Victoria’s Secret & (US:VSCO)2025-06-12 20:17Financial Performance - Net sales for Q1 2025 were $1.353 billion, flat compared to Q1 2024, with a 1% decrease in North America stores and a 3% decrease in the direct channel[92]. - Operating income decreased by $6 million to $20 million in Q1 2025, with an operating income rate of 1.5%, down from 1.9% in Q1 2024[93]. - International channel net sales increased by 9% compared to Q1 2024, reaching $199 million[92]. - Sales per average selling square foot increased by 2% to $128 in Q1 2025, while sales per average store rose by 3% to $880[104]. - Comparable store sales decreased by 1% in Q1 2025 compared to a 5% decrease in Q1 2024[112]. - Gross profit decreased by $27 million to $474 million, with a gross profit rate of 35.1%, down from 36.9%[116]. - Adjusted operating income for Q1 2025 was $32 million, down from $40 million in Q1 2024[100]. - Adjusted net income attributable to Victoria's Secret & Co. was $7 million in Q1 2025, compared to $9 million in Q1 2024[100]. Operational Changes - The company operated 1,378 stores as of May 3, 2025, a net decrease of 24 stores from the previous year[105]. - The strategic priorities include recommitting to PINK, supercharging bras, fueling growth in lifestyle categories, and evolving brand projection and go-to-market strategy[94]. - The company faced near-term headwinds due to newly imposed U.S. tariffs, with uncertain impacts on business operations[97]. - A security incident involving IT systems was detected on May 24, 2025, but has not materially disrupted operations to date[98]. Cash Flow and Expenditures - Net cash used for operating activities was $150 million in Q1 2025, an increase of $34 million compared to Q1 2024[131]. - Capital expenditures for Q1 2025 were $43 million, with an estimated total of approximately $220 million for fiscal year 2025[135]. - Net cash provided by financing activities was $106 million in Q1 2025, primarily from borrowings under the ABL Facility[136]. Debt and Financing - Long-term debt as of May 3, 2025, was $1.078 billion, an increase from $973 million as of February 1, 2025[142]. - The effective tax rate for Q1 2025 was 50.9%, significantly lower than 151.1% in Q1 2024[123]. - The company has a senior secured term loan B credit facility with an original principal amount of $400 million, maturing in August 2028, requiring quarterly principal payments of $1 million[144]. - As of May 3, 2025, the interest rate on the term loan facility was 7.81%, with a margin ranging from 3.36% to 3.68% for Term SOFR loans[145]. - The company has an asset-based revolving credit facility (ABL Facility) with aggregate commitments of $750 million, with $105 million outstanding as of May 3, 2025, and an interest rate of 5.89%[147]. - An amendment to the ABL Facility on May 21, 2025, extended its maturity and reduced the applicable interest rates for borrowings[148]. - The company borrowed $160 million from the ABL Facility in Q1 2025, compared to $90 million in Q1 2024, and made repayments of $55 million in Q1 2025[147]. - As of May 3, 2025, the company had $509 million remaining availability under the ABL Facility after accounting for $17 million in outstanding letters of credit[147]. - The company's long-term debt includes the 2029 Notes and outstanding borrowings under the Term Loan Facility and ABL Facility, with a total principal value of $986 million as of May 3, 2025[163]. - The company is in compliance with all covenants under its long-term debt and borrowing facilities as of May 3, 2025[149]. - The company's credit ratings as of May 3, 2025, are Ba3 from Moody's and BB from S&P for corporate ratings, with a stable outlook[150]. Accounting and Taxation - The company does not expect new accounting standards related to income taxes to have a material impact on its financial position or cash flows[154].