Bath & Body Works(BBWI) - 2026 Q1 - Quarterly Report

Financial Performance - Consolidated Net Sales for Q1 2025 were $1,424 million, an increase of$40 million or 2.9% compared to Q1 2024[86] - Operating Income for Q1 2025 was $209 million, up$22 million or 11.7% from Q1 2024, with an Operating Income rate of 14.7%[86] - Gross Profit increased by $40 million to$646 million, with a Gross Profit rate of 45.4%, up from 43.8% in Q1 2024[96] - In the first quarter of 2025, the company reported net sales of $1,355 million, with a gross profit of$602 million and a net income of $91 million[135] Expenses and Capital Expenditures - Total General, Administrative and Store Operating Expenses rose by$18 million to $437 million, with a rate of 30.7$39 million, primarily for new off-mall stores and technology projects[109] - The company plans capital expenditures of approximately $250 million to$270 million for 2025, focusing on real estate and technology[111] Cash Flow and Share Repurchase - Net cash provided by operating activities in Q1 2025 was $188 million, compared to$76 million in Q1 2024[106] - The company repurchased 4.326 million shares for $135 million during Q1 2025[104] - The company repurchased a total of 4,326 thousand shares in 2025, with an average stock price of$30.47, and repurchased shares worth $135 million[115] - The company had remaining authority of$382 million under the January 2025 share repurchase program as of May 3, 2025[116] Debt and Credit Facilities - As of May 3, 2025, the total long-term debt stood at $3,886 million, a slight decrease from$4,282 million in May 2024[118] - The company had an available borrowing base of $639 million under its Asset-backed Revolving Credit Facility, with no borrowings outstanding as of May 3, 2025[123] - The company had$11 million of outstanding letters of credit as of May 3, 2025, reducing its availability under the ABL Facility to $628 million[124] - The principal value of outstanding long-term debt is$3,916 million, with an estimated fair value of $3,957 million[149] Tax and Effective Tax Rate - The effective tax rate for Q1 2025 was 28.4%, compared to 26.8% in Q1 2024[102] Risk Management - The company utilizes foreign currency forward contracts to partially offset exchange rate risks associated with Canadian dollar-denominated earnings[144] - Royalties from international partners are exposed to foreign currency exchange rate fluctuations, as they are calculated based on local currency sales[145] - The company monitors credit risk by limiting exposure to any single financial institution and reviewing the credit standing of franchise and wholesale partners[148] - The carrying values of accounts receivable, accounts payable, and accrued expenses approximate their fair values due to short maturities as of May 3, 2025[150] Investment Activities - The company maintains a diversified investment portfolio primarily composed of U.S. government obligations, U.S. Treasury, AAA-rated money market funds, commercial paper, and bank deposits[146][148] - The primary objectives of the investment activities are the preservation of principal, maintenance of liquidity, and maximization of interest income while minimizing risk[146] - The company does not believe there is any material risk to principal associated with interest rate changes due to the short-term nature of its investments[146] - Interest rate swap arrangements may be utilized to adjust exposure to interest rate risk as needed[147] - All outstanding long-term debt as of May 3, 2025, has fixed interest rates, limiting exposure to interest rate risk[147] Credit Ratings - The company's credit ratings as of May 3, 2025, were Ba2 from Moody's and BB+ from S&P for corporate ratings, with a stable outlook[128] Fixed Charge Coverage Ratio - The company maintained a fixed charge coverage ratio requirement of not less than 1.00 to 1.00 during an event of default, but was not required to maintain this ratio as of May 3, 2025[126]