Bath & Body Works(BBWI) - 2025 Q3 - Quarterly Report

PART I—FINANCIAL INFORMATION Presents the company's unaudited consolidated financial statements, notes, auditor's report, and management's discussion and analysis Item 1. Financial Statements This section presents the unaudited consolidated financial statements, including statements of income, comprehensive income, balance sheets, statements of total equity (deficit), and cash flows, along with detailed notes explaining accounting policies, revenue recognition, equity changes, debt, and commitments; it also includes the independent auditor's review report and a safe harbor statement Consolidated Statements of Income (Unaudited) Details the company's revenues, costs, and net income for the current and prior quarter and year-to-date periods Consolidated Statements of Income (in millions, except per share amounts) | Metric | Q3 2024 (Unaudited) | Q3 2023 (Unaudited) | YTD 2024 (Unaudited) | YTD 2023 (Unaudited) | | :--------------------- | :------------------ | :------------------ | :------------------- | :------------------- | | Net Sales | $1,610 | $1,562 | $4,520 | $4,517 | | Gross Profit | $700 | $682 | $1,933 | $1,899 | | Operating Income | $218 | $221 | $588 | $589 |\ | Net Income | $106 | $119 | $345 | $299 | | Net Income per Basic Share | $0.49 | $0.52 | $1.56 | $1.31 | | Net Income per Diluted Share | $0.49 | $0.52 | $1.55 | $1.31 | Consolidated Statements of Comprehensive Income (Unaudited) Outlines net income and other comprehensive income components, reflecting total comprehensive income for the periods presented Consolidated Statements of Comprehensive Income (in millions) | Metric | Q3 2024 (Unaudited) | Q3 2023 (Unaudited) | YTD 2024 (Unaudited) | YTD 2023 (Unaudited) | | :--------------------------- | :------------------ | :------------------ | :------------------- | :------------------- | | Net Income | $106 | $119 | $345 | $299 | | Total Other Comprehensive Loss, Net of Tax | $(1) | $(2) | $(2) | $(3) | | Total Comprehensive Income | $105 | $117 | $343 | $296 | Consolidated Balance Sheets as of November 2, 2024 (Unaudited), February 3, 2024 and October 28, 2023 (Unaudited) Provides a snapshot of the company's assets, liabilities, and equity at specific fiscal year-end and interim dates Consolidated Balance Sheets (in millions) | Asset/Liability/Equity | Nov 2, 2024 (Unaudited) | Feb 3, 2024 | Oct 28, 2023 (Unaudited) | | :--------------------------- | :---------------------- | :------------------ | :----------------------- | | ASSETS | | | | | Cash and Cash Equivalents | $191 | $1,084 | $412 | | Inventories | $1,178 | $710 | $1,205 | | Total Current Assets | $1,720 | $2,115 | $1,959 | | Property and Equipment, Net | $1,158 | $1,220 | $1,244 | | Total Assets | $4,984 | $5,463 | $5,243 | | LIABILITIES AND EQUITY (DEFICIT) | | | | | Accounts Payable | $510 | $380 | $627 | | Current Debt | $314 | $— | $— | | Total Current Liabilities | $1,575 | $1,289 | $1,409 | | Long-term Debt | $3,883 | $4,388 | $4,497 | | Total Equity (Deficit) | $(1,748) | $(1,626) | $(2,124) | Consolidated Statements of Total Equity (Deficit) (Unaudited) Shows changes in shareholders' equity, including net income, dividends, and stock repurchases, over the reporting periods Changes in Total Equity (Deficit) (in millions) | Metric | Q3 2024 (Unaudited) | Q3 2023 (Unaudited) | YTD 2024 (Unaudited) | YTD 2023 (Unaudited) | | :--------------------------- | :------------------ | :------------------ | :------------------- | :------------------- |\ | Balance, Beginning of Period | $(1,718) | $(2,154) | $(1,626) | $(2,205) | | Net Income | $106 | $119 | $345 | $299 | | Total Comprehensive Income | $105 | $117 | $343 | $296 | | Cash Dividends | $(44) | $(45) | $(134) | $(137) | | Repurchases of Common Stock | $(99) | $(50) | $(348) | $(100) | | Balance, End of Period | $(1,748) | $(2,124) | $(1,748) | $(2,124) | Consolidated Statements of Cash Flows (Unaudited) Summarizes cash inflows and outflows from operating, investing, and financing activities for the year-to-date periods Consolidated Statements of Cash Flows (in millions) | Activity | YTD 2024 (Unaudited) | YTD 2023 (Unaudited) | | :----------------------------------------- | :------------------- | :------------------- | | Net Cash (Used for) Provided by Operating Activities | $(69) | $28 | | Net Cash Used for Investing Activities | $(114) | $(239) | | Net Cash Used for Financing Activities | $(710) | $(609) | | Net Decrease in Cash and Cash Equivalents | $(893) | $(820) | | Cash and Cash Equivalents, End of Period | $191 | $412 | Notes to Consolidated Financial Statements (Unaudited) Provides detailed explanations of the company's accounting policies, financial statement line items, and significant transactions 1. Description of Business and Basis of Presentation Describes the company's business, fiscal year, and the basis for preparing the consolidated financial statements - Bath & Body Works, Inc. is a global omnichannel retailer focused on personal care and home fragrance, operating as a single segment[24] - The company's fiscal year ends on the Saturday nearest to January 31, with operations being seasonal and sales highest in the fourth quarter[25][28] - Sold entire interests in Easton Town Center and Easton Gateway in May and August 2024, respectively, for $50 million cash proceeds and a $39 million pre-tax gain. Remaining Easton investments of approximately $100 million will be presented as held for sale in Q4 2024[33] 2. Revenue Recognition Explains the company's policies for recognizing revenue, including details on accounts receivable and deferred revenue - Accounts receivable, net from revenue-generating activities were $94 million as of November 2, 2024, primarily from franchise, license, and wholesale partners[36] - Deferred revenue, primarily from gift cards and loyalty points, was $170 million as of November 2, 2024. The company recognized $116 million as revenue year-to-date 2024 from amounts previously deferred[36] Net Sales Disaggregation (in millions) | Category | Q3 2024 | Q3 2023 | YTD 2024 | YTD 2023 | | :----------------------- | :------ | :------ | :------- | :------- | | Stores - U.S. and Canada | $1,220 | $1,168 | $3,425 | $3,345 | | Direct - U.S. and Canada | $321 | $317 | $879 | $926 | | International | $69 | $77 | $216 | $246 | | Total Net Sales | $1,610| $1,562| $4,520 | $4,517 | 3. Net Income Per Share and Shareholders' Equity (Deficit) Details the calculation of net income per share, share repurchase programs, and dividend payments Weighted-Average Shares for EPS Calculation (in millions) | Share Type | Q3 2024 | Q3 2023 | YTD 2024 | YTD 2023 | | :------------ | :------ | :------ | :------- | :------- | | Basic Shares | 218 | 227 | 222 | 227 | | Diluted Shares| 219 | 228 | 223 | 228 | - Under the February 2022 Program, 842 thousand shares were repurchased for $39 million (average price $46.08) year-to-date 2024. This program had no remaining authority as of May 4, 2024[40] - Under the January 2024 Program, 8.121 million shares were repurchased for $309 million (average price $38.05) year-to-date 2024, with $191 million of remaining authority as of November 2, 2024[41][42] - Year-to-date 2024, 8.963 million repurchased shares were retired, resulting in reductions of $5 million in Common Stock par value, $28 million in Paid-in Capital, and $315 million in Retained Earnings[42] Dividends Paid (in millions) | Period | Ordinary Dividends (per share) | Total Paid (in millions) | | :----- | :----------------------------- | :----------------------- | | YTD 2024 | $0.60 | $134 | | YTD 2023 | $0.60 | $137 | 4. Inventories Provides a breakdown of inventory components and the valuation methods used by the company Inventories (in millions) | Category | Nov 2, 2024 | Feb 3, 2024 | Oct 28, 2023 | | :------------------------------- | :---------- | :---------- | :----------- | | Finished Goods Merchandise | $1,003 | $558 | $1,035 | | Raw Materials and Merchandise Components | $175 | $152 | $170 | | Total Inventories | $1,178 | $710 | $1,205 | - Inventories are principally valued at the lower of cost or net realizable value, on an average cost basis[42] 5. Long-lived Assets Presents the net book value of property and equipment and details depreciation expenses for the reporting periods Property and Equipment, Net (in millions) | Category | Nov 2, 2024 | Feb 3, 2024 | Oct 28, 2023 | | :------------------------------------- | :---------- | :---------- | :----------- | | Property and Equipment, at Cost | $3,197 | $3,123 | $3,121 | | Accumulated Depreciation and Amortization | $(2,039) | $(1,903) | $(1,877) | | Property and Equipment, Net | $1,158 | $1,220 | $1,244 | - Depreciation expense was $69 million for Q3 2024 (vs $70 million in Q3 2023) and $211 million for YTD 2024 (vs $199 million in YTD 2023)[45] 6. Income Taxes Discusses the effective tax rates, their drivers, and income taxes paid for the current and prior periods - The effective tax rate for Q3 2024 was 26.7% (vs 25.3% in Q3 2023), higher due to accrued interest expense related to unrecognized tax benefits[46] - The effective tax rate for YTD 2024 was 17.2% (vs 24.9% in YTD 2023), lower due to the release of a valuation allowance on a deferred tax asset from Easton investment sales[46] - Income taxes paid were $285 million for YTD 2024 (vs $213 million for YTD 2023)[46] 7. Long-term Debt and Borrowing Facility Outlines the company's outstanding debt balances, debt repurchases, and available credit facilities Outstanding Debt Balances (in millions) | Debt Type | Nov 2, 2024 | Feb 3, 2024 | Oct 28, 2023 | | :-------------------------------------- | :---------- | :---------- | :----------- | | Total Senior Debt with Subsidiary Guarantee | $3,