10-Q

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 July 30, 2022

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)

 _______________________________

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, 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 September 2, 2022, the number of outstanding shares of the Registrant’s common stock was 81,245,512 shares.

VICTORIA'S SECRET & CO.

TABLE OF CONTENTS

	Page No.
Part I. Financial Information
Item 1. Financial Statements *
Consolidated and Combined Statements of Income for the Thirteen-Weeks and Twenty-Six-Weeks Ended July 30, 2022 and July 31, 2021 (Unaudited)	3
Consolidated and Combined Statements of Comprehensive Income for the Thirteen-Weeks and Twenty-Six-Weeks Ended July 30, 2022 and July 31, 2021 (Unaudited)	3
Consolidated and Combined Balance Sheets as of July 30, 2022 (Unaudited), January 29, 2022 and July 31, 2021 (Unaudited)	4
Consolidated and Combined Statements of Equity for the Thirteen-Weeks and Twenty-Six-Weeks Ended July 30, 2022 and July 31, 2021 (Unaudited)	5
Consolidated and Combined Statements of Cash Flows for the Twenty-Six-Weeks Ended July 30, 2022 and July 31, 2021 (Unaudited)	7
Notes to Consolidated and Combined Financial Statements (Unaudited)	8
Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995	22
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	23
Item 3. Quantitative and Qualitative Disclosures About Market Risk	35
Item 4. Controls and Procedures	36
Part II. Other Information	37
Item 1. Legal Proceedings	37
Item 1A. Risk Factors	37
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	37
Item 3. Defaults Upon Senior Securities	37
Item 4. Mine Safety Disclosures	38
Item 5. Other Information	38
Item 6. Exhibits	38
Signature	39

* Victoria's Secret & Co.'s fiscal year ends on the Saturday nearest to January 31. As used herein, “second quarter of 2022” and “second quarter of 2021” refer to the thirteen-week periods ended July 30, 2022 and July 31, 2021, respectively. “Year-to-date 2022” and “year-to-date 2021” refer to the twenty-six-week periods ended July 30, 2022 and July 31, 2021, respectively.

2

PART I—FINANCIAL INFORMATION

Item 1.    FINANCIAL STATEMENTS

VICTORIA'S SECRET & CO.

CONSOLIDATED AND COMBINED STATEMENTS OF INCOME

(in millions except per share amounts)

(Unaudited)

	Second Quarter				Year-to-Date
	2022		2021		2022		2021
Net Sales	$	1,521	$	1,614	$	3,005	$	3,168
Costs of Goods Sold, Buying and Occupancy	(986)		(944)		(1,948)		(1,826)
Gross Profit	535		670		1,057		1,342
General, Administrative and Store Operating Expenses	(437)		(467)		(865)		(914)
Operating Income	98		203		192		428
Interest Expense	(13)		(3)		(25)		(4)
Other Loss	(2)		(1)		(6)		—
Income Before Income Taxes	83		199		161		424
Provision for Income Taxes	16		48		18		99
Net Income	67		151		143		325
Less: Net Loss Attributable to Noncontrolling Interest	(3)		—		(8)		—
Net Income Attributable to Victoria's Secret & Co.	$	70	$	151	$	151	$	325
Net Income Per Basic Share Attributable to Victoria's Secret & Co.	$	0.84	$	1.71	$	1.81	$	3.68
Net Income Per Diluted Share Attributable to Victoria's Secret & Co.	$	0.83	$	1.71	$	1.76	$	3.68

VICTORIA'S SECRET & CO.

CONSOLIDATED AND COMBINED STATEMENTS OF COMPREHENSIVE INCOME

(in millions)

(Unaudited)

	Second Quarter				Year-to-Date
	2022		2021		2022		2021
Net Income	$	67	$	151	$	143	$	325
Other Comprehensive Income (Loss), Net of Tax:
Foreign Currency Translation	(1)		—		—		4
Unrealized Gain on Cash Flow Hedges	—		1		—		—
Amounts Reclassified from Accumulated Other Comprehensive Income to Paid-in Capital	—		—		3		—
Total Other Comprehensive Income (Loss), Net of Tax	(1)		1		3		4
Total Comprehensive Income	66		152		146		329
Less: Net Loss Attributable to Noncontrolling Interest	(3)		—		(8)		—
Less: Foreign Currency Translation Attributable to Noncontrolling Interest	1		—		2		—
Comprehensive Income Attributable to Victoria's Secret & Co.	$	68	$	152	$	152	$	329

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

3

VICTORIA'S SECRET & CO.

CONSOLIDATED AND COMBINED BALANCE SHEETS

(in millions except par value amounts)

 

	July 30, 2022		January 29, 2022		July 31, 2021
	(Unaudited)				(Unaudited)
ASSETS
Current Assets:
Cash and Cash Equivalents	$	201	$	490	$	293
Cash in Escrow related to the Spin-Off	—		—		600
Accounts Receivable, Net	149		162		99
Inventories	1,086		949		745
Other	116		90		90
Total Current Assets	1,552		1,691		1,827
Property and Equipment, Net	864		957		999
Operating Lease Assets	1,298		1,369		1,513
Trade Name	246		246		246
Deferred Income Taxes	21		17		12
Other Assets	91		64		61
Total Assets	$	4,072	$	4,344	$	4,658
LIABILITIES AND EQUITY
Current Liabilities:
Accounts Payable	$	490	$	538	$	371
Accrued Expenses and Other	623		714		704
Current Debt	4		4		—
Current Operating Lease Liabilities	322		340		332
Income Taxes	6		102		28
Total Current Liabilities	1,445		1,698		1,435
Deferred Income Taxes	60		58		70
Long-term Debt	977		978		592
Long-term Debt due to Former Parent	—		—		97
Long-term Operating Lease Liabilities	1,269		1,314		1,457
Other Long-term Liabilities	52		39		123
Total Liabilities	3,803		4,087		3,774
Shareholders' Equity:
Preferred Stock — $0.01 par value; 10 shares authorized; 0 issued and outstanding	—		—		—
Common Stock — $0.01 par value; 1,000 shares authorized; 82, 85, and 0 shares issued and outstanding, respectively	1		1		—
Paid-in Capital	177		125		—
Accumulated Other Comprehensive Income	6		5		8
Retained Earnings	65		126		—
Net Investment by Former Parent	—		—		876
Less: Treasury Stock, at Average Cost; 0, 0, and 0 shares, respectively	(2)		—		—
Total Victoria's Secret & Co. Shareholders' Equity	247		257		884
Noncontrolling Interest	22		—		—
Total Equity	269		257		884
Total Liabilities and Equity	$	4,072	$	4,344	$	4,658

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

4

VICTORIA'S SECRET & CO.

CONSOLIDATED AND COMBINED STATEMENTS OF EQUITY

(in millions)

(Unaudited)

Second Quarter 2022

	Common Stock					Accumulated Other Comprehensive Income		Retained Earnings		Treasury Stock, at Average Cost		Total Victoria's Secret & Co. Equity
	Shares Outstanding	Par Value		Paid-in Capital										Noncontrolling Interest		Total Equity
Balance, April 30, 2022	83	$	1	$	166	$	8	$	52	$	—	$	227	$	24	$	251
Net Income (Loss)	—	—		—		—		70		—		70		(3)		67
Other Comprehensive Income (Loss)	—	—		—		(2)		—		—		(2)		1		(1)
Total Comprehensive Income (Loss)	—	—		—		(2)		70		—		68		(2)		66
Repurchases of Common Stock	(1)	—		—		—		—		(62)		(62)		—		(62)
Treasury Share Retirements	—	—		(3)		—		(57)		60		—		—		—
Share-based Compensation Expense	—	—		14		—		—		—		14		—		14
Tax Payments related to Share-based Awards	—	—		(1)		—		—		—		(1)		—		(1)
Other	—	—		1		—		—		—		1		—		1
Balance, July 30, 2022	82	$	1	$	177	$	6	$	65	$	(2)	$	247	$	22	$	269

Second Quarter 2021

	Common Stock					Net Investment by Former Parent		Accumulated Other Comprehensive Income		Retained Earnings		Total Victoria's Secret & Co. Equity
	Shares Outstanding	Par Value		Paid-in Capital										Noncontrolling Interest		Total Equity
Balance, May 1, 2021	—	$	—	$	—	$	1,000	$	7	$	—	$	1,007	$	—	$	1,007
Net Income	—	—		—		151		—		—		151		—		151
Other Comprehensive Income	—	—		—		—		1		—		1		—		1
Total Comprehensive Income	—	—		—		151		1		—		152		—		152
Net Transfers to Former Parent	—	—		—		(275)		—		—		(275)		—		(275)
Balance, July 31, 2021	—	$	—	$	—	$	876	$	8	$	—	$	884	$	—	$	884

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

5

VICTORIA'S SECRET & CO.

CONSOLIDATED AND COMBINED STATEMENTS OF EQUITY

(in millions)

(Unaudited)

Year-to-Date 2022

	Common Stock					Accumulated Other Comprehensive Income		Retained Earnings		Treasury Stock, at Average Cost		Total Victoria's Secret & Co. Equity
	Shares Outstanding	Par Value		Paid-in Capital										Noncontrolling Interest		Total Equity
Balance, January 29, 2022	85	$	1	$	125	$	5	$	126	$	—	$	257	$	—	$	257
Net Income (Loss)	—	—		—		—		151		—		151		(8)		143
Other Comprehensive Income	—	—		—		1		—		—		1		2		3
Total Comprehensive Income (Loss)	—	—		—		1		151		—		152		(6)		146
Sale of Noncontrolling Interest	—	—		17		—		—		—		17		28		45
Repurchases of Common Stock	(4)	—		50		—		—		(221)		(171)		—		(171)
Treasury Share Retirements	—	—		(7)		—		(212)		219		—		—		—
Share-based Compensation Expense	—	—		26		—		—		—		26		—		26
Tax Payments related to Share-based Awards	(1)	—		(39)		—		—		—		(39)		—		(39)
Other	2	—		5		—		—		—		5		—		5
Balance, July 30, 2022	82	$	1	$	177	$	6	$	65	$	(2)	$	247	$	22	$	269

Year-to-Date 2021

	Common Stock					Net Investment by Former Parent		Accumulated Other Comprehensive Income		Retained Earnings		Total Victoria's Secret & Co. Equity
	Shares Outstanding	Par Value		Paid-in Capital										Noncontrolling Interest		Total Equity
Balance, January 30, 2021	—	$	—	$	—	$	887	$	4	$	—	$	891	$	—	$	891
Net Income	—	—		—		325		—		—		325		—		325
Other Comprehensive Income	—	—		—		—		4		—		4		—		4
Total Comprehensive Income	—	—		—		325		4		—		329		—		329
Net Transfers to Former Parent	—	—		—		(336)		—		—		(336)		—		(336)
Balance, July 31, 2021	—	$	—	$	—	$	876	$	8	$	—	$	884	$	—	$	884

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

6

VICTORIA'S SECRET & CO.

CONSOLIDATED AND COMBINED STATEMENTS OF CASH FLOWS

(in millions)

(Unaudited)

	Year-to-Date
	2022		2021
Operating Activities:
Net Income	$	143	$	325
Adjustments to Reconcile Net Income to Net Cash Provided by (Used for) Operating Activities:
Depreciation of Long-lived Assets	140		158
Share-based Compensation Expense	26		15
Deferred Income Taxes	(2)		59
Changes in Assets and Liabilities:
Accounts Receivable	12		22
Inventories	(138)		(44)
Accounts Payable, Accrued Expenses and Other	(137)		(86)
Income Taxes	(120)		12
Other Assets and Liabilities	25		(72)
Net Cash Provided by (Used for) Operating Activities	(51)		389
Investing Activities:
Capital Expenditures	(58)		(66)
Investment in Frankies Bikinis, LLC	(18)		—
Other Investing Activities	(7)		—
Net Cash Used for Investing Activities	(83)		(66)
Financing Activities:
Repurchases of Common Stock	(169)		—
Cash Received from Noncontrolling Interest Partner	55		—
Tax Payments related to Share-based Awards	(39)		—
Proceeds from Stock Option Exercises	4		—
Payments of Long-term Debt	(2)		—
Proceeds from Issuance of Long-term Debt	—		600
Net Transfers to Former Parent	—		(367)
Other Financing Activities	(2)		—
Net Cash Provided by (Used for) Financing Activities	(153)		233
Effects of Exchange Rate Changes on Cash and Cash Equivalents and Restricted Cash	(2)		2
Net Increase (Decrease) in Cash and Cash Equivalents and Restricted Cash	(289)		558
Cash and Cash Equivalents and Restricted Cash, Beginning of Period	490		335
Cash and Cash Equivalents and Restricted Cash, End of Period	$	201	$	893

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

7

VICTORIA'S SECRET & CO.

NOTES TO CONSOLIDATED AND COMBINED 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 and PINK brand names. The Company has more than 890 Victoria’s Secret and PINK stores in the U.S., Canada and China as well as online at www.VictoriasSecret.com and www.PINK.com and other online channels worldwide. Additionally, Victoria’s Secret and PINK have more than 440 stores in 70 countries operating under franchise, license and wholesale arrangements. The Company also includes the Victoria’s Secret and PINK 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.

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. For additional information, see Note 4, “Restructuring Activities.”

Victoria's Secret & Co. Spin-Off

On July 9, 2021, L Brands, Inc. (“L Brands” or the “Former Parent”) announced that its Board of Directors approved the previously announced separation of the Victoria’s Secret business, including PINK, into an independent, publicly traded company (the “Separation”). Prior to the Separation, L Brands operated the Bath & Body Works, Victoria’s Secret and PINK retail brands.

On August 2, 2021 (the “Distribution Date”), after the New York Stock Exchange (“NYSE”) market closing, the Separation of the Victoria’s Secret business was completed. On August 3, 2021, Victoria’s Secret & Co. became an independent, publicly traded company trading on the NYSE under the stock symbol “VSCO.”

The Separation was achieved through the Former Parent’s distribution of 100% of the shares of the Company’s common stock to holders of the Former Parent’s common stock as of the close of business on the record date of July 22, 2021. The Former Parent’s stockholders of record received one share of the Company’s common stock for every three shares of the Former Parent’s common stock. In connection with the Separation, the Company made a cash payment of approximately $976 million to the Former Parent on August 2, 2021 using cash proceeds from the issuances of certain debt (discussed in Note 10, “Long-term Debt and Borrowing Facilities”). The Former Parent retained no ownership interest in the Company following the Separation.

The Company entered into several agreements with the Former Parent that, among other things, effect the Separation and govern the relationship of the parties following the Separation, including a Separation and Distribution Agreement, a Tax Matters Agreement, an L Brands to VS Transition Services Agreement, a VS to L Brands Transition Services Agreement, an Employee Matters Agreement and a Domestic Transportation Services Agreement. For additional information, see Note 2, “Transactions with Former Parent.”

Fiscal Year

The Company’s fiscal year ends on the Saturday nearest to January 31. As used herein, “second quarter of 2022” and “second quarter of 2021” refer to the thirteen-week periods ended July 30, 2022 and July 31, 2021, respectively. “Year-to-date 2022” and “year-to-date 2021” refer to the twenty-six-week periods ended July 30, 2022 and July 31, 2021, respectively.

Basis of Presentation - Unaudited Consolidated and Combined Financial Statements

The Company’s financial statements for periods through the Separation date of August 2, 2021 are combined financial statements prepared on a carve-out basis as discussed below. The Company’s financial statements for the period from August 3, 2021 through July 30, 2022 are consolidated financial statements based on the reported results of Victoria's Secret & Co. as a standalone company.

The Consolidated and Combined Financial Statements have been prepared in conformity with accounting principles generally accepted in the United States (“GAAP”). The Consolidated and Combined Financial Statements may not be indicative of the Company’s future performance and do not necessarily reflect what the financial position, results of operations, and cash flows would have been had it operated as an independent company during all of the periods presented.

8

Basis of Presentation - Prior to Separation

Through the Separation date, the Company's combined financial statements are prepared on a “carve-out” basis. The Combined Financial Statements have been derived from the consolidated financial statements and accounting records of the Former Parent in conformity with GAAP.

Intracompany transactions have been eliminated. Transactions between the Company and the Former Parent have been included in these financial statements. For those transactions between the Company and the Former Parent that were historically settled in cash, the Company reflected such balances in the Consolidated and Combined Balance Sheets in Other Current Assets for balances due from the Former Parent and in Accrued Expenses and Other for balances due to the Former Parent. The aggregate net effect of transactions between the Company and the Former Parent that were historically settled other than in cash are reflected in the Consolidated and Combined Balance Sheets as Net Investment by Former Parent and in the Consolidated and Combined Statements of Cash Flows as Net Transfers to Former Parent. For additional information, see Note 2, “Transactions with Former Parent.”

The Consolidated and Combined Balance Sheets include certain of the Former Parent's assets and liabilities that were specifically identifiable or otherwise attributable to the Company. The Former Parent's third-party long-term notes payable and the related interest expense have not been allocated to the Company for any of the periods presented as the Company was not the legal obligor of such debt. Except for Long-term Debt due to Former Parent, the debt reflected in the Consolidated and Combined Balance Sheets relate to third-party borrowings specifically attributable to, and legal obligations of, the Company.

The Former Parent utilized a centralized approach to cash management and financing its operations. The Cash and Cash Equivalents held by the Former Parent at the corporate level were not specifically identifiable to the Company and, therefore, were not reflected in the Company’s Consolidated and Combined Balance Sheets. Cash transfers between the Former Parent and the Company were accounted for through Net Investment by Former Parent. Cash and Cash Equivalents in the Consolidated and Combined Balance Sheets represent cash and cash equivalents held by the Company at period-end prior to any potential transfer to the centralized cash management pool of the Former Parent.

The Consolidated and Combined Statements of Income include costs for certain functions, including information technology, human resources and store design and construction, that historically were provided and administered on a centralized basis by the Former Parent. Starting in the third quarter of 2020, as part of the steps to prepare the Company to operate as a separate, standalone company, these functions were transitioned to the business and began to be operated and administered as part of Victoria’s Secret & Co. Costs applicable to the Company related to these functions are included in the Consolidated and Combined Statements of Income for all periods presented. Prior to the transition of these functions, these costs were directly charged to the Company by the Former Parent.

In addition, for purposes of preparing the combined financial statements on a “carve-out” basis prior to the Separation, a portion of the Former Parent's corporate expenses were allocated to the Company. These expense allocations include the cost of corporate functions and resources provided by, or administered by, the Former Parent including, but not limited to, executive management and other corporate and governance functions, such as corporate finance, internal audit, tax and treasury. The related employee payroll and benefit costs associated with such functions, such as share-based compensation, were included in the expense allocations. Corporate expenses of $30 million and $49 million in the second quarter of 2021 and year-to-date 2021, respectively, were allocated and included within General, Administrative and Store Operating Expenses in the Consolidated and Combined Statements of Income.

Costs were allocated to the Company based on direct usage when identifiable or, when not directly identifiable, on the basis of proportional net sales. Management considers the basis on which the expenses have been allocated to reasonably reflect the utilization of services provided to, or the benefit received by, the Company during the periods presented. However, the allocations may not reflect the expenses the Company would have incurred if the Company had been a standalone company for the periods presented. Actual costs that may have been incurred if the Company had been a standalone company would depend on a number of factors, including the organizational structure, whether functions were outsourced or performed by employees, and strategic or capital decisions. Going forward, the Company may perform these functions using its own resources or outsourced services. For a period following the Separation, however, some of these functions will continue to be provided by the Former Parent under a transition services agreement, and the Company will provide some services to the Former Parent under a transition services agreement. The Company has also entered into certain commercial arrangements with the Former Parent in connection with the Separation. For more information, see Note 2, “Transactions with Former Parent.”

9

During the periods prior to the Separation that are presented in these Consolidated and Combined Financial Statements, the Company's income tax expense (benefit) and deferred tax balances were included in the Former Parent's income tax returns. Income tax expense (benefit) and deferred tax balances contained in these Consolidated and Combined Financial Statements for periods prior to the Separation are presented on a separate return basis, as if the Company had filed its own income tax returns. As a result, actual tax transactions included in the consolidated financial statements of the Former Parent may or may not be included in the Consolidated and Combined Financial Statements of the Company. Similarly, the tax treatment of certain items reflected in the Consolidated and Combined Financial Statements of the Company may or may not be reflected in the consolidated financial statements and income tax returns of the Former Parent. The taxes recorded in the Consolidated and Combined Statement of Income for periods prior to the Separation are not necessarily representative of the taxes that may arise in the future when the Company files its income tax returns independent from the Former Parent's returns.

Interim Financial Statements

The Consolidated and Combined Financial Statements as of and for the periods ended July 30, 2022 and July 31, 2021 are unaudited. These Consolidated and Combined Financial Statements should be read in conjunction with the audited Consolidated and Combined Financial Statements and Notes thereto included in our Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on March 18, 2022.

In the opinion of management, the accompanying Consolidated and Combined Financial Statements reflect all adjustments, which are of a normal recurring nature, necessary for a fair presentation of the results for the interim periods.

Ongoing Impacts of COVID-19

Even as the coronavirus pandemic (“COVID-19”) subsides, macroeconomic impacts related to the pandemic, including inflation, supply chain disruptions and labor shortages, are expected to continue. The Company remains focused on the safe operation of its business, including its stores, distribution, fulfillment and call centers. There remains the potential for COVID-19-related risks of closure or operating restrictions, as well as risks related to delays or disruptions in our supply chain and related pricing impacts, which could materially impact the Company's operations and financial performance in future periods.

Seasonality of Business

Due to the seasonal variations in the retail industry, the results of operations for the thirteen-week and twenty-six-week periods ended July 30, 2022 are not necessarily indicative of the results expected for any other interim period or the full fiscal year ending January 28, 2023.

Restricted Cash

In July 2021, the Company issued $600 million of 4.625% notes due in July 2029 (the “2029 Notes”) in a transaction exempt from registration under the Securities Act of 1933, as amended. As of July 31, 2021, the proceeds were held in escrow for release to the Company upon satisfaction of certain conditions, including completion of the Separation. The $600 million initial gross proceeds were included in Cash in Escrow related to the Spin-Off on the July 31, 2021 combined balance sheet. For additional information, see Note 10, “Long-term Debt and Borrowing Facilities.”

As of July 31, 2021, the Company's Cash and Cash Equivalents and restricted cash totaled $893 million.

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 and Combined Statements of Income, 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 and Combined Statements of Income. 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.

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 $57 million as of July 30, 2022, $35 million as of January 29, 2022 and $32 million as of July 31, 2021. These investments are recorded in Other Assets on the Consolidated and Combined 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 and Combined Financial Statements. The share of the investment not owned by the Company is reflected in Noncontrolling Interest in the Consolidated and Combined Balance Sheets. The Company recognizes the share of net income or loss not attributable to the Company in Net Loss Attributable to Noncontrolling Interest in the Consolidated and Combined Statements of Income. 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.”

Net Investment by Former Parent

Net Investment by Former Parent in the Consolidated and Combined Balance Sheets represents the Former Parent's historical investment in the Company, the accumulated net earnings after taxes and the net effect of the transactions with and allocations from the Former Parent. All transactions reflected in Net Investment by Former Parent in the accompanying Consolidated and Combined Balance Sheets have been considered as financing activities for purposes of the Consolidated and Combined Statements of Cash Flows.

For additional information, see Basis of Presentation above and Note 2, “Transactions with Former Parent.”

Derivative Financial Instruments

The Company from time to time uses derivative financial instruments to manage exposure to foreign currency exchange rates. The Company does not use derivative instruments for trading purposes. All derivative instruments are recorded on the Consolidated and Combined Balance Sheets at fair value.

The earnings of the Company’s foreign operations are subject to exchange rate risk as substantially all the merchandise is sourced through U.S. dollar transactions. The Company from time to time utilizes foreign currency forward contracts designated as cash flow hedges to mitigate this foreign currency exposure. Amounts for these designated cash flow hedges are reclassified from Accumulated Other Comprehensive Income (Loss) upon sale of the hedged merchandise to the customer. These gains and losses are recognized in Costs of Goods Sold, Buying and Occupancy in the Consolidated and Combined Statements of Income. During the second quarter of 2021, the Company terminated its foreign currency forward contracts designated as cash flow hedges that were used to mitigate foreign currency exposure for its Canadian operations. The fair value of designated cash flow hedges is not significant for any period presented.

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 July 30, 2022, the Company's investment portfolio is primarily comprised of bank deposits. Prior to the Separation, cash generated by the Company was invested by the Former Parent in U.S. government obligations and U.S. Treasury and AAA-rated money market funds.

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.

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 second quarter of 2022 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. Transactions with Former Parent

Prior to the Separation, the Company's financial statements were prepared on a “carve-out” basis and were derived from the consolidated financial statements and accounting records of the Former Parent. The following discussion summarizes activity between the Company and the Former Parent.

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Allocation of General Corporate Expenses

Prior to the Separation, for purposes of preparing the financial statements on a “carve-out” basis, the Company was allocated a portion of the Former Parent's total corporate expenses. See Note 1 for a discussion of the methodology used to allocate corporate-related costs for purposes of preparing the financial statements on a “carve-out” basis.

Balances Between the Company and the Former Parent Prior to the Separation

Balances between the Company and the Former Parent or its affiliates prior to the Separation, that are derived from transactions that historically were cash settled, are reflected in the Consolidated and Combined Balance Sheets in Other Current Assets for balances due from the Former Parent and in Accrued Expenses and Other for balances due to the Former Parent for periods prior to the Separation.

Balances between the Company and the Former Parent or its affiliates prior to the Separation, that are derived from transactions that were historically settled other than in cash, are included in Net Investment by Former Parent within Shareholders' Equity on the Consolidated and Combined Balance Sheets for periods prior to the Separation.

Long-term Debt due to Former Parent

Prior to the Separation, during 2020, the Company borrowed $97 million from the Former Parent to pay down outstanding debt with external parties. This borrowing was due in September 2025 and had a variable interest rate based on the China Loan Prime Rate. As a result of the Separation, the Company no longer has this Long-term Debt due to Former Parent. Prior to the Separation, the Company recognized $2 million of interest expense year-to-date 2021 related to this borrowing.

Net Transfers from (to) Former Parent

The following table presents the components of Net Transfers from (to) Former Parent prior to the Separation in the second quarter and year-to-date 2021 Consolidated and Combined Statements of Equity:

	Second Quarter		Year-to-Date
	2021		2021
Cash Pooling and General Financing Activities, Net	$	(322)	$	(431)
Long-lived Assets (a)	(4)		16
Corporate Expense Allocations	30		49
Share-based Compensation Expense	8		15
Assumed Income Tax Payments	13		15
Total Net Transfers to Former Parent	$	(275)	$	(336)

_______________

(a)Represents long-lived assets transferred between the Company and the Former Parent as a result of asset allocation decisions made during the period.

Agreements with Former Parent

The Company entered into several agreements with the Former Parent that, among other things, effect the Separation and govern the relationship of the parties following the Separation, including a Separation and Distribution Agreement, a Tax Matters Agreement, an L Brands to VS Transition Services Agreement, a VS to L Brands Transition Services Agreement, an Employee Matters Agreement and a Domestic Transportation Services Agreement.

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Under the terms of the transition services agreements, as amended, the Company provides its Former Parent, on a transitional basis, certain services or functions, including information technology, certain logistics functions, customer marketing and customer call center services. Additionally, the Former Parent provides to the Company various services or functions, many of which currently use a shared technology platform, including human resources, payroll and certain logistics functions. Generally, these services will be provided for a period of up to two years following the Separation, except for information technology services, which will be provided for a period of up to three years following the Separation and may be extended for a maximum of two additional one-year periods subject to increased administrative charges. Consideration and costs for the transition services will be determined using several billing methodologies as described in the agreements, including customary billing, pass-through billing, percent of sales billing or fixed fee billing. Costs for transition services provided by the Former Parent are recorded within the Consolidated and Combined Statements of Income based on the nature of the services. Consideration for transition services provided to the Former Parent are recorded within the Consolidated and Combined Statements of Income based on the nature of the services and as an offset to expenses incurred to provide the services. The Company recognized consideration of $20 million and $40 million for services provided to the Former Parent and recognized costs of $19 million and $38 million for services provided by the Former Parent in the second quarter of 2022 and year-to-date 2022, respectively, pursuant to the transition services agreements.

Under the terms of the Domestic Transportation Services Agreement, the Former Parent will continue to provide transportation services to the Company for certain beauty and apparel merchandise in the United States and Canada for an initial term of three years following the Separation, which term will thereafter continuously renew unless and until either party elects to terminate the arrangement upon written prior notice. Costs for the transportation services will be determined using customary billing and fixed billing methodologies, which are described in the agreement, and are subject to an administrative charge. Costs for transition services are recorded within Costs of Goods Sold, Buying and Occupancy in the Consolidated and Combined Statements of Income. The Company recognized costs of $21 million and $39 million pursuant to the Domestic Transportation Services Agreement during the second quarter of 2022 and year-to-date 2022, respectively.

Prior to the Separation, certain Company employees participated in the stock option and performance incentive plan of the Former Parent. Under the terms of the Employee Matters Agreement, in connection with the Separation, restricted stock and stock option equity awards held by Company employees were converted to awards representing approximately 6.0 million shares of the Company's common stock under the Company's 2021 Stock Option and Performance Incentive Plan.

3. Revenue Recognition

Accounts receivable, net from revenue-generating activities were $101 million as of July 30, 2022, $101 million as of January 29, 2022 and $73 million as of July 31, 2021. 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 $238 million as of July 30, 2022, $258 million as of January 29, 2022 and $219 million as of July 31, 2021. The Company recognized $105 million as revenue year-to-date 2022 from amounts recorded as deferred revenue at the beginning of the year. As of July 30, 2022, the Company recorded deferred revenue of $218 million within Accrued Expenses and Other, and $20 million within Other Long-term Liabilities on the Consolidated and Combined Balance Sheet.

The following table provides a disaggregation of Net Sales for the second quarter and year-to-date 2022 and 2021:

	Second Quarter				Year-to-Date
	2022		2021		2022		2021
	(in millions)
Stores – North America	$	968	$	1,037	$	1,900	$	1,970
Direct	414		469		834		990
International (a)	139		108		271		208
Total Net Sales	$	1,521	$	1,614	$	3,005	$	3,168

 _______________

(a)Results include consolidated joint venture sales in China, royalties associated with franchised stores and wholesale sales.

In April 2022, the Company launched a new co-branded credit card through which customers can earn points on purchases of Company product as well as on purchases outside of the Company. The co-branded credit card is in addition to the Company's existing U.S. private label credit card.

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The Company recognized Net Sales of $30 million and $31 million for the second quarter of 2022 and 2021, respectively, related to revenue earned in connection with its credit card arrangements. The Company recognized Net Sales of $57 million and $59 million year-to-date 2022 and 2021, 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 $199 million and $167 million for the second quarter of 2022 and 2021, respectively. The Company’s net sales outside of the U.S. totaled $383 million and $330 million year-to-date 2022 and 2021, respectively.

4. Restructuring Activities

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 and Combined Statement of Cash Flows.

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 sheet and in Net Loss Attributable to Noncontrolling Interest in the consolidated statements of income.

Corporate Leadership Restructuring

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. As a result of the restructuring, 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, are included in the 2022 consolidated statements of income.

During the second quarter of 2022, the Company made payments of $2 million related to severance and related costs associated with these reductions. As of July 30, 2022, liabilities related to the restructuring of $27 million are included in the consolidated balance sheet.

5. Earnings Per Share and Shareholders' Equity

Earnings Per Share

Earnings per basic share is computed based on the weighted-average number of common shares outstanding. Earnings per diluted share include the weighted-average effect of dilutive restricted stock and options on the weighted-average shares outstanding.

On August 2, 2021, the Separation was achieved through the Former Parent's distribution of 100% of the shares of the Company's common stock to holders of the Former Parent's common stock as of the close of business on the record date of July 22, 2021. The Former Parent's stockholders of record received one share of the Company's common stock for every three shares of the Former Parent's common stock. As a result, on August 3, 2021, the Company had 88 million shares of common stock outstanding. This share amount is being utilized for the calculation of basic and diluted earnings per share for all periods presented prior to the Separation. After the Separation, actual outstanding shares are used to calculate both basic and diluted weighted-average number of common shares outstanding.

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The following table provides the weighted-average shares utilized for the calculation of basic and diluted earnings per share for the second quarter and year-to-date 2022 and 2021:

	Second Quarter		Year-to-Date
	2022	2021	2022	2021
	(in millions)
Common Shares	83	88	83	88
Treasury Shares	—	—	—	—
Basic Shares	83	88	83	88
Effect of Dilutive Options and Restricted Stock Awards	1	—	3	—
Diluted Shares	84	88	86	88
Anti-dilutive Options and Restricted Stock Awards (a)	2	—	1	—

 _______________

(a)These options and restricted stock awards were excluded from the calculation of diluted earnings per share because their inclusion would have been anti-dilutive.

Shareholders' Equity

Common Stock Share Repurchases & Treasury Stock Retirements

In February 2022, upon final settlement of the Company's December 2021 accelerated share repurchase agreement (“ASR Agreement”) with Goldman Sachs & Co. LLC (“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 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 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.

In March 2022, the Company's Board of Directors approved a new 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 is expected to be utilized to repurchase shares in the open market, subject to market conditions and other factors. Shares acquired through the March 2022 Share Repurchase Program will be available to meet obligations under equity compensation plans and for general corporate purposes. The March 2022 Share Repurchase Program will continue until exhausted, but no later than January 28, 2023.

The Company repurchased the following shares of its common stock under its March 2022 Share Repurchase Program during year-to-date 2022:

	Amount Authorized		Shares Repurchased	Amount Repurchased		Average Stock Price
	(in millions)		(in thousands)	(in millions)
March 2022 Share Repurchase Program	$	250	3,879	$	171	$	44.06

The March 2022 Share Repurchase Program has $79 million remaining as of July 30, 2022. There were $2 million of share repurchases reflected in Accounts Payable on the July 30, 2022 consolidated balance sheet.

Subsequent to July 30, 2022, the Company repurchased an additional 0.7 million shares for $27 million through September 7, 2022 under the March 2022 Share Repurchase Program.

In accordance with the Board of Directors' resolution, shares of the Company's common stock repurchased under the March 2022 Share Repurchase Program will be retired and cancelled upon repurchase. As a result, year-to-date 2022 the Company retired 3.8 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, $7 million in Paid-in Capital and $162 million in Retained Earnings.

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6. Inventories

The following table provides details of Inventories as of July 30, 2022, January 29, 2022 and July 31, 2021:

	July 30, 2022		January 29, 2022		July 31, 2021
	(in millions)
Finished Goods Merchandise	$	1,020	$	898	$	694
Raw Materials and Merchandise Components	66		51		51
Total Inventories	$	1,086	$	949	$	745

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 July 30, 2022, January 29, 2022 and July 31, 2021:

	July 30, 2022		January 29, 2022		July 31, 2021
	(in millions)
Property and Equipment, at Cost	$	3,667	$	3,795	$	3,755
Accumulated Depreciation and Amortization	(2,803)		(2,838)		(2,756)
Property and Equipment, Net	$	864	$	957	$	999

Depreciation expense was $70 million and $78 million for the second quarter of 2022 and 2021, respectively. Depreciation expense was $140 million and $158 million for year-to-date 2022 and 2021, respectively.

8. Accrued Expenses and Other

The following table provides additional information about the composition of Accrued Expenses and Other as of July 30, 2022, January 29, 2022 and July 31, 2021:

	July 30, 2022		January 29, 2022		July 31, 2021
	(in millions)
Deferred Revenue on Gift Cards	$	170	$	198	$	158
Compensation, Payroll Taxes and Benefits	87		152		145
Rent	63		45		80
Accrued Freight and Other Logistics	41		62		19
Accrued Marketing	37		36		39
Deferred Revenue on Loyalty and Credit Card Programs	28		36		37
Taxes, Other than Income	22		24		37
Deferred Revenue on Direct Shipments not yet Delivered	20		16		15
Returns Reserve	17		23		20
Accrued Interest	6		5		1
Accrued Claims on Self-insured Activities	6		4		15
Other	126		113		138
Total Accrued Expenses and Other	$	623	$	714	$	704

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9. Income Taxes

Prior to the Separation, the Company's U.S. operations and certain of its non-U.S. operations were historically included in the income tax returns of the Former Parent or its subsidiaries that may not be part of the Company. For the periods prior to the Separation, the income tax expense (benefit) and all tax liabilities that are presented in these financial statements were calculated on a “carve-out” basis, which applied the accounting guidance as if we filed income tax returns for the Company on a standalone, separate return basis. The Company believes the assumptions supporting its allocation and presentation of income taxes on a separate return basis are reasonable. However, the Company's tax results, as presented in these financial statements for periods prior to the Separation, may not be reflective of the results that the Company expects to generate in the future.

Post-Separation, the Company is filing a consolidated U.S. federal income tax return as well as separate and combined income tax returns in numerous state, local and international jurisdictions. Income tax expense (benefit) for the period prior to the Separation is based on the combined financial statements prepared on a “carve-out” basis. Income tax expense (benefit) for the period after the Separation is based on the consolidated results of the Company on a standalone basis.

The provision for income taxes is based on the current estimate of the annual effective tax rate and adjusted as necessary for quarterly events.

For the second quarter of 2022, the Company’s effective tax rate was 19.2% compared to 24.1% in the second quarter of 2021. The second quarter of 2022 rate was lower than the Company's combined estimated federal and state statutory rate primarily due to foreign earnings taxed at a rate lower than our combined statutory rate. The second quarter of 2021 rate was lower than the Company's 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 quarter.

For year-to-date 2022, the Company’s effective tax rate was 11.1% compared to 23.2% for year-to-date 2021. Both rates were lower than the Company's 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 $130 million and $13 million for the second quarter of 2022 and 2021, respectively. Year-to-date income taxes paid were $140 million and $15 million for 2022 and 2021, respectively.

On August 2, 2021, in connection with the Separation, the Company and the Former Parent entered into a Tax Matters Agreement. Under the agreement, the Former Parent will generally be responsible for all U.S. federal, state, local and non-U.S. income taxes of the Company for any taxable period, or portion of such period, ending on or before the Distribution Date. As such, the net liabilities associated with uncertain tax positions that were presented in the financial statements in prior periods on a carve-out basis were not transferred to the Company as part of the Separation.

10. Long-term Debt and Borrowing Facilities

The following table provides the Company's outstanding debt balance, net of unamortized debt issuance costs and discounts, as of July 30, 2022, January 29, 2022 and July 31, 2021:

	July 30, 2022		January 29, 2022		July 31, 2021
	(in millions)
Senior Secured Debt with Subsidiary Guarantee
$397 million Term Loan due August 2028 (“Term Loan Facility”)	$	388	$	390	$	—
Total Senior Secured Debt with Subsidiary Guarantee	388		390		—
Senior Debt with Subsidiary Guarantee
$600 million, 4.625% Fixed Interest Rate Notes due July 2029 (“2029 Notes”)	593		592		592
Total Senior Debt with Subsidiary Guarantee	593		592		592
Long-term Debt due to Former Parent	—		—		97
Total	981		982		689
Current Debt	(4)		(4)		—
Total Long-term Debt, Net of Current Portion	$	977	$	978	$	689

Cash paid for interest was $21 million year-to-date 2022.

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Issuance of Notes

In July 2021, the Company issued $600 million of 4.625% notes due in July 2029 in a transaction exempt from registration under the Securities Act of 1933, as amended. The obligation to pay principal and interest on the 2029 Notes is jointly and severally guaranteed on a full and unconditional basis by certain of the Company's wholly-owned subsidiaries. As of July 31, 2021, the proceeds were held in escrow for release to the Company upon satisfaction of certain conditions, including completion of the Separation. If the conditions for the release from escrow of the proceeds of this offering were not satisfied, the 2029 Notes would have been subject to mandatory redemption. The $600 million initial gross proceeds were included in Cash in Escrow related to the Spin-Off on the July 31, 2021 combined balance sheet.

On August 2, 2021, the Company used cash proceeds of $592 million, which were net of issuance costs of $8 million, from the 2029 Notes, to partially fund the approximately $976 million cash payment to the Former Parent in connection with the Separation. The issuance costs are being amortized through the maturity date and are included within Long-term Debt on the Consolidated and Combined Balance Sheets.

Credit Facilities

On August 2, 2021, the Company entered into a term loan B credit facility in an aggregate principal amount of $400 million (the “Term Loan Facility”), which will mature in August 2028. 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 a principal payment of $1 million and $2 million for the Term Loan Facility during the second quarter of 2022 and year-to-date 2022, respectively.

Interest under the Term Loan Facility is calculated by reference to the London Interbank Offered Rate (“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 will be subject to a floor of 0.50%. 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 asset-based revolving credit facility and on a second-priority lien basis by priority collateral of the asset-based revolving credit facility, subject to customary exceptions.

On August 2, 2021, the Company also entered into a senior secured asset-based revolving credit facility (the “ABL 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. Interest on the loans under the ABL Facility is 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%. Unused commitments under the ABL Facility accrue an unused commitment fee ranging from 0.25% to 0.30%.

For the reporting period ended July 30, 2022, the Company's borrowing base was $585 million and there were no borrowings outstanding under the ABL Facility. The Company had $40 million of outstanding letters of credit as of July 30, 2022 that reduced its availability under the ABL Facility.

On August 2, 2021, the Company used the net cash proceeds from the credit facilities of $384 million, which were net of issuance and financing costs of $10 million for the Term Loan Facility and $6 million for the ABL Facility, to partially fund the approximately $976 million cash payment to the Former Parent in connection with the Separation. 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 July 30, 2022 and January 29, 2022 Consolidated and Combined Balance Sheets.

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 July 30, 2022, the Company was in compliance with all covenants under its long-term debt and borrowing facilities.

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Foreign Facilities

Certain of the Company's China subsidiaries previously utilized revolving and term loan bank facilities to support their operations (“Foreign Facilities”). During the second quarter of 2021, with no borrowings outstanding, the Company terminated the Foreign Facilities.

Long-term Debt due to Former Parent

During 2020, the Company borrowed $97 million from the Former Parent to pay down outstanding debt with external parties. This borrowing was due in September 2025 and had a variable interest rate based on the China Loan Prime Rate. As a result of the Separation, the Company no longer has this Long-term Debt due to Former Parent. Prior to the Separation, the Company recognized $2 million of interest expense year-to-date 2021 related to this borrowing.

11. Fair Value of Financial Instruments

Cash and Cash Equivalents and restricted cash 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 and restricted cash 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 publicly traded debt as of July 30, 2022, January 29, 2022 and July 31, 2021:

	July 30, 2022		January 29, 2022		July 31, 2021
	(in millions)
Principal Value	$	997	$	999	$	600
Fair Value, Estimated (a)	865		975		603

________________

(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.

Management believes that the carrying values of accounts receivable, accounts payable and accrued expenses approximate fair value because of their short maturity.

12. Comprehensive Income (Loss)

The following table provides the rollforward of accumulated other comprehensive income attributable to Victoria's Secret & Co. for year-to-date 2022:

	Foreign Currency Translation		Accumulated Other Comprehensive Income
	(in millions)
Balance as of January 29, 2022	$	5	$	5
Other Comprehensive Income (Loss) Before Reclassifications	(2)		(2)
Amounts Reclassified from Accumulated Other Comprehensive Income to Paid-in Capital	3		3
Tax Effect	—		—
Current-period Other Comprehensive Income	1		1
Balance as of July 30, 2022	$	6	$	6

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.”

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The following table provides the rollforward of accumulated other comprehensive income attributable to Victoria's Secret & Co. for year-to-date 2021:

	Foreign Currency Translation		Accumulated Other Comprehensive Income
	(in millions)
Balance as of January 30, 2021	$	4	$	4
Other Comprehensive Income (Loss) Before Reclassifications	4		4
Tax Effect	—		—
Current-period Other Comprehensive Income	4		4
Balance as of July 31, 2021	$	8	$	8

13. Retirement Benefits

The Company sponsors a tax-qualified defined contribution retirement plan for employees who meet certain age and service requirements. The qualified plan permits participating associates to elect contributions up to the maximum limits allowable under the Internal Revenue Code. The Company matches associate contributions according to a predetermined formula and contributes additional amounts based on a percentage of the associates' eligible annual compensation and years of service. Associate contributions and Company matching contributions vest immediately. Additional Company contributions and the related investment earnings are subject to vesting based on years of service. Total expense recognized related to the qualified plan was $12 million and $9 million for the second quarter of 2022 and 2021, respectively. Total expense recognized related to the qualified plan was $24 million and $19 million for year-to-date 2022 and 2021, respectively.

The Former Parent previously sponsored a non-qualified supplemental retirement plan. The non-qualified plan was an unfunded plan which provided benefits beyond the Internal Revenue Code limits for qualified defined contribution plans. On June 27, 2020, the Human Capital and Compensation Committee of the Former Parent's Board of Directors authorized the termination of the non-qualified plan. All benefits and obligations due under the non-qualified plan were fully paid during the second quarter of 2021. Total expense recognized related to the non-qualified plan was not significant for any period presented.

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.

Former Parent Derivative Lawsuits

As previously disclosed by the Former Parent, on May 19, 2020 and January 12, 2021, the Former Parent's shareholders filed derivative lawsuits in the Court of Common Pleas for Franklin County, Ohio (subsequently removed to the United States District Court for the Southern District of Ohio) and the Delaware Court of Chancery, respectively, naming as defendants certain current and former directors and officers of the Former Parent and alleging, among other things, breaches of fiduciary duty through asserted violations of law and failures to monitor workplace conduct (the “Lawsuits”). In addition, the Former Parent also received litigation and books-and-records demands from other shareholders related to the same matters (together with the Lawsuits, the “Actions”).

In July 2021, the Former Parent announced the global settlement resolving the Actions. The settlement resolves all derivative claims that have been or could have been asserted in the Actions or that involve in any way the allegations referred to in the Actions and releases all such claims against the Former Parent (and its subsidiaries, including the Company) and past and present employees, officers and directors, among others. As part of the settlement, the Former Parent (and its subsidiaries, including the Company) has agreed to implement certain management and governance measures, including the maintenance of a Diversity, Equity, and Inclusion Council. Following the Separation, the settlement terms apply to both the Former Parent and the Company. Each company has committed to invest $45 million over at least five years to fund the management and governance measures. The settlement was preliminarily approved on August 25, 2021, and a fairness hearing occurred on January 18, 2022. On May 16, 2022, the United States District Court of the Southern District of Ohio granted final approval of the settlement.

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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 has appealed both judgments; the appeals have not yet been decided by the appellate court. As of the end of the second quarter of 2022, we remain fully accrued for both judgments.

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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 the Company, 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. 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,” “target,” “goal,” “project,” “plan,” “believe,” “seek,” “strive,” “expect,” “anticipate,” “intend,” “potential” and any similar expressions may 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;

•    a loss of synergies from separating the businesses that could negatively impact our balance sheet, profit margins or earnings;

•we may not realize all of the expected benefits of the spin-off;

•    general economic conditions, inflation, consumer confidence, consumer spending patterns and 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;

•    the novel coronavirus (COVID-19) global pandemic has had and may continue to have an adverse effect on our business and results of operations;

•    the seasonality of our business;

•    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 grow through new store openings and existing store remodels;

•    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;

•    our ability to maintain, enforce and protect our trade names, trademarks and patents;

•    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 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, which could result in closed factories, reduced workforces, scarcity of raw materials, and scrutiny or embargoing of goods produced in impacted areas;

•    duties, taxes and other charges;

•    legal and regulatory matters;

•    volatility in currency exchange rates;

•    local business practices and political issues;

•    delays or disruptions in shipping and transportation and related pricing impacts;

•    disruption due to labor disputes; and

•    changing expectations regarding product safety due to new legislation;

•    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;

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•    fluctuations in freight, product input and energy costs, including those caused by inflation;

•    our ability to adequately protect our assets from loss and theft;

•    claims arising from our self-insurance;

•    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 service or refinance our debt and maintain compliance with our restrictive covenants;

•    our ability to comply with laws, regulations and technology platform rules or other obligations related to data privacy and security;

•    our ability to comply with regulatory requirements;

•    legal and compliance matters; and

•    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, 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 Annual Report on Form 10-K filed with the SEC on March 18, 2022.

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 and Combined 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 primarily through two brands, Victoria’s Secret and PINK. Victoria’s Secret is a category-defining global lingerie brand with a leading market position and a rich, 40-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. Together, Victoria’s Secret, PINK and Victoria’s Secret Beauty support, inspire and celebrate women through every phase of their life.

Victoria’s Secret and PINK 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 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 second quarter of 2022, our operating income was $98 million as compared to $203 million in the second quarter of 2021, and our operating income rate (expressed as a percentage of net sales) was 6.4% as compared to 12.6% last year. The operating income decrease in the second quarter of 2022 as compared to the second quarter of 2021 was primarily driven by a decrease in net sales and merchandise margin. We experienced slowing customer traffic sequentially throughout the quarter as our customers and the broader retail environment were impacted by increasing inflationary pressures. Net sales decreased $93 million, or 6%, to $1.521 billion compared to $1.614 billion in the second quarter of 2021. Our North American store sales decreased $69 million, to $968 million compared to $1.037 billion in the second quarter of 2021. In our North American stores, although traffic slowed sequentially throughout the quarter and compared to the first quarter of 2022, traffic in the quarter increased as compared to the second quarter of 2021. The increase in traffic in the quarter as compared to last year was more than offset by a decrease in conversion (which we define as the percentage of customers who visit our stores and make a purchase) and a decrease in average unit retail (which we define as the average price per unit purchased). Our direct channel sales decreased by 12%, or $55 million, to $414 million compared to $469 million in the second quarter of 2021, primarily due to a decline in average unit retail and traffic.

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In the second quarter of 2022, we announced a new, simplified corporate leadership structure designed to unite our brands, better align our teams with a shifting consumer landscape and enable better execution of our strategy. The restructuring eliminated approximately 160 management roles, or approximately 5% of our home office headcount. As a result of the restructuring, pre-tax severance and related costs of $29 million were recognized in the second quarter.

We are committed to optimizing our performance by focusing on our brand transformation, being best at bras and enhancing the customer experience. We will continue to search for growth vehicles to help us attract new customers and better meet the needs of existing ones, including developing new brands as well as pursuing partnerships with existing brands. Despite the inflationary pressures we continue to face, we are confident in our ability to navigate this shifting consumer landscape and remain committed to delivering long-term sustainable value for our shareholders.

For additional information related to our second quarter of 2022 financial performance, see “Results of Operations.”

Impacts of Victoria's Secret Spin-Off

The spin-off of Victoria’s Secret & Co. into an independent, publicly traded company was completed on August 2, 2021. We believe the spin-off will enable us to maximize management focus and financial flexibility to thrive in an evolving retail environment and deliver long-term profitable growth.

In connection with the Separation, we have incurred, and expect to continue to incur, incremental capital and expense related to the implementation of new information technology platforms. We currently estimate that our total incremental expenditures could be $100 million to $150 million over the transition period, with the majority of costs being incurred by the end of 2023. These estimated costs consist of internal and external labor, software licensing, networking, security and infrastructure required to separate the current information technology capabilities (systems and infrastructure) in support of two independent companies. Such estimates are subject to change as our work continues. We provide technology services to the Former Parent under the transition services agreements while independent systems environments are created, which we believe help to minimize dis-synergies. The above estimates are preliminary in nature, are based solely on information available to us as of the date of this quarterly report and are inherently uncertain and subject to change.

Ongoing Impacts of COVID-19

Even as the COVID-19 pandemic subsides, macroeconomic impacts related to the pandemic, including inflation, supply chain disruptions and labor shortages, are expected to continue. We remain focused on the safe operation of our business, including our stores, distribution, fulfillment and call centers. There remains the potential for COVID-19-related risks of closure or operating restrictions, as well as risks related to delays or disruptions in our supply chain and related pricing impacts, which could materially impact our operations and financial performance in future periods.

Basis of Presentation

Our financial statements for periods through the Separation date of August 2, 2021 are combined financial statements prepared on a “carve-out” basis, which reflects the business as historically managed within the Former Parent. The balance sheets and cash flows for the periods prior to the Separation include only those assets and liabilities directly related to the Victoria’s Secret business, and the statements of income include the historically reported results of the Victoria’s Secret business along with allocations of a portion of the Former Parent's total corporate expenses. Our financial statements for the period from August 3, 2021 through July 30, 2022 are consolidated financial statements based on our reported results as a standalone company. For additional information on the “carve-out” basis of accounting, see Note 1, “Description of Business, Basis of Presentation and Summary of Significant Accounting Policies.”

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Adjusted 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, net income attributable to Victoria's Secret & Co., and net income per diluted share attributable to Victoria's Secret & Co. on an adjusted basis, which remove certain special items. We believe that these special items are not indicative of our ongoing operations due to their size and nature. 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.

	Second Quarter				Year-to-Date
(in millions, except per share amounts)	2022		2021		2022		2021
Reconciliation of Reported to Adjusted Operating Income
Reported Operating Income - GAAP	$	98	$	203	$	192	$	428
Occupancy-related Legal Matter (a)	—		—		22		—
Restructuring Charge (b)	29		—		29		—
Adjusted Operating Income	$	127	$	203	$	243	$	428
Reconciliation of Reported to Adjusted Net Income Attributable to Victoria's Secret & Co.
Reported Net Income Attributable to Victoria's Secret & Co. - GAAP	$	70	$	151	$	151	$	325
Occupancy-related Legal Matter (a)	—		—		22		—
Restructuring Charge (b)	29		—		29		—
Tax Effect of Adjusted Items	(7)		—		(13)		—
Adjusted Net Income Attributable to Victoria's Secret & Co.	$	92	$	151	$	189	$	325
Reconciliation of Reported to Adjusted Net Income Per Diluted Share Attributable to Victoria's Secret & Co.
Reported Net Income Per Diluted Share Attributable to Victoria's Secret & Co. - GAAP	$	0.83	$	1.71	$	1.76	$	3.68
Occupancy-related Legal Matter (a)	—		—		0.19		—
Restructuring Charge (b)	0.26		—		0.26		—
Adjusted Net Income Per Diluted Share Attributable to Victoria's Secret & Co.	$	1.09	$	1.71	$	2.21	$	3.68

 ________________

(a)In the first quarter of 2022, we recognized a pre-tax charge of $22 million ($16 million after-tax), included in buying and occupancy expense, related to a legal matter with a landlord regarding a high-profile store that we surrendered to the landlord prior to the Separation. For additional information see Note 14, “Commitments and Contingencies” included in Item 1. Financial Statements.

(b)In the second quarter of 2022, we recognized a pre-tax charge of $29 million ($22 million after-tax), $16 million included in general, administrative and store operating expense and $13 million included in buying and occupancy expense, related to restructuring activities to reorganize our leadership structure. For additional information see Note 4, “Restructuring Activities” included in Item 1. Financial Statements.

25

Store Data

The following table compares the second quarter of 2022 U.S. company-operated store data to the second quarter of 2021 and year-to-date 2022 to year-to-date 2021:

	Second Quarter						Year-to-Date
	2022		2021		% Change		2022		2021		% Change
Sales per Average Selling Square Foot (a)	$	163	$	172	(5	%)	$	321	$	325	(1	%)
Sales per Average Store (in thousands) (a)	$	1,133	$	1,183	(4	%)	$	2,228	$	2,245	(1	%)
Average Store Size (selling square feet)	6,949		6,888		1	%
Total Selling Square Feet (in thousands)	5,580		5,772		(3	%)

 ________________

(a)Sales per average selling square foot and sales per average store, which are indicators of store productivity, are calculated based on store sales for the period divided by the average, including the beginning and end of period, of total square footage and store count, respectively.

The following table represents store data for year-to-date 2022:

	Stores at			Reclassed to	Stores at
	January 29, 2022	Opened	Closed	Joint Venture (a)	July 30, 2022
Company-Operated:
U.S.	808	1	(6)	—	803
Canada	26	—	—	—	26
Subtotal Company-Operated	834	1	(6)	—	829
China Joint Venture:
Beauty & Accessories (a)	35	1	(3)	8	41
Full Assortment	30	1	—	—	31
Subtotal China Joint Venture	65	2	(3)	8	72
Partner-Operated:
Beauty & Accessories	335	2	(19)	(8)	310
Full Assortment	128	8	(7)	—	129
Subtotal Partner-Operated	463	10	(26)	(8)	439
Total	1,362	13	(35)	—	1,340

________________

(a)Includes eight partner-operated stores.

The following table represents store data for year-to-date 2021:

	Stores at			Stores at
	January 30, 2021	Opened	Closed	July 31, 2021
Company-Operated:
U.S.	846	—	(8)	838
Canada	25	1	—	26
China - Beauty & Accessories	36	1	(1)	36
China - Full Assortment	26	—	—	26
Subtotal Company-Operated	933	2	(9)	926
Partner-Operated:
Beauty & Accessories	338	7	(6)	339
Full Assortment	120	3	—	123
Subtotal Partner-Operated	458	10	(6)	462
Total	1,391	12	(15)	1,388

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Results of Operations

Second Quarter of 2022 Compared to Second Quarter of 2021

Operating Income

For the second quarter of 2022, operating income decreased $105 million, to $98 million, compared to operating income of $203 million in the second quarter of 2021, and the operating income rate (expressed as a percentage of net sales) decreased to 6.4% from 12.6%. The drivers of the operating income results are discussed in the following sections.

Net Sales

The following table provides net sales for the second quarter of 2022 in comparison to the second quarter of 2021:

	2022		2021		% Change
Second Quarter	(in millions)
Stores – North America	$	968	$	1,037	(7	%)
Direct	414		469		(12	%)
International (a)	139		108		28	%
Total Net Sales	$	1,521	$	1,614	(6	%)

 _______________

(a)Results include consolidated joint venture sales in China, royalties associated with franchised stores and wholesale sales.

The following table provides a reconciliation of net sales from the second quarter of 2021 to the second quarter of 2022:

	(in millions)
2021 Net Sales	$	1,614
Comparable Store Sales	(75)
Sales Associated with New, Closed and Non-comparable Remodeled Stores, Net	4
Direct Channel	(48)
Credit Card Programs	(1)
International Wholesale, Royalty and Other	30
Foreign Currency Translation	(3)
2022 Net Sales	$	1,521

The following table compares the second quarter of 2022 comparable sales to the second quarter of 2021:

	2022		2021
Comparable Sales (Stores and Direct) (a)	(8	%)	(9	%)
Comparable Store Sales (a)	(7	%)	16	%

________

(a)The percentage change in comparable sales represents direct and comparable store sales. The percentage change in comparable store sales represents the change in sales at comparable stores only and excludes the change in sales from our direct channels. The change in comparable sales provides an indication of period over period growth (decline). A store is typically included in the calculation of comparable sales when it has been open 12 months or more and it has not had a change in selling square footage of 20% or more. Closed stores are excluded from the comparable sales calculation if they have been closed for four consecutive days or more. Upon re-opening, the stores are included in the calculation. Therefore, comparable sales results exclude the closure period of stores that were closed for four consecutive days or more as a result of the COVID-19 pandemic. Additionally, stores are excluded if total selling square footage in the mall changes by 20% or more through the opening or closing of a second store. The percentage change in comparable sales is calculated on a comparable calendar period as opposed to a fiscal basis. Comparable sales attributable to our international stores are calculated on a constant currency basis.

Net sales in the second quarter of 2022 decreased $93 million, or 6%, to $1.521 billion compared to $1.614 billion in the second quarter of 2021. We experienced slowing customer traffic sequentially throughout the second quarter as our customers and the broader retail environment were impacted by increasing inflationary pressures.

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In the stores channel, our North America net sales decreased $69 million, or 7%, to $968 million as compared to the second quarter of 2021. Although traffic slowed sequentially throughout the quarter and compared to the first quarter of 2022 in our stores, traffic in the quarter increased as compared to the second quarter of 2021. The increase in traffic in the quarter as compared to last year was more than offset by a decrease in conversion and a decrease in average unit retail. Net sales in stores outside of North America increased in the second quarter of 2022 compared to the second quarter of 2021 driven by fewer COVID-19-related store restrictions this year.

In the direct channel, net sales decreased $55 million, or 12%, to $414 million, primarily due to a decrease in average unit retail and traffic.

Gross Profit

For the second quarter of 2022, our gross profit decreased $135 million compared to the second quarter of 2021 to $535 million, and our gross profit rate (expressed as a percentage of net sales) decreased to 35.2% from 41.5%.

The gross profit decrease was due to the decrease in merchandise margin dollars related to the decrease in net sales, increased promotional activity primarily driven by the longer semi-annual sale period this year and incremental supply chain and inflationary cost pressures compared to the second quarter of 2021 of approximately $60 million. The gross profit decrease was also due to pre-tax severance and related costs of $13 million associated with the restructuring activities in the second quarter of 2022. Partially offsetting these decreases was lower buying and occupancy expenses this year compared to last year driven by lower landlord-related expenses this year, an asset write-off last year related to the Separation and lower management compensation expense this year.

The gross profit rate decrease was driven by a decrease in the merchandise margin rate reflecting increased promotional activity and increased supply chain and inflationary cost pressures, as well as the severance and related costs associated with the restructuring activities, partially offset by buying and occupancy leverage driven by the lower landlord-related expenses this year, the asset write-off last year related to the Separation and lower management compensation expense this year.

General, Administrative and Store Operating Expenses

For the second quarter of 2022, our general, administrative and store operating expenses decreased $30 million, or 6%, compared to the second quarter of 2021 to $437 million. The decrease in general, administrative and store operating expenses compared to the second quarter of 2021 was due to lower management compensation expense and lower selling expenses driven by our disciplined and proactive expense management, partially offset by the pre-tax severance and related costs of $16 million associated with the restructuring activities in the second quarter of 2022.

The general, administrative and store operating expense rate (expressed as a percentage of net sales) decreased slightly to 28.8% from 28.9% due to the lower management compensation and selling expenses, partially offset by the severance and related costs associated with the restructuring activities.

Interest Expense

For the second quarter of 2022, our interest expense increased $10 million to $13 million compared to the second quarter of 2021, driven by the increase in our outstanding debt due to the issuance of the 2029 Notes and the Term Loan Facility that we entered into upon the Separation in August 2021.

Provision for Income Taxes

For the second quarter of 2022, the Company's effective tax rate was 19.2% compared to 24.1% in the second quarter of 2021. The second quarter of 2022 rate was lower than the Company's combined estimated federal and state statutory rate primarily due to foreign earnings taxed at a rate lower than our combined statutory rate. The second quarter of 2021 rate was lower than the Company's 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 quarter.

Results of Operations

Year-to-Date 2022 Compared to Year-to-Date 2021

Operating Income

For year-to-date 2022, operating income decreased $236 million, to $192 million, from $428 million year-to-date 2021, and the operating income rate (expressed as a percentage of net sales) decreased to 6.4% from 13.5%. The drivers of the operating income results are discussed in the following sections.

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Net Sales

The following table provides net sales for year-to-date 2022 in comparison to year-to-date 2021:

	2022		2021		% Change
Year-to-Date	(in millions)
Stores – North America	$	1,900	$	1,970	(4	%)
Direct	834		990		(16	%)
International (a)	271		208		30	%
Total Net Sales	$	3,005	$	3,168	(5	%)

 _______________

(a)Results include consolidated joint venture sales in China, royalties associated with franchised stores and wholesale sales.

The following table provides a reconciliation of net sales from year-to-date 2021 to year-to-date 2022:

	(in millions)
2021 Net Sales	$	3,168
Comparable Store Sales	(99)
Sales Associated with New, Closed and Non-comparable Remodeled Stores, Net	16
Direct Channel	(141)
Credit Card Programs	(2)
International Wholesale, Royalty and Other	65
Foreign Currency Translation	(2)
2022 Net Sales	$	3,005

The following table compares year-to-date 2022 comparable sales to year-to-date 2021:

	2022		2021
Comparable Sales (Stores and Direct) (a)	(8	%)	6	%
Comparable Store Sales (a)	(5	%)	9	%

________

(a)The percentage change in comparable sales represents direct and comparable store sales. The percentage change in comparable store sales represents the change in sales at comparable stores only and excludes the change in sales from our direct channels. The change in comparable sales provides an indication of period over period growth (decline). A store is typically included in the calculation of comparable sales when it has been open 12 months or more and it has not had a change in selling square footage of 20% or more. Closed stores are excluded from the comparable sales calculation if they have been closed for four consecutive days or more. Upon re-opening, the stores are included in the calculation. Therefore, comparable sales results exclude the closure period of stores that were closed for four consecutive days or more as a result of the COVID-19 pandemic. Additionally, stores are excluded if total selling square footage in the mall changes by 20% or more through the opening or closing of a second store. The percentage change in comparable sales is calculated on a comparable calendar period as opposed to a fiscal basis. Comparable sales attributable to our international stores are calculated on a constant currency basis.

Net sales year-to-date 2022 decreased $163 million, or 5%, to $3.005 billion compared to $3.168 billion year-to-date 2021.

In the stores channel year-to-date 2022, our North America net sales decreased $70 million, or 4%, to $1.900 billion, as compared to year-to-date 2021 as an increase in traffic was more than offset by a decrease in conversion and a decrease in average unit retail. Net sales in stores outside of North America increased year-to-date 2022 compared to year-to-date 2021 driven by fewer COVID-19-related store restrictions this year.

In the direct channel, net sales decreased $156 million, or 16%, to $834 million, primarily due to a decrease in average unit retail and traffic.

Additionally, net sales year-to-date 2022 as compared to year-to-date 2021 were impacted by incremental net sales recognized in the first quarter last year as a result of federal stimulus benefits.

Gross Profit

For year-to-date 2022, our gross profit decreased $285 million to $1.057 billion, and our gross profit rate (expressed as a percentage of net sales) decreased to 35.2% from 42.3%.

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The gross profit decrease was primarily due to the decrease in merchandise margin dollars related to the decrease in net sales, incremental supply chain and inflationary cost pressures compared to last year of approximately $140 million and increased promotional activity primarily driven by the longer semi-annual sale period this year. Additionally, the decrease in net sales and merchandise margin was due to incremental net sales and merchandise margin recognized in the first quarter last year as a result of federal stimulus benefits. Partially offsetting these decreases was lower buying and occupancy expenses this year compared to last year driven by lower management compensation expense and an asset write-off last year related to the Separation.

The gross profit rate decrease was primarily driven by a decrease in the merchandise margin rate reflecting increased supply chain and inflationary cost pressures and increased promotional activity, partially offset by slight buying and occupancy leverage driven by the lower management compensation expense and the asset write-off last year related to the Separation.

General, Administrative and Store Operating Expenses

For year-to-date 2022, our general, administrative and store operating expenses decreased $49 million, or 5%, to $865 million primarily due to lower management compensation expense and lower selling expenses driven by our disciplined and proactive expense management.

The general, administrative and store operating expense rate (expressed as a percentage of net sales) remained unchanged at 28.8% for both years.

Interest Expense

For year-to-date 2022, our interest expense increased $21 million to $25 million compared to year-to-date 2021, primarily driven by the increase in our outstanding debt due to the issuance of the 2029 Notes and the Term Loan Facility that we entered into upon the Separation in August 2021.

Provision for Income Taxes

For year-to-date 2022, the Company's effective tax rate was 11.1% compared to 23.2% year-to-date 2021. The effective tax rate for both years was lower than the Company's 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 periods.

FINANCIAL CONDITION

Liquidity and Capital Resources

Liquidity, or access to cash, is an important factor in determining our financial stability. We are committed to maintaining adequate liquidity. Cash generated from our operating activities provides the primary resources to support current operations, growth initiatives, seasonal funding requirements and capital expenditures. Our cash provided from operations is impacted by our net income and working capital changes. Our net income is impacted by, among other things, sales volume, seasonal sales patterns, success of new product introductions, profit margins and income taxes. Historically, sales are higher during the fourth quarter of the fiscal year due to seasonal and holiday-related sales patterns. Generally, our need for working capital peaks during the summer and fall months as inventory builds in anticipation of the holiday period.

Prior to the Separation, we generated annual cash flow from operating activities. However, we were operating within the Former Parent's cash management structure, which used a centralized approach to cash management and financing of our operations. As a result, a substantial portion of our cash was transferred to the Former Parent. This arrangement was not reflective of the manner in which we would have financed our operations had we been an independent, publicly traded company during the periods prior to the Separation.

The cash and cash equivalents held by the Former Parent at the corporate level prior to the Separation were not specifically identifiable to us and, therefore, were not reflected in the Consolidated and Combined Balance Sheets. The Former Parent's third-party long-term debt and the related interest expense were not allocated to us for any of the periods presented prior to the Separation as we were not the legal obligor of such debt.

Following the Separation from the Former Parent, our capital structure and sources of liquidity changed from the historical capital structure because we no longer participate in the Former Parent's centralized cash management program. Our ability to fund our operating needs is primarily dependent upon our ability to continue to generate positive cash flow from operations, as well as borrowing capacity under our ABL Facility, which we rely on to supplement cash generated by our operating activities, particularly when our need for working capital peaks in the summer and fall months as discussed above. Management believes that our cash balances and funds provided by operating activities, along with the borrowing capacity under our ABL Facility, taken as a whole, provide (i) adequate liquidity to meet all of our current and long-term obligations when due, including third-party debt that we incurred in connection with the Separation, (ii) adequate liquidity to fund capital expenditures, and (iii) flexibility to consider investment opportunities that may arise. However, certain investment opportunities may require us to seek additional debt or equity financing, and there can be no assurances that we will be able to obtain additional debt or equity financing on acceptable terms, if at all, in the future.

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We expect to utilize our cash flows to continue to invest in our brands, talent and capabilities, and growth strategies as well as to repay our indebtedness over time. We believe that our available short-term and long-term capital resources are sufficient to fund requirements over the next 12 months.

Working Capital and Capitalization

Prior to the Separation, we generated annual cash flow from operating activities to support our working capital needs. However, we were operating within the Former Parent’s cash management structure, which used a centralized approach to cash management and financing of our operations. As a result, a substantial portion of our cash was transferred to the Former Parent. This arrangement was not reflective of the manner in which we would have financed our operations had we been an independent, publicly traded company during the periods presented prior to the Separation. Based upon our cash balances and funds provided by operating activities, along with the borrowing capacity under our ABL Facility, we believe we will be able to continue to meet our working capital needs.

The following table provides a summary of our working capital position and capitalization for the periods post-Separation as of July 30, 2022 and January 29, 2022:

	July 30, 2022		January 29, 2022
	(in millions)
Net Cash Provided by (Used for) Operating Activities (a)	$	(51)	$	851
Capital Expenditures (a)	58		169
Working Capital	107		(7)
Capitalization:
Long-term Debt	977		978
Victoria's Secret & Co. Shareholders' Equity	247		257
Total Capitalization	$	1,224	$	1,235
Amounts Available Under the ABL Facility (b)	$	545	$	523

_______________

(a)The July 30, 2022 amounts represent a twenty-six-week period and the January 29, 2022 amounts represent a fifty-two-week period.

(b)For the reporting periods ended July 30, 2022 and January 29, 2022, our borrowing base was $585 million and $564 million, respectively, and there were no borrowings outstanding under the ABL Facility for either period. We had outstanding letters of credit, which reduce our availability under the ABL Facility, of $40 million as of July 30, 2022 and $41 million as of January 29, 2022.

Cash Flow

The following table provides a summary of our cash flow activity for year-to-date 2022 and 2021:

	Year-to-Date
	2022		2021
	(in millions)
Cash and Cash Equivalents and Restricted Cash, Beginning of Period	$	490	$	335
Net Cash Flows Provided by (Used for) Operating Activities	(51)		389
Net Cash Flows Used for Investing Activities	(83)		(66)
Net Cash Flows Provided by (Used for) Financing Activities	(153)		233
Effects of Exchange Rate Changes on Cash and Cash Equivalents and Restricted Cash	(2)		2
Net Increase (Decrease) in Cash and Cash Equivalents and Restricted Cash	(289)		558
Cash and Cash Equivalents and Restricted Cash, End of Period	$	201	$	893

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Operating Activities

Net cash provided by (used for) operating activities reflects net income adjusted for non-cash items, including depreciation, share-based compensation expense and deferred tax expense, as well as changes in working capital. Net cash used for operating activities year-to-date 2022 was $51 million, a decrease in net cash flows from operating activities of $440 million compared to year-to-date 2021. The decrease in net cash from operating activities year-to-date 2022 was primarily driven by higher cash outflows associated with working capital changes and lower net income. The most significant working capital driver resulting in the decrease in operating cash flows this year compared to last year is our increased inventory levels, primarily driven by higher cost of goods due to supply chain cost pressures and longer in-transit shipment times which we began to experience in the third and fourth quarter of 2021, and the associated impact on accounts payable due to the timing of payments for inventory. The other significant working capital driver resulting in the decrease in operating cash flows this year is related to income taxes paid of $140 million year-to-date 2022 as compared to $15 million paid year-to-date 2021. In 2021, the income tax provision assumed the utilization of certain tax benefits that only existed on a “carve-out” basis from the Former Parent.

Investing Activities

Net cash used for investing activities year-to-date 2022 was $83 million, consisting primarily of capital expenditures of $58 million and our $18 million investment in Frankies Bikinis. The capital expenditures were primarily related to our store capital program, along with investments in technology, distribution and logistics to support our retail capabilities.

Net cash used for investing activities for year-to-date 2021 was $66 million for capital expenditures. The capital expenditures were primarily related to spending on technology and logistics to support our digital business and other retail capabilities.

We estimate 2022 capital expenditures of approximately $200 million for the year. Capital investments during 2022 are focused on our store capital program, along with investments in technology, distribution and logistics capabilities.

Financing Activities

Net cash used for financing activities year-to-date 2022 was $153 million, consisting primarily of $169 million of share repurchases and $39 million of payments for taxes on share-based compensation awards issued, partially offset by $55 million of cash received from Regina Miracle in connection with the joint venture agreement completed in the first quarter of 2022.

Net cash provided by financing activities year-to-date 2021 was $233 million consisting primarily of $600 million in proceeds from the issuance of the 2029 Notes, partially offset by net transfers to the Former Parent of $367 million.

Common Stock Share Repurchases & Treasury Stock Retirements

Our Board of Directors will determine share repurchase authorizations, giving consideration to our levels of profit and cash flow, capital requirements, current and forecasted liquidity, the restrictions placed upon us by our borrowing arrangements and the Tax Matters Agreement with the Former Parent, as well as financial and other conditions existing at the time. We use cash flow generated from operating activities to fund our share repurchase programs. The timing and amount of any repurchases will be made at our discretion, taking into account a number of factors, including market conditions.

In February 2022, upon final settlement of our December 2021 ASR Agreement with Goldman Sachs, we received an additional 0.3 million shares of our 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 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, we immediately retired the additional 0.3 million shares repurchased in connection with the settlement of the 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.

In March 2022, our Board of Directors approved a new share repurchase program, providing for the repurchase of up to $250 million of our common stock. The $250 million authorization is expected to be utilized to repurchase shares in the open market, subject to market conditions and other factors. Shares acquired through the March 2022 Share Repurchase Program will be available to meet obligations under equity compensation plans and for general corporate purposes. The March 2022 Share Repurchase Program will continue until exhausted, but no later than January 28, 2023.

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We repurchased the following shares of our common stock under our March 2022 Share Repurchase Program during year-to-date 2022:

	Amount Authorized		Shares Repurchased	Amount Repurchased		Average Stock Price
	(in millions)		(in thousands)	(in millions)
March 2022 Share Repurchase Program	$	250	3,879	$	171	$	44.06

The March 2022 Share Repurchase Program has $79 million remaining as of July 30, 2022. There were $2 million of share repurchases reflected in Accounts Payable on the July 30, 2022 consolidated balance sheet.

Subsequent to July 30, 2022, we repurchased an additional 0.7 million shares for $27 million through September 7, 2022 under the March 2022 Share Repurchase Program.

In accordance with the Board of Directors' resolution, shares of our common stock repurchased under the March 2022 Share Repurchase Program will be retired and cancelled upon repurchase. As a result, year-to-date 2022 we retired 3.8 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, $7 million in Paid-in Capital and $162 million in Retained Earnings.

Dividend Policy and Procedures

We have not paid any cash dividends since the Separation. We cannot guarantee that we will pay a dividend in the future or continue to pay any dividends if and when we commence paying dividends. The declaration and amount of any dividends to holders of our common stock will be at the discretion of our Board of Directors and will depend upon many factors, including our financial condition, earnings, cash flows, capital requirements of our business, covenants associated with our debt obligations, legal requirements, regulatory constraints, industry practice and any other factors the Board of Directors deems relevant. We would use cash flow generated from operating and financing activities to fund our dividends.

Long-term Debt and Borrowing Facilities

The following table provides our outstanding debt balance, net of unamortized debt issuance costs and discounts, as of July 30, 2022, January 29, 2022 and July 31, 2021:

	July 30, 2022		January 29, 2022		July 31, 2021
	(in millions)
Senior Secured Debt with Subsidiary Guarantee
$397 million Term Loan due August 2028 (“Term Loan Facility”)	$	388	$	390	$	—
Total Senior Secured Debt with Subsidiary Guarantee	388		390		—
Senior Debt with Subsidiary Guarantee
$600 million, 4.625% Fixed Interest Rate Notes due July 2029 (“2029 Notes”)	593		592		592
Total Senior Debt with Subsidiary Guarantee	593		592		592
Long-term Debt due to Former Parent	—		—		97
Total	981		982		689
Current Debt	(4)		(4)		—
Total Long-term Debt, Net of Current Portion	$	977	$	978	$	689

Cash paid for interest was $21 million year-to-date 2022.

Issuance of Notes

In July 2021, we issued $600 million of 4.625% notes due in July 2029 in a transaction exempt from registration under the Securities Act of 1933, as amended. The obligation to pay principal and interest on the 2029 Notes is jointly and severally guaranteed on a full and unconditional basis by certain of our wholly-owned subsidiaries. As of July 31, 2021, the proceeds were held in escrow for release to us upon satisfaction of certain conditions, including completion of the Separation. If the conditions for the release from escrow of the proceeds of this offering were not satisfied, the 2029 Notes would have been subject to mandatory redemption. The $600 million initial gross proceeds were included in Cash in Escrow related to the Spin-Off on the July 31, 2021 combined balance sheet.

On August 2, 2021, we used cash proceeds of $592 million, which were net of issuance costs of $8 million, from the 2029 Notes, to partially fund the approximately $976 million cash payment to the Former Parent in connection with the Separation. The issuance costs are being amortized through the maturity date and are included within Long-term Debt on the Consolidated and Combined Balance Sheets.

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Credit Facilities

On August 2, 2021, we entered into a term loan B credit facility in an aggregate principal amount of $400 million, which will mature in August 2028. Commencing in December 2021, we are 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. We made a principal payment of $1 million and $2 million for the Term Loan Facility during the second quarter of 2022 and year-to-date 2022, respectively.

Interest under the Term Loan Facility is calculated by reference to the 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 will be subject to a floor of 0.50%. 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 our wholly-owned domestic subsidiaries. The loans under the Term Loan Facility are secured on a first-priority lien basis by certain assets of ours and guarantors that do not constitute priority collateral of the asset-based revolving credit facility and on a second-priority lien basis by priority collateral of the asset-based revolving credit facility, subject to customary exceptions.

On August 2, 2021, we 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 our eligible U.S. and Canadian credit card receivables, eligible accounts receivable, eligible inventory and eligible real property, and (ii) the aggregate commitment. Interest on the loans under the ABL Facility is calculated by reference to (i) LIBOR or an alternative base rate and (ii) in the case of loans denominated in Canadian dollars, 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%. Unused commitments under the ABL Facility accrue an unused commitment fee ranging from 0.25% to 0.30%.

For the reporting period ended July 30, 2022, our borrowing base was $585 million and there were no borrowings outstanding under the ABL Facility. We had $40 million of outstanding letters of credit as of July 30, 2022 that reduced our availability under the ABL Facility.

On August 2, 2021, we used the net cash proceeds from the credit facilities of $384 million, which were net of issuance and financing costs of $10 million for the Term Loan Facility and $6 million for the ABL Facility, to partially fund the approximately $976 million cash payment to the Former Parent in connection with the Separation. 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 July 30, 2022 and January 29, 2022 Consolidated and Combined Balance Sheets.

Our 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 EBITDAR ratio. The financial covenants could, within specific predefined circumstances, limit our ability to incur additional indebtedness, make certain investments, pay dividends or repurchase shares. As of July 30, 2022, we were in compliance with all covenants under our long-term debt and borrowing facilities.

Foreign Facilities

Certain of our China subsidiaries previously utilized revolving and term loan bank facilities to support their operations (“Foreign Facilities”). During the second quarter of 2021, with no borrowings outstanding, we terminated the Foreign Facilities.

Long-term Debt due to Former Parent

During 2020, we borrowed $97 million from the Former Parent to pay down outstanding debt with external parties. This borrowing was due in September 2025 and had a variable interest rate based on the China Loan Prime Rate. As a result of the Separation, we no longer have this Long-term Debt due to Former Parent. Prior to the Separation, we recognized $2 million of interest expense year-to-date 2021 related to this borrowing.

Credit Ratings

The following table provides our credit ratings as of July 30, 2022:

	Moody’s	S&P
Corporate	Ba3	BB-
Senior Secured Debt with Subsidiary Guarantee	Ba2	BB+
Senior Unsecured Debt with Subsidiary Guarantee	B1	BB-
Outlook	Stable	Stable

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Contingent Liabilities and Contractual Obligations

Contractual Obligations

Our contractual obligations primarily consist of long-term debt and the related interest payments, operating leases, purchase orders for merchandise inventory and other long-term obligations. These contractual obligations impact our short-term and long-term liquidity and capital resource needs. There have been no material changes in our contractual obligations since January 29, 2022, as discussed in “Contingent Liabilities and Contractual Obligations” in our Annual Report on Form 10-K filed with the SEC on March 18, 2022. Certain of our contractual obligations may fluctuate during the normal course of business (primarily changes in our merchandise inventory-related purchase obligations, which fluctuate throughout the year as a result of the seasonal nature of our operations).

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

We did not adopt any new accounting standards during the second quarter of 2022 that had a material impact on our 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 our results of operations, financial position or cash flows.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The preparation of financial statements in conformity with GAAP requires management to adopt accounting policies related to 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. On an ongoing basis, management evaluates its accounting policies, estimates and judgments, including those related to inventories, long-lived assets, claims and contingencies, income taxes and revenue recognition. Management bases our estimates and judgments on historical experience and various other factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates.

There have been no material changes to the critical accounting policies and estimates disclosed in our Annual Report on Form 10-K filed with the SEC on March 18, 2022.

Item 3.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market Risk

The market risk inherent in our financial instruments represents the potential loss in fair value, earnings or cash flows arising from adverse changes in foreign currency exchange rates or interest rates. We may use derivative financial instruments like foreign currency forward contracts, cross-currency swaps and interest rate swap arrangements to manage exposure to market risks. We do not use derivative financial instruments for trading purposes.

Foreign Exchange Rate Risk

We have operations and investments in unconsolidated entities in foreign countries which expose us to market risk associated with foreign currency exchange rate fluctuations. Our Canadian dollar and Chinese Yuan denominated earnings are subject to exchange rate risk as substantially all our merchandise sold in Canada and China is sourced through U.S. dollar transactions. From time to time we may adjust our exposure to foreign exchange rate risk by entering into foreign currency forward contracts, however, these measures may not succeed in offsetting all the short-term impact of foreign currency rate movements and generally may not be effective in offsetting the long-term impact of sustained shifts in foreign currency rates.

Further, although our royalty arrangements with our international partners are denominated in U.S. dollars, the royalties we receive in U.S. dollars are calculated based on sales in the local currency. As a result, our royalties in these arrangements are exposed to foreign currency exchange rate fluctuations.

Interest Rate Risk

Our investment portfolio primarily consists of interest-bearing instruments that are classified as cash and cash equivalents based on their original maturities. Our investment portfolio is maintained in accordance with our investment policy, which specifies permitted types of investments, specifies credit quality standards and maturity profiles and limits credit exposure to any single issuer. The primary objective of our investment activities is the preservation of principal, the maintenance of liquidity and the maximization of interest income while minimizing risk. As of July 30, 2022, our investment portfolio is primarily comprised of bank deposits. Prior to the Separation, cash generated by us was invested by the Former Parent in U.S. government obligations and U.S. Treasury and AAA-rated money market funds. Given the short-term nature and quality of investments in our portfolio, we do not believe there is any material risk to principal associated with increases or decreases in interest rates.

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Our long-term debt as of July 30, 2022 consists of the 2029 Notes, which have a fixed interest rate, and $397 million in outstanding borrowing under the Term Loan Facility, which has a variable interest rate based on either the LIBOR or an alternate base rate. Our exposure to interest rate changes is limited to the fair value of the debt issued as well as the interest we pay on the Term Loan Facility, which would not have a material impact on our earnings or cash flows.

Fair Value of Financial Instruments

The following table provides a summary of the principal value and estimated fair value of our outstanding publicly traded debt as of July 30, 2022, January 29, 2022 and July 31, 2021:

	July 30, 2022		January 29, 2022		July 31, 2021
	(in millions)
Principal Value	$	997	$	999	$	600
Fair Value, Estimated (a)	865		975		603

________________

(a)The estimated fair value of our publicly traded debt is based on reported transaction prices which are considered Level 2 inputs in accordance with ASC 820, Fair Value Measurement. The estimates presented are not necessarily indicative of the amounts that we could realize in a current market exchange.

As of July 30, 2022, we believe that the carrying values of accounts receivable, accounts payable and accrued expenses approximate fair value because of their short maturity.

Concentration of Credit Risk

We maintain cash and cash equivalents with various major financial institutions. We monitor the relative credit standing of financial institutions with whom we transact and limit the amount of credit exposure with any one entity. As of July 30, 2022, our investment portfolio is primarily comprised of bank deposits. Prior to the Separation, cash generated by us was invested by the Former Parent in U.S. government obligations and U.S. Treasury and AAA-rated money market funds. We also periodically review the relative credit standing of franchise, license and wholesale partners and other entities to which we grant credit terms in the normal course of business.

Item 4.    CONTROLS AND PROCEDURES

Evaluation of disclosure controls and procedures. As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures, as such term is defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934 (the "Exchange Act"). Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that as of the end of the period covered by this report, our disclosure controls and procedures were effective and designed to ensure that information required to be disclosed by us in reports we file or submit under the Exchange Act is (1) recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and (2) accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

Changes in internal control over financial reporting. There were no changes in our internal control over financial reporting that occurred during the second quarter of 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II—OTHER INFORMATION

Item 1.    LEGAL PROCEEDINGS

We are a defendant in a variety of lawsuits arising in the ordinary course of business. Actions filed against us from time to time include commercial, tort, intellectual property, customer, employment, data privacy, securities and other claims, including purported class action lawsuits. Although it is not possible to predict with certainty the eventual outcome of any litigation, in the opinion of management, our current legal proceedings are not expected to have a material adverse effect on our financial position or results of operations.

As previously disclosed by the Former Parent, on May 19, 2020 and January 12, 2021, the Former Parent's shareholders filed derivative lawsuits in the Court of Common Pleas for Franklin County, Ohio (subsequently removed to the United States District Court for the Southern District of Ohio) and the Delaware Court of Chancery, respectively, naming as defendants certain current and former directors and officers of the Former Parent and alleging, among other things, breaches of fiduciary duty through asserted violations of law and failures to monitor workplace conduct (the “Lawsuits”). In addition, the Former Parent also received litigation and books-and-records demands from other shareholders related to the same matters (together with the Lawsuits, the “Actions”).

In July 2021, the Former Parent announced the global settlement resolving the Actions. The settlement resolves all derivative claims that have been or could have been asserted in the Actions or that involve in any way the allegations referred to in the Actions and releases all such claims against the Former Parent (and its subsidiaries, including us) and past and present employees, officers and directors, among others. As part of the settlement, the Former Parent (and its subsidiaries, including us) has agreed to implement certain management and governance measures, including the maintenance of a Diversity, Equity, and Inclusion Council. Following the Separation, the settlement terms apply to both the Former Parent and us. Each company has committed to invest $45 million over at least five years to fund the management and governance measures. The settlement was preliminarily approved on August 25, 2021, and a fairness hearing occurred on January 18, 2022. On May 16, 2022, the United States District Court of the Southern District of Ohio granted final approval of the settlement.

Item 1A.    RISK FACTORS

The risk factors that affect our business and financial results are set forth under “Item 1A. Risk Factors” in our 2021 Annual Report on Form 10-K filed with the SEC on March 18, 2022. There have been no material changes to the risk factors from those described in the 2021 Annual Report on Form 10-K. We wish to caution the reader that the risk factors discussed in “Item 1A. Risk Factors” in our 2021 Annual Report on Form 10-K and those described in this report or other SEC filings could cause actual results to differ materially from those stated in any forward-looking statements.

Item 2.    UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The following table provides our repurchases of our common stock during the second quarter of 2022:

Period	Total Number of Shares Purchased (a)	Average Price Paid per Share (b)		Total Number of Shares Purchased as Part of Publicly Announced Programs	Maximum Number of Shares (or Approximate Dollar Value) that May Yet be Purchased Under the Program
	(in thousands)			(in thousands)
May 2022	439	$	46.28	432	$	121,012
June 2022	664	35.22		652	98,125
July 2022	638	30.01		633	79,120
Total	1,741			1,717

_______________

(a)The total number of shares repurchased includes shares repurchased as part of publicly announced programs, with the remainder relating to shares repurchased in connection with tax payments due upon vesting of employee restricted stock awards and the use of our stock to pay the exercise price on employee stock options.

(b)The average price paid per share includes any broker commissions.

Item 3.    DEFAULTS UPON SENIOR SECURITIES

Not applicable.

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Item 4.    MINE SAFETY DISCLOSURES

Not applicable.

Item 5.    OTHER INFORMATION

None.

Item 6. EXHIBITS

Exhibits
3.1*	Amended and Restated Certificate of Incorporation of Victoria’s Secret & Co. (incorporated by reference to Exhibit 3.1 to the Company's Form 8-K filed on August 3, 2021).
3.2*	Amended and Restated Bylaws of Victoria’s Secret & Co. (incorporated by reference to Exhibit 3.2 to the Company's Form 8-K filed on August 3, 2021).
10.1**	Amendment No. 1 to L Brands to VS Transition Services Agreement between Bath and Body Works, Inc. and Victoria’s Secret & Co., dated July 20, 2022.
10.2**	Amendment No. 1 to VS to L Brands Transition Services Agreement between Bath and Body Works, Inc. and Victoria’s Secret & Co., dated July 20, 2022.
31.1	Section 302 Certification of CEO.
31.2	Section 302 Certification of CFO.
32	Section 906 Certification (by CEO and CFO).
101.INS	XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH	Inline XBRL Taxonomy Extension Schema Document
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	Inline XBRL Taxonomy Definition Linkbase Document
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document
104	Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)

________________________

* Previously filed.

** Certain exhibits and schedules have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The registrant hereby undertakes to furnish supplementally a copy of any omitted exhibit or schedule upon request by the Securities and Exchange Commission.

38

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. 

VICTORIA'S SECRET & CO.
(Registrant)
By:	/s/ Timothy Johnson
	Timothy Johnson Chief Financial and Administrative Officer *

Date: September 8, 2022

*    Mr. Johnson is the principal financial officer and the principal accounting officer and has been duly authorized to sign on behalf of the Registrant.

39

EX-10.1

Exhibit 10.1

AMENDMENT NO. 1 TO L BRANDS TO VS TRANSITION SERVICES AGREEMENT

This AMENDMENT NO. 1 TO L BRANDS TO VS TRANSITION SERVICES AGREEMENT (this “Amendment”) is dated as of July 20, 2022 and effective as of January 31, 2022 (the “Effective Date”), by and between Victoria’s Secret & Co., a Delaware corporation (“VS”), and Bath & Body Works, Inc. (formerly known as L Brands, Inc.), a Delaware corporation (“BBW”) (“Service Provider,” and together with VS, the “Parties”).

WHEREAS, VS and Service Provider entered into that certain L Brands to VS Transition Services Agreement, dated as of August 2, 2021 (the “Agreement”); and

WHEREAS, pursuant to Section 9.02of the Agreement, VS and Service Provider desire to amend the Agreement.

NOW, THEREFORE, in consideration of the covenants and agreements contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby mutually acknowledged, the Parties agree to supplement, modify and amend the Agreement as set forth below.

1.     Amendment. The Schedules to the Agreement are amended as outlined in the attached Exhibit A.

2.Miscellaneous.

(a)    Except as expressly amended by this Amendment, all provisions of the Agreement shall remain in full force and effect.

(b)    Unless otherwise defined herein, capitalized terms in this Amendment shall have the meanings given to them in the Agreement.

(c)    This Amendment shall be governed by and construed in accordance with the law of the State of Delaware, without regard to the conflicts of law rules of such state.

(d)    This Amendment may be executed in two or more counterparts (delivery of which may occur via facsimile), each of which shall be binding as of the date first written above, and, when delivered, all of which shall constitute one and the same instrument. A facsimile signature or electronically scanned copy of a signature shall constitute and shall be deemed to be sufficient evidence of a Party’s execution of this Amendment, without necessity of further proof. Each such copy (or facsimile) shall be deemed an original, and it shall not be necessary in making proof of this Amendment to produce or account for more than one such counterpart.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

IN WITNESS WHEREOF, this Amendment No. 1 to L Brands to VS Transition Services Agreement has been executed by the Parties effective as of the date first written above.

VICTORIA'S SECRET & CO.
By:	/s/ Timothy Johnson
Name:	Timothy Johnson
Title:	Chief Financial Officer
BATH & BODY WORKS, INC.
By:	/s/ Wendy C. Arlin
Name:	Wendy C. Arlin
Title:	Executive Vice President and Chief Financial Officer

[Signature Page to Amendment No. 1 to L Brands to VS Transition Services Agreement]

EXHIBIT A

[Intentionally Omitted]

EX-10.2

Exhibit 10.2

AMENDMENT NO. 1 TO VS TO L BRANDS TRANSITION SERVICES AGREEMENT

This AMENDMENT NO. 1 TO VS TO L BRANDS TRANSITION SERVICES AGREEMENT (this “Amendment”) is dated as of July 20, 2022 and effective as of January 31, 2022 (the “Effective Date”), by and between Bath & Body Works, Inc. (formerly known as L Brands, Inc.), a Delaware corporation (“BBW”), and Victoria’s Secret & Co., a Delaware corporation (“Service Provider,” and together with BBW, the “Parties”).

WHEREAS, BBW and Service Provider entered into that certain VS to L Brands Transition Services Agreement, dated as of August 2, 2021 (the “Agreement”); and

WHEREAS, pursuant to Section 9.02of the Agreement, BBW and Service Provider desire to amend the Agreement.

NOW, THEREFORE, in consideration of the covenants and agreements contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby mutually acknowledged, the Parties agree to supplement, modify and amend the Agreement as set forth below.

1.     Amendment. The Schedules to the Agreement are amended as outlined in the attached Exhibit A.

2.Miscellaneous.

(a)    Except as expressly amended by this Amendment, all provisions of the Agreement shall remain in full force and effect.

(b)    Unless otherwise defined herein, capitalized terms in this Amendment shall have the meanings given to them in the Agreement.

(c)    This Amendment shall be governed by and construed in accordance with the law of the State of Delaware, without regard to the conflicts of law rules of such state.

(d)    This Amendment may be executed in two or more counterparts (delivery of which may occur via facsimile), each of which shall be binding as of the date first written above, and, when delivered, all of which shall constitute one and the same instrument. A facsimile signature or electronically scanned copy of a signature shall constitute and shall be deemed to be sufficient evidence of a Party’s execution of this Amendment, without necessity of further proof. Each such copy (or facsimile) shall be deemed an original, and it shall not be necessary in making proof of this Amendment to produce or account for more than one such counterpart.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

IN WITNESS WHEREOF, this Amendment No. 1 to VS to L Brands Transition Services Agreement has been executed by the Parties effective as of the date first written above.

BATH & BODY WORKS, INC.
By:	/s/ Wendy C. Arlin
Name:	Wendy C. Arlin
Title:	Executive Vice President and Chief Financial Officer
VICTORIA'S SECRET & CO.
By:	/s/ Timothy Johnson
Name:	Timothy Johnson
Title:	Chief Financial Officer

[Signature Page to Amendment No. 1 to VS to L Brands Transition Services Agreement]

Exhibit A

[Intentionally Omitted]

EX-31.1

Exhibit 31.1

Section 302 Certification

I, Martin Waters, certify that:

1.I have reviewed this report on Form 10-Q of Victoria’s Secret & Co.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(c)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/ Martin Waters

Martin Waters

Chief Executive Officer

Date: September 8, 2022

EX-31.2

Exhibit 31.2

Section 302 Certification

I, Timothy Johnson, certify that:

1.I have reviewed this report on Form 10-Q of Victoria’s Secret & Co.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(c)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/ Timothy Johnson

Timothy Johnson

Chief Financial and Administrative Officer

Date: September 8, 2022

EX-32

Exhibit 32

Section 906 Certification

Martin Waters, the Chief Executive Officer, and Timothy Johnson, the Chief Financial and Administrative Officer, of Victoria’s Secret & Co. (the “Company”), each certifies that, to the best of his knowledge:

(i)the Quarterly Report of the Company on Form 10-Q dated September 8, 2022 for the period ending July 30, 2022 (the “Form 10-Q”), fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(ii)the information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Martin Waters

Martin Waters

Chief Executive Officer

/s/ Timothy Johnson

Timothy Johnson

Chief Financial and Administrative Officer

Date: September 8, 2022

XML

Cover - shares	6 Months Ended
	Jul. 30, 2022	Sep. 02, 2022
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Jul. 30, 2022
Document Transition Report	false
Entity File Number	001-40515
Entity Registrant Name	VICTORIA'S SECRET & CO.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	86-3167653
Entity Address, Address Line One	4 Limited Parkway East
Entity Address, City or Town	Reynoldsburg,
Entity Address, State or Province	OH
Entity Address, Postal Zip Code	43068
City Area Code	(614)
Local Phone Number	577-7000
Title of 12(b) Security	Common Stock, $0.01 Par Value
Trading Symbol	VSCO
Security Exchange Name	NYSE
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		81,245,512
Amendment Flag	false
Document Fiscal Year Focus	2022
Document Fiscal Period Focus	Q2
Entity Central Index Key	0001856437
Current Fiscal Year End Date	--01-28

XML

CONSOLIDATED AND COMBINED STATEMENTS OF INCOME - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jul. 30, 2022	Jul. 31, 2021	Jul. 30, 2022	Jul. 31, 2021
Income Statement [Abstract]
Net Sales	$ 1,521	$ 1,614	$ 3,005	$ 3,168
Costs of Goods Sold, Buying and Occupancy	(986)	(944)	(1,948)	(1,826)
Gross Profit	535	670	1,057	1,342
General, Administrative and Store Operating Expenses	(437)	(467)	(865)	(914)
Operating Income	98	203	192	428
Interest Expense	(13)	(3)	(25)	(4)
Other Loss	(2)	(1)	(6)	0
Income Before Income Taxes	83	199	161	424
Provision for Income Taxes	16	48	18	99
Net Income	67	151	143	325
Less: Net Loss Attributable to Noncontrolling Interest	(3)	0	(8)	0
Net Income Attributable to Victoria's Secret & Co.	$ 70	$ 151	$ 151	$ 325
Net Income Per Basic Share Attributable to Victoria's Secret & Co. (in usd per share)	$ 0.84	$ 1.71	$ 1.81	$ 3.68
Net Income Per Diluted Share Attributable to Victoria's Secret & Co. (in usd per share)	$ 0.83	$ 1.71	$ 1.76	$ 3.68

XML

CONSOLIDATED AND COMBINED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jul. 30, 2022	Jul. 31, 2021	Jul. 30, 2022	Jul. 31, 2021
Statement of Comprehensive Income [Abstract]
Net Income	$ 67	$ 151	$ 143	$ 325
Other Comprehensive Income (Loss), Net of Tax:
Foreign Currency Translation	(1)	0	0	4
Unrealized Gain on Cash Flow Hedges	0	1	0	0
Amounts Reclassified from Accumulated Other Comprehensive Income to Paid-in Capital	0	0	3	0
Total Other Comprehensive Income (Loss), Net of Tax	(1)	1	3	4
Total Comprehensive Income (Loss)	66	152	146	329
Less: Net Loss Attributable to Noncontrolling Interest	(3)	0	(8)	0
Less: Foreign Currency Translation Attributable to Noncontrolling Interest	1	0	2	0
Comprehensive Income Attributable to Victoria's Secret & Co.	$ 68	$ 152	$ 152	$ 329

XML

CONSOLIDATED AND COMBINED BALANCE SHEETS - USD ($) shares in Millions, $ in Millions	Jul. 30, 2022	Jan. 29, 2022	Jul. 31, 2021
Current Assets:
Cash and Cash Equivalents	$ 201	$ 490	$ 293
Cash in Escrow related to the Spin-Off	0	0	600
Accounts Receivable, Net	149	162	99
Inventories	1,086	949	745
Other	116	90	90
Total Current Assets	1,552	1,691	1,827
Property and Equipment, Net	864	957	999
Operating Lease Assets	1,298	1,369	1,513
Trade Name	246	246	246
Deferred Income Taxes	21	17	12
Other Assets	91	64	61
Total Assets	4,072	4,344	4,658
Current Liabilities:
Accounts Payable	490	538	371
Accrued Expenses and Other	623	714	704
Current Debt	4	4	0
Current Operating Lease Liabilities	322	340	332
Income Taxes	6	102	28
Total Current Liabilities	1,445	1,698	1,435
Deferred Income Taxes	60	58	70
Long-term Debt	977	978	592
Long-term Debt due to Former Parent	0	0	97
Long-term Operating Lease Liabilities	1,269	1,314	1,457
Other Long-term Liabilities	52	39	123
Total Liabilities	3,803	4,087	3,774
Shareholders' Equity:
Preferred Stock — $0.01 par value; 10 shares authorized; 0 issued and outstanding	0	0	0
Common Stock — $0.01 par value; 1,000 shares authorized; 82, 85, and 0 shares issued and outstanding, respectively	1	1	0
Paid-in Capital	177	125	0
Accumulated Other Comprehensive Income	6	5	8
Retained Earnings	65	126	0
Net Investment by Former Parent	0	0	876
Treasury Stock, Value	$ (2)	$ 0	$ 0
Treasury Stock, Shares	0	0	0
Total Victoria's Secret & Co. Shareholders' Equity	$ 247	$ 257	$ 884
Noncontrolling Interest	22	0	0
Total Equity	269	257	884
Total Liabilities and Equity	$ 4,072	$ 4,344	$ 4,658

XML

CONSOLIDATED AND COMBINED BALANCE SHEETS (Parenthetical) - $ / shares shares in Millions	Jul. 30, 2022	Jan. 29, 2022	Jul. 31, 2021
Statement of Financial Position [Abstract]
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01	$ 0.01
Preferred stock, shares authorized (in shares)	10	10	10
Preferred stock, shares issued (in shares)	0	0	0
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	1,000	1,000	1,000
Common stock, shares issued (in shares)	82	0	85
Common stock, shares outstanding (in shares)	82	0	85

XML

CONSOLIDATED AND COMBINED STATEMENTS OF EQUITY - USD ($) shares in Millions, $ in Millions	Total	Total Victoria's Secret & Co. Equity	Common Stock	Paid-in Capital	Net Investment by Former Parent	Accumulated Other Comprehensive Income	Retained Earnings	Treasury Stock	Noncontrolling Interest
Beginning Balance (in shares) at Jan. 30, 2021			0
Beginning Balance at Jan. 30, 2021	$ 891	$ 891	$ 0	$ 0	$ 887	$ 4			$ 0
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net Income	325	325			325
Other Comprehensive Income (Loss)	4	4				4
Total Comprehensive Income (Loss)	329	329			325	4
Net Transfers to Former Parent	$ (336)	(336)			(336)
Ending Balance (in shares) at Jul. 31, 2021	85		0
Ending Balance at Jul. 31, 2021	$ 884	884	$ 0	0	876	8			0
Beginning Balance (in shares) at May. 01, 2021			0
Beginning Balance at May. 01, 2021	1,007	1,007	$ 0	0	1,000	7			0
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net Income	151	151			151
Other Comprehensive Income (Loss)	1	1				1
Total Comprehensive Income (Loss)	152	152			151	1
Net Transfers to Former Parent	$ (275)	(275)			(275)
Ending Balance (in shares) at Jul. 31, 2021	85		0
Ending Balance at Jul. 31, 2021	$ 884	884	$ 0	0	$ 876	8			0
Beginning Balance (in shares) at Jan. 29, 2022	0		85
Beginning Balance at Jan. 29, 2022	$ 257	257	$ 1	125		5	$ 126		0
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net Income	143	151					151		(8)
Other Comprehensive Income (Loss)	3	1				1			2
Total Comprehensive Income (Loss)	146	152				1	151		(6)
Sale of Noncontrolling Interest	45	17		17					28
Repurchase of Common Stock (shares)			(4)
Repurchase of Common Stock	(171)	(171)		50				$ (221)
Treasury Share Retirements				(7)			(212)	219
Share-based Compensation Expense (in shares)			0
Share-based Compensation Expense	26	26		26
Tax Payments related to Share-based Awards			(1)
Tax Payments related to Share-based Awards	(39)	(39)		(39)
Other (in shares)			2
Other	$ 5	5		5
Ending Balance (in shares) at Jul. 30, 2022	82		82
Ending Balance at Jul. 30, 2022	$ 269	247	$ 1	177		6	65	(2)	22
Beginning Balance (in shares) at Apr. 30, 2022			83
Beginning Balance at Apr. 30, 2022	251	227	$ 1	166		8	52		24
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net Income	67	70					70		(3)
Other Comprehensive Income (Loss)	(1)	(2)				(2)			1
Total Comprehensive Income (Loss)	66	68				(2)	70		(2)
Repurchase of Common Stock (shares)			(1)
Repurchase of Common Stock	(62)	(62)		0				(62)
Treasury Share Retirements				(3)			(57)	60
Share-based Compensation Expense	14	14		14
Tax Payments related to Share-based Awards			0
Tax Payments related to Share-based Awards	(1)	(1)		(1)
Other (in shares)			0
Other	$ 1	1		1
Ending Balance (in shares) at Jul. 30, 2022	82		82
Ending Balance at Jul. 30, 2022	$ 269	$ 247	$ 1	$ 177		$ 6	$ 65	$ (2)	$ 22

XML

CONSOLIDATED AND COMBINED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions	6 Months Ended
	Jul. 30, 2022	Jul. 31, 2021
Operating Activities:
Net Income	$ 143	$ 325
Adjustments to Reconcile Net Income to Net Cash Provided by (Used for) Operating Activities:
Depreciation of Long-lived Assets	140	158
Share-based Compensation Expense	26	15
Deferred Income Taxes	(2)	59
Changes in Assets and Liabilities:
Accounts Receivable	12	22
Inventories	(138)	(44)
Accounts Payable, Accrued Expenses and Other	(137)	(86)
Income Taxes	(120)	12
Other Assets and Liabilities	25	(72)
Net Cash Provided by (Used for) Operating Activities	(51)	389
Investing Activities:
Capital Expenditures	(58)	(66)
Investment in Frankies Bikinis, LLC	(18)	0
Other Investing Activities	(7)	0
Net Cash Used for Investing Activities	(83)	(66)
Financing Activities:
Repurchases of Common Stock	(169)	0
Cash Received from Noncontrolling Interest Partner	55	0
Tax Payments related to Share-based Awards	(39)	0
Proceeds from Stock Option Exercises	4	0
Payments of Long-term Debt	(2)	0
Proceeds from Issuance of Long-term Debt	0	600
Net Transfers to Former Parent	0	(367)
Other Financing Activities	(2)	0
Net Cash Provided by (Used for) Financing Activities	(153)	233
Effects of Exchange Rate Changes on Cash and Cash Equivalents and Restricted Cash	(2)	2
Net Increase (Decrease) in Cash and Cash Equivalents and Restricted Cash	(289)	558
Cash and Cash Equivalents and Restricted Cash, Beginning of Period	490	335
Cash and Cash Equivalents and Restricted Cash, End of Period	$ 201	$ 893

XML

Description of Business, Basis of Presentation and Summary of Significant Accounting Policies

6 Months Ended

Jul. 30, 2022

Description Of Business And Basis Of Presentation [Abstract]

Description of Business, Basis of Presentation and Summary of Significant Accounting Policies

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 and PINK brand names. The Company has more than 890 Victoria’s Secret and PINK stores in the U.S., Canada and China as well as online at www.VictoriasSecret.com and www.PINK.com and other online channels worldwide. Additionally, Victoria’s Secret and PINK have more than 440 stores in 70 countries operating under franchise, license and wholesale arrangements. The Company also includes the Victoria’s Secret and PINK 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.

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. For additional information, see Note 4, “Restructuring Activities.”

Victoria's Secret & Co. Spin-Off

On July 9, 2021, L Brands, Inc. (“L Brands” or the “Former Parent”) announced that its Board of Directors approved the previously announced separation of the Victoria’s Secret business, including PINK, into an independent, publicly traded company (the “Separation”). Prior to the Separation, L Brands operated the Bath & Body Works, Victoria’s Secret and PINK retail brands.

On August 2, 2021 (the “Distribution Date”), after the New York Stock Exchange (“NYSE”) market closing, the Separation of the Victoria’s Secret business was completed. On August 3, 2021, Victoria’s Secret & Co. became an independent, publicly traded company trading on the NYSE under the stock symbol “VSCO.”

The Separation was achieved through the Former Parent’s distribution of 100% of the shares of the Company’s common stock to holders of the Former Parent’s common stock as of the close of business on the record date of July 22, 2021. The Former Parent’s stockholders of record received one share of the Company’s common stock for every three shares of the Former Parent’s common stock. In connection with the Separation, the Company made a cash payment of approximately $976 million to the Former Parent on August 2, 2021 using cash proceeds from the issuances of certain debt (discussed in Note 10, “Long-term Debt and Borrowing Facilities”). The Former Parent retained no ownership interest in the Company following the Separation.

The Company entered into several agreements with the Former Parent that, among other things, effect the Separation and govern the relationship of the parties following the Separation, including a Separation and Distribution Agreement, a Tax Matters Agreement, an L Brands to VS Transition Services Agreement, a VS to L Brands Transition Services Agreement, an Employee Matters Agreement and a Domestic Transportation Services Agreement. For additional information, see Note 2, “Transactions with Former Parent.”

Fiscal Year

The Company’s fiscal year ends on the Saturday nearest to January 31. As used herein, “second quarter of 2022” and “second quarter of 2021” refer to the thirteen-week periods ended July 30, 2022 and July 31, 2021, respectively. “Year-to-date 2022” and “year-to-date 2021” refer to the twenty-six-week periods ended July 30, 2022 and July 31, 2021, respectively.

Basis of Presentation - Unaudited Consolidated and Combined Financial Statements

The Company’s financial statements for periods through the Separation date of August 2, 2021 are combined financial statements prepared on a carve-out basis as discussed below. The Company’s financial statements for the period from August 3, 2021 through July 30, 2022 are consolidated financial statements based on the reported results of Victoria's Secret & Co. as a standalone company.

The Consolidated and Combined Financial Statements have been prepared in conformity with accounting principles generally accepted in the United States (“GAAP”). The Consolidated and Combined Financial Statements may not be indicative of the Company’s future performance and do not necessarily reflect what the financial position, results of operations, and cash flows would have been had it operated as an independent company during all of the periods presented.

Basis of Presentation - Prior to Separation

Through the Separation date, the Company's combined financial statements are prepared on a “carve-out” basis. The Combined Financial Statements have been derived from the consolidated financial statements and accounting records of the Former Parent in conformity with GAAP.

Intracompany transactions have been eliminated. Transactions between the Company and the Former Parent have been included in these financial statements. For those transactions between the Company and the Former Parent that were historically settled in cash, the Company reflected such balances in the Consolidated and Combined Balance Sheets in Other Current Assets for balances due from the Former Parent and in Accrued Expenses and Other for balances due to the Former Parent. The aggregate net effect of transactions between the Company and the Former Parent that were historically settled other than in cash are reflected in the Consolidated and Combined Balance Sheets as Net Investment by Former Parent and in the Consolidated and Combined Statements of Cash Flows as Net Transfers to Former Parent. For additional information, see Note 2, “Transactions with Former Parent.”

The Consolidated and Combined Balance Sheets include certain of the Former Parent's assets and liabilities that were specifically identifiable or otherwise attributable to the Company. The Former Parent's third-party long-term notes payable and the related interest expense have not been allocated to the Company for any of the periods presented as the Company was not the legal obligor of such debt. Except for Long-term Debt due to Former Parent, the debt reflected in the Consolidated and Combined Balance Sheets relate to third-party borrowings specifically attributable to, and legal obligations of, the Company.

The Former Parent utilized a centralized approach to cash management and financing its operations. The Cash and Cash Equivalents held by the Former Parent at the corporate level were not specifically identifiable to the Company and, therefore, were not reflected in the Company’s Consolidated and Combined Balance Sheets. Cash transfers between the Former Parent and the Company were accounted for through Net Investment by Former Parent. Cash and Cash Equivalents in the Consolidated and Combined Balance Sheets represent cash and cash equivalents held by the Company at period-end prior to any potential transfer to the centralized cash management pool of the Former Parent.

The Consolidated and Combined Statements of Income include costs for certain functions, including information technology, human resources and store design and construction, that historically were provided and administered on a centralized basis by the Former Parent. Starting in the third quarter of 2020, as part of the steps to prepare the Company to operate as a separate, standalone company, these functions were transitioned to the business and began to be operated and administered as part of Victoria’s Secret & Co. Costs applicable to the Company related to these functions are included in the Consolidated and Combined Statements of Income for all periods presented. Prior to the transition of these functions, these costs were directly charged to the Company by the Former Parent.

In addition, for purposes of preparing the combined financial statements on a “carve-out” basis prior to the Separation, a portion of the Former Parent's corporate expenses were allocated to the Company. These expense allocations include the cost of corporate functions and resources provided by, or administered by, the Former Parent including, but not limited to, executive management and other corporate and governance functions, such as corporate finance, internal audit, tax and treasury. The related employee payroll and benefit costs associated with such functions, such as share-based compensation, were included in the expense allocations. Corporate expenses of $30 million and $49 million in the second quarter of 2021 and year-to-date 2021, respectively, were allocated and included within General, Administrative and Store Operating Expenses in the Consolidated and Combined Statements of Income.

Costs were allocated to the Company based on direct usage when identifiable or, when not directly identifiable, on the basis of proportional net sales. Management considers the basis on which the expenses have been allocated to reasonably reflect the utilization of services provided to, or the benefit received by, the Company during the periods presented. However, the allocations may not reflect the expenses the Company would have incurred if the Company had been a standalone company for the periods presented. Actual costs that may have been incurred if the Company had been a standalone company would depend on a number of factors, including the organizational structure, whether functions were outsourced or performed by employees, and strategic or capital decisions. Going forward, the Company may perform these functions using its own resources or outsourced services. For a period following the Separation, however, some of these functions will continue to be provided by the Former Parent under a transition services agreement, and the Company will provide some services to the Former Parent under a transition services agreement. The Company has also entered into certain commercial arrangements with the Former Parent in connection with the Separation. For more information, see Note 2, “Transactions with Former Parent.”

During the periods prior to the Separation that are presented in these Consolidated and Combined Financial Statements, the Company's income tax expense (benefit) and deferred tax balances were included in the Former Parent's income tax returns. Income tax expense (benefit) and deferred tax balances contained in these Consolidated and Combined Financial Statements for periods prior to the Separation are presented on a separate return basis, as if the Company had filed its own income tax returns. As a result, actual tax transactions included in the consolidated financial statements of the Former Parent may or may not be included in the Consolidated and Combined Financial Statements of the Company. Similarly, the tax treatment of certain items reflected in the Consolidated and Combined Financial Statements of the Company may or may not be reflected in the consolidated financial statements and income tax returns of the Former Parent. The taxes recorded in the Consolidated and Combined Statement of Income for periods prior to the Separation are not necessarily representative of the taxes that may arise in the future when the Company files its income tax returns independent from the Former Parent's returns.

Interim Financial Statements

The Consolidated and Combined Financial Statements as of and for the periods ended July 30, 2022 and July 31, 2021 are unaudited. These Consolidated and Combined Financial Statements should be read in conjunction with the audited Consolidated and Combined Financial Statements and Notes thereto included in our Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on March 18, 2022.

In the opinion of management, the accompanying Consolidated and Combined Financial Statements reflect all adjustments, which are of a normal recurring nature, necessary for a fair presentation of the results for the interim periods.

Ongoing Impacts of COVID-19

Even as the coronavirus pandemic (“COVID-19”) subsides, macroeconomic impacts related to the pandemic, including inflation, supply chain disruptions and labor shortages, are expected to continue. The Company remains focused on the safe operation of its business, including its stores, distribution, fulfillment and call centers. There remains the potential for COVID-19-related risks of closure or operating restrictions, as well as risks related to delays or disruptions in our supply chain and related pricing impacts, which could materially impact the Company's operations and financial performance in future periods.

Seasonality of Business

Due to the seasonal variations in the retail industry, the results of operations for the thirteen-week and twenty-six-week periods ended July 30, 2022 are not necessarily indicative of the results expected for any other interim period or the full fiscal year ending January 28, 2023.

Restricted Cash

In July 2021, the Company issued $600 million of 4.625% notes due in July 2029 (the “2029 Notes”) in a transaction exempt from registration under the Securities Act of 1933, as amended. As of July 31, 2021, the proceeds were held in escrow for release to the Company upon satisfaction of certain conditions, including completion of the Separation. The $600 million initial gross proceeds were included in Cash in Escrow related to the Spin-Off on the July 31, 2021 combined balance sheet. For additional information, see Note 10, “Long-term Debt and Borrowing Facilities.”

As of July 31, 2021, the Company's Cash and Cash Equivalents and restricted cash totaled $893 million.

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 and Combined Statements of Income, 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 and Combined Statements of Income. 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.

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 $57 million as of July 30, 2022, $35 million as of January 29, 2022 and $32 million as of July 31, 2021. These investments are recorded in Other Assets on the Consolidated and Combined 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 and Combined Financial Statements. The share of the investment not owned by the Company is reflected in Noncontrolling Interest in the Consolidated and Combined Balance Sheets. The Company recognizes the share of net income or loss not attributable to the Company in Net Loss Attributable to Noncontrolling Interest in the Consolidated and Combined Statements of Income. 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.”

Net Investment by Former Parent

Net Investment by Former Parent in the Consolidated and Combined Balance Sheets represents the Former Parent's historical investment in the Company, the accumulated net earnings after taxes and the net effect of the transactions with and allocations from the Former Parent. All transactions reflected in Net Investment by Former Parent in the accompanying Consolidated and Combined Balance Sheets have been considered as financing activities for purposes of the Consolidated and Combined Statements of Cash Flows.

For additional information, see Basis of Presentation above and Note 2, “Transactions with Former Parent.”

Derivative Financial Instruments

The Company from time to time uses derivative financial instruments to manage exposure to foreign currency exchange rates. The Company does not use derivative instruments for trading purposes. All derivative instruments are recorded on the Consolidated and Combined Balance Sheets at fair value.

The earnings of the Company’s foreign operations are subject to exchange rate risk as substantially all the merchandise is sourced through U.S. dollar transactions. The Company from time to time utilizes foreign currency forward contracts designated as cash flow hedges to mitigate this foreign currency exposure. Amounts for these designated cash flow hedges are reclassified from Accumulated Other Comprehensive Income (Loss) upon sale of the hedged merchandise to the customer. These gains and losses are recognized in Costs of Goods Sold, Buying and Occupancy in the Consolidated and Combined Statements of Income. During the second quarter of 2021, the Company terminated its foreign currency forward contracts designated as cash flow hedges that were used to mitigate foreign currency exposure for its Canadian operations. The fair value of designated cash flow hedges is not significant for any period presented.

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 July 30, 2022, the Company's investment portfolio is primarily comprised of bank deposits. Prior to the Separation, cash generated by the Company was invested by the Former Parent in U.S. government obligations and U.S. Treasury and AAA-rated money market funds.

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.

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 second quarter of 2022 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.

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Transactions with Former Parent

6 Months Ended

Jul. 30, 2022

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Transactions with Former Parent

Transactions with Former ParentPrior to the Separation, the Company's financial statements were prepared on a “carve-out” basis and were derived from the consolidated financial statements and accounting records of the Former Parent. The following discussion summarizes activity between the Company and the Former Parent.

Allocation of General Corporate Expenses

Prior to the Separation, for purposes of preparing the financial statements on a “carve-out” basis, the Company was allocated a portion of the Former Parent's total corporate expenses. See Note 1 for a discussion of the methodology used to allocate corporate-related costs for purposes of preparing the financial statements on a “carve-out” basis.

Balances Between the Company and the Former Parent Prior to the Separation

Balances between the Company and the Former Parent or its affiliates prior to the Separation, that are derived from transactions that historically were cash settled, are reflected in the Consolidated and Combined Balance Sheets in Other Current Assets for balances due from the Former Parent and in Accrued Expenses and Other for balances due to the Former Parent for periods prior to the Separation.

Balances between the Company and the Former Parent or its affiliates prior to the Separation, that are derived from transactions that were historically settled other than in cash, are included in Net Investment by Former Parent within Shareholders' Equity on the Consolidated and Combined Balance Sheets for periods prior to the Separation.

Long-term Debt due to Former Parent

Prior to the Separation, during 2020, the Company borrowed $97 million from the Former Parent to pay down outstanding debt with external parties. This borrowing was due in September 2025 and had a variable interest rate based on the China Loan Prime Rate. As a result of the Separation, the Company no longer has this Long-term Debt due to Former Parent. Prior to the Separation, the Company recognized $2 million of interest expense year-to-date 2021 related to this borrowing.

Net Transfers from (to) Former Parent

The following table presents the components of Net Transfers from (to) Former Parent prior to the Separation in the second quarter and year-to-date 2021 Consolidated and Combined Statements of Equity:

	Second Quarter		Year-to-Date
	2021		2021
Cash Pooling and General Financing Activities, Net	$	(322)	$	(431)
Long-lived Assets (a)	(4)		16
Corporate Expense Allocations	30		49
Share-based Compensation Expense	8		15
Assumed Income Tax Payments	13		15
Total Net Transfers to Former Parent	$	(275)	$	(336)

_______________

(a)Represents long-lived assets transferred between the Company and the Former Parent as a result of asset allocation decisions made during the period.

Agreements with Former Parent

The Company entered into several agreements with the Former Parent that, among other things, effect the Separation and govern the relationship of the parties following the Separation, including a Separation and Distribution Agreement, a Tax Matters Agreement, an L Brands to VS Transition Services Agreement, a VS to L Brands Transition Services Agreement, an Employee Matters Agreement and a Domestic Transportation Services Agreement.

Under the terms of the transition services agreements, as amended, the Company provides its Former Parent, on a transitional basis, certain services or functions, including information technology, certain logistics functions, customer marketing and customer call center services. Additionally, the Former Parent provides to the Company various services or functions, many of which currently use a shared technology platform, including human resources, payroll and certain logistics functions. Generally, these services will be provided for a period of up to two years following the Separation, except for information technology services, which will be provided for a period of up to three years following the Separation and may be extended for a maximum of two additional one-year periods subject to increased administrative charges. Consideration and costs for the transition services will be determined using several billing methodologies as described in the agreements, including customary billing, pass-through billing, percent of sales billing or fixed fee billing. Costs for transition services provided by the Former Parent are recorded within the Consolidated and Combined Statements of Income based on the nature of the services. Consideration for transition services provided to the Former Parent are recorded within the Consolidated and Combined Statements of Income based on the nature of the services and as an offset to expenses incurred to provide the services. The Company recognized consideration of $20 million and $40 million for services provided to the Former Parent and recognized costs of $19 million and $38 million for services provided by the Former Parent in the second quarter of 2022 and year-to-date 2022, respectively, pursuant to the transition services agreements.

Under the terms of the Domestic Transportation Services Agreement, the Former Parent will continue to provide transportation services to the Company for certain beauty and apparel merchandise in the United States and Canada for an initial term of three years following the Separation, which term will thereafter continuously renew unless and until either party elects to terminate the arrangement upon written prior notice. Costs for the transportation services will be determined using customary billing and fixed billing methodologies, which are described in the agreement, and are subject to an administrative charge. Costs for transition services are recorded within Costs of Goods Sold, Buying and Occupancy in the Consolidated and Combined Statements of Income. The Company recognized costs of $21 million and $39 million pursuant to the Domestic Transportation Services Agreement during the second quarter of 2022 and year-to-date 2022, respectively.

Prior to the Separation, certain Company employees participated in the stock option and performance incentive plan of the Former Parent. Under the terms of the Employee Matters Agreement, in connection with the Separation, restricted stock and stock option equity awards held by Company employees were converted to awards representing approximately 6.0 million shares of the Company's common stock under the Company's 2021 Stock Option and Performance Incentive Plan.

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Revenue Recognition

6 Months Ended

Jul. 30, 2022

Revenue Recognition and Deferred Revenue [Abstract]

Revenue Recognition

Revenue Recognition

Accounts receivable, net from revenue-generating activities were $101 million as of July 30, 2022, $101 million as of January 29, 2022 and $73 million as of July 31, 2021. 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 $238 million as of July 30, 2022, $258 million as of January 29, 2022 and $219 million as of July 31, 2021. The Company recognized $105 million as revenue year-to-date 2022 from amounts recorded as deferred revenue at the beginning of the year. As of July 30, 2022, the Company recorded deferred revenue of $218 million within Accrued Expenses and Other, and $20 million within Other Long-term Liabilities on the Consolidated and Combined Balance Sheet.

The following table provides a disaggregation of Net Sales for the second quarter and year-to-date 2022 and 2021:

	Second Quarter				Year-to-Date
	2022		2021		2022		2021
	(in millions)
Stores – North America	$	968	$	1,037	$	1,900	$	1,970
Direct	414		469		834		990
International (a)	139		108		271		208
Total Net Sales	$	1,521	$	1,614	$	3,005	$	3,168

 _______________

(a)Results include consolidated joint venture sales in China, royalties associated with franchised stores and wholesale sales.

In April 2022, the Company launched a new co-branded credit card through which customers can earn points on purchases of Company product as well as on purchases outside of the Company. The co-branded credit card is in addition to the Company's existing U.S. private label credit card.

The Company recognized Net Sales of $30 million and $31 million for the second quarter of 2022 and 2021, respectively, related to revenue earned in connection with its credit card arrangements. The Company recognized Net Sales of $57 million and $59 million year-to-date 2022 and 2021, 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 $199 million and $167 million for the second quarter of 2022 and 2021, respectively. The Company’s net sales outside of the U.S. totaled $383 million and $330 million year-to-date 2022 and 2021, respectively.

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Restructuring Activities

6 Months Ended

Jul. 30, 2022

Restructuring and Related Activities [Abstract]

Restructuring Activities

Restructuring Activities

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 and Combined Statement of Cash Flows.

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 sheet and in Net Loss Attributable to Noncontrolling Interest in the consolidated statements of income.

Corporate Leadership Restructuring

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. As a result of the restructuring, 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, are included in the 2022 consolidated statements of income.

During the second quarter of 2022, the Company made payments of $2 million related to severance and related costs associated with these reductions. As of July 30, 2022, liabilities related to the restructuring of $27 million are included in the consolidated balance sheet.

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Earnings Per Share and Shareholders' Equity

6 Months Ended

Jul. 30, 2022

Earnings Per Share [Abstract]

Earnings Per Share and Shareholders' Equity

Earnings Per Share and Shareholders' Equity

Earnings Per Share

Earnings per basic share is computed based on the weighted-average number of common shares outstanding. Earnings per diluted share include the weighted-average effect of dilutive restricted stock and options on the weighted-average shares outstanding.

On August 2, 2021, the Separation was achieved through the Former Parent's distribution of 100% of the shares of the Company's common stock to holders of the Former Parent's common stock as of the close of business on the record date of July 22, 2021. The Former Parent's stockholders of record received one share of the Company's common stock for every three shares of the Former Parent's common stock. As a result, on August 3, 2021, the Company had 88 million shares of common stock outstanding. This share amount is being utilized for the calculation of basic and diluted earnings per share for all periods presented prior to the Separation. After the Separation, actual outstanding shares are used to calculate both basic and diluted weighted-average number of common shares outstanding.

The following table provides the weighted-average shares utilized for the calculation of basic and diluted earnings per share for the second quarter and year-to-date 2022 and 2021:

	Second Quarter		Year-to-Date
	2022	2021	2022	2021
	(in millions)
Common Shares	83	88	83	88
Treasury Shares	—	—	—	—
Basic Shares	83	88	83	88
Effect of Dilutive Options and Restricted Stock Awards	1	—	3	—
Diluted Shares	84	88	86	88
Anti-dilutive Options and Restricted Stock Awards (a)	2	—	1	—

 _______________

(a)These options and restricted stock awards were excluded from the calculation of diluted earnings per share because their inclusion would have been anti-dilutive.

Shareholders' Equity

Common Stock Share Repurchases & Treasury Stock Retirements

In February 2022, upon final settlement of the Company's December 2021 accelerated share repurchase agreement (“ASR Agreement”) with Goldman Sachs & Co. LLC (“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 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 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.

In March 2022, the Company's Board of Directors approved a new 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 is expected to be utilized to repurchase shares in the open market, subject to market conditions and other factors. Shares acquired through the March 2022 Share Repurchase Program will be available to meet obligations under equity compensation plans and for general corporate purposes. The March 2022 Share Repurchase Program will continue until exhausted, but no later than January 28, 2023.

The Company repurchased the following shares of its common stock under its March 2022 Share Repurchase Program during year-to-date 2022:

	Amount Authorized		Shares Repurchased	Amount Repurchased		Average Stock Price
	(in millions)		(in thousands)	(in millions)
March 2022 Share Repurchase Program	$	250	3,879	$	171	$	44.06

The March 2022 Share Repurchase Program has $79 million remaining as of July 30, 2022. There were $2 million of share repurchases reflected in Accounts Payable on the July 30, 2022 consolidated balance sheet.

Subsequent to July 30, 2022, the Company repurchased an additional 0.7 million shares for $27 million through September 7, 2022 under the March 2022 Share Repurchase Program.

In accordance with the Board of Directors' resolution, shares of the Company's common stock repurchased under the March 2022 Share Repurchase Program will be retired and cancelled upon repurchase. As a result, year-to-date 2022 the Company retired 3.8 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, $7 million in Paid-in Capital and $162 million in Retained Earnings.

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Inventories

6 Months Ended

Jul. 30, 2022

Inventory, Net [Abstract]

Inventories

Inventories

The following table provides details of Inventories as of July 30, 2022, January 29, 2022 and July 31, 2021:

	July 30, 2022		January 29, 2022		July 31, 2021
	(in millions)
Finished Goods Merchandise	$	1,020	$	898	$	694
Raw Materials and Merchandise Components	66		51		51
Total Inventories	$	1,086	$	949	$	745

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.

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Long-Lived Assets

6 Months Ended

Jul. 30, 2022

Property, Plant and Equipment [Abstract]

Long-Lived Assets

Long-Lived Assets

The following table provides details of Property and Equipment, Net as of July 30, 2022, January 29, 2022 and July 31, 2021:

	July 30, 2022		January 29, 2022		July 31, 2021
	(in millions)
Property and Equipment, at Cost	$	3,667	$	3,795	$	3,755
Accumulated Depreciation and Amortization	(2,803)		(2,838)		(2,756)
Property and Equipment, Net	$	864	$	957	$	999

Depreciation expense was $70 million and $78 million for the second quarter of 2022 and 2021, respectively.

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Accrued Expenses and Other

6 Months Ended

Jul. 30, 2022

Accrued Liabilities, Current [Abstract]

Accrued Expenses and Other

Accrued Expenses and Other

The following table provides additional information about the composition of Accrued Expenses and Other as of July 30, 2022, January 29, 2022 and July 31, 2021:

	July 30, 2022		January 29, 2022		July 31, 2021
	(in millions)
Deferred Revenue on Gift Cards	$	170	$	198	$	158
Compensation, Payroll Taxes and Benefits	87		152		145
Rent	63		45		80
Accrued Freight and Other Logistics	41		62		19
Accrued Marketing	37		36		39
Deferred Revenue on Loyalty and Credit Card Programs	28		36		37
Taxes, Other than Income	22		24		37
Deferred Revenue on Direct Shipments not yet Delivered	20		16		15
Returns Reserve	17		23		20
Accrued Interest	6		5		1
Accrued Claims on Self-insured Activities	6		4		15
Other	126		113		138
Total Accrued Expenses and Other	$	623	$	714	$	704

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Income Taxes

6 Months Ended

Jul. 30, 2022

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

Prior to the Separation, the Company's U.S. operations and certain of its non-U.S. operations were historically included in the income tax returns of the Former Parent or its subsidiaries that may not be part of the Company. For the periods prior to the Separation, the income tax expense (benefit) and all tax liabilities that are presented in these financial statements were calculated on a “carve-out” basis, which applied the accounting guidance as if we filed income tax returns for the Company on a standalone, separate return basis. The Company believes the assumptions supporting its allocation and presentation of income taxes on a separate return basis are reasonable. However, the Company's tax results, as presented in these financial statements for periods prior to the Separation, may not be reflective of the results that the Company expects to generate in the future.

Post-Separation, the Company is filing a consolidated U.S. federal income tax return as well as separate and combined income tax returns in numerous state, local and international jurisdictions. Income tax expense (benefit) for the period prior to the Separation is based on the combined financial statements prepared on a “carve-out” basis. Income tax expense (benefit) for the period after the Separation is based on the consolidated results of the Company on a standalone basis.

The provision for income taxes is based on the current estimate of the annual effective tax rate and adjusted as necessary for quarterly events.

For the second quarter of 2022, the Company’s effective tax rate was 19.2% compared to 24.1% in the second quarter of 2021. The second quarter of 2022 rate was lower than the Company's combined estimated federal and state statutory rate primarily due to foreign earnings taxed at a rate lower than our combined statutory rate. The second quarter of 2021 rate was lower than the Company's 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 quarter.

For year-to-date 2022, the Company’s effective tax rate was 11.1% compared to 23.2% for year-to-date 2021. Both rates were lower than the Company's 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 $130 million and $13 million for the second quarter of 2022 and 2021, respectively. Year-to-date income taxes paid were $140 million and $15 million for 2022 and 2021, respectively.

On August 2, 2021, in connection with the Separation, the Company and the Former Parent entered into a Tax Matters Agreement. Under the agreement, the Former Parent will generally be responsible for all U.S. federal, state, local and non-U.S. income taxes of the Company for any taxable period, or portion of such period, ending on or before the Distribution Date. As such, the net liabilities associated with uncertain tax positions that were presented in the financial statements in prior periods on a carve-out basis were not transferred to the Company as part of the Separation.

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Long-term Debt and Borrowing Facilities

6 Months Ended

Jul. 30, 2022

Long-term Debt, by Current and Noncurrent [Abstract]

Long-term Debt and Borrowing Facilities

Long-term Debt and Borrowing Facilities

The following table provides the Company's outstanding debt balance, net of unamortized debt issuance costs and discounts, as of July 30, 2022, January 29, 2022 and July 31, 2021:

	July 30, 2022		January 29, 2022		July 31, 2021
	(in millions)
Senior Secured Debt with Subsidiary Guarantee
$397 million Term Loan due August 2028 (“Term Loan Facility”)	$	388	$	390	$	—
Total Senior Secured Debt with Subsidiary Guarantee	388		390		—
Senior Debt with Subsidiary Guarantee
$600 million, 4.625% Fixed Interest Rate Notes due July 2029 (“2029 Notes”)	593		592		592
Total Senior Debt with Subsidiary Guarantee	593		592		592
Long-term Debt due to Former Parent	—		—		97
Total	981		982		689
Current Debt	(4)		(4)		—
Total Long-term Debt, Net of Current Portion	$	977	$	978	$	689

Cash paid for interest was $21 million year-to-date 2022.

Issuance of Notes

In July 2021, the Company issued $600 million of 4.625% notes due in July 2029 in a transaction exempt from registration under the Securities Act of 1933, as amended. The obligation to pay principal and interest on the 2029 Notes is jointly and severally guaranteed on a full and unconditional basis by certain of the Company's wholly-owned subsidiaries. As of July 31, 2021, the proceeds were held in escrow for release to the Company upon satisfaction of certain conditions, including completion of the Separation. If the conditions for the release from escrow of the proceeds of this offering were not satisfied, the 2029 Notes would have been subject to mandatory redemption. The $600 million initial gross proceeds were included in Cash in Escrow related to the Spin-Off on the July 31, 2021 combined balance sheet.

On August 2, 2021, the Company used cash proceeds of $592 million, which were net of issuance costs of $8 million, from the 2029 Notes, to partially fund the approximately $976 million cash payment to the Former Parent in connection with the Separation. The issuance costs are being amortized through the maturity date and are included within Long-term Debt on the Consolidated and Combined Balance Sheets.

Credit Facilities

On August 2, 2021, the Company entered into a term loan B credit facility in an aggregate principal amount of $400 million (the “Term Loan Facility”), which will mature in August 2028. 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 a principal payment of $1 million and $2 million for the Term Loan Facility during the second quarter of 2022 and year-to-date 2022, respectively.

Interest under the Term Loan Facility is calculated by reference to the London Interbank Offered Rate (“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 will be subject to a floor of 0.50%. 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 asset-based revolving credit facility and on a second-priority lien basis by priority collateral of the asset-based revolving credit facility, subject to customary exceptions.

On August 2, 2021, the Company also entered into a senior secured asset-based revolving credit facility (the “ABL 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. Interest on the loans under the ABL Facility is 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%. Unused commitments under the ABL Facility accrue an unused commitment fee ranging from 0.25% to 0.30%.

For the reporting period ended July 30, 2022, the Company's borrowing base was $585 million and there were no borrowings outstanding under the ABL Facility. The Company had $40 million of outstanding letters of credit as of July 30, 2022 that reduced its availability under the ABL Facility.

On August 2, 2021, the Company used the net cash proceeds from the credit facilities of $384 million, which were net of issuance and financing costs of $10 million for the Term Loan Facility and $6 million for the ABL Facility, to partially fund the approximately $976 million cash payment to the Former Parent in connection with the Separation. 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 July 30, 2022 and January 29, 2022 Consolidated and Combined Balance Sheets.

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 July 30, 2022, the Company was in compliance with all covenants under its long-term debt and borrowing facilities.

Foreign Facilities

Certain of the Company's China subsidiaries previously utilized revolving and term loan bank facilities to support their operations (“Foreign Facilities”). During the second quarter of 2021, with no borrowings outstanding, the Company terminated the Foreign Facilities.

Long-term Debt due to Former Parent

During 2020, the Company borrowed $97 million from the Former Parent to pay down outstanding debt with external parties. This borrowing was due in September 2025 and had a variable interest rate based on the China Loan Prime Rate. As a result of the Separation, the Company no longer has this Long-term Debt due to Former Parent. Prior to the Separation, the Company recognized $2 million of interest expense year-to-date 2021 related to this borrowing.

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Fair Value of Financial Instruments

6 Months Ended

Jul. 30, 2022

Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract]

Fair Value of Financial Instruments

Fair Value of Financial Instruments

Cash and Cash Equivalents and restricted cash 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 and restricted cash 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 publicly traded debt as of July 30, 2022, January 29, 2022 and July 31, 2021:

	July 30, 2022		January 29, 2022		July 31, 2021
	(in millions)
Principal Value	$	997	$	999	$	600
Fair Value, Estimated (a)	865		975		603

________________

(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.

Management believes that the carrying values of accounts receivable, accounts payable and accrued expenses approximate fair value because of their short maturity.

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Comprehensive Income (Loss)

6 Months Ended

Jul. 30, 2022

OCI, Net of Tax [Abstract]

Comprehensive Income (Loss)

Comprehensive Income (Loss)

The following table provides the rollforward of accumulated other comprehensive income attributable to Victoria's Secret & Co. for year-to-date 2022:

	Foreign Currency Translation		Accumulated Other Comprehensive Income
	(in millions)
Balance as of January 29, 2022	$	5	$	5
Other Comprehensive Income (Loss) Before Reclassifications	(2)		(2)
Amounts Reclassified from Accumulated Other Comprehensive Income to Paid-in Capital	3		3
Tax Effect	—		—
Current-period Other Comprehensive Income	1		1
Balance as of July 30, 2022	$	6	$	6

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.”

The following table provides the rollforward of accumulated other comprehensive income attributable to Victoria's Secret & Co. for year-to-date 2021:

	Foreign Currency Translation		Accumulated Other Comprehensive Income
	(in millions)
Balance as of January 30, 2021	$	4	$	4
Other Comprehensive Income (Loss) Before Reclassifications	4		4
Tax Effect	—		—
Current-period Other Comprehensive Income	4		4
Balance as of July 31, 2021	$	8	$	8

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Retirement Benefits

6 Months Ended

Jul. 30, 2022

Retirement Benefits [Abstract]

Retirement Benefits

Retirement Benefits

The Company sponsors a tax-qualified defined contribution retirement plan for employees who meet certain age and service requirements. The qualified plan permits participating associates to elect contributions up to the maximum limits allowable under the Internal Revenue Code. The Company matches associate contributions according to a predetermined formula and contributes additional amounts based on a percentage of the associates' eligible annual compensation and years of service. Associate contributions and Company matching contributions vest immediately. Additional Company contributions and the related investment earnings are subject to vesting based on years of service. Total expense recognized related to the qualified plan was $12 million and $9 million for the second quarter of 2022 and 2021, respectively. Total expense recognized related to the qualified plan was $24 million and $19 million for year-to-date 2022 and 2021, respectively.

The Former Parent previously sponsored a non-qualified supplemental retirement plan. The non-qualified plan was an unfunded plan which provided benefits beyond the Internal Revenue Code limits for qualified defined contribution plans. On June 27, 2020, the Human Capital and Compensation Committee of the Former Parent's Board of Directors authorized the termination of the non-qualified plan. All benefits and obligations due under the non-qualified plan were fully paid during the second quarter of 2021. Total expense recognized related to the non-qualified plan was not significant for any period presented.

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Commitments and Contingencies

6 Months Ended

Jul. 30, 2022

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

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.

Former Parent Derivative Lawsuits

As previously disclosed by the Former Parent, on May 19, 2020 and January 12, 2021, the Former Parent's shareholders filed derivative lawsuits in the Court of Common Pleas for Franklin County, Ohio (subsequently removed to the United States District Court for the Southern District of Ohio) and the Delaware Court of Chancery, respectively, naming as defendants certain current and former directors and officers of the Former Parent and alleging, among other things, breaches of fiduciary duty through asserted violations of law and failures to monitor workplace conduct (the “Lawsuits”). In addition, the Former Parent also received litigation and books-and-records demands from other shareholders related to the same matters (together with the Lawsuits, the “Actions”).

In July 2021, the Former Parent announced the global settlement resolving the Actions. The settlement resolves all derivative claims that have been or could have been asserted in the Actions or that involve in any way the allegations referred to in the Actions and releases all such claims against the Former Parent (and its subsidiaries, including the Company) and past and present employees, officers and directors, among others. As part of the settlement, the Former Parent (and its subsidiaries, including the Company) has agreed to implement certain management and governance measures, including the maintenance of a Diversity, Equity, and Inclusion Council. Following the Separation, the settlement terms apply to both the Former Parent and the Company. Each company has committed to invest $45 million over at least five years to fund the management and governance measures. The settlement was preliminarily approved on August 25, 2021, and a fairness hearing occurred on January 18, 2022. On May 16, 2022, the United States District Court of the Southern District of Ohio granted final approval of the settlement.

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 has appealed both judgments; the appeals have not yet been decided by the appellate court. As of the end of the second quarter of 2022, we remain fully accrued for both judgments.

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Description of Business, Basis of Presentation and Summary of Significant Accounting Policies (Policy)

6 Months Ended

Jul. 30, 2022

Description Of Business And Basis Of Presentation [Abstract]

Description of Business

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 and PINK brand names. The Company has more than 890 Victoria’s Secret and PINK stores in the U.S., Canada and China as well as online at www.VictoriasSecret.com and www.PINK.com and other online channels worldwide. Additionally, Victoria’s Secret and PINK have more than 440 stores in 70 countries operating under franchise, license and wholesale arrangements. The Company also includes the Victoria’s Secret and PINK 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.

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. For additional information, see Note 4, “Restructuring Activities.”

Fiscal Year

Fiscal Year

The Company’s fiscal year ends on the Saturday nearest to January 31. As used herein, “second quarter of 2022” and “second quarter of 2021” refer to the thirteen-week periods ended July 30, 2022 and July 31, 2021, respectively. “Year-to-date 2022” and “year-to-date 2021” refer to the twenty-six-week periods ended July 30, 2022 and July 31, 2021, respectively.

Basis of Presentation

Basis of Presentation - Unaudited Consolidated and Combined Financial Statements

The Company’s financial statements for periods through the Separation date of August 2, 2021 are combined financial statements prepared on a carve-out basis as discussed below. The Company’s financial statements for the period from August 3, 2021 through July 30, 2022 are consolidated financial statements based on the reported results of Victoria's Secret & Co. as a standalone company.

The Consolidated and Combined Financial Statements have been prepared in conformity with accounting principles generally accepted in the United States (“GAAP”). The Consolidated and Combined Financial Statements may not be indicative of the Company’s future performance and do not necessarily reflect what the financial position, results of operations, and cash flows would have been had it operated as an independent company during all of the periods presented.

Basis of Presentation - Prior to Separation

Through the Separation date, the Company's combined financial statements are prepared on a “carve-out” basis. The Combined Financial Statements have been derived from the consolidated financial statements and accounting records of the Former Parent in conformity with GAAP.

Intracompany transactions have been eliminated. Transactions between the Company and the Former Parent have been included in these financial statements. For those transactions between the Company and the Former Parent that were historically settled in cash, the Company reflected such balances in the Consolidated and Combined Balance Sheets in Other Current Assets for balances due from the Former Parent and in Accrued Expenses and Other for balances due to the Former Parent. The aggregate net effect of transactions between the Company and the Former Parent that were historically settled other than in cash are reflected in the Consolidated and Combined Balance Sheets as Net Investment by Former Parent and in the Consolidated and Combined Statements of Cash Flows as Net Transfers to Former Parent. For additional information, see Note 2, “Transactions with Former Parent.”

The Consolidated and Combined Balance Sheets include certain of the Former Parent's assets and liabilities that were specifically identifiable or otherwise attributable to the Company. The Former Parent's third-party long-term notes payable and the related interest expense have not been allocated to the Company for any of the periods presented as the Company was not the legal obligor of such debt. Except for Long-term Debt due to Former Parent, the debt reflected in the Consolidated and Combined Balance Sheets relate to third-party borrowings specifically attributable to, and legal obligations of, the Company.

The Former Parent utilized a centralized approach to cash management and financing its operations. The Cash and Cash Equivalents held by the Former Parent at the corporate level were not specifically identifiable to the Company and, therefore, were not reflected in the Company’s Consolidated and Combined Balance Sheets. Cash transfers between the Former Parent and the Company were accounted for through Net Investment by Former Parent. Cash and Cash Equivalents in the Consolidated and Combined Balance Sheets represent cash and cash equivalents held by the Company at period-end prior to any potential transfer to the centralized cash management pool of the Former Parent.

The Consolidated and Combined Statements of Income include costs for certain functions, including information technology, human resources and store design and construction, that historically were provided and administered on a centralized basis by the Former Parent. Starting in the third quarter of 2020, as part of the steps to prepare the Company to operate as a separate, standalone company, these functions were transitioned to the business and began to be operated and administered as part of Victoria’s Secret & Co. Costs applicable to the Company related to these functions are included in the Consolidated and Combined Statements of Income for all periods presented. Prior to the transition of these functions, these costs were directly charged to the Company by the Former Parent.

In addition, for purposes of preparing the combined financial statements on a “carve-out” basis prior to the Separation, a portion of the Former Parent's corporate expenses were allocated to the Company. These expense allocations include the cost of corporate functions and resources provided by, or administered by, the Former Parent including, but not limited to, executive management and other corporate and governance functions, such as corporate finance, internal audit, tax and treasury. The related employee payroll and benefit costs associated with such functions, such as share-based compensation, were included in the expense allocations. Corporate expenses of $30 million and $49 million in the second quarter of 2021 and year-to-date 2021, respectively, were allocated and included within General, Administrative and Store Operating Expenses in the Consolidated and Combined Statements of Income.

Costs were allocated to the Company based on direct usage when identifiable or, when not directly identifiable, on the basis of proportional net sales. Management considers the basis on which the expenses have been allocated to reasonably reflect the utilization of services provided to, or the benefit received by, the Company during the periods presented. However, the allocations may not reflect the expenses the Company would have incurred if the Company had been a standalone company for the periods presented. Actual costs that may have been incurred if the Company had been a standalone company would depend on a number of factors, including the organizational structure, whether functions were outsourced or performed by employees, and strategic or capital decisions. Going forward, the Company may perform these functions using its own resources or outsourced services. For a period following the Separation, however, some of these functions will continue to be provided by the Former Parent under a transition services agreement, and the Company will provide some services to the Former Parent under a transition services agreement. The Company has also entered into certain commercial arrangements with the Former Parent in connection with the Separation. For more information, see Note 2, “Transactions with Former Parent.”

During the periods prior to the Separation that are presented in these Consolidated and Combined Financial Statements, the Company's income tax expense (benefit) and deferred tax balances were included in the Former Parent's income tax returns. Income tax expense (benefit) and deferred tax balances contained in these Consolidated and Combined Financial Statements for periods prior to the Separation are presented on a separate return basis, as if the Company had filed its own income tax returns. As a result, actual tax transactions included in the consolidated financial statements of the Former Parent may or may not be included in the Consolidated and Combined Financial Statements of the Company. Similarly, the tax treatment of certain items reflected in the Consolidated and Combined Financial Statements of the Company may or may not be reflected in the consolidated financial statements and income tax returns of the Former Parent. The taxes recorded in the Consolidated and Combined Statement of Income for periods prior to the Separation are not necessarily representative of the taxes that may arise in the future when the Company files its income tax returns independent from the Former Parent's returns.

Interim Financial Statements

Interim Financial Statements

The Consolidated and Combined Financial Statements as of and for the periods ended July 30, 2022 and July 31, 2021 are unaudited. These Consolidated and Combined Financial Statements should be read in conjunction with the audited Consolidated and Combined Financial Statements and Notes thereto included in our Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on March 18, 2022.

In the opinion of management, the accompanying Consolidated and Combined Financial Statements reflect all adjustments, which are of a normal recurring nature, necessary for a fair presentation of the results for the interim periods.

Impacts of COVID-19

Impacts of COVID-19Even as the coronavirus pandemic (“COVID-19”) subsides, macroeconomic impacts related to the pandemic, including inflation, supply chain disruptions and labor shortages, are expected to continue. The Company remains focused on the safe operation of its business, including its stores, distribution, fulfillment and call centers. There remains the potential for COVID-19-related risks of closure or operating restrictions, as well as risks related to delays or disruptions in our supply chain and related pricing impacts, which could materially impact the Company's operations and financial performance in future periods.

Seasonality of Business

Seasonality of Business

Due to the seasonal variations in the retail industry, the results of operations for the thirteen-week and twenty-six-week periods ended July 30, 2022 are not necessarily indicative of the results expected for any other interim period or the full fiscal year ending January 28, 2023.

Equity Method Investments

Equity Method InvestmentsThe 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 and Combined Statements of Income, 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 and Combined Statements of Income. 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.

Noncontrolling Interest

Noncontrolling InterestThe 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 and Combined Financial Statements. The share of the investment not owned by the Company is reflected in Noncontrolling Interest in the Consolidated and Combined Balance Sheets. The Company recognizes the share of net income or loss not attributable to the Company in Net Loss Attributable to Noncontrolling Interest in the Consolidated and Combined Statements of Income. Noncontrolling interest represents the portion of equity interests in a joint venture in China that is not owned by the Company.

Net Investment by Former Parent

Net Investment by Former Parent

Net Investment by Former Parent in the Consolidated and Combined Balance Sheets represents the Former Parent's historical investment in the Company, the accumulated net earnings after taxes and the net effect of the transactions with and allocations from the Former Parent. All transactions reflected in Net Investment by Former Parent in the accompanying Consolidated and Combined Balance Sheets have been considered as financing activities for purposes of the Consolidated and Combined Statements of Cash Flows.

Derivative Financial Instruments

Derivative Financial Instruments

The Company from time to time uses derivative financial instruments to manage exposure to foreign currency exchange rates. The Company does not use derivative instruments for trading purposes. All derivative instruments are recorded on the Consolidated and Combined Balance Sheets at fair value.

The earnings of the Company’s foreign operations are subject to exchange rate risk as substantially all the merchandise is sourced through U.S. dollar transactions. The Company from time to time utilizes foreign currency forward contracts designated as cash flow hedges to mitigate this foreign currency exposure. Amounts for these designated cash flow hedges are reclassified from Accumulated Other Comprehensive Income (Loss) upon sale of the hedged merchandise to the customer. These gains and losses are recognized in Costs of Goods Sold, Buying and Occupancy in the Consolidated and Combined Statements of Income. During the second quarter of 2021, the Company terminated its foreign currency forward contracts designated as cash flow hedges that were used to mitigate foreign currency exposure for its Canadian operations. The fair value of designated cash flow hedges is not significant for any period presented.

Concentration of Credit Risk

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 July 30, 2022, the Company's investment portfolio is primarily comprised of bank deposits. Prior to the Separation, cash generated by the Company was invested by the Former Parent in U.S. government obligations and U.S. Treasury and AAA-rated money market funds.

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.

Use of Estimates in the Preparation of Financial Statements

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

Recently Issued Accounting Pronouncements

The Company did not adopt any new accounting standards during the second quarter of 2022 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.

Earnings Per Share

Earnings Per ShareEarnings per basic share is computed based on the weighted-average number of common shares outstanding. Earnings per diluted share include the weighted-average effect of dilutive restricted stock and options on the weighted-average shares outstanding.

Inventory

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.

Fair Value

Cash and Cash Equivalents and restricted cash 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 and restricted cash are considered Level 1 fair value measurements as they are valued using unadjusted quoted prices in active markets for identical assets.

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Transactions with Former Parent (Tables)

6 Months Ended

Jul. 30, 2022

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Schedule of Net Transfers from (to) Former Parent

The following table presents the components of Net Transfers from (to) Former Parent prior to the Separation in the second quarter and year-to-date 2021 Consolidated and Combined Statements of Equity:

	Second Quarter		Year-to-Date
	2021		2021
Cash Pooling and General Financing Activities, Net	$	(322)	$	(431)
Long-lived Assets (a)	(4)		16
Corporate Expense Allocations	30		49
Share-based Compensation Expense	8		15
Assumed Income Tax Payments	13		15
Total Net Transfers to Former Parent	$	(275)	$	(336)

_______________

(a)Represents long-lived assets transferred between the Company and the Former Parent as a result of asset allocation decisions made during the period.

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Revenue Recognition (Tables)

6 Months Ended

Jul. 30, 2022

Revenue Recognition and Deferred Revenue [Abstract]

Disaggregation of Revenue

The following table provides a disaggregation of Net Sales for the second quarter and year-to-date 2022 and 2021:

	Second Quarter				Year-to-Date
	2022		2021		2022		2021
	(in millions)
Stores – North America	$	968	$	1,037	$	1,900	$	1,970
Direct	414		469		834		990
International (a)	139		108		271		208
Total Net Sales	$	1,521	$	1,614	$	3,005	$	3,168

 _______________

(a)Results include consolidated joint venture sales in China, royalties associated with franchised stores and wholesale sales.

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Earnings Per Share and Shareholders' Equity (Tables)

6 Months Ended

Jul. 30, 2022

Earnings Per Share [Abstract]

Shares Utilized for the Calculation of Basic and Diluted Earnings Per Share

The following table provides the weighted-average shares utilized for the calculation of basic and diluted earnings per share for the second quarter and year-to-date 2022 and 2021:

	Second Quarter		Year-to-Date
	2022	2021	2022	2021
	(in millions)
Common Shares	83	88	83	88
Treasury Shares	—	—	—	—
Basic Shares	83	88	83	88
Effect of Dilutive Options and Restricted Stock Awards	1	—	3	—
Diluted Shares	84	88	86	88
Anti-dilutive Options and Restricted Stock Awards (a)	2	—	1	—

 _______________

(a)These options and restricted stock awards were excluded from the calculation of diluted earnings per share because their inclusion would have been anti-dilutive.

Schedule of Repurchase of Common Stock

The Company repurchased the following shares of its common stock under its March 2022 Share Repurchase Program during year-to-date 2022:

	Amount Authorized		Shares Repurchased	Amount Repurchased		Average Stock Price
	(in millions)		(in thousands)	(in millions)
March 2022 Share Repurchase Program	$	250	3,879	$	171	$	44.06

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Inventories (Tables)

6 Months Ended

Jul. 30, 2022

Inventory, Net [Abstract]

Summary of Inventories

The following table provides details of Inventories as of July 30, 2022, January 29, 2022 and July 31, 2021:

	July 30, 2022		January 29, 2022		July 31, 2021
	(in millions)
Finished Goods Merchandise	$	1,020	$	898	$	694
Raw Materials and Merchandise Components	66		51		51
Total Inventories	$	1,086	$	949	$	745

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Long-Lived Assets (Tables)

6 Months Ended

Jul. 30, 2022

Property, Plant and Equipment [Abstract]

Summary of Property And Equipment, Net

The following table provides details of Property and Equipment, Net as of July 30, 2022, January 29, 2022 and July 31, 2021:

	July 30, 2022		January 29, 2022		July 31, 2021
	(in millions)
Property and Equipment, at Cost	$	3,667	$	3,795	$	3,755
Accumulated Depreciation and Amortization	(2,803)		(2,838)		(2,756)
Property and Equipment, Net	$	864	$	957	$	999

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Accrued Expenses and Other (Tables)

6 Months Ended

Jul. 30, 2022

Accrued Liabilities, Current [Abstract]

Schedule of Accrued Liabilities

The following table provides additional information about the composition of Accrued Expenses and Other as of July 30, 2022, January 29, 2022 and July 31, 2021:

	July 30, 2022		January 29, 2022		July 31, 2021
	(in millions)
Deferred Revenue on Gift Cards	$	170	$	198	$	158
Compensation, Payroll Taxes and Benefits	87		152		145
Rent	63		45		80
Accrued Freight and Other Logistics	41		62		19
Accrued Marketing	37		36		39
Deferred Revenue on Loyalty and Credit Card Programs	28		36		37
Taxes, Other than Income	22		24		37
Deferred Revenue on Direct Shipments not yet Delivered	20		16		15
Returns Reserve	17		23		20
Accrued Interest	6		5		1
Accrued Claims on Self-insured Activities	6		4		15
Other	126		113		138
Total Accrued Expenses and Other	$	623	$	714	$	704

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Long-term Debt and Borrowing Facilities (Tables)

6 Months Ended

Jul. 30, 2022

Long-term Debt, by Current and Noncurrent [Abstract]

Schedule Of Long-term Debt Instruments

The following table provides the Company's outstanding debt balance, net of unamortized debt issuance costs and discounts, as of July 30, 2022, January 29, 2022 and July 31, 2021:

	July 30, 2022		January 29, 2022		July 31, 2021
	(in millions)
Senior Secured Debt with Subsidiary Guarantee
$397 million Term Loan due August 2028 (“Term Loan Facility”)	$	388	$	390	$	—
Total Senior Secured Debt with Subsidiary Guarantee	388		390		—
Senior Debt with Subsidiary Guarantee
$600 million, 4.625% Fixed Interest Rate Notes due July 2029 (“2029 Notes”)	593		592		592
Total Senior Debt with Subsidiary Guarantee	593		592		592
Long-term Debt due to Former Parent	—		—		97
Total	981		982		689
Current Debt	(4)		(4)		—
Total Long-term Debt, Net of Current Portion	$	977	$	978	$	689

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Fair Value of Financial Instruments (Tables)

6 Months Ended

Jul. 30, 2022

Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract]

Schedule of Fair Value of Financial Instruments

The following table provides a summary of the principal value and estimated fair value of the Company's outstanding publicly traded debt as of July 30, 2022, January 29, 2022 and July 31, 2021:

	July 30, 2022		January 29, 2022		July 31, 2021
	(in millions)
Principal Value	$	997	$	999	$	600
Fair Value, Estimated (a)	865		975		603

________________

(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.

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Comprehensive Income (Loss) (Tables)

6 Months Ended

Jul. 30, 2022

OCI, Net of Tax [Abstract]

Components of Accumulated Other Comprehensive Income (Loss)

The following table provides the rollforward of accumulated other comprehensive income attributable to Victoria's Secret & Co. for year-to-date 2022:

	Foreign Currency Translation		Accumulated Other Comprehensive Income
	(in millions)
Balance as of January 29, 2022	$	5	$	5
Other Comprehensive Income (Loss) Before Reclassifications	(2)		(2)
Amounts Reclassified from Accumulated Other Comprehensive Income to Paid-in Capital	3		3
Tax Effect	—		—
Current-period Other Comprehensive Income	1		1
Balance as of July 30, 2022	$	6	$	6

The following table provides the rollforward of accumulated other comprehensive income attributable to Victoria's Secret & Co. for year-to-date 2021:

	Foreign Currency Translation		Accumulated Other Comprehensive Income
	(in millions)
Balance as of January 30, 2021	$	4	$	4
Other Comprehensive Income (Loss) Before Reclassifications	4		4
Tax Effect	—		—
Current-period Other Comprehensive Income	4		4
Balance as of July 31, 2021	$	8	$	8

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Description of Business, Basis of Presentation and Summary of Significant Accounting Policies (Details) $ in Millions		3 Months Ended	6 Months Ended
	Mar. 25, 2022 USD ($)	Jul. 31, 2021 USD ($)	Jul. 30, 2022 USD ($) store country associate	Jul. 31, 2021 USD ($)	Jan. 29, 2022 USD ($)	Aug. 03, 2021	Aug. 02, 2021 USD ($) shares
Spinoff Transactions [Line Items]
Number of countries in which stores operating | country			70
Number of home office associates | associate			160
Reduction of home office headcount			5.00%
Investment in Frankies Bikinis, LLC			$ 18	$ 0
Cash in Escrow related to the Spin-Off		$ 600	0	600	$ 0
Restricted Cash Related to Spin Off
Spinoff Transactions [Line Items]
Cash in Escrow related to the Spin-Off		600		600
Frankies Bikinis, LLC
Spinoff Transactions [Line Items]
Investment in Frankies Bikinis, LLC	$ 18
Victoria's Secret U.K. and Other
Spinoff Transactions [Line Items]
Equity method investments		32	$ 57	32	$ 35
Stores in the U.S., Canada and Greater China and Stores Online
Spinoff Transactions [Line Items]
Number of stores (more than) | store			890
Stores Operating under Franchise, License and Wholesale Arrangements
Spinoff Transactions [Line Items]
Number of stores (more than) | store			440
Victoria's Secret & Co. | Former Parent
Spinoff Transactions [Line Items]
Ownership percent						0.00%
Former Parent
Spinoff Transactions [Line Items]
Spinoff transactions, common stock distributed, percentage							100.00%
Spinoff transaction, shares of parent exchanged for each share of company | shares							3
Spinoff transactions, cash payment to parent							$ 976
Allocated corporate expense		$ 30		$ 49

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Transactions with Former Parent - Narrative (Details) shares in Millions, $ in Millions		3 Months Ended		6 Months Ended
	Aug. 02, 2021 period shares	Jul. 30, 2022 USD ($)	Jul. 31, 2021 USD ($)	Jul. 30, 2022 USD ($)	Jul. 31, 2021 USD ($)	Jan. 29, 2022 USD ($)	Dec. 31, 2020 USD ($)
Debt Instrument [Line Items]
Long-term Debt due to Former Parent		$ 0	$ 97	$ 0	$ 97	$ 0
Interest expense		13	$ 3	25	4
Transition services agreements, number of extension periods | period	2
Transition services agreements, extension period	1 year
Domestic transportation services, initial term	3 years
Share-based payment award, award converted from former parent (in shares) | shares	6.0
Maximum
Debt Instrument [Line Items]
Transition services agreements, general services term (up to)	2 years
Transition services agreements, information technology service term (up to)	3 years
Former Parent
Debt Instrument [Line Items]
Transition service consideration		20		40
Transition service cost		19		38
Domestic transportation services cost		$ 21		$ 39
Former Parent
Debt Instrument [Line Items]
Long-term Debt due to Former Parent							$ 97
Interest expense					$ 2

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Transactions with Former Parent - Schedule of Net Transfers from (to) Former Parent (Details) - USD ($) $ in Millions	3 Months Ended	6 Months Ended
	Jul. 31, 2021	Jul. 31, 2021
Transaction With Former Parent [Line Items]
Net Transfers to Former Parent	$ (275)	$ (336)
Former Parent
Transaction With Former Parent [Line Items]
Net Transfers to Former Parent	(275)	(336)
Former Parent | Cash Pooling and General Financing Activities, Net
Transaction With Former Parent [Line Items]
Net Transfers to Former Parent	(322)	(431)
Former Parent | Long-lived Assets
Transaction With Former Parent [Line Items]
Net Transfers to Former Parent	(4)	16
Former Parent | Corporate Expense Allocations
Transaction With Former Parent [Line Items]
Net Transfers to Former Parent	30	49
Former Parent | Share-based Compensation Expense
Transaction With Former Parent [Line Items]
Net Transfers to Former Parent	8	15
Former Parent | Assumed Income Tax Payments
Transaction With Former Parent [Line Items]
Net Transfers to Former Parent	$ 13	$ 15

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Revenue Recognition - Narrative (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jul. 30, 2022	Jul. 31, 2021	Jul. 30, 2022	Jul. 31, 2021	Jan. 29, 2022
Accounts receivable, net from revenue-generating activities	$ 101	$ 73	$ 101	$ 73	$ 101
Deferred revenue	238	219	238	219	$ 258
Contract with customer, revenue recognized			105
Net sale	1,521	1,614	$ 3,005	3,168
Minimum
Payment term			60 days
Maximum
Payment term			90 days
U.S. Private Label Credit Card Arrangement
Net sale	30	31	$ 57	59
Net Sale Outside of the U.S.
Net sale	199	$ 167	383	$ 330
Accrued Liabilities
Deferred revenue	218		218
Other Long-term Liabilities
Deferred revenue	$ 20		$ 20

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Revenue Recognition - Schedule of Disaggregation of Revenue (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jul. 30, 2022	Jul. 31, 2021	Jul. 30, 2022	Jul. 31, 2021
Disaggregation of Revenue [Line Items]
Net Sales	$ 1,521	$ 1,614	$ 3,005	$ 3,168
Stores – North America
Disaggregation of Revenue [Line Items]
Net Sales	968	1,037	1,900	1,970
Direct
Disaggregation of Revenue [Line Items]
Net Sales	414	469	834	990
International
Disaggregation of Revenue [Line Items]
Net Sales	$ 139	$ 108	$ 271	$ 208

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Restructuring Activities (Details) - USD ($) $ in Millions	1 Months Ended	3 Months Ended	6 Months Ended
	Apr. 30, 2022	Jul. 30, 2022	Jul. 30, 2022
Restructuring Cost and Reserve [Line Items]
Proceeds from divestiture of interest in consolidated subsidiaries	$ 45
Restructuring charges			$ 29
Payments for Restructuring		$ 2
Accrued termination payable		$ 27	27
Cost of Goods Sold, Buying and Occupancy [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring charges			13
Selling, General and Administrative Expenses [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring charges			$ 16
Victoria's Secret China
Restructuring Cost and Reserve [Line Items]
Ownership percentage by parent	51.00%
Payments to acquire interest in joint venture	$ 10
Regina Miracle | Victoria's Secret China
Restructuring Cost and Reserve [Line Items]
Ownership percentage by noncontrolling owners	49.00%
Regina Miracle | Victoria's Secret China
Restructuring Cost and Reserve [Line Items]
Payments to acquire interest in joint venture	$ 10

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Earnings Per Share and Shareholders' Equity - Narrative (Details) - USD ($) $ in Millions	1 Months Ended		3 Months Ended	6 Months Ended
	Sep. 07, 2022	Feb. 28, 2022	Jul. 30, 2022	Jul. 30, 2022	Apr. 30, 2022	Mar. 31, 2022	Jan. 29, 2022	Aug. 03, 2021	Aug. 02, 2021	Jul. 31, 2021	May 01, 2021	Jan. 30, 2021
Class of Stock [Line Items]
Common stock, shares outstanding (in shares)			82,000,000	82,000,000			0			85,000,000
Accounts Payable
Class of Stock [Line Items]
Payable Under Repurchase Agreements			$ 2	$ 2
Treasury Stock
Class of Stock [Line Items]
Stock repurchased and retired			$ (60)	$ (219)
Common Stock
Class of Stock [Line Items]
Common stock, shares outstanding (in shares)			82,000,000	82,000,000	83,000,000		85,000,000			0	0	0
Paid-in Capital
Class of Stock [Line Items]
Stock repurchased and retired			$ 3	$ 7
Retained Earnings
Class of Stock [Line Items]
Stock repurchased and retired			57	$ 212
ASR Program
Class of Stock [Line Items]
Stock repurchased and retired (in shares)		300,000
ASR Program | Treasury Stock
Class of Stock [Line Items]
Amount reclassified to treasury stock		$ 50
Stock repurchased and retired		50
ASR Program | Common Stock
Class of Stock [Line Items]
Stock repurchased and retired		1
ASR Program | Paid-in Capital
Class of Stock [Line Items]
Stock repurchased and retired		1
ASR Program | Retained Earnings
Class of Stock [Line Items]
Stock repurchased and retired		$ 50
March 2022 Repurchase Program
Class of Stock [Line Items]
Stock repurchased and retired (in shares)				3,800,000
Amount Authorized						$ 250
Remaining authorized repurchase amount			$ 79	$ 79
March 2022 Repurchase Program | Subsequent Event
Class of Stock [Line Items]
Stock repurchased and retired (in shares)	700,000
Stock repurchased and retired	$ 27
March 2022 Repurchase Program | Common Stock
Class of Stock [Line Items]
Stock repurchased and retired				1
March 2022 Repurchase Program | Paid-in Capital
Class of Stock [Line Items]
Stock repurchased and retired				7
March 2022 Repurchase Program | Retained Earnings
Class of Stock [Line Items]
Stock repurchased and retired				$ 162
Former Parent
Class of Stock [Line Items]
Spinoff transactions, common stock distributed, percentage									100.00%
Spinoff transaction, shares of parent exchanged for each share of company									3
Common stock, shares outstanding (in shares)								88,000,000

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Earnings Per Share and Shareholders' Equity - Shares Utilized for the Calculation of Basic and Diluted Earnings per Share (Details) - shares shares in Millions	3 Months Ended		6 Months Ended
	Jul. 30, 2022	Jul. 31, 2021	Jul. 30, 2022	Jul. 31, 2021
Earnings Per Share [Abstract]
Common Shares (in shares)	83	88	83	88
Treasury Shares (in shares)	0	0	0	0
Basic shares (in shares)	83	88	83	88
Effect of Dilutive Restricted Stock and Options (in shares)	1	0	3	0
Diluted Shares (in shares)	84	88	86	88
Antidilutive Options and Awards (in shares)	2	0	1	0

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Earnings Per Share and Shareholders' Equity - Schedule of Repurchase of Common Stock (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Millions	3 Months Ended	6 Months Ended
	Jul. 30, 2022	Jul. 30, 2022	Mar. 31, 2022
Equity, Class of Treasury Stock [Line Items]
Amount Repurchased	$ 62	$ 171
March 2022 Repurchase Program
Equity, Class of Treasury Stock [Line Items]
Amount Authorized			$ 250
Shares Repurchased (in shares)		3,879
Amount Repurchased		$ 171
Average Stock Price (in dollars per share)		$ 44.06

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Inventories (Details) - USD ($) $ in Millions	Jul. 30, 2022	Jan. 29, 2022	Jul. 31, 2021
Inventory, Net [Abstract]
Finished Goods Merchandise	$ 1,020	$ 898	$ 694
Raw Materials and Merchandise Components	66	51	51
Total Inventories	$ 1,086	$ 949	$ 745

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Long-Lived Assets - Summary of Property And Equipment, Net (Details) - USD ($) $ in Millions	Jul. 30, 2022	Jan. 29, 2022	Jul. 31, 2021
Property, Plant and Equipment [Abstract]
Property and Equipment, at Cost	$ 3,667	$ 3,795	$ 3,755
Accumulated Depreciation and Amortization	(2,803)	(2,838)	(2,756)
Property and Equipment, Net	$ 864	$ 957	$ 999

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Long-Lived Assets - Narrative (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jul. 30, 2022	Jul. 31, 2021	Jul. 30, 2022	Jul. 31, 2021
Property, Plant and Equipment [Abstract]
Depreciation	$ 70	$ 78	$ 140	$ 158

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Accrued Expenses and Other (Details) - USD ($) $ in Millions	Jul. 30, 2022	Jan. 29, 2022	Jul. 31, 2021
Disaggregation of Revenue [Line Items]
Compensation, Payroll Taxes and Benefits	$ 87	$ 152	$ 145
Rent	63	45	80
Accrued Marketing	37	36	39
Accrued Freight and Other Logistics	41	62	19
Taxes, Other than Income	22	24	37
Returns Reserve	17	23	20
Accrued Interest	6	5	1
Accrued Claims on Self-insured Activities	6	4	15
Other	126	113	138
Total Accrued Expenses and Other	623	714	704
Sales Channel, Gift Cards
Disaggregation of Revenue [Line Items]
Deferred Revenue	170	198	158
Sales Channel, Loyalty and Private Label Credit Card
Disaggregation of Revenue [Line Items]
Deferred Revenue	28	36	37
Sales Channel, Direct Shipment
Disaggregation of Revenue [Line Items]
Deferred Revenue	$ 20	$ 16	$ 15

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Income Taxes (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jul. 30, 2022	Jul. 31, 2021	Jul. 30, 2022	Jul. 31, 2021
Income Tax Disclosure [Abstract]
Effective income tax rate	19.20%	24.10%	11.10%	23.20%
Income taxes paid	$ 130	$ 13	$ 140	$ 15

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Long-term Debt and Borrowing Facilities - Schedule of Long-term Debt Instruments (Details) - USD ($) $ in Millions	Jul. 30, 2022	Jan. 29, 2022	Jul. 31, 2021
Total debt	$ 981	$ 982	$ 689
Current Debt	(4)	(4)	0
Total Long-term Debt, Net of Current Portion	977	978	689
With Subsidiary Guarantee | Senior Secured Debt with Subsidiary Guarantee
Total debt	388	390	0
With Subsidiary Guarantee | Senior Debt
Total debt	593	592	592
With Subsidiary Guarantee | Term Loan due August 2028
Debt instrument, face amount	397
With Subsidiary Guarantee | Term Loan due August 2028 | Senior Secured Debt with Subsidiary Guarantee
Total debt	388	390	0
With Subsidiary Guarantee | 4.625% Fixed Interest Rate Secured Notes due July 2029
Debt instrument, face amount	$ 600		$ 600
Fixed interest rate	4.625%		4.625%
With Subsidiary Guarantee | 4.625% Fixed Interest Rate Secured Notes due July 2029 | Senior Debt
Total debt	$ 593	592	$ 592
Without Subsidiary Guarantee | Long-term Debt due to Former Parent
Total debt	$ 0	$ 0	$ 97

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Long-term Debt and Borrowing Facilities - Narrative (Details) $ in Millions		3 Months Ended		6 Months Ended
	Aug. 02, 2021 USD ($)	Jul. 30, 2022 USD ($)	Jul. 31, 2021 USD ($)	Jul. 30, 2022 USD ($)	Jul. 31, 2021 USD ($)	Jan. 29, 2022 USD ($)	Dec. 31, 2020 USD ($)
Cash paid for interest				$ 21
Long-term Debt due to Former Parent		$ 0	$ 97	0	$ 97	$ 0
Interest expense		13	3	25	4
Former Parent
Spinoff transactions, cash payment to parent	$ 976
Long-term Debt due to Former Parent							$ 97
Interest expense					2
Credit Facility
Proceeds from issuance of notes	384
Term Loan due August 2028 | Term Loan
Debt issuance costs	10
Term loan B credit facility	$ 400
Periodic principal payment, percent	0.0025
Debt instrument, principal payment		1		2
Term Loan due August 2028 | London Interbank Offered Rate (LIBOR) | Term Loan
Percentage spread over variable base rate	3.25%
Term Loan due August 2028 | Base Rate | Term Loan
Percentage spread over variable base rate	2.25%
Term Loan due August 2028 | Interest Rate Floor | Term Loan
Percentage spread over variable base rate	0.50%
Revolving Credit Expiring August 2026 | Revolving Credit Facility
Debt issuance costs	$ 6
Maximum borrowing capacity	$ 750
Revolving Credit Expiring August 2026 | Minimum | Revolving Credit Facility
Commitment fee percentage, unused capacity	0.25%
Revolving Credit Expiring August 2026 | Maximum | Revolving Credit Facility
Commitment fee percentage, unused capacity	0.30%
Revolving Credit Expiring August 2026 | Average Daily Excess Availability | LIBOR and CDOR Loans | Minimum | Revolving Credit Facility
Percentage spread over variable base rate	1.50%
Revolving Credit Expiring August 2026 | Average Daily Excess Availability | LIBOR and CDOR Loans | Maximum | Revolving Credit Facility
Percentage spread over variable base rate	2.00%
Revolving Credit Expiring August 2026 | Average Daily Excess Availability | Alternate Base Rate Loans and Canadian Base Rate Loans | Minimum | Revolving Credit Facility
Percentage spread over variable base rate	0.50%
Revolving Credit Expiring August 2026 | Average Daily Excess Availability | Alternate Base Rate Loans and Canadian Base Rate Loans | Maximum | Revolving Credit Facility
Percentage spread over variable base rate	1.00%
Revolving Credit Expiring August 2026 | Letter of Credit
Line of credit		40		40
ABL Facility, Borrowing | Revolving Credit Facility
Line of credit facility, current borrowing capacity		585		585
Line of credit		0		0
With Subsidiary Guarantee | 4.625% Fixed Interest Rate Secured Notes due July 2029
Principal Value		$ 600	$ 600	$ 600	$ 600
Fixed interest rate		4.625%	4.625%	4.625%	4.625%
Proceeds from issuance of notes	$ 592
Debt issuance costs	$ 8
With Subsidiary Guarantee | Term Loan due August 2028
Principal Value		$ 397		$ 397

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Fair Value Measurements - Carrying Value and Fair Value of Long-Term Debt, Disclosure (Details) - USD ($) $ in Millions	Jul. 30, 2022	Jan. 29, 2022	Jul. 31, 2021
Principal Value
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Debt instrument, fair value	$ 997	$ 999	$ 600
Fair Value, Estimated
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Debt instrument, fair value	$ 865	$ 975	$ 603

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Comprehensive Income (Loss) - Components of Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Millions	1 Months Ended	3 Months Ended		6 Months Ended
	Apr. 30, 2022	Jul. 30, 2022	Jul. 31, 2021	Jul. 30, 2022	Jul. 31, 2021
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Beginning Balance		$ 251	$ 1,007	$ 257	$ 891
Total Other Comprehensive Income (Loss), Net of Tax		(1)	1	3	4
Ending Balance	$ 251	269	884	269	884
Accumulated Other Comprehensive Income
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Beginning Balance		8	7	5	4
Other Comprehensive Income (Loss) Before Reclassifications				(2)	4
Amounts Reclassified from Accumulated Other Comprehensive Income to Paid-in Capital				3
Tax Effect				0	0
Total Other Comprehensive Income (Loss), Net of Tax		(2)	1	1	4
Ending Balance	8	6	8	6	8
Foreign Currency Translation
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Beginning Balance				5	4
Other Comprehensive Income (Loss) Before Reclassifications				(2)	4
Amounts Reclassified from Accumulated Other Comprehensive Income to Paid-in Capital	$ 3			3
Tax Effect				0	0
Total Other Comprehensive Income (Loss), Net of Tax				1	4
Ending Balance		$ 6	$ 8	$ 6	$ 8

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Comprehensive Income (Loss) - Narrative (Details) - USD ($) $ in Millions	1 Months Ended	6 Months Ended
	Apr. 30, 2022	Jul. 30, 2022
Foreign Currency Translation
Accumulated Other Comprehensive Income (Loss) [Line Items]
Amounts Reclassified from Accumulated Other Comprehensive Income to Paid-in Capital	$ 3	$ 3

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Retirement Benefits (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jul. 30, 2022	Jul. 31, 2021	Jul. 30, 2022	Jul. 31, 2021
Retirement Benefits [Abstract]
Expense related to the qualified plan	$ 12	$ 9	$ 24	$ 19

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Commitments and Contingencies (Details) $ in Millions			1 Months Ended
	May 09, 2022 USD ($)	Aug. 06, 2021 USD ($)	Jul. 31, 2021 USD ($)	Apr. 22, 2022	Jul. 21, 2021
Occupancy-related Legal Matter
Other Commitments [Line Items]
Calculation of settlement amount				3	3
Judicial Ruling on Appeal | Occupancy-related Legal Matter
Other Commitments [Line Items]
Loss contingency, amount accrued	$ 22	$ 23
Management and Governance Investments
Other Commitments [Line Items]
Investment commitment, amount			$ 45
Investment commitment, period			5 years
Management and Governance Investments | Former Parent
Other Commitments [Line Items]
Investment commitment, amount			$ 45
Investment commitment, period			5 years