vsco-20240504

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 May 4, 2024


☐			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)

_______________________________

Delaware

86-3167653

(State or other jurisdiction of
incorporation or organization)

(IRS Employer Identification No.)

4 Limited Parkway East

Reynoldsburg,

Ohio

43068

(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 class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 Par Value	VSCO	The 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 filer	☒	Accelerated 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 May 31, 2024, the number of outstanding shares of the Registrant’s common stock was 78,299,234 shares.

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VICTORIA'S SECRET & CO.

TABLE OF CONTENTS


			Page No.
Part I. Financial Information

Item 1. Financial Statements *

Consolidated Statements of Income (Loss) for the Thirteen-Weeks Ended May 4 , 202 4 and April 29 , 202 3 (Unaudited)			3

Consolidated Statements of Comprehensive Income (Loss) for the Thirteen-Weeks Ended May 4 , 202 4 and April 29, 202 3 (Unaudited)			3

Consolidated Balance Sheets as of May 4 , 202 4 (Unaudited), February 3 , 202 4 and April 29, 202 3 (Unaudited)			4

Consolidated Statements of Equity for the Thirteen-Weeks Ended May 4 , 202 4 and April 29, 202 3 (Unaudited)			5

Consolidated Statements of Cash Flows for the Thirt een -Weeks Ended May 4 , 202 4 and April 29, 202 3 (Unaudited)			6

Notes to Consolidated Financial Statements (Unaudited)			7

Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995			16

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			17

Item 3. Quantitative and Qualitative Disclosures About Market Risk			27

Item 4. Controls and Procedures			28

Part II. Other Information			29

Item 1. Legal Proceedings			29

Item 1A. Risk Factors			29

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			29

Item 3. Defaults Upon Senior Securities			29

Item 4. Mine Safety Disclosures			29

Item 5. Other Information			29

Item 6. Exhibits			30

Signature			31


*			Victoria's Secret & Co.'s fiscal year ends on the Saturday nearest to January 31. As used herein, “first quarter of 2024” and “first quarter of 2023” refer to the thirteen-week periods ended May 4, 2024 and April 29, 2023, respectively, and “fiscal year 2024” and “fiscal year 2023” refer to the fifty-two-week period ending February 1, 2025 and the fifty-three-week period ended February 3, 2024, respectively.

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PART I—FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS

VICTORIA'S SECRET & CO.

CONSOLIDATED STATEMENTS OF INCOME (LOSS)

(in millions except per share amounts)

(Unaudited)


	First Quarter
	2024		2023
Net Sales	$	1,359	$	1,407
Costs of Goods Sold, Buying and Occupancy	(858)		(905)
Gross Profit	501		502
General, Administrative and Store Operating Expenses	(475)		(474)
Operating Income	26		28
Interest Expense	(22)		(22)
Other Income	1		—
Income Before Income Taxes	5		6
Provision for Income Taxes	8		2
Net Income (Loss)	(3)		4
Less: Net Income Attributable to Noncontrolling Interest	1		3
Net Income (Loss) Attributable to Victoria's Secret & Co.	$	(4)	$	1
Net Income (Loss) Per Basic Share Attributable to Victoria's Secret & Co.	$	(0.05)	$	0.01
Net Income (Loss) Per Diluted Share Attributable to Victoria's Secret & Co.	$	(0.05)	$	0.01

VICTORIA'S SECRET & CO.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(in millions)

(Unaudited)


	First Quarter
	2024		2023
Net Income (Loss)	$	(3)	$	4
Other Comprehensive Income (Loss), Net of Tax:
Foreign Currency Translation	—		(1)


Total Other Comprehensive Loss, Net of Tax	—		(1)
Total Comprehensive Income (Loss)	(3)		3
Less: Net Income Attributable to Noncontrolling Interest	1		3
Less: Foreign Currency Translation Attributable to Noncontrolling Interest	—		1
Comprehensive Loss Attributable to Victoria's Secret & Co.	$	(4)	$	(1)

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

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VICTORIA'S SECRET & CO.

CONSOLIDATED BALANCE SHEETS

(in millions except par value amounts)


	May 4, 2024		February 3, 2024		April 29, 2023
	(Unaudited)				(Unaudited)
ASSETS
Current Assets:
Cash and Cash Equivalents	$	105	$	270	$	132
Accounts Receivable, Net	152		152		126
Inventories	987		985		1,041

Other	149		126		136
Total Current Assets	1,393		1,533		1,435
Property and Equipment, Net	805		843		834
Operating Lease Assets	1,316		1,351		1,245
Goodwill	367		367		368
Trade Names	283		284		288
Other Intangible Assets, Net	111		116		132
Deferred Income Taxes	20		20		16
Other Assets	89		86		87
Total Assets	$	4,384	$	4,600	$	4,405
LIABILITIES AND EQUITY
Current Liabilities:
Accounts Payable	$	412	$	513	$	388
Accrued Expenses and Other	755		810		649
Current Debt	4		4		4
Current Operating Lease Liabilities	246		267		298
Income Taxes	18		20		30
Total Current Liabilities	1,435		1,614		1,369
Deferred Income Taxes	42		37		62
Long-term Debt	1,119		1,120		1,271
Long-term Operating Lease Liabilities	1,285		1,312		1,219
Other Long-term Liabilities	58		79		197
Total Liabilities	3,939		4,162		4,118
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; 78, 78, and 78 shares issued and outstanding, respectively	1		1		1
Paid-in Capital	248		238		173
Accumulated Other Comprehensive Income (Loss)	—		—		(1)
Retained Earnings	174		178		92

Total Victoria's Secret & Co. Shareholders' Equity	423		417		265
Noncontrolling Interest	22		21		22
Total Equity	445		438		287
Total Liabilities and Equity	$	4,384	$	4,600	$	4,405

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

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VICTORIA'S SECRET & CO.

CONSOLIDATED STATEMENTS OF EQUITY

(in millions)

(Unaudited)

First Quarter 2024


	Common Stock					Accumulated Other Comprehensive Income		Retained Earnings		Treasury Stock		Total Victoria's Secret & Co. Equity
	Shares Outstanding	Par Value		Paid-in Capital										Noncontrolling Interest		Total Equity
Balance, February 3, 2024	78	$	1	$	238	$	—	$	178	$	—	$	417	$	21	$	438
Net Income (Loss)	—	—		—		—		(4)		—		(4)		1		(3)
Other Comprehensive Income	—	—		—		—		—		—		—		—		—
Total Comprehensive Income (Loss)	—	—		—		—		(4)		—		(4)		1		(3)




Share-based Compensation Expense	—	—		16		—		—		—		16		—		16
Tax Payments related to Share-based Awards	(1)	—		(7)		—		—		—		(7)		—		(7)

Other	1	—		1		—		—		—		1		—		1
Balance, May 4, 2024	78	$	1	$	248	$	—	$	174	$	—	$	423	$	22	$	445

First Quarter 2023


	Common Stock					Accumulated Other Comprehensive Income (Loss)		Retained Earnings		Treasury Stock		Total Victoria's Secret & Co. Equity
	Shares Outstanding	Par Value		Paid-in Capital										Noncontrolling Interest		Total Equity
Balance, January 28, 2023	80	$	1	$	195	$	1	$	186	$	—	$	383	$	18	$	401
Net Income	—	—		—		—		1		—		1		3		4
Other Comprehensive Income (Loss)	—	—		—		(2)		—		—		(2)		1		(1)
Total Comprehensive Income (Loss)	—	—		—		(2)		1		—		(1)		4		3

Repurchases of Common Stock	(2)	—		(25)		—		—		(101)		(126)		—		(126)
Treasury Share Retirements	—	—		(6)		—		(95)		101		—		—		—

Share-based Compensation Expense	—	—		14		—		—		—		14		—		14
Tax Payments related to Share-based Awards	(1)	—		(9)		—		—		—		(9)		—		(9)
Other	1	—		4		—		—		—		4		—		4
Balance, April 29, 2023	78	$	1	$	173	$	(1)	$	92	$	—	$	265	$	22	$	287

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

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VICTORIA'S SECRET & CO.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions)

(Unaudited)


	First Quarter
	2024		2023
Operating Activities:
Net Income (Loss)	$	(3)	$	4
Adjustments to Reconcile Net Income (Loss) to Net Cash Used for Operating Activities:
Depreciation and Amortization of Long-lived Assets	65		73


Share-based Compensation Expense	16		14
Deferred Income Taxes	5		10
Amortization of Fair Value Adjustment to Acquired Inventories	—		9
Changes in Assets and Liabilities:
Accounts Receivable	—		14
Inventories	(2)		2
Accounts Payable, Accrued Expenses and Other	(174)		(180)
Income Taxes	(3)		(18)
Other Assets and Liabilities	(20)		(36)
Net Cash Used for Operating Activities	(116)		(108)
Investing Activities:
Capital Expenditures	(39)		(55)




Net Cash Used for Investing Activities	(39)		(55)
Financing Activities:
Borrowings from Asset-based Revolving Credit Facility	90		15
Repayments of Borrowings from Asset-based Revolving Credit Facility	(90)		(15)
Payments for Contingent Consideration related to Adore Me Acquisition	(16)		—
Tax Payments related to Share-based Awards	(7)		(9)
Payments of Long-term Debt	(1)		(1)

Repurchases of Common Stock	—		(125)
Proceeds from Stock Option Exercises	—		3



Other Financing Activities	14		—
Net Cash Used for Financing Activities	(10)		(132)
Effects of Exchange Rate Changes on Cash and Cash Equivalents	—		—
Net Decrease in Cash and Cash Equivalents	(165)		(295)
Cash and Cash Equivalents, Beginning of Period	270		427
Cash and Cash Equivalents, End of Period	$	105	$	132

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

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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 approximately 910 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 digital channels worldwide. Additionally, the Company has more than 470 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 digital channels.

In the first quarter of 2023, the Company implemented 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, “first quarter of 2024” and “first quarter of 2023” refer to the thirteen-week periods ended May 4, 2024 and April 29, 2023, respectively, and “fiscal year 2024” and “fiscal year 2023” refer to the fifty-two-week period ending February 1, 2025 and the fifty-three-week period ended February 3, 2024, 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 May 4, 2024 and April 29, 2023 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 22, 2024.

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 period ended May 4, 2024 are not necessarily indicative of the results expected for any other interim period or the full fiscal year ending February 1, 2025.

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.

The carrying values of equity method investments were $60 million as of May 4, 2024, $60 million as of February 3, 2024 and $58 million as of April 29, 2023. These investments are recorded in Other Assets on the Consolidated Balance Sheets.

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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 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.

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 May 4, 2024, 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 $117 million as of May 4, 2024, $183 million as of February 3, 2024 and $155 million as of April 29, 2023.

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 first quarter of 2024 that had a material impact on the Company’s results of operations, financial position or cash flows.

Income Taxes

In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which is intended to enhance the transparency and decision-usefulness of income tax disclosures, primarily by requiring enhanced disclosure for income taxes paid and the effective tax rate reconciliation. This standard will be effective for annual reporting periods beginning in fiscal year 2025 and for interim periods beginning in fiscal year 2026, with early adoption permitted. The updates required by this standard should be applied prospectively, but retroactive application is permitted. The Company does not expect this standard to have a material impact on its results of operations, financial position or cash flows.

Segment Reporting

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosure, which is intended to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expense categories that are regularly provided to the chief operating decision maker and included in each reported measure of a segment’s profit or loss. The update also requires all annual disclosures about a reportable segment’s profit or loss and assets to be provided in interim periods and for entities with a single reportable segment to provide all the disclosures required by ASC 280, Segment Reporting, including the significant segment expense disclosures. This standard will be effective for annual reporting periods beginning in fiscal year 2024 and interim periods beginning in fiscal year 2025, with early adoption permitted. The updates required by this standard should be applied retrospectively to all periods presented in the financial statements. The Company does not expect this standard to have a material impact on its results of operations, financial position or cash flows.

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2. Acquisition

On December 30, 2022, the Company completed its acquisition of 100% of the equity interests of AdoreMe, Inc. (“Adore Me”). 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 agreed to 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.

During the first quarter of 2024, the Company made payments of $20 million for the achievement of a specified strategic objective under the terms of the Merger Agreement, including $16 million for contingent consideration classified as financing cash outflows and $4 million of Contingent Compensation Payments classified as operating cash outflows in the Consolidated Statement of Cash Flows.

In both the first quarter of 2024 and 2023, the Company recognized the financial impact of purchase accounting items, including recognition of changes in the estimated fair value of contingent consideration and Contingent Compensation Payments and amortization of acquired intangible assets. In addition, in the first quarter of 2023, the Company recognized the financial impact of additional acquisition-related costs and recognition in gross profit of the fair value adjustment to acquired inventories that were sold in the first quarter of 2023.

The following table provides a summary by line item in the Consolidated Statements of Income (Loss) of the financial impact of purchase accounting items and additional acquisition-related costs for the first quarter of 2024 and 2023:


	First Quarter
	2024		2023
Income Statement Line Item	(in millions)
Costs of Goods Sold, Buying and Occupancy	$	—	$	9
General, Administrative and Store Operating Expenses	13		7
Interest Expense	1		1

The deferred consideration liability for the future fixed payment was $77 million and $76 million as of May 4, 2024 and February 3, 2024, respectively, and is included within Accrued Expenses and Other in the Consolidated Balance Sheets. As of April 29, 2023, the deferred consideration liability for the future fixed payment was $72 million and is included within Other Long-term Liabilities in the Consolidated Balance Sheet. See Note 11, “Fair Value of Financial Instruments” for further information regarding the liability recognized at fair value for the contingent consideration.

3. Revenue Recognition

Accounts receivable, net from revenue-generating activities were $113 million as of May 4, 2024, $103 million as of February 3, 2024 and $99 million as of April 29, 2023. 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 $298 million as of May 4, 2024, $310 million as of February 3, 2024 and $284 million as of April 29, 2023. The Company recognized $64 million as revenue in the first quarter of 2024 from amounts recorded as deferred revenue at the beginning of the year. As of May 4, 2024, the Company recorded deferred revenue of $284 million within Accrued Expenses and Other, and $14 million within Other Long-term Liabilities on the Consolidated Balance Sheet.

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The following table provides a disaggregation of Net Sales for the first quarter of 2024 and 2023:


	First Quarter
	2024		2023
	(in millions)
Stores – North America	$	729	$	786
Direct	449		464
International (a)	181		157
Total Net Sales	$	1,359	$	1,407

_______________

(a)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 $17 million and $23 million in the first quarter of 2024 and 2023, 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 $221 million and $200 million for the first quarter of 2024 and 2023, respectively.

4. Restructuring Activities

Organizational Restructuring

In the first quarter of 2023, the Company implemented 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 2023 Consolidated Statement of Income.

The Company made payments of $2 million and $5 million related to severance and related costs associated with these restructuring actions during the first quarter of 2024 and the first quarter of 2023, respectively. Liabilities, after accrual adjustments, related to the restructuring actions of $3 million are included in the May 4, 2024 Consolidated Balance Sheet.

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.

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The following table provides the weighted-average shares utilized for the calculation of basic and diluted earnings (loss) per share for the first quarter of 2024 and 2023:


	First Quarter
	2024	2023
	(in millions)
Common Shares	78	78
Treasury Shares	—	—
Basic Shares	78	78
Effect of Dilutive Awards (a)(b)	—	2
Diluted Shares	78	80
Anti-dilutive Awards (a)	6	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 first quarter of 2024, 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 period.

Shareholders' Equity

Common Stock Share Repurchases & Treasury Stock Retirements

March 2024 Share Repurchase Program

In March 2024, the Company's Board of Directors approved a share repurchase program (“March 2024 Share Repurchase Program”), authorizing the repurchase of up to $250 million of the Company's common stock, subject to market conditions and other factors, through open market, accelerated share repurchase or privately negotiated transactions, including pursuant to one or more Rule 10b5-1 trading plans. The March 2024 Share Repurchase Program is open-ended in term and will continue until exhausted.

The Company did not repurchase any shares of its common stock under the March 2024 Share Repurchase Program during the first quarter of 2024. As of May 4, 2024, the Company was authorized to repurchase up to $250 million of the Company's common stock under the March 2024 Share Repurchase Program.

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 authorization, which expired at the end of fiscal year 2023, was utilized in fiscal year 2023 to repurchase shares in the open market and under the accelerated share repurchase agreement described below.

In February 2023, as part of the January 2023 Share Repurchase Program, 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. 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. The final settlement of the ASR Agreement occurred in May 2023 subsequent to the end of the first quarter of 2023. At final settlement, the Company received an additional 1.3 million shares of the Company's common stock from Goldman Sachs.

As of April 29, 2023, the $125 million payment to Goldman Sachs was recognized as a reduction to shareholders’ equity, consisting of a $100 million increase in Treasury Stock, which reflected the value of the initial 2.4 million shares received upon initial settlement, and a $25 million decrease in Paid-in Capital, which reflected the value of the stock then held by Goldman Sachs pending final settlement of the ASR Agreement. The $25 million recorded in Paid-in Capital as of April 29, 2023 was reclassified to Treasury Stock in the second quarter of 2023 in connection with the final settlement of the ASR Agreement. As a result of the initial share delivery, there was an additional $1 million increase in Treasury Stock, which reflected the excise tax liability recorded related to the share repurchase in accordance with the Inflation Reduction Act of 2022.

Shares repurchased under the January 2023 Share Repurchase Program were retired upon repurchase. As a result, the Company retired the 2.4 million shares repurchased in connection with the settlement of the ASR Agreement during the first quarter of 2023. The retirement resulted in a reduction of $101 million in Treasury Stock, less than $1 million in the par value of Common Stock, $6 million in Paid-in Capital and $95 million in Retained Earnings during the first quarter of 2023.

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6. Inventories

The following table provides details of Inventories as of May 4, 2024, February 3, 2024 and April 29, 2023:


	May 4, 2024		February 3, 2024		April 29, 2023
	(in millions)
Finished Goods Merchandise	$	937	$	929	$	983
Raw Materials and Merchandise Components	50		56		58
Total Inventories	$	987	$	985	$	1,041

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.

7. Long-Lived Assets

The following table provides details of Property and Equipment, Net as of May 4, 2024, February 3, 2024 and April 29, 2023:


	May 4, 2024		February 3, 2024		April 29, 2023
	(in millions)
Property and Equipment, at Cost	$	3,564	$	3,616	$	3,676
Accumulated Depreciation and Amortization	(2,759)		(2,773)		(2,842)
Property and Equipment, Net	$	805	$	843	$	834

Depreciation expense was $59 million and $67 million for the first quarter of 2024 and 2023, respectively. Amortization expense for intangible assets was $6 million for the first quarter of 2024 and 2023, respectively.

In the first quarter of 2024, the Company classified certain non-store corporate-related assets that are expected to be sold within the next twelve months as held for sale within Other Current Assets on the Consolidated Balance Sheet. As of May 4, 2024, the carrying value of these assets held for sale was $18 million.

8. Accrued Expenses and Other

The following table provides additional information about the composition of Accrued Expenses and Other as of May 4, 2024, February 3, 2024 and April 29, 2023:


	May 4, 2024		February 3, 2024		April 29, 2023
	(in millions)
Deferred Revenue on Gift Cards and Merchandise Credits	$	226	$	239	$	221
Compensation, Payroll Taxes and Benefits	97		135		95
Contingent Consideration Related to Adore Me Acquisition	78		74		31
Future Fixed Payment Related to Adore Me Acquisition	77		76		—
Deferred Revenue on Loyalty and Credit Card Programs	43		45		34
Taxes, Other than Income	39		43		39
Accrued Marketing	24		39		42
Accrued Interest	16		9		14
Returns Reserve	15		16		15
Deferred Revenue on Direct Shipments not yet Delivered	15		11		11
Accrued Claims on Self-insured Activities	12		11		8
Accrued Freight and Other Logistics	10		12		14
Rent	6		6

SEC Form 10-Q filed by Victorias Secret & Co.