Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 _________________________________
FORM 10-Q
 _________________________________
ý☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended October 28, 2017April 29, 2023
OR
o☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from              to             
Commission file number 1-8344
 _________________________________
L BRANDS,BATH & BODY WORKS, INC.
(Exact name of registrant as specified in its charter)
 _________________________________
_______________________________
Delaware31-1029810
(State or other jurisdiction of

incorporation or organization)
(IRS Employer Identification No.)
Three Limited Parkway
Columbus, Ohio
43230
Columbus,Ohio43230
(Address of principal executive offices)(Zip Code)
(614)415-7000
(614) 415-7000
(Registrant's Telephone Number, Including Area Code)
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d)15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes   ý☒   No  o☐
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  ý☒   No  o☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerý☒Accelerated filero
☐
Non-accelerated filer
o  (Do not check if a smaller reporting company)
Smaller reporting companyo
☐Non-accelerated filer☐
Emerging growth companyo☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.o☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.):    Yes  o☐    No  ý☒
IndicateSecurities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.50 Par ValueBBWIThe New York Stock Exchange
As of May 26, 2023, the number of shares outstanding of eachshares of the issuer’s classes ofRegistrant’s common stock as of the latest practicable date.
was 228,911,583 shares.
Common Stock, $.50 Par ValueOutstanding at November 24, 2017
282,265,177 Shares

Table of Contents

L BRANDS,BATH & BODY WORKS, INC.
TABLE OF CONTENTS
 
Page No.
Page No.
Part I. Financial Information
Item 1. Financial Statements *
Consolidated Statements of Income for the Thirteen Weeks and Thirty-Nine Weeks Ended October 28, 2017 and October 29, 2016 (Unaudited)(Unaudited)
3
Consolidated Statements of Comprehensive Income for the Thirteen Weeks and Thirty-Nine Weeks Ended October 28, 2017 and October 29, 2016 (Unaudited)
3
Consolidated Balance Sheets as of October 28, 2017April 29, 2023 (Unaudited), January 28, 201728, 2023 and October 29, 2016April 30, 2022 (Unaudited)
4
Consolidated Statements of Total Equity (Deficit) (Unaudited)
5
Consolidated Statements of Cash Flows for the Thirty-Nine Weeks Ended October 28, 2017 and October 29, 2016 (Unaudited)
56
Notes to Consolidated Financial Statements (Unaudited)
67
Report of Independent Registered Public Accounting Firm
3013
Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995
3114
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
3215
Item 3. Quantitative and Qualitative Disclosures About Market Risk
4824
Item 4. Controls and Procedures
5025
5126
Item 1. Legal Proceedings
5126
Item 1A. Risk Factors
5126
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
5126
Item 3. Defaults Upon Senior Securities
51
Item 4. Mine Safety Disclosures
51
Item 5. Other Information
51
Item 6. Exhibits
52
Signature
53
Item 3. Defaults Upon Senior Securities
26
Item 4. Mine Safety Disclosures
26
Item 5. Other Information
27
Item 6. Exhibits
27
28
*The Company's fiscal year ends on the Saturday nearest to January 31. As used herein, “third“first quarter of 2017”2023” and “third“first quarter of 2016”2022” refer to the thirteen weekthirteen-week periods ending October 28, 2017ended April 29, 2023 and October 29, 2016, respectively. “Year-to-date 2017” and “year-to-date 2016” refer to the thirty-nine week periods ending October 28, 2017 and October 29, 2016,April 30, 2022, respectively.



2
Table of Contents
PART I—FINANCIAL INFORMATION
 
Item 1.
Item 1. FINANCIAL STATEMENTS


L BRANDS,
BATH & BODY WORKS, INC.
CONSOLIDATED STATEMENTS OF INCOME
(in millions, except per share amounts)
(Unaudited)
 
 First Quarter
 20232022
Net Sales$1,396 $1,450 
Costs of Goods Sold, Buying and Occupancy(800)(781)
Gross Profit596 669 
General, Administrative and Store Operating Expenses(415)(389)
Operating Income181 280 
Interest Expense(89)(89)
Other Income20 1 
Income Before Income Taxes112 192 
Provision for Income Taxes31 37 
Net Income$81 $155 
Net Income per Basic Share$0.36 $0.65 
Net Income per Diluted Share$0.35 $0.64 
 Third Quarter Year-to-Date
 2017 2016 2017 2016
Net Sales$2,618
 $2,581
 $7,809
 $8,085
Costs of Goods Sold, Buying and Occupancy(1,629) (1,556) (4,890) (4,904)
Gross Profit989
 1,025

2,919

3,181
General, Administrative and Store Operating Expenses(757) (741) (2,177) (2,166)
Operating Income232
 284

742

1,015
Interest Expense(99) (97) (300) (295)
Other Income2
 3
 28
 83
Income Before Income Taxes135
 190

470

803
Provision for Income Taxes49
 68
 151
 277
Net Income$86
 $122

$319

$526
Net Income Per Basic Share$0.30
 $0.43
 $1.12
 $1.83
Net Income Per Diluted Share$0.30
 $0.42
 $1.11
 $1.81
Dividends Per Share$0.60
 $0.60
 $1.80
 $3.80


L BRANDS,BATH & BODY WORKS, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in millions)
(Unaudited)
First Quarter
20232022
Net Income$81 $155 
Other Comprehensive Income (Loss), Net of Tax:
   Foreign Currency Translation(2)— 
   Unrealized Gain on Cash Flow Hedges1 — 
Total Other Comprehensive Loss, Net of Tax(1)— 
Total Comprehensive Income$80 $155 
 Third Quarter Year-to-Date
 2017 2016 2017 2016
Net Income$86
 $122
 $319
 $526
Other Comprehensive Income (Loss), Net of Tax:       
   Foreign Currency Translation(2) (15) 8
 (25)
   Unrealized Gain (Loss) on Cash Flow Hedges10
 9
 (7) (2)
   Reclassification of Cash Flow Hedges to Earnings(4) (4) 1
 5
   Unrealized Gain (Loss) on Marketable Securities—
 —
 1
 (3)
   Reclassification of Gain on Marketable Securities to Earnings—
 —
 —
 (3)
Total Other Comprehensive Income (Loss), Net of Tax4
 (10)
3

(28)
Total Comprehensive Income$90
 $112
 $322
 $498



The accompanying Notes are an integral part of these Consolidated Financial Statements.

3
L BRANDS,
Table of Contents
BATH & BODY WORKS, INC.
CONSOLIDATED BALANCE SHEETS
(in millions, except par value amounts)

October 28,
2017		 January 28,
2017		 October 29,
2016		April 29,
2023		January 28,
2023		April 30,
2022
(Unaudited)   (Unaudited)(Unaudited)(Unaudited)
ASSETS     ASSETS
Current Assets:     Current Assets:
Cash and Cash Equivalents$735
 $1,934
 $654
Cash and Cash Equivalents$1,046 $1,232 $651 
Accounts Receivable, Net285
 294
 325
Accounts Receivable, Net145 226 167 
Inventories1,715
 1,096
 1,651
Inventories771 709 820 
Other195
 141
 256
Other118 99 114 
Total Current Assets2,930
 3,465
 2,886
Total Current Assets2,080 2,266 1,752 
Property and Equipment, Net2,920
 2,741
 2,770
Property and Equipment, Net1,223 1,193 1,059 
Operating Lease AssetsOperating Lease Assets1,072 1,050 1,058 
Goodwill1,348
 1,348
 1,348
Goodwill628 628 628 
Trade Names and Other Intangible Assets, Net411
 411
 411
Trade NameTrade Name165 165 165 
Deferred Income Taxes23
 19
 30
Deferred Income Taxes37 37 44 
Other Assets184
 186
 218
Other Assets158 155 154 
Total Assets$7,816
 $8,170
 $7,663
Total Assets$5,363 $5,494 $4,860 
LIABILITIES AND EQUITY (DEFICIT)     LIABILITIES AND EQUITY (DEFICIT)
Current Liabilities:     Current Liabilities:
Accounts Payable$1,037
 $683
 $962
Accounts Payable$426 $455 $470 
Accrued Expenses and Other896
 997
 909
Accrued Expenses and Other585 673 534 
Current Portion of Long-term Debt80
 36
 23
Current Operating Lease LiabilitiesCurrent Operating Lease Liabilities165 177 163 
Income Taxes6
 298
 113
Income Taxes101 74 73 
Total Current Liabilities2,019
 2,014
 2,007
Total Current Liabilities1,277 1,379 1,240 
Deferred Income Taxes367
 352
 262
Deferred Income Taxes168 168 157 
Long-term Debt5,705
 5,700
 5,701
Long-term Debt4,781 4,862 4,856 
Long-term Operating Lease LiabilitiesLong-term Operating Lease Liabilities1,032 1,014 1,019 
Other Long-term Liabilities844
 831
 881
Other Long-term Liabilities275 276 246 
Shareholders’ Equity (Deficit):     Shareholders’ Equity (Deficit):
Preferred Stock - $1.00 par value; 10 shares authorized; none issued—
 —
 —
Preferred Stock - $1.00 par value; 10 shares authorized; none issued— — — 
Common Stock - $0.50 par value; 1,000 shares authorized; 318, 315 and 315 shares issued; 282, 286 and 286 shares outstanding, respectively159
 157
 157
Common Stock - $0.50 par value; 1,000 shares authorized; 244, 244 and 251 shares issued; 229, 229 and 236 shares outstanding, respectivelyCommon Stock - $0.50 par value; 1,000 shares authorized; 244, 244 and 251 shares issued; 229, 229 and 236 shares outstanding, respectively122 122 126 
Paid-in Capital732
 650
 620
Paid-in Capital818 817 618 
Accumulated Other Comprehensive Income15
 12
 12
Accumulated Other Comprehensive Income77 78 80 
Retained Earnings (Accumulated Deficit)8
 205
 (254)Retained Earnings (Accumulated Deficit)(2,366)(2,401)(2,661)
Less: Treasury Stock, at Average Cost; 36, 29 and 29 shares, respectively(2,035) (1,753) (1,725)
Total L Brands, Inc. Shareholders’ Equity (Deficit)(1,121) (729) (1,190)
Less: Treasury Stock, at Average Cost; 15, 15 and 15 shares, respectivelyLess: Treasury Stock, at Average Cost; 15, 15 and 15 shares, respectively(822)(822)(822)
Total Shareholders’ Equity (Deficit)Total Shareholders’ Equity (Deficit)(2,171)(2,206)(2,659)
Noncontrolling Interest2
 2
 2
Noncontrolling Interest1 1 1 
Total Equity (Deficit)(1,119) (727) (1,188)Total Equity (Deficit)(2,170)(2,205)(2,658)
Total Liabilities and Equity (Deficit)$7,816
 $8,170
 $7,663
Total Liabilities and Equity (Deficit)$5,363 $5,494 $4,860 


The accompanying Notes are an integral part of these Consolidated Financial Statements.

4
L BRANDS,
Table of Contents
BATH & BODY WORKS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWSTOTAL EQUITY (DEFICIT)
(in millions)millions, except per share amounts)
(Unaudited)
 Year-to-Date
 2017 2016
Operating Activities:   
Net Income$319
 $526
Adjustments to Reconcile Net Income to Net Cash Provided by (Used for) Operating Activities:   
Depreciation and Amortization of Long-lived Assets426
 378
Amortization of Landlord Allowances(35) (35)
Share-based Compensation Expense74
 70
Deferred Income Taxes11
 9
Gains on Distributions from Easton Investments(20) (112)
Loss on Extinguishment of Debt—
 36
Gain on Sale of Marketable Securities—
 (4)
Changes in Assets and Liabilities, Net of Assets and Liabilities from Acquisition:   
Accounts Receivable9
 (75)
Inventories(616) (527)
Accounts Payable, Accrued Expenses and Other247
 224
Income Taxes Payable(307) (74)
Other Assets and Liabilities30
 (5)
Net Cash Provided by Operating Activities138
 411
Investing Activities:   
Capital Expenditures(599) (825)
Return of Capital from Easton Investments27
 116
Acquisition, Net of Cash Acquired of $1—
 (33)
Proceeds from Sale of Marketable Securities—
 10
Other Investing Activities(9) 11
Net Cash Used for Investing Activities(581) (721)
Financing Activities:   
Proceeds from Issuance of Long-term Debt, Net of Issuance Costs—
 692
Payment of Long-term Debt—
 (742)
Borrowings from Foreign Facilities67
 20
Repayments on Foreign Facilities(23) (4)
Dividends Paid(516) (1,096)
Repurchases of Common Stock(283) (410)
Tax Payments related to Share-based Awards(31) (56)
Proceeds from Exercise of Stock Options37
 17
Financing Costs(5) —
Other Financing Activities(4) (2)
Net Cash Used for Financing Activities(758) (1,581)
Effects of Exchange Rate Changes on Cash and Cash Equivalents2
 (3)
Net Decrease in Cash and Cash Equivalents(1,199) (1,894)
Cash and Cash Equivalents, Beginning of Period1,934
 2,548
Cash and Cash Equivalents, End of Period$735
 $654


First Quarter 2023
 Common StockPaid-In
Capital		Accumulated
Other
Comprehensive
Income		Retained
Earnings (Accumulated Deficit)		Treasury
Stock, at
Average
Cost		Noncontrolling InterestTotal Equity (Deficit)
Shares
Outstanding		Par
Value
Balance, January 28, 2023229 $122 $817 $78 $(2,401)$(822)$1 $(2,205)
Net Income— — — — 81 — — 81 
Other Comprehensive Loss— — — (1)— — — (1)
Total Comprehensive Income— — — (1)81 — — 80 
Cash Dividends ($0.20 per share)— — — — (46)— — (46)
Share-based Compensation and Other— — 1 — — — — 1 
Balance, April 29, 2023229 $122 $818 $77 $(2,366)$(822)$1 $(2,170)

First Quarter 2022
 Common StockPaid-In
Capital		Accumulated
Other
Comprehensive
Income		Retained
Earnings (Accumulated Deficit)		Treasury
Stock, at
Average
Cost		Noncontrolling InterestTotal Equity (Deficit)
Shares
Outstanding		Par
Value
Balance, January 29, 2022254 $134 $893 $80 $(1,803)$(822)$1 $(1,517)
Net Income and Total Comprehensive Income— — — — 155 — — 155 
Cash Dividends ($0.20 per share)— — — — (48)— — (48)
Repurchases of Common Stock(5)— — — — (235)— (235)
Accelerated Share Repurchase Program(14)— (200)— — (800)— (1,000)
Treasury Share Retirement— (9)(61)— (965)1,035 — — 
Share-based Compensation and Other1 1 (14)— — — — (13)
Balance, April 30, 2022236 $126 $618 $80 $(2,661)$(822)$1 $(2,658)

The accompanying Notes are an integral part of these Consolidated Financial Statements.

5
L BRANDS,
Table of Contents
BATH & BODY WORKS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
(Unaudited)
 First Quarter
 20232022
Operating Activities:
Net Income$81 $155 
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:
Depreciation of Long-lived Assets63 53 
Gain on Extinguishment of Debt(7)— 
Share-based Compensation Expense7 12 
Changes in Assets and Liabilities:
Accounts Receivable81 72 
Inventories(63)(111)
Accounts Payable, Accrued Expenses and Other(113)(97)
Income Taxes Payable23 35 
Other Assets and Liabilities(28)(53)
Net Cash Provided by Operating Activities44 66 
Investing Activities:
Capital Expenditures(93)(88)
Other Investing Activities(1)— 
Net Cash Used for Investing Activities(94)(88)
Financing Activities:
Payments of Long-term Debt(74)— 
Repurchases of Common Stock— (1,227)
Dividends Paid(46)(48)
Tax Payments Related to Share-based Awards(8)(26)
Other Financing Activities(7)(5)
Net Cash Used for Financing Activities(135)(1,306)
Effects of Exchange Rate Changes on Cash and Cash Equivalents(1)— 
Net Decrease in Cash and Cash Equivalents(186)(1,328)
Cash and Cash Equivalents, Beginning of Year1,232 1,979 
Cash and Cash Equivalents, End of Period$1,046 $651 

The accompanying Notes are an integral part of these Consolidated Financial Statements.
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Table of Contents
BATH & BODY WORKS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)


1. Description of Business and Basis of Presentation
Description of Business
L Brands,Bath & Body Works, Inc. (“the Company”(the "Company") operates in the highly competitive specialty retail business. The Company is a specialtyglobal omnichannel retailer of women’s intimate and other apparel,focused on personal care beauty and home fragrance products.fragrance. The Company sells its merchandise through company-owned specialtyits retail stores in the United States (“of America ("U.S.”), Canada, United Kingdom (“U.K.”") and Greater China (China and Hong Kong),Canada, and through its websites and other channels.channels, under the Bath & Body Works, White Barn and other brand names. The Company's other international operations are primarilybusiness is conducted through franchise, license and wholesale partners. The Company currently operates the following retail brands:
Victoria’s Secret
PINK
Bath & Body Works
La Senza
Henri Bendelas and reports a single segment.
Fiscal Year
The Company’s fiscal year ends on the Saturday nearest to January 31. As used herein, “third“first quarter of 2017”2023” and “third“first quarter of 2016”2022” refer to the thirteen weekthirteen-week periods ending October 28, 2017ended April 29, 2023 and October 29, 2016,April 30, 2022, respectively. “Year-to-date 2017” and “year-to-date 2016” refer to the thirty-nine week periods ending October 28, 2017 and October 29, 2016, respectively.
Basis of Consolidation
The Consolidated Financial Statements include the accounts of the Company and its subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.
The Company accounts for investments in unconsolidated entities where it exercises significant influence, but does not have control, using the equity method. Under the equity method of accounting, the Company recognizes its share of the investee's net income or loss. Losses are only recognized to the extent the Company has positive carrying value related to the investee. Carrying values are only reduced below zero if the Company has an obligation to provide funding to the investee. The Company’s share of net income or loss of unconsolidated entities from which the Company purchases merchandise or merchandise components is included in Costs of Goods Sold, Buying and Occupancy on the Consolidated Statements of Income. The Company’s share of net income or loss of all other unconsolidated entities is included in Other Income on the Consolidated Statements of Income. The Company’s equity method investments are required to be tested for impairment when it is determined there may be an other-than-temporary loss in value.
Interim Financial Statements
The Consolidated Financial Statements as of and for the periods ended October 28, 2017April 29, 2023 and October 29, 2016April 30, 2022 are unaudited and are presented pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”).Commission. These Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and Notes thereto contained in the Company’s 20162022 Annual Report on Form 10-K.
In the opinion of management, the accompanying Consolidated Financial Statements reflect all adjustments whichthat are of a normal recurring nature and necessary for a fair presentation of the results for the interim periods.
Seasonality of Business
The Company's operations are seasonal in nature and consist of two principal selling seasons: Spring (the first and second quarters) and Fall (the third and fourth quarters). Historically, the Company's sales are higher during the fourth quarter of the fiscal year due to seasonal and holiday-related sales patterns. Due to the seasonal variations in the retail industry, the results of operations for anythe interim periodperiods are not necessarily indicative of the results expected for the full fiscal year.
Derivative Financial Instruments
The Company's Canadian dollar denominated earnings are subject to exchange rate risk as substantially all the Company's merchandise sold in Canada is sourced through U.S. dollar transactions. The Company uses foreign currency forward contracts designated as cash flow hedges to mitigate this foreign currency exposure. Amounts are reclassified from Accumulated Other Comprehensive Income upon sale of the hedged merchandise to the customer. These gains and losses are recognized in Costs of Goods Sold, Buying and Occupancy in the Consolidated Statements of Income. All designated cash flow hedges are recorded on the Consolidated Balance Sheets at fair value. The fair value of designated cash flow hedges is not significant for any period presented. The Company does not use derivative financial instruments for trading purposes.
Concentration of Credit Risk and Investments
The Company maintains cash and cash equivalents and derivative contracts with various major financial institutions. The Company monitors the relative credit standing of financial institutions with whom the Company transacts and limits the amount of credit exposure with any one entity. Typically, theThe Company’s investment portfolio is primarily comprisedcomposed of U.S. government obligations, U.S. Treasury and AAA-rated money market funds, commercial paper and bank deposits.

The Company also periodically reviews the relative credit standing of franchise, license and wholesale partners and other entities to which the Company grants credit terms in the normal course of business. The Company records andetermines the required allowance for uncollectable accountsexpected credit losses using information such as customer credit history and financial condition. Amounts are recorded to the allowance when it becomes probableis determined that expected credit losses may occur.
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Table of Contents
Easton Investments
The Company has land and other investments in Easton, a planned community in Columbus, Ohio, that integrates office, hotel, retail, residential and recreational space. These investments, totaling $126 million as of April 29, 2023, $124 million as of January 28, 2023 and $126 million as of April 30, 2022, are recorded in Other Assets on the counterparty willConsolidated Balance Sheets.
Included in the Company’s Easton investments are equity interests in Easton Town Center, LLC (“ETC”) and Easton Gateway, LLC (“EG”), entities that own and develop commercial entertainment and shopping centers. The Company’s investments in ETC and EG are accounted for using the equity method of accounting. The Company has majority financial interests in ETC and EG, but another unaffiliated member manages them, and certain significant decisions regarding ETC and EG require the consent of unaffiliated members in addition to the Company.
Under the equity method of accounting, the Company recognizes its share of the investee's net income or loss. Losses are only recognized to the extent the Company has positive carrying value related to the investee. Carrying values are only reduced below zero if the Company has an obligation to provide funding to the investee. The Company’s share of net income or loss of all unconsolidated entities is included in Other Income (Loss) in the Consolidated Statements of Income. The Company’s equity method investments are required to be unable to pay.reviewed for impairment when it is determined there may be an other-than-temporary loss in value.
Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period, as well as the related disclosure of contingent assets and liabilities at the date of the financial statements. Actual results may differ from those estimates, and the Company revises its estimates and assumptions as new information becomes available.

2. NewRecently Issued Accounting Pronouncements
Share-Based Compensation
In the first quarter of 2017, the Company adopted Accounting Standards Update (“ASU”) No. 2016-09, Improvements to Employee Share-Based Payment Accounting.  On a prospective basis, this standard requires recognition of the income tax effects of share-based awards in the income statement when the awards vest or are exercised.  These effects were historically recorded in equity on the balance sheet.  As a result, the Company recognized $13 million of excess tax benefits related to share-based awards in Provision for Income Taxes in the year-to-date 2017 Consolidated Statement of Income. The standard also requires all tax-related cash flows from share-based awards to be reported as operating activities on the statements of cash flows and any cash payments made to taxing authorities on an employee's behalf from withheld shares as financing activities.  The retrospective application of these changes resulted in an $95 million increase in operating cash flows and a corresponding decrease to financing cash flows on the 2016 Consolidated Statement of Cash Flows. Further, as allowed by the standard, the Company will continue to estimate award forfeitures at the time awards are granted and adjust, if necessary, in subsequent periods based on historical experience and expected future forfeiture rates. 

Revenue from Contracts with Customers
In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers, which was further clarified and amended in 2015 and 2016. This guidance requires companies to recognize revenue in a manner that depicts the transfer of promised goods or services to customers in amounts that reflect the consideration to which a company expects to be entitled in exchange for those goods or services. The new standard also will result in enhanced disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. This guidance will be effective beginning in fiscal 2018. The standard allows for either a full retrospective or a modified retrospective transition method.

The Company continues to evaluate the impacts of this standard. Thedid not adopt any new standard will change current accounting related to loyalty points earned under the Victoria's Secret customer loyalty program as revenue associated with customer loyalty points will be deferred until redeemed using a relative stand-alone selling price method. The new standard will also change the Company's accounting for sales returns which requires balance sheet presentation on a gross basis. Further, income from the Victoria's Secret private label credit card arrangement, which has historically been presented as a reduction to General, Administrative and Store Operating Expenses, will now be presented as revenue under the new standard. The Company is continuing to evaluate the further impacts the standard will have on the Consolidated Statements of Income and Comprehensive Income, Balance Sheets, Statements of Cash Flows and disclosures. The Company will adopt the standardstandards in the first quarter of fiscal 2018 under2023 that had a material impact on its consolidated results of operations, financial position or cash flows. In addition, as of June 2, 2023, there were no new accounting standards that the modified retrospective approach, which will result in a cumulative adjustment to retained earnings.

Leases
In February 2016, the FASB issued ASC 842, Leases, which requires companies classified as lessees to put most leases on their balance sheets but recognize expenses on their income statements in a manner similar to today’s accounting. The new standard also will result in enhanced quantitative and qualitative disclosures, including significant judgments made by management, to provide greater insight into the extent of revenue and expense recognized andCompany has not yet adopted that are expected to be recognizedhave a material impact on its consolidated results of operations, financial position or cash flows.
2. Revenue Recognition
Accounts receivable, net from existing leases. The standard requires modified retrospective adoptionrevenue-generating activities were $79 million as of April 29, 2023, $79 million as of January 28, 2023 and will be effective beginning in fiscal 2019, with early adoption permitted.

$77 million as of April 30, 2022. These accounts receivable primarily relate to amounts due from the Company's franchise, license and wholesale partners. Under these arrangements, payment terms are typically 45 to 75 days.
The Company records deferred revenue when cash payments are received in advance of transfer of control of goods or services. Deferred revenue primarily relates to gift cards, loyalty points and awards and direct channel shipments, which are all impacted by seasonal and holiday-related sales patterns. Deferred revenue, which is currently evaluating the impacts that this standard will have on its Consolidated Statements of Incomerecorded within Accrued Expenses and Comprehensive Income, Balance Sheets and Statements of Cash Flows. The Company currently expects that most of its operating lease commitments will be recognized as operating lease liabilities and right-of-use assets upon adoption of the

standard. Thus, the Company expects adoption will result in a material increase to the assets and liabilitiesOther on the Consolidated Balance Sheet.Sheets, was $171 million as of April 29, 2023, $195 million as of January 28, 2023 and $133 million as of April 30, 2022. The Company will adopt the standard inrecognized $77 million as revenue during the first quarter of 2023 from amounts recorded as deferred revenue at the beginning of the Company's fiscal 2019.year.

The following table provides a disaggregation of Net Sales for the first quarters of 2023 and 2022:
Hedging Activities
First Quarter
20232022
(in millions)
Stores - U.S. and Canada$1,034 $1,059 
Direct - U.S. and Canada280 318 
International (a)82 73 
Total Net Sales$1,396 $1,450 
In August 2017, _______________
(a)Results include royalties associated with franchised stores and wholesale sales.
The Company’s net sales outside of the FASB issued ASU 2017-12, Targeted ImprovementsU.S. include sales from Company-operated stores and its e-commerce site in Canada, royalties associated with franchised stores and wholesale sales. Certain of these sales are subject to Accounting for Hedging Activities, which is intended to better align risk management activities and financial reporting for hedging relationships. The new standard eliminates the requirement to separately measure and report hedge ineffectiveness and generally requires the entire change in the fair value of a hedging instrument to be presented in the same income statement line as the hedged item. It also eases certain documentation and assessment requirements. This guidance will be effective beginning in fiscal 2019, with early adoption permitted. The Company is currently evaluating the impact of this standard on its Consolidated Statementsfluctuations in foreign currency. The Company’s net sales outside of Incomethe U.S. totaled $145 million and Comprehensive Income, Balance Sheets$137 million for the first quarters of 2023 and Statements2022, respectively.
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Table of Cash Flows.Contents
3. Earnings Per Share and Shareholders’ Equity (Deficit)
Earnings Per Share
Earnings per basic share is computed based on the weighted-average number of outstanding common shares.shares outstanding. Earnings per diluted share includeincludes the weighted-average effect of dilutive options and restricted stock units, performance share units and stock options (collectively, "Dilutive Awards") on the weighted-average common shares outstanding.
The following table provides the weighted-average shares utilized for the calculation of basicBasic and diluted earningsDiluted Earnings per shareShare for the third quarterfirst quarters of 2023 and year-to-date 2017 and 2016:2022:
 First Quarter
20232022
(in millions)
Common Shares244 255 
Treasury Shares(15)(15)
Basic Shares229 240 
Effect of Dilutive Awards1 3 
Diluted Shares230 243 
Anti-dilutive Awards (a)1 — 
 _______________
 Third Quarter Year-to-Date
 2017 2016 2017 2016
 (in millions)
Weighted-average Common Shares:       
Issued Shares318
 315
 317
 314
Treasury Shares(34) (29) (32) (27)
Basic Shares284
 286

285

287
Effect of Dilutive Options and Restricted Stock1
 4
 3
 4
Diluted Shares285
 290

288

291
Anti-dilutive Options and Awards (a)6
 2
 5
 2
 _______________
(a)These options and awards were excluded from the calculation of diluted earnings per share because their inclusion would have been anti-dilutive.

Shareholders’ Equity (Deficit)(a)These awards were excluded from the calculation of Diluted Earnings per Share because their inclusion would have been anti-dilutive.
Common Stock Share Repurchases
Under2022 Share Repurchase Program
In February 2022, the authority of the Company’sCompany's Board of Directors the(the "Board") authorized a $1.5 billion share repurchase program (the "February 2022 Program"). The Company repurchaseddid not repurchase any shares of its common stock under the following repurchase programs for year-to-date 2017 and 2016:
 
Amount
Authorized
 
Shares
Repurchased
 
Amount
Repurchased
 Average Stock Price of Shares Repurchased within Program
Repurchase Program 2017 2016 2017 2016 2017 2016
 (in millions) (in thousands) (in millions)    
September 2017$250
 935
 NA
 $39
 NA
 $41.30
 NA
February 2017250
 5,500
 NA
 240
 NA
 $43.57
 NA
February 2016500
 51
 5,270
 3
 $410
 $58.95
 $77.75
Total  6,486
 5,270
 $282
 $410
    
In the third quarter of 2017, the Company's Board of Directors approved a new $250 million share repurchase program, which included the $10 million remaining under the February 2017 repurchase program.
Induring the first quarter of 2017, the Company's Board2023. The February 2022 Program had $188 million of Directors approved a $250 million share repurchase program, which included the $59 million remaining under the February 2016 repurchase program.
In the first quarter of 2016, the Company's Board of Directors approved a $500 million share repurchase program, which included the $17 million remaining under the June 2015 repurchase program.

The September 2017 repurchase program had $211 million remainingauthority as of October 28, 2017.April 29, 2023. Subsequent to October 28, 2017,April 29, 2023 through June 2, 2023, the Company repurchased an additional 0.1 million216 thousand shares of its common stock for $6$8 million under this program.
There were $2 million and $3 million of share repurchases reflected in Accounts Payable on the October 28, 2017 and January 28, 2017 Consolidated Balance Sheets, respectively. There were no share repurchases reflected in Accounts Payable on the October 29, 2016 Consolidated Balance Sheet.
Treasury Stock Retirement
Subsequent to October 28, 2017, the Company retired 36 million shares of its treasury stock.February 2022 Program.
Dividends
Under the authority and declaration of the Board of Directors, theThe Company paid the following dividends during year-to-date 2017the first quarters of 2023 and 2016:2022:
Ordinary DividendsTotal Paid
(per share)(in millions)
2023
First Quarter$0.20 $46 
2022
First Quarter$0.20 $48 
  Ordinary Dividends Special Dividends Total Dividends Total Paid
  (per share) (in millions)
2017        
Third Quarter $0.60
 $—
 $0.60
 $172
Second Quarter 0.60
 —
 0.60
 172
First Quarter 0.60
 —
 0.60
 172
2017 Total $1.80
 $—
 $1.80
 $516
2016        
Third Quarter $0.60
 $—
 $0.60
 $173
Second Quarter 0.60
 —
 0.60
 173
First Quarter 0.60
 2.00
 2.60
 750
2016 Total $1.80
 $2.00
 $3.80
 $1,096

4. Acquisition
On April 18, 2016,In May 2023, the Company completed the acquisition of 100% of the shares of American Beauty Limited for a total purchase price of $44 million. This agreement included the reacquisition of the franchise rights from one of our partners to operate Victoria's Secret Beauty and Accessories stores in Greater China, including 26 stores already open at the time of acquisition. The purchase price included $10 million in forgiveness of liabilities owed to the Company from the pre-existing relationship. As a result of this acquisition, the Company's financial statements include the financial results of American Beauty Limited, which are reported as part of the Victoria's Secret and Bath & Body Works International segment.
The total purchase price was allocated to the net tangible and intangible assets acquired based on their estimated fair value. Such estimated fair values require management to make estimates and judgments, especially with respect to intangible assets. The allocation of the purchase price to goodwill was complete as ofBoard declared the second quarter 2023 ordinary dividend of 2016. Goodwill related$0.20 per share payable on June 16, 2023 to stockholders of record at the acquisition is not deductible for tax purposes.close of business on June 2, 2023.
The allocation of the purchase price to the fair value of assets acquired and liabilities assumed is as follows:
 (in millions)
Cash and Cash Equivalents$1
Inventories3
Property and Equipment10
Goodwill30
Other Assets3
Current Liabilities(3)
Net Assets Acquired$44
Forgiveness of Liabilities Owed to the Company(10)
Consideration Paid$34


5. Restructuring Activities
During the first quarter of 2016, the Company made strategic changes within the Victoria’s Secret segment designed to focus the brand on its core merchandise categories, streamline operations and emphasize brand building and loyalty-enhancing marketing and advertising rather than using traditional catalogues and offers. As a result of these actions, the Company recorded charges related to cancellations of fabric commitments for non-go forward merchandise and a reserve against paper that was previously intended for future catalogues. These costs, totaling $11 million, including non-cash charges of $10 million, are included in Cost of Goods Sold, Buying and Occupancy on the year-to-date 2016 Consolidated Statement of Income. These actions also resulted in the elimination of approximately 200 positions primarily in the Company's Ohio and New York home offices. Severance and related costs associated with these eliminations, totaling $24 million, are included in General, Administrative and Store Operating Expenses on the year-to-date 2016 Consolidated Statement of Income. The Company recognized a total pre-tax charge of $35 million for these items in the first quarter of 2016. The remaining liability for unpaid severance and related costs was not significant as of October 28, 2017.

6.4. Inventories
The following table provides details of inventoriesInventories as of October 28, 2017, April 29, 2023, January 28, 20172023 and October 29, 2016:April 30, 2022:
October 28,
2017		 January 28,
2017		 October 29,
2016		April 29,
2023		January 28,
2023		April 30,
2022
(in millions)(in millions)
Finished Goods Merchandise$1,549
 $982
 $1,499
Finished Goods Merchandise$611 $538 $627 
Raw Materials and Merchandise Components166
 114
 152
Raw Materials and Merchandise Components160 171 193 
Total Inventories$1,715
 $1,096
 $1,651
Total Inventories$771 $709 $820 
Inventories are principally valued at the lower of cost as determined by the weighted-average cost method, or net realizable value.value, on an average cost basis.

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7. Property and Equipment, Net5. Long-Lived Assets
The following table provides details of propertyProperty and equipment, netEquipment, Net as of October 28, 2017, April 29, 2023, January 28, 20172023 and October 29, 2016:April 30, 2022:
October 28,
2017		 January 28,
2017		 October 29,
2016		April 29,
2023		January 28,
2023		April 30,
2022
(in millions)(in millions)
Property and Equipment, at Cost$6,608
 $6,282
 $6,218
Property and Equipment, at Cost$2,993 $2,915 $2,669 
Accumulated Depreciation and Amortization(3,688) (3,541) (3,448)Accumulated Depreciation and Amortization(1,770)(1,722)(1,610)
Property and Equipment, Net$2,920
 $2,741
 $2,770
Property and Equipment, Net$1,223 $1,193 $1,059 
Depreciation expense was $144$63 million and $133$53 million for the third quarterfirst quarters of 20172023 and 2016, respectively. Depreciation expense was $426 million and $378 million for year-to-date 2017 and 2016,2022, respectively.

8. Equity Investments and Other
Easton Investments
The Company has land and other investments in Easton, a planned community in Columbus, Ohio, that integrates office, hotel, retail, residential and recreational space. These investments, totaling $78 million as of October 28, 2017, $79 million as of January 28, 2017, and $80 million as of October 29, 2016, and are recorded in Other Assets on the Consolidated Balance Sheets.

Included in the Company’s Easton investments are equity interests in Easton Town Center, LLC (“ETC”) and Easton Gateway, LLC (“EG”), entities that own and develop commercial entertainment and shopping centers. The Company’s investments in ETC and EG are accounted for using the equity method of accounting. The Company has a majority financial interest in ETC and EG, but another unaffiliated member manages them, and certain significant decisions regarding ETC and EG require the consent of unaffiliated members in addition to the Company.

During 2017, the Company received cash distributions of $27 million from certain of its Easton investments. As a result, the Company recognized pre-tax gains totaling $20 million which are included in Other Income on the 2017 Consolidated

Statements of Income and the return of capital is included within the Investing Activities section of the 2017 Consolidated Statement of Cash Flows.

In July 2016, ETC refinanced its bank loan. In conjunction with the loan refinancing, the Company received a cash distribution from ETC of $124 million and recognized a pre-tax gain of $108 million (after-tax gain of $70 million). The gain is included in Other Income on the year-to-date 2016 Consolidated Statements of Income and the return of capital is included within the Investing Activities section of the 2016 Consolidated Statement of Cash Flows.

9.6. Income Taxes
The provision for income taxes is based on the current estimate of the annual effective tax rate and is adjusted as necessary for quarterly events. The Company’s quarterly effective tax rate does not reflect a benefit associated with losses related to certain foreign subsidiaries.
For the thirdfirst quarter of 2017, 2023, the Company’s effective tax rate was 36.1%27.7% compared to 36.0%19.4% in the thirdfirst quarter of 2016.2022. The thirdfirst quarter 2017 rate and the third quarter 2016 rate were lower than the Company's combined federal and state statutory rate primarily due to the resolution of certain tax matters.
For year-to-date 2017, the Company's effective tax2023 rate was 32.2% compared to 34.5% year-to-date 2016. The year-to-date 2017 rate was lowerhigher than the Company's combined estimated federal and state statutory rate primarily due to the recognitionaccrued interest expense related to unrecognized tax benefits. The first quarter of tax benefits resulting from stock options exercised. The year-to-date 20162022 rate was lower than the Company's combined estimated federal and state statutory raterates primarily due to the resolutionrecognition of certainexcess tax matters.benefits recorded through the Consolidated Statements of Income on share-based awards that vested.
As of October 28, 2017, any unrecognized deferred income tax liability resulting from the Company's undistributed foreign earnings from non-U.S. subsidiaries is not expected to reverse in the foreseeable future; furthermore, the undistributed foreign earnings are permanently reinvested. If the Company elects to distribute these foreign earnings in the future, they could be subject to additional income taxes. Determination of the amount of any unrecognized deferred income tax liability on these undistributed foreign earnings is not practicable because such liability, if any, is dependent on circumstances existing if and when remittance occurs.
Income taxes paid were approximately $141were $7 million and $103and $8 million for the third quarterfirst quarters of 20172023 and 2016,2022, respectively. Income taxes paid were approximately $461 million and $441 million for year-to-date 2017 and 2016, respectively.


10.7. Long-term Debt and Borrowing Facilities
The following table provides the Company’s outstanding long-term debt balance, net of unamortized debt issuance costs and discounts, as of October 28, 2017, April 29, 2023, January 28, 20172023 and OctoberApril 30, 2022:
April 29,
2023		January 28,
2023		April 30,
2022
(in millions)
Senior Debt with Subsidiary Guarantee
$314 million, 9.375% Fixed Interest Rate Notes due July 2025 ("2025 Notes")$312 $317 $317 
$297 million, 6.694% Fixed Interest Rate Notes due January 2027 (“2027 Notes”)284 283 281 
$500 million, 5.250% Fixed Interest Rate Notes due February 2028 (“2028 Notes”)498 498 497 
$500 million, 7.500% Fixed Interest Rate Notes due June 2029 ("2029 Notes")491 491 490 
$999 million, 6.625% Fixed Interest Rate Notes due October 2030 ("2030 Notes")990 991 990 
$986 million, 6.875% Fixed Interest Rate Notes due November 2035 (“2035 Notes”)979 993 992 
$643 million, 6.750% Fixed Interest Rate Notes due July 2036 (“2036 Notes”)638 694 694 
Total Senior Debt with Subsidiary Guarantee$4,192 $4,267 $4,261 
Senior Debt
$347 million, 6.950% Fixed Interest Rate Debentures due March 2033 (“2033 Notes”)$346 $349 $349 
$245 million, 7.600% Fixed Interest Rate Notes due July 2037 (“2037 Notes”)243 246 246 
Total Senior Debt589 595 595 
Total Long-term Debt$4,781 $4,862 $4,856 
Repurchases of Notes
During the first quarter of 2023, the Company repurchased in the open market and extinguished $84 million principal amount of its outstanding senior notes. The aggregate repurchase price for these notes was $76 million, resulting in a pre-tax gain of $7 million, net of the write-off of unamortized issuance costs. This gain is included in Other Income in the first quarter of 2023 Consolidated Statement of Income. There were $2 million of repurchases reflected in Accounts Payable on the April 29, 2016:2023 Consolidated Balance Sheet.
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Table of Contents
 October 28,
2017		 January 28,
2017		 October 29,
2016
 (in millions)
Senior Unsecured Debt with Subsidiary Guarantee     
$1 billion, 6.875% Fixed Interest Rate Notes due November 2035 (“2035 Notes”)$990
 $989
 $989
$1 billion, 5.625% Fixed Interest Rate Notes due February 2022 (“2022 Notes”)993
 992
 992
$1 billion, 6.625% Fixed Interest Rate Notes due April 2021 (“2021 Notes”)994
 992
 992
$700 million, 6.75% Fixed Interest Rate Notes due July 2036 (“2036 Notes”)692
 692
 692
$500 million, 5.625% Fixed Interest Rate Notes due October 2023 (“2023 Notes”)497
 497
 497
$500 million, 8.50% Fixed Interest Rate Notes due June 2019 (“2019 Notes”)(a)496
 496
 498
$400 million, 7.00% Fixed Interest Rate Notes due May 2020 (“2020 Notes”)398
 397
 396
Total Senior Unsecured Debt with Subsidiary Guarantee$5,060
 $5,055
 $5,056
Senior Unsecured Debt     
$350 million, 6.95% Fixed Interest Rate Debentures due March 2033 (“2033 Notes”)$348
 $348
 $348
$300 million, 7.60% Fixed Interest Rate Notes due July 2037 (“2037 Notes”)297
 297
 297
Foreign Facilities80
 36
 23
Total Senior Unsecured Debt$725
 $681
 $668
Total$5,785
 $5,736
 $5,724
Current Portion of Long-term Debt(80) (36) (23)
Total Long-term Debt, Net of Current Portion$5,705
 $5,700
 $5,701
The following table provides details of the outstanding principal amount of senior notes repurchased and extinguished during the first quarter of 2023:
________________
(a)The balances include a fair value interest rate hedge adjustment which increased the debt balance by $1 million as of October 28, 2017, $2 million as of January 28, 2017 and $6 million as of October 29, 2016.(in millions)
2025 Notes$6 
2030 Notes2 
2033 Notes3 
2035 Notes14 
2036 Notes57 
2037 Notes2 
Total$84 
Issuance of Notes
InSubsequent to April 29, 2023 through June 2016,2, 2023, the Company issued $700repurchased in the open market and extinguished $50 million principal amount of 6.75%its outstanding senior notes due in July 2036. for an aggregate repurchase price of $46 million.
Asset-backed Revolving Credit Facility
The obligation to pay principalCompany and interest on these notes is jointly and severally guaranteed on a full and unconditional basis by certain of the Company's 100% owned subsidiaries (the “Guarantors”). The proceeds from the issuance were $692 million, which were net of issuance costs of $8 million. These issuance costs are being amortized through the maturity date of July 2036guarantee and are included within Long-term Debt on the Consolidated Balance Sheets.
Repurchase of Notes
In July 2016, the Company used the proceeds from the 2036 Notespledge collateral to repurchase the $700 million 2017 Notes for $742 million. In the second quarter of 2016, the Company recognized a pre-tax loss on extinguishment of this debt of $36 million (after-tax net loss of $22 million), which is net of gains of $7 million related to terminated interest rate swaps associated with the 2017 Notes. This loss is included in Other Income in the year-to-date 2016 Consolidated Statement of Income.
Revolving Facility
In May 2017, the Company entered intosecure an amendment and restatement (“Amendment”) of its securedasset-backed revolving credit facility (“RevolvingABL Facility”). The Amendment maintains the aggregate amount of the commitments of the lenders under the RevolvingABL Facility, at $1 billionwhich allows borrowings and extends the termination date from July 18, 2019 to May 11, 2022. The Amendment allows certain of the Company's non-U.S. subsidiaries to borrow and obtain letters of credit in U.S. dollars or Canadian dollars, Euros, Hong Kong dollars or British pounds.has aggregate commitments of $750 million and an expiration date in August 2026.
In addition, the Amendment reduced the commitment fees payableAvailability under the RevolvingABL Facility which areis the lesser of (i) the borrowing base, determined primarily based on the Company's long-termeligible U.S. and Canadian credit rating,card receivables, accounts receivable, inventory and eligible real property, or (ii) the aggregate commitment. If at any time the outstanding amount under the ABL Facility exceeds the lesser of (i) the borrowing base and (ii) the aggregate commitment, the Company is required to 0.25% per annum. The Amendment did not modifyrepay the outstanding amounts under the ABL Facility to the extent of such excess. As of April 29, 2023, the Company's quantitative covenant requirements, but did provide an increased limit on restricted payments inborrowing base was $623 million, and it had no borrowings outstanding under the event the Company does not meet the criteria to make these payments without limitation and provides greater flexibility with respect toABL Facility.
The ABL Facility supports the Company’s ability to grant liens on assets.

letter of credit program. The Company incurred fees related tohad $16 million of outstanding letters of credit as of April 29, 2023 that reduced its availability under the AmendmentABL Facility. As of April 29, 2023, the RevolvingCompany's availability under the ABL Facility was $607 million.
As of $5 million, which were capitalized and recorded in Other Assets onApril 29, 2023, the October 28, 2017 Consolidated Balance Sheet and are being amortized over the remaining term of the Revolving Facility.
The RevolvingABL Facility fees related to committed and unutilized amounts are 0.25%were 0.30% per annum, and the fees related to outstanding letters of credit are 1.50%were 1.25% per annum. In addition, the interest rate on outstanding U.S. dollar borrowings iswas the London Interbank Offered Rate (“LIBOR”) plus 1.50%1.25% per annum. The interest rate on outstanding foreign denominatedCanadian dollar-denominated borrowings iswas the applicable benchmark rateCanadian Dollar Offered Rate plus 1.50%1.25% per annum.
The RevolvingABL Facility contains fixed charge coverage and debt to EBITDA financial covenants. Therequires the Company is required to maintain a fixed charge coverage ratio of not less than 1.751.00 to 1.00 and a consolidated debt to consolidated EBITDA ratio not exceeding 4.00 to 1.00 for the most recent four-quarter period. In addition, the Revolving Facility provides that investments and restricted payments may be made, without limitationduring an event of default or any period commencing on amount, if (a) at the time of and after giving effect to such investment or restricted payment, the ratio of consolidated debt to consolidated EBITDA for the most recent four-quarter periodany day when specified excess availability is less than 3.00 to 1.00 and (b) no defaultthe greater of (i) $70 million or event(ii) 10% of default exists.the maximum borrowing amount. As of October 28, 2017,April 29, 2023, the Company was in compliance with both of its financial covenants, and the ratio of consolidated debtnot required to consolidated EBITDA was less than 3.00 to 1.00.maintain this ratio.
As of October 28, 2017, there were no borrowings outstanding under the Revolving Facility.
The Revolving Facility supports the Company’s letter of credit program. The Company had $8 million of outstanding letters of credit as of October 28, 2017 that reduced its remaining availability under the Revolving Facility.
Foreign Facilities
In addition to the Revolving Facility, the Company maintains various revolving and term loan bank facilities with availability totaling $100 million to support its foreign operations (“Foreign Facilities”). Current borrowings on these Foreign Facilities mature between October 31, 2017 and October 18, 2018. The interest rates on outstanding borrowings are based upon the applicable benchmark rate for the currency of each borrowing.
For year-to-date 2017, the Company borrowed $67 million and made payments of $23 million under the Foreign Facilities. The maximum daily amount outstanding at any point in time during 2017 was $80 million.
Interest Rate Swap Arrangements
For information related to the Company’s fair value interest rate swap arrangements, see Note 11, “Derivative Financial Instruments.”

11. Derivative Financial Instruments
Foreign Exchange Derivative Instruments
The earnings of the Company's wholly owned foreign businesses are subject to exchange rate risk as substantially all of their merchandise is sourced through U.S. dollar transactions. The Company uses foreign currency forward contracts designated as cash flow hedges to mitigate this foreign currency exposure for its Canadian and U.K. businesses. These forward contracts currently have a maximum term of 18 months. Amounts are reclassified from accumulated other comprehensive income (loss) upon sale of the hedged merchandise to the customer. These gains and losses are recognized in Cost of Goods Sold, Buying and Occupancy on the Consolidated Statements of Income.

The Company has a cross-currency swap related to an intercompany loan of approximately CAD$170 million maturing in January 2018 which is designated as a cash flow hedge of foreign currency exchange risk. This cross-currency swap mitigates the exposure to fluctuations in the U.S. dollar-Canadian dollar exchange rate related to the Company's Canadian operations. The cross-currency swap requires the periodic exchange of fixed-rate Canadian dollar interest payments for fixed-rate U.S. dollar interest payments as well as exchange of Canadian dollar and U.S. dollar principal payments upon maturity. Changes in the U.S. dollar-Canadian dollar exchange rate and the related swap settlements result in reclassification of amounts from accumulated other comprehensive income (loss) to earnings to completely offset foreign currency transaction gains and losses recognized on the intercompany loan.

The Company uses foreign currency forward contracts to mitigate the impact of fluctuations in foreign currency exchange rates relative to recognized payable balances denominated in non-functional currencies. The fair value of these non-designated foreign currency forward contracts is not significant as of October 28, 2017.


The following table provides the U.S. dollar notional amount of outstanding foreign currency derivative financial instruments as of October 28, 2017, January 28, 2017 and October 29, 2016:
 October 28,
2017		 January 28,
2017		 October 29,
2016
 (in millions)
Notional Amount$379
 $360
 $362

The following table provides a summary of the fair value and balance sheet classification of outstanding derivative financial instruments designated as foreign currency cash flow hedges as of October 28, 2017, January 28, 2017 and October 29, 2016:
 October 28,
2017		 January 28,
2017		 October 29,
2016
 (in millions)
Other Current Assets$14
 $18
 $6
Accrued Expenses and Other4
 1
 —
Other Long-term Assets1
 —
 20

The following table provides a summary of the pre-tax financial statement effect of the gains and losses on derivative financial instruments designated as foreign currency cash flow hedges for the third quarter and year-to-date 2017 and 2016:
 Third Quarter Year-to-Date
 2017 2016 2017 2016
 (in millions)
Gain (Loss) Recognized in Accumulated Other Comprehensive Income (Loss)$11
 $10
 $(8) $(1)
(Gain) Loss Reclassified from Accumulated Other Comprehensive Income into Cost of Goods Sold, Buying and Occupancy Expense (a)—
 —
 (3) —
(Gain) Loss Reclassified from Accumulated Other Comprehensive Income into Other Income (b)(4) (4) 3
 5
________________
(a)Represents reclassification of amounts from accumulated other comprehensive income (loss) to earnings when the hedged merchandise is sold to the customer. No ineffectiveness was associated with these foreign currency cash flow hedges.
(b)Represents reclassification of amounts from accumulated other comprehensive income (loss) to earnings to completely offset foreign currency transaction gains and losses recognized on the intercompany loan. No ineffectiveness was associated with this foreign currency cash flow hedge.

The Company estimates that $3 million of losses included in accumulated other comprehensive income (loss) as of October 28, 2017 related to foreign currency forward contracts designated as cash flow hedges will be reclassified into earnings within the following 12 months. Actual amounts ultimately reclassified depend on the exchange rates in effect when derivative contracts that are currently outstanding mature.
Interest Rate Derivative Instruments
The Company has interest rate swap arrangements related to $300 million of the outstanding 2019 Notes that are designated as interest rate fair value hedges. The interest rate swap arrangements effectively convert the fixed interest rate on the related debt to a variable interest rate based on LIBOR plus a fixed percentage. The changes in the fair value of the interest rate swaps have an equal and offsetting impact to the carrying value of the debt on the balance sheet. The differential to be paid or received on the interest rate swap arrangements is accrued and recognized as an adjustment to interest expense.
The following table provides a summary of the fair value and balance sheet classification of the derivative financial instruments designated as interest rate fair value hedges as of October 28, 2017, January 28, 2017 and October 29, 2016:
 October 28,
2017		 January 28,
2017		 October 29,
2016
 (in millions)
Other Long-term Assets$1
 $2
 $6


12.8. Fair Value Measurements
Cash and Cash Equivalents include cash on hand, deposits with financial institutions and highly liquid investments with original maturities of less than 90 days. The Company's Cash and Cash Equivalents are considered Level 1 fair value measurements as they are valued using unadjusted quoted prices in active markets for identical assets.
The following table provides a summary of the principal value and estimated fair value of long-termoutstanding debt excluding foreign facility borrowings, as of October 28, 2017, April 29, 2023, January 28, 20172023 and October 29, 2016:April 30, 2022:
April 29,
2023		January 28,
2023		April 30,
2022
(in millions)
Principal Value$4,831 $4,915 $4,915 
Fair Value, Estimated (a)4,589 4,707 4,866 
 October 28,
2017		 January 28,
2017		 October 29,
2016
 (in millions)
Principal Value$5,750
 $5,750
 $5,750
Fair Value (a)6,033
 6,030
 6,352
 _______________
 _______________
(a)
(a)The estimated fair value of the Company’s publicly traded debt is based on reported transaction prices which are considered Level 2 inputs in accordance with ASC Topic 820, Fair Value Measurement. The estimates presented are not necessarily indicative of the amounts that the Company could realize in a current market exchange.
The authoritative guidance included in ASC Topic 820 establishes a three-level fair value hierarchy that prioritizes the inputs used to measure fair value. This hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows:
Level 1 – Quoted market prices in active markets for identical assets or liabilities.
Level 2 – Observable inputs other than quoted market prices included in Level 1, such as quoted prices of similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.
Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets and liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniquesCompany’s debt is based on reported transaction prices, which are considered Level 2 inputs in accordance with Accounting Standards Codification 820, Fair Value Measurement. The estimates presented are not necessarily indicative of the amounts that use significant unobservable inputs.

The following table provides a summary of assets and liabilities measured in the consolidated financial statements at fair value on a recurring basis as of October 28, 2017, January 28, 2017 and October 29, 2016:
 Level 1 Level 2 Level 3 Total
 (in millions)
As of October 28, 2017       
Assets:       
Cash and Cash Equivalents$735
 $—
 $—
 $735
Marketable Securities6
 —
 —
 6
Interest Rate Fair Value Hedges—
 1
 —
 1
Foreign Currency Cash Flow Hedges—
 15
 —
 15
Liabilities:       
Foreign Currency Cash Flow Hedges—
 4
 —
 4
As of January 28, 2017       
Assets:       
Cash and Cash Equivalents$1,934
 $—
 $—
 $1,934
Marketable Securities5
 —
 —
 5
Interest Rate Fair Value Hedges—
 2
 —
 2
Foreign Currency Cash Flow Hedges—
 18
 —
 18
Liabilities:       
Foreign Currency Cash Flow Hedges—
 1
 —
 1
As of October 29, 2016       
Assets:       
Cash and Cash Equivalents$654
 $—
 $—
 $654
Marketable Securities8
 —
 —
 8
Interest Rate Fair Value Hedges—
 6
 —
 6
Foreign Currency Cash Flow Hedges—
 26
 —
 26

The Company's Level 1 fair value measurements use unadjusted quoted prices in active markets for identical assets. In the first quarter of 2016, the Company soldcould realize in a portion of its marketable securities, which are classified as available-for-sale, for $10 million and recognized a pre-tax gain of $4 million (after-tax gain of $3 million). The gain is included within Other Income in the year-to-date 2016 Consolidated Statement of Income, and the cash proceeds are included in Proceeds from Sale of Marketable Securities within the Investing Activities section of the 2016 Consolidated Statement of Cash Flows. These securities are classified as Level 1 fair value measurements as they are traded with sufficient frequency and volume to enable the Company to obtain pricing information on an ongoing basis.
The Company’s Level 2 fair value measurements usecurrent market approach valuation techniques. The primary inputs to these techniques include benchmark interest rates and foreign currency exchange rates, as applicable to the underlying instruments.exchange.
Management believes that the carrying values of accounts receivable, accounts payable, accrued expensesAccounts Receivable, Accounts Payable and current debtAccrued Expenses approximate fair value because of their short maturity.


13. Comprehensive Income
The following table provides the rollforward of accumulated other comprehensive income (loss) for year-to-date 2017:
11
 Foreign Currency Translation Cash Flow Hedges Marketable Securities Accumulated Other Comprehensive Income (Loss)
 (in millions)
Balance as of January 28, 2017$9
 $3
 $—
 $12
Other Comprehensive Income (Loss) Before Reclassifications8
 (8) 1
 1
Amounts Reclassified from Accumulated Other Comprehensive Income (Loss)—
 1
 —
 1
Tax Effect—
 1
 —
 1
Current-period Other Comprehensive Income (Loss)8
 (6) 1
 3
Balance as of October 28, 2017$17
 $(3) $1
 $15
The following table provides the rollforward
Table of accumulated other comprehensive income (loss) for year-to-date 2016:
Contents
 Foreign Currency Translation Cash Flow Hedges Marketable Securities Accumulated Other Comprehensive Income (Loss)
 (in millions)
Balance as of January 30, 2016$28
 $4
 $8
 $40
Other Comprehensive Income (Loss) Before Reclassifications(25) (1) (6) (32)
Amounts Reclassified from Accumulated Other Comprehensive Income (Loss)—
 5
 (4) 1
Tax Effect—
 (1) 4
 3
Current-period Other Comprehensive Income (Loss)(25) 3
 (6) (28)
Balance as of October 29, 2016$3
 $7
 $2
 $12
The following table provides a summary of the reclassification adjustments out of accumulated other comprehensive income (loss) for the third quarter and year-to-date 2017 and 2016:
Details About Accumulated Other Comprehensive Income (Loss) Components Amount Reclassified from Accumulated Other Comprehensive Income (Loss) Location on Consolidated Statements of Income
  Third Quarter Year-to-Date  
  2017 2016 2017 2016  
  (in millions)  
(Gain) Loss on Cash Flow Hedges $—
 $—
 $(3) $—
 Cost of Goods Sold, Buying and Occupancy
  (4) (4) 3
 5
 Other Income
  —
 —
 1
 —
 Provision for Income Taxes
  $(4) $(4) $1
 $5
 Net Income
           
Sale of Available-for-Sale Securities $—
 $—
 $—
 $(4) Other Income
  —
 —
 —
 1
 Provision for Income Taxes
  $—
 $—
 $—
 $(3) Net Income

14.9. Commitments and Contingencies
The Company is subject to various claims and contingencies related to lawsuits, taxes, insurance, regulatory and other matters arising out of the normal course of business. Actions filed against the Company from time to time include commercial, tort, intellectual property, customer, employment, data privacy, securities and other claims, including purported class action lawsuits. Management believes that the ultimate liability arising from such claims and contingencies, if any, is not likely to have a material adverse effect on the Company’s results of operations, financial condition or cash flows.

Lease Guarantees
In connection with the dispositionspin-off of Victoria's Secret & Co. and the disposal of a certain businesses,other business, the Company hashad remaining guaranteescontingent obligations of $11$278 million as of April 29, 2023 related to lease payments under the current terms of noncancellablenoncancelable leases, primarily related to office space, expiring at various dates through 2021.2037. These guaranteesobligations include minimum rent and additional payments covering taxes, common area costs and certain other expenses and relate to leases that commenced prior to the disposition of thethese businesses. In certain instances, the Company’s guarantee may remain in effect if the term of a lease is extended. The Company has not recorded a liability with respect to these guarantee obligations as of October 28, 2017, January 28, 2017 or October 29, 2016 as it concluded that payments under these guarantees were not probable.
In connection with noncancellable operating leases of certain assets, the Company provides residual value guarantees to the lessor if the leased assets cannot be sold for an amount in excess of a specified minimum value at the conclusion of the lease term. The leases expire at various dates through 2021, and the total amount of the guarantees is $104 million. The Company recorded a liability of less than $1 million as of October 28, 2017, a liability of $1 million as of January 28, 2017, and a liability of $3 million as of October 29, 2016Company's reserves related to these guarantee obligations which are included in Other Long-term Liabilities on the Consolidated Balance Sheets.

15. Retirement Benefits
The Company sponsors a tax-qualified defined contribution retirement plan and a non-qualified supplemental retirement planwere not significant for substantially all of its associates within the U.S. Participation in the tax-qualified plan is available to associates who meet certain age and service requirements. Participation in the non-qualified plan is available to associates who meet certain age, service, job level and compensation requirements.
The qualified plan permits participating associates to elect contributions up to the maximum limits allowable under the Internal Revenue Code. The Company matches associate contributions according to a predetermined formula and contributes additional amounts based on a percentage of the associates’ eligible annual compensation and years of service. Associate contributions and Company matching contributions vest immediately. Additional Company contributions and the related investment earnings are subject to vesting based on years of service. Total expense recognized related to the qualified plan was $17 million for the third quarter of 2017 and $15 million for the third quarter of 2016. Total expense recognized related to the qualified plan was $49 million for year-to-date 2017 and $47 million for year-to-date 2016.
The non-qualified plan is an unfunded plan which provides benefits beyond the Internal Revenue Code limits for qualified defined contribution plans. The plan permits participating associates to elect contributions up to a maximum percentage of eligible compensation. The Company matches associate contributions according to a predetermined formula and contributes additional amounts based on a percentage of the associates’ eligible compensation and years of service. The plan also permits participating associates to defer additional compensation up to a maximum amount which the Company does not match. Associates’ accounts are credited with interest using a fixed rate determined by the Company and reviewed by the Compensation Committee of the Board of Directors, prior to the beginning of each year. Associate contributions and the related interest vest immediately. Company contributions, along with related interest, are subject to vesting based on years of service. Associates may elect in-service distributions for the unmatched additional deferred compensation component only. The remaining vested portion of associates’ accounts in the plan will be distributed upon termination of employment in either a lump sum or in annual installments over a specifiedany period of up to 10 years. Total expense recognized related to the non-qualified plan was $6 million for the third quarter of 2017 and $7 million for the third quarter of 2016. Total expense recognized related to the non-qualified plan was $15 million for year-to-date 2017 and $20 million for year-to-date 2016.

16. Segment Information
The Company has three reportable segments: Victoria’s Secret, Bath & Body Works and Victoria's Secret and Bath & Body Works International.
The Victoria’s Secret segment sells women’s intimate and other apparel, personal care and beauty products under the Victoria’s Secret and PINK brand names. Victoria’s Secret merchandise is sold through retail stores located in the U.S. and Canada and its website, www.VictoriasSecret.com.
The Bath & Body Works segment sells body care, home fragrance products, soaps and sanitizers under the Bath & Body Works, White Barn, C.O. Bigelow and other brand names. Bath & Body Works merchandise is sold at retail stores located in the U.S. and Canada and through its website, www.BathandBodyWorks.com.

The Victoria's Secret and Bath & Body Works International segment includes the Victoria's Secret and Bath & Body Works company-owned and partner-operated stores located outside of the U.S. and Canada, as well as its online business in Greater China on the Tmall domestic platform. This segment includes the following:
Victoria's Secret International, comprised of company-owned stores in the U.K. and Greater China, as well as stores operated by partners under franchise and license arrangements;
Victoria's Secret Beauty and Accessories, comprised of company-owned stores in Greater China, as well as stores operated by partners under franchise, license and wholesale arrangements, which feature Victoria's Secret branded beauty and accessories products in travel retail and other locations; and
Bath & Body Works International stores in travel retail and other locations operated by partners under franchise, license and wholesale arrangements.
Other consists of the following:
Mast Global, a merchandise sourcing and production function serving the Company and its international partners;presented.
La Senza, which sells women's intimate apparel through company-owned stores located in the U.S. and Canada, its website, www.LaSenza.com, as well as stores operated by partners under franchise and license arrangements;
12
Henri Bendel, which sells handbags, jewelry and other accessory products through company-owned stores and its website, www.HenriBendel.com;and
Table of Contents
Corporate functions including non-core real estate, equity investments and other governance functions such as treasury and tax.
The following table provides the Company’s segment information for the third quarter and year-to-date 2017 and 2016:
 
Victoria’s
Secret
 
Bath &
Body Works
 
Victoria’s Secret
and
Bath & Body Works International
 Other Total
 (in millions)
2017         
Third Quarter:         
Net Sales$1,539
 $816
 $115
 $148
 $2,618
Operating Income (Loss)134
 138
 —
 (40) 232
Year-to-Date:         
Net Sales$4,718
 $2,354
 $332
 $405
 $7,809
Operating Income (Loss)476
 396
 1
 (131) 742
2016         
Third Quarter:         
Net Sales$1,584
 $770
 $104
 $123
 $2,581
Operating Income (Loss)164
 145
 9
 (34) 284
Year-to-Date:        

Net Sales$5,192
 $2,232
 $299
 $362
 $8,085
Operating Income (Loss)679
 405
 30
 (99) 1,015
The Company's international net sales include sales from company-owned stores, royalty revenue from franchise and license arrangements, wholesale revenues and direct sales shipped internationally. Certain of these sales are subject to the impact of fluctuations in foreign currency. The Company’s international net sales across all segments totaled $365 million and $330 million for the third quarter of 2017 and 2016, respectively. The Company's international net sales across all segments totaled $1.014 billion and $958 million for year-to-date 2017 and 2016, respectively.
17. Subsequent Events
Subsequent to October 28, 2017, the Company retired 36 million shares of its treasury stock.
Subsequent to October 28, 2017, the Company repurchased an additional 0.1 million shares of common stock for $6 million under the September 2017 repurchase program. For additional information, see Note 3, “Earnings Per Share and Shareholders' Equity (Deficit).”


18. Supplemental Guarantor Financial Information
The Company’s 2019 Notes, 2020 Notes, 2021 Notes, 2022 Notes, 2023 Notes, 2035 Notes and 2036 Notes are jointly and severally guaranteed on a full and unconditional basis by the Guarantors. The Company is a holding company, and its most significant assets are the stock of its subsidiaries. The Guarantors represent: (a) substantially all of the sales of the Company’s domestic subsidiaries, (b) more than 90% of the assets owned by the Company’s domestic subsidiaries, other than real property, certain other assets and intercompany investments and balances and (c) more than 95% of the accounts receivable and inventory directly owned by the Company’s domestic subsidiaries.
The following supplemental financial information sets forth for the Company and its guarantor and non-guarantor subsidiaries: the Condensed Consolidating Balance Sheets as of October 28, 2017, January 28, 2017 and October 29, 2016 and the Condensed Consolidating Statements of Income, Comprehensive Income and Cash Flows for the periods ended October 28, 2017 and October 29, 2016.

L BRANDS, INC.
CONDENSED CONSOLIDATING BALANCE SHEET
(in millions)
(Unaudited)
 October 28, 2017
 L Brands, Inc. 
Guarantor
Subsidiaries
 
Non-
guarantor
Subsidiaries
 Eliminations 
Consolidated
L Brands, Inc.
ASSETS         
Current Assets:         
Cash and Cash Equivalents$—
 $377
 $358
 $—
 $735
Accounts Receivable, Net1
 181
 103
 —
 285
Inventories—
 1,519
 196
 —
 1,715
Other(1) 74
 122
 —
 195
Total Current Assets—
 2,151
 779
 —
 2,930
Property and Equipment, Net—
 2,056
 864
 —
 2,920
Goodwill—
 1,318
 30
 —
 1,348
Trade Names and Other Intangible Assets, Net—
 411
 —
 —
 411
Net Investments in and Advances to/from Consolidated Affiliates4,552
 18,111
 1,687
 (24,350) —
Deferred Income Taxes—
 10
 13
 —
 23
Other Assets130
 26
 640
 (612) 184
Total Assets$4,682
 $24,083
 $4,013
 $(24,962) $7,816
LIABILITIES AND EQUITY (DEFICIT)         
Current Liabilities:         
Accounts Payable$2
 $567
 $468
 $—
 $1,037
Accrued Expenses and Other108
 485
 303
 —
 896
Current Portion of Long-term Debt—
 —
 80
 —
 80
Income Taxes—
 —
 6
 —
 6
Total Current Liabilities110
 1,052
 857
 —
 2,019
Deferred Income Taxes(2) (82) 451
 —
 367
Long-term Debt5,705
 597
 —
 (597) 5,705
Other Long-term Liabilities3
 766
 90
 (15) 844
Total Equity (Deficit)(1,134) 21,750
 2,615
 (24,350) (1,119)
Total Liabilities and Equity (Deficit)$4,682
 $24,083
 $4,013
 $(24,962) $7,816

















L BRANDS, INC.
CONDENSED CONSOLIDATING BALANCE SHEET
(in millions)

 January 28, 2017
 L Brands, Inc. 
Guarantor
Subsidiaries
 
Non-
guarantor
Subsidiaries
 Eliminations 
Consolidated
L Brands, Inc.
ASSETS         
Current Assets:         
Cash and Cash Equivalents$—
 $1,562
 $372
 $—
 $1,934
Accounts Receivable, Net—
 228
 66
 —
 294
Inventories—
 976
 120
 —
 1,096
Other—
 53
 88
 —
 141
Total Current Assets—
 2,819
 646
 —
 3,465
Property and Equipment, Net—
 1,897
 844
 —
 2,741
Goodwill—
 1,318
 30
 —
 1,348
Trade Names and Other Intangible Assets, Net—
 411
 —
 —
 411
Net Investments in and Advances to/from Consolidated Affiliates4,923
 15,824
 1,350
 (22,097) —
Deferred Income Taxes—
 10
 9
 —
 19
Other Assets130
 28
 639
 (611) 186
Total Assets$5,053
 $22,307
 $3,518
 $(22,708) $8,170
LIABILITIES AND EQUITY (DEFICIT)         
Current Liabilities:         
Accounts Payable$3
 $326
 $354
 $—
 $683
Accrued Expenses and Other100
 526
 371
 —
 997
Current Portion of Long-term Debt—
 —
 36
 —
 36
Income Taxes(11) 221
 88
 —
 298
Total Current Liabilities92
 1,073
 849
 —
 2,014
Deferred Income Taxes(3) (93) 448
 —
 352
Long-term Debt5,700
 597
 —
 (597) 5,700
Other Long-term Liabilities3
 761
 81
 (14) 831
Total Equity (Deficit)(739) 19,969
 2,140
 (22,097) (727)
Total Liabilities and Equity (Deficit)$5,053
 $22,307
 $3,518
 $(22,708) $8,170


L BRANDS, INC.
CONDENSED CONSOLIDATING BALANCE SHEET
(in millions)
(Unaudited)
 October 29, 2016
 L Brands, Inc. 
Guarantor
Subsidiaries
 
Non-
guarantor
Subsidiaries
 Eliminations 
Consolidated
L Brands, Inc.
ASSETS         
Current Assets:         
Cash and Cash Equivalents$—
 $370
 $284
 $—
 $654
Accounts Receivable, Net1
 260
 64
 —
 325
Inventories—
 1,501
 150
 —
 1,651
Other—
 158
 98
 —
 256
Total Current Assets1
 2,289
 596
 —
 2,886
Property and Equipment, Net—
 1,955
 815
 —
 2,770
Goodwill—
 1,318
 30
 —
 1,348
Trade Names and Other Intangible Assets, Net—
 411
 —
 —
 411
Net Investments in and Advances to/from Consolidated Affiliates4,475
 15,461
 1,815
 (21,751) —
Deferred Income Taxes1
 11
 18
 —
 30
Other Assets133
 35
 661
 (611) 218
Total Assets$4,610
 $21,480
 $3,935
 $(22,362) $7,663
LIABILITIES AND EQUITY (DEFICIT)         
Current Liabilities:         
Accounts Payable$—
 $580
 $382
 $—
 $962
Accrued Expenses and Other111
 513
 285
 —
 909
Current Portion of Long-term Debt—
 —
 23
 —
 23
Income Taxes—
 (2) 115
 —
 113
Total Current Liabilities111
 1,091
 805
 —
 2,007
Deferred Income Taxes(3) (83) 348
 —
 262
Long-term Debt5,701
 597
 —
 (597) 5,701
Other Long-term Liabilities1
 747
 147
 (14) 881
Total Equity (Deficit)(1,200) 19,128
 2,635
 (21,751) (1,188)
Total Liabilities and Equity (Deficit)$4,610
 $21,480
 $3,935
 $(22,362) $7,663


L BRANDS, INC.
CONDENSED CONSOLIDATING STATEMENT OF INCOME
(in millions)
(Unaudited)
 Third Quarter 2017
 L Brands, Inc. 
Guarantor
Subsidiaries
 
Non-
guarantor
Subsidiaries
 Eliminations 
Consolidated
L Brands, Inc.
Net Sales$—
 $2,508
 $947
 $(837) $2,618
Costs of Goods Sold, Buying and Occupancy—
 (1,639) (717) 727
 (1,629)
Gross Profit—
 869
 230
 (110) 989
General, Administrative and Store Operating Expenses(2) (731) (104) 80
 (757)
Operating Income (Loss)(2) 138
 126
 (30) 232
Interest Expense(98) (28) (3) 30
 (99)
Other Income—
 2
 —
 —
 2
Income (Loss) Before Income Taxes(100) 112
 123
 —
 135
Provision for Income Taxes1
 27
 21
 —
 49
Equity in Earnings (Loss), Net of Tax187
 166
 67
 (420) —
Net Income (Loss)$86
 $251
 $169
 $(420) $86



L BRANDS, INC.
CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME
(in millions)
(Unaudited)
 Third Quarter 2017
 L Brands, Inc. 
Guarantor
Subsidiaries
 
Non-
guarantor
Subsidiaries
 Eliminations 
Consolidated
L Brands, Inc.
Net Income (Loss)$86
 $251
 $169
 $(420) $86
Other Comprehensive Income (Loss), Net of Tax:         
Foreign Currency Translation—
 —
 (2) —
 (2)
Unrealized Gain (Loss) on Cash Flow Hedges—
 —
 10
 —
 10
Reclassification of Cash Flow Hedges to Earnings—
 —
 (4) —
 (4)
Total Other Comprehensive Income (Loss), Net of Tax—
 —
 4
 —
 4
Total Comprehensive Income (Loss)$86
 $251
 $173
 $(420) $90













L BRANDS, INC.
CONDENSED CONSOLIDATING STATEMENT OF INCOME
(in millions)
(Unaudited)
 Third Quarter 2016
 L Brands, Inc. 
Guarantor
Subsidiaries
 
Non-
guarantor
Subsidiaries
 Eliminations 
Consolidated
L Brands, Inc.
Net Sales$—
 $2,478
 $846
 $(743) $2,581
Costs of Goods Sold, Buying and Occupancy—
 (1,545) (678) 667
 (1,556)
Gross Profit—
 933
 168
 (76) 1,025
General, Administrative and Store Operating Expenses(1) (685) (111) 56
 (741)
Operating Income (Loss)(1) 248
 57
 (20) 284
Interest Expense(97) (20) (2) 22
 (97)
Other Income (Loss)—
 —
 3
 —
 3
Income (Loss) Before Income Taxes(98) 228
 58
 2
 190
Provision (Benefit) for Income Taxes—
 82
 (14) —
 68
Equity in Earnings (Loss), Net of Tax220
 47
 4
 (271) —
Net Income (Loss)$122
 $193
 $76
 $(269) $122



L BRANDS, INC.
CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME
(in millions)
(Unaudited)
 Third Quarter 2016
 L Brands, Inc. 
Guarantor
Subsidiaries
 
Non-
guarantor
Subsidiaries
 Eliminations 
Consolidated
L Brands, Inc.
Net Income (Loss)$122
 $193
 $76
 $(269) $122
Other Comprehensive Income (Loss), Net of Tax:         
Foreign Currency Translation—
 —
 (15) —
 (15)
Unrealized Gain (Loss) on Cash Flow Hedges—
 —
 9
 —
 9
Reclassification of Cash Flow Hedges to Earnings—
 —
 (4) —
 (4)
Total Other Comprehensive Income (Loss), Net of Tax—
 —
 (10) —
 (10)
Total Comprehensive Income (Loss)$122
 $193
 $66
 $(269) $112


L BRANDS, INC.
CONDENSED CONSOLIDATING STATEMENT OF INCOME
(in millions)
(Unaudited)
 Year-to-Date 2017
 L Brands, Inc. 
Guarantor
Subsidiaries
 
Non-
guarantor
Subsidiaries
 Eliminations 
Consolidated
L Brands, Inc.
Net Sales$—
 $7,398
 $2,472
 $(2,061) $7,809
Costs of Goods Sold, Buying and Occupancy—
 (4,779) (1,930) 1,819
 (4,890)
Gross Profit—
 2,619
 542
 (242) 2,919
General, Administrative and Store Operating Expenses(8) (2,059) (290) 180
 (2,177)
Operating Income (Loss)(8) 560
 252
 (62) 742
Interest Expense(298) (61) (8) 67
 (300)
Other Income (Loss)—
 6
 22
 —
 28
Income (Loss) Before Income Taxes(306) 505
 266
 5
 470
Provision (Benefit) for Income Taxes1
 92
 58
 —
 151
Equity in Earnings (Loss), Net of Tax626
 642
 447
 (1,715) —
Net Income (Loss)$319
 $1,055
 $655
 $(1,710) $319



L BRANDS, INC.
CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME
(in millions)
(Unaudited)
 Year-to-Date 2017
 L Brands, Inc. 
Guarantor
Subsidiaries
 
Non-
guarantor
Subsidiaries
 Eliminations 
Consolidated
L Brands, Inc.
Net Income (Loss)$319
 $1,055
 $655
 $(1,710) $319
Other Comprehensive Income (Loss), Net of Tax:         
Foreign Currency Translation—
 —
 8
 —
 8
Unrealized Gain (Loss) on Cash Flow Hedges—
 —
 (7) —
 (7)
Reclassification of Cash Flow Hedges to Earnings—
 —
 1
 —
 1
Unrealized Gain (Loss) on Marketable Securities—
 —
 1
 —
 1
Total Other Comprehensive Income (Loss), Net of Tax—
 —
 3
 —

3
Total Comprehensive Income (Loss)$319
 $1,055
 $658
 $(1,710) $322









L BRANDS, INC.
CONDENSED CONSOLIDATING STATEMENT OF INCOME
(in millions)
(Unaudited)
 Year-to-Date 2016
 L Brands, Inc. 
Guarantor
Subsidiaries
 
Non-
guarantor
Subsidiaries
 Eliminations 
Consolidated
L Brands, Inc.
Net Sales$—
 $7,674
 $2,512
 $(2,101) $8,085
Costs of Goods Sold, Buying and Occupancy—
 (4,785) (2,058) 1,939
 (4,904)
Gross Profit—
 2,889
 454
 (162) 3,181
General, Administrative and Store Operating Expenses(6) (1,959) (330) 129
 (2,166)
Operating Income (Loss)(6) 930
 124
 (33) 1,015
Interest Expense(295) (40) (7) 47
 (295)
Other Income (Loss)(36) 2
 117
 —
 83
Income (Loss) Before Income Taxes(337) 892
 234
 14
 803
Provision (Benefit) for Income Taxes(13) 216
 74
 —
 277
Equity in Earnings (Loss), Net of Tax850
 332
 268
 (1,450) —
Net Income (Loss)$526
 $1,008
 $428
 $(1,436) $526



L BRANDS, INC.
CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME
(in millions)
(Unaudited)
 Year-to-Date 2016
 L Brands, Inc. 
Guarantor
Subsidiaries
 
Non-
guarantor
Subsidiaries
 Eliminations 
Consolidated
L Brands, Inc.
Net Income (Loss)$526
 $1,008
 $428
 $(1,436) $526
Other Comprehensive Income (Loss), Net of Tax:         
Foreign Currency Translation—
 —
 (25) —
 (25)
Unrealized Gain (Loss) on Cash Flow Hedges—
 —
 (2) —
 (2)
Reclassification of Cash Flow Hedges to Earnings—
 —
 5
 —
 5
Unrealized Gain (Loss) on Marketable Securities—
 —
 (3) —
 (3)
Reclassification of Gain on Marketable Securities to Earnings—
 —
 (3) —
 (3)
Total Other Comprehensive Income (Loss), Net of Tax—
 —
 (28) —
 (28)
Total Comprehensive Income (Loss)$526
 $1,008
 $400
 $(1,436)
$498








L BRANDS, INC.
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
(in millions)
(Unaudited)
 Year-to-Date 2017
 L Brands, Inc. 
Guarantor
Subsidiaries
 
Non-
guarantor
Subsidiaries
 Eliminations 
Consolidated
L Brands, Inc.
Net Cash Provided by (Used for) Operating Activities$(289) $230
 $197
 $—
 $138
Investing Activities:         
Capital Expenditures—
 (461) (138) —
 (599)
Return of Capital from Easton Investments—
 —
 27
 —
 27
Net Investments in Consolidated Affiliates—
 —
 (12) 12
 —
Other Investing Activities—
 —
 (9) —
 (9)
Net Cash Provided by (Used for) Investing Activities—
 (461) (132) 12
 (581)
Financing Activities:         
Borrowings from Foreign Facilities—
 —
 67
 —
 67
Repayments on Foreign Facilities—
 —
 (23) —
 (23)
Dividends Paid(516) —
 —
 —
 (516)
Repurchases of Common Stock(283) —
 —
 —
 (283)
Tax Payments related to Share-based Awards(31) —
 —
 —
 (31)
Proceeds from Exercise of Stock Options37
 —
 —
 —
 37
Financing Costs(5) —
 —
 —
 (5)
Other Financing Activities—
 (4) —
 —
 (4)
Net Financing Activities and Advances to/from Consolidated Affiliates1,087
 (950) (125) (12) —
Net Cash Provided by (Used for) Financing Activities289
 (954) (81) (12) (758)
Effects of Exchange Rate Changes on Cash and Cash Equivalents—
 —
 2
 —
 2
Net Decrease in Cash and Cash Equivalents—
 (1,185) (14) —
 (1,199)
Cash and Cash Equivalents, Beginning of Period—
 1,562
 372
 —
 1,934
Cash and Cash Equivalents, End of Period$—
 $377
 $358
 $—
 $735


L BRANDS, INC.
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
(in millions)
(Unaudited)
 Year-to-Date 2016
 L Brands, Inc. 
Guarantor
Subsidiaries
 
Non-
guarantor
Subsidiaries
 Eliminations 
Consolidated
L Brands, Inc.
Net Cash Provided by (Used for) Operating Activities$(286) $437
 $260
 $—
 $411
Investing Activities:         
Capital Expenditures—
 (648) (177) —
 (825)
Return of Capital from Easton Investments—
 —
 116
 —
 116
Acquisition, Net of Cash Acquired of $1—
 —
 (33) —
 (33)
Proceeds from Sale of Marketable Securities—
 —
 10
 —
 10
Net Investments in Consolidated Affiliates—
 —
 (27) 27
 —
Other Investing Activities—
 1
 10
 —
 11
Net Cash Provided by (Used for) Investing Activities—
 (647) (101) 27
 (721)
Financing Activities:         
Proceeds from the Issuance of Long-term Debt, Net of Issuance Costs692
 —
 —
 —
 692
Payment of Long-term Debt(742) —
 —
 —
 (742)
Borrowings from Foreign Facilities—
 —
 20
 —
 20
Repayments on Foreign Facilities—
 —
 (4) —
 (4)
Dividends Paid(1,096) —
 —
 —
 (1,096)
Repurchases of Common Stock(410) —
 —
 —
 (410)
Tax Payments related to Share-based Awards(56) —
 —
 —
 (56)
Proceeds from Exercise of Stock Options17
 —
 —
 —
 17
Other Financing Activities—
 (2) —
 —
 (2)
Net Financing Activities and Advances to/from Consolidated Affiliates1,881
 (1,608) (246) (27) —
Net Cash Provided by (Used for) Financing Activities286
 (1,610) (230) (27) (1,581)
Effects of Exchange Rate Changes on Cash and Cash Equivalents—
 —
 (3) —
 (3)
Net Decrease in Cash and Cash Equivalents—
 (1,820) (74) —
 (1,894)
Cash and Cash Equivalents, Beginning of Period—
 2,190
 358
 —
 2,548
Cash and Cash Equivalents, End of Period$—
 $370
 $284
 $—
 $654


Review Report of Independent Registered Public Accounting Firm



To the Shareholders and Board of Directors and Shareholdersof Bath & Body Works, Inc.
Results of L Brands, Inc.:

Review of Interim Financial Statements
We have reviewed the accompanying consolidated balance sheetsheets of L Brands,Bath & Body Works, Inc. and subsidiaries(the Company) as of October 28, 2017April 29, 2023, and October 29, 2016,April 30, 2022, and the related consolidated statements of income, and comprehensive income, for the thirteen and thirty-nine week periods ended October 28, 2017 and October 29, 2016total equity (deficit) and cash flows for the thirty-nine weekthirteen-week periods ended October 28, 2017April 29, 2023 and October 29, 2016. TheseApril 30, 2022, and the related notes (collectively referred to as the “consolidated interim financial statements”). Based on our reviews, we are not aware of any material modifications that should be made to the consolidated interim financial statements are the responsibility of the Company’s management.

for them to be in conformity with U.S. generally accepted accounting principles.
We conducted our reviewhave previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States). (PCAOB), the consolidated balance sheet of the Company as of January 28, 2023, and the related consolidated statements of income, comprehensive income, total equity (deficit), and cash flows for the year then ended, and the related notes (not presented herein); and in our report dated March 17, 2023, we expressed an unqualified audit opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying consolidated balance sheet as of January 28, 2023, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.
Basis for Review Results
These financial statements are the responsibility of the Company’s management. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the SEC and the PCAOB. We conducted our review in accordance with the standards of the PCAOB. A review of interim financial informationstatements consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the Public Company Accounting Oversight Board (United States),PCAOB, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material modifications that should be made to the consolidated interim financial statements referred to above for them to be in conformity with U.S. generally accepted accounting principles.

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet of L Brands, Inc. and subsidiaries as of January 28, 2017, and the related consolidated statements of income, comprehensive income, total equity (deficit), and cash flows for the year then ended (not presented herein) and we expressed an unqualified audit opinion on those consolidated financial statements in our report dated March 17, 2017. In our opinion, the accompanying consolidated balance sheet of L Brands, Inc. and subsidiaries as of January 28, 2017, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

/s/ Ernst & Young LLP

Grandview Heights, Ohio
December 1, 2017June 2, 2023



13
Table of Contents
SAFE HARBOR STATEMENT UNDER THE PRIVATE
SECURITIES LITIGATION ACT OF 1995
Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995
We caution that any forward-looking statements (as such term is defined in the Private Securities Litigation Reform Act of 1995) contained in this report or made by our companyCompany or our management involve risks and uncertainties and are subject to change based on various factors, many of which are beyond our control. Accordingly, our future performance and financial results may differ materially from those expressed or implied in any such forward-looking statements. Words such as “estimate,” “project,” “plan,” “believe,” “expect,” “anticipate,” “intend,” “planned,” “potential”“potential,” "target," "goal" and any similar expressions may identify forward-looking statements. Risks associated with the following factors, among others, in some cases have affected and in the future could affect our financial performance and actual results and could cause actual results to differ materially from those expressed or implied in any forward-looking statements included in this report or otherwise made by our companyCompany or our management:
•general economic conditions, inflation and deflation, consumer confidence, consumer spending patterns and market disruptions including pandemics or significant health hazards, severe weather conditions, natural disasters, health hazards, terrorist activities, financial crises, political crises or other major events, or the prospect of these events;
•the seasonality of our business;
•the anticipated benefits from the Victoria's Secret & Co. ("Victoria's Secret") spin-off may not be realized;
•the spin-off of Victoria’s Secret may not be tax-free for U.S. federal income tax purposes;
•our dependence on Victoria's Secret for information technology services and the transition of such services to our own information technology systems or to those of third-party technology service providers;
•our ability to attract, develop and retain qualified associates and manage labor-related costs;
•difficulties arising from turnover in Company leadership or other key positions;
•the dependence on mallstore traffic and the availability of suitable store locations on appropriate terms;
•our ability to growcontinued growth in part through new store openings and existing store remodels and expansions;
•our ability to successfully operate and expand internationally and related risks;
•our independent franchise, license and wholesale partners;
•our direct channel businesses;business;
•our ability to protect our reputation and our brand images;image;
•our ability to successfully complete environmental, social and governance initiatives, and associated costs thereof;
•our ability to successfully achieve expected annual cost savings in connection with our profit optimization efforts to reduce expenses and improve operating efficiency in the business;
•our ability to attract customers with marketing, advertising and promotional programs;
•our ability to maintain, enforce and protect our trade names, trademarks and patents;
•the highly competitive nature of the retail industry and the segments in which we operate;
•consumer acceptance of our products and our ability to manage the life cycle of our brands, keep up with fashion trends,brand, develop new merchandise and launch new product lines successfully;
•our ability to source, distribute and sell goods and materials on a global basis, including risks related to:
•political instability, significant health hazards,wars and other armed conflicts, environmental hazards or natural disasters;
•significant health hazards or pandemics, such as the COVID-19 pandemic, which could result in closed factories and/or stores, reduced workforces, scarcity of raw materials, and scrutiny or embargoing of goods produced in impacted areas;
•duties, taxes and other charges;
•legal and regulatory matters;
•volatility in currency exchange rates;
•local business practices and political issues;
potential •delays or disruptions in shipping and transportation and related pricing impacts;
•disruption due to labor disputes; and
•changing expectations regarding product safety due to new legislation;
•our geographic concentration of suppliervendor and distribution facilities in central Ohio;
fluctuations in foreign currency exchange rates;•our reliance on a limited number of suppliers to support a substantial portion of our inventory purchasing needs;
stock price volatility;
our ability to pay dividends and related effects;
our ability to maintain our credit rating;
our ability to service or refinance our debt;
our ability to retain key personnel;
our ability to attract, develop and retain qualified associates and manage labor-related costs;

•the ability of our manufacturersvendors to deliver products in a timely manner, meet quality standards and comply with applicable laws and regulations;
•fluctuations in foreign currency exchange rates;
•fluctuations in product input costs;
•fluctuations in energy costs;
•our ability to adequately protect our assets from loss and theft;
fluctuations in energy costs;
•increases in the costs of mailing, paper, and printing;printing or other order fulfillment logistics;
•claims arising from our self-insurance;
14
Table of Contents
•our and our third-party service providers’, including Victoria’s Secret during the term of the Transition Services Agreement between us and Victoria’s Secret, ability to implement and maintain information technology systems and to protect associated data;
•our ability to maintain the security of customer, associate, supplierthird-party and Company information;
•stock price volatility;
•our ability to pay dividends and make share repurchases under share repurchase authorizations;
•shareholder activism matters;
•our ability to maintain our credit ratings;
•our ability to service, repurchase or company information;refinance our debt and maintain compliance with our restrictive covenants;
•the impact of the transition from London Interbank Offered Rate and our ability to adequately manage such transition;
•our ability to comply with laws, regulations and technology platform rules or other obligations related to data privacy and security;
•our ability to comply with regulatory requirements;
•legal and compliance matters; and
•tax, trade and other regulatory matters.
We are not under any obligation and do not intend to make publicly available any update or other revisions to any of the forward-looking statements contained in this report to reflect circumstances existing after the date of this report or to reflect the occurrence of future events even if experience or future events make it clear that any expected results expressed or implied by those forward-looking statements will not be realized. Additional information regarding these and other factors can be found in “ItemItem 1A. Risk Factors”Factors in our 20162022 Annual Report on Form 10-K.

Item 2.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of financial condition and results of operations areis based upon our Consolidated Financial Statements, which have been prepared in accordance with GAAP.accounting principles generally accepted in the United States of America ("GAAP") as codified in the Accounting Standards Codification. The following information should be read in conjunction with our financial statements and the related notes included in Part I, Item 1. Financial Statements.Statements in this Quarterly Report on Form 10-Q.
Executive Overview
In the thirdfirst quarter of 2017, our operating income2023, Net Sales decreased $52$54 million, or 18%4%, to $232$1.396 billion compared to the first quarter of 2022, reflecting a decrease in both transactions and average dollar sale. In our stores and direct channels, Net Sales decreased 2% to $1.034 billion, and 12% to $280 million, respectively. In our international business, Net Sales increased 13% to $82 million.
In the first quarter of 2023, Operating Income decreased $99 million, or 35%, to $181 million, from $280 million in the first quarter of 2022, and our operating incomethe Operating Income rate (expressed as a percentage of Net Sales) decreased to 8.8%12.9% from 11.0%19.3%. These decreases were due to declines in Gross Profit dollars and rate, as a result of the decline in Net sales increased $37 million to $2.618 billion, comparable sales decreased 1%Sales as well as continued inflationary pressures in raw materials and comparable store sales decreased 3%. Atinvestments in product formulations and packaging innovation, and increases in General, Administrative and Store Operating expenses and rate, as a result of investments in technology in connection with our information technology ("IT") separation from Victoria's Secret, net sales decreased 3%,increased customer-facing associate wages and operating income decreased 18%. At Bath & Body Works, net sales increased 6%, and operating income decreased 5%. At Victoria's Secret and Bath & Body Works International, net sales increased 11%, and operating income decreasedother corporate expenses. We expect our IT separation to approximately break-even. be substantially complete in the summer of 2023.
For additional information related to our thirdfirst quarter 20172023 financial performance, see “Results of Operations.”
The global retail sectorOutlook
We anticipate continued macroeconomic uncertainty and a continuation of first quarter of 2023 sales trends in the second quarter of 2023, with a moderate improvement in the back half of the year as we anniversary softer sales trends. We anticipate modest cost deflation benefits in the second quarter of 2023 and increasing deflation benefits in the second half of 2023, which we expect will be partially offset by investments in product formulation and packaging innovation. General, Administrative and Store Operating Expenses are expected to deleverage compared to 2022, driven by lower Net Sales, expenses related to our business continue to face an uncertain environmentIT separation and as a result, we continue to take a conservative stance with respect toincreased customer-facing associate wages, partially offset by the financial managementexpected benefits of our business. profit optimization work (discussed below).
Profit Optimization
We will continueare evaluating our cost structure and taking actions to manage our business carefully,offset ongoing cost pressures in both Gross Profit and General, Administrative and Store Operating Expenses. We are targeting $200 million of annual cost savings across the Company, and we will focus on the executionexpect to achieve more than $100 million of cost savings in 2023. We expect to realize increased savings as we move through 2023, including savings in freight and store selling expenses, as well as in home office and indirect spend. We expect to realize a substantial portion of the retail fundamentals.remaining benefits in 2024.
At the same time, we are aggressively focusing on bringing compelling merchandise assortments and store and online experiences to our customers. We will look for, and capitalize on, those opportunities available to us. We believe that our brands, which lead their categories and offer high emotional content to customers at accessible prices, are well-positioned.
15

Table of Contents
Adjusted Financial Information
In addition to our results provided in accordance with GAAP above and throughout this Quarterly Report on Form 10-Q, provided below are non-GAAP measurements which present net income and earnings per diluted share in 2016for the first quarter of 2023 on an adjusted basis, whichto remove a certain special items.item recorded in the first quarter of 2023. We believe that thesethis special items areitem is not indicative of our ongoing operations due to theirits size and nature. We did not make any adjustments to our results in the first quarter of 2022. We use adjusted financial information as key performance measures of results of operations for the purpose of evaluating performance internally. These non-GAAP measurements are not intended to replace the presentation of our financial results in accordance with GAAP. Instead, we believe that the presentation of adjusted financial information provides additional information to investors to facilitate the comparison of past and present operations. Further, our definitiondefinitions of adjusted financial information may differ from similarly titled measures used by other companies.
The table below reconciles the first quarter of 2023 GAAP financial measures to the non-GAAP financial measures.measures:
 Third Quarter Year-to-Date
(in millions, except per share amounts)2017 2016 2017 2016
Detail of Special Items included in Operating Income - Income (Expense)       
Victoria's Secret Restructuring (a)$—
 $—
 $—
 $(35)
Total Special Items included in Operating Income$—
 $—
 $—
 $(35)
        
Detail of Special Items included in Other Income - Income (Loss)       
Gain on Distribution from Easton Town Center, LLC (b)$—
 $—
 $—
 $108
Loss on Extinguishment of Debt (c)—
 —
 —
 (36)
Total Special Items included in Other Income$—
 $—
 $—
 $72
        
Detail of Special Items included in Provision for Income Taxes - Provision       
Tax effect of Special Items$—
 $—
 $—
 $(11)
Total Special Items included in Provision for Income Taxes$—
 $—
 $—
 $(11)
        
Reconciliation of Reported Operating Income to Adjusted Operating Income       
Reported Operating Income$232
 $284
 $742
 $1,015
Special Items included in Operating Income—
 —
 —
 35
Adjusted Operating Income$232
 $284
 $742
 $1,050
        
Reconciliation of Reported Net Income to Adjusted Net Income       
Reported Net Income$86
 $122
 $319
 $526
Special Items included in Net Income—
 —
 —
 (26)
Adjusted Net Income$86
 $122
 $319
 $500
        
Reconciliation of Reported Earnings Per Diluted Share to Adjusted Earnings Per Diluted Share       
Reported Earnings Per Diluted Share$0.30
 $0.42
 $1.11
 $1.81
Special Items included in Earnings Per Diluted Share—
 —
 —
 (0.09)
Adjusted Earnings Per Diluted Share$0.30
 $0.42
 $1.11
 $1.72
_______________
(a)(in millions, except per share amounts)In the first quarter of 2016, we made strategic changes within the Victoria’s Secret segment designed to focus the brand on its core merchandise categories and streamline operations. As a result of these changes, we recorded charges related to severance and related costs, fabric cancellations and catalogue paper write-offs. For additional information see Note 5, “Restructuring Activities” included in Item 1. Financial Statements.
First Quarter
(b)In the second quarterReconciliation of 2016, we received a $124 million cash distribution from Easton Town Center, LLC resulting in a pre-tax gain of $108 million (after-tax gain of $70 million). For additional information see Note 8, "Equity Investments and Other" included in Item 1. Financial Statements.Reported Net Income to Adjusted Net Income
(c)Reported Net IncomeIn the second quarter$81 
Gain on Extinguishment of 2016, we repurchased our $700 million 6.90% Senior Unsecured Notes due July 2017 resulting in a pre-tax lossDebt (a)(7)
Tax Effect of Gain on extinguishmentExtinguishment of $36 million (after-tax lossDebt (a)2 
Adjusted Net Income$76 
Reconciliation of $22 million). For additional information see Note 10, "Long-term Debt" included in Item 1. Financial Statements.Reported Earnings Per Diluted Share to Adjusted Earnings Per Diluted Share
Reported Earnings Per Diluted Share$0.35 
Gain on Extinguishment of Debt (a)(0.03)
Tax Effect of Gain on Extinguishment of Debt (a)0.01 
Adjusted Earnings Per Diluted Share$0.33 

 ________________

(a)In the first quarter of 2023, we recognized a pre-tax gain of $7 million (after-tax gain of $5 million) related to the repurchase and extinguishment of outstanding notes. For additional information, see Note 7, "Long-term Debt and Borrowing Facilities" included in Part I, Item 1. Financial Statements.

Company-OwnedCompany-Operated Store Data
The following table compares the third quarter of 2017 company-ownedCompany-operated U.S. store data tofor the third quarterfirst quarters of 20162023 and year-to-date 20172022:
First Quarter
20232022% Change
Sales per Average Selling Square Foot (a)$207 $222 (7 %)
Sales per Average Store (in thousands) (a)$576 $605 (5 %)
Average Store Size (selling square feet)2,789 2,725 2 %
Total Selling Square Feet (in thousands)4,744 4,510 5 %
 ________________
(a)Sales per average selling square foot and sales per average store, data to year-to-date 2016:
 Third Quarter Year-to-Date
 2017 2016 % Change 2017 2016 % Change
Sales per Average Selling Square Foot           
Victoria’s Secret U.S.$164
 $174
 (6)% $510
 $563
 (9)%
Bath & Body Works U.S.162
 164
 (1)% 480
 485
 (1)%
Sales per Average Store (in thousands)           
Victoria’s Secret U.S.$1,050
 $1,091
 (4)% $3,252
 $3,523
 (8)%
Bath & Body Works U.S.407
 399
 2 % 1,196
 1,170
 2 %
Average Store Size (selling square feet)           
Victoria’s Secret U.S.6,390
 6,330
 1 %      
Bath & Body Works U.S.2,525
 2,444
 3 %      
Total Selling Square Feet (in thousands)           
Victoria’s Secret U.S.7,234
 7,153
 1 %      
Bath & Body Works U.S.4,045
 3,891
 4 %      

which are indicators of store productivity, are calculated based on store sales for the period divided by the average, including the beginning and end of period, of total square footage and store count, respectively.
The following table represents company-ownedCompany-operated store data for year-to-date 2017:the first quarter of 2023:
StoresStores
January 28, 2023OpenedClosedApril 29, 2023
United States1,693 16 (8)1,701 
Canada109 — — 109 
Total1,802 16 (8)1,810 

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 Stores Operating at     Stores Operating at
 January 28, 2017 Opened Closed October 28, 2017
Victoria’s Secret U.S.1,131
 10
 (9) 1,132
Victoria’s Secret Canada46
 2
 (2) 46
Total Victoria's Secret1,177
 12
 (11) 1,178
Bath & Body Works U.S.1,591
 25
 (14) 1,602
Bath & Body Works Canada102
 —
 —
 102
Total Bath & Body Works1,693
 25
 (14) 1,704
Victoria's Secret U.K.18
 2
 —
 20
Victoria's Secret Beauty and Accessories31
 1
 (3) 29
Victoria's Secret China—
 2
 —
 2
Total Victoria's Secret and Bath & Body Works International49
 5
 (3) 51
Henri Bendel29
 —
 (1) 28
La Senza U.S.4
 1
 —
 5
La Senza Canada122
 1
 (2) 121
Total L Brands Stores3,074
 44
 (31) 3,087
The following table represents Company-operated store data for the first quarter of 2022:
StoresStores
January 29, 2022OpenedClosedApril 30, 2022
United States1,651 12 (8)1,655 
Canada104 — — 104 
Total1,755 12 (8)1,759 




Partner-Operated Store Data
The following table represents company-ownedpartner-operated store data for year-to-date 2016:the first quarter of 2023:
 Stores Operating at       Stores Operating at
 January 30, 2016 Opened Acquired (a) Closed October 29, 2016
Victoria’s Secret U.S.1,118
 19
 —
 (7) 1,130
Victoria’s Secret Canada46
 —
 —
 —
 46
Total Victoria's Secret1,164
 19
 —
 (7) 1,176
Bath & Body Works U.S.1,574
 23
 —
 (5) 1,592
Bath & Body Works Canada98
 4
 —
 —
 102
Total Bath & Body Works1,672
 27
 —
 (5) 1,694
Victoria's Secret U.K.14
 3
 —
 —
 17
Victoria's Secret Beauty and Accessories—
 4
 26
 (1) 29
Total Victoria's Secret and Bath & Body Works International14
 7
 26
 (1) 46
Henri Bendel29
 —
 —
 —
 29
La Senza U.S.—
 3
 —
 —
 3
La Senza Canada126
 —
 —
 (1) 125
Total L Brands Stores3,005
 56
 26
 (14) 3,073
_______________
(a)    Relates to the acquisition of Victoria's Secret Beauty and Accessories franchise stores in Greater China. For additional
information see Note 4, “Acquisition” included in Item 1. Financial Statements.
Noncompany-Owned Store Data
The following table represents noncompany-owned store data for year-to-date 2017:
 Stores Operating at     Stores Operating at
 January 28, 2017 Opened Closed October 28, 2017
Victoria’s Secret Beauty & Accessories391
 25
 (18) 398
Victoria's Secret28
 7
 —
 35
Bath & Body Works159
 18
 (1) 176
La Senza203
 4
 (13) 194
Total781
 54
 (32) 803
StoresStores
January 28, 2023OpenedClosedApril 29, 2023
International401 9 — 410 
International - Travel Retail26 — — 26 
Total International427 9 — 436 
The following table represents noncompany-ownedpartner-operated store data for year-to-date 2016:the first quarter of 2022:
StoresStores
January 29, 2022OpenedClosedApril 30, 2022
International317 18 — 335 
International - Travel Retail21 — — 21 
Total International338 18 — 356 
 Stores Operating at       Stores Operating at
 January 30, 2016 Opened Closed Transferred (a) October 29, 2016
Victoria’s Secret Beauty & Accessories373
 43
 (9) (26) 381
Victoria's Secret19
 7
 —
 —
 26
Bath & Body Works125
 26
 (1) —
 150
La Senza221
 4
 (18) —
 207
Total738
 80
 (28) (26) 764

_______________
(a)    Relates to the acquisition of Victoria's Secret Beauty and Accessories franchise stores in Greater China. For additional
information see Note 4, “Acquisition” included in Item 1. Financial Statements.


Results of Operations
ThirdFirst Quarter of 20172023 Compared to ThirdFirst Quarter of 20162022
Operating IncomeNet Sales
The following table provides our segment operating income (loss) and operating income (loss) rates (expressed as a percentage of net sales)Net Sales for the thirdfirst quarter of 20172023 in comparison to the thirdfirst quarter of 2016:2022:
     Operating Income Rate
 2017 2016 2017 2016
Third Quarter(in millions)    
Victoria’s Secret$134
 $164
 8.7 % 10.3 %
Bath & Body Works138
 145
 16.9 % 18.9 %
Victoria’s Secret and Bath & Body Works International—
 9
 (0.1)% 8.6 %
Other (a)(40) (34) (26.9)% (28.1)%
Total Operating Income$232
 $284
 8.8 % 11.0 %
 _______________
(a)Includes Mast Global, La Senza, Henri Bendel and Corporate.
For the third quarter of 2017, operating income decreased $52 million, or 18%, to $232 million, and the operating income rate decreased to 8.8% from 11.0%. The drivers of the operating income results are discussed in the following sections.
Net Sales
The following table provides net sales for the third quarter of 2017 in comparison to the third quarter of 2016:
 2017 2016 % Change
Third Quarter(in millions)  
Victoria’s Secret Stores (a)$1,243
 $1,286
 (3)%
Victoria’s Secret Direct296
 298
 (1)%
Total Victoria’s Secret1,539
 1,584
 (3)%
Bath & Body Works Stores (a)703
 682
 3 %
Bath & Body Works Direct113
 88
 27 %
Total Bath & Body Works816
 770
 6 %
Victoria’s Secret and Bath & Body Works International115
 104
 11 %
Other (b)148
 123
 20 %
Total Net Sales$2,618
 $2,581
 1 %
20232022% Change
(in millions) 
Stores - U.S. and Canada$1,034 $1,059 (2 %)
Direct - U.S. and Canada280 318 (12 %)
International (a)82 73 13 %
Total Net Sales$1,396 $1,450 (4 %)
 _______________
(a)Includes company-owned stores in the U.S. and Canada.
(b)Includes Mast Global, La Senza, Henri Bendel and Corporate.
(a)Results include royalties associated with franchised stores and wholesale sales.

The following table provides a reconciliation of net salesNet Sales for the thirdfirst quarter of 20172023 to the thirdfirst quarter of 2016:
 
Victoria’s
Secret
 
Bath &
Body Works
 
Victoria’s Secret
and
Bath & Body Works International
 Other Total
Third Quarter(in millions)
2016 Net Sales$1,584
 $770
 $104
 $123
 $2,581
Comparable Store Sales(59) 4
 (2) 1
 (56)
Sales Associated with New, Closed and Non-comparable Remodeled Stores, Net13
 16
 6
 (1) 34
Foreign Currency Translation3
 2
 1
 2
 8
Direct Channels(2) 24
 5
 2
 29
International Wholesale, Royalty and Other—
 —
 1
 21
 22
2017 Net Sales$1,539
 $816
 $115
 $148
 $2,618


The following table compares the third quarter of 2017 comparable sales to the third quarter of 2016:
Third Quarter2017 2016
Comparable Sales (Stores and Direct) (a)   
Victoria's Secret (b)(4)% (1)%
Bath & Body Works (b)4 % 7 %
Total Comparable Sales(1)% 2 %
    
Comparable Store Sales (a)   
Victoria’s Secret (b)(5)% (2)%
Bath & Body Works (b)1 % 5 %
Total Comparable Store Sales(3)% — %
________
2022:
(a)The percentage change (in comparable sales represents direct and comparable store sales. The percentage change in comparable store sales represents the change in sales at comparable stores only and excludes the change in sales from our direct channels. A store is typically included in the calculation of comparable sales when it has been open or owned 12 months or more and it has not had a change in selling square footage of 20% or more. Additionally, stores of a given brand are excluded if total selling square footage for the brand in the mall changes by 20% or more through the opening or closing of a second store. Comparable sales attributable to our international stores are calculated on a constant currency basis.millions)
2022 Net Sales$1,450 
(b)Comparable Store SalesIncludes company-owned stores in the U.S.(65)
Sales Associated with New, Closed and Canada.Non-comparable Remodeled Stores, Net44 
Direct Channels(38)
International Wholesale, Royalty and Other9 
Foreign Currency Translation(4)
2023 Net Sales$1,396 
The results by segment are as follows:
Victoria's Secret
For the thirdfirst quarter of 2017, net sales2023, Net Sales decreased $45$54 million, to $1.539$1.396 billion, comparable salescompared to the first quarter of 2022. Net Sales decreased 4%in the stores channel by $25 million, or 2%, and comparable store sales decreased 5%. Net sales decreased primarily due to strategic decisions to exit the swimdeclines in both average dollar sales and apparel categories, a decrease in core bra salestransactions. Direct Net Sales decreased $38 million, or 12%, primarily due to a decline in unconstructed bras and a declineorders, which was partially due to our customers continuing to select our buy online-pick up in pantiesstore ("BOPIS") option (which is recognized as store Net Sales) as we repositioncontinued to expand BOPIS availability in the category. These results were partially offset by increasesU.S. We completed our rollout of BOPIS capabilities to our U.S. stores in PINK and beauty driven by a compelling merchandise assortment that incorporated newness, innovation and fashion.
The decrease in comparable store sales was driven primarily by a decrease in total transactions driven by reduced traffic.
Bath & Body Works
For the thirdfirst quarter of 2017, net sales2023. International Net Sales increased $46$9 million, to $816 million, comparable sales increased 4%or 13%, and comparable store sales increased 1%. Net sales increased in the home fragrance and body care categories, which incorporated newness, innovation and fashion.
The increase in comparable store sales was driven by higher average dollar sales.
Victoria's Secret and Bath & Body Works International
For the third quarter of 2017, net sales increased $11 million to $115 million primarily relateddue to new company-owned Victoria's Secret stores and direct channel growth in Greater China and additional stores opened by our partners.
Other
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ForIn terms of category performance, Net Sales in home fragrance and soaps and sanitizers were down compared to 2022 primarily driven by normalization following the thirdCOVID-19 pandemic. Though total body care Net Sales decreased compared to the first quarter of 2017, net sales2022, Net Sales in our men's and wellness categories increased $25 million to $148 million primarily due to an increase in wholesale sales to our international partners.during the period.
Gross Profit
For the thirdfirst quarter of 2017,2023, our gross profitGross Profit decreased $36$73 million to $989$596 million, and our gross profitGross Profit rate (expressed as a percentage of net sales)Net Sales) decreased to 37.8%42.7% from 39.7%,46.1%. Gross Profit decreased due to the decline in Net Sales, a decline in the merchandise margin rate primarily driven by the following:
Victoria's Secret
For the third quarterapproximately $13 million of 2017, the gross profit decrease was primarily driven by lower merchandise margin dollarsinflationary pressures largely related to the decrease in net sales and higher store inventory shrink, and higher occupancy expenses due toraw materials, further investments in store real estate.
The gross profit rate decrease was driven byproduct formulations and packaging innovation, and an increase in occupancy expenses primarily due toassociated with store growth and investments in store real estateour new Company-operated direct channel fulfillment center and buying and occupancy deleverage on lower sales.


Bath & Body Works
For the third quarter of 2017, the gross profit increase was primarily driven by higher merchandise margin dollars related to the increase in net sales, partially offset by higher occupancy expenses due to investments in store real estate.other distribution capabilities.
The gross profitGross Profit rate decreasedecline was driven by a decreaseBuying and Occupancy expense deleverage due to lower Net Sales and the decline in the merchandise margin rate due to increased promotional activity and product mix, and an increase in occupancy expenses primarily due to investments in store real estate.
Victoria's Secret and Bath & Body Works International
For the third quarter of 2017, the gross profit decrease was primarily driven by higher occupancy expenses due to investments in store real estate at Victoria's Secret U.K. and in Greater China, partially offset by increased merchandise margin dollars related to higher net sales in Greater China and additional stores opened by our partners.
The gross profit rate decrease was driven by an increase in occupancy expenses due to investments in store real estate at Victoria's Secret U.K. and in Greater China.factors discussed above.
General, Administrative and Store Operating Expenses
For the third quarter of 2017, our general, administrative and store operating expenses increased $16 million to $757 million driven by an increase in marketing expenses primarily due to the return to targeted direct mail at Victoria's Secret and higher selling expenses at Bath & Body Works and in Greater China, partially offset by lower selling expenses related to lower sales volumes at Victoria's Secret and lower legal expenses.
The general, administrative and store operating expense rate increased to 28.9% from 28.7% due to increased marketing expenses.
Other Income and Expense
Interest Expense
The following table provides the average daily borrowingsdetail for our General, Administrative and average borrowing ratesStore Operating Expenses for the thirdfirst quarter of 2017 and 2016:2023 compared to the first quarter of 2022:
Third Quarter2017 2016
Average daily borrowings (in millions)$5,819
 $5,770
Average borrowing rate (in percentages)6.95% 6.75%
20232022Change
(in millions)% of Net Sales(in millions)% of Net Sales(in millions)% of Net Sales
Selling Expenses$243 17.4 %$246 16.9 %$(3)0.5 %
Home Office and Marketing Expenses172 12.3 %143 9.9 %29 2.4 %
Total$415 29.7 %$389 26.8 %$26 2.9 %
For the thirdfirst quarter of 2017,2023, our interest expenseGeneral, Administrative and Store Operating Expenses increased $2$26 million to $99 million primarily due to higher average daily borrowings as well as a higher average borrowing rate.
Provision for Income Taxes
For the third quarter of 2017, our effective tax rate was 36.1% compared to 36.0% in the third quarter of 2016. The third quarter of 2017 rate and the third quarter of 2016 rate were lower than our combined federal and state statutory rate primarily due to the resolution of certain tax matters.

Year-to-Date 2017 Compared to Year-to-Date 2016
Operating Income
The following table provides our segment operating income (loss) and operating income (loss) rates (expressed as a percentage of net sales) for year-to-date 2017 in comparison to year-to-date 2016:
     Operating Income Rate
 2017 2016 2017 2016
Year-to-Date(in millions)    
Victoria’s Secret$476
 $679
 10.1 % 13.1 %
Bath & Body Works396
 405
 16.8 % 18.2 %
Victoria’s Secret and Bath & Body Works International1
 30
 0.3 % 9.9 %
Other (a)(131) (99) (32.3)% (27.3)%
Total Operating Income$742
 $1,015
 9.5 % 12.6 %
 _______________
(a)Includes Mast Global, La Senza, Henri Bendel and Corporate.
For year-to-date 2017, operating income decreased $273 million, or 27%, to $742$415 million, and the operating income rate decreased to 9.5% from 12.6%. The drivers of the operating income results are discussed in the following sections.
Net Sales
The following table provides net sales for year-to-date 2017 in comparison to year-to-date 2016:
 2017 2016 % Change
Year-to-Date(in millions)  
Victoria’s Secret Stores (a)$3,840
 $4,136
 (7)%
Victoria’s Secret Direct878
 1,056
 (17)%
Total Victoria’s Secret4,718
 5,192
 (9)%
Bath & Body Works Stores (a)2,044
 1,977
 3 %
Bath & Body Works Direct310
 255
 22 %
Total Bath & Body Works2,354
 2,232
 5 %
Victoria’s Secret and Bath & Body Works International332
 299
 11 %
Other (b)405
 362
 12 %
Total Net Sales$7,809
 $8,085
 (3)%
 _______________
(a)Includes company-owned stores in the U.S. and Canada.
(b)Includes Mast Global, La Senza, Henri Bendel and Corporate.

The following table provides a reconciliation of net sales for year-to-date 2017 to year-to-date 2016:
 
Victoria’s
Secret
 
Bath &
Body Works
 
Victoria’s Secret
and
Bath & Body Works International
 Other Total
Year-to-Date(in millions)
2016 Net Sales$5,192
 $2,232
 $299
 $362
 $8,085
Comparable Store Sales(356) 22
 (7) (4) (345)
Sales Associated with New, Closed and Non-comparable Remodeled Stores, Net59
 44
 38
 —
 141
Foreign Currency Translation1
 1
 (7) 1
 (4)
Direct Channels(178) 55
 12
 7
 (104)
International Wholesale, Royalty and Other—
 —
 (3) 39
 36
2017 Net Sales$4,718
 $2,354
 $332
 $405
 $7,809


The following table compares year-to-date 2017 comparable sales to year-to-date 2016:
Year-to-Date2017 2016
Comparable Sales (Stores and Direct) (a)   
Victoria's Secret (b)(11)% 1%
Bath & Body Works (b)4 % 6%
Total Comparable Sales(6)% 3%
    
Comparable Store Sales (a)   
Victoria’s Secret (b)(9)% —%
Bath & Body Works (b)1 % 4%
Total Comparable Store Sales(6)% 1%
________
(a)The percentage change in comparable sales represents direct and comparable store sales. The percentage change in comparable store sales represents the change in sales at comparable stores only and excludes the change in sales from our direct channels. A store is typically included in the calculation of comparable store sales when it has been open or owned 12 months or more and it has not had a change in selling square footage of 20% or more. Additionally, stores of a given brand are excluded if total selling square footage for the brand in the mall changes by 20% or more through the opening or closing of a second store. Comparable store sales attributable to our international stores are calculated on a constant currency basis.
(b)Includes company-owned stores in the U.S. and Canada.
The results by segment are as follows:
Victoria's Secret
For year-to-date 2017, net sales decreased $474 million to $4.718 billion, comparable sales decreased 11%, and comparable store sales decreased 9%. Net sales decreased primarily due to strategic decisions to exit the swim and apparel categories and decrease direct mail and certain other promotional activities, a decline in core bra sales and a decline in panties and beauty as we reposition the categories. These results were partially offset by increases in PINK and sport driven by a compelling merchandise assortment that incorporated newness, innovation and fashion.
The decrease in comparable store sales was driven primarily by a decrease in total transactions driven by reduced traffic, impacted significantly by the exit of certain categories and the promotional changes discussed above.
Bath & Body Works
For year-to-date 2017, net sales increased $122 million to $2.354 billion, comparable sales increased 4%, and comparable store sales increased 1%. Net sales increased in the home fragrance and body care categories, which incorporated newness, innovation and fashion.
The increase in comparable store sales was driven by higher average dollar sales.
Victoria's Secret and Bath & Body Works International
For year-to-date 2017, net sales increased $33 million to $332 million primarily related to new company-owned Victoria's Secret stores and direct channel growth in Greater China and additional stores opened by our partners. These results were partially offset by declines in the Victoria's Secret International business and the negative impacts of foreign currency at Victoria's Secret U.K.
Other
For year-to-date 2017, net sales increased $43 million to $405 million primarily due to an increase in wholesale sales to our international partners.
Gross Profit
For year-to-date 2017, our gross profit decreased $262 million to $2.919 billion, and our gross profit rate (expressed as a percentage of net sales) decreasedNet Sales) increased to 37.4%29.7% from 39.3%,26.8%. Our home office expenses increased primarily driven by the following:

Victoria's Secret
For year-to-date 2017, the gross profit decrease was primarily driven by lower merchandise margin dollars relateddue to the decreaseour investments in net sales,technology, in connection with our IT separation, as well as other corporate expenses, partially offset by lower buying and occupancy expenses which decreasedthe early benefits of our profit optimization initiatives. Our Selling Expenses remained generally flat as the decreases due to the discontinuation of catalogue productiondecline in Net Sales and other cost reductions from strategic actions takenefficiencies in the first quarter of 2016. These decreasesstore labor hours were partiallymostly offset by an increase in occupancy expenses due to investmentsincreases in store real estate.wage rates.
The gross profit rate decrease was driven by deleverage of buying and occupancy expenses on lower sales, partially offset by lower catalogue costs and other cost reductions.
Bath & Body Works
For year-to-date 2017, the gross profit increase was primarily driven by higher merchandise margin dollars related to the increase in net sales, partially offset by higher occupancy expenses due to investments in store real estate.
The gross profit rate decrease was driven by an increase in occupancy expenses primarily due to investments in store real estate.
Victoria's Secret and Bath & Body Works International
For year-to-date 2017, the gross profit decrease was primarily driven by higher occupancy expenses due to investments in store real estate in Greater China, lower merchandise margin dollars in our Victoria's Secret International business due to performance and the negative impacts of foreign currency at Victoria's Secret U.K. These decreases were partially offset by increased merchandise margin dollars related to higher net sales in Greater China and additional stores opened by our partners.
The gross profit rate decrease was driven by an increase in occupancy expenses due to investments in store real estate in Greater China and buying and occupancy deleverage on lower sales in our Victoria's Secret International business.
General, Administrative and Store Operating Expenses
For year-to-date 2017, our general, administrative and store operating expensesExpense rate increased $11 million to $2.177 billion primarily driven by an increase in marketing expenses due to our investments in technology, which accounted for approximately half of the return of targeted direct mail at Victoria's Secret, higher selling expenses at Bath & Body Worksrate increase, as well as deleverage on lower Net Sales and in Greater China, and increased corporate expenses in Greater China. These increases were partially offset by lower selling expenses related to lower sales volumes at Victoria's Secret and severance charges recorded in the first quarter of 2016 related to the Victoria's Secret restructuring.
The general, administrative and store operating expense rate increased to 27.9% from 26.8% due to deleverage from lower sales and increased marketing expenses, partially offset by Victoria's Secret restructuring charges recorded in the first quarter of 2016.other expenses.
Other Income and ExpenseExpenses
Interest Expense
The following table provides the average daily borrowings and average borrowing rates for year-to-date 2017the first quarters of 2023 and 2016:2022:
Year-to-Date2017 2016
Average daily borrowings (in millions)$5,804
 $5,843
Average borrowing rate (in percentages)6.98% 6.73%
20232022
Average daily borrowings (in millions)$4,896 $4,915 
Average borrowing rate7.3 %7.1 %
For year-to-date 2017,the first quarter of 2023, our interest expense increased $5was $89 million, which was flat to $300the first quarter of 2022. Our lower average daily borrowings were offset by a higher average borrowing rate.
Other Income
For the first quarter of 2023, our other income was $20 million, primarily due to a higher average borrowing rate partially offset by lower average daily borrowings.
Other Income
For year-to-date 2017, our otherinterest income decreased $55 million to $28 million primarily driven by 2016 activity which included a distribution received from Easton Town Center, LLC resulting inon cash balances and a pre-tax gain of $108$7 million partially offset by a $36 million pre-tax loss on extinguishmentassociated with the repurchases and early extinguishments of the 2017 Notes. The 2016 activity was partially offset by gains in 2017 related to distributions from certain of our Easton investments.outstanding notes.
Provision for Income Taxes
For year-to-date 2017,the first quarter of 2023, our effective tax rate was 32.2%27.7% compared to 34.5% year-to-date 2016.19.4% in the first quarter of 2022. The year-to-date 2017 first quarter of 2023 rate was lowerhigher than our combined estimated federal and state statutory rate primarily due to the recognitionaccrued interest expense related to unrecognized tax benefits. The first quarter of tax benefits resulting from stock options exercised. The year-to-date 2016 2022 rate was lower than our combined estimated federal and state statutory raterates primarily due to the resolutionrecognition of certainexcess tax matters.benefits recorded through the Consolidated Statements of Income on share-based awards that vested.



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Table of Contents
FINANCIAL CONDITION

Liquidity and Capital Resources
Liquidity, or access to cash, is an important factor in determining our financial stability. We are committed to maintaining adequate liquidity. Cash generated from our operating activities provides the primary resources to support current operations, growth initiatives, seasonal funding requirements, future common stock and debt repurchases, and capital expenditures. Our cash provided from operations is impacted by our net income and working capital changes. Our net income is impacted by, among other things, sales volume, seasonal sales patterns, success of new product introductions, profit margins, income taxes and income taxes.inflationary pressures. Historically, our sales are higher during the fourth quarter of the fiscal year due to seasonal and holiday-related sales patterns. Generally, our need for working capital peaks during the summer and fall months as inventory builds in anticipation of the holiday period.
We believe in returning value to our shareholders through a combination of dividends and share repurchase programs. During 2017, we have paid $516 million in regular dividends and repurchased $282 million of our common stock. We use cash flow generated from operating and financing activities to fund our dividends and share repurchase programs.
Our total cash and cash equivalents held by foreign subsidiaries were $357$101 million as of October 28, 2017. Under current tax laws and regulations, if cash and cash equivalents held outsideApril 29, 2023.
During the U.S. are repatriated to the U.S., in certain circumstances we may be subject to additional income taxes.
The following table provides our debt balance, net of unamortized debt issuance costs and discounts, as of October 28, 2017, January 28, 2017 and October 29, 2016:
 October 28,
2017		 January 28,
2017		 October 29,
2016
 (in millions)
Senior Unsecured Debt with Subsidiary Guarantee     
$1 billion, 6.875% Fixed Interest Rate Notes due November 2035 (“2035 Notes”)$990
 $989
 $989
$1 billion, 5.625% Fixed Interest Rate Notes due February 2022 (“2022 Notes”)993
 992
 992
$1 billion, 6.625% Fixed Interest Rate Notes due April 2021 (“2021 Notes”)994
 992
 992
$700 million, 6.75% Fixed Interest Rate Notes due July 2036 (“2036 Notes”)692
 692
 692
$500 million, 5.625% Fixed Interest Rate Notes due October 2023 (“2023 Notes”)497
 497
 497
$500 million, 8.50% Fixed Interest Rate Notes due June 2019 (“2019 Notes”) (a)496
 496
 498
$400 million, 7.00% Fixed Interest Rate Notes due May 2020 (“2020 Notes”)398
 397
 396
Total Senior Unsecured Debt with Subsidiary Guarantee$5,060
 $5,055
 $5,056
Senior Unsecured Debt     
$350 million, 6.95% Fixed Interest Rate Debentures due March 2033 (“2033 Notes”)$348
 $348
 $348
$300 million, 7.60% Fixed Interest Rate Notes due July 2037 (“2037 Notes”)297
 297
 297
Foreign Facilities80
 36
 23
Total Senior Unsecured Debt$725
 $681
 $668
Total$5,785
 $5,736
 $5,724
Current Portion of Long-term Debt(80) (36) (23)
Total Long-term Debt, Net of Current Portion$5,705
 $5,700
 $5,701
 _______________
(a)The balances include a fair value interest rate hedge adjustment which increased the debt balance by $1 million as of October 28, 2017, $2 million as of January 28, 2017 and $6 million as of October 29, 2016.


Issuance of Notes
In June 2016, we issued $700 million of 6.75% notes due in July 2036. The obligation to pay principal and interest on these notes is jointly and severally guaranteed on a full and unconditional basis by our Guarantors. The proceeds from the issuance were $692 million, which were net of issuance costs of $8 million. These issuance costs are being amortized through the maturity date of July 2036 and are included within Long-term Debt on the Consolidated Balance Sheets.
Repurchase of Notes
In July 2016, we used the proceeds from the 2036 Notes to repurchase the $700 million 2017 Notes for $742 million. In the secondfirst quarter of 2016,2023, we recognized a pre-tax loss on extinguishment of this debt of $36repurchased and extinguished $84 million (after-tax net loss of $22 million), which is net of gains of $7 million related to terminated interest rate swaps associated with the 2017 Notes. This loss is included in Other Income in the year-to-date 2016 Consolidated Statement of Income.
Revolving Facility
In May 2017, we entered into an amendment and restatementprincipal amount of our securedoutstanding senior notes for an aggregate repurchase price of $76 million. We may, from time to time, repurchase, or otherwise retire, additional debt or shares of common stock, as applicable.
We believe that our current cash position, our cash flow generated from operations and our borrowing capacity under our asset-backed revolving credit facility. The Amendment maintainsfacility (“ABL Facility”) will be sufficient to meet our liquidity needs, including capital expenditure requirements, for at least the aggregate amount of the commitments of the lenders under the Revolving Facility at $1 billion and extends the termination date from July 18, 2019 to May 11, 2022. The Amendment allows certain of our non-U.S. subsidiaries to borrow and obtain letters of credit in U.S. dollars, Canadian dollars, Euros, Hong Kong dollars or British pounds.
In addition, the Amendment reduced the commitment fees payable under the Revolving Facility, which are based on our long-term credit rating, to 0.25% per annum. The Amendment did not modify our quantitative covenant requirements, but did provide an increased limit on restricted payments in the event we do not meet the criteria to make these payments without limitation and provides greater flexibility with respect to our ability to grant liens on assets.
We incurred fees related to the Amendment of the Revolving Facility of $5 million, which were capitalized and recorded in Other Assets on the October 28, 2017 Consolidated Balance Sheet and are being amortized over the remaining term of the Revolving Facility.
The Revolving Facility fees related to committed and unutilized amounts are 0.25% per annum, and the fees related to outstanding letters of credit are 1.50% per annum. In addition, the interest rate on outstanding U.S. dollar borrowings is LIBOR plus 1.50% per annum. The interest rate on outstanding foreign denominated borrowings is the applicable benchmark rate plus 1.50% per annum.
The Revolving Facility contains fixed charge coverage and debt to EBITDA financial covenants. We are required to maintain a fixed charge coverage ratio of not less than 1.75 to 1.00 and a consolidated debt to consolidated EBITDA ratio not exceeding 4.00 to 1.00 for the most recent four-quarter period. In addition, the Revolving Facility provides that investments and restricted payments may be made, without limitation on amount, if (a) at the time of and after giving effect to such investment or restricted payment, the ratio of consolidated debt to consolidated EBITDA for the most recent four-quarter period is less than 3.00 to 1.00 and (b) no default or event of default exists. As of October 28, 2017, we were in compliance with both of our financial covenants, and the ratio of consolidated debt to consolidated EBITDA was less than 3.00 to 1.00.
As of October 28, 2017, there were no borrowings outstanding under the Revolving Facility.
The Revolving Facility supports our letter of credit program. We had $8 million of outstanding letters of credit as of October 28, 2017 that reduced our remaining availability under our Revolving Facility.
Foreign Facilities
In addition to the Revolving Facility, we maintain various revolving and term loan bank facilities with availability totaling $100 million to support our foreign operations. Current borrowings on these Foreign Facilities mature between October 31, 2017 and October 18, 2018. The interest rates on outstanding borrowings are based upon the applicable benchmark rate for the currency of each borrowing.
For year-to-date 2017, we borrowed $67 million and made payments of $23 million under the Foreign Facilities. The maximum daily amount outstanding at any point in time during 2017 was $80 million.
Interest Rate Swap Arrangements
We have interest rate swap arrangements related to $300 million of the outstanding 2019 Notes that are designated as interest rate fair value hedges as of October 28, 2017. The interest rate swap arrangements effectively convert the fixed interest rate on the related debt to a variable interest rate based on LIBOR plus a fixed percentage. The changes in the fair value of the interest rate swaps have an equal and offsetting impact to the carrying value of the debt on the balance sheet. The differential to be paid or received on the interest rate swap arrangements is accrued and recognized as an adjustment to interest expense.

next twelve months.
Working Capital and Capitalization
We believe that our available short-term and long-term capital resources are sufficient to fund foreseeable requirements.
The following table provides a summary of our working capital position and capitalization as of October 28, 2017,April 29, 2023, January 28, 20172023 and OctoberApril 30, 2022:
April 29,
2023		January 28,
2023		April 30,
2022
(in millions)
Net Cash Provided by Operating Activities (a)$44 $1,144 $66 
Capital Expenditures (a)93 328 88 
Working Capital803 887 512 
Capitalization:
Long-term Debt4,781 4,862 4,856 
Shareholders’ Equity (Deficit)(2,171)(2,206)(2,659)
Total Capitalization$2,610 $2,656 $2,197 
Amounts Available Under the ABL Facility (b)$607 $509 $604 
 _______________
(a)The January 28, 2023 amounts represent a fifty-two-week period, and the April 29, 2016:2023 and April 30, 2022 amounts represent thirteen-week periods.
(b)Our borrowing base was $623 million, $525 million and $620 million as of April 29, 2023, January 28, 2023 and April 30, 2022, respectively. We had outstanding letters of credit, which reduce our availability under the ABL Facility, of $16 million as of each of these dates.
 October 28,
2017		 January 28, 2017 October 29,
2016
 (in millions)
Net Cash Provided by Operating Activities (a) (b)$138
 $1,990
 $411
Capital Expenditures (a)599
 990
 825
Working Capital911
 1,451
 879
Capitalization:     
Long-term Debt5,705
 5,700
 5,701
Shareholders’ Equity (Deficit)(1,121) (729) (1,190)
Total Capitalization$4,584
 $4,971
 $4,511
Remaining Amounts Available Under Credit Agreements (c)$992
 $992
 $992
 _______________
(a)The January 28, 2017 amounts represent a fifty-two week period, and the October 28, 2017 and October 29, 2016 amounts represent thirty-nine week periods.
(b)
As further discussed in Note 2 included in Item 1. Financial Statements, prior year amounts have been recast to reflect the retrospective application of ASU No. 2016-09, Improvements to Employee Share-Based Payment Accounting.
(c)Letters of credit issued reduce our remaining availability under the Revolving Facility. We had outstanding letters of credit that reduce our remaining availability under the Revolving Facility of $8 million as of October 28, 2017, January 28, 2017 and October 29, 2016.
Credit RatingsCash Flows
The following table provides a summary of our credit ratings ascash flow activity during the first quarters of October 28, 2017:2023 and 2022:
20232022
(in millions)
Cash and Cash Equivalents, Beginning of Period$1,232 $1,979 
Net Cash Flows Provided by Operating Activities44 66 
Net Cash Flows Used for Investing Activities(94)(88)
Net Cash Flows Used for Financing Activities(135)(1,306)
Effects of Exchange Rate Changes on Cash and Cash Equivalents(1)— 
Net Decrease in Cash and Cash Equivalents(186)(1,328)
Cash and Cash Equivalents, End of Period$1,046 $651 
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Moody’sS&PFitch
CorporateBa1BB+BB+
Senior Unsecured Debt with Subsidiary GuaranteeBa1BB+BB+
Senior Unsecured DebtBa2BB-BB
OutlookStableStableStable
Operating Activities
Our borrowing costs underNet cash provided by operating activities in the first quarter of 2023 was $44 million, including net income of $81 million. Net income included depreciation of $63 million, share-based compensation expense of $7 million and a pre-tax gain on extinguishment of debt of $7 million. Other changes in assets and liabilities represent items that had a current period cash flow impact, such as changes in working capital. The most significant items in working capital were the seasonal changes in Accounts Payable, Accrued Expenses and Other, Accounts Receivable and Inventories.
Net cash provided by operating activities in the first quarter of 2022 was $66 million, including net income of $155 million. Net income included depreciation of $53 million and share-based compensation expense of $12 million. Other changes in assets and liabilities represent items that had a current period cash flow impact, such as changes in working capital. The most significant items in working capital were the seasonal changes in Inventories, Accounts Payable, Accrued Expenses and Other, and Accounts Receivable. Additionally, we proactively pulled forward the purchase and delivery of certain Inventory items in the first quarter of 2022 to mitigate against potential global supply chain and distribution network disruptions.
Investing Activities
Net cash used for investing activities in the first quarter of 2023 was $94 million, primarily related to capital expenditures. The capital expenditures included approximately $40 million related to new, off-mall stores and remodels of existing stores, and approximately $35 million for various IT projects primarily supporting the separation of our Revolving FacilityIT systems from Victoria's Secret's IT systems.
Net cash used for investing activities in the first quarter of 2022 was $88 million related to capital expenditures. The capital expenditures included $37 million related to new off-mall stores and remodels, $27 million for our new Company-operated direct channel fulfillment center and $12 million related to IT projects.
We continue to plan for approximately $300 million to $350 million of capital expenditures in 2023, focused on investments to support long-term growth. We are linkedprioritizing investments in select remodels to the White Barn store design and new off-mall store openings. We are also investing in our technology, distribution, and logistics capabilities to better serve our customers.
Financing Activities
Net cash used for financing activities in the first quarter of 2023 was $135 million, consisting of $74 million for open market debt repurchases, dividend payments of $0.20 per share, or $46 million, and $8 million of tax payments related to share-based awards.
Net cash used for financing activities in the first quarter of 2022 was $1.306 billion consisting of $1.227 billion in payments for share repurchases, including the payment of $1 billion related to our credit ratings at Moody’s, S&Paccelerated share repurchase program, dividend payments of $0.20 per share, or $48 million, and Fitch. If we receive an upgrade or downgrade$26 million of tax payments related to our corporate credit ratings by Moody’s, S&P or Fitch, the borrowing costs could decrease or increase, respectively. The guarantees of our obligations under the Revolving Facility by the Guarantors and the security interests granted in our, and the Guarantors’, collateral securing such obligations are released if our credit ratings are higher than a certain level. Additionally, the restrictions imposed under the Revolving Facility on our ability to make investments and to make restricted payments cease to apply if our credit ratings are higher than certain levels. Credit rating downgrades by any of the agencies do not accelerate the repayment of any of our debt.share-based awards.
Common Stock Shareand Debt Repurchases
Our Board of Directors (the "Board") will determine share and debt repurchase authorizations, giving consideration to our levels of profit and cash flow, capital requirements, current and forecasted liquidity, the restrictions placed upon us by our borrowing arrangements as well as financial and other conditions existing at the time. We use cash flow generated from operating and financing activities to fund our share or debt repurchase programs. The timing and amount of any repurchases will be made at our discretion, taking into account a number of factors, including market conditions.

2022 Share Repurchase Program
Under the authority ofIn February 2022, our Board of Directors, we repurchasedauthorized a $1.5 billion share repurchase program (the "February 2022 Program"). We did not repurchase any shares of our common stock under the following repurchase programs for year-to-date 2017 and 2016:
 
Amount
Authorized
 
Shares
Repurchased
 
Amount
Repurchased
 Average Stock Price of Shares Repurchased within Program
Repurchase Program 2017 2016 2017 2016 2017 2016
 (in millions) (in thousands) (in millions)    
September 2017$250
 935
 NA
 $39
 NA
 $41.30
 NA
February 2017250
 5,500
 NA
 240
 NA
 $43.57
 NA
February 2016500
 51
 5,270
 3
 $410
 $58.95
 $77.75
Total  6,486
 5,270
 $282
 $410
    
In the third quarter of 2017, our Board of Directors approved a new $250 million share repurchase program, which included the $10 million remaining under the February 2017 repurchase program.
Induring the first quarter of 2017, our Board2023. The February 2022 Program had $188 million of Directors approved a $250 million share repurchase program, which included the $59 million remaining under the February 2016 repurchase program.
In the first quarter of 2016, our Board of Directors approved a $500 million share repurchase program, which included the $17 million remaining under the June 2015 repurchase program.
The September 2017 repurchase program had $211 million remainingauthority as of October 28, 2017.April 29, 2023. Subsequent to October 28, 2017,April 29, 2023 through June 2, 2023, we repurchased an additional 0.1 million216 thousand shares of our common stock for $6$8 million under this program.
There were $2 million and $3 million of share repurchases reflected in Accounts Payable on the October 28, 2017 and January 28, 2017 Consolidated Balance Sheets, respectively. There were no share repurchases reflected in Accounts Payable on the October 29, 2016 Consolidated Balance Sheet.
Treasury Stock Retirement
Subsequent to October 28, 2017, we retired 36 million shares of our treasury stock to reduce the related administrative expense.February 2022 Program.
Dividend Policy and Procedures
Our Board of Directors will determine future dividends after giving consideration to our levels of profit and cash flow, capital requirements, current and forecasted liquidity, the restrictions placed upon us by our borrowing arrangements as well as financial and other conditions existing at the time. We use cash flow generated from operating activities to fund our ordinary dividends and a combination of cash flow generated from operating activities and financing activities to fund our special dividends.
Under the authority and declaration
20
Table of our Board of Directors, weContents
We paid the following dividends during year-to-date 2017the first quarters of 2023 and 2016:2022:
Ordinary DividendsTotal Paid
(per share)(in millions)
2023
First Quarter$0.20 $46 
2022
First Quarter$0.20 $48 
In May 2023, our Board declared the second quarter 2023 ordinary dividend of $0.20 per share payable on June 16, 2023 to stockholders of record at the close of business on June 2, 2023.
  Ordinary Dividends Special Dividends Total Dividends Total Paid
  (per share) (in millions)
2017        
Third Quarter $0.60
 $—
 $0.60
 $172
Second Quarter 0.60
 —
 0.60
 172
First Quarter 0.60
 —
 0.60
 172
2017 Total $1.80
 $—
 $1.80
 $516
2016        
Third Quarter $0.60
 $—
 $0.60
 $173
Second Quarter 0.60
 —
 0.60
 173
First Quarter 0.60
 2.00
 2.60
 750
2016 Total $1.80
 $2.00
 $3.80
 $1,096





Cash FlowLong-term Debt and Borrowing Facilities
The following table provides a summaryour outstanding long-term debt balance, net of unamortized debt issuance costs and discounts, as of April 29, 2023, January 28, 2023 and April 30, 2022:
April 29,
2023		January 28,
2023		April 30,
2022
(in millions)
Senior Debt with Subsidiary Guarantee
$314 million, 9.375% Fixed Interest Rate Notes due July 2025 ("2025 Notes")$312 $317 $317 
$297 million, 6.694% Fixed Interest Rate Notes due January 2027 (“2027 Notes”)284 283 281 
$500 million, 5.250% Fixed Interest Rate Notes due February 2028 (“2028 Notes”)498 498 497 
$500 million, 7.500% Fixed Interest Rate Notes due June 2029 ("2029 Notes")491 491 490 
$999 million, 6.625% Fixed Interest Rate Notes due October 2030 ("2030 Notes")990 991 990 
$986 million, 6.875% Fixed Interest Rate Notes due November 2035 (“2035 Notes”)979 993 992 
$643 million, 6.750% Fixed Interest Rate Notes due July 2036 (“2036 Notes”)638 694 694 
Total Senior Debt with Subsidiary Guarantee$4,192 $4,267 $4,261 
Senior Debt
$347 million, 6.950% Fixed Interest Rate Debentures due March 2033 (“2033 Notes”)$346 $349 $349 
$245 million, 7.600% Fixed Interest Rate Notes due July 2037 (“2037 Notes”)243 246 246 
Total Senior Debt589 595 595 
Total Long-term Debt$4,781 $4,862 $4,856 
Repurchases of Notes
During the first quarter of 2023, we repurchased in the open market and extinguished $84 million principal amount of our cash flow activityoutstanding senior notes. The aggregate repurchase price for year-to-date 2017 and 2016:
 Year-to-Date
 2017 2016
 (in millions)
Cash and Cash Equivalents, Beginning of Period$1,934
 $2,548
Net Cash Flows Provided by Operating Activities138
 411
Net Cash Flows Used for Investing Activities(581) (721)
Net Cash Flows Used for Financing Activities(758) (1,581)
Effects of Exchange Rate Changes on Cash and Cash Equivalents2
 (3)
Net Decrease in Cash and Cash Equivalents(1,199) (1,894)
Cash and Cash Equivalents, End of Period$735
 $654
Operating Activities
Net cash provided by operating activitiesthese notes was $76 million, resulting in 2017 was $138a pre-tax gain of $7 million, including net income of $319 million. Net incomethe write-off of unamortized issuance costs. This gain is included depreciation and amortizationin Other Income in the first quarter of $4262023 Consolidated Statement of Income. There were $2 million and share-based compensation expense of $74 million. Other changes in assets and liabilities represent items that had a current period cash flow impact, such as changes in working capital. The most significant items in working capital were the seasonal changes in Inventories (and related increasesrepurchases reflected in Accounts Payable), as we build our inventory levels in anticipationPayable on the April 29, 2023 Consolidated Balance Sheet.
The following table provides details of the holiday season, which generates a substantial portionoutstanding principal amount of senior notes repurchased and extinguished during the first quarter of 2023:
(in millions)
2025 Notes$6 
2030 Notes2 
2033 Notes3 
2035 Notes14 
2036 Notes57 
2037 Notes2 
Total$84 
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Subsequent to April 29, 2023 through June 2, 2023, we repurchased in the open market and extinguished $50 million principal amount of our operating cash flowoutstanding senior notes for the year. In addition, our Income Taxes Payable decrease was due to seasonal tax payments.an aggregate repurchase price of $46 million.
Net cash provided by operating activities in 2016 was $411 million, including net income of $526 million. Net income included depreciationAsset-backed Revolving Credit Facility
We and amortization of $378 million, a gain on distribution from Easton investments of $112 million, share-based compensation expense of $70 million and loss on extinguishment of debt of $36 million. Other changes in assets and liabilities represent items that had a current period cash flow impact, such as changes in working capital. The most significant items in working capital were the seasonal changes in Inventories (and related increases in Accounts Payable), as we build our inventory levels in anticipation of the holiday season, which generates a substantial portion of our operating cash flow for the year. In addition, our Income Taxes Payable decrease was due to seasonal tax payments.
Investing Activities
Net cash used for investing activities in 2017 was $581 million consisting primarily of capital expenditures of $599 million partially offset by a $27 million return of capital from certain of our Easton investments.100% owned subsidiaries guarantee and pledge collateral to secure our ABL Facility. The capital expenditures included $527ABL Facility, which allows borrowings and letters of credit in U.S. dollars or Canadian dollars, has aggregate commitments of $750 million for opening new stores and remodelingan expiration date in August 2026.
Availability under the ABL Facility is the lesser of (i) the borrowing base, determined primarily based on our eligible U.S. and improving existing stores. Remaining capital expenditures were primarilyCanadian credit card receivables, accounts receivable, inventory and eligible real property, or (ii) the aggregate commitment. If at any time the outstanding amount under the ABL Facility exceeds the lesser of (i) the borrowing base and (ii) the aggregate commitment, we are required to repay the outstanding amounts under the ABL Facility to the extent of such excess. As of April 29, 2023, our borrowing base was $623 million, and we had no borrowings outstanding under the ABL Facility.
The ABL Facility supports our letter of credit program. We had $16 million of outstanding letters of credit as of April 29, 2023 that reduced our availability under the ABL Facility. As of April 29, 2023, our availability under the ABL Facility was $607 million.
As of April 29, 2023, the ABL Facility fees related to spendingcommitted and unutilized amounts were 0.30% per annum, and the fees related to outstanding letters of credit were 1.25% per annum. In addition, the interest rate on technologyoutstanding U.S. dollar borrowings was the London Interbank Offered Rate plus 1.25% per annum. The interest rate on outstanding Canadian dollar-denominated borrowings was the Canadian Dollar Offered Rate plus 1.25% per annum. 
The ABL Facility requires us to maintain a fixed charge coverage ratio of not less than 1.00 to 1.00 during an event of default or any period commencing on any day when specified excess availability is less than the greater of (i) $70 million or (ii) 10% of the maximum borrowing amount. As of April 29, 2023, we were not required to maintain this ratio.
Credit Ratings
The following table provides our credit ratings as of April 29, 2023:
Moody’sS&P
CorporateBa2BB
Senior Unsecured Debt with Subsidiary GuaranteeBa2BB
Senior Unsecured DebtB1B+
OutlookStableStable
Guarantor Summarized Financial Information
Certain of our subsidiaries, which are listed on Exhibit 22 to this Quarterly Report on Form 10-Q, have guaranteed our obligations under the 2025 Notes, 2027 Notes, 2028 Notes, 2029 Notes, 2030 Notes, 2035 Notes and infrastructure2036 Notes (collectively, the "Notes").
The Notes have been issued by Bath & Body Works, Inc. (the “Parent Company”). The Notes are its senior unsecured obligations and rank equally in right of payment with all of our existing and future senior unsecured obligations, are senior to support growth.any of our future subordinated indebtedness, are effectively subordinated to all of our existing and future indebtedness that is secured by a lien and are structurally subordinated to all existing and future obligations of each of our subsidiaries that do not guarantee the Notes.
Net cash usedThe Notes are fully and unconditionally guaranteed on a joint and several basis by certain of our wholly-owned subsidiaries, including certain subsidiaries that also guarantee our obligations under our ABL Facility (such guarantees, the “Guarantees”; and, such guaranteeing subsidiaries, the “Subsidiary Guarantors”). The Guarantees of the Subsidiary Guarantors are subject to release in limited circumstances only upon the occurrence of certain customary conditions. Each Guarantee is limited, by its terms, to an amount not to exceed the maximum amount that can be guaranteed by the applicable Subsidiary Guarantor subject to avoidance under applicable fraudulent conveyance provisions of U.S. and non-U.S. law.
The following tables set forth summarized financial information for investing activitiesthe Parent Company and the Subsidiary Guarantors, on a combined basis after elimination of (i) intercompany transactions and balances among the Parent Company and the Subsidiary Guarantors and (ii) investments in 2016 was $721and equity in the earnings of non-Guarantor subsidiaries.
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SUMMARIZED BALANCE SHEETSApril 29,
2023		January 28,
2023
(in millions)
ASSETS
Current Assets (a)$2,507 $2,642 
Noncurrent Assets (b)2,595 2,561 
LIABILITIES
Current Liabilities (c)$3,002 $3,084 
Noncurrent Liabilities6,113 6,143 
 _______________
(a)Includes amounts due from non-Guarantor subsidiaries of $613 million consisting primarilyand $589 million as of capital expendituresApril 29, 2023 and January 28, 2023, respectively.
(b)Includes amounts due from non-Guarantor subsidiaries of $825$40 million and$33as of January 28, 2023.
(c)Includes amounts due to non-Guarantor subsidiaries of $1.977 billion and $1.987 billion as of April 29, 2023 and January 28, 2023, respectively.
FIRST QUARTER OF 2023 SUMMARIZED STATEMENT OF INCOME(in millions)
Net Sales (a)$1,352 
Gross Profit556 
Operating Income162 
Income Before Income Taxes91 
Net Income (b)63 
 _______________
(a)Includes net sales of $50 million to non-Guarantor subsidiaries.
(b)Includes a net loss of $6 million related to the acquisition of our Victoria's Secret Beauty and Accessories franchise partner's operations and stores in Greater China, partially offset by a $116 million return of capital from certain of our Easton investments and proceeds from the sale of marketable securities of $10 million. The capital expenditures included $691 million for opening new stores and remodeling and improving existing stores. Remaining capital expenditures were primarily related to spending on technology and infrastructure to support growth.
Financing Activities
Net cash used for financing activities in 2017 was $758 million consisting primarily of quarterly dividend payments of $1.80 per share, or $516 million, payments for repurchases of common stock of $283 million, tax payments related to share-based awards of $31 million and $44 million of net new borrowings under our foreign facilities, partially offset by proceeds from the exercise of stock options of $37 million.
Net cash used for financing activities in 2016 was $1.581 billion consisting primarily of quarterly and special dividend payments aggregating to $3.80 per share, or $1.096 billion, $742 million to repurchase our 2017 Notes, payments for repurchases of common stock of $410 million, and tax payments related to share-based awards of $56 million, partially offset by net proceeds of $692 million from the 2036 Notes issuance and proceeds from the exercise of stock options of $17 million.

transactions with non-Guarantor subsidiaries.
Contingent Liabilities and Contractual Obligations
Lease Guarantees
In connection with the dispositionspin-off of Victoria's Secret and the disposal of a certain businesses,other business, we havehad remaining guaranteescontingent obligations of $11$278 million as of April 29, 2023 related to lease payments under the current terms of noncancellablenoncancelable leases, primarily related to office space, expiring at various dates through 2021.2037. These guaranteesobligations include minimum rent and additional payments covering taxes, common area costs and certain other expenses and relate to leases that commenced prior to the disposition of thethese businesses. In certain instances, our guarantee may remain in effect if the term of a lease is extended. We have not recorded a liability with respect to these guarantee obligations as of October 28, 2017, January 28, 2017 or October 29, 2016 as we concluded that payments under these guarantees were not probable.
In connection with noncancellable operating leases of certain assets, we provided residual value guarantees to the lessor if the leased assets cannot be sold for an amount in excess of a specified minimum value at the conclusion of the lease term. The leases expire at various dates through 2021, and the total amount of the guarantees is $104 million. We recorded a liability of less than $1 million as of October 28, 2017, a liability of $1 million as of January 28, 2017, and a liability of $3 million as of October 29, 2016Our reserves related to these guarantee obligations which are included in Other Long-term Liabilities on the Consolidated Balance Sheets.were not significant for any period presented.
Contractual Obligations
Our contractual obligations primarily consist of long-term debt and the related interest payments, operating leases, purchase orders for merchandise inventory and other long-term obligations. These contractual obligations impact our short-term and long-term liquidity and capital resource needs. ThereOther than the repurchase of $84 million principal amount of our outstanding senior notes during the first quarter of 2023, there have been no material changes in our contractual obligations sincesubsequent to January 28, 2017,2023, as discussed in “Contingent Liabilities and Contractual Obligations” in our 20162022 Annual Report on Form 10-K. Certain of our contractual obligations may fluctuate during the normal course of business (primarily changes in our merchandise inventory-related purchase obligations which fluctuate throughout the year as a result of the seasonal nature of our operations)business).

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
Share-Based Compensation
In the first quarter of 2017, we adopted ASU No. 2016-09, Improvements to Employee Share-Based Payment Accounting.  On a prospective basis, this standard requires recognition of the income tax effects of share-based awards in the income statement when the awards vest or are exercised.  These effects were historically recorded in equity on the balance sheet.  As a result, we recognized $13 million of excess tax benefits related to share-based awards in Provision for Income Taxes in the year-to-date 2017 Consolidated Statement of Income. The standard also requires all tax-related cash flows from share-based awards to be reported as operating activities on the statements of cash flows andWe did not adopt any cash payments made to taxing authorities on an employee's behalf from withheld shares as financing activities.  The retrospective application of these changes resulted in an $95 million increase in operating cash flows and a corresponding decrease to financing cash flows on the 2016 Consolidated Statement of Cash Flows. Further, as allowed by the standard, we will continue to estimate award forfeitures at the time awards are granted and adjust, if necessary, in subsequent periods based on historical experience and expected future forfeiture rates. 

Revenue from Contracts with Customers
In May 2014, the FASB issued ASC 606, Revenue from Contracts with Customers, which was further clarified and amended in 2015 and 2016. This guidance requires companies to recognize revenue in a manner that depicts the transfer of promised goods or services to customers in amounts that reflect the consideration to which a company expects to be entitled in exchange for those goods or services. The new standard also will result in enhanced disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. This guidance will be effective beginning in fiscal 2018. The standard allows for either a full retrospective or a modified retrospective transition method.

We continue to evaluate the impacts of this standard. The new standard will change current accounting related to loyalty points earned under the Victoria's Secret customer loyalty program as revenue associated with customer loyalty points will be deferred until redeemed using a relative stand-alone selling price method. The new standard will also change our accounting for sales returns which requires balance sheet presentation on a gross basis. Further, income from our Victoria's Secret private label credit card arrangement, which has historically been presented as a reduction to General, Administrative and Store Operating Expenses, will now be presented as revenue under the new standard. We are continuing to evaluate the further impacts the standard will have on the Consolidated Statements of Income and Comprehensive Income, Balance Sheets, Statements of Cash Flows and disclosures. We will adopt the standardstandards in the first quarter of fiscal 2018 under the modified retrospective approach, which will result in2023 that had a cumulative adjustment to retained earnings.



Leases
In February 2016, the FASB issued ASC 842, Leases, which requires companies classified as lessees to put most leases on their balance sheets but recognize expenses on their income statements in a manner similar to today’s accounting. The new standard also will result in enhanced quantitative and qualitative disclosures, including significant judgments made by management, to provide greater insight into the extent of revenue and expense recognized and expected to be recognized from existing leases. The standard requires modified retrospective adoption and will be effective beginning in fiscal 2019, with early adoption permitted.

We are currently evaluating the impacts that this standard will havematerial impact on our Consolidated Statements of Income and Comprehensive Income, Balance Sheets and Statements of Cash Flows. We currently expect that most of our operating lease commitments will be recognized as operating lease liabilities and right-of-use assets upon adoption of the standard. Thus, we expect adoption will result in a material increase to the assets and liabilities on our Consolidated Balance Sheet. We will adopt the standard in the first quarter of fiscal 2019.

Hedging Activities
In August 2017, the FASB issued ASU 2017-12, Targeted Improvements to Accounting for Hedging Activities, which is intended to better align risk management activities and financial reporting for hedging relationships. The new standard eliminates the requirement to separately measure and report hedge ineffectiveness and generally requires the entire change in the fair value of a hedging instrument to be presented in the same income statement line as the hedged item. It also eases certain documentation and assessment requirements. This guidance will be effective beginning in fiscal 2019, with early adoption permitted. We are currently evaluating the impact of this standard on our Consolidated Statements of Income and Comprehensive Income, Balance Sheets and Statements of Cash Flows.
IMPACT OF INFLATION
While it is difficult to accurately measure the impact of inflation due to the imprecise nature of the estimates required, we believe the effects of inflation, if any, on theconsolidated results of operations, and financial conditionposition or cash flows. In addition, as of June 2, 2023, there were no new accounting standards that we have been minor.not yet adopted that are expected to have a material impact on our consolidated results of operations, financial position or cash flows.

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CRITICAL ACCOUNTING POLICIES AND ESTIMATES
The preparation of financial statements in conformity with GAAP requires management to adopt accounting policies related to estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period, as well as the related disclosure of contingent assets and liabilities at the date of the financial statements. On an ongoing basis, management evaluates its accounting policies, estimates and judgments, including those related to inventories, valuation of long-lived store assets, claims and contingencies, income taxes and revenue recognition.recognition, including revenue associated with our loyalty program. Management bases our estimates and judgments on historical experience and various other factors that we believe are believed to be reasonable under the circumstances. Actual results may differ from these estimates.
There have been no material changes to the critical accounting policies and estimates disclosed in our 20162022 Annual Report on Form 10-K, other than the adoption of ASU No. 2016-09, Improvements to Employee Share-Based Payment Accounting.10-K.

Item 3.
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market Risk
The market risk inherent in our financial instruments represents the potential loss in fair value, earnings or cash flows arising from adverse changes in foreign currency exchange rates or interest rates. We may use derivative financial instruments like cross-currency swaps, foreign currency forward contracts, cross-currency swaps and interest rate swap arrangements to manage exposure to market risks. We do not use derivative financial instruments for trading purposes.
Foreign Exchange Rate Risk
We have operations in foreign countries which expose us to market risk associated with foreign currency exchange rate fluctuations. To mitigate the translation risk to our earnings and the fair value of ourOur Canadian operations associated with fluctuations in the U.S. dollar-Canadian dollar exchange rate, we entered into a cross-currency swap related to a Canadian dollar denominated intercompany loan. This cross-currency swap requires the periodic exchange of fixed rate Canadian dollar interest payments for fixed rate U.S. dollar interest payments as well as exchange of Canadian dollar and U.S. dollar principal payments upon maturity. The swap arrangement matures in January 2018 at the same time as the related loan. As a result of the Canadian dollar denominated intercompany loan and the related cross-currency swap, we do not believe there is any material translation risk to our Canadian net earnings associated with fluctuations in the U.S. dollar-Canadian dollar exchange rate.

In addition, our Canadian dollar, British pound, Chinese yuan and Hong Kong dollar denominated earnings are subject to exchange rate risk as substantially all of our merchandise sold in Canada the U.K. and Greater China is sourced through U.S. dollar transactions. Although we utilize foreign currency forward contracts to partially offset risks associated with Canadian dollar and British pound denominated earnings,our operations in Canada, these measures may not succeed in offsetting all of the short-term impact of foreign currency rate movements and generally may not be effective in offsetting the long-term impact of sustained shifts in foreign currency rates.
Further, although our royalty arrangements with our international partners are denominated in U.S. dollars, the royalties we receive in U.S. dollars are calculated based on sales in the local currency. As a result, our royalties in these arrangements are exposed to foreign currency exchange rate fluctuations.
Interest Rate Risk
Our investment portfolio primarily consists of interest-bearing instruments that are classified as cash and cash equivalents based on their original maturities. Our investment portfolio is maintained in accordance with our investment policy, which specifies permitted types of investments, specifies credit quality standards and maturity profiles and limits credit exposure to any single issuer. The primary objective of our investment activities areis the preservation of principal, the maintenance of liquidity and the maximization of interest income while minimizing risk. Typically, ourOur investment portfolio is primarily comprisedcomposed of U.S. government obligations, U.S. Treasury and AAA-rated money market funds, commercial paper and bank deposits. Given the short-term nature and quality of investments in our portfolio, we do not believe there is any material risk to principal associated with increases or decreases in interest rates.
The majorityAll of our long-term debtLong-term Debt as of October 28, 2017,April 29, 2023 has fixed interest rates. We will from time to time adjust our exposure to interest rate risk by entering into interest rate swap arrangements. As of October 28, 2017, we have interest rate swap arrangements with notional amounts of $300 million related to a portion of our 2019 Notes.
The effect of the interest rate swap arrangements is to convert the respective amount of debt from a fixed interest rate to a variable interest rate. The variable interest rate associated with these swap arrangements fluctuates based on changes in three-month LIBOR.
For the balance of our long-term debt that is not subject to interest rate swap arrangements, ourOur exposure to interest rate changes is limited to the fair value of the debt issued, which would not have a material impact on our earnings or cash flows.
Fair Value of Financial Instruments
As of October 28, 2017,April 29, 2023, we believe that the carrying values of accounts receivable, accounts payable, accrued expensesAccounts Receivable, Accounts Payable and current debtAccrued Expenses approximate fair value because of their short maturity.
The following table provides a summary of the principal value and estimated fair value of long-termoutstanding debt excluding foreign facility borrowings, and swap arrangements as of October 28, 2017, April 29, 2023, January 28, 20172023 and October 29, 2016:April 30, 2022:
April 29,
2023		January 28,
2023		April 30,
2022
(in millions)
Principal Value$4,831 $4,915 $4,915 
Fair Value, Estimated (a)4,589 4,707 4,866 
 _______________
(a)    The estimated fair values are based on reported transaction prices and are not necessarily indicative of the amounts that we could realize in a current market exchange.
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 October 28,
2017		 January 28, 2017 October 29,
2016
 (in millions)
Long-term Debt:     
Principal Value$5,750
 $5,750
 $5,750
Fair Value, Estimated (a)6,033
 6,030
 6,352
Foreign Currency Cash Flow Hedges (b)(11) (17) (26)
Interest Rate Fair Value Hedges (b)(1) (2) (6)
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 _______________
(a)The estimated fair value is based on reported transaction prices. The estimates presented are not necessarily indicative of the amounts that we could realize in a current market exchange.
(b)Hedge arrangements are in a net asset position.
Concentration of Credit Risk
We maintain cash and cash equivalents and derivative contracts with various major financial institutions. We monitor the relative credit standing of financial institutions with whom we transact and limit the amount of credit exposure with any one entity. Typically, ourOur investment portfolio is primarily comprisedcomposed of U.S. government obligations, U.S. Treasury and AAA-rated money market funds, commercial paper and bank deposits. We also periodically review the relative credit standing of franchise, license and wholesale partners and other entities to which we grant credit terms in the normal course of business.


Item 4.
Item 4. CONTROLS AND PROCEDURES

Evaluation of disclosure controls and procedures. As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures, as such term is defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act.Act of 1934, as amended (the "Exchange Act"). Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that as of the end of the period covered by this report, our disclosure controls and procedures were effective and designed to ensure that information required to be disclosed by us in reports we file or submit under the Exchange Act is (1) recorded, processed, summarized and reported within the time periods specified in SECSecurities and Exchange Commission ("SEC") rules and forms, and (2) accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.
Changes in internal control over financial reporting. There were no changes in our internal control over financial reporting that occurred in the thirdfirst quarter 2017of 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II—OTHER INFORMATION


Item 1.
Item 1. LEGAL PROCEEDINGS

We are a defendant in a variety of lawsuits arising in the ordinary course of business. Actions filed against our Company from time to time include commercial, tort, intellectual property, tax, customer, employment, wage and hour, data privacy, securities, anti-corruption and other claims, including purported class action lawsuits. Although it is not possible to predict with certainty the eventual outcome of any litigation, in the opinion of management, our current legal proceedings are not expected to have a material adverse effect on our financial position or results of operations.operations, financial condition and cash flows.

Fair and Accurate Credit Transactions Act Cases
We were named as a defendant in three putative class actions: Smidga, et al. v. Bath & Body Works, LLC in the Allegheny County, Pennsylvania Court of Common Pleas; Dahlin v. Bath & Body Works, LLC in the Santa Barbara County, California Superior Court; and Blanco v. Bath & Body Works, LLC in the Cook County, Illinois Circuit Court. The complaints each allege that we violated the Fair and Accurate Credit Transactions Act by printing more than the last five digits of credit or debit card numbers on customers’ receipts and, among other things, seek statutory damages, attorneys’ fees and costs. We have reached an agreement in principle with the plaintiffs in the Smidga and Dahlin cases that will resolve those matters. The resolution, which is not expected to have a material financial impact and will include no admission of liability or wrongdoing by the Company, is subject to court approval. The Blanco case has been sent to private individual arbitration by court order. We continue to believe that we have strong defenses to the Blanco action and intend to vigorously defend against the allegations in the arbitration proceeding. We do not believe that the resolution of the Blanco action will have a material adverse effect on our results of operations, financial condition or cash flows.
Item 1A.
Item 1A. RISK FACTORS

The risk factors that affect our business and financial results are discussed in “Item 1A:Item 1A. Risk Factors”Factors in the 2016our 2022 Annual Report on Form 10-K. We wish to caution the reader that the risk factors discussed in “Item 1A:Item 1A. Risk Factors”Factors in our 20162022 Annual Report on Form 10-K and those described elsewhere in this report or other SEC filings, could cause actual results to differ materially from those stated in any forward-looking statements.

Item 2.
Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The following table provides ourthe repurchases of our common stock during the thirdfirst quarter of 2017:2023:
PeriodTotal
Number of
Shares
Purchased (a)		Average Price
Paid per
Share (b)		Total Number of Shares Purchased as Part of Publicly Announced Programs (c)Maximum Number of Shares (or Approximate Dollar Value) that May Yet be Purchased Under the Programs (c)
 (in thousands) (in thousands)
February 20234 $46.24 — $187,775 
March 2023205 36.36 — 187,775 
April 20239 35.08 — 187,775 
Total218 — 
 _______________
(a)The total number of shares repurchased represent shares in connection with tax payments due upon vesting of associate restricted stock and performance share unit awards and the use of our stock to pay the exercise price on associate stock options.
(b)The average price paid per share includes any broker commissions.
(c)For additional share repurchase program information, see Note 3, “Earnings Per Share and Shareholders' Equity (Deficit)” included in Part I, Item 1. Financial Statements.

Period
Total
Number of
Shares
Purchased (a)
 
Average Price
Paid per
Share (b)
 Total Number of Shares Purchased as Part of Publicly Announced Programs (c) Maximum Number of Shares (or Approximate Dollar Value) that May Yet be Purchased Under the Programs (c)
 (in thousands)   (in thousands)
August 20172,206
 $38.36
 2,199
 $36,433
September 20171,079
 38.31
 1,074
 235,040
October 2017577
 42.45
 558
 211,352
Total3,862
   3,831
  
 _______________
(a)The total number of shares repurchased includes shares repurchased as part of publicly announced programs, with the remainder relating to shares repurchased in connection with tax payments due upon vesting of employee restricted stock awards and the use of our stock to pay the exercise price on employee stock options.
(b)The average price paid per share includes any broker commissions.
(c)For additional share repurchase program information, see Note 3, “Earnings Per Share and Shareholders' Equity (Deficit)” included in Item 1. Financial Statements.

Item 3.DEFAULTS UPON SENIOR SECURITIES

Item 3. DEFAULTS UPON SENIOR SECURITIES

Not applicable.


Item 4.MINE SAFETY DISCLOSURES

Item 4. MINE SAFETY DISCLOSURES

Not applicable.


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Item 5.OTHER INFORMATION

Item 5. OTHER INFORMATION

None.



Item 6. EXHIBITS

Exhibits
15
31.1
101.INSXBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCHInline XBRL Taxonomy Extension Schema Document
101.CALInline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEFInline XBRL Taxonomy Definition Linkbase Document
101.LABInline XBRL Taxonomy Extension Label Linkbase Document
101.PREInline XBRL Taxonomy Extension Presentation Linkbase Document
104Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)



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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
L BRANDS, INC.
BATH & BODY WORKS, INC.
(Registrant)
By:/s/ STUART B. BURGDOERFERWENDY C. ARLIN
Stuart B. Burgdoerfer
Executive Vice President and Wendy C. Arlin
Chief Financial Officer *
Date: December 1, 2017
*Mr. Burgdoerfer is the principal financial officer and the principal accounting officer and has been duly authorized to sign on behalf of the Registrant.

June 2, 2023

*    Ms. Arlin is the principal financial officer and the principal accounting officer and has been duly authorized to sign on behalf of the Registrant.

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