Revenue Recognition

3 Months Ended

May 04, 2024

Revenue from Contract with Customer [Abstract]

Revenue Recognition

Revenue Recognition

Accounts receivable, net from revenue-generating activities were $113 million as of May 4, 2024, $103 million as of February 3, 2024 and $99 million as of April 29, 2023. Accounts receivable primarily relate to amounts due from the Company's franchise, license and wholesale partners. Under these arrangements, payment terms are typically 60 to 90 days.

The Company records deferred revenue when cash payments are received in advance of transfer of control of goods or services. Deferred revenue primarily relates to gift cards, loyalty and credit card programs and direct channel shipments, which are all impacted by seasonal and holiday-related sales patterns. Deferred revenue was $298 million as of May 4, 2024, $310 million as of February 3, 2024 and $284 million as of April 29, 2023. The Company recognized $64 million as revenue in the first quarter of 2024 from amounts recorded as deferred revenue at the beginning of the year. As of May 4, 2024, the Company recorded deferred revenue of $284 million within Accrued Expenses and Other, and $14 million within Other Long-term Liabilities on the Consolidated Balance Sheet.

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

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

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

The Company has a Victoria's Secret and PINK multi-tender loyalty program along with a co-branded credit card and U.S. private label credit card through which customers can earn points on purchases of Victoria's Secret and PINK product and through the co-branded credit card can earn points on purchases outside of the Company. A third-party financing company is the sole owner of the credit card accounts and underwrites the credit issued under the credit card programs. Revenue earned in connection with the Company's credit card arrangements with the third-party is primarily recognized based on credit card sales and usage.

The Company recognized Net Sales of $17 million and $23 million in the first quarter of 2024 and 2023, respectively, related to revenue earned in connection with its credit card arrangements.

The Company’s international net sales include sales from Company-operated stores, royalty revenue from franchise and license arrangements, wholesale revenues and direct sales shipped internationally. Certain of these sales are subject to the impact of fluctuations in foreign currency. The Company’s net sales outside of the U.S. totaled $221 million and $200 million for the first quarter of 2024 and 2023, respectively.