Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 _________________________________ FORM 10-Q _________________________________ 4 Limited Parkway East QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended August 2, 2025 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 __________________________ ...

Question-and-Answer SessionHillary SuperCEO & Director Well, first, I'll just start by saying when I got the call for the job, which was a move across country. The question for me was, do I want to disrupt my life and move across the country? And it was just a resounding, yes, because of what these brands represent in culture, the reach, the power, the market share, there's just no more interesting transformation in the industry, and I was so excited about that. And I know Scott felt the same way when I cal ...

Financial Data and Key Metrics Changes - The company has updated its guidance to account for 30% tariffs in China and 20% for the rest of the world, estimating a net impact of about $100 million for fiscal year 2025, which includes $70 million from mitigation efforts this year [35][36] - The company reported a comp sales growth of about 22% last quarter, indicating strong performance in the international market [34] Business Line Data and Key Metrics Changes - The bra business is central to the company's strategy, with a reestablished innovation pipeline and dedicated teams focusing on bra expertise, leading to a significant increase in market share [11][13] - The beauty segment is described as a "secret assassin," with less than 40% of the customer file currently shopping beauty, indicating substantial growth potential [21][22] - The PINK brand is being repositioned to regain its former size, with a focus on marketing and brand differentiation [15][16] Market Data and Key Metrics Changes - The company is acquiring a younger customer demographic, particularly through collaborations like LoveShackFancy, which is expected to enhance brand equity [19][20] - The international business has seen strong growth, particularly in China, where the company was the number one brand during a recent TikTok event [33] Company Strategy and Development Direction - The company is focused on two distinct growth brands, emphasizing creativity, customer focus, and technology [6][7] - The strategy includes evolving the brand projection and go-to-market approach, with a new Chief Marketing and Customer Officer to differentiate the Victoria's Secret and PINK brands [23][25] - The company aims to convert about 50% of its global footprint to the "store of the future" concept by the end of 2027, which has shown to increase sales significantly [27][28] Management's Comments on Operating Environment and Future Outlook - Management describes the current consumer state as strong, with a focus on creating emotional connections through product execution and modern marketing strategies [30] - The company is optimistic about returning to historical margin levels by finding efficiencies in non-customer-facing areas and optimizing the supply chain [46][47] Other Important Information - The company is implementing a new 26-week production calendar to enhance agility in product development, particularly for PINK apparel [41][43] - The company is strategically evaluating pricing and promotions to mitigate tariff impacts while maintaining customer engagement [35][37] Q&A Session Summary Question: What changes should we expect in the bra business go-to-market strategy? - The company has reestablished a deeper innovation pipeline and dedicated teams focusing on bra expertise, leading to a significant increase in market share [11][12] Question: What excites you about the PINK brand? - The PINK brand has the potential to regain its former size, with a clear path to address past dilution and a focus on lifestyle branding [15][16] Question: How is the beauty business performing? - The beauty segment is a powerful growth area, with significant opportunities to increase customer engagement and market share [21][22] Question: What is the company's strategy for the store of the future? - The company plans to convert 50% of its global footprint to the store of the future concept by 2027, which has shown to increase sales [27][28] Question: How is the company addressing tariff impacts? - The company has updated its guidance to account for tariffs and is focusing on sourcing diversification and reducing promotional activities to mitigate impacts [35][36]

Group 1 - The company is experiencing limited overall growth, with indications that the U.S. business is performing significantly better [1] - The investment approach focuses on operational aspects and long-term earnings potential rather than market-driven dynamics [1] - The majority of investment calls are expected to be holds, reflecting a cautious stance in a bullish market [1] Group 2 - There is no current stock or derivative position held by the analyst in the companies mentioned, nor any plans to initiate such positions in the near term [2] - The article expresses the author's personal opinions and is not influenced by compensation from any company mentioned [2] Group 3 - Seeking Alpha emphasizes that past performance does not guarantee future results and that no specific investment recommendations are provided [3] - The views expressed may not represent those of Seeking Alpha as a whole, highlighting the diversity of opinions among analysts [3]

Core Viewpoint - Victoria's Secret & Co. will participate in a fireside chat at the Goldman Sachs 32nd Annual Global Retailing conference on September 4, 2025, featuring CEO Hillary Super and CFO Scott Sekella [1]. Company Overview - Victoria's Secret & Co. is a specialty retailer offering modern, fashion-inspired collections, including bras, panties, lingerie, apparel, casual sleepwear, swimwear, lounge, and sport items, as well as prestige fragrances and body care [3]. - The company operates leading brands, Victoria's Secret and PINK, and also includes Adore Me, a technology-driven, digital-first intimates brand catering to women of all sizes and budgets [3]. - Victoria's Secret & Co. employs over 30,000 associates and has approximately 1,380 retail stores across nearly 70 countries [3]. Event Details - A live audio webcast of the fireside chat will be available on the company's investor relations website, with a replay accessible afterward [2].

Core Insights - Victoria's Secret reported Q2 2025 net sales of $1.459 billion, a 3% year-over-year increase, exceeding the guidance range of $1.38 billion to $1.41 billion [1] - Comparable sales grew by 4% during the same period, indicating strong performance across various channels [1] - Adjusted operating income reached $55 million, surpassing the previous guidance of $15 million to $35 million [1] - Adjusted net income was $27 million, with diluted earnings per share of $0.33, also exceeding the prior guidance of $0 to $0.15 [1] - Based on Q2 performance, the company raised its full-year net sales forecast to a range of $6.33 billion to $6.41 billion, up from the previous range of $6.2 billion to $6.3 billion [1] - CEO Hillary Super highlighted strong growth momentum in Q2, with sales and operating profit exceeding guidance, driven by product innovation and brand storytelling [1] Financial Performance - Q2 2025 net sales: $1.459 billion, up 3% year-over-year [1] - Comparable sales growth: 4% [1] - Adjusted operating income: $55 million, exceeding guidance [1] - Adjusted net income: $27 million, diluted EPS: $0.33, exceeding guidance [1] - Revised full-year net sales forecast: $6.33 billion to $6.41 billion [1] Market Dynamics - Growth observed in North America and global markets, with both Victoria's Secret and PINK brands showing comparable sales growth [1] - Notable growth in July and August, attributed to product innovation and continuous new launches [1] - Strong connection established with both new and existing consumers through effective brand storytelling [1]

Core Insights - Victoria's Secret reported revenue of $1.46 billion for the quarter ended July 2025, marking a year-over-year increase of 3% and a surprise of +3.78% over the Zacks Consensus Estimate of $1.41 billion [1] - The company's EPS for the same period was $0.33, down from $0.40 a year ago, but exceeded the consensus estimate of $0.13 by +153.85% [1] Financial Performance - Comparable sales for stores and direct channels increased by 4%, significantly outperforming the estimated -0.4% by analysts [4] - The total number of company-operated stores was 787, slightly below the average estimate of 793 from two analysts [4] - The total number of stores in the China joint venture was 63, compared to the estimated 70 by two analysts [4] - Geographic net sales for direct channels were reported at $406.5 million, which is lower than the average estimate of $415.58 million, reflecting a year-over-year decline of -5.5% [4] Stock Performance - Over the past month, shares of Victoria's Secret have returned +16.7%, outperforming the Zacks S&P 500 composite's +1.5% change [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the broader market in the near term [3]

Financial Data and Key Metrics Changes - Net sales increased by 3% year over year to $1,459 million, with comparable sales growing by 4%, reflecting sequential improvements over the prior quarter [35][36] - Adjusted operating income reached $55 million, exceeding the high end of guidance by $20 million, despite a $14 million impact from a security incident [35][36] - Gross margins improved to 35.6%, up 20 basis points year over year and 60 basis points above guidance, driven by lower discounting and stronger regular price selling [10][40] Business Line Data and Key Metrics Changes - Victoria's Secret and PINK both saw comparable sales growth, with PINK experiencing double-digit increases in apparel and a significant improvement in new customer acquisition [20][36] - The beauty segment continued to perform well, with sales up mid-single digits, marking the eighth consecutive quarter of growth [21][37] - Bra sales in North America were down low single digits, but showed sequential improvement over Q1, with market share growing by approximately 0.5% in total bras [12][36] Market Data and Key Metrics Changes - International sales grew by 22% year over year, with retail comps up high single digits, particularly strong in China driven by digital channels [9][38] - The 18 to 24 age group was identified as a strong customer growth segment, contributing to improved customer acquisition [24][25] Company Strategy and Development Direction - The company is focused on its "Path to Potential" strategy, emphasizing product innovation, brand strength, and customer experience to drive long-term growth [5][34] - Plans to enhance the PINK brand with a digital and social-first approach, aiming to reconnect with younger consumers [15][16] - The upcoming Victoria's Secret Fashion Show is expected to be a key brand moment, aimed at driving traffic and customer acquisition [27][45] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate a complex macro environment while continuing to invest in brand building and innovative marketing [26][53] - The company anticipates continued momentum into the third quarter, with a forecast for net sales between $1,390 million and $1,420 million [50] - Despite challenges from tariffs, the company is maintaining its adjusted operating income guidance for the year [46][47] Other Important Information - The company is committed to optimizing inventory levels and improving production lead times to enhance operational efficiency [11][102] - A focus on strategic pricing and promotional strategies is being implemented to mitigate tariff impacts while maintaining customer value [71][104] Q&A Session Summary Question: Implications of the end of the de minimis exemption on the industry - Management indicated that the de minimis exemption is not a significant factor for the business, as e-commerce distribution centers are primarily located in Columbus [56] Question: Insights on innovation and future plans - Management highlighted a deep pipeline of innovation focused on bras and sports, with a more frequent release of new products planned for the back half of the year [62][65] Question: Gross margin strategy and Store of the Future performance - Management discussed a conscious effort to reduce promotions and focus on regular price sales, with positive results from Store of the Future remodels showing double-digit sales lifts [71][72] Question: Performance of international business and category strengths - Management noted that the intimates business is strong internationally, with beauty and intimates being the core categories performing well globally [75][76] Question: Details on the upcoming fashion show and marketing investments - Management confirmed that the fashion show will focus on the Victoria's Secret brand, with marketing spend remaining flat year over year [81][83] Question: Inventory planning and pricing power - Management acknowledged the need for better inventory optimization and indicated that pricing power exists, particularly in gifting and beauty categories [101][104]

Financial Data and Key Metrics Changes - Net sales increased by 3% year over year to $1,459 million, with comparable sales growing by 4% despite a digital outage in May that negatively impacted sales by approximately $20 million [7][36][40] - Adjusted gross margin rate improved to 35.6%, up 20 basis points from last year and 60 basis points above guidance, driven by lower discounting and stronger regular price selling [10][41][42] - Adjusted operating income reached $55 million, exceeding guidance by $20 million, and adjusted net income per diluted share was $0.33, significantly above the high end of guidance [11][37] Business Line Data and Key Metrics Changes - Victoria's Secret and PINK both saw comparable sales growth, with PINK experiencing double-digit increases in apparel and a healthier quality of sales [20][39] - Beauty sales grew mid-single digits, marking the eighth consecutive quarter of growth, with strong performance across body care and seasonal fragrance categories [21][39] - International sales grew by 22% year over year, with retail comparable sales up in high single digits, particularly strong in China [8][40] Market Data and Key Metrics Changes - The company gained market share in bras, with an approximate 0.5% increase in total bras and nearly a full point in traditional bras [12] - The 18 to 44 age group showed strong customer growth, indicating effective marketing strategies targeting this demographic [24][87] Company Strategy and Development Direction - The company is focused on its "Path to Potential" strategy, emphasizing product innovation, brand strength, and customer experience to drive long-term growth [5][35] - Plans include enhancing the PINK brand's appeal to younger consumers and expanding the beauty category, which is significantly larger than the intimates market [15][21] - The upcoming Victoria's Secret Fashion Show is expected to be a key brand moment, aimed at driving customer engagement and sales momentum [28][79] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate a complex macro environment while continuing to invest in brand building and innovative marketing [26][54] - The company anticipates continued momentum into the third quarter, with a forecast for net sales between $1,390 million and $1,420 million [51] - Despite challenges from tariffs, the company is maintaining its adjusted operating income guidance for the year, reflecting strong business momentum [48] Other Important Information - The company is committed to optimizing inventory levels and enhancing the customer experience through strategic pricing and promotional strategies [10][100] - The successful launch of the Body by Victoria collection is seen as a significant driver of customer engagement and sales growth [9][39] Q&A Session Summary Question: Implications of the end of the de minimis exemption on the industry - Management indicated that the de minimis exemption is not a significant factor for their e-commerce distribution strategy [56][57] Question: Insights on innovation and plans for the back half of the year - Management highlighted a strong pipeline of innovation focused on bras and sports, with a more frequent release schedule planned [61][63] Question: Gross margin strategy and Store of the Future performance - Management discussed a conscious effort to reduce promotions and improve regular price sales, with positive results from Store of the Future remodels [69][70] Question: Performance of international business and go-to-market strategy - Management confirmed strong performance in beauty and intimates internationally, with no significant differences in marketing strategies compared to domestic [74][76] Question: Details on the upcoming fashion show and marketing investments - Management confirmed that the fashion show will focus on the Victoria's Secret brand, with marketing investments remaining flat year over year [79][81] Question: Inventory planning and pricing power - Management acknowledged the need for better inventory optimization and indicated that pricing power exists, particularly in gifting and beauty categories [96][101]

Core Viewpoint - Victoria's Secret reported quarterly earnings of $0.33 per share, significantly exceeding the Zacks Consensus Estimate of $0.13 per share, representing an earnings surprise of +153.85% [1][2] Financial Performance - The company posted revenues of $1.46 billion for the quarter ended July 2025, surpassing the Zacks Consensus Estimate by 3.78% and showing an increase from $1.42 billion year-over-year [2] - Over the last four quarters, Victoria's Secret has surpassed consensus EPS estimates three times and topped consensus revenue estimates four times [2] Stock Performance and Outlook - Victoria's Secret shares have declined approximately 45% since the beginning of the year, contrasting with the S&P 500's gain of 10.2% [3] - The current consensus EPS estimate for the upcoming quarter is -$0.58 on revenues of $1.35 billion, while for the current fiscal year, it is $2.01 on revenues of $6.24 billion [7] Industry Context - The Retail - Apparel and Shoes industry, to which Victoria's Secret belongs, is currently ranked in the bottom 34% of over 250 Zacks industries, indicating potential challenges ahead [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which could impact Victoria's Secret's stock performance [5][6]