Transactions with Former Parent

12 Months Ended

Feb. 03, 2024

Organization, Consolidation and Presentation of Financial Statements [Abstract]

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.

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.

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 2021 Consolidated and Combined Statement of Equity:


	2021
	(in millions)
Cash Pooling and General Financing Activities, Net	$	(172)
Long-lived Assets (a)	16
Corporate Expense Allocations	49
Share-based Compensation Expense	15
Assumed Income Tax Payments	15
Cash Payment to Former Parent	(976)
Total Net Transfers to Former Parent	$	(1,053)

_______________

(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 has provided its Former Parent certain services or functions, including information technology, certain logistics functions and customer marketing services. The primary services that the Company still provides to its Former Parent relate to information technology services. Additionally, the Former Parent has provided to the Company various services or functions, including human resources, payroll, information technology and certain logistics functions. The primary services that the Former Parent still provides to the Company relate to information technology services. The Company anticipates that both transition services agreements will terminate during fiscal 2024. Consideration and costs for the transition services are 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 following table summarizes the recognized consideration and costs pursuant to the transition services agreements for 2023, 2022 and 2021:


	2023		2022		2021
	(in millions)
Consideration Received	$	29	$	72	$	55
Costs Recognized	43		74		42

Under the terms of the Domestic Transportation Services Agreement, the Former Parent will provide transportation services to the Company for certain beauty and apparel merchandise in the U.S. and Canada until September 2026. Costs for the transportation services is 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 following table summarizes the recognized costs pursuant to the Domestic Transportation Services Agreement for 2023, 2022 and 2021:


	2023		2022		2021
	(in millions)
Costs Recognized	$	78	$	91	$	46