Victoria’s Secret & (VSCO) - 2025 Q3 - Quarterly Report

Financial Performance - In Q3 2024, net sales increased by $82 million, or 7%, to $1.347 billion compared to $1.265 billion in Q3 2023, with comparable sales up 3%[77] - North American store sales rose by 2%, or $15 million, to $738 million in Q3 2024, while direct channel sales increased by 7%, or $29 million, to $411 million[77] - Adjusted net loss attributable to Victoria's Secret & Co. was $39 million in Q3 2024, compared to a loss of $66 million in Q3 2023[83] - Year-to-date 2024 net sales increased by $25 million, or 1%, to $4.124 billion compared to $4.099 billion in year-to-date 2023[98] - Year-to-date 2024 gross profit increased by $55 million to $1.471 billion, with the gross profit rate increasing to 35.7% from 34.6%[99] - Gross profit for Q3 2024 increased by $41 million to $468 million, with the gross profit rate rising to 34.8% from 33.8% in Q3 2023[94] Operating Performance - Operating loss improved by $20 million to $47 million in Q3 2024, with an operating loss rate of (3.5%) compared to (5.3%) in Q3 2023[77] - The operating income for year-to-date 2024 was reported at $42 million, compared to an operating loss of $13 million in the same period of 2023[83] - For Q3 2024, the operating loss improved by $20 million to $47 million, with the operating loss rate improving to (3.5%) from (5.3%) compared to Q3 2023[91] Store Operations - The total number of company-operated stores decreased from 831 to 813, with 16 new stores opened and 35 closed in the U.S.[88] - Sales per average selling square foot increased by 4% to $127 in Q3 2024, while sales per average store rose by 5% to $877[87] - The average store size increased by 1% to 6,878 selling square feet in Q3 2024[87] Strategic Focus - The company continues to focus on strategic priorities: Accelerate Our Core, Ignite Growth, and Transform the Foundation[77] Cash Flow and Capital Expenditures - Net cash used for operating activities year-to-date 2024 was $249 million, an increase of $49 million compared to year-to-date 2023[109] - Capital expenditures year-to-date 2024 were $150 million, down from $224 million in year-to-date 2023[111] - The company expects capital expenditures to be approximately $190 million for fiscal year 2024[111] Debt and Financing - Total long-term debt as of November 2, 2024, was $1,414 million, a decrease from $1,530 million as of October 28, 2023[117] - The availability under the ABL Facility as of November 2, 2024, was $291 million, down from $423 million as of February 3, 2024[107] - The company has a senior secured term loan B credit facility with an aggregate principal amount of $400 million, maturing in August 2028, with quarterly principal payments of $1 million[118] - The interest rate on the term loan facility was 8.46% as of November 2, 2024, with a margin ranging from 3.36% to 3.68% based on Term SOFR[118] - The company has an asset-based revolving credit facility (ABL Facility) with aggregate commitments of $750 million, expiring in August 2026, and outstanding borrowings of $440 million as of November 2, 2024[120] - Year-to-date borrowings from the ABL Facility were $460 million in 2024, compared to $405 million in 2023, with repayments of $165 million and $145 million respectively[120] Credit Ratings and Compliance - The company maintains a negative outlook on its credit ratings, with a corporate rating of Ba3 from Moody's and BB+ from S&P[123] - The company was in compliance with all covenants under its long-term debt and borrowing facilities as of November 2, 2024[120] Investment and Risk Management - The company’s investment portfolio primarily consists of money market funds and bank deposits, with no material risk to principal associated with interest rate changes[133] - The company monitors credit exposure with financial institutions and limits exposure to any single entity, maintaining a diversified investment portfolio[136] - As of November 2, 2024, the estimated fair value of the company's publicly traded debt was $916 million, compared to a principal value of $988 million[135] Accounting and Reporting - The company has not adopted any new accounting standards during the third quarter of 2024 that had a material impact on its financial position[122]