vsco-20231028
FALSE2023Q30001856437--02-0300018564372023-01-292023-10-2800018564372023-11-30xbrli:shares00018564372023-07-302023-10-28iso4217:USD00018564372022-07-312022-10-2900018564372022-01-302022-10-29iso4217:USDxbrli:shares00018564372023-10-2800018564372023-01-2800018564372022-10-290001856437us-gaap:CommonStockMember2023-07-290001856437us-gaap:AdditionalPaidInCapitalMember2023-07-290001856437us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-07-290001856437vsco:RetainedEarningsExcludingNetInvestmentByFormerParentMember2023-07-290001856437us-gaap:TreasuryStockCommonMember2023-07-290001856437us-gaap:ParentMember2023-07-290001856437us-gaap:NoncontrollingInterestMember2023-07-2900018564372023-07-290001856437vsco:RetainedEarningsExcludingNetInvestmentByFormerParentMember2023-07-302023-10-280001856437us-gaap:ParentMember2023-07-302023-10-280001856437us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-07-302023-10-280001856437us-gaap:NoncontrollingInterestMember2023-07-302023-10-280001856437us-gaap:AdditionalPaidInCapitalMember2023-07-302023-10-280001856437us-gaap:CommonStockMember2023-10-280001856437us-gaap:AdditionalPaidInCapitalMember2023-10-280001856437us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-10-280001856437vsco:RetainedEarningsExcludingNetInvestmentByFormerParentMember2023-10-280001856437us-gaap:TreasuryStockCommonMember2023-10-280001856437us-gaap:ParentMember2023-10-280001856437us-gaap:NoncontrollingInterestMember2023-10-280001856437us-gaap:CommonStockMember2022-07-300001856437us-gaap:AdditionalPaidInCapitalMember2022-07-300001856437us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-07-300001856437vsco:RetainedEarningsExcludingNetInvestmentByFormerParentMember2022-07-300001856437us-gaap:TreasuryStockCommonMember2022-07-300001856437us-gaap:ParentMember2022-07-300001856437us-gaap:NoncontrollingInterestMember2022-07-3000018564372022-07-300001856437vsco:RetainedEarningsExcludingNetInvestmentByFormerParentMember2022-07-312022-10-290001856437us-gaap:ParentMember2022-07-312022-10-290001856437us-gaap:NoncontrollingInterestMember2022-07-312022-10-290001856437us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-07-312022-10-290001856437us-gaap:CommonStockMember2022-07-312022-10-290001856437us-gaap:AdditionalPaidInCapitalMember2022-07-312022-10-290001856437us-gaap:TreasuryStockCommonMember2022-07-312022-10-290001856437us-gaap:CommonStockMember2022-10-290001856437us-gaap:AdditionalPaidInCapitalMember2022-10-290001856437us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-10-290001856437vsco:RetainedEarningsExcludingNetInvestmentByFormerParentMember2022-10-290001856437us-gaap:TreasuryStockCommonMember2022-10-290001856437us-gaap:ParentMember2022-10-290001856437us-gaap:NoncontrollingInterestMember2022-10-290001856437us-gaap:CommonStockMember2023-01-280001856437us-gaap:AdditionalPaidInCapitalMember2023-01-280001856437us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-01-280001856437vsco:RetainedEarningsExcludingNetInvestmentByFormerParentMember2023-01-280001856437us-gaap:ParentMember2023-01-280001856437us-gaap:NoncontrollingInterestMember2023-01-280001856437vsco:RetainedEarningsExcludingNetInvestmentByFormerParentMember2023-01-292023-10-280001856437us-gaap:ParentMember2023-01-292023-10-280001856437us-gaap:NoncontrollingInterestMember2023-01-292023-10-280001856437us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-01-292023-10-280001856437us-gaap:CommonStockMember2023-01-292023-10-280001856437us-gaap:AdditionalPaidInCapitalMember2023-01-292023-10-280001856437us-gaap:TreasuryStockCommonMember2023-01-292023-10-280001856437us-gaap:CommonStockMember2022-01-290001856437us-gaap:AdditionalPaidInCapitalMember2022-01-290001856437us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-01-290001856437vsco:RetainedEarningsExcludingNetInvestmentByFormerParentMember2022-01-290001856437us-gaap:ParentMember2022-01-290001856437us-gaap:NoncontrollingInterestMember2022-01-2900018564372022-01-290001856437vsco:RetainedEarningsExcludingNetInvestmentByFormerParentMember2022-01-302022-10-290001856437us-gaap:ParentMember2022-01-302022-10-290001856437us-gaap:NoncontrollingInterestMember2022-01-302022-10-290001856437us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-01-302022-10-290001856437us-gaap:AdditionalPaidInCapitalMember2022-01-302022-10-290001856437us-gaap:CommonStockMember2022-01-302022-10-290001856437us-gaap:TreasuryStockCommonMember2022-01-302022-10-290001856437us-gaap:SalesChannelDirectlyToConsumerMember2023-10-28vsco:store0001856437us-gaap:SalesChannelThroughIntermediaryMember2023-10-28vsco:country0001856437vsco:AdoreMeMember2022-12-30xbrli:purevsco:associate0001856437vsco:FrankiesBikinisLLCMember2022-03-252022-03-250001856437vsco:VictoriasSecretUKAndOtherMember2023-10-280001856437vsco:VictoriasSecretUKAndOtherMember2023-01-280001856437vsco:VictoriasSecretUKAndOtherMember2022-10-290001856437vsco:AdoreMeMember2022-12-302022-12-300001856437vsco:AdoreMeMembersrt:MinimumMember2022-12-300001856437srt:MaximumMembervsco:AdoreMeMember2022-12-300001856437vsco:AdoreMeMember2023-04-302023-07-290001856437vsco:AdoreMeMember2023-01-292023-10-280001856437vsco:AdoreMeMember2023-10-280001856437vsco:AdoreMeMemberus-gaap:TradeNamesMember2022-12-300001856437vsco:AdoreMeMemberus-gaap:TradeNamesMember2023-10-280001856437vsco:AdoreMeMembervsco:OtherFiniteLivedIntangibleAssetsMember2022-12-300001856437vsco:AdoreMeMembervsco:OtherFiniteLivedIntangibleAssetsMember2023-10-280001856437vsco:AdoreMeMemberus-gaap:CustomerRelationshipsMember2022-12-302022-12-300001856437vsco:AdoreMeMemberus-gaap:CustomerRelationshipsMember2022-12-300001856437vsco:AdoreMeMemberus-gaap:TechnologyBasedIntangibleAssetsMember2022-12-302022-12-300001856437vsco:AdoreMeMemberus-gaap:TechnologyBasedIntangibleAssetsMember2022-12-300001856437vsco:AdoreMeMemberus-gaap:TradeNamesMember2022-12-302022-12-300001856437vsco:AdoreMeMember2023-07-302023-10-280001856437vsco:AdoreMeMembervsco:CostsOfGoodsSoldBuyingAndOccupancyMember2023-07-302023-10-280001856437vsco:AdoreMeMemberus-gaap:InterestExpenseMember2023-07-302023-10-280001856437vsco:AdoreMeMembervsco:CostsOfGoodsSoldBuyingAndOccupancyMember2023-01-292023-10-280001856437vsco:AdoreMeMembervsco:GeneralAdministrativeAndStoreOperatingExpensesMember2023-01-292023-10-280001856437vsco:AdoreMeMemberus-gaap:InterestExpenseMember2023-01-292023-10-280001856437vsco:AdoreMeMember2023-01-280001856437srt:MinimumMember2023-01-292023-10-280001856437srt:MaximumMember2023-01-292023-10-280001856437us-gaap:AccruedLiabilitiesMember2023-10-280001856437us-gaap:OtherNoncurrentLiabilitiesMember2023-10-280001856437vsco:SalesChannelNorthAmericaStoresMember2023-07-302023-10-280001856437vsco:SalesChannelNorthAmericaStoresMember2022-07-312022-10-290001856437vsco:SalesChannelNorthAmericaStoresMember2023-01-292023-10-280001856437vsco:SalesChannelNorthAmericaStoresMember2022-01-302022-10-290001856437us-gaap:SalesChannelDirectlyToConsumerMember2023-07-302023-10-280001856437us-gaap:SalesChannelDirectlyToConsumerMember2022-07-312022-10-290001856437us-gaap:SalesChannelDirectlyToConsumerMember2023-01-292023-10-280001856437us-gaap:SalesChannelDirectlyToConsumerMember2022-01-302022-10-290001856437vsco:SalesChannelInternationalMember2023-07-302023-10-280001856437vsco:SalesChannelInternationalMember2022-07-312022-10-290001856437vsco:SalesChannelInternationalMember2023-01-292023-10-280001856437vsco:SalesChannelInternationalMember2022-01-302022-10-290001856437vsco:SalesChannelLoyaltyAndPrivateLabelCreditCardMember2023-07-302023-10-280001856437vsco:SalesChannelLoyaltyAndPrivateLabelCreditCardMember2022-07-312022-10-290001856437vsco:SalesChannelLoyaltyAndPrivateLabelCreditCardMember2023-01-292023-10-280001856437vsco:SalesChannelLoyaltyAndPrivateLabelCreditCardMember2022-01-302022-10-290001856437vsco:SalesChannelNetSalesOutsideOfTheUSMember2023-07-302023-10-280001856437vsco:SalesChannelNetSalesOutsideOfTheUSMember2022-07-312022-10-290001856437vsco:SalesChannelNetSalesOutsideOfTheUSMember2023-01-292023-10-280001856437vsco:SalesChannelNetSalesOutsideOfTheUSMember2022-01-302022-10-2900018564372023-01-292023-04-290001856437us-gaap:SellingGeneralAndAdministrativeExpensesMember2023-01-292023-04-290001856437vsco:CostOfGoodsSoldBuyingAndOccupancyMember2023-01-292023-04-2900018564372022-07-012022-07-300001856437us-gaap:SellingGeneralAndAdministrativeExpensesMember2022-07-012022-07-300001856437vsco:CostOfGoodsSoldBuyingAndOccupancyMember2022-07-012022-07-3000018564372022-10-302023-01-280001856437us-gaap:SellingGeneralAndAdministrativeExpensesMember2022-10-302023-01-280001856437vsco:CostOfGoodsSoldBuyingAndOccupancyMember2022-10-302023-01-280001856437vsco:VictoriasSecretChinaMember2022-04-300001856437vsco:ReginaMiracleMembervsco:VictoriasSecretChinaMember2022-04-3000018564372022-04-012022-04-300001856437vsco:ReginaMiracleMembervsco:VictoriasSecretChinaMember2022-04-012022-04-300001856437vsco:VictoriasSecretChinaMember2022-04-012022-04-300001856437vsco:January2023ShareRepurchaseProgramMember2023-01-110001856437vsco:February2023ASRProgramMember2023-01-310001856437vsco:February2023ASRProgramMember2023-02-012023-02-2800018564372023-02-012023-02-280001856437vsco:February2023ASRProgramMember2023-05-012023-05-310001856437vsco:January2023ShareRepurchaseProgramMember2023-01-292023-10-280001856437vsco:January2023ShareRepurchaseProgramMember2023-10-280001856437vsco:February2023ASRProgramMember2023-01-292023-10-280001856437us-gaap:TreasuryStockCommonMembervsco:February2023ASRProgramMember2023-01-292023-10-280001856437us-gaap:CommonStockMembervsco:February2023ASRProgramMember2023-01-292023-10-280001856437us-gaap:AdditionalPaidInCapitalMembervsco:February2023ASRProgramMember2023-01-292023-10-280001856437us-gaap:RetainedEarningsMembervsco:February2023ASRProgramMember2023-01-292023-10-280001856437vsco:March2022RepurchaseProgramMember2022-03-310001856437vsco:March2022RepurchaseProgramMember2022-01-302022-10-290001856437us-gaap:CommonStockMembervsco:March2022RepurchaseProgramMember2022-01-302022-10-290001856437us-gaap:AdditionalPaidInCapitalMembervsco:March2022RepurchaseProgramMember2022-01-302022-10-290001856437us-gaap:RetainedEarningsMembervsco:March2022RepurchaseProgramMember2022-01-302022-10-290001856437vsco:December2021ASRProgramMember2022-02-012022-02-280001856437us-gaap:TreasuryStockCommonMembervsco:December2021ASRProgramMember2022-02-012022-02-280001856437us-gaap:CommonStockMembervsco:December2021ASRProgramMember2022-02-012022-02-280001856437us-gaap:AdditionalPaidInCapitalMembervsco:December2021ASRProgramMember2022-02-012022-02-280001856437us-gaap:RetainedEarningsMembervsco:December2021ASRProgramMember2022-02-012022-02-280001856437vsco:VictoriasSecretTradeNamesExcludingAdoreMeMember2023-10-280001856437vsco:VictoriasSecretTradeNamesExcludingAdoreMeMember2022-10-290001856437vsco:VictoriasSecretTradeNamesExcludingAdoreMeMember2023-01-280001856437us-gaap:CustomerRelationshipsMember2023-10-280001856437us-gaap:CustomerRelationshipsMember2023-01-280001856437us-gaap:TechnologyBasedIntangibleAssetsMember2023-10-280001856437us-gaap:TechnologyBasedIntangibleAssetsMember2023-01-280001856437us-gaap:TradeNamesMember2023-10-280001856437us-gaap:TradeNamesMember2023-01-280001856437vsco:SalesChannelGiftCardsMember2023-10-280001856437vsco:SalesChannelGiftCardsMember2023-01-280001856437vsco:SalesChannelGiftCardsMember2022-10-290001856437vsco:SalesChannelLoyaltyAndPrivateLabelCreditCardMember2023-10-280001856437vsco:SalesChannelLoyaltyAndPrivateLabelCreditCardMember2023-01-280001856437vsco:SalesChannelLoyaltyAndPrivateLabelCreditCardMember2022-10-290001856437vsco:AdoreMeMembervsco:AccruedLiabilityCurrentMember2023-10-280001856437vsco:AdoreMeMembervsco:AccruedLiabilityCurrentMember2023-01-280001856437vsco:AdoreMeMembervsco:AccruedLiabilityCurrentMember2022-10-290001856437us-gaap:SalesChannelDirectlyToConsumerMember2023-01-280001856437us-gaap:SalesChannelDirectlyToConsumerMember2022-10-290001856437vsco:TermLoanBMembervsco:WithSubsidiaryGuaranteeMember2023-10-280001856437vsco:TermLoanBMembervsco:WithSubsidiaryGuaranteeMemberus-gaap:SecuredDebtMember2023-10-280001856437vsco:TermLoanBMembervsco:WithSubsidiaryGuaranteeMemberus-gaap:SecuredDebtMember2023-01-280001856437vsco:TermLoanBMembervsco:WithSubsidiaryGuaranteeMemberus-gaap:SecuredDebtMember2022-10-290001856437vsco:RevolvingCreditExpiringAugust2026Membervsco:WithSubsidiaryGuaranteeMemberus-gaap:SecuredDebtMember2023-10-280001856437vsco:RevolvingCreditExpiringAugust2026Membervsco:WithSubsidiaryGuaranteeMemberus-gaap:SecuredDebtMember2023-01-280001856437vsco:RevolvingCreditExpiringAugust2026Membervsco:WithSubsidiaryGuaranteeMemberus-gaap:SecuredDebtMember2022-10-290001856437vsco:WithSubsidiaryGuaranteeMemberus-gaap:SecuredDebtMember2023-10-280001856437vsco:WithSubsidiaryGuaranteeMemberus-gaap:SecuredDebtMember2023-01-280001856437vsco:WithSubsidiaryGuaranteeMemberus-gaap:SecuredDebtMember2022-10-290001856437vsco:A4625FixedInterestRateSecuredNotesDueJuly2029Membervsco:WithSubsidiaryGuaranteeMember2023-10-280001856437us-gaap:SeniorNotesMembervsco:A4625FixedInterestRateSecuredNotesDueJuly2029Membervsco:WithSubsidiaryGuaranteeMember2023-10-280001856437us-gaap:SeniorNotesMembervsco:A4625FixedInterestRateSecuredNotesDueJuly2029Membervsco:WithSubsidiaryGuaranteeMember2023-01-280001856437us-gaap:SeniorNotesMembervsco:A4625FixedInterestRateSecuredNotesDueJuly2029Membervsco:WithSubsidiaryGuaranteeMember2022-10-290001856437us-gaap:SeniorNotesMembervsco:WithSubsidiaryGuaranteeMember2023-10-280001856437us-gaap:SeniorNotesMembervsco:WithSubsidiaryGuaranteeMember2023-01-280001856437us-gaap:SeniorNotesMembervsco:WithSubsidiaryGuaranteeMember2022-10-290001856437vsco:DelayedDrawTermLoanMemberus-gaap:SecuredDebtMember2023-09-300001856437vsco:TermLoanBMembervsco:TermLoanMember2021-08-020001856437vsco:TermLoanBMembervsco:TermLoanMember2022-07-312022-10-290001856437vsco:TermLoanBMembervsco:TermLoanMember2023-07-302023-10-280001856437vsco:TermLoanBMembervsco:TermLoanMember2022-01-302022-10-290001856437vsco:TermLoanBMembervsco:TermLoanMember2023-01-292023-10-280001856437vsco:LIBORMembervsco:TermLoanBMembervsco:TermLoanMember2021-08-022021-08-020001856437vsco:TermLoanBMemberus-gaap:BaseRateMembervsco:TermLoanMember2021-08-022021-08-020001856437vsco:TermLoanBMembervsco:TermLoanMemberus-gaap:InterestRateFloorMember2021-08-022021-08-020001856437vsco:TermLoanBMemberus-gaap:SecuredOvernightFinancingRateSofrOvernightIndexSwapRateMembervsco:TermLoanMembersrt:MinimumMember2023-05-082023-05-080001856437srt:MaximumMembervsco:TermLoanBMemberus-gaap:SecuredOvernightFinancingRateSofrOvernightIndexSwapRateMembervsco:TermLoanMember2023-05-082023-05-080001856437vsco:TermLoanBMembervsco:TermLoanMember2023-10-280001856437us-gaap:RevolvingCreditFacilityMembervsco:RevolvingCreditExpiringAugust2026Member2021-08-020001856437vsco:AverageDailyExcessAvailabilityMemberus-gaap:RevolvingCreditFacilityMembervsco:RevolvingCreditExpiringAugust2026Membersrt:MinimumMembervsco:LIBORAndCDORLoansMember2021-08-022021-08-020001856437vsco:AverageDailyExcessAvailabilityMembersrt:MaximumMemberus-gaap:RevolvingCreditFacilityMembervsco:RevolvingCreditExpiringAugust2026Membervsco:LIBORAndCDORLoansMember2021-08-022021-08-020001856437vsco:AverageDailyExcessAvailabilityMembervsco:AlternateBaseRateLoansAndCanadianBaseRateLoansMemberus-gaap:RevolvingCreditFacilityMembervsco:RevolvingCreditExpiringAugust2026Membersrt:MinimumMember2021-08-022021-08-020001856437vsco:AverageDailyExcessAvailabilityMembersrt:MaximumMembervsco:AlternateBaseRateLoansAndCanadianBaseRateLoansMemberus-gaap:RevolvingCreditFacilityMembervsco:RevolvingCreditExpiringAugust2026Member2021-08-022021-08-020001856437us-gaap:RevolvingCreditFacilityMembervsco:RevolvingCreditExpiringAugust2026Membersrt:MinimumMember2023-05-082023-05-080001856437srt:MaximumMemberus-gaap:SecuredOvernightFinancingRateSofrOvernightIndexSwapRateMemberus-gaap:RevolvingCreditFacilityMembervsco:RevolvingCreditExpiringAugust2026Member2023-05-082023-05-080001856437us-gaap:RevolvingCreditFacilityMembervsco:RevolvingCreditExpiringAugust2026Membersrt:MinimumMember2021-08-022021-08-020001856437srt:MaximumMemberus-gaap:RevolvingCreditFacilityMembervsco:RevolvingCreditExpiringAugust2026Member2021-08-022021-08-020001856437us-gaap:RevolvingCreditFacilityMembervsco:RevolvingCreditExpiringAugust2026Member2023-01-292023-10-280001856437us-gaap:RevolvingCreditFacilityMembervsco:RevolvingCreditExpiringAugust2026Member2023-10-280001856437vsco:RevolvingCreditExpiringAugust2026Memberus-gaap:LetterOfCreditMember2023-10-280001856437us-gaap:SubsequentEventMemberus-gaap:RevolvingCreditFacilityMembervsco:RevolvingCreditExpiringAugust2026Member2023-11-300001856437us-gaap:CarryingReportedAmountFairValueDisclosureMember2023-10-280001856437us-gaap:CarryingReportedAmountFairValueDisclosureMember2023-01-280001856437us-gaap:CarryingReportedAmountFairValueDisclosureMember2022-10-290001856437us-gaap:EstimateOfFairValueFairValueDisclosureMember2023-10-280001856437us-gaap:EstimateOfFairValueFairValueDisclosureMember2023-01-280001856437us-gaap:EstimateOfFairValueFairValueDisclosureMember2022-10-290001856437vsco:AdoreMeMemberus-gaap:FairValueInputsLevel1Membervsco:AccruedLiabilityCurrentMember2023-10-280001856437us-gaap:FairValueInputsLevel2Membervsco:AdoreMeMembervsco:AccruedLiabilityCurrentMember2023-10-280001856437vsco:AdoreMeMembervsco:AccruedLiabilityCurrentMemberus-gaap:FairValueInputsLevel3Member2023-10-280001856437vsco:AdoreMeMembervsco:OtherLongTermLiabilitiesMember2023-10-280001856437vsco:AdoreMeMemberus-gaap:FairValueInputsLevel1Membervsco:OtherLongTermLiabilitiesMember2023-10-280001856437us-gaap:FairValueInputsLevel2Membervsco:AdoreMeMembervsco:OtherLongTermLiabilitiesMember2023-10-280001856437vsco:AdoreMeMembervsco:OtherLongTermLiabilitiesMemberus-gaap:FairValueInputsLevel3Member2023-10-280001856437vsco:AdoreMeMemberus-gaap:FairValueInputsLevel1Membervsco:AccruedLiabilityCurrentMember2023-01-280001856437us-gaap:FairValueInputsLevel2Membervsco:AdoreMeMembervsco:AccruedLiabilityCurrentMember2023-01-280001856437vsco:AdoreMeMembervsco:AccruedLiabilityCurrentMemberus-gaap:FairValueInputsLevel3Member2023-01-280001856437vsco:AdoreMeMembervsco:OtherLongTermLiabilitiesMember2023-01-280001856437vsco:AdoreMeMemberus-gaap:FairValueInputsLevel1Membervsco:OtherLongTermLiabilitiesMember2023-01-280001856437us-gaap:FairValueInputsLevel2Membervsco:AdoreMeMembervsco:OtherLongTermLiabilitiesMember2023-01-280001856437vsco:AdoreMeMembervsco:OtherLongTermLiabilitiesMemberus-gaap:FairValueInputsLevel3Member2023-01-280001856437us-gaap:AccumulatedTranslationAdjustmentMember2023-01-280001856437us-gaap:AccumulatedTranslationAdjustmentMember2023-01-292023-10-280001856437us-gaap:AccumulatedTranslationAdjustmentMember2023-10-280001856437us-gaap:AccumulatedTranslationAdjustmentMember2022-01-290001856437us-gaap:AccumulatedTranslationAdjustmentMember2022-01-302022-10-290001856437us-gaap:AccumulatedTranslationAdjustmentMember2022-10-290001856437us-gaap:AccumulatedTranslationAdjustmentMember2022-04-012022-04-300001856437vsco:OccupancyRelatedLegalMatterMember2021-07-210001856437vsco:OccupancyRelatedLegalMatterMemberus-gaap:JudicialRulingMember2021-08-062021-08-060001856437vsco:OccupancyRelatedLegalMatterMember2022-04-220001856437vsco:OccupancyRelatedLegalMatterMemberus-gaap:JudicialRulingMember2022-05-092022-05-09
Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 _________________________________
FORM 10-Q
 _________________________________
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended October 28, 2023
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from              to             
Commission file number 001-40515
 _________________________________
VICTORIA'S SECRET & CO.
(Exact name of registrant as specified in its charter)
 _______________________________
Delaware86-3167653
(State or other jurisdiction of
incorporation or organization)
(IRS Employer Identification No.)
4 Limited Parkway East
Reynoldsburg,Ohio43068
(Address of principal executive offices)(Zip Code)
(614)577-7000
(Registrant's Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.01 Par ValueVSCOThe New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No   
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes     No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
Non-accelerated filer
Smaller reporting company
Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.).    Yes      No  
As of November 24, 2023, the number of outstanding shares of the Registrant’s common stock was 77,434,945 shares.


Table of Contents
VICTORIA'S SECRET & CO.
TABLE OF CONTENTS
 
 Page No.
Item 1A. Risk Factors
Item 6. Exhibits
 
*
Victoria's Secret & Co.'s fiscal year ends on the Saturday nearest to January 31. As used herein, “third quarter of 2023” and “third quarter of 2022” refer to the thirteen-week periods ended October 28, 2023 and October 29, 2022, respectively. “Year-to-date 2023” and “year-to-date 2022” refer to the thirty-nine-week periods ended October 28, 2023 and October 29, 2022, respectively, and “fiscal year 2023” and “fiscal year 2022” refer to the fifty-three-week period ending February 3, 2024 and the fifty-two-week period ended January 28, 2023, respectively.

2

Table of Contents
PART I—FINANCIAL INFORMATION
 
Item 1.    FINANCIAL STATEMENTS

VICTORIA'S SECRET & CO.
CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(in millions except per share amounts)
(Unaudited)
 
 Third QuarterYear-to-Date
 2023202220232022
Net Sales$1,265 $1,318 $4,099 $4,323 
Costs of Goods Sold, Buying and Occupancy(838)(861)(2,683)(2,809)
Gross Profit427 457 1,416 1,514 
General, Administrative and Store Operating Expenses(494)(414)(1,429)(1,280)
Operating Income (Loss)(67)43 (13)234 
Interest Expense(26)(15)(72)(41)
Other Income (Loss) 2  (2)
Income (Loss) Before Income Taxes(93)30 (85)191 
Provision (Benefit) for Income Taxes(22)8 (17)25 
Net Income (Loss)(71)22 (68)166 
   Less: Net Income (Loss) Attributable to Noncontrolling Interest (2)4 (9)
Net Income (Loss) Attributable to Victoria's Secret & Co.$(71)$24 $(72)$175 
Net Income (Loss) Per Basic Share Attributable to Victoria's Secret & Co.$(0.92)$0.30 $(0.93)$2.12 
Net Income (Loss) Per Diluted Share Attributable to Victoria's Secret & Co.$(0.92)$0.29 $(0.93)$2.07 


VICTORIA'S SECRET & CO.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(in millions)
(Unaudited)
Third QuarterYear-to-Date
2023202220232022
Net Income (Loss)$(71)$22 $(68)$166 
Other Comprehensive Income (Loss), Net of Tax:
   Foreign Currency Translation(2)(9)(4)(10)
   Amounts Reclassified from Accumulated Other Comprehensive Income to Paid-in Capital   3 
Total Other Comprehensive Loss, Net of Tax(2)(9)(4)(7)
Total Comprehensive Income (Loss)(73)13 (72)159 
   Less: Net Income (Loss) Attributable to Noncontrolling Interest (2)4 (9)
   Less: Foreign Currency Translation Attributable to Noncontrolling Interest(1)(3)(2)(2)
Comprehensive Income (Loss) Attributable to Victoria's Secret & Co.$(72)$18 $(74)$170 


The accompanying Notes are an integral part of these Consolidated Financial Statements.
3

Table of Contents
VICTORIA'S SECRET & CO.
CONSOLIDATED BALANCE SHEETS
(in millions except par value amounts)

 
October 28,
2023
January 28,
2023
October 29,
2022
 (Unaudited) (Unaudited)
ASSETS
Current Assets:
Cash and Cash Equivalents$124 $427 $126 
Accounts Receivable, Net139 141 184 
Inventories1,211 1,052 1,242 
Other162 117 157 
Total Current Assets1,636 1,737 1,709 
Property and Equipment, Net871 846 855 
Operating Lease Assets1,311 1,232 1,228 
Goodwill365 365  
Trade Names286 289 246 
Other Intangible Assets, Net121 137  
Deferred Income Taxes15 18 20 
Other Assets82 87 84 
Total Assets$4,687 $4,711 $4,142 
LIABILITIES AND EQUITY
Current Liabilities:
Accounts Payable$449 $481 $397 
Accrued Expenses and Other625 737 618 
Current Debt4 4 4 
Current Operating Lease Liabilities288 310 305 
Income Taxes2 47 8 
Total Current Liabilities1,368 1,579 1,332 
Deferred Income Taxes60 53 59 
Long-term Debt1,530 1,271 1,244 
Long-term Operating Lease Liabilities1,279 1,201 1,207 
Other Long-term Liabilities212 206 48 
Total Liabilities4,449 4,310 3,890 
Shareholders' Equity:
Preferred Stock — $0.01 par value; 10 shares authorized; 0 shares issued and outstanding
   
Common Stock — $0.01 par value; 1,000 shares authorized; 77, 80, and 81 shares issued and outstanding, respectively
1 1 1 
Paid-in Capital223 195 187 
Accumulated Other Comprehensive Income (Loss)(1)1  
Retained Earnings (Accumulated Deficit)(3)186 47 
Total Victoria's Secret & Co. Shareholders' Equity220 383 235 
Noncontrolling Interest18 18 17 
Total Equity238 401 252 
Total Liabilities and Equity$4,687 $4,711 $4,142 

The accompanying Notes are an integral part of these Consolidated Financial Statements.
4

Table of Contents
VICTORIA'S SECRET & CO.
CONSOLIDATED STATEMENTS OF EQUITY
(in millions)
(Unaudited)

Third Quarter 2023
Common StockAccumulated
Other
Comprehensive
Income (Loss)
Retained Earnings
(Accumulated Deficit)
Treasury StockTotal Victoria's Secret & Co. Equity
 Shares OutstandingPar ValuePaid-in CapitalNoncontrolling InterestTotal Equity
Balance, July 29, 202377 $1 $210 $ $68 $ $279 $21 $300 
Net Loss— — — — (71)— (71)— (71)
Other Comprehensive Loss— — — (1)— — (1)(1)(2)
Total Comprehensive Loss— — — (1)(71)— (72)(1)(73)
Share-based Compensation Expense— — 14 — — — 14 — 14 
Tax Payments related to Share-based Awards— — (1)— — — (1)— (1)
Distribution to Noncontrolling Interest— — — — — — — (2)(2)
Balance, October 28, 202377 $1 $223 $(1)$(3)$ $220 $18 $238 

Third Quarter 2022
Common StockAccumulated
Other
Comprehensive
Income
Retained EarningsTreasury StockTotal Victoria's Secret & Co. Equity
 Shares OutstandingPar ValuePaid-in CapitalNoncontrolling InterestTotal Equity
Balance, July 30, 202282 $1 $177 $6 $65 $(2)$247 $22 $269 
Net Income (Loss)— — — — 24 — 24 (2)22 
Other Comprehensive Loss— — — (6)— — (6)(3)(9)
Total Comprehensive Income (Loss)— — — (6)24 — 18 (5)13 
Repurchases of Common Stock(1)—  — — (43)(43)— (43)
Treasury Share Retirements— — (3)— (42)45 — —  
Share-based Compensation Expense— — 12 — — — 12 — 12 
Tax Payments related to Share-based Awards— — (1)— — — (1)— (1)
Other— — 2 — — — 2 — 2 
Balance, October 29, 202281 $1 $187 $ $47 $ $235 $17 $252 

The accompanying Notes are an integral part of these Consolidated Financial Statements.
5

Table of Contents
VICTORIA'S SECRET & CO.
CONSOLIDATED STATEMENTS OF EQUITY
(in millions)
(Unaudited)

Year-to-Date 2023
Common StockAccumulated
Other
Comprehensive
Income (Loss)
Retained Earnings
(Accumulated Deficit)
Treasury StockTotal Victoria's Secret & Co. Equity
 Shares OutstandingPar ValuePaid-in CapitalNoncontrolling InterestTotal Equity
Balance, January 28, 202380 $1 $195 $1 $186 $— $383 $18 $401 
Net Income (Loss)— — — — (72)— (72)4 (68)
Other Comprehensive Loss— — — (2)— — (2)(2)(4)
Total Comprehensive Income (Loss)— — — (2)(72)— (74)2 (72)
Repurchases of Common Stock(3)—  — — (126)(126)— (126)
Treasury Share Retirements— — (9)— (117)126 — — — 
Share-based Compensation Expense— — 41 — — — 41 — 41 
Tax Payments related to Share-based Awards(1)— (10)— — — (10)— (10)
Distribution to Noncontrolling Interest— — — — — — — (2)(2)
Other1 — 6 — — — 6 — 6 
Balance, October 28, 202377 $1 $223 $(1)$(3)$ $220 $18 $238 

Year-to-Date 2022
Common StockAccumulated
Other
Comprehensive
Income
Retained EarningsTreasury StockTotal Victoria's Secret & Co. Equity
 Shares OutstandingPar ValuePaid-in CapitalNoncontrolling InterestTotal Equity
Balance, January 29, 202285 $1 $125 $5 $126 $— $257 $ $257 
Net Income (Loss)— — — — 175 — 175 (9)166 
Other Comprehensive Loss— — — (5)— — (5)(2)(7)
Total Comprehensive Income (Loss)— — — (5)175 — 170 (11)159 
Sale of Noncontrolling Interest— — 17 — — — 17 28 45 
Repurchases of Common Stock(5)— 50 — — (264)(214)— (214)
Treasury Share Retirements— — (10)— (254)264 — — — 
Share-based Compensation Expense— — 38 — — — 38 — 38 
Tax Payments related to Share-based Awards(1)— (40)— — — (40)— (40)
Other2 — 7 — — — 7 — 7 
Balance, October 29, 202281 $1 $187 $ $47 $ $235 $17 $252 

The accompanying Notes are an integral part of these Consolidated Financial Statements.

6

Table of Contents
VICTORIA'S SECRET & CO.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
(Unaudited)
 Year-to-Date
 20232022
Operating Activities:
Net Income (Loss)$(68)$166 
Adjustments to Reconcile Net Income (Loss) to Net Cash Used for Operating Activities:
Depreciation and Amortization of Long-lived Assets216 208 
Share-based Compensation Expense41 38 
Amortization of Fair Value Adjustment to Acquired Inventories22  
Deferred Income Taxes7 (3)
Changes in Assets and Liabilities:
Accounts Receivable (23)
Inventories(184)(298)
Accounts Payable, Accrued Expenses and Other(122)(229)
Income Taxes(83)(131)
Other Assets and Liabilities(29)(7)
Net Cash Used for Operating Activities(200)(279)
Investing Activities:
Capital Expenditures(224)(125)
Acquisition, Net of Cash Acquired1  
Investment in Frankies Bikinis, LLC (18)
Other Investing Activities (7)
Net Cash Used for Investing Activities(223)(150)
Financing Activities:
Borrowings from Asset-based Revolving Credit Facility405 267 
Repayments of Borrowings from Asset-based Revolving Credit Facility(145) 
Repurchases of Common Stock(125)(214)
Tax Payments related to Share-based Awards(10)(40)
Proceeds from Stock Option Exercises3 4 
Payments of Long-term Debt(3)(3)
Cash Received from Noncontrolling Interest Partner 55 
Other Financing Activities(3)(2)
Net Cash Provided by Financing Activities122 67 
Effects of Exchange Rate Changes on Cash and Cash Equivalents(2)(2)
Net Decrease in Cash and Cash Equivalents(303)(364)
Cash and Cash Equivalents, Beginning of Period427 490 
Cash and Cash Equivalents, End of Period$124 $126 

The accompanying Notes are an integral part of these Consolidated Financial Statements.
7

Table of Contents
VICTORIA'S SECRET & CO.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

1. Description of Business, Basis of Presentation and Summary of Significant Accounting Policies
Description of Business
Victoria’s Secret & Co. (together with its subsidiaries unless the context otherwise requires, 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. The Company has more than 900 stores in the United States (“U.S.”), Canada and China as well as its own websites, www.VictoriasSecret.com, www.PINK.com and www.AdoreMe.com and other online channels worldwide. Additionally, the Company has more than 440 stores in nearly 70 countries operating under franchise, license and wholesale arrangements. The Company also includes the merchandise sourcing and production function serving the Company and its international partners. The Company operates as a single segment designed to serve customers worldwide seamlessly through stores and online channels.
On December 30, 2022, the Company completed its acquisition of 100% of AdoreMe, Inc. (“Adore Me”), a digitally-native intimates brand. For additional information, see Note 2, “Acquisition.”
In July 2022, the Company announced a new, simplified corporate leadership structure designed to unite the Company's brands, better align its teams with a shifting consumer landscape and enable better execution of its strategy. The restructuring eliminated approximately 160 management roles, or approximately 5% of the Company's home office headcount. In the fourth quarter of 2022 and in the first quarter of 2023, the Company implemented additional restructuring actions to continue to reorganize and improve its organizational structure. For additional information, see Note 4, “Restructuring Activities.”
Fiscal Year
The Company’s fiscal year ends on the Saturday nearest to January 31. As used herein, “third quarter of 2023” and “third quarter of 2022” refer to the thirteen-week periods ended October 28, 2023 and October 29, 2022, respectively. “Year-to-date 2023” and “year-to-date 2022” refer to the thirty-nine-week periods ended October 28, 2023 and October 29, 2022, respectively, and “fiscal year 2023” and “fiscal year 2022” refer to the fifty-three-week period ending February 3, 2024 and the fifty-two-week period ended January 28, 2023, respectively.
Basis of Presentation
The Consolidated Financial Statements have been prepared in conformity with accounting principles generally accepted in the United States (“GAAP”).
Interim Financial Statements
The Consolidated Financial Statements as of and for the periods ended October 28, 2023 and October 29, 2022 are unaudited. These Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements and Notes thereto included in our Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on March 17, 2023.
In the opinion of management, the accompanying Consolidated Financial Statements reflect all adjustments, which are of a normal recurring nature, necessary for a fair presentation of the results for the interim periods.
Seasonality of Business
Due to the seasonal variations in the retail industry, the results of operations for the thirteen-week and thirty-nine week periods ended October 28, 2023 are not necessarily indicative of the results expected for any other interim period or the full fiscal year ending February 3, 2024.
Equity Method Investments
The Company accounts for investments in unconsolidated entities where it exercises significant influence, but does not have control, using the equity method. Under the equity method of accounting, the Company recognizes its share of the investee's net income or loss. Losses are only recognized to the extent the Company has positive carrying value related to the investee. Carrying values are only reduced below zero if the Company has an obligation to provide funding to the investee. The Company’s share of net income or loss of unconsolidated entities from which the Company purchases merchandise or merchandise components is included in Costs of Goods Sold, Buying and Occupancy in the Consolidated Statements of Income (Loss), and the Company's share of net income or loss from all other unconsolidated entities is included in General, Administrative and Store Operating Expenses in the Consolidated Statements of Income (Loss). The Company’s equity method investments are required to be reviewed for impairment when it is determined there may be an other-than-temporary loss in value.
8

Table of Contents
In March 2022, the Company acquired a minority interest in swimwear brand Frankies Bikinis, LLC (“Frankies Bikinis”) in exchange for $18 million. The investment in Frankies Bikinis is accounted for using the equity method of accounting.
The carrying values of equity method investments were $56 million as of October 28, 2023, $56 million as of January 28, 2023 and $52 million as of October 29, 2022. These investments are recorded in Other Assets on the Consolidated Balance Sheets.
Noncontrolling Interest
The Company accounts for investments in entities where it has control over the entity by consolidating the entities' assets, liabilities and results of operations and including them in the Company's Consolidated Financial Statements. The share of the investment not owned by the Company is reflected in Noncontrolling Interest in the Consolidated Balance Sheets. The Company recognizes the share of net income or loss not attributable to the Company in Net Income (Loss) Attributable to Noncontrolling Interest in the Consolidated Statements of Income (Loss). Noncontrolling interest represents the portion of equity interests in a joint venture in China that is not owned by the Company. For additional information, see Note 4, “Restructuring Activities.”
Concentration of Credit Risk
The Company maintains cash and cash equivalents with various major financial institutions. The Company monitors the relative credit standing of financial institutions with whom the Company transacts with and limits the amount of credit exposure with any one entity. As of October 28, 2023, the Company's investment portfolio is primarily comprised of bank deposits.
The Company also periodically reviews the relative credit standing of franchise, license and wholesale partners and other entities to which the Company grants credit terms in the normal course of business. The Company determines the required allowance for expected credit losses using information such as customer credit history and financial condition. Amounts are recorded to the allowance when it is determined that expected credit losses may occur.
Supplier Finance Programs
The Company has agreements with designated third-party financial institutions to provide supplier finance programs which facilitate participating suppliers’ ability to finance payment obligations of the Company. Participating suppliers may finance one or more payment obligations of the Company prior to their scheduled due dates and receive a discounted payment from participating financial institutions. The Company’s obligations to its suppliers, including amounts due and scheduled payment dates, are not impacted by suppliers’ decisions to finance amounts under these arrangements. All amounts payable to financial institutions relating to suppliers participating in these programs are recorded in Accounts Payable in the Consolidated Balance Sheets and were $154 million as of October 28, 2023, $213 million as of January 28, 2023 and $140 million as of October 29, 2022.
Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period, as well as the related disclosure of contingent assets and liabilities at the date of the financial statements. Actual results may differ from those estimates, and the Company revises its estimates and assumptions as new information becomes available.
Recently Issued Accounting Pronouncements
The Company did not adopt any new accounting standards during the third quarter of 2023 that had a material impact on the Company's results of operations, financial position or cash flows. In addition, there are no new accounting standards not yet adopted that are expected to have a material impact on the Company's results of operations, financial position or cash flows.
2. Acquisition
On December 30, 2022, the Company completed the acquisition of 100% of Adore Me. Adore Me is a direct-to-consumer lingerie and apparel brand with technology driven commerce service and a series of innovation-driven products. The acquisition creates the opportunity for the Company to leverage Adore Me's expertise and technology to continue to improve the Victoria's Secret and PINK customer shopping experience and accelerate the modernization of the Company's digital platform.
9

Table of Contents
Under the terms of the definitive agreement setting forth the terms and conditions of the acquisition (the “Merger Agreement”), the Company made an upfront cash payment of $391 million at closing and will pay further cash consideration in an aggregate amount of at least $80 million, consisting of a fixed payment to be made on or prior to January 15, 2025, and up to $300 million based on the performance of Adore Me and achievement of specified strategic objectives and certain EBITDA and net revenue goals within the two-year period following closing of the transaction. Under the terms of the Merger Agreement, up to $60 million of the further cash consideration is subject to the continued employment of a certain Adore Me employee (“Contingent Compensation Payments”). These Contingent Compensation Payments are not included as consideration when applying the acquisition method of accounting and are recognized as compensation expense within General, Administrative and Store Operating Expenses in the Consolidated Statements of Income (Loss) if and when earned in future periods.
The total consideration when applying the acquisition method of accounting was initially $537 million, net of $22 million of cash acquired. The gross consideration as of the acquisition date of $559 million consisted of $391 million in cash paid at closing, $98 million which represented the fair value of the contingent cash consideration as of the acquisition date and $70 million which represented the fair value of the future fixed payment as of the acquisition date. During the second quarter of 2023, the Company received $1 million in cash for the final working capital settlement, which decreased the total consideration of the acquisition to $536 million.
The Company accounted for the acquisition of Adore Me using the acquisition method of accounting. Assets acquired and liabilities assumed have been recorded based on their preliminary fair values, and as a result, the estimates and assumptions are subject to change. The Company is still in the process of finalizing the valuation estimates and final purchase price allocation which includes potential adjustments related to amounts allocated to intangible assets. The Company expects to complete this process no later than twelve months after the closing of the acquisition. Year-to-date 2023, the Company recorded certain measurement period adjustments based on additional information, primarily related to assumed deferred income tax liabilities, assumed accrued expenses and other liabilities and acquired accounts receivable, resulting in a $2 million increase to Deferred Income Tax Liabilities, a $2 million decrease to Accrued Expenses and Other and a $1 million decrease to Accounts Receivable. The measurement period adjustments had an offsetting impact to Goodwill.
The following is a preliminary purchase price allocation of assets acquired and liabilities assumed as of December 30, 2022 related to the Adore Me acquisition:
Initial AllocationMeasurement Period AdjustmentsAdjusted Allocation
(in millions)
Accounts Receivable
$1 $(1)$ 
Inventories105 — 105 
Other Current Assets7 — 7 
Property and Equipment, Net12 — 12 
Operating Lease Assets5 — 5 
Goodwill365 — 365 
Trade Name43 — 43 
Other Intangible Assets137 — 137 
Other Assets1 — 1 
Accounts Payable17 — 17 
Accrued Expenses and Other88 (2)86 
Current Operating Lease Liabilities2 — 2 
Deferred Income Tax Liabilities21 2 23 
Long-term Operating Lease Liabilities3 — 3 
Other Long-term Liabilities8 — 8 
Net Assets Acquired and Liabilities Assumed$537 $(1)$536 
10

Table of Contents
The following table represents the definite-lived intangible assets acquired, the preliminary fair values and respective useful lives:
Useful LifePreliminary Fair Value
(in millions)
Customer Relationships
7 years$81 
Developed Technology
6 years56 
Trade Name10 years43 
Total Definite-Lived Intangible Assets$180 
The Company used the multi-period excess earnings method to value the customer relationships intangible assets and the relief from royalty method to value the developed technology and trade name intangible assets. The significant assumptions used to estimate the fair value of customer relationships included forecasted revenues, customer attrition rates and a discount rate. The significant assumptions used to estimate the fair value of developed technology and the trade name included forecasted revenues, royalty rates and a discount rate. These significant assumptions are forward-looking and could be affected by future economic and market conditions. The estimated weighted-average useful life was 7.4 years for definite-lived intangible assets.
Goodwill was calculated as the difference between the acquisition date fair value of the consideration transferred and the fair value of net assets recognized for Adore Me, and represents the future economic benefits, including synergies, and assembled workforce, that are expected to be achieved as a result of the consummation of the acquisition of Adore Me. The goodwill arising from the acquisition is not expected to be deductible for tax purposes.
The Company consolidates Adore Me's financial information on an approximate one-month reporting lag. Accordingly, given the acquisition closing date of December 30, 2022, the operating results of Adore Me for the period subsequent to the acquisition date are recorded in the Company's consolidated financial statements beginning in 2023.
In the third quarter and year-to-date 2023, the Company 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. During the third quarter of 2023, the Company recognized total related costs of $8 million, including $7 million in Costs of Goods Sold, Buying and Occupancy and $1 million in Interest Expense. Year-to-date 2023, the Company recognized total related costs of $49 million, including $22 million in Costs of Goods Sold, Buying and Occupancy, $24 million in General, Administrative and Store Operating Expenses and $3 million in Interest Expense. See Note 12, “Fair Value of Financial Instruments” for further information on the contingent consideration. The deferred consideration liability for the future fixed payment is included within Other Long-term Liabilities in the Consolidated Balance Sheets and was $74 million as of October 28, 2023 and $71 million as of January 28, 2023.
3. Revenue Recognition
Accounts receivable, net from revenue-generating activities were $102 million as of October 28, 2023, $101 million as of January 28, 2023 and $133 million as of October 29, 2022. Accounts receivable primarily relate to amounts due from the Company's franchise, license and wholesale partners. Under these arrangements, payment terms are typically 60 to 90 days.
The Company records deferred revenue when cash payments are received in advance of transfer of control of goods or services. Deferred revenue primarily relates to gift cards, loyalty and credit card programs and direct channel shipments, which are all impacted by seasonal and holiday-related sales patterns. Deferred revenue was $283 million as of October 28, 2023, $309 million as of January 28, 2023 and $229 million as of October 29, 2022. The Company recognized $109 million as revenue year-to-date 2023 from amounts recorded as deferred revenue at the beginning of the year. As of October 28, 2023, the Company recorded deferred revenue of $267 million within Accrued Expenses and Other, and $16 million within Other Long-term Liabilities on the Consolidated Balance Sheet.
11

Table of Contents
The following table provides a disaggregation of Net Sales for the third quarter and year-to-date 2023 and 2022:
Third QuarterYear-to-Date
2023202220232022
(in millions)
Stores – North America (a)
$723 $813 $2,326 $2,712 
Direct (a)382 342 1,281 1,176 
International (b)160 163 492 435 
Total Net Sales$1,265 $1,318 $4,099 $4,323 
 _______________
(a)Results in 2023 include Adore Me sales.
(b)Results include consolidated joint venture sales in China, royalties associated with franchised stores and wholesale sales.
The Company has a Victoria's Secret and PINK multi-tender loyalty program along with a co-branded credit card and U.S. private label credit card through which customers can earn points on purchases of Victoria's Secret and PINK product and through the co-branded credit card can earn points on purchases outside of the Company. A third-party financing company is the sole owner of the credit card accounts and underwrites the credit issued under the credit card programs. Revenue earned in connection with the Company's credit card arrangements with the third-party is primarily recognized based on credit card sales and usage.
The Company recognized Net Sales of $20 million and $29 million in the third quarter of 2023 and 2022, respectively, related to revenue earned in connection with its credit card arrangements. The Company recognized Net Sales of $66 million and $85 million year-to-date 2023 and 2022, respectively, related to revenue earned in connection with its credit card arrangements.
The Company’s international net sales include sales from Company-operated stores, royalty revenue from franchise and license arrangements, wholesale revenues and direct sales shipped internationally. Certain of these sales are subject to the impact of fluctuations in foreign currency. The Company’s net sales outside of the U.S. totaled $205 million and $211 million for the third quarter of 2023 and 2022, respectively. The Company’s net sales outside of the U.S. totaled $637 million and $594 million year-to-date 2023 and 2022, respectively.
4. Restructuring Activities
Organizational Restructuring
In the first quarter of 2023, the Company implemented additional restructuring actions to continue to reorganize and improve its organizational structure. As a result, pre-tax severance and related costs of $11 million, of which $8 million are included in General, Administrative and Store Operating Expenses and $3 million are included in Costs of Goods Sold, Buying and Occupancy, are included in the Year-to-Date 2023 Consolidated Statement of Loss.
During the second quarter and fourth quarter of 2022, the Company implemented restructuring actions to reorganize and improve its organizational structure. As a result of the restructuring actions in the second quarter of 2022, the Company incurred pre-tax severance and related costs of $29 million, of which $16 million are included in General, Administrative and Store Operating Expenses and $13 million are included in Costs of Goods Sold, Buying and Occupancy in the 2022 Consolidated Statements of Income. As a result of the restructuring actions in the fourth quarter of 2022, the Company incurred pre-tax severance and related costs of $6 million, of which $5 million are included in General, Administrative and Store Operating Expenses and $1 million are included in Costs of Goods Sold, Buying and Occupancy.
Year-to-date 2023, the Company made payments of $14 million related to severance and related costs associated with these reductions. As of October 28, 2023, liabilities, after accrual adjustments, related to these restructuring activities of $9 million are included in the October 28, 2023 Consolidated Balance Sheet.
Victoria's Secret China
In April 2022, the Company announced the completion of the joint venture agreement with Regina Miracle International (Holdings) Limited (“Regina Miracle”), a company listed on the Hong Kong Stock Exchange, related to its existing Company-owned business in China. The Company and Regina Miracle formed a joint venture to operate Victoria's Secret stores and the related online business in China. Under the terms of the agreement, the Company owns 51% of the joint venture and Regina Miracle owns the remaining 49%. The Company received $45 million in cash from Regina Miracle during the first quarter of 2022 as consideration for its investment in the joint venture. In connection with the execution of the agreement, the Company and Regina Miracle each contributed $10 million in cash to the joint venture. The cash received from Regina Miracle is reflected within Cash Received from Noncontrolling Interest Partner in the 2022 Consolidated Statement of Cash Flows.
12

Table of Contents
Since the Company has retained control over the joint venture, the joint venture's assets, liabilities and results of operations will continue to be consolidated in the Company's consolidated financial statements. Regina Miracle's interest in the joint venture is now reflected in Noncontrolling Interest in the Consolidated Balance Sheets and in Net Income (Loss) Attributable to Noncontrolling Interest in the Consolidated Statements of Income (Loss).
5. Earnings (Loss) Per Share and Shareholders' Equity
Earnings (Loss) Per Share
Earnings (loss) per basic share is computed based on the weighted-average number of common shares outstanding. Earnings (loss) per diluted share include the weighted-average effect of dilutive restricted stock units, performance share units and options (collectively, “Dilutive Awards”) on the weighted-average shares outstanding.
The following table provides the weighted-average shares utilized for the calculation of basic and diluted earnings (loss) per share for the third quarter and year-to-date 2023 and 2022:
Third QuarterYear-to-Date
2023202220232022
(in millions)
Common Shares77 81 78 83 
Treasury Shares    
Basic Shares77 81 78 83 
Effect of Dilutive Awards (a)(b) 2  2 
Diluted Shares77 83 78 85 
Anti-dilutive Awards (a)5 2 5 1 
 _______________
(a)Shares underlying certain restricted stock units, performance share units and options were excluded from the calculation of diluted earnings per share because their inclusion would have been anti-dilutive.
(b)For the third quarter and year-to-date 2023, shares underlying outstanding restricted stock units, performance share units and options were excluded from dilutive shares as a result of the Company's net loss for the periods.
Shareholders' Equity
Common Stock Share Repurchases & Treasury Stock Retirements
Fiscal Year 2023
January 2023 Share Repurchase Program
In January 2023, the Company's Board of Directors approved a share repurchase program (“January 2023 Share Repurchase Program”), authorizing the repurchase of up to $250 million of the Company's common stock. The $250 million authorization is expected to be utilized to repurchase shares in the open market or as otherwise authorized by the Board of Directors, subject to market conditions and other factors. The January 2023 Share Repurchase Program began upon completion of the March 2022 Share Repurchase Program and will continue until exhausted, but no later than the end of fiscal year 2023.
In February 2023, as part of the January 2023 Share Repurchase Program, the Company entered into an accelerated share repurchase agreement (“ASR Agreement”) with Goldman Sachs & Co. LLC (“Goldman Sachs”) to repurchase $125 million of the Company's common stock. In February 2023, the Company made an initial payment of $125 million to Goldman Sachs and received an initial delivery of 2.4 million shares of the Company's common stock. As a result of the initial share delivery, there was an additional $1 million increase in Treasury Stock, which reflects the excise tax liability recorded related to the share repurchase in accordance with the Inflation Reduction Act of 2022.
In May 2023, upon final settlement of the ASR Agreement, the Company received an additional 1.3 million shares of the Company's common stock from Goldman Sachs. The final number of shares received was based on the volume-weighted average price of the Company’s common stock during the term of the ASR Agreement, less a discount and subject to adjustments pursuant to the terms of the ASR Agreement.
13

Table of Contents
The Company repurchased the following shares of its common stock under the January 2023 Share Repurchase Program during year-to-date 2023:
Amount AuthorizedShares RepurchasedAmount RepurchasedAverage Stock Price
(in millions)(in thousands)(in millions)
January 2023 Share Repurchase Program$250 3,652 $125 $34.22 
As of October 28, 2023, the Company was authorized to repurchase up to $125 million of the Company's common stock under the January 2023 Share Repurchase Program.
In accordance with the Board of Directors' resolution, shares repurchased under the January 2023 Share Repurchase Program were immediately retired. As a result, the Company retired the 3.7 million shares repurchased in connection with the settlement of the ASR Agreement year-to-date 2023. The retirement resulted in a reduction of $126 million in Treasury Stock, less than $1 million in the par value of Common Stock, $9 million in Paid-in Capital and $117 million in Retained Earnings (Accumulated Deficit) year-to-date 2023.
Fiscal Year 2022
March 2022 Share Repurchase Program
In March 2022, the Company's Board of Directors approved a share repurchase program (“March 2022 Share Repurchase Program”), providing for the repurchase of up to $250 million of the Company's common stock. The $250 million authorization was utilized in fiscal year 2022 to repurchase shares in the open market, subject to market conditions and other factors.
The Company repurchased the following shares of its common stock under the March 2022 Share Repurchase Program during year-to-date 2022:
Amount AuthorizedShares RepurchasedAmount RepurchasedAverage Stock Price
(in millions)(in thousands)(in millions)
March 2022 Share Repurchase Program$250 5,104 $214 $41.91 
In accordance with the Board of Directors' resolution, shares of the Company's common stock repurchased under the March 2022 Share Repurchase Program were retired upon repurchase. As a result, year-to-date 2022 the Company retired 5.1 million shares repurchased under the March 2022 Share Repurchase Program, which resulted in reductions of less than $1 million in the par value of Common Stock, $10 million in Paid-in Capital and $204 million in Retained Earnings.
December 2021 Accelerated Share Repurchase Agreement
In February 2022, upon final settlement of the Company's December 2021 accelerated share repurchase agreement (“December 2021 ASR Agreement”) with Goldman Sachs, the Company received an additional 0.3 million shares of the Company's common stock from Goldman Sachs. The delivery of shares resulted in an immediate reduction of the outstanding shares used to calculate the weighted-average common shares outstanding for basic and diluted net income per share. In connection with the settlement of the December 2021 ASR Agreement, $50 million previously recorded in Paid-in Capital as of January 29, 2022, was reclassified to Treasury Stock in the first quarter of 2022. In February 2022, the Company immediately retired the additional 0.3 million shares repurchased in connection with the settlement of the December 2021 ASR Agreement. The retirement resulted in a reduction of $50 million in Treasury Stock, less than $1 million in the par value of Common Stock, less than $1 million in Paid-in Capital and nearly $50 million in Retained Earnings.
6. Inventories
The following table provides details of Inventories as of October 28, 2023, January 28, 2023 and October 29, 2022:
October 28,
2023
January 28,
2023
October 29,
2022
(in millions)
Finished Goods Merchandise$1,159 $997 $1,186 
Raw Materials and Merchandise Components52 55 56 
Total Inventories$1,211 $1,052 $1,242 
Inventories are principally valued at the lower of cost or net realizable value, on an average cost basis. The above amounts are net of valuation adjustments for inventory where the cost exceeds the amount the Company expects to realize from the ultimate sale or disposal of the inventory and net of loss adjustments for estimated physical inventory losses that have occurred since the date of the last physical inventory.
14

Table of Contents
7. Long-Lived Assets
The following table provides details of Property and Equipment, Net as of October 28, 2023, January 28, 2023 and October 29, 2022:
October 28,
2023
January 28,
2023
October 29,
2022
(in millions)
Property and Equipment, at Cost$3,654 $3,716 $3,684 
Accumulated Depreciation and Amortization(2,783)(2,870)(2,829)
Property and Equipment, Net$871 $846 $855 
Depreciation expense was $65 million and $68 million for the third quarter of 2023 and 2022, respectively. Depreciation expense was $197 million and $208 million for year-to-date 2023 and 2022, respectively.
8. Intangible Assets
Goodwill
The Company's goodwill was established as a result of the acquisition of Adore Me on December 30, 2022. For additional information, see Note 2, “Acquisition.” Prior to the acquisition of Adore Me, the Company did not have any goodwill.
The following table shows the change in the carrying value of goodwill:
(in millions)
Balance, January 28, 2023$365 
Adjustments (a) 
Balance, October 28, 2023$365 
 _______________
(a)Includes offsetting measurement period adjustments related to the acquisition of Adore Me. For additional information, see Note 2, “Acquisition.”
Trade Name - Indefinite-Lived
The Victoria's Secret trade name, an indefinite-lived intangible asset, was $246 million as of October 28, 2023, January 28, 2023 and October 29, 2022, respectively.
Definite-Lived Intangible Assets
The Company's definite-lived intangible assets were established as a result of the acquisition of Adore Me. Prior to the acquisition of Adore Me, the Company did not have any definite-lived intangible assets.
The following table provides details of the gross carrying amount and accumulated amortization of the Company's definite-lived intangible assets as of October 28, 2023 and January 28, 2023:
October 28,
2023
January 28,
2023
(in millions)
Gross Definite-Lived Intangible Assets
Customer Relationships
$81 $81 
Developed Technology
56 56 
Adore Me Trade Name43 43 
Total Gross Definite-Lived Intangible Assets$180 $180 
Accumulated Amortization
Customer Relationships
$(9)$ 
Developed Technology
(7) 
Adore Me Trade Name(3) 
Total Accumulated Amortization(19) 
Total Definite-Lived Intangible Assets, Net$161 $180 
15

Table of Contents
Amortization expense for intangible assets was $6 million and $19 million for the third quarter of 2023 and year-to-date 2023, respectively. There was no amortization expense recorded related to these definite-lived intangible assets in fiscal year 2022.
9. Accrued Expenses and Other
The following table provides additional information about the composition of Accrued Expenses and Other as of October 28, 2023, January 28, 2023 and October 29, 2022:

October 28,
2023
January 28,
2023
October 29,
2022
(in millions)
Deferred Revenue on Gift Cards$213 $238 $168 
Compensation, Payroll Taxes and Benefits103 105 112 
Deferred Revenue on Loyalty and Credit Card Programs43 40 30 
Taxes, Other than Income39 40 21 
Accrued Marketing37 37 38 
Accrued Interest19 7 13 
Contingent Consideration Related to Adore Me Acquisition16 30  
Returns Reserve14 22 15 
Accrued Freight and Other Logistics11 16 23 
Deferred Revenue on Direct Shipments not yet Delivered11 13 12 
Accrued Claims on Self-insured Activities10 8 6 
Rent5 63 62 
Other104 118 118 
Total Accrued Expenses and Other$625 $737 $618 
10. Income Taxes
The provision (benefit) for income taxes is based on the current estimate of the annual effective tax rate and is adjusted as necessary for quarterly events.
For the third quarter of 2023, the Company’s effective tax rate was 24.1% compared to 25.0% in the third quarter of 2022. The third quarter of 2023 rate differed from the Companys combined estimated federal and state statutory rate primarily due to foreign earnings taxed at a lower rate than the Companys combined federal and state statutory rate. The third quarter of 2022 rate was consistent with the Companys combined federal and state statutory rate.
For year-to-date 2023, the Company’s effective tax rate was 20.6% compared to 13.2% for year-to-date 2022. The year-to-date 2023 rate differed from the Company's combined estimated federal and state statutory rate primarily due to non-deductible liabilities related to contingent consideration and Contingent Compensation Payments. The year-to-date 2022 rate was lower than the Companys combined estimated federal and state statutory rate primarily due to the recognition of excess tax benefits related to share-based compensation awards that vested in the respective period.
The Company paid income taxes in the amount of $6 million and $18 million for the third quarter of 2023 and 2022, respectively. Year-to-date income taxes paid were $65 million and $158 million for 2023 and 2022, respectively.
16

Table of Contents
11. Long-term Debt and Borrowing Facilities
The following table provides the Companys outstanding Long-term Debt balance, net of unamortized debt issuance costs and discounts and any current portion, as of October 28, 2023, January 28, 2023 and October 29, 2022:
October 28,
2023
January 28,
2023
October 29,
2022
(in millions)
Senior Secured Debt with Subsidiary Guarantee
$392 million Term Loan due August 2028 (“Term Loan Facility”)
$385 $387 $388 
Asset-based Revolving Credit Facility due August 2026 (“ABL Facility”)
555 295 267 
Total Senior Secured Debt with Subsidiary Guarantee940 682 655 
Senior Debt with Subsidiary Guarantee
$600 million, 4.625% Fixed Interest Rate Notes due July 2029 (“2029 Notes”)
594 593 593 
Total Senior Debt with Subsidiary Guarantee594 593 593 
Total1,534 1,275 1,248 
Current Debt(4)(4)(4)
Total Long-term Debt, Net of Current Portion$1,530 $1,271 $1,244 
Cash paid for interest was $54 million and $29 million for year-to-date 2023 and year-to-date 2022, respectively.
Credit Facilities
In September 2023, the Company entered into a delayed draw term loan, secured by certain real estate assets owned by the Company, to increase available liquidity in consideration of potential seasonal working capital needs. The delayed draw term loan has a maximum borrowing capacity of $75 million and any amounts borrowed will mature in December 2023. As of December 1, 2023, the Company has not drawn any amounts under this term loan. During the third quarter of 2023 and year-to-date 2023, fees incurred in relation to this delayed draw term loan were $1 million and are being amortized over the life of the delayed draw term loan through the maturity date.
On August 2, 2021, the Company 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. Commencing in December 2021, the Company is required to make quarterly principal payments on the Term Loan Facility in an amount equal to 0.25% of the original principal amount of $400 million. The Company made principal payments for the Term Loan Facility of $1 million during both the third quarter of 2023 and the third quarter of 2022 and $3 million during both year-to-date 2023 and year-to-date 2022.
In May 2023, the Company amended its Term Loan Facility to allow for an early transition to using the Term Secured Overnight Financing Rate (“Term SOFR”) as the applicable reference rate to calculate interest instead of the London Interbank Offered Rate (“LIBOR”). 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%. The LIBOR rate applicable to the Term Loan Facility was subject to a floor of 0.50%. In accordance with the amendment, interest on Term SOFR loans under the Term Loan Facility is now calculated by reference to Term SOFR, plus an interest rate margin ranging from 3.36% to 3.68%. The obligation to pay principal and interest on the loans under the Term Loan Facility is jointly and severally guaranteed on a full and unconditional basis by certain of the Company's wholly-owned domestic subsidiaries. The loans under the Term Loan Facility are secured on a first-priority lien basis by certain assets of the Company 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. As of October 28, 2023, the interest rate on the loans under the Term Loan Facility was 8.90%.
17

Table of Contents
On August 2, 2021, the Company also entered into 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. The availability under the ABL Facility is the lesser of (i) the borrowing base, determined primarily based on the Company's eligible U.S. and Canadian credit card receivables, eligible accounts receivable, eligible inventory and eligible real property, and (ii) the aggregate commitment. In May 2023, the Company amended its ABL Facility to allow for an early transition to using Term SOFR as the applicable reference rate to calculate interest instead of LIBOR. 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%. In accordance with the amendment, interest on Term SOFR loans under the ABL Facility is now calculated by reference to Term SOFR, plus an interest rate margin based on average daily excess availability ranging from 1.60% to 2.10%. 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 the Company's wholly-owned domestic and Canadian subsidiaries. The loans under the ABL Facility are secured on a first-priority lien basis by the Company's eligible U.S. and Canadian credit card receivables, eligible accounts receivable, eligible inventory and eligible real property and on a second-priority lien basis on substantially all other assets of the Company, subject to customary exceptions.
Year-to-date 2023, the Company borrowed $405 million and made payments of $145 million under the ABL Facility. As of October 28, 2023, there were borrowings of $555 million outstanding under the ABL Facility and the interest rate on the borrowings was 7.58%. The Company had $19 million of outstanding letters of credit as of October 28, 2023 that further reduced its availability under the ABL Facility. As of October 28, 2023, the Company's remaining availability under the ABL Facility was $176 million.
Subsequent to the end of the third quarter of 2023 and as of November 30, 2023, borrowings of $464 million remained outstanding under the ABL Facility.
The Company's long-term debt and borrowing facilities contain certain financial and other covenants, including, but not limited to, the maintenance of financial ratios. The 2029 Notes and the Term Loan Facility include the maintenance of a consolidated coverage ratio and a consolidated total leverage ratio, and the ABL Facility includes the maintenance of a fixed charge coverage ratio and a debt to earnings before interest, income taxes, depreciation, amortization and rent (“EBITDAR”) ratio. The financial covenants could, within specific predefined circumstances, limit the Company's ability to incur additional indebtedness, make certain investments, pay dividends or repurchase shares. As of October 28, 2023, the Company was in compliance with all covenants under its long-term debt and borrowing facilities.
The Company elected the optional expedient under Accounting Standards Update No. 2020-04, Reference Rate Reform, in connection with amending its Term Loan Facility and ABL Facility agreements to replace the reference rate from LIBOR to Term SOFR to consider the amendments as a continuation of the existing contract without having to perform an assessment that would otherwise be required under GAAP.
12. Fair Value of Financial Instruments
Cash and Cash Equivalents include cash on hand, deposits with financial institutions and highly liquid investments with original maturities of 90 days or less. The Company's Cash and Cash Equivalents are considered Level 1 fair value measurements as they are valued using unadjusted quoted prices in active markets for identical assets.
The following table provides a summary of the principal value and estimated fair value of the Company's outstanding debt as of October 28, 2023, January 28, 2023 and October 29, 2022:
October 28,
2023
January 28,
2023
October 29,
2022
(in millions)
Principal Value$992 $995 $996 
Fair Value, Estimated (a)830 894 870 
________________
(a)The estimated fair value of the Company’s publicly traded debt is based on reported transaction prices which are considered Level 2 inputs in accordance with ASC 820, Fair Value Measurement. The estimates presented are not necessarily indicative of the amounts that the Company could realize in a current market exchange.
18

Table of Contents
Management believes that the carrying values of accounts receivable, accounts payable and accrued expenses approximate fair value because of their short maturity. Management further believes the principal value of the outstanding debt under the ABL Facility approximates its fair value as of October 28, 2023 based on the terms of the borrowings from the ABL Facility.
Recurring Fair Value Measurements
The following tables provide a summary of the Company's contingent consideration recognized at fair value related to the Adore Me acquisition as of October 28, 2023 and January 28, 2023 (in millions):
Balance Sheet LocationOctober 28,
2023
Level 1Level 2Level 3
Accrued Expenses and Other$16 $ $ $16 
Other Long-term Liabilities71   71 
Balance Sheet LocationJanuary 28,
2023
Level 1Level 2Level 3
Accrued Expenses and Other$30 $ $ $30 
Other Long-term Liabilities70   70 
The estimated fair value of the contingent consideration is valued using a Scenario-Based method and a Monte Carlo simulation which utilize inputs including discount rates, estimated probability of achievement of certain milestones, forecasted revenues, forecasted EBITDA and volatility rates. These are considered Level 3 inputs in accordance with ASC 820, Fair Value Measurement. Changes in the fair value of the contingent consideration are recorded within General, Administrative and Store Operating Expenses on the Consolidated Statements of Income (Loss). For additional information regarding the contingent consideration, see Note 2, “Acquisition.”
13. Comprehensive Income (Loss)
The following table provides the rollforward of accumulated other comprehensive income (loss) attributable to Victoria's Secret & Co. for year-to-date 2023:
Foreign Currency TranslationAccumulated Other Comprehensive Income (Loss)
(in millions)
Balance as of January 28, 2023$1 $1 
Other Comprehensive Loss Before Reclassifications(2)(2)
Tax Effect
  
Current-period Other Comprehensive Loss(2)(2)
Balance as of October 28, 2023$(1)$(1)
The following table provides the rollforward of accumulated other comprehensive income attributable to Victoria's Secret & Co. for year-to-date 2022:
Foreign Currency TranslationAccumulated Other Comprehensive Income (Loss)
(in millions)
Balance as of January 29, 2022$5 $5 
Other Comprehensive Loss Before Reclassifications(8)(8)
Amounts Reclassified from Accumulated Other Comprehensive Income to Paid-in Capital3 3 
Tax Effect
  
Current-period Other Comprehensive Loss(5)(5)
Balance as of October 29, 2022$ $ 
As a result of the China joint venture agreement completed in April 2022, the Company reclassified $3 million of accumulated foreign currency translation adjustments related to the joint venture out of Accumulated Other Comprehensive Income and into Paid-in Capital in the first quarter of 2022 in order to reflect the amount attributable to the noncontrolling interest partner. For additional information see Note 4, “Restructuring Activities.”
19

Table of Contents
14. Commitments and Contingencies
The Company is subject to various claims and contingencies related to lawsuits, taxes, insurance and other matters arising out of the normal course of business. Actions filed against the Company from time to time include commercial, tort, intellectual property, customer, employment, data privacy and other claims, including purported class action lawsuits. Management believes that the ultimate liability arising from such claims and contingencies, if any, is not likely to have a material adverse effect on the Company’s results of operations, financial condition or cash flows.
Occupancy-related Legal Matter
The Company was a tenant of portions of a building known as Two Herald Square, New York, New York (the “Premises”) pursuant to an Agreement of Lease dated August 22, 2001 (the “Lease”) with Herald Square Owner LLC (the “Landlord”). On February 20, 2021, the Company surrendered the Premises to the Landlord. On February 16, 2021, the Landlord filed a Motion for Partial Summary Judgment seeking treble holdover damages against the Company for the period commencing June 9, 2020 through February 20, 2021, the date on which the Company vacated and surrendered the Premises. By an order dated July 21, 2021, the court granted the Landlord’s motion and awarded it damages in an amount equal to three times the aggregate of the rents and charges payable under the Lease during the last month of the term of the Lease. On August 6, 2021, judgment was entered against the Company in the amount of $23 million. On September 15, 2021, the Landlord filed a Motion for Partial Summary Judgment seeking treble holdover damages against the Company for the period commencing February 21, 2021 through September 30, 2021. By an order dated April 22, 2022, the court granted the Landlord’s motion and awarded it damages in an amount equal to three times the aggregate amount of the rents and charges payable under the Lease during the last month of the term of the Lease. On May 9, 2022, judgment was entered against the Company in the amount of $22 million. The Company appealed both judgments; on March 2, 2023, the appellate court issued a denial of the appeals. During the first quarter of 2023, the Company paid the Landlord for the judgment amount in full.
20

Table of Contents
SAFE HARBOR STATEMENT UNDER THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995
Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995
We caution that any forward-looking statements (as such term is defined in the U.S. Private Securities Litigation Reform Act of 1995) contained in this report or made by us, our management, or our spokespeople involve risks and uncertainties and are subject to change based on various factors, many of which are beyond our control. Accordingly, our future performance and financial results may differ materially from those expressed or implied in any such forward-looking statements, and any future performance or financial results expressed or implied by such forward-looking statements are not guarantees of future performance. Forward-looking statements include, without limitation, statements regarding our future operating results, the implementation and impact of our strategic plans, and our ability to meet environmental, social, and governance goals. Words such as “estimate,” “commit,” “will,” “target,” “goal,” “project,” “plan,” “believe,” “seek,” “strive,” “expect,” “anticipate,” “intend,” “potential” and any similar expressions are intended to identify forward-looking statements. Risks associated with the following factors, among others, could affect our financial performance and cause actual results to differ materially from those expressed or implied in any forward-looking statements:
•    the spin-off from our Former Parent may not be tax-free for U.S. federal income tax purposes;
we may not realize all of the expected benefits of the spin-off;
•    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;
•    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 mall traffic and the availability of suitable store locations on appropriate terms;
•    our ability to successfully operate and expand internationally and related risks;
•    our independent franchise, license, wholesale, and joint venture partners;
•    our direct channel business;
•    our ability to protect our reputation and the image of our brands;
•    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, keep up with fashion trends, develop new merchandise and launch new product lines 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 effectively managing the associated risks;
•    our ability to source, distribute and sell goods and materials on a global basis, including risks related to:
•    political instability, environmental hazards or natural disasters;
•    significant health hazards or pandemics;
•    legal and regulatory matters;
•    delays or disruptions in shipping and transportation and related pricing impacts; and
•    disruption due to labor disputes;
•    our geographic concentration of vendor and distribution facilities in central Ohio and Southeast Asia;
•    the ability of our vendors to deliver products in a timely manner, meet quality standards and comply with applicable laws and regulations;
•    fluctuations in freight, product input and energy costs, including those caused by inflation;
•    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
21

Table of Contents
•    legal, tax, trade and other regulatory matters.
Except as may be required by law, we assume no obligation and do not intend to make publicly available any update or other revisions to any of the forward-looking statements contained in this report to reflect circumstances existing after the date of this report or to reflect the occurrence of future events, even if experience or future events make it clear that any expected results expressed or implied by those forward-looking statements will not be realized. Additional information regarding these and other factors can be found in “Item 1A. Risk Factors” in our 2022 Annual Report on Form 10-K filed with the SEC on March 17, 2023.
Item 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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 GAAP. The following information should be read in conjunction with our financial statements and the related notes included in Item 1. Financial Statements.
Executive Overview
Victoria’s Secret is an iconic global brand of women’s intimate and other apparel, personal care and beauty products. We sell our products through three brands, Victoria’s Secret, PINK and Adore Me. Victoria’s Secret is a category-defining global lingerie brand with a leading market position and a rich, over 45-year history of serving women across the globe. PINK is a lifestyle brand for the college-oriented customer, built around a strong intimates core. We also sell beauty products under both the Victoria’s Secret and PINK brands. Adore Me is a technology-led, digital first innovative intimates brand serving women of all sizes and budgets at all phases of life. Together, Victoria’s Secret, PINK, Victoria’s Secret Beauty and Adore Me support, inspire and celebrate women through every phase of their life.
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. We have a presence in nearly 70 countries and we believe we benefit from global brand awareness, a wide and compelling product assortment and a powerful, deep connection with our customers.
In the third quarter of 2023, our operating loss was $67 million compared to operating income of $43 million in the third quarter of 2022, and our operating income (loss) rate (expressed as a percentage of net sales) was (5.3%) compared to 3.2% last year. The operating income (loss) decrease in the third quarter of 2023 compared to the third quarter of 2022 was primarily driven by an increase in general, administrative and store operating expense and a decrease in net sales and gross profit. Net sales decreased $53 million, or 4%, to $1.265 billion compared to $1.318 billion in the third quarter of 2022 and comparable sales decreased 7% in the third quarter of 2023. Our North American store sales decreased $90 million, to $723 million compared to $813 million in the third quarter of 2022, primarily driven by a decrease in traffic, average unit retail (which we define as the average price per unit purchased) and conversion (which we define as the percentage of customers who visit our stores and make a purchase) in the quarter compared to the third quarter of 2022. Our direct channel sales increased by 12%, or $40 million, to $382 million compared to $342 million in the third quarter of 2022, driven by the inclusion of Adore Me sales in our results beginning in fiscal year 2023. On a comparable basis, our direct channel sales decrease was driven by a decrease in average unit retail and traffic compared to the third quarter of 2022.
Despite a macro environment that remained challenging on the customer, we continue to focus on our strategic growth plan and the three priorities of our strategy: accelerating our core, igniting growth and transforming the foundation. We are committed to optimizing our performance in the current challenging environment by focusing on what is within our control, and we are confident in our strategic growth plan and remain committed to delivering long-term sustainable value for our shareholders.
For additional information related to our third quarter of 2023 financial performance, see “Results of Operations.”
Financial Impacts of the Adore Me Acquisition
We consolidate Adore Me's financial information on an approximate one-month reporting lag. Accordingly, given the acquisition closing date of December 30, 2022, the operating results of Adore Me for the period subsequent to the acquisition date are recorded in our results beginning in 2023.
In the third quarter and year-to-date 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. For additional information, see Note 2, “Acquisition.”
22

Table of Contents
Non-GAAP Financial Information
In addition to our results provided in accordance with GAAP above and throughout this Form 10-Q, provided below are non-GAAP financial measures that present operating income (loss), net income (loss) attributable to Victoria's Secret & Co. and net income (loss) per diluted share attributable to Victoria's Secret & Co. on an adjusted basis, which remove certain special items. We believe that these special items are not indicative of our ongoing operations due to their size and nature. The intangible asset amortization excluded from these non-GAAP financial measures is excluded because the amortization, unlike the related revenue, is not affected by operations of any particular period unless an intangible asset becomes impaired or the estimated useful life of an intangible asset is revised. We use adjusted financial information as key performance measures of results of operations for the purpose of evaluating performance internally. These non-GAAP measurements are not intended to replace the presentation of our financial results in accordance with GAAP. Instead, we believe that the presentation of adjusted financial information provides additional information to investors to facilitate the comparison of past and present operations. Further, our definition of adjusted financial information may differ from similarly titled measures used by other companies. The table below reconciles the GAAP financial measures to the non-GAAP financial measures.
Third QuarterYear-to-Date
(in millions, except per share amounts)2023202220232022
Reconciliation of Reported to Adjusted Operating Income (Loss)
Reported Operating Income (Loss) - GAAP$(67)$43 $