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Victoria’s Secret & (VSCO) - 2025 Q1 - Quarterly Report
VSCOVictoria’s Secret & (VSCO)2024-06-07 11:30

Financial Performance - In Q1 2024, net sales decreased by 48million,or348 million, or 3%, to 1.359 billion compared to 1.407billioninQ12023,withcomparablesalesdown51.407 billion in Q1 2023, with comparable sales down 5%[87] - North American store sales fell by 57 million, or 7%, to 729million,primarilyduetodecreasesinaverageunitretail,traffic,andconversion[101]−Directchannelsalesdecreasedby729 million, primarily due to decreases in average unit retail, traffic, and conversion[101] - Direct channel sales decreased by 15 million, or 3%, to 449million,asanincreaseinconversionwasoffsetbydeclinesinaverageunitretailandtraffic[101]−Internationalnetsalesincreasedby449 million, as an increase in conversion was offset by declines in average unit retail and traffic[101] - International net sales increased by 24 million, or 16%, to 181million,drivenbygrowthinChinaandwholesalearrangements[102]−OperatingincomeforQ12024was181 million, driven by growth in China and wholesale arrangements[102] - Operating income for Q1 2024 was 26 million, down from 28millioninQ12023,withanoperatingincomerateof1.928 million in Q1 2023, with an operating income rate of 1.9% compared to 2.0%[96] - Gross profit decreased slightly by 1 million to 501million,whilethegrossprofitrateincreasedto36.9501 million, while the gross profit rate increased to 36.9% from 35.7%[103] - General, administrative, and store operating expenses rose by 1 million to 475million,withtheexpenserateincreasingto34.9475 million, with the expense rate increasing to 34.9% from 33.7%[106] Tax and Compliance - The effective tax rate for Q1 2024 was 151.1%, significantly higher than 34.0% in Q1 2023, primarily due to additional tax expenses from share-based compensation[109] - The company is in compliance with all covenants under its long-term debt and borrowing facilities as of May 4, 2024[136] Strategic Focus - The company continues to focus on strategic priorities: Accelerate Our Core, Ignite Growth, and Transform the Foundation[88] Store Operations - The company operates a total of 1,370 stores as of May 4, 2024, with a net increase of 21 stores during the quarter[93] Cash Flow and Financing - Net cash used for operating activities in Q1 2024 was 116 million, an increase of 8millioncomparedtoQ12023[117]−CapitalexpendituresforQ12024were8 million compared to Q1 2023[117] - Capital expenditures for Q1 2024 were 39 million, down from 55millioninQ12023,primarilyrelatedtostorecapitalprogramsandtechnologyinvestments[118][119]−CashandcashequivalentsattheendofQ12024were55 million in Q1 2023, primarily related to store capital programs and technology investments[118][119] - Cash and cash equivalents at the end of Q1 2024 were 105 million, down from 132millionattheendofQ12023[116]−NetcashusedforfinancingactivitiesinQ12024was132 million at the end of Q1 2023[116] - Net cash used for financing activities in Q1 2024 was 10 million, significantly lower than 132millioninQ12023[121][122]−CashpaidforinterestinQ12024was132 million in Q1 2023[121][122] - Cash paid for interest in Q1 2024 was 12 million, compared to 13millioninQ12023[131]DebtandCredit−Totallong−termdebtasofMay4,2024,was13 million in Q1 2023[131] Debt and Credit - Total long-term debt as of May 4, 2024, was 1,119 million, a slight decrease from 1,120millionasofFebruary3,2024[131]−Thecompanyborrowed1,120 million as of February 3, 2024[131] - The company borrowed 90 million and made repayments of 15millionundertheABLFacilityduringthefirstquarterof2024and2023,respectively[135]−Theprincipalvalueofthecompany′soutstandingdebtasofMay4,2024,was15 million under the ABL Facility during the first quarter of 2024 and 2023, respectively[135] - The principal value of the company's outstanding debt as of May 4, 2024, was 990 million, with an estimated fair value of $867 million[149] - The company's credit ratings as of May 4, 2024, are Ba3 from Moody's and BB from S&P for corporate ratings[137] Investments and Obligations - The company’s contractual obligations primarily consist of long-term debt, operating leases, and purchase orders for merchandise inventory[138] - The company’s investment portfolio is primarily comprised of interest-bearing instruments, with no material risk to principal associated with interest rate changes[147] - The company maintains cash and cash equivalents primarily in bank deposits, monitoring the credit standing of financial institutions[151] Accounting Standards - The company has not adopted any new accounting standards during the first quarter of 2024 that had a material impact on its results[139]