](index=61&type=chunk)[62](index=62&type=chunk) [6. Inventories](index=12&type=section&id=6%2E%20Inventories) Provides a breakdown of inventory categories and their values over different periods Inventories (in millions) | Category | August 2, 2025 | February 1, 2025 | August 3, 2024 | | :----------------------------- | :------------- | :--------------- | :------------- | | Finished Goods Merchandise | $981 | $901 | $954 | | Raw Materials and Merchandise Components | $77 | $54 | $65 | | **Total Inventories** | **$1,058** | **$955** | **$1,019** | - Total Inventories increased by **$39 million** (**3.8%**) from August 3, 2024, to August 2, 2025[63](index=63&type=chunk) [7. Long-Lived Assets](index=12&type=section&id=7%2E%20Long-Lived%20Assets) Details property and equipment, net, including depreciation and amortization expenses Property and Equipment, Net (in millions) | Category | August 2, 2025 | February 1, 2025 | August 3, 2024 | | :----------------------------- | :------------- | :--------------- | :------------- | | Property and Equipment, at Cost | $3,482 | $3,503 | $3,576 | | Accumulated Depreciation and Amortization | ($2,705) | ($2,729) | ($2,766) | | **Property and Equipment, Net** | **$777** | **$774** | **$810** | - Depreciation expense was **$55 million** in Q2 2025 (up from **$53 million** in Q2 2024) and **$110 million** YTD 2025 (down from **$112 million** YTD 2024). Amortization expense for intangible assets was **$6 million** in Q2 2025 and Q2 2024, and **$13 million** YTD 2025 and YTD 2024[64](index=64&type=chunk) - In Q2 2024, the company sold non-store corporate assets for **$16 million**, resulting in a **$6 million** gain[65](index=65&type=chunk) [8. Accrued Expenses and Other](index=13&type=section&id=8%2E%20Accrued%20Expenses%20and%20Other) Lists the composition of accrued expenses and other liabilities over different periods Composition of Accrued Expenses and Other (in millions) | Category | August 2, 2025 | February 1, 2025 | August 3, 2024 | | :--------------------------------------- | :------------- | :--------------- | :------------- | | Deferred Revenue on Gift Cards and Merchandise Credits | $185 | $209 | $218 | | Compensation, Payroll Taxes and Benefits | $106 | $150 | $117 | | Accrued Freight and Other Logistics | $35 | $36 | $24 | | Accrued Duty | $35 | $14 | $19 | | Taxes, Other than Income | $31 | $30 | $35 | | Deferred Revenue on Loyalty and Credit Card Programs | $28 | $33 | $38 | | Accrued Marketing | $25 | $25 | $23 | | Returns Reserve | $16 | $17 | $13 | | Deferred Revenue on Direct Shipments not yet Delivered | $16 | $14 | $15 | | Accrued Claims on Self-insured Activities | $15 | $14 | $14 | | Accrued Interest | $7 | $7 | $9 | | Rent | $2 | $4 | $3 | | Fixed Payment Related to Adore Me Acquisition | — | — | $78 | | Contingent Consideration Related to Adore Me Acquisition | — | — | $68 | | Other | $99 | $80 | $78 | | **Total Accrued Expenses and Other** | **$600** | **$633** | **$752** | - Total Accrued Expenses and Other decreased by **$152 million** (**20.2%**) from August 3, 2024, to August 2, 2025, primarily due to the absence of fixed and contingent payments related to the Adore Me acquisition[66](index=66&type=chunk) [9. Income Taxes](index=13&type=section&id=9%2E%20Income%20Taxes) Presents effective tax rates and income taxes paid, along with impacts of new tax legislation Effective Tax Rates | Period | Effective Tax Rate | | :----------------- | :----------------- | | Second Quarter 2025 | 25.7% | | Second Quarter 2024 | 22.4% | | Year-to-Date 2025 | 30.5% | | Year-to-Date 2024 | 35.9% | - The Q2 2025 effective tax rate was consistent with the combined estimated federal and state statutory rate, while the Q2 2024 rate was lower due to foreign earnings. The YTD 2025 rate decreased from YTD 2024 primarily due to additional tax expense from share-based compensation awards[68](index=68&type=chunk)[69](index=69&type=chunk) Income Taxes Paid (in millions) | Period | Amount | | :----------------- | :----- | | Second Quarter 2025 | $42 | | Second Quarter 2024 | $31 | | Year-to-Date 2025 | $46 | | Year-to-Date 2024 | $37 | - The company does not expect the One Big Beautiful Bill Act (OBBBA) enacted in July 2025 to have a material impact on its fiscal year 2025 income tax provision[70](index=70&type=chunk) [10. Long-term Debt and Borrowing Facilities](index=14&type=section&id=10%2E%20Long-term%20Debt%20and%20Borrowing%20Facilities) Details outstanding long-term debt, borrowing facilities, and compliance with covenants Outstanding Long-term Debt (in millions) | Debt Type | August 2, 2025 | February 1, 2025 | August 3, 2024 | | :--------------------------------------- | :------------- | :--------------- | :------------- | | Term Loan Facility ($385M due Aug 2028) | $381 | $382 | $383 | | ABL Facility (due May 2030) | $75 | — | $145 | | 2029 Notes ($600M, 4.625% due Jul 2029) | $596 | $595 | $595 | | **Total Long-term Debt, Net of Current Portion** | **$1,048** | **$973** | **$1,119** | - Cash paid for interest was **$31 million** YTD 2025, down from **$38 million** YTD 2024[71](index=71&type=chunk) - The ABL Facility was amended in May 2025, extending its maturity to May 2030, increasing the seasonal advance rate for eligible inventory, reducing availability thresholds, and lowering applicable interest rates[76](index=76&type=chunk) - As of August 2, 2025, there were **$75 million** outstanding borrowings under the ABL Facility with an interest rate of **5.81%**, and **$524 million** remaining availability[79](index=79&type=chunk) - The company was in compliance with all covenants under its long-term debt and borrowing facilities as of August 2, 2025[80](index=80&type=chunk) [11. Fair Value of Financial Instruments](index=15&type=section&id=11%2E%20Fair%20Value%20of%20Financial%20Instruments) Discusses the fair value measurements of financial instruments, including debt and contingent consideration - Cash and Cash Equivalents are considered Level 1 fair value measurements[81](index=81&type=chunk) Principal and Estimated Fair Value of Outstanding Debt (in millions) | Metric | August 2, 2025 | February 1, 2025 | August 3, 2024 | | :----------------------- | :------------- | :--------------- | :------------- | | Principal Value | $985 | $987 | $989 | | Fair Value, Estimated (a) | $942 | $940 | $877 | - The estimated fair value of publicly traded debt uses Level 2 inputs. Carrying values of accounts receivable, accounts payable, and accrued expenses approximate fair value due to short maturity. The principal value of outstanding ABL Facility debt approximates its fair value[82](index=82&type=chunk)[83](index=83&type=chunk)[192](index=192&type=chunk) Contingent Consideration Related to Adore Me Acquisition (in millions) | Balance Sheet Location | August 2, 2025 | February 1, 2025 | August 3, 2024 | February 3, 2024 | | :--------------------- | :------------- | :--------------- | :------------- | :--------------- | | Accrued Expenses and Other | $— | $— | $68 | $74 | | Other Long-term Liabilities | $— | $— | $— | $18 | - Contingent consideration for the Adore Me acquisition is valued using Level 3 inputs (Scenario-Based method and Monte Carlo simulation). Changes in fair value are recorded in General, Administrative and Store Operating Expenses[85](index=85&type=chunk) [12. Comprehensive Income (Loss)](index=16&type=section&id=12%2E%20Comprehensive%20Income%20%28Loss%29) Explains the rollforward of accumulated other comprehensive income attributable to Victoria's Secret & Co Rollforward of Accumulated Other Comprehensive Income (Loss) Attributable to VSCO (in millions) | Metric | Year-to-Date 2025 | Year-to-Date 2024 | | :-------------------------------------- | :---------------- | :---------------- | | Balance as of February 1/3 | ($1) | $— | | Other Comprehensive Income Before Reclassifications | $3 | $— | | Current-period Other Comprehensive Income | $3 | $— | | Balance as of August 2/3 | $2 | $— | - Accumulated other comprehensive income attributable to Victoria's Secret & Co. increased from (**$1**) million at February 1, 2025, to **$2 million** at August 2, 2025, primarily due to foreign currency translation[86](index=86&type=chunk) [13. Commitments and Contingencies](index=16&type=section&id=13%2E%20Commitments%20and%20Contingencies) Outlines the company's legal claims, contingencies, and settlement accruals - The company is subject to various claims and contingencies, including lawsuits, taxes, and insurance matters, but management believes the ultimate liability will not materially adversely affect financial results[87](index=87&type=chunk) - A putative class action lawsuit filed in April 2023 regarding wage payment practices for manual workers in New York has been settled, subject to final court approval, and the company has accrued for the settlement[88](index=88&type=chunk) [14. Segment Information](index=17&type=section&id=14%2E%20Segment%20Information) Provides financial data by segment and geographic location, confirming single reportable segment operation - The company operates as a single reportable segment, with the CEO as the Chief Operating Decision Maker, assessing performance and allocating resources based on Net Income Attributable to Victoria's Secret & Co[89](index=89&type=chunk) Segment Information (in millions) | Metric | Second Quarter 2025 | Second Quarter 2024 | Year-to-Date 2025 | Year-to-Date 2024 | | :------------------------------------- | :------------------ | :------------------ | :---------------- | :---------------- | | Net Sales | $1,459 | $1,417 | $2,812 | $2,777 | | Costs of Goods Sold | ($610) | ($588) | ($1,168) | ($1,123) | | Buying and Occupancy Expenses | ($330) | ($328) | ($651) | ($651) | | General, Administrative and Store Operating Expenses (a) | ($394) | ($364) | ($751) | ($726) | | Advertising and Marketing Expenses | ($84) | ($75) | ($181) | ($188) | | Operating Income | $41 | $62 | $61 | $89 | | Net Income Attributable to Victoria's Secret & Co. | $16 | $32 | $14 | $28 | Net Sales by Geographic Location (in millions) | Geographic Location | Second Quarter 2025 | Second Quarter 2024 | Year-to-Date 2025 | Year-to-Date 2024 | | :------------------ | :------------------ | :------------------ | :---------------- | :---------------- | | U.S. | $1,179 | $1,182 | $2,292 | $2,322 | | Outside of the U.S. | $280 | $235 | $520 | $455 | | **Total Net Sales** | **$1,459** | **$1,417** | **$2,812** | **$2,777** | Long-Lived Assets by Geographic Location (in millions) | Geographic Location | August 2, 2025 | February 1, 2025 | August 3, 2024 | | :------------------ | :------------- | :--------------- | :------------- | | U.S. | $2,258 | $2,136 | $2,159 | | Outside of the U.S. | $160 | $143 | $152 | | **Total Long-lived Assets** | **$2,418** | **$2,279** | **$2,311** | [Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995](index=18&type=section&id=Safe%20Harbor%20Statement%20Under%20the%20Private%20Securities%20Litigation%20Reform%20Act%20of%201995) Provides a cautionary statement regarding forward-looking statements, highlighting that future performance and financial results may differ materially from expectations due to various risks and uncertainties - Forward-looking statements involve risks and uncertainties, and actual results may differ materially from those expressed or implied[96](index=96&type=chunk) - Key risks include general economic conditions, inflation, and consumer spending patterns - Market disruptions such as pandemics, severe weather, natural disasters, and financial/political crises - Uncertainty in the global trade environment, including tariffs and retaliatory measures - Ability to successfully implement strategic plans, manage leadership changes, and attract/retain qualified associates - Dependence on store traffic, ability to operate and expand internationally, and performance of partners (franchisees, licensees, wholesalers, joint ventures) - Ability to grow direct channel business, protect brand reputation, and attract customers with marketing - Highly competitive retail industry, consumer acceptance of products, and ability to manage brand lifecycle and launch new merchandise - Ability to integrate acquired businesses and realize synergies, and incorporate AI successfully and ethically - Risks related to global sourcing, production, and distribution, including political instability, environmental hazards, shipping disruptions, foreign currency fluctuations, and labor disputes - Geographic concentration of facilities in central Ohio and Southeast Asia - Vendor ability to manufacture and deliver products, meet quality standards, and comply with regulations - Fluctuations in freight, product input, and energy costs - Ability to maintain IT systems and protect data against cybersecurity incidents - Stock price volatility and shareholder activism matters[96](index=96&type=chunk)[103](index=103&type=chunk) - The company assumes no obligation to publicly update or revise any forward-looking statements[97](index=97&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=19&type=section&id=Item%202%2E%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Provides management's perspective on the company's financial condition and results of operations, analyzing performance indicators, strategic priorities, and the impact of macro-environmental factors and a recent security incident [Executive Overview](index=19&type=section&id=Executive%20Overview) Summarizes Victoria's Secret & Co.'s Q2 2025 performance, strategic priorities, and security incident impact - Victoria's Secret & Co. operates globally recognized brands (Victoria's Secret, PINK, Adore Me) specializing in women's intimate, apparel, personal care, and beauty products, united by a commitment to supporting women[100](index=100&type=chunk) - Net sales in Q2 2025 increased **3%** to **$1.459 billion**, despite a **$20 million** negative impact from a four-day U.S. e-commerce website closure due to a security incident[102](index=102&type=chunk)[109](index=109&type=chunk) - North America store net sales increased **3%**, driven by higher average transaction value and conversion, with flat traffic (comparable traffic increased) - North America direct channel net sales decreased **5%**, with an estimated **$20 million** negative impact from the security incident. Excluding this, direct channel sales were approximately flat - International net sales increased **22%**[102](index=102&type=chunk) - Operating income in Q2 2025 decreased **$21 million** to **$41 million** (**2.8%** operating income rate), down from **$62 million** (**4.4%**) in Q2 2024. This was primarily due to increased tariff and transportation costs, higher incentive compensation, increased store selling expenses, and a strategic shift in marketing spend, partially offset by increased merchandise margin dollars[105](index=105&type=chunk) - Strategic priorities include Supercharge Bras, Recommit to PINK, Fuel Growth in Lifestyle Categories, and Evolve Brand Projection & Go-To-Market Strategy[106](index=106&type=chunk) - The security incident in May 2025 did not cause a material disruption or adverse financial impact, with all systems restored. The estimated negative impact on net sales was **$20 million** and operating income was **$14 million**, excluding potential insurance recoveries[108](index=108&type=chunk)[109](index=109&type=chunk) [Non-GAAP Financial Information](index=21&type=section&id=Non-GAAP%20Financial%20Information) Reconciles GAAP to non-GAAP financial measures for adjusted operating income, net income, and diluted EPS - The company provides non-GAAP financial measures (adjusted operating income, net income, and diluted EPS) to exclude certain non-recurring, infrequent, or unusual items, such as intangible asset amortization, restructuring charges, and Adore Me acquisition-related items, to facilitate comparison of ongoing operations[111](index=111&type=chunk) Reconciliation of Reported to Adjusted Operating Income (in millions) | Metric | Second Quarter 2025 | Second Quarter 2024 | Year-to-Date 2025 | Year-to-Date 2024 | | :------------------------------------- | :------------------ | :------------------ | :---------------- | :---------------- | | Reported Operating Income - GAAP | $41 | $62 | $61 | $89 | | Amortization of Intangible Assets | $6 | $6 | $13 | $13 | | Restructuring and Other One-time Charges | $8 | — | $13 | — | | Adore Me Acquisition-related Items | — | ($6) | — | $1 | | **Adjusted Operating Income** | **$55** | **$62** | **$87** | **$102** | Reconciliation of Reported to Adjusted Net Income Attributable to Victoria's Secret & Co. (in millions) | Metric | Second Quarter 2025 | Second Quarter 2024 | Year-to-Date 2025 | Year-to-Date 2024 | | :------------------------------------- | :------------------ | :------------------ | :---------------- | :---------------- | | Reported Net Income Attributable to VSCO - GAAP | $16 | $32 | $14 | $28 | | Amortization of Intangible Assets | $6 | $6 | $13 | $13 | | Restructuring and Other One-time Charges | $8 | — | $13 | — | | Adore Me Acquisition-related Items | — | ($5) | — | $3 | | Tax Effect of Adjusted Items | ($3) | ($1) | ($7) | ($3) | | **Adjusted Net Income Attributable to VSCO** | **$27** | **$31** | **$34** | **$41** | Reconciliation of Reported to Adjusted Net Income Per Diluted Share Attributable to Victoria's Secret & Co. | Metric | Second Quarter 2025 | Second Quarter 2024 | Year-to-Date 2025 | Year-to-Date 2024 | | :------------------------------------- | :------------------ | :------------------ | :---------------- | :---------------- | | Reported Net Income Per Diluted Share - GAAP | $0.20 | $0.40 | $0.18 | $0.35 | | Amortization of Intangible Assets | $0.06 | $0.06 | $0.11 | $0.12 | | Restructuring and Other One-time Charges | $0.07 | — | $0.12 | — | | Adore Me Acquisition-related Items | — | ($0.06) | — | $0.04 | | **Adjusted Net Income Per Diluted Share** | **$0.33** | **$0.40** | **$0.42** | **$0.51** | [Store Data](index=22&type=section&id=Store%20Data) Presents U.S. company-operated store data and changes in total store count year-to-date 2025 U.S. Company-Operated Store Data | Metric | Second Quarter 2025 | Second Quarter 2024 | % Change | Year-to-Date 2025 | Year-to-Date 2024 | % Change | | :----------------------------------- | :------------------ | :------------------ | :------- | :---------------- | :---------------- | :------- | | Sales per Average Selling Square Foot | $145 | $137 | 6% | $273 | $263 | 4% | | Sales per Average Store (in thousands) | $1,004 | $944 | 6% | $1,883 | $1,804 | 4% | | Average Store Size (selling square feet) | 6,907 | 6,892 | —% | | | | | Total Selling Square Feet (in thousands) | 5,305 | 5,507 | (4%) | | | | Store Count Changes Year-to-Date 2025 | Category | Stores at Feb 1, 2025 | Opened | Closed | Stores at Aug 2, 2025 | | :------------------- | :-------------------- | :----- | :----- | :-------------------- | | Company-Operated U.S. | 782 | 5 | (24) | 763 | | Company-Operated Canada | 24 | 1 | (1) | 24 | | China Joint Venture | 70 | — | (7) | 63 | | Partner-Operated | 505 | 35 | (19) | 521 | | Adore Me | 6 | — | (1) | 5 | | **Total** | **1,387** | **41** | **(52)** | **1,376** | - Overall, the total number of stores decreased from **1,387** at February 1, 2025, to **1,376** at August 2, 2025, with **41** new openings and **52** closures[117](index=117&type=chunk) [Results of Operations](index=23&type=section&id=Results%20of%20Operations) Analyzes the company's financial performance, including net sales, gross profit, and operating expenses [Second Quarter of 2025 Compared to Second Quarter of 2024](index=23&type=section&id=Second%20Quarter%20of%202025%20Compared%20to%20Second%20Quarter%20of%202024) Compares the company's financial results for the second quarter of 2025 against the same period in 2024 - Operating income decreased by **$21 million** to **$41 million** in Q2 2025, with the operating income rate falling to **2.8%** from **4.4%** in Q2 2024[120](index=120&type=chunk) Net Sales by Channel (Q2 2025 vs Q2 2024) | Channel | 2025 (in millions) | 2024 (in millions) | % Change | | :------------------ | :----------------- | :----------------- | :------- | | Stores – North America | $825 | $800 | 3% | | Direct | $406 | $430 | (5%) | | International | $228 | $187 | 22% | | **Total Net Sales** | **$1,459** | **$1,417** | **3%** | Comparable Sales (Q2 2025 vs Q2 2024) | Metric | 2025 | 2024 | | :-------------------------- | :--- | :--- | | Comparable Sales (Stores and Direct) | 4% | (3%) | | Comparable Store Sales | 4% | (5%) | - Gross profit increased by **$18 million** to **$519 million**, with the gross profit rate increasing to **35.6%** from **35.4%**. This was driven by increased merchandise margin dollars due to higher net sales and decreased promotional activity, partially offset by increased tariff and transportation costs[128](index=128&type=chunk)[130](index=130&type=chunk)[131](index=131&type=chunk) - General, administrative, and store operating expenses increased by **$39 million** (**9%**) to **$478 million**, primarily due to higher store selling expenses, a strategic shift in marketing spend, increased incentive compensation, and charges related to Adore Me acquisition accounting items and executive leadership restructuring[132](index=132&type=chunk) - Interest expense decreased **$3 million** to **$18 million**, mainly due to lower average outstanding debt and lower average borrowing rates[134](index=134&type=chunk) - The effective tax rate was **25.7%** in Q2 2025, up from **22.4%** in Q2 2024, consistent with the combined estimated federal and state statutory rate[135](index=135&type=chunk) [Year-to-Date 2025 Compared to Year-to-Date 2024](index=25&type=section&id=Year-to-Date%202025%20Compared%20to%20Year-to-Date%202024) Compares the company's financial results for the year-to-date period of 2025 against the same period in 2024 - Operating income decreased **$28 million** to **$61 million** YTD 2025, with the operating income rate falling to **2.2%** from **3.2%** YTD 2024[136](index=136&type=chunk) Net Sales by Channel (YTD 2025 vs YTD 2024) | Channel | 2025 (in millions) | 2024 (in millions) | % Change | | :------------------ | :----------------- | :----------------- | :------- | | Stores – North America | $1,546 | $1,529 | 1% | | Direct | $840 | $879 | (4%) | | International | $426 | $369 | 16% | | **Total Net Sales** | **$2,812** | **$2,777** | **1%** | Comparable Sales (YTD 2025 vs YTD 2024) | Metric | 2025 | 2024 | | :-------------------------- | :--- | :--- | | Comparable Sales (Stores and Direct) | 1% | (4%) | | Comparable Store Sales | 2% | (6%) | - Gross profit decreased **$10 million** to **$993 million**, with the gross profit rate decreasing to **35.3%** from **36.1%**. This was primarily due to decreased merchandise margin dollars driven by increased transportation and tariff costs, partially offset by increased net sales and decreased promotional activity[144](index=144&type=chunk)[145](index=145&type=chunk)[147](index=147&type=chunk) - General, administrative, and store operating expenses increased **$18 million** (**2%**) to **$932 million**, mainly due to higher store selling expenses, executive leadership restructuring expenses, and incentive compensation, partially offset by lower marketing expenses[148](index=148&type=chunk) - Interest expense decreased **$8 million** to **$35 million**, primarily due to lower average outstanding debt and lower average borrowing rates[150](index=150&type=chunk) - The effective tax rate was **30.5%** YTD 2025, down from **35.9%** YTD 2024, primarily due to additional tax expense from share-based compensation awards[151](index=151&type=chunk) [FINANCIAL CONDITION](index=27&type=section&id=FINANCIAL%20CONDITION) Assesses the company's liquidity, capital resources, working capital, and debt structure [Liquidity and Capital Resources](index=27&type=section&id=Liquidity%20and%20Capital%20Resources) Discusses the company's sources of liquidity, capital needs, and ability to meet financial obligations - The company relies on cash generated from operating activities and borrowing capacity under its ABL Facility to support operations, growth, seasonal funding, and capital expenditures[152](index=152&type=chunk)[153](index=153&type=chunk) - Management believes current cash balances, operating cash flows, and ABL Facility capacity provide adequate liquidity for current and long-term obligations, capital expenditures, and potential investment opportunities[153](index=153&type=chunk) - The company expects to use cash flows to invest in brands, talent, capabilities, strategic initiatives, and debt repayment[154](index=154&type=chunk) [Working Capital and Capitalization](index=27&type=section&id=Working%20Capital%20and%20Capitalization) Presents key metrics related to working capital, long-term debt, and total capitalization Working Capital and Capitalization (in millions) | Metric | August 2, 2025 | February 1, 2025 | August 3, 2024 | | :------------------------------------- | :------------- | :--------------- | :------------- | | Net Cash Provided by (Used for) Operating Activities (a) | $6 | $425 | ($1) | | Capital Expenditures (a) | $111 | $178 | $99 | | Working Capital | $194 | $66 | ($6) | | Long-term Debt | $1,048 | $973 | $1,119 | | Victoria's Secret & Co. Shareholders' Equity | $680 | $640 | $472 | | **Total Capitalization** | **$1,728** | **$1,613** | **$1,591** | | Amounts Available Under the ABL Facility | $524 | $533 | $483 | - Working Capital significantly improved from (**$6**) million at August 3, 2024, to **$194 million** at August 2, 2025[156](index=156&type=chunk) [Cash Flow](index=28&type=section&id=Cash%20Flow) Analyzes cash flows from operating, investing, and financing activities for year-to-date periods Cash Flow Activity (Year-to-Date) | Metric | 2025 (in millions) | 2024 (in millions) | | :------------------------------------- | :----------------- | :----------------- | | Cash and Cash Equivalents, Beginning of Period | $227 | $270 | | Net Cash Provided by (Used for) Operating Activities | $6 | ($1) | | Net Cash Used for Investing Activities | ($111) | ($83) | | Net Cash Provided by (Used for) Financing Activities | $67 | ($17) | | Effects of Exchange Rate Changes on Cash and Cash Equivalents | ($1) | — | | Net Decrease in Cash and Cash Equivalents | ($39) | ($101) | | Cash and Cash Equivalents, End of Period | $188 | $169 | - Net cash provided by operating activities increased by **$7 million** YTD 2025 compared to YTD 2024, driven by lower net operating cash outflows from working capital changes, partially offset by a decrease in net income. The increase in inventory levels, related to international growth, European distribution center, and increased average unit costs, was a significant working capital driver[159](index=159&type=chunk) - Net cash used for investing activities was **$111 million** YTD 2025, consisting solely of capital expenditures, primarily for store capital programs and technology/logistics investments. This is an increase from **$83 million** used YTD 2024[160](index=160&type=chunk)[161](index=161&type=chunk) - Capital expenditures are estimated to be approximately **$200 million** for fiscal year 2025[163](index=163&type=chunk) - Net cash provided by financing activities was **$67 million** YTD 2025, primarily from **$245 million** in ABL Facility borrowings, partially offset by **$170 million** in repayments. This contrasts with a **$17 million** use in YTD 2024[164](index=164&type=chunk) [Common Stock Share Repurchases](index=29&type=section&id=Common%20Stock%20Share%20Repurchases) Details the company's share repurchase program and activity during the period - The Board approved a **$250 million** share repurchase program in March 2024, which is open-ended. As of August 2, 2025, no shares have been repurchased under this program[166](index=166&type=chunk)[167](index=167&type=chunk) [Dividend Policy and Procedures](index=29&type=section&id=Dividend%20Policy%20and%20Procedures) Outlines the company's dividend policy and factors influencing future dividend declarations - The company has not paid cash dividends since becoming an independent public company. Future dividend declarations are at the Board's discretion, considering financial condition, earnings, cash flows, capital requirements, debt covenants, and legal/regulatory factors[168](index=168&type=chunk) [Long-term Debt and Borrowing Facilities](index=29&type=section&id=Long-term%20Debt%20and%20Borrowing%20Facilities) Details outstanding long-term debt, borrowing facilities, and compliance with covenants Outstanding Long-term Debt (in millions) | Debt Type | August 2, 2025 | February 1, 2025 | August 3, 2024 | | :--------------------------------------- | :------------- | :--------------- | :------------- | | Term Loan Facility ($385M due Aug 2028) | $381 | $382 | $383 | | ABL Facility (due May 2030) | $75 | — | $145 | | 2029 Notes ($600M, 4.625% due Jul 2029) | $596 | $595 | $595 | | **Total Long-term Debt, Net of Current Portion** | **$1,048** | **$973** | **$1,119** | - Cash paid for interest was **$31 million** YTD 2025, down from **$38 million** YTD 2024[169](index=169&type=chunk) - The ABL Facility was amended in May 2025, extending its maturity to May 2030, increasing the seasonal advance rate for eligible inventory, reducing availability thresholds, and lowering applicable interest rates[174](index=174&type=chunk) - As of August 2, 2025, there were **$75 million** outstanding borrowings under the ABL Facility with an interest rate of **5.81%**, and **$524 million** remaining availability[177](index=177&type=chunk) - The company was in compliance with all covenants under its long-term debt and borrowing facilities as of August 2, 2025[178](index=178&type=chunk) [Credit Ratings](index=31&type=section&id=Credit%20Ratings) Provides the company's credit ratings from Moody's and S&P, along with their outlooks Credit Ratings as of August 2, 2025 | Category | 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 | [Contingent Liabilities and Contractual Obligations](index=31&type=section&id=Contingent%20Liabilities%20and%20Contractual%20Obligations) Summarizes the company's contingent liabilities and contractual obligations - Contractual obligations primarily include long-term debt, interest payments, operating leases, and merchandise inventory purchase orders. There have been no material changes since February 1, 2025, except for an additional **$75 million** in ABL Facility borrowings[180](index=180&type=chunk) [Recently Issued Accounting Pronouncements](index=31&type=section&id=Recently%20Issued%20Accounting%20Pronouncements) Discusses the impact of recently issued accounting standards on the company's financial statements - The company did not adopt any new accounting standards in Q2 2025 that materially impacted its financial statements[181](index=181&type=chunk) - FASB ASU 2024-03 (Expense Disaggregation Disclosures) will be effective for annual periods beginning FY2027 and interim periods beginning FY2028. The company is evaluating its impact[182](index=182&type=chunk) - FASB ASU 2023-09 (Improvements to Income Tax Disclosures) will be effective for annual periods beginning FY2025. The company does not expect a material impact[183](index=183&type=chunk) [Critical Accounting Policies and Estimates](index=31&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) Highlights key accounting policies and estimates that require significant management judgment - Management evaluates accounting policies, estimates, and judgments related to inventories, long-lived assets, claims and contingencies, income taxes, and revenue recognition. Actual results may differ from these estimates[184](index=184&type=chunk) - There have been no material changes to the critical accounting policies and estimates disclosed in the 2024 Annual Report on Form 10-K[185](index=185&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=32&type=section&id=Item%203%2E%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Discusses the company's exposure to market risks, specifically foreign currency exchange rate risk and interest rate risk, and how these are managed [Market Risk](index=32&type=section&id=Market%20Risk) Explains the company's exposure to market risks, including foreign currency and interest rate fluctuations - The company's market risk stems from potential losses in fair value, earnings, or cash flows due to adverse changes in foreign currency exchange rates or interest rates. Derivative financial instruments may be used to manage these exposures, but not for trading[186](index=186&type=chunk) [Foreign Exchange Rate Risk](index=32&type=section&id=Foreign%20Exchange%20Rate%20Risk) Details the company's exposure to foreign currency exchange rate fluctuations from international operations - Operations and investments in foreign countries (Canada, China, Europe) expose the company to foreign currency exchange rate fluctuations, particularly as merchandise is sourced through U.S. dollar transactions[187](index=187&type=chunk) - Royalty arrangements with international partners, though denominated in U.S. dollars, are calculated based on local currency sales, exposing them to exchange rate risk[188](index=188&type=chunk) [Interest Rate Risk](index=32&type=section&id=Interest%20Rate%20Risk) Describes the company's exposure to interest rate changes on its investment portfolio and long-term debt - The investment portfolio consists primarily of short-term, high-quality interest-bearing instruments (money market funds and bank deposits), minimizing principal risk from interest rate changes[189](index=189&type=chunk) - Long-term debt includes fixed-rate 2029 Notes and variable-rate Term Loan Facility and ABL Facility (based on Term SOFR). Exposure to interest rate changes is limited to the fair value of debt and interest paid on variable-rate facilities, not expected to materially impact earnings or cash flows[190](index=190&type=chunk) [Fair Value of Financial Instruments](index=32&type=section&id=Fair%20Value%20of%20Financial%20Instruments) Presents the fair value measurements of the company's financial instruments, particularly outstanding debt Principal and Estimated Fair Value of Outstanding Debt (in millions) | Metric | August 2, 2025 | February 1, 2025 | August 3, 2024 | | :----------------------- | :------------- | :--------------- | :------------- | | Principal Value | $985 | $987 | $989 | | Fair Value, Estimated (a) | $942 | $940 | $877 | - The estimated fair value of publicly traded debt is based on Level 2 inputs (reported transaction prices). Carrying values of accounts receivable, accounts payable, and accrued expenses approximate fair value due to their short maturity. The principal value of outstanding ABL Facility debt also approximates its fair value[191](index=191&type=chunk)[192](index=192&type=chunk) [Concentration of Credit Risk](index=33&type=section&id=Concentration%20of%20Credit%20Risk) Discusses how the company manages credit risk related to cash, cash equivalents, and partner relationships - The company manages credit risk by monitoring financial institutions for cash and cash equivalents (primarily money market funds and bank deposits) and periodically reviewing the credit standing of franchise, license, and wholesale partners[193](index=193&type=chunk) [Item 4. Controls and Procedures](index=33&type=section&id=Item%204%2E%20Controls%20and%20Procedures) Confirms the effectiveness of the company's disclosure controls and procedures and reports no material changes in internal control over financial reporting during the second quarter of 2025 - As of August 2, 2025, management, including the CEO and CFO, concluded that disclosure controls and procedures were effective[194](index=194&type=chunk) - There were no material changes in internal control over financial reporting during Q2 2025[195](index=195&type=chunk) Part II [Item 1. Legal Proceedings](index=34&type=section&id=Item%201%2E%20Legal%20Proceedings) States that the company is involved in various lawsuits, not expected to materially impact financial results - The company is a defendant in various lawsuits arising in the ordinary course of business, including commercial, tort, intellectual property, customer, employment, data privacy, and securities claims[198](index=198&type=chunk) - Management believes current legal proceedings are not expected to have a material adverse effect on the company's financial position or results of operations[198](index=198&type=chunk) [Item 1A. Risk Factors](index=34&type=section&id=Item%201A%2E%20Risk%20Factors) Refers to risk factors from the annual report, noting no material changes and potential impact on forward-looking statements - The risk factors affecting the business are set forth in the 2024 Annual Report on Form 10-K[199](index=199&type=chunk) - There have been no material changes to the risk factors from those described in the 2024 Annual Report on Form 10-K[199](index=199&type=chunk) - These risk factors could cause actual results to differ materially from any forward-looking statements[199](index=199&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=34&type=section&id=Item%202%2E%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) Details share repurchase activity for tax withholding and stock option exercises, not under the public program Repurchases of Common Stock During Q2 2025 | Period | Total Number of Shares Purchased (in thousands) | Average Price Paid per Share | | :---------------------- | :-------------------------------------------- | :--------------------------- | | May 4, 2025 - May 31, 2025 | 4 | $19.14 | | June 1, 2025 - July 5, 2025 | 4 | $20.81 | | July 6, 2025 - August 2, 2025 | 7 | $20.39 | | **Total** | **15** | | - The repurchased shares were primarily related to tax withholding payments upon vesting of employee restricted stock awards and paying the exercise price on employee stock options[200](index=200&type=chunk) - No shares were repurchased under the March 2024 Share Repurchase Program, which authorizes up to **$250 million** in repurchases and remains open-ended[200](index=200&type=chunk)[201](index=201&type=chunk) [Item 3. Defaults Upon Senior Securities](index=34&type=section&id=Item%203%2E%20Defaults%20Upon%20Senior%20Securities) Indicates that this item is not applicable, with no defaults on senior securities - Not applicable[202](index=202&type=chunk) [Item 4. Mine Safety Disclosures](index=34&type=section&id=Item%204%2E%20Mine%20Safety%20Disclosures) Indicates that this item is not applicable, with no mine safety disclosures - Not applicable[203](index=203&type=chunk) [Item 5. Other Information](index=34&type=section&id=Item%205%2E%20Other%20Information) States that there is no other information to report for this section - None[204](index=204&type=chunk) [Item 6. Exhibits](index=35&type=section&id=Item%206%2E%20Exhibits) Lists the exhibits filed with the 10-Q report, including corporate governance documents, the shareholder rights agreement, an amendment to the revolving credit agreement, and certifications - Amended and Restated Certificate of Incorporation and Bylaws - Certificate of Designations of Series A Preferred Stock - Rights Agreement, dated May 19, 2025 - Amendment No. 2 to Revolving Credit Agreement, dated May 21, 2025 - Section 302 and 906 Certifications by CEO and CFO - XBRL Instance Document and Taxonomy Extension Documents[206](index=206&type=chunk) [Signature](index=36&type=section&id=Signature) Contains the signature of the registrant's Chief Financial and Operating Officer, confirming report authorization - The report is signed by Scott Sekella, Chief Financial and Operating Officer of Victoria's Secret & Co., on September 5, 2025[208](index=208&type=chunk)

Core Insights - The CEO expresses enthusiasm about the transformative potential of the brands and their cultural significance, indicating a strong belief in the company's market position and future growth [1]. Company Changes - The company has implemented numerous changes, although specific details were not provided in the excerpt [2].

Financial Data and Key Metrics Changes - The company has updated its guidance to account for 30% tariffs in China and 20% for the rest of the world, estimating a net impact of about $100 million for fiscal year 2025, which includes $70 million from mitigation efforts this year [35][36] - The company reported a comp sales growth of about 22% last quarter, indicating strong performance in the international market [34] Business Line Data and Key Metrics Changes - The bra business is central to the company's strategy, with a reestablished innovation pipeline and dedicated teams focusing on bra expertise, leading to a significant increase in market share [11][13] - The beauty segment is described as a "secret assassin," with less than 40% of the customer file currently shopping beauty, indicating substantial growth potential [21][22] - The PINK brand is being repositioned to regain its former size, with a focus on marketing and brand differentiation [15][16] Market Data and Key Metrics Changes - The company is acquiring a younger customer demographic, particularly through collaborations like LoveShackFancy, which is expected to enhance brand equity [19][20] - The international business has seen strong growth, particularly in China, where the company was the number one brand during a recent TikTok event [33] Company Strategy and Development Direction - The company is focused on two distinct growth brands, emphasizing creativity, customer focus, and technology [6][7] - The strategy includes evolving the brand projection and go-to-market approach, with a new Chief Marketing and Customer Officer to differentiate the Victoria's Secret and PINK brands [23][25] - The company aims to convert about 50% of its global footprint to the "store of the future" concept by the end of 2027, which has shown to increase sales significantly [27][28] Management's Comments on Operating Environment and Future Outlook - Management describes the current consumer state as strong, with a focus on creating emotional connections through product execution and modern marketing strategies [30] - The company is optimistic about returning to historical margin levels by finding efficiencies in non-customer-facing areas and optimizing the supply chain [46][47] Other Important Information - The company is implementing a new 26-week production calendar to enhance agility in product development, particularly for PINK apparel [41][43] - The company is strategically evaluating pricing and promotions to mitigate tariff impacts while maintaining customer engagement [35][37] Q&A Session Summary Question: What changes should we expect in the bra business go-to-market strategy? - The company has reestablished a deeper innovation pipeline and dedicated teams focusing on bra expertise, leading to a significant increase in market share [11][12] Question: What excites you about the PINK brand? - The PINK brand has the potential to regain its former size, with a clear path to address past dilution and a focus on lifestyle branding [15][16] Question: How is the beauty business performing? - The beauty segment is a powerful growth area, with significant opportunities to increase customer engagement and market share [21][22] Question: What is the company's strategy for the store of the future? - The company plans to convert 50% of its global footprint to the store of the future concept by 2027, which has shown to increase sales [27][28] Question: How is the company addressing tariff impacts? - The company has updated its guidance to account for tariffs and is focusing on sourcing diversification and reducing promotional activities to mitigate impacts [35][36]

Group 1 - The company is experiencing limited overall growth, with indications that the U.S. business is performing significantly better [1] - The investment approach focuses on operational aspects and long-term earnings potential rather than market-driven dynamics [1] - The majority of investment calls are expected to be holds, reflecting a cautious stance in a bullish market [1] Group 2 - There is no current stock or derivative position held by the analyst in the companies mentioned, nor any plans to initiate such positions in the near term [2] - The article expresses the author's personal opinions and is not influenced by compensation from any company mentioned [2] Group 3 - Seeking Alpha emphasizes that past performance does not guarantee future results and that no specific investment recommendations are provided [3] - The views expressed may not represent those of Seeking Alpha as a whole, highlighting the diversity of opinions among analysts [3]

Core Viewpoint - Victoria's Secret & Co. will participate in a fireside chat at the Goldman Sachs 32nd Annual Global Retailing conference on September 4, 2025, featuring CEO Hillary Super and CFO Scott Sekella [1]. Company Overview - Victoria's Secret & Co. is a specialty retailer offering modern, fashion-inspired collections, including bras, panties, lingerie, apparel, casual sleepwear, swimwear, lounge, and sport items, as well as prestige fragrances and body care [3]. - The company operates leading brands, Victoria's Secret and PINK, and also includes Adore Me, a technology-driven, digital-first intimates brand catering to women of all sizes and budgets [3]. - Victoria's Secret & Co. employs over 30,000 associates and has approximately 1,380 retail stores across nearly 70 countries [3]. Event Details - A live audio webcast of the fireside chat will be available on the company's investor relations website, with a replay accessible afterward [2].

Core Insights - Victoria's Secret reported Q2 2025 net sales of $1.459 billion, a 3% year-over-year increase, exceeding the guidance range of $1.38 billion to $1.41 billion [1] - Comparable sales grew by 4% during the same period, indicating strong performance across various channels [1] - Adjusted operating income reached $55 million, surpassing the previous guidance of $15 million to $35 million [1] - Adjusted net income was $27 million, with diluted earnings per share of $0.33, also exceeding the prior guidance of $0 to $0.15 [1] - Based on Q2 performance, the company raised its full-year net sales forecast to a range of $6.33 billion to $6.41 billion, up from the previous range of $6.2 billion to $6.3 billion [1] - CEO Hillary Super highlighted strong growth momentum in Q2, with sales and operating profit exceeding guidance, driven by product innovation and brand storytelling [1] Financial Performance - Q2 2025 net sales: $1.459 billion, up 3% year-over-year [1] - Comparable sales growth: 4% [1] - Adjusted operating income: $55 million, exceeding guidance [1] - Adjusted net income: $27 million, diluted EPS: $0.33, exceeding guidance [1] - Revised full-year net sales forecast: $6.33 billion to $6.41 billion [1] Market Dynamics - Growth observed in North America and global markets, with both Victoria's Secret and PINK brands showing comparable sales growth [1] - Notable growth in July and August, attributed to product innovation and continuous new launches [1] - Strong connection established with both new and existing consumers through effective brand storytelling [1]

Core Insights - Victoria's Secret reported revenue of $1.46 billion for the quarter ended July 2025, marking a year-over-year increase of 3% and a surprise of +3.78% over the Zacks Consensus Estimate of $1.41 billion [1] - The company's EPS for the same period was $0.33, down from $0.40 a year ago, but exceeded the consensus estimate of $0.13 by +153.85% [1] Financial Performance - Comparable sales for stores and direct channels increased by 4%, significantly outperforming the estimated -0.4% by analysts [4] - The total number of company-operated stores was 787, slightly below the average estimate of 793 from two analysts [4] - The total number of stores in the China joint venture was 63, compared to the estimated 70 by two analysts [4] - Geographic net sales for direct channels were reported at $406.5 million, which is lower than the average estimate of $415.58 million, reflecting a year-over-year decline of -5.5% [4] Stock Performance - Over the past month, shares of Victoria's Secret have returned +16.7%, outperforming the Zacks S&P 500 composite's +1.5% change [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the broader market in the near term [3]

Financial Data and Key Metrics Changes - Net sales increased by 3% year over year to $1,459 million, with comparable sales growing by 4%, reflecting sequential improvements over the prior quarter [35][36] - Adjusted operating income reached $55 million, exceeding the high end of guidance by $20 million, despite a $14 million impact from a security incident [35][36] - Gross margins improved to 35.6%, up 20 basis points year over year and 60 basis points above guidance, driven by lower discounting and stronger regular price selling [10][40] Business Line Data and Key Metrics Changes - Victoria's Secret and PINK both saw comparable sales growth, with PINK experiencing double-digit increases in apparel and a significant improvement in new customer acquisition [20][36] - The beauty segment continued to perform well, with sales up mid-single digits, marking the eighth consecutive quarter of growth [21][37] - Bra sales in North America were down low single digits, but showed sequential improvement over Q1, with market share growing by approximately 0.5% in total bras [12][36] Market Data and Key Metrics Changes - International sales grew by 22% year over year, with retail comps up high single digits, particularly strong in China driven by digital channels [9][38] - The 18 to 24 age group was identified as a strong customer growth segment, contributing to improved customer acquisition [24][25] Company Strategy and Development Direction - The company is focused on its "Path to Potential" strategy, emphasizing product innovation, brand strength, and customer experience to drive long-term growth [5][34] - Plans to enhance the PINK brand with a digital and social-first approach, aiming to reconnect with younger consumers [15][16] - The upcoming Victoria's Secret Fashion Show is expected to be a key brand moment, aimed at driving traffic and customer acquisition [27][45] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate a complex macro environment while continuing to invest in brand building and innovative marketing [26][53] - The company anticipates continued momentum into the third quarter, with a forecast for net sales between $1,390 million and $1,420 million [50] - Despite challenges from tariffs, the company is maintaining its adjusted operating income guidance for the year [46][47] Other Important Information - The company is committed to optimizing inventory levels and improving production lead times to enhance operational efficiency [11][102] - A focus on strategic pricing and promotional strategies is being implemented to mitigate tariff impacts while maintaining customer value [71][104] Q&A Session Summary Question: Implications of the end of the de minimis exemption on the industry - Management indicated that the de minimis exemption is not a significant factor for the business, as e-commerce distribution centers are primarily located in Columbus [56] Question: Insights on innovation and future plans - Management highlighted a deep pipeline of innovation focused on bras and sports, with a more frequent release of new products planned for the back half of the year [62][65] Question: Gross margin strategy and Store of the Future performance - Management discussed a conscious effort to reduce promotions and focus on regular price sales, with positive results from Store of the Future remodels showing double-digit sales lifts [71][72] Question: Performance of international business and category strengths - Management noted that the intimates business is strong internationally, with beauty and intimates being the core categories performing well globally [75][76] Question: Details on the upcoming fashion show and marketing investments - Management confirmed that the fashion show will focus on the Victoria's Secret brand, with marketing spend remaining flat year over year [81][83] Question: Inventory planning and pricing power - Management acknowledged the need for better inventory optimization and indicated that pricing power exists, particularly in gifting and beauty categories [101][104]

Financial Data and Key Metrics Changes - Net sales increased by 3% year over year to $1,459 million, with comparable sales growing by 4% despite a digital outage in May that negatively impacted sales by approximately $20 million [7][36][40] - Adjusted gross margin rate improved to 35.6%, up 20 basis points from last year and 60 basis points above guidance, driven by lower discounting and stronger regular price selling [10][41][42] - Adjusted operating income reached $55 million, exceeding guidance by $20 million, and adjusted net income per diluted share was $0.33, significantly above the high end of guidance [11][37] Business Line Data and Key Metrics Changes - Victoria's Secret and PINK both saw comparable sales growth, with PINK experiencing double-digit increases in apparel and a healthier quality of sales [20][39] - Beauty sales grew mid-single digits, marking the eighth consecutive quarter of growth, with strong performance across body care and seasonal fragrance categories [21][39] - International sales grew by 22% year over year, with retail comparable sales up in high single digits, particularly strong in China [8][40] Market Data and Key Metrics Changes - The company gained market share in bras, with an approximate 0.5% increase in total bras and nearly a full point in traditional bras [12] - The 18 to 44 age group showed strong customer growth, indicating effective marketing strategies targeting this demographic [24][87] Company Strategy and Development Direction - The company is focused on its "Path to Potential" strategy, emphasizing product innovation, brand strength, and customer experience to drive long-term growth [5][35] - Plans include enhancing the PINK brand's appeal to younger consumers and expanding the beauty category, which is significantly larger than the intimates market [15][21] - The upcoming Victoria's Secret Fashion Show is expected to be a key brand moment, aimed at driving customer engagement and sales momentum [28][79] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate a complex macro environment while continuing to invest in brand building and innovative marketing [26][54] - The company anticipates continued momentum into the third quarter, with a forecast for net sales between $1,390 million and $1,420 million [51] - Despite challenges from tariffs, the company is maintaining its adjusted operating income guidance for the year, reflecting strong business momentum [48] Other Important Information - The company is committed to optimizing inventory levels and enhancing the customer experience through strategic pricing and promotional strategies [10][100] - The successful launch of the Body by Victoria collection is seen as a significant driver of customer engagement and sales growth [9][39] Q&A Session Summary Question: Implications of the end of the de minimis exemption on the industry - Management indicated that the de minimis exemption is not a significant factor for their e-commerce distribution strategy [56][57] Question: Insights on innovation and plans for the back half of the year - Management highlighted a strong pipeline of innovation focused on bras and sports, with a more frequent release schedule planned [61][63] Question: Gross margin strategy and Store of the Future performance - Management discussed a conscious effort to reduce promotions and improve regular price sales, with positive results from Store of the Future remodels [69][70] Question: Performance of international business and go-to-market strategy - Management confirmed strong performance in beauty and intimates internationally, with no significant differences in marketing strategies compared to domestic [74][76] Question: Details on the upcoming fashion show and marketing investments - Management confirmed that the fashion show will focus on the Victoria's Secret brand, with marketing investments remaining flat year over year [79][81] Question: Inventory planning and pricing power - Management acknowledged the need for better inventory optimization and indicated that pricing power exists, particularly in gifting and beauty categories [96][101]

Core Viewpoint - Victoria's Secret reported quarterly earnings of $0.33 per share, significantly exceeding the Zacks Consensus Estimate of $0.13 per share, representing an earnings surprise of +153.85% [1][2] Financial Performance - The company posted revenues of $1.46 billion for the quarter ended July 2025, surpassing the Zacks Consensus Estimate by 3.78% and showing an increase from $1.42 billion year-over-year [2] - Over the last four quarters, Victoria's Secret has surpassed consensus EPS estimates three times and topped consensus revenue estimates four times [2] Stock Performance and Outlook - Victoria's Secret shares have declined approximately 45% since the beginning of the year, contrasting with the S&P 500's gain of 10.2% [3] - The current consensus EPS estimate for the upcoming quarter is -$0.58 on revenues of $1.35 billion, while for the current fiscal year, it is $2.01 on revenues of $6.24 billion [7] Industry Context - The Retail - Apparel and Shoes industry, to which Victoria's Secret belongs, is currently ranked in the bottom 34% of over 250 Zacks industries, indicating potential challenges ahead [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which could impact Victoria's Secret's stock performance [5][6]