UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_________________________________

FORM 10-Q

_________________________________


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended July ~~31, 2021~~30, 2022


☐			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

_________________________________

BATH & BODY WORKS, INC.

(Exact name of registrant as specified in its charter)

_______________________________


Delaware		31-1029810
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)
Three Limited Parkway
Columbus,	Ohio	43230
(Address of principal executive offices)		(Zip Code)
(614)	415-7000
(Registrant's Telephone Number, Including Area Code)
~~L BRANDS, INC.~~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) 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 ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically 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 ☒ No ☐

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 filer	☒	Accelerated filer	☐

Non-accelerated filer	☐ (Do not check if a smaller reporting company)	Smaller reporting company	☐

		Emerging growth company	☐

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. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.): Yes ☐ No ☒

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.50 Par Value	BBWI	The New York Stock Exchange

As of August ~~27, 2021,~~26, 2022, the number of outstanding shares of the Registrant’s common stock, was ~~264,372,947~~228,374,316 shares.

Table of Contents

BATH & BODY WORKS, INC.

TABLE OF CONTENTS


			Page No.
Part I. Financial Information

Item 1. Financial Statements *

Consolidated Statements of Income ~~(Loss)~~ for the Thirteen-Weeks and ~~Twenty-Six-Weeks~~T wenty-Six -Weeks Ended July 30, 2022 and July 31 , 2021 ~~and August 1, 2020~~ (Unaudited)			3

Consolidated Statements of Comprehensive Income ~~(Loss)~~ for the Thirteen-Weeks and ~~Twenty-Six-Weeks~~ Tw enty-Six-Weeks Ended July 30, 2022 and July ~~31,~~3 1, 2021 ~~and August 1, 2020~~ (Unaudited)			3

Consolidated Balance Sheets as of July ~~31, 2021~~30, 2022 (Unaudited), January ~~30,~~29, 2022 and July 31 , 2021 ~~and August 1, 2020~~ (Unaudited)			4

Consolidated Statements of Total Equity (Deficit) for the Thirteen-Weeks and Twenty-Six-Weeks Ended July ~~31,~~30, 2022 and July 3 1, 2021 ~~and August 1, 2020~~ (Unaudited)			5

Consolidated Statements of Cash Flows for the ~~Twenty-Six-Weeks~~T wenty-Six -Weeks Ended July 30, 2022 and July ~~31,~~3 1, 2021 ~~and August 1, 2020~~ (Unaudited)			7

Notes to Consolidated Financial Statements (Unaudited)			8

Report of Independent Registered Public Accounting Firm			2018

Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995			2119

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			2220

Item 3. Quantitative and Qualitative Disclosures About Market Risk			4031

Item 4. Controls and Procedures			4132

Part II. Other Information			4233

Item 1. Legal Proceedings			4233

Item 1A. Risk Factors			4233

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			4333

Item 3. Defaults Upon Senior Securities			4333

Item 4. Mine Safety Disclosures			4334

Item 5. Other Information			4334

Item 6. Exhibits			4434

Signature			4535


*			The Company's fiscal year ends on the Saturday nearest to January 31. As used herein, “second quarter of ~~2021”~~2022” and “second quarter of ~~2020”~~2021” refer to the thirteen-week periods ended July 30, 2022 and July 31, 2021, ~~and August 1, 2020,~~ respectively. “Year-to-date ~~2021”~~2022” and “year-to-date ~~2020”~~2021” refer to the twenty-six-week periods ~~ending~~ended July 30, 2022 and July 31, 2021, ~~and August 1, 2020,~~ respectively.

Table of Contents

PART I—FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS

BATH & BODY WORKS, INC.

CONSOLIDATED STATEMENTS OF INCOME ~~(LOSS)~~

(in millions, except per share amounts)

(Unaudited)

Second Quarter Year-to-Date
2021 2020 2021 2020
Net Sales $ 3,318 $ 2,319 $ 6,341 $ 3,974
Costs of Goods Sold, Buying and Occupancy (1,820) (1,608) (3,429) (2,974)
Gross Profit 1,498 711 2,912 1,000
General, Administrative and Store Operating Expenses (899) (667) (1,741) (1,274)
Operating Income (Loss) 599 44 1,171 (274)
Interest Expense (99) (104) (212) (201)
Other Income (Loss) (1) — (106) 3
Income (Loss) Before Income Taxes 499 (60) 853 (472)
Provision (Benefit) for Income Taxes 125 (11) 202 (126)
Net Income (Loss) $ 374 $ (49) $ 651 $ (346)
Net Income (Loss) Per Basic Share $ 1.36 $ (0.18) $ 2.35 $ (1.25)
Net Income (Loss) Per Dilutive Share $ 1.34 $ (0.18) $ 2.31 $ (1.25)
Dividends Per Share $ 0.15 $ — $ 0.15 $ 0.30


	Second Quarter				Year-to-Date
	2022		2021		2022		2021
Net Sales	$	1,618	$	1,704	$	3,067	$	3,173
Costs of Goods Sold, Buying and Occupancy	(958)		(876)		(1,739)		(1,603)
Gross Profit	660		828		1,328		1,570
General, Administrative and Store Operating Expenses	(418)		(444)		(806)		(849)
Operating Income	242		384		522		721
Interest Expense	(86)		(97)		(175)		(210)
Other Income (Loss)	2		—		3		(105)
Income from Continuing Operations Before Income Taxes	158		287		350		406
Provision for Income Taxes	38		72		75		100
Net Income from Continuing Operations	120		215		275		306
Income from Discontinued Operations, Net of Tax	—		159		—		345
Net Income	$	120	$	374	$	275	$	651

Net Income per Basic Share
Continuing Operations	$	0.52	$	0.78	$	1.17	$	1.10
Discontinued Operations	—		0.58		—		1.25
Total Net Income per Basic Share	$	0.52	$	1.36	$	1.17	$	2.35

Net Income per Diluted Share
Continuing Operations	$	0.52	$	0.77	$	1.16	$	1.08
Discontinued Operations	—		0.57		—		1.22
Total Net Income per Diluted Share	$	0.52	$	1.34	$	1.16	$	2.31

BATH & BODY WORKS, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME ~~(LOSS)~~

(in millions)

(Unaudited)

Second Quarter Year-to-Date
2021 2020 2021 2020
Net Income (Loss) $ 374 $ (49) $ 651 $ (346)
Other Comprehensive Income (Loss), Net of Tax:
   Foreign Currency Translation (2) 2 4 (4)
   Unrealized Gain (Loss) on Cash Flow Hedges 2 (3) (1) 2
   Reclassification of Cash Flow Hedges to Earnings 1 (1) 1 (1)
Total Other Comprehensive Income (Loss), Net of Tax 1 (2) 4 (3)
Total Comprehensive Income (Loss) $ 375 $ (51) $ 655 $ (349)


	Second Quarter				Year-to-Date
	2022		2021		2022		2021
Net Income	$	120	$	374	$	275	$	651
Other Comprehensive Income (Loss), Net of Tax:
Foreign Currency Translation	—		(2)		—		4
Unrealized Gain (Loss) on Cash Flow Hedges	—		2		—		(1)
Reclassification of Cash Flow Hedges to Earnings	—		1		—		1
Total Other Comprehensive Income, Net of Tax	—		1		—		4
Total Comprehensive Income	$	120	$	375	$	275	$	655

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

Table of Contents

BATH & BODY WORKS, INC.

CONSOLIDATED BALANCE SHEETS

(in millions, except par value amounts)


		July 31, 2021		January 30, 2021		August 1, 2020			July 30, 2022		January 29, 2022		July 31, 2021
		(Unaudited)				(Unaudited)			(Unaudited)				(Unaudited)
ASSETS	ASSETS							ASSETS
Current Assets:	Current Assets:							Current Assets:
Cash and Cash Equivalents	Cash and Cash Equivalents	$	1,988	$	3,903	$	2,611	Cash and Cash Equivalents	$	452	$	1,979	$	1,695
Cash in Escrow related to Victoria's Secret & Co. Spin-Off		600		—		—
Accounts Receivable, Net	Accounts Receivable, Net	230		269		268		Accounts Receivable, Net	184		240		131
Inventories	Inventories	1,473		1,273		1,476		Inventories	971		709		728
Other	Other	223		134		150		Other	147		81		134
Current Assets of Discontinued Operations								Current Assets of Discontinued Operations	—		—		1,826
Total Current Assets	Total Current Assets	4,514		5,579		4,505		Total Current Assets	1,754		3,009		4,514
Property and Equipment, Net	Property and Equipment, Net	2,001		2,095		2,292		Property and Equipment, Net	1,071		1,009		1,002
Operating Lease Assets	Operating Lease Assets	2,564		2,558		2,635		Operating Lease Assets	1,087		1,021		1,051
Goodwill	Goodwill	628		628		628		Goodwill	628		628		628
Trade Names	Trade Names	411		411		411		Trade Names	165		165		165
Deferred Income Taxes	Deferred Income Taxes	70		69		74		Deferred Income Taxes	45		45		59
Other Assets	Other Assets	204		231		335		Other Assets	151		149		142
Other Assets of Discontinued Operations								Other Assets of Discontinued Operations	—		—		2,831
Total Assets	Total Assets	$	10,392	$	11,571	$	10,880	Total Assets	$	4,901	$	6,026	$	10,392
LIABILITIES AND EQUITY (DEFICIT)	LIABILITIES AND EQUITY (DEFICIT)							LIABILITIES AND EQUITY (DEFICIT)
Current Liabilities:	Current Liabilities:							Current Liabilities:
Accounts Payable	Accounts Payable	$	838	$	683	$	957	Accounts Payable	$	587	$	435	$	460
Accrued Expenses and Other	Accrued Expenses and Other	1,305		1,457		1,340		Accrued Expenses and Other	512		651		717
Current Debt		—		—		460

Current Operating Lease Liabilities	Current Operating Lease Liabilities	480		594		624		Current Operating Lease Liabilities	158		170		148
Income Taxes	Income Taxes	2		92		52		Income Taxes	1		34		—
Current Liabilities of Discontinued Operations								Current Liabilities of Discontinued Operations	—		—		1,300
Total Current Liabilities	Total Current Liabilities	2,625		2,826		3,433		Total Current Liabilities	1,258		1,290		2,625
Deferred Income Taxes	Deferred Income Taxes	250		234		191		Deferred Income Taxes	157		157		149
Long-term Debt	Long-term Debt	5,938		6,366		6,269		Long-term Debt	4,858		4,854		5,346
Long-term Operating Lease Liabilities	Long-term Operating Lease Liabilities	2,476		2,495		2,698		Long-term Operating Lease Liabilities	1,050		989		1,020
Other Long-term Liabilities	Other Long-term Liabilities	291		311		193		Other Long-term Liabilities	240		253		270
Other Long-term Liabilities of Discontinued Operations								Other Long-term Liabilities of Discontinued Operations	—		—		2,170
Shareholders’ Equity (Deficit):	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	—		—		—		Preferred Stock - $1.00 par value; 10 shares authorized; none issued	—		—		—
Common Stock - $0.50 par value; 1,000 shares authorized; 280, 286 and 286 shares issued; 265, 278 and 278 shares outstanding, respectively		140		143		143
Common Stock - $0.50 par value; 1,000 shares authorized; 243, 269 and 280 shares issued; 228, 254 and 265 shares outstanding, respectively								Common Stock - $0.50 par value; 1,000 shares authorized; 243, 269 and 280 shares issued; 228, 254 and 265 shares outstanding, respectively	122		134		140
Paid-in Capital	Paid-in Capital	911		891		869		Paid-in Capital	791		893		911
Accumulated Other Comprehensive Income	Accumulated Other Comprehensive Income	87		83		49		Accumulated Other Comprehensive Income	80		80		87
Retained Earnings (Accumulated Deficit)	Retained Earnings (Accumulated Deficit)	(1,505)		(1,421)		(2,611)		Retained Earnings (Accumulated Deficit)	(2,834)		(1,803)		(1,505)
Less: Treasury Stock, at Average Cost; 15, 8 and 8 shares, respectively		(822)		(358)		(358)
Less: Treasury Stock, at Average Cost; 15, 15 and 15 shares, respectively								Less: Treasury Stock, at Average Cost; 15, 15 and 15 shares, respectively	(822)		(822)		(822)
Total Shareholders’ Equity (Deficit)	Total Shareholders’ Equity (Deficit)	(1,189)		(662)		(1,908)		Total Shareholders’ Equity (Deficit)	(2,663)		(1,518)		(1,189)
Noncontrolling Interest	Noncontrolling Interest	1		1		4		Noncontrolling Interest	1		1		1
Total Equity (Deficit)	Total Equity (Deficit)	(1,188)		(661)		(1,904)		Total Equity (Deficit)	(2,662)		(1,517)		(1,188)
Total Liabilities and Equity (Deficit)	Total Liabilities and Equity (Deficit)	$	10,392	$	11,571	$	10,880	Total Liabilities and Equity (Deficit)	$	4,901	$	6,026	$	10,392

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

Table of Contents

BATH & BODY WORKS, INC.

CONSOLIDATED STATEMENTS OF TOTAL EQUITY (DEFICIT)

(in millions, except per share amounts)

(Unaudited)

Second Quarter ~~2021~~2022

Common Stock Paid-In
Capital Accumulated
Other
Comprehensive
Income Retained
Earnings (Accumulated Deficit) Treasury
Stock, at
Average
Cost Noncontrolling Interest Total Equity (Deficit)
Shares
Outstanding Par
Value
Balance, May 1, 2021 277 $ 144 $ 903 $ 86 $ (1,144) $ (523) $ 1 $ (533)
Net Income — — — — 374 — — 374
Other Comprehensive Income — — — 1 — — — 1
Total Comprehensive Income — — — 1 374 — — 375
Cash Dividends ($0.15 per share) — — — — (42) — — (42)
Repurchases of Common Stock (14) — — — — (1,029) — (1,029)
Treasury Share Retirement — (5) (32) — (693) 730 — —
Share-based Compensation and Other 2 1 40 — — — — 41
Balance, July 31, 2021 265 $ 140 $ 911 $ 87 $ (1,505) $ (822) $ 1 $ (1,188)


	Common Stock			Paid-In Capital		Accumulated Other Comprehensive Income		Retained Earnings (Accumulated Deficit)		Treasury Stock, at Average Cost		Noncontrolling Interest		Total Equity (Deficit)
	Shares Outstanding	Par Value
Balance, April 30, 2022	236	$	126	$	618	$	80	$	(2,661)	$	(822)	$	1	$	(2,658)
Net Income and Total Comprehensive Income	—	—		—		—		120		—		—		120


Cash Dividends ($0.20 per share)	—	—		—		—		(46)		—		—		(46)
Repurchases of Common Stock	(2)	—		—		—		—		(77)		—		(77)
Accelerated Share Repurchase Program	(7)	—		200		—		—		(200)		—		—
Treasury Share Retirement	—	(4)		(26)		—		(247)		277		—		—
Share-based Compensation and Other	1	—		(1)		—		—		—		—		(1)
Balance, July 30, 2022	228	$	122	$	791	$	80	$	(2,834)	$	(822)	$	1	$	(2,662)

Second Quarter ~~2020~~2021

Common Stock Paid-In
Capital Accumulated
Other
Comprehensive
Income Retained
Earnings (Accumulated Deficit) Treasury
Stock, at
Average
Cost Noncontrolling Interest Total Equity (Deficit)
Shares
Outstanding Par
Value
Balance, May 2, 2020 278 $ 143 $ 865 $ 51 $ (2,562) $ (358) $ 3 $ (1,858)
Net Loss — — — — (49) — — (49)
Other Comprehensive Loss — — — (2) — — — (2)
Total Comprehensive Loss — — — (2) (49) — — (51)
Share-based Compensation and Other — — 4 — — — 1 5
Balance, August 1, 2020 278 $ 143 $ 869 $ 49 $ (2,611) $ (358) $ 4 $ (1,904)


	Common Stock			Paid-In Capital		Accumulated Other Comprehensive Income		Retained Earnings (Accumulated Deficit)		Treasury Stock, at Average Cost		Noncontrolling Interest		Total Equity (Deficit)
	Shares Outstanding	Par Value
Balance, May 1, 2021	277	$	144	$	903	$	86	$	(1,144)	$	(523)	$	1	$	(533)
Net Income	—	—		—		—		374		—		—		374
Other Comprehensive Income	—	—		—		1		—		—		—		1
Total Comprehensive Income	—	—		—		1		374		—		—		375
Cash Dividends ($0.15 per share)	—	—		—		—		(42)		—		—		(42)
Repurchases of Common Stock	(14)	—		—		—		—		(1,029)		—		(1,029)
Treasury Share Retirement	—	(5)		(32)		—		(693)		730		—		—
Share-based Compensation and Other	2	1		40		—		—		—		—		41
Balance, July 31, 2021	265	$	140	$	911	$	87	$	(1,505)	$	(822)	$	1	$	(1,188)

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

Table of Contents

BATH & BODY WORKS, INC.

CONSOLIDATED STATEMENTS OF TOTAL EQUITY (DEFICIT)

(in millions except per share amounts)

(Unaudited)

Year-to-Date ~~2021~~2022

Common Stock Paid-In
Capital Accumulated
Other
Comprehensive
Income Retained
Earnings (Accumulated Deficit) Treasury
Stock, at
Average
Cost Noncontrolling Interest Total Equity (Deficit)
Shares
Outstanding Par
Value
Balance, January 30, 2021 278 $ 143 $ 891 $ 83 $ (1,421) $ (358) $ 1 $ (661)
Net Loss — — — — 651 — — 651
Other Comprehensive Income — — — 4 — — — 4
Total Comprehensive Income — — — 4 651 — — 655
Cash Dividends ($0.15 per share) — — — — (42) — — (42)
Repurchases of Common Stock (17) — — — — (1,194) — (1,194)
Treasury Share Retirement — (5) (32) — (693) 730 — —
Share-based Compensation and Other 4 2 52 — — — — 54
Balance, July 31, 2021 265 $ 140 $ 911 $ 87 $ (1,505) $ (822) $ 1 $ (1,188)


	Common Stock			Paid-In Capital		Accumulated Other Comprehensive Income		Retained Earnings (Accumulated Deficit)		Treasury Stock, at Average Cost		Noncontrolling Interest		Total Equity (Deficit)
	Shares Outstanding	Par Value
Balance, January 29, 2022	254	$	134	$	893	$	80	$	(1,803)	$	(822)	$	1	$	(1,517)
Net Income and Total Comprehensive Income	—	—		—		—		275		—		—		275


Cash Dividends ($0.40 per share)	—	—		—		—		(94)		—		—		(94)
Repurchases of Common Stock	(7)	—		—		—		—		(312)		—		(312)
Accelerated Share Repurchase Program	(20)	—		—		—		—		(1,000)		—		(1,000)
Treasury Share Retirement	—	(13)		(87)		—		(1,212)		1,312		—		—
Share-based Compensation and Other	1	1		(15)		—		—		—		—		(14)
Balance, July 30, 2022	228	$	122	$	791	$	80	$	(2,834)	$	(822)	$	1	$	(2,662)

Year-to-Date ~~2020~~2021

Common Stock Paid-In
Capital Accumulated
Other
Comprehensive
Income Retained
Earnings (Accumulated Deficit) Treasury
Stock, at
Average
Cost Noncontrolling Interest Total Equity (Deficit)
Shares
Outstanding Par
Value
Balance, February 1, 2020 277 $ 142 $ 847 $ 52 $ (2,182) $ (358) $ 4 $ (1,495)
Net Loss — — — — (346) — — (346)
Other Comprehensive Loss — — — (3) — — — (3)
Total Comprehensive Loss — — — (3) (346) — — (349)
Cash Dividends ($0.30 per share) — — — — (83) — — (83)
Share-based Compensation and Other 1 1 22 — — — — 23
Balance, August 1, 2020 278 $ 143 $ 869 $ 49 $ (2,611) $ (358) $ 4 $ (1,904)


	Common Stock			Paid-In Capital		Accumulated Other Comprehensive Income		Retained Earnings (Accumulated Deficit)		Treasury Stock, at Average Cost		Noncontrolling Interest		Total Equity (Deficit)
	Shares Outstanding	Par Value
Balance, January 30, 2021	278	$	143	$	891	$	83	$	(1,421)	$	(358)	$	1	$	(661)
Net Income	—	—		—		—		651		—		—		651
Other Comprehensive Income	—	—		—		4		—		—		—		4
Total Comprehensive Income	—	—		—		4		651		—		—		655
Cash Dividends ($0.15 per share)	—	—		—		—		(42)		—		—		(42)
Repurchases of Common Stock	(17)	—		—		—		—		(1,194)		—		(1,194)
Treasury Share Retirement	—	(5)		(32)		—		(693)		730		—		—
Share-based Compensation and Other	4	2		52		—		—		—		—		54
Balance, July 31, 2021	265	$	140	$	911	$	87	$	(1,505)	$	(822)	$	1	$	(1,188)

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

Table of Contents

BATH & BODY WORKS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions)

(Unaudited)


		Year-to-Date					Year-to-Date
		2021		2020			2022		2021 (a)
Operating Activities:	Operating Activities:					Operating Activities:
Net Income (Loss)		$	651	$	(346)
Adjustments to Reconcile Net Income (Loss) to Net Cash Provided by Operating Activities:
Net Income						Net Income	$	275	$	651
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:						Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:
Depreciation of Long-lived Assets	Depreciation of Long-lived Assets	258		266		Depreciation of Long-lived Assets	106		258
Loss on Extinguishment of Debt	Loss on Extinguishment of Debt	105		—		Loss on Extinguishment of Debt	—		105
Victoria's Secret Asset Impairment Charges		—		214
Share-based Compensation Expense	Share-based Compensation Expense	30		28		Share-based Compensation Expense	15		30
Deferred Income Taxes	Deferred Income Taxes	16		(19)		Deferred Income Taxes	—		16
Gain from Hong Kong Store Closure and Lease Termination		—		(39)

Changes in Assets and Liabilities:	Changes in Assets and Liabilities:					Changes in Assets and Liabilities:
Accounts Receivable	Accounts Receivable	39		37		Accounts Receivable	55		39
Inventories	Inventories	(200)		(191)		Inventories	(261)		(200)
Accounts Payable, Accrued Expenses and Other	Accounts Payable, Accrued Expenses and Other	(42)		304		Accounts Payable, Accrued Expenses and Other	16		(42)
Income Taxes Payable	Income Taxes Payable	(144)		(92)		Income Taxes Payable	(69)		(144)
Other Assets and Liabilities	Other Assets and Liabilities	(140)		124		Other Assets and Liabilities	(56)		(140)
Net Cash Provided by Operating Activities	Net Cash Provided by Operating Activities	573		286		Net Cash Provided by Operating Activities	81		573
Investing Activities:	Investing Activities:					Investing Activities:
Capital Expenditures	Capital Expenditures	(178)		(124)		Capital Expenditures	(161)		(178)

Other Investing Activities	Other Investing Activities	10		8		Other Investing Activities	(1)		10
Net Cash Used for Investing Activities	Net Cash Used for Investing Activities	(168)		(116)		Net Cash Used for Investing Activities	(162)		(168)
Financing Activities:	Financing Activities:					Financing Activities:
Proceeds from Issuance of Long-Term Debt, Net of Issuance Costs		—		1,231

Proceeds from Victoria's Secret & Co. Notes	Proceeds from Victoria's Secret & Co. Notes	600		—		Proceeds from Victoria's Secret & Co. Notes	—		600
Payments of Long-term Debt	Payments of Long-term Debt	(1,130)		—		Payments of Long-term Debt	—		(1,130)
Borrowing from Credit Agreement		—		950
Repayment of Credit Agreement		—		(950)
Borrowings from Foreign Facilities		—		33
Repayments of Foreign Facilities		—		(85)

Repurchases of Common Stock	Repurchases of Common Stock	(1,194)		—		Repurchases of Common Stock	(1,312)		(1,194)
Dividends Paid	Dividends Paid	(42)		(83)		Dividends Paid	(94)		(42)
Tax Payments related to Share-based Awards	Tax Payments related to Share-based Awards	(56)		(6)		Tax Payments related to Share-based Awards	(31)		(56)
Proceeds from Stock Option Exercises	Proceeds from Stock Option Exercises	76		—		Proceeds from Stock Option Exercises	2		76
Other Financing Activities	Other Financing Activities	(6)		(19)		Other Financing Activities	(11)		(6)
Net Cash Provided by (Used for) Financing Activities		(1,752)		1,071
Net Cash Used for Financing Activities						Net Cash Used for Financing Activities	(1,446)		(1,752)
Effects of Exchange Rate Changes on Cash and Cash Equivalents and Restricted Cash	Effects of Exchange Rate Changes on Cash and Cash Equivalents and Restricted Cash	2		(1)		Effects of Exchange Rate Changes on Cash and Cash Equivalents and Restricted Cash	—		2
Net Increase (Decrease) in Cash and Cash Equivalents and Restricted Cash		(1,345)		1,240
Net Decrease in Cash and Cash Equivalents and Restricted Cash						Net Decrease in Cash and Cash Equivalents and Restricted Cash	(1,527)		(1,345)
Cash and Cash Equivalents and Restricted Cash, Beginning of Period	Cash and Cash Equivalents and Restricted Cash, Beginning of Period	3,933		1,499		Cash and Cash Equivalents and Restricted Cash, Beginning of Period	1,979		3,933
Cash and Cash Equivalents and Restricted Cash, End of Period	Cash and Cash Equivalents and Restricted Cash, End of Period	$	2,588	$	2,739	Cash and Cash Equivalents and Restricted Cash, End of Period	$	452	$	2,588

_______________

(a)The cash flows related to discontinued operations have not been segregated. Accordingly, the 2021 Consolidated Statement of Cash Flows includes the results of continuing and discontinued operations.

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

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BATH & BODY WORKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. Description of Business and Basis of Presentation

Description of Business

~~As of July 31, 2021, L Brands,~~Bath & Body Works, Inc. ("~~L Brands"~~Bath & Body Works" or the "Company") ~~was~~is a specialty retailer of home fragrance, ~~products,~~ body care ~~soaps~~ and ~~sanitizers, women’s intimate~~soap and ~~other apparel, and personal and beauty care~~sanitizer products. ~~Through the Bath & Body Works, Victoria's Secret and PINK retail brands, the~~The Company ~~sold~~sells merchandise through ~~company-operated~~its specialty retail stores in the United States of America ("U.S.~~, Canada~~") and ~~Greater China,~~Canada, and through its websites and other ~~channels.~~channels, under the Bath & Body Works, White Barn and other brand names. The Company's international ~~operations are~~business is primarily conducted through franchise, license and wholesale partners. The Company operates as and ~~joint venture partners.~~reports a single segment that includes all of its continuing operations.

On August 2, 2021, ~~in connection with~~ the ~~separation~~Company completed the tax-free spin-off of its Victoria's Secret business, which included the Victoria's Secret business discussed below, the Company changed its name from L Brands, Inc. to Bath & Body Works, Inc. Additionally, starting August 3, 2021, the Company's common stock began trading under the stock symbol "BBWI."

~~Victoria's Secret & Co. Spin-Off~~

~~On July 9, 2021, the Company announced that its Board of Directors approved the previously announced separation of the Victoria’s Secret business, including~~and PINK ~~(the "Separation"),~~brands, into an independent publicly traded company ~~("Victoria's Secret & Co."~~(the "Separation"). ~~On August 2, 2021 (the “Distribution Date”), after~~Accordingly, the ~~New York Stock Exchange ("NYSE") market closing, the Separation was completed~~operating results of, and ~~the Company transferred certain assets and liabilities associated with its Victoria's Secret business~~costs to Victoria's Secret & Co. The Separation was achieved through the Company's distribution (the "Distribution") of 100% of the shares of Victoria's Secret & Co. common stock to holders of L Brands' common stock as of the close of business on the record date of July 22, 2021. The Company's stockholders of record received one share of Victoria’s Secret & Co. common stock for every three shares of the Company's common stock. On August 3, 2021, Victoria’s Secret & Co. became an independent, publicly-traded company trading on the NYSE under the stock symbol "VSCO." The Company retained no ownership interest in Victoria’s Secret & Co. following the Separation. Beginning in the third quarter of fiscal 2021, the historical financial results ofseparate, the Victoria's Secret business ~~for periods prior to the Distribution Date will be reflected~~are reported in Income from Discontinued Operations, Net of Tax in the ~~Company’s consolidated financial statements~~Consolidated Statements of Income for all periods presented. In addition, the related assets and liabilities are reported as ~~discontinued operations. On August~~Assets and Liabilities of Discontinued Operations on the Consolidated Balance Sheets. All amounts and disclosures included in the Notes to Consolidated Financial Statements reflect only the Company's continuing operations unless otherwise noted. For additional information, see Note 2, ~~2021, Victoria's Secret & Co. made cash payments of approximately $976 million to the Company in connection with the Separation.~~"Discontinued Operations."

~~Impacts of~~ COVID-19

The coronavirus ~~pandemic~~ ("COVID-19") pandemic has created significant public health concerns as well as economic disruption, uncertainty and volatility. The Company's operations and financial performance have been materially impacted by the COVID-19 pandemic. In the first quarter of 2020, all the Company's stores in North America were closed on March 17, 2020, but the Company was able to re-open the majority of its stores as of the end of the second quarter of 2020. Additionally, operations for Victoria’s Secret Direct were temporarily suspended for approximately one week in late March 2020, while Bath & Body Works Direct remained open for the duration of 2020.

~~During 2020, the Company took prudent actions to manage expenses and to maintain its cash position and financial flexibility. The Company also has adopted new operating models~~remains focused on providing a safe store environment for its customers and associates while ~~also~~ delivering an engaging shopping ~~experience. The Company remains focused on~~experience, and in establishing the necessary protocols to ensure the safe operations of its distribution and fulfillment centers and ~~call centers while maximizing~~corporate offices. As expected, the Company has experienced channel and product category shifts as customer mindset and needs have shifted coming out of the pandemic.

The Company continues to monitor the COVID-19 pandemic and the effects on its ~~direct businesses.~~operations and financial performance. There remains the potential for ~~COVID-related risks of closure~~future COVID-19-related closures or operating restrictions, which could materially impact the Company's operations and financial performance in future periods.

Fiscal Year

The Company’s fiscal year ends on the Saturday nearest to January 31. As used herein, “second quarter of ~~2021”~~2022” and “second quarter of ~~2020”~~2021” refer to the thirteen-week periods ended July 30, 2022 and July 31, 2021, ~~and August 1, 2020,~~ respectively. ~~“Year-to-Date 2021”~~“Year-to-date 2022” and “year-to-date ~~2020”~~2021” refer to the twenty-six-week periods ~~ending~~ended July 30, 2022 and July 31, 2021, ~~and August 1, 2020,~~ 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~~

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merchandise components is included in Costs of Goods Sold, Buying and Occupancy in the Consolidated Statements of Income (Loss). The Company’s share of net income or loss from its investment in the Victoria's Secret U.K. joint venture with Next PLC is included in General, Administrative and Store Operating Expenses in the Consolidated Statements of Income (Loss). The Company’s share of net income or loss of all ~~other~~ unconsolidated entities is included in Other Income (Loss) in the Consolidated Statements of ~~Income (Loss).~~Income. The Company’s equity method investments are required to be reviewed 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 July 30, 2022 and July 31, 2021 ~~and August 1, 2020~~ are unaudited and are presented pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). These Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and Notes thereto contained in the Company’s ~~2020~~2021 Annual Report on Form 10-K.

In the opinion of management, the accompanying Consolidated Financial Statements reflect all adjustments ~~which~~that are of a normal recurring nature and necessary for a fair presentation of the results for the interim periods.

Seasonality of Business

Due to the seasonal variations in the retail industry, the results of operations for the interim ~~period is~~periods are not necessarily indicative of the results expected for the full fiscal year.

~~Restricted Cash~~

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In July 2021, Victoria’s Secret & Co., prior to the Separation and while a subsidiary of the Company, issued $600 million of 4.625% notes due in July 2029 (the "Victoria's Secret & Co. Notes"). As of July 31, 2021, the initial proceeds were held in escrow for release to Victoria's Secret & Co. upon satisfaction of certain conditions, including completion of the Separation. If the conditions for the release from escrow of the proceeds were not satisfied, the Victoria's Secret & Co. Notes would have been subject to mandatory redemption. The $600 million initial proceeds are included in Cash in Escrow related to Victoria's Secret & Co. Spin-Off on the July 31, 2021 Consolidated Balance Sheet. For additional information, see Note 9, “Long-term Debt and Borrowing Facilities.”

During 2020, the Company placed cash on deposit with certain financial institutions as collateral for their lending commitments. These deposits totaled $30 million and $128 million as of January 30, 2021 and August 1, 2020, respectively, and were recorded in Other Assets on the Consolidated Balance Sheets. During the second quarter of 2021, the Company terminated these lending commitments which released the restrictions on this cash. Accordingly, the balance was reclassified to Cash and Cash Equivalents ~~during~~and Restricted Cash

The following table summarizes the ~~second quarter~~location of ~~2021.~~

~~As of July 31, 2021,~~ the Company's ~~total~~ Cash and Cash Equivalents and restricted cash ~~totaled $2.588 billion.~~in the Consolidated Balance Sheets as of July 30, 2022, January 29, 2022 and July 31, 2021:


	July 30, 2022		January 29, 2022		July 31, 2021
	(in millions)
Cash and Cash Equivalents	$	452	$	1,979	$	1,695
Current Assets of Discontinued Operations	—		—		893
Total Cash and Cash Equivalents and Restricted Cash	$	452	$	1,979	$	2,588

Derivative Financial Instruments

The Company uses derivative financial instruments to manage exposure to foreign currency exchange rates. The Company does not use derivative instruments for trading purposes. All derivative instruments are recorded on the Consolidated Balance Sheets at fair value.

~~The~~Company's Canadian dollar denominated earnings ~~of the Company's wholly owned foreign operations~~ 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 for its Canadian operations.~~exposure. 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 Costs of Goods Sold, Buying and Occupancy in the Consolidated Statements of ~~Income (Loss).~~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

The Company maintains cash and cash equivalents ~~restricted cash~~ 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. The Company’s investment portfolio is primarily comprised 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 determines the required allowance for expected credit losses using information such as customer credit history and financial condition. Amounts are recorded to the allowance when it is determined that expected credit losses may occur.

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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.

Recently Issued Accounting Pronouncements

The Company did not adopt any new accounting standards ~~during the second quarter of 2021~~in 2022 that had a material impact on ~~the Company's~~its consolidated results of operations, financial position or cash flows. In addition, as of September 2, 2022, there ~~are~~were no new accounting standards that the Company has not yet adopted that are expected to have a material impact on ~~the Company's~~its consolidated results of operations, financial position or cash flows.

2. Discontinued Operations

Victoria's Secret & Co. Spin-Off

On July 9, 2021, the Company announced that its Board of Directors (the "Board") approved the previously announced Separation of the Victoria’s Secret business into an independent, publicly traded company, Victoria's Secret & Co. On August 2, 2021 (the "Distribution Date"), after the New York Stock Exchange ("NYSE") market closing, the Separation was completed. The Separation was achieved through the Company's tax-free distribution (the "Distribution") of 100% of the shares of Victoria's Secret & Co. common stock to holders of L Brands, Inc. common stock as of the close of business on the record date of July 22, 2021. The Company's stockholders of record received one share of Victoria’s Secret & Co. common stock for every three shares of the Company's common stock. On August 3, 2021, Victoria’s Secret & Co. became an independent, publicly-traded company trading on the NYSE under the stock symbol "VSCO." The Company retained no ownership interest in Victoria’s Secret & Co. following the Separation.

In connection with the Separation, the Company entered into several agreements with Victoria's Secret & Co. that govern the relationship of the parties following the spin-off, including the Separation and Distribution Agreement, the Transition Services

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Agreements, the Tax Matters Agreement, the Employee Matters Agreement and the Domestic Transportation Services Agreement.

Under the terms of the Transition Services Agreements, as amended, the Company provides to Victoria's Secret & Co. various services or functions, including human resources, payroll and certain logistics functions. Additionally, Victoria's Secret & Co. provides to the Company various services or functions, including information technology, certain logistics functions, customer marketing and customer call center services. Generally, these services will be performed for a period of up to two years following the Distribution, except for information technology services, which will be provided for a period of up to three years following the Distribution and may be extended for a maximum of two additional one-year periods subject to increased administrative charges. Consideration and costs for the transition services are determined using several billing methodologies as described in the agreements, including customary billing, pass-through billing, percent of sales billing or fixed fee billing. Consideration for transition services provided to Victoria's Secret & Co. are recorded within the 2022 Consolidated Statements of Income based on the nature of the service and as an offset to expenses incurred to provide the services. Costs for transition services provided by Victoria's Secret & Co. are recorded within the 2022 Consolidated Statements of Income based on the nature of the service. During the second quarter of 2022, the Company recognized consideration of $19 million and recognized costs of $20 million pursuant to the Transition Service Agreements. During year-to-date 2022, the Company recognized consideration of $38 million and recognized costs of $40 million pursuant to the Transition Service Agreements.

Under the terms of the Domestic Transportation Services Agreement, the Company provides transportation services for Victoria's Secret & Co. merchandise in the U.S. and Canada for an initial term of three years following the Distribution, which term will thereafter continuously renew unless and until Victoria’s Secret & Co. or the Company elects to terminate the arrangement upon 18 or 36 months’ prior written notice, respectively. Consideration for the transportation services is determined using customary billing and fixed billing methodologies, which are described in the agreement, and are subject to an administrative charge. Consideration for logistics services provided to Victoria's Secret & Co. are recorded within Costs of Goods Sold, Buying and Occupancy in the 2022 Consolidated Statements of Income and as an offset to expenses incurred to provide the services. During the second quarter of 2022, the Company recognized consideration of $21 million pursuant to the Domestic Transportation Services Agreement. During year-to-date 2022, the Company recognized consideration of $39 million pursuant to the Domestic Transportation Services Agreement.

In conjunction with the Separation, the Company has contingent obligations relating to certain lease payments under the current terms of noncancelable leases. For additional information, see Note 12, "Commitments and Contingencies."

Financial Information of Discontinued Operations

Income from Discontinued Operations, Net of Tax in the Consolidated Statements of Income reflects the after-tax results of the Victoria's Secret business and Separation-related fees, and does not include any allocation of general corporate overhead expense or interest expense of the Company. The Company did not report any results from discontinued operations year-to-date 2022.

The following table summarizes the significant line items included in Income from Discontinued Operations, Net of Tax in the second quarter and year-to-date 2021 Consolidated Statements of Income:


	Second Quarter		Year-to-Date
	(in millions)
Net Sales	$	1,614	$	3,168
Costs of Goods Sold, Buying and Occupancy	(944)		(1,826)
General, Administrative and Store Operating Expenses (a)	(455)		(892)
Interest Expense	(2)		(2)
Other Loss	(1)		(1)
Income from Discontinued Operations Before Income Taxes	212		447
Provision for Income Taxes	53		102
Income from Discontinued Operations, Net of Tax	$	159	$	345

_______________

(a)The second quarter of 2021 includes Separation-related costs of $18 million. Year-to-date 2021 includes Separation-related costs of $27 million. Prior to the Separation, these costs were reported in the Other category under the Company's previous segment reporting.

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The information presented as discontinued operations on the Consolidated Balance Sheets includes certain assets and liabilities that were transferred to Victoria’s Secret & Co. pursuant to the Separation agreements, and excludes certain liabilities that were retained by the Company in connection with the Separation. There were no assets or liabilities classified as discontinued operations as of July 30, 2022 or January 29, 2022.

In July 2021, Victoria’s Secret & Co., prior to the Separation and while a subsidiary of the Company, issued $600 million of 4.625% notes due in July 2029 (the "Victoria's Secret & Co. Notes"). As of July 31, 2021, the initial proceeds were held in escrow for release to Victoria's Secret & Co. upon satisfaction of certain conditions, including completion of the Separation. The $600 million initial proceeds are included in Current Assets of Discontinued Operations on the July 31, 2021 Consolidated Balance Sheet. The long-term debt is included in Other Long-Term Liabilities of Discontinued Operations on the July 31, 2021 Consolidated Balance Sheet. On August 2, 2021, the Victoria's Secret & Co. Notes became the obligations of Victoria's Secret & Co. concurrent with the Separation.

The following table summarizes the carrying value of the significant classes of assets and liabilities classified as discontinued operations as of July 31, 2021:


	(in millions)
Cash and Cash Equivalents	$	293
Cash in Escrow related to Victoria's Secret & Co. Spin-Off	600
Accounts Receivable, Net	99
Inventories	745
Other	89
Current Assets of Discontinued Operations	1,826

Property and Equipment, Net	999
Operating Lease Assets	1,513
Trade Names	246
Deferred Income Taxes	11
Other Assets	62
Other Assets of Discontinued Operations	$	2,831

Accounts Payable	$	379
Accrued Expenses and Other	587

Current Operating Lease Liabilities	332
Income Taxes	2
Current Liabilities of Discontinued Operations	1,300

Deferred Income Taxes	101
Long-term Debt	592
Long-term Operating Lease Liabilities	1,457
Other Long-term Liabilities	20
Other Long-term Liabilities of Discontinued Operations	$	2,170

The cash flows related to discontinued operations have not been segregated. Accordingly, the 2021 Consolidated Statement of Cash Flows includes the results of continuing and discontinued operations. The Company did not report any cash flows from discontinued operations year-to-date 2022.

The following table summarizes Depreciation of Long-Lived Assets, Share-based Compensation Expense, Capital Expenditures and Financing Activities of discontinued operations for year-to-date 2021:


	(in millions)
Depreciation of Long-Lived Assets	$	158
Share-based Compensation Expense	15
Capital Expenditures	(66)
Proceeds from Victoria's Secret & Co. Notes	600

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3. Revenue Recognition

Accounts receivable, net from revenue-generating activities were ~~$129~~$98 million as of July 30, 2022, $64 million as of January 29, 2022 and $56 million as of July 31, ~~2021, $125 million as of January 30, 2021 and $186 million as of August 1, 2020.~~2021. Accounts receivable primarily relate to amounts due from the Company's franchise, license and wholesale partners. Under these arrangements, payment terms are typically 6045 to 9075 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 ~~and private label credit card programs~~points and direct channel shipments, which are all impacted by seasonal and holiday-related sales patterns. Deferred revenue, which is recorded within Accrued Expenses and Other on the Consolidated Balance Sheets, was ~~$325~~$123 million as of July 30, 2022, $148 million as of January 29, 2022 and $106 million as of July 31, ~~2021, $371 million as of January 30, 2021 and $316 million as of August 1, 2020.~~2021. The Company recognized ~~$167~~$76 million as revenue year-to-date ~~2021~~2022 from amounts recorded as deferred revenue at the beginning of the Company's 2022 fiscal year. ~~As of July 31, 2021, the Company recorded deferred revenue of $316 million within Accrued Expenses and Other, and $9 million within Other Long-term Liabilities on the Consolidated Balance Sheet.~~

The following table provides a disaggregation of Net Sales for the second ~~quarter~~quarters of and year-to-date ~~2021~~2022 and ~~2020:~~2021:

Second Quarter Year-to-Date
2021 2020 2021 2020
(in millions)
Bath & Body Works Stores - U.S. and Canada $ 1,230 $ 678 $ 2,280 $ 1,102
Bath & Body Works Direct 407 519 756 807
Bath & Body Works International (a) 67 56 137 105
Total Bath & Body Works 1,704 1,253 3,173 2,014
Victoria’s Secret Stores - U.S. and Canada 1,037 364 1,970 877
Victoria’s Secret Direct 469 614 990 922
Victoria’s Secret International (b) 108 88 208 161
Total Victoria’s Secret 1,614 1,066 3,168 1,960
Total Net Sales $ 3,318 $ 2,319 $ 6,341 $ 3,974


	Second Quarter				Year-to-Date
	2022		2021		2022		2021
	(in millions)
Stores - U.S. and Canada	$	1,161	$	1,230	$	2,220	$	2,280
Direct - U.S. and Canada	367		407		684		756
International (a)	90		67		163		137
Total Net Sales	$	1,618	$	1,704	$	3,067	$	3,173

_______________

(a)Results include royalties associated with franchised ~~store~~stores and wholesale sales.

~~(b)Results~~The Company’s net sales outside of the U.S. include ~~company-operated~~sales from Company-operated stores and its e-commerce site in ~~the U.K. (pre-joint venture) and Greater China, and~~Canada, royalties associated with franchised stores and wholesale sales.

~~3. Restructuring Activities~~

~~During~~ Certain of these sales are subject to the impact of fluctuations in foreign currency. The Company’s net sales outside of the U.S. totaled $164 million and $122 million for the second ~~quarter~~quarters of ~~2020, the Company completed a comprehensive review of its home office organizations in order to achieve meaningful reductions in overhead expenses~~2022 and ~~decentralize significant shared functions~~2021, respectively, and services to support the separation of the Bath & Body Works and Victoria's Secret businesses. This resulted in a reduction of the home office headcount by approximately 15%, or about 850 associates. Pre-tax severance and related costs associated with these reductions, totaling $81 million, are included in General, Administrative and Store Operating Expenses in the 2020 Consolidated Statements of Loss. Costs of $51$301 million and ~~$12~~$238 million ~~are recorded within the Victoria's Secret~~for year-to-date 2022 and ~~Bath & Body Works segments, respectively, while the remaining $18 million is recorded within Other.~~

~~During year-to-date~~ 2021, the Company made payments of $22 million related to severance and related costs associated with these reductions. As of July 31, 2021, a liability of $14 million related to these reductions is included in Accrued Expenses and Other on the Consolidated Balance Sheet.

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~~Victoria's Secret U.K.~~

Due to challenging business results for Victoria's Secret in the U.K., the Company entered into Administration in June 2020 to restructure store lease agreements and reduce operating losses in the Victoria's Secret U.K. business. In October 2020, the Company entered into a joint venture with Next PLC for the Victoria’s Secret business in the United Kingdom and Ireland. Under this agreement, the Company owns 49% of the joint venture, and Next owns 51% and is responsible for operations. The Company accounts for its investment in the joint venture under the equity method of accounting.respectively.

4. Earnings ~~(Loss)~~ Per Share and Shareholders’ Equity (Deficit)

Earnings ~~(Loss)~~ Per Share

Earnings ~~(loss)~~ per basic share is computed based on the weighted-average number of common ~~shares.~~shares outstanding. Earnings ~~(loss)~~ per diluted share include the weighted-average effect of dilutive 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 basic and diluted earnings ~~(loss)~~ per share for the second ~~quarter~~quarters of and year-to-date ~~2021~~2022 and ~~2020:~~2021:


		Second Quarter		Year-to-Date			Second Quarter		Year-to-Date
		2021	2020	2021	2020		2022	2021	2022	2021
		(in millions)					(in millions)

Common Shares	Common Shares	288	286	288	285	Common Shares	245	288	250	288
Treasury Shares	Treasury Shares	(13)	(8)	(11)	(8)	Treasury Shares	(15)	(13)	(15)	(11)
Basic Shares	Basic Shares	275	278	277	277	Basic Shares	230	275	235	277
Effect of Dilutive Restricted Stock and Options		5	—	5	—
Effect of Dilutive Awards						Effect of Dilutive Awards	1	5	2	5
Diluted Shares	Diluted Shares	280	278	282	277	Diluted Shares	231	280	237	282
Anti-dilutive Options and Awards (a)		1	11	1	12
Anti-dilutive Awards (a)						Anti-dilutive Awards (a)	2	1	1	1

_______________

(a)~~These options and~~The awards were excluded from the calculation of diluted earnings per share because their inclusion would have been anti-dilutive. ~~For 2020, the dilutive impact of all outstanding options and awards were excluded from dilutive shares as a result of the Company's net loss for the period.~~

~~Shareholders’ Equity (Deficit)~~

Common Stock Share Repurchases

2021 Repurchase Programs

In March 2021, the ~~Company's~~ Board ~~of Directors~~ authorized a ~~new~~ $500 million share repurchase plan (the "March 2021 Program"), which replaced the $79 million remaining under ~~the~~a March 2018 repurchase program. Pursuant to the Board's authorization, the Company entered into a Rule 10b5-1 purchase plan to effectuate share repurchases for the first $250 million. In May 2021, the Company initiated a second $250 million Rule 10b5-1 purchase plan to effectuate the remaining share repurchases under the March 2021 repurchase plan.

In July 2021, the ~~Company's~~ Board ~~of Directors~~ authorized a ~~new~~ $1.5 billion share repurchase program (the "July 2021 Program"), which replaced the $36 million remaining under the March 2021 ~~repurchase program.~~Program. Under the authorization of this program, the Company entered into a stock

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repurchase agreement with its former Chief Executive Officer and certain of his affiliated entities pursuant to which the Company repurchased 10 million shares of its common stock for an aggregate purchase price of $730 million in July 2021.

The Company repurchased the following shares of its common stock during year-to-date 2021:
Repurchase Program Amount
Authorized Shares
Repurchased Amount
Repurchased Average Stock Price
(in millions) (in thousands) (in millions)
March 2021 $ 500 6,996 $ 464 $ 66.30
July 2021 $ 1,500 10,000 $ 730 $ 73.01

~~The~~


Repurchase Program	Amount Authorized		Shares Repurchased	Amount Repurchased		Average Stock Price
	(in millions)		(in thousands)	(in millions)
March 2021 (a)	$	500	6,996	$	464	$	66.30
July 2021 (a)	1,500		10,000	730		73.01
Total			16,996	$	1,194

_______________

(a)Reflects repurchases of L Brands, Inc. common stock prior to the August 2, 2021 spin-off of Victoria's Secret & Co.

Under the July 2021 Program, ~~had $770 million remaining as of July 31, 2021.~~

~~Subsequent to July 31, 2021,~~ the Company repurchased an additional ~~1.0~~11 million shares of its common stock for ~~$65~~an aggregate purchase price of $770 million during the third and fourth quarters of 2021.

2022 Repurchase Program

In February 2022, the Board authorized a new $1.5 billion share repurchase program (the "February 2022 Program"). As part of the February 2022 Program, the Company entered into an accelerated share repurchase program ("ASR") under which the Company repurchased $1 billion of its own outstanding common stock. The delivery of shares under the ASR resulted in an immediate reduction of the Company's outstanding shares used to calculate the weighted-average common shares outstanding for basic and diluted net income per share. Pursuant to the Board's authorization, the Company made other share repurchases in the open market under the February 2022 Program during 2022.

On February 4, 2022, the Company delivered $1 billion to the ASR bank, and the bank delivered 13.6 million shares of common stock to the Company (the "Initial Shares"). Pursuant to the terms of the ASR, the Initial Shares represented 80% of the number of shares determined by dividing the $1 billion Company payment by the closing price of its common stock on February 2, 2022.

In May 2022, the Company received an additional 6.7 million shares of its common stock from the ASR bank for the final settlement of the ASR. The final number of shares of common stock delivered under the ASR was based generally upon a discount to the average daily Rule 10b-18 volume-weighted average price at which the shares of common stock traded during the regular trading sessions on the NYSE during the term of the repurchase period. In connection with the final settlement, in the second quarter the Company reclassified the $200 million recorded in Paid-in Capital as of April 30, 2022.

The Company repurchased the following shares of its common stock during year-to-date 2022:


Repurchase Program	Amount Authorized		Shares Repurchased	Amount Repurchased		Average Stock Price
	(in millions)		(in thousands)	(in millions)
February 2022	$	1,500	6,401	$	312	$	48.77
February 2022 - Accelerated Share Repurchase Program			20,295	1,000		49.27
Total			26,696	$	1,312

The February 2022 Program had $188 million of remaining authority as of July ~~2021 Program.~~

~~Table of Contents~~

30, 2022.

Common Stock Retirement

~~In accordance with the Company's Board of Directors' resolution, shares~~Shares of common stock repurchased under the July 2021 Program ~~will be automatically~~were retired and cancelled upon repurchase. As a result, the Company retired the 10 million shares repurchased under the July 2021 Program in the second quarter of 2021, which resulted in ~~a reduction~~reductions of $5 million in the par value of Common Stock, $32 million in Paid-in Capital and $693 million in Retained ~~Earnings.~~Earnings (Accumulated Deficit).

~~Dividends~~

~~Under~~Shares of common stock repurchased under the ~~authority~~February 2022 Program were retired and ~~declaration of~~cancelled upon repurchase, including shares repurchased under the ~~Board of Directors,~~ASR. As a result, the Company ~~paid~~retired the ~~following dividends~~27 million shares repurchased under the February 2022 Program during ~~year-to-date 2021~~2022, which resulted in reductions of $13 million in the par value of Common Stock, $87 million in Paid-in Capital and ~~2020:~~$1.212 billion in Retained Earnings (Accumulated Deficit).

Ordinary Dividends Total Paid
(per share) (in millions)
2021
Second Quarter $ 0.15 $ 42
First Quarter — —
Total $ 0.15 $ 42
2020
Second Quarter $ — $ —
First Quarter 0.30 83
Total $ 0.30 $ 83
Dividends

The Board ~~of Directors~~ suspended the Company's quarterly cash dividend beginning in the second quarter of ~~2020 as a proactive measure to strengthen the Company's financial flexibility and manage through the COVID-19 pandemic.~~2020. In March 2021, the ~~Company's~~ Board ~~of Directors~~ reinstated the annual dividend at $0.60 per share, beginning with the quarterly dividend paid in June 2021. In ~~August 2021,~~February 2022, the ~~Company's~~ Board increased the annual dividend to $0.80 per share, beginning with the quarterly dividend paid in March 2022.

Table of ~~Directors declared~~Contents

The Company paid the following dividends during 2022 and 2021:


	Ordinary Dividends			Total Paid
	(per share)		(in millions)
2022
First Quarter	$	0.20		$	48
Second Quarter	0.20			46

Total	$	0.40		$	94
2021
First Quarter	$	—		$	—
Second Quarter	0.15			42

Total	$	0.15		$	42

On September 2, 2022, the Company paid the third quarter ~~of 2021~~2022 ordinary dividend of ~~$0.15~~$0.20 per ~~share.~~

share to shareholders of record at the close of business on August 19, 2022.

5. Inventories

The following table provides details of ~~inventories~~Inventories as of July 30, 2022, January 29, 2022 and July 31, ~~2021, January 30, 2021 and August 1, 2020:~~2021:


		July 31, 2021		January 30, 2021		August 1, 2020			July 30, 2022		January 29, 2022		July 31, 2021
		(in millions)							(in millions)
Finished Goods Merchandise	Finished Goods Merchandise	$	1,245	$	1,073	$	1,259	Finished Goods Merchandise	$	739	$	521	$	551
Raw Materials and Merchandise Components	Raw Materials and Merchandise Components	228		200		217		Raw Materials and Merchandise Components	232		188		177
Total Inventories	Total Inventories	$	1,473	$	1,273	$	1,476	Total Inventories	$	971	$	709	$	728

Inventories are principally valued at the lower of cost or net realizable value, on an average cost basis.

6. Long-Lived Assets

The following table provides details of ~~property~~Property and ~~equipment, net~~Equipment, Net as of July 30, 2022, January 29, 2022 and July 31, ~~2021, January 30, 2021 and August 1, 2020:~~2021:


		July 31, 2021		January 30, 2021		August 1, 2020			July 30, 2022		January 29, 2022		July 31, 2021
		(in millions)							(in millions)
Property and Equipment, at Cost	Property and Equipment, at Cost	$	6,274	$	6,204	$	6,276	Property and Equipment, at Cost	$	2,721	$	2,583	$	2,519
Accumulated Depreciation and Amortization	Accumulated Depreciation and Amortization	(4,273)		(4,109)		(3,984)		Accumulated Depreciation and Amortization	(1,650)		(1,574)		(1,517)
Property and Equipment, Net	Property and Equipment, Net	$	2,001	$	2,095	$	2,292	Property and Equipment, Net	$	1,071	$	1,009	$	1,002

Depreciation expense from continuing operations was ~~$129~~$53 million and ~~$127~~$51 million for the second ~~quarter~~quarters of ~~2021~~2022 and ~~2020,~~2021, respectively. Depreciation expense from continuing operations was ~~$258~~$106 million and ~~$266~~$100 million for year-to-date 2022 and 2021, ~~and 2020,~~ respectively.

Long-lived store assets, which include leasehold improvements, store related assets and operating lease assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. Store assets are grouped at the lowest level for which they are largely independent of other assets or asset groups. If the estimated undiscounted future cash flows related to the asset group are less than the carrying value, the Company recognizes a loss equal to the difference between the carrying value and the estimated fair value, determined by the estimated

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discounted future cash flows of the asset group. For operating lease assets, the Company determines the fair value of the assets by comparing the contractual rent payments to estimated market rental rates. An individual asset within an asset group is not impaired below its estimated fair value. The fair value of long-lived store assets are determined using Level 3 inputs within the fair value hierarchy.

As a result of the Victoria's Secret fleet rationalization executed during 2020 and the negative operating results of certain Victoria's Secret stores, the Company determined that the estimated undiscounted future cash flows were less than the carrying values for certain Victoria's Secret asset groups and, as a result, determined the estimated fair values of the store asset groups using estimated discounted future cash flows and estimated market rental rates. Long-lived store asset impairment charges are included within the Victoria's Secret segment, in Costs of Goods Sold, Buying and Occupancy in the 2020 Consolidated Statements of Loss.

~~The following table provides pre-tax long-lived store asset impairment charges included in the 2020 Consolidated Statements of Loss:~~

2020
Second Quarter Year-to-Date
(in millions)
Store Asset Impairment $ 14 $ 111
Operating Lease Asset Impairment 103 103
Total Impairment $ 117 $ 214

~~Victoria's Secret Hong Kong~~

During the second quarter of 2020, the Company closed its unprofitable Victoria's Secret flagship store in Hong Kong. As a result of the store closure, the Company recognized a non-cash pre-tax gain of $39 million, primarily due to terminating the store lease and the related write-off of the operating lease liability in excess of the operating lease asset, which was partially impaired in fiscal 2019. This gain is included in Costs of Goods Sold, Buying and Occupancy in the 2020 Consolidated Statements of Loss. The Company also recorded $3 million of severance and related costs, included in General, Administrative and Store Operating Expenses in the 2020 Consolidated Statements of Loss.

7. Equity Investments

~~Easton~~

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 $125 million as of July 30, 2022, $126 million as of January 29, 2022 and $119 million as of July 31, 2021, ~~$119 million as of January 30, 2021 and $124 million as of August 1, 2020,~~ 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~~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.

8. Income Taxes

~~For the second quarter of 2021, the Company calculated the~~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. ~~Due to the impacts of the COVID-19 pandemic, the income tax expense for the second quarter of 2020 was computed on a year-to-date effective tax rate.~~

For the second quarter of ~~2021,~~2022, the Company’s effective tax rate was ~~25.1%~~23.9% compared to ~~17.7%~~25.1% in the second quarter of ~~2020.~~2021. The second quarter of 2022 rate was lower than the Company's combined estimated federal and state statutory rate primarily

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due to the resolution of certain tax matters during the quarter. The second quarter of 2021 rate was consistent with the Company's combined estimated federal and state statutory rate.

For year-to-date 2022, the Company’s effective tax rate was 21.4% compared to 24.7% year-to-date 2021. The year-to-date 2022 rate was lower than the Company's combined estimated federal and state statutory rate primarily due to the ~~recognition~~resolution of ~~excess~~certain tax ~~benefits recorded through~~matters during the Consolidated Statements of Income on share-based awards that vested in the quarter. In the second quarter of 2020, the Company recognized a benefit for income taxes of $11 million on a loss before income taxes of $60 million. The second quarter of 2020 rate was lower than the Company's combined federal and state statutory rate primarily due to losses related to certain foreign subsidiaries, which generated no tax benefit, offset by changes in tax legislation included in the CARES Act, which resulted in a $21 million tax benefit.

~~For year-to-date 2021, the Company's effective tax rate was 23.6% compared to 26.7% year-to-date 2020.~~period. The year-to-date 2021 rate was lower than the Company's combined estimated federal and state statutory rate primarily due to the recognition of excess tax benefits recorded through the Consolidated Statements of Income on share-based awards that vested year-to-date. The year-to-date 2020 rate was generally consistent with the Company's combined estimated federal and state statutory ~~rate due~~

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to the resolution of certain tax matters, which resulted in a $50 million tax benefit and changes in tax legislation included in the CARES Act, which resulted in a $21 million tax benefit, offset by losses related to certain foreign subsidiaries, which generate no tax benefit.rate.

Income taxes paid were ~~$320~~$144 million and ~~$13~~$320 million for the second ~~quarter~~quarters of ~~2021~~2022 and ~~2020,~~2021, respectively. Income taxes paid were $152 million and $330 million for the year-to-date 2022 and ~~$22 million for year-to-date~~ 2021, ~~and 2020,~~ respectively.

9. 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 July 30, 2022, January 29, 2022 and July 31, ~~2021, January 30, 2021 and August 1, 2020:~~2021:

July 31,
2021 January 30,
2021 August 1,
2020
(in millions)
Senior Secured Debt with Subsidiary Guarantee
$750 million, 6.875% Fixed Interest Rate Secured Notes due July 2025 ("2025 Secured Notes") $ — $ 740 $ 739
Foreign Facilities — — 101
Total Senior Secured Debt with Subsidiary Guarantee $ — $ 740 $ 840
Senior Debt with Subsidiary Guarantee
$1 billion, 6.625% Fixed Interest Rate Notes due April 2021 (“2021 Notes”) $ — $ — $ 450
$1 billion, 5.625% Fixed Interest Rate Notes due February 2022 (“2022 Notes”) — 284 858
$320 million, 5.625% Fixed Interest Rate Notes due October 2023 (“2023 Notes”) 319 319 498
$500 million, 9.375% Fixed Interest Rate Notes due July 2025 ("2025 Notes") 494 493 492
$297 million, 6.694% Fixed Interest Rate Notes due January 2027 (“2027 Notes”) 279 278 277
$500 million, 5.250% Fixed Interest Rate Notes due February 2028 (“2028 Notes”) 497 497 496
$500 million, 7.500% Fixed Interest Rate Notes due June 2029 ("2029 Notes") 489 488 488
$1 billion, 6.625% Fixed Interest Rate Notes due October 2030 ("2030 Notes") 989 988 —
$1 billion, 6.875% Fixed Interest Rate Notes due November 2035 (“2035 Notes”) 991 991 991
$700 million, 6.750% Fixed Interest Rate Notes due July 2036 (“2036 Notes”) 694 694 693
Total Senior Debt with Subsidiary Guarantee $ 4,752 $ 5,032 $ 5,243
Senior Debt
$350 million, 6.950% Fixed Interest Rate Debentures due March 2033 (“2033 Notes”) $ 348 $ 348 $ 348
$247 million, 7.600% Fixed Interest Rate Notes due July 2037 (“2037 Notes”) 246 246 298
Total Senior Debt $ 594 $ 594 $ 646
Victoria's Secret & Co. Notes
Victoria's Secret & Co. $600 million, 4.625% Fixed Interest Rate Notes due July 2029 ("Victoria's Secret & Co. Notes") 592 — —
Total $ 5,938 $ 6,366 $ 6,729
Current Debt — — (460)
Total Long-term Debt, Net of Current Portion $ 5,938 $ 6,366 $ 6,269


	July 30, 2022		January 29, 2022		July 31, 2021
	(in millions)




Senior Debt with Subsidiary Guarantee


$500 million, 5.625% Fixed Interest Rate Notes due October 2023 (“2023 Notes”)	$	—	$	—	$	319
$320 million, 9.375% Fixed Interest Rate Notes due July 2025 ("2025 Notes")	317		316		494
$297 million, 6.694% Fixed Interest Rate Notes due January 2027 (“2027 Notes”)	282		281		279
$500 million, 5.250% Fixed Interest Rate Notes due February 2028 (“2028 Notes”)	497		497		497
$500 million, 7.500% Fixed Interest Rate Notes due June 2029 ("2029 Notes")	490		489		489
$1 billion, 6.625% Fixed Interest Rate Notes due October 2030 ("2030 Notes")	990		990		989
$1 billion, 6.875% Fixed Interest Rate Notes due November 2035 (“2035 Notes”)	993		992		991
$700 million, 6.750% Fixed Interest Rate Notes due July 2036 (“2036 Notes”)	694		694		694
Total Senior Debt with Subsidiary Guarantee	$	4,263	$	4,259	$	4,752
Senior Debt
$350 million, 6.950% Fixed Interest Rate Debentures due March 2033 (“2033 Notes”)	$	349	$	349	$	348��
$247 million, 7.600% Fixed Interest Rate Notes due July 2037 (“2037 Notes”)	246		246		246
Total Senior Debt	595		595		594
Total Long-term Debt	$	4,858	$	4,854	$	5,346

Repurchases of Notes

In September 2021, the Company completed the tender offers to purchase $270 million of its outstanding 2023 Notes and $180 million of its outstanding 2025 Notes for an aggregate purchase price of $532 million. Additionally, in October 2021, the Company redeemed the remaining $50 million of its outstanding 2023 Notes for an aggregate purchase price of $54 million. The Company recognized a pre-tax loss related to this extinguishment of debt of $89 million (after-tax loss of $68 million), which included the write-offs of unamortized issuance costs, in the third quarter of 2021.

In April 2021, the Company ~~completed a make-whole call to repurchase~~redeemed the remaining $285 million of its outstanding 5.625% senior notes due February 2022 ~~Notes~~ and ~~the~~ $750 million of its outstanding ~~2025 Secured Notes.~~6.875% senior secured notes due July 2025. The Company recognized a pre-tax loss related to this extinguishment of debt of $105 million (after-tax loss of $80 million), which ~~includes~~included the write-offs of unamortized issuance costs. This loss is included in Other Income (Loss) in the year-to-date 2021 Consolidated Statement of Income.

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Company intends to make payment for these accepted notes on September 3, 2021, and expects to recognize a pre-tax loss of approximately $84 million in the third quarter of 2021 related to these purchases. The tender offers will expire on September 16, 2021, unless extended or earlier terminated by the Company.

~~Victoria's Secret & Co. Notes~~

In July 2021, Victoria’s Secret & Co., prior to the Separation and while a subsidiary of the Company, issued $600 million of 4.625% notes due in July 2029 in a transaction exempt from registration under the Securities Act of 1933, as amended. As of July 31, 2021, the initial proceeds were held in escrow for release to Victoria's Secret & Co. upon satisfaction of certain conditions, including completion of the Separation. If the conditions for the release from escrow of the proceeds were not satisfied, the Victoria's Secret & Co. Notes would have been subject to mandatory redemption. The $600 million initial proceeds are included in Cash in Escrow related to Victoria's Secret & Co. Spin-Off on the July 31, 2021 Consolidated Balance Sheet. The Victoria's Secret & Co. Notes were not guaranteed at issuance by any guarantors or by Bath & Body Works, Inc. or any of its subsidiaries following the Separation.

On August 2, 2021, the Victoria's Secret & Co. Notes became the obligations of Victoria's Secret & Co. concurrent with the Separation. Victoria's Secret & Co. received cash proceeds of $592 million, which were net of issuance costs of $8 million, which it used to partially fund the approximately $976 million cash payments to the Company in connection with the Separation.

~~Asset-Backed~~Asset-backed Revolving Credit Facility

The Company and certain of the Company's 100% owned subsidiaries guarantee and pledge collateral to secure ~~a revolving credit facility ("Credit Agreement"). In April 2020, the Company entered into an amendment and restatement of the Credit Agreement to convert the Company’s credit facility into~~ an asset-backed revolving credit facility (“ABL Facility”). During the first quarter of 2020, in an abundance of caution and as a proactive measure in response to the COVID-19 pandemic, the Company elected to borrow $950 million from its revolving facility. This borrowing was repaid during the first quarter of 2020 upon completion of the April amendment.

~~As of July 31, 2021, the~~The ABL Facility, which ~~allowed~~allows borrowings and letters of credit in U.S. dollars or Canadian dollars, ~~had~~has aggregate commitments ~~at $1 billion~~of $750 million and an expiration date in August ~~2024.~~2026.

~~As of July 31, 2021, the availability~~Availability under the ABL Facility ~~was~~is the lesser of (i) the borrowing base, determined primarily based on the Company's eligible U.S. and Canadian 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 ~~exceeded~~exceeds the lesser of (i) the borrowing base and (ii) the aggregate commitment, the Company ~~would have been~~is required to ~~prepay~~repay the outstanding amounts under the ABL Facility to ~~the extent~~

Table of ~~such excess. In addition, at any time that the Company's consolidated cash balance exceeded $350 million, it would have been required to prepay outstanding amounts under the ABL Facility to~~ Contents

the extent of such excess. As of July ~~31, 2021,~~30, 2022, the Company's borrowing base was ~~$1.045 billion, but~~$730 million, and it ~~was unable to draw upon~~had no borrowings outstanding under the ABL ~~Facility as its consolidated cash balance exceeded $350 million.~~Facility.

The ABL Facility supports the Company’s letter of credit program. The Company had ~~$58~~$16 million of outstanding letters of credit as of July ~~31, 2021~~30, 2022 that reduced its availability under the ABL Facility. As of July 30, 2022, the Company's availability under the ABL Facility was $714 million.

As of July ~~31, 2021,~~30, 2022, the ABL Facility fees related to committed and unutilized amounts were ~~0.30%~~0.25% per annum, and the fees related to outstanding letters of credit were ~~1.75%~~1.25% per annum. In addition, the interest rate on outstanding U.S. dollar borrowings was the London Interbank Offered Rate plus ~~1.75%~~1.25% per annum. The interest rate on outstanding Canadian dollar-denominated borrowings was the Canadian Dollar Offered Rate plus ~~1.75%~~1.25% per annum.

The ABL Facility ~~required~~requires the Company 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 ~~(1) $100~~(i) $70 million or ~~(2) 15%~~(ii) 10% of the maximum borrowing amount. As of July ~~31, 2021,~~30, 2022, the Company was not required to maintain this ratio.

~~As of July 31, 2021, there were no borrowings outstanding under the ABL Facility.~~

Subsequent to July 31, 2021, the Company entered into an amendment and restatement (“Amendment”) of the ABL Facility. The Amendment reduced the aggregate commitments under the ABL Facility to $750 million, reduced the interest rates on outstanding borrowings by 50 basis points, removed the requirement to prepay outstanding amounts under the ABL Facility should the Company's consolidated cash balance exceed $350 million, extended the expiration date from August 2024 to August 2026 and released Victoria's Secret & Co. subsidiaries as guarantors, among other things.

~~Foreign Facilities~~

Certain of the Company's Victoria's Secret subsidiaries in China previously utilized revolving and term loan bank facilities to support their operations ("Foreign Facilities"). During the second quarter of 2021, with no borrowings outstanding, the Company terminated the Foreign Facilities.

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10. Fair Value Measurements

Cash and Cash Equivalents ~~and restricted cash~~ 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 ~~and restricted cash~~ 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 outstanding publicly traded debt as of July 30, 2022, January 29, 2022 and July 31, ~~2021, January 30, 2021 and August 1, 2020:~~2021:


		July 31, 2021		January 30, 2021		August 1, 2020			July 30, 2022		January 29, 2022		July 31, 2021
		(in millions)							(in millions)
Principal Value	Principal Value	$	5,414	$	6,449	$	6,708	Principal Value	$	4,915	$	4,915	$	5,414
Fair Value, Estimated (a)	Fair Value, Estimated (a)	6,581		7,243		6,692		Fair Value, Estimated (a)	4,631		5,493		6,581

_______________

(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~~Accounting Standards Codification ("ASC") 820, Fair Value Measurement. The estimates presented are not necessarily indicative of the amounts that the Company could realize in a current market exchange.

As of July 31, 2021, the fair value of the Victoria's Secret & Co. Notes approximated its principal value. The estimated fair value is based on reported transaction prices, which are considered Level 2 inputs in accordance with ASC 820. This estimate is not necessarily indicative of the amount that the Company could realize in a current market exchange.

Management believes that the carrying values of accounts receivable, accounts payable and accrued expenses approximate fair value because of their short maturity.

11. Accumulated Other Comprehensive Income

The following ~~table provides~~tables provide the rollforward of ~~accumulated other comprehensive income~~Accumulated Other Comprehensive Income for year-to-date 2022 and 2021:

Foreign Currency Translation Cash Flow Hedges Accumulated Other Comprehensive Income
(in millions)
Balance as of January 30, 2021 $ 85 $ (2) $ 83
Other Comprehensive Income (Loss) Before Reclassifications 4 (1) 3
Amounts Reclassified from Accumulated Other Comprehensive Income — 2 2
Tax Effect — (1) (1)
Current-period Other Comprehensive Income 4 — 4
Balance as of July 31, 2021 $ 89 $ (2) $ 87

~~The following table provides the rollforward of accumulated other comprehensive income for year-to-date 2020:~~

Foreign Currency Translation Cash Flow Hedges Accumulated Other Comprehensive Income
(in millions)
Balance as of February 1, 2020 $ 52 $ — $ 52
Other Comprehensive Income (Loss) Before Reclassifications (4) 2 (2)
Amounts Reclassified from Accumulated Other Comprehensive Income — (1) (1)
Tax Effect — — —
Current-period Other Comprehensive Income (Loss) (4) 1 (3)
Balance as of August 1, 2020 $ 48 $ 1 $ 49


	Foreign Currency Translation		Cash Flow Hedges		Accumulated Other Comprehensive Income
	(in millions)
Balance as of January 29, 2022	$	79	$	1	$	80
Other Comprehensive Income Before Reclassifications	—		—		—
Amounts Reclassified from Accumulated Other Comprehensive Income	—		—		—
Tax Effect	—		—		—
Current-period Other Comprehensive Income	—		—		—
Balance as of July 30, 2022	$	79	$	1	$	80

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	Foreign Currency Translation		Cash Flow Hedges		Accumulated Other Comprehensive Income
	(in millions)
Balance as of January 30, 2021	$	85	$	(2)	$	83
Other Comprehensive Income (Loss) Before Reclassifications	4		(1)		3
Amounts Reclassified from Accumulated Other Comprehensive Income	—		2		2
Tax Effect	—		(1)		(1)
Current-period Other Comprehensive Income	4		—		4
Balance as of July 31, 2021	$	89	$	(2)	$	87

12. 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~~position or cash flows.

On May 19, 2020 and January 12, 2021, certain ~~shareholders~~ of the ~~Company~~Company's stockholders filed derivative lawsuits in the Court of Common Pleas for Franklin County, Ohio (subsequently removed to the United States District Court for the Southern District of Ohio) and the Delaware Court of Chancery, respectively, naming as defendants certain current and former directors and officers of the Company and alleging, among other things, breaches of fiduciary duty through asserted violations of law and failures to monitor workplace conduct (the ~~“Lawsuits”~~"Lawsuits"). In addition, the Company also received litigation and books-and-records demands from certain other ~~shareholders~~stockholders related to the same matters (together with the Lawsuits, the ~~“Actions”~~"Actions").

In July 2021, the Company announced the global settlement resolving the Actions. The settlement ~~resolves~~resolved all derivative claims that have been or could have been asserted in the Actions or that involve in any way the allegations referred to in the Actions and ~~releases~~released all such claims against the Company and its past and present ~~Company~~ employees, officers and directors, among others. As part of the settlement, the Company has agreed to implement certain management and governance measures, including the maintenance of a Diversity, Equity, and Inclusion Council. Following the August 2, 2021 spin-off of Victoria’s Secret & Co., the settlement terms ~~will~~ apply to both the Company and Victoria’s Secret & Co. Each company has committed to invest $45 million over at least five years to fund the management and governance measures. In May 2022, the U.S. District Court of the Southern District of Ohio granted final approval of the settlement.

~~La Senza~~Lease Guarantees

In connection with the spin-off of Victoria's Secret & Co. and the sale of the La Senza inbusiness, the ~~fourth quarter of 2018, certain of the Company's subsidiaries have~~Company had remaining contingent obligations of ~~approximately $30~~$295 million as of July 30, 2022 related to lease payments under the current terms of noncancelable leases, primarily related to office space, expiring at various dates through ~~2028.~~2037. These obligations 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 ~~the business.~~

~~13. Retirement Benefits~~

The Company sponsors a tax-qualified defined contribution retirement plan for substantially all its associates within the U.S. Participation is available to associates who meet certain age and service 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 $19 million and $18 million for the second quarter of 2021 and 2020, respectively. Total expense recognized related to the qualified plan was $40 million and $39 million for year-to-date 2021 and 2020, respectively.

The Company previously sponsored a non-qualified supplemental retirement plan. The non-qualified plan was an unfunded plan, which provided benefits beyond the Internal Revenue Code limits for qualified defined contribution plans. On June 27, 2020, the Human Capital and Compensation Committee of the Board of Directors authorized the termination of the non-qualified plan. In July 2021, the Company made payments of $143 million for the final settlement of all its obligations and benefits payable under the non-qualified plan. Total expense recognized related to the non-qualified plan was not significant for any period presented.

~~14. Segment Information~~

In the third quarter of 2020, the Company changed its segment reporting as a result of leadership changes and restructuring actions taken to facilitate the ongoing efforts to separate Bath & Body Works and Victoria’s Secret into separatethese businesses. As of July 31, 2021, the Company had 2 reportable segments: Bath & Body Works and Victoria's Secret. While this reporting change did not impact the Company's consolidated results, historical segment data has been recast to be consistent for all periods presented.

The Bath & Body Works segment sells body care, home fragrance products, soaps and sanitizers under the Bath & Body Works, White Barn and other brand names. Bath & Body Works merchandise is sold online and at retail stores located in the U.S. and Canada, and international stores operated by partners under franchise, license and wholesale arrangements. Additionally, this segment includes the Bath & Body Works merchandise sourcing and production function serving the Company and its international partners.

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 and PINK merchandise is sold online and through retail stores located in the

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U.S., Canada and Greater China, and international stores operated by partners under franchise, license, wholesale and joint venture arrangements. Additionally, this segment includes the Victoria's Secret and PINK merchandise sourcing and production function serving the Company and its international partners. As discussed in Note 1, the Company completed the spin-off of its Victoria's Secret business into an independent, publicly traded company on August 2, 2021.

~~Other includes corporate infrastructure and governance functions and other non-recurring items that are deemed to be corporate in nature.~~

~~The following table provides the Company’s segment information for the second quarter and year-to-date of 2021 and 2020:~~

Bath & Body
Works Victoria’s
Secret Other Total
(in millions)
2021
Second Quarter:
Net Sales $ 1,704 $ 1,614 $ — $ 3,318
Operating Income (Loss) 431 233 (65) 599
Year-to-Date:
Net Sales $ 3,173 $ 3,168 $ — $ 6,341
Operating Income (Loss) 811 477 (117) 1,171
2020
Second Quarter:
Net Sales $ 1,253 $ 1,066 $ — $ 2,319
Operating Income (Loss) (a) 337 (219) (74) 44
Year-to-Date:
Net Sales $ 2,014 $ 1,960 $ — $ 3,974
Operating Income (Loss) (a) 413 (573) (114) (274)

~~_______________~~

~~(a)~~Victoria's Secret includes store and lease asset impairment charges of $117 million and $214 million for the second quarter and year-to-date 2020, respectively. Additionally, Victoria's Secret includes a $36 million net gain related to the closure and lease termination of the Hong Kong flagship store. For additional information, see Note 6, “Long-Lived Assets." Bath & Body Works, Victoria's Secret and Other includes severance and related charges of $12 million, $51 million and $18 million, respectively, in the second quarter of 2020. For additional information, see Note 3, “Restructuring Activities."

The Company’s international net sales include sales from company-operated 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 totaled $289 million and $238 million for the second quarter of 2021 and 2020, respectively. The Company's ~~international net sales totaled $568 million and $418 million for year-to-date 2021 and 2020, respectively.~~

~~15. Subsequent Events~~

~~Victoria's Secret & Co. Spin-Off~~

On August 2, 2021, after the NYSE market closing, the Separation of Victoria's Secret & Co. into an independent publicly-traded company was completed and the Company transferred certain assets and liabilities associated with its Victoria's Secret business to Victoria's Secret & Co. The Separation was achieved through the Company's distribution of 100% of the shares of Victoria's Secret & Co. common stock to holders of L Brands' common stock as of the close of business on the record date of July 22, 2021. The Company's stockholders of record received one share of Victoria’s Secret & Co. common stock for every three shares of the Company's common stock. On August 3, 2021, Victoria’s Secret & Co. began trading on the NYSE under the stock symbol "VSCO." The Company retained no ownership interest in Victoria’s Secret & Co. following the Separation. Beginning in the third quarter of fiscal 2021, the historical financial results of the Victoria's Secret business for periods prior to the Distribution Date will be reflected in the Company’s consolidated financial statements as discontinued operations. On August 2, 2021, Victoria's Secret & Co. made cash payments of approximately $976 million to the Company in connection with the Separation. Additionally, the Victoria's Secret & Co. Notes became the obligations of Victoria's Secret & Co. concurrent with the Separation.

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~~Corporate Name Change~~

On August 2, 2021, in connection with the Separation of the Victoria's Secret business discussed above, the Company changed its name from L Brands, Inc. to Bath & Body Works, Inc. Starting August 3, 2021, the Company's common stock began trading under the stock symbol "BBWI."

~~Leadership Changes~~

As previously announced, the Company appointed Wendy C. Arlin as Executive Vice President and Chief Financial Officer effective August 2, 2021. Stuart B. Burgdoerfer retired and ceased serving as Executive Vice President and Chief Financial Officer effective August 2, 2021.

~~ABL Facility~~

~~Subsequent to July 31, 2021, the Company entered into an amendment and restatement of the ABL Facility. For additional information, see Note 9, “Long-term Debt and Borrowing Facilities.”~~

~~Repurchase of Notes~~

Subsequent to July 31, 2021, the Company announced that it had commenced tender offers to purchase for cash its outstanding 2023 Notes, 2025 Notes and 2027 Notes up to a maximum aggregate principal amount of $500 million. The maximum aggregate amount to be purchased by the Company for the 2025 Notes and 2027 Notes is limited to $180 million. On September 2, 2021, the Company announced that it had accepted for early settlement tender offers to purchase $270 million of outstanding 2023 Notes and $180 million of outstanding 2025 Notes for an aggregate purchase price of $532 million. The Company intends to make payment for these accepted notes on September 3, 2021, and expects to recognize a pre-tax loss of approximately $84 million in the third quarter of 2021reserves related to these ~~purchases. The tender offers will expire on September 16, 2021, unless extended or earlier terminated by the Company.~~

~~Common Stock Share Repurchases~~

~~Subsequent to~~obligations were not significant as of July ~~31, 2021, the Company repurchased an additional 1.0 million shares of its common stock for $65 million under the July 2021 Program.~~30, 2022.

1917

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Report of Independent Registered Public Accounting Firm

To the Shareholders and Board of Directors of Bath & Body Works, Inc.

Results of Review of Interim Financial Statements

We have reviewed the accompanying consolidated balance sheets of Bath & Body Works, Inc. (the Company) as of July 30, 2022 and July 31, 2021, ~~and August 1, 2020,~~ and the related consolidated statements of income, ~~(loss),~~ comprehensive income, ~~(loss),~~ and total equity (deficit) for the thirteen and twenty-six week periods ended July 30, 2022 and July 31, 2021, ~~and August 1, 2020,~~ and the consolidated statements of cash flows for the twenty-six week periods ended July 30, 2022 and July 31, 2021, ~~and August 1, 2020,~~ 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 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) (PCAOB), the consolidated balance sheet of the Company as of January ~~30, 2021,~~29, 2022, and the related consolidated statements of income, ~~(loss),~~ comprehensive income, ~~(loss),~~ total equity (deficit), and cash flows for the year then ended, and the related notes (not presented herein); and in our report dated March ~~19, 2021,~~18, 2022, 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 ~~30, 2021,~~29, 2022, 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 statements 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 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.

/s/ Ernst & Young LLP

Grandview Heights, Ohio

September 2, ~~2021~~2022

2018

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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 ~~company~~Company 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” 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 ~~company~~Company or our management:

•~~the spin-off of Victoria’s Secret may not be tax-free for U.S. federal income tax purposes;~~

•a loss of synergies from separating the businesses that could negatively impact the balance sheet, profit margins or earnings of Bath & Body Works or that Bath & Body Works does not realize all of the expected benefits of the spin-off;

•general economic conditions, inflation, consumer confidence, consumer spending patterns and market disruptions including pandemics or significant health hazards, severe weather conditions, natural disasters, terrorist activities, financial crises, political crises or other major events, or the prospect of these events;

•the ~~novel coronavirus (COVID-19) global~~COVID-19 pandemic has had and ~~is expected to~~may continue to have an adverse effect on our business and results of operations;

•the seasonality of our business;

•~~divestitures or other dispositions and related operations and contingent liabilities~~the anticipated benefits from ~~businesses that we have divested;~~the Victoria's Secret & Co. spin-off may not be realized;

•the spin-off of Victoria’s Secret & Co. may not be tax-free for U.S. federal income tax purposes;

•our dependence on Victoria's Secret & Co. for information technology services;

•difficulties arising from turnover in ~~company~~Company leadership or other key positions;

•our ability to attract, develop and retain qualified associates and manage labor-related costs;

•the dependence on ~~mall~~store traffic and the availability of suitable store locations on appropriate terms;

•our ~~ability to grow~~continued 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 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, wars and other armed conflicts, environmental hazards or natural disasters;

▪•significant health hazards or pandemics, 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 vendor and distribution facilities in central Ohio;

•~~fluctuations in foreign currency exchange rates;~~

~~Table~~our reliance on a limited number of ~~Contents~~suppliers to support a substantial portion of our inventory purchasing needs;

•the ability of our vendors to deliver products in a timely manner, meet quality standards and comply with applicable laws and regulations;

•fluctuations in foreign currency exchange rates;

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•fluctuations in product input ~~costs, including those caused by inflation;~~costs;

•fluctuations in energy costs;

•our ability to adequately protect our assets from loss and theft;

•~~fluctuations in energy costs, including those caused by inflation;~~

•increases in the costs of mailing, paper, printing or other order fulfillment logistics;

•claims arising from our ~~self-insurance~~self-insurance;

•our and our third-party service providers', including Victoria's Secret & Co. during the term of the Transition Services Agreement between us and Victoria's Secret & Co., ability to implement and maintain information technology systems and to protect associated data;

•our ability to maintain the security of customer, associate, third-party and ~~company~~Company information;

•stock price volatility;

•our ability to pay dividends and ~~related effects;~~make share repurchases under share repurchase authorizations;

•shareholder activism matters;

•our ability to maintain our credit ~~rating;~~ratings;

•our ability to service or 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 ~~“Item~~Item 1A. Risk ~~Factors” in this Form 10-Q and~~Factors in our ~~2020~~2021 Annual Report on Form 10-K.

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 are 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 ASC. The following information should be read in conjunction with our financial statements and the related notes included in Part 1, Item 1. Financial ~~Statements.~~Statements in this Quarterly Report on Form 10-Q.

On August 2, 2021, we completed the tax-free spin-off of our Victoria's Secret business, which included the Victoria's Secret and PINK brands, into an independent publicly traded company. Accordingly, the operating results of, and costs to separate, the Victoria's Secret business are reported in Income from Discontinued Operations, Net of Tax in the Consolidated Statements of Income for all periods presented. In addition, the related assets and liabilities are reported as Assets and Liabilities of Discontinued Operations on the Consolidated Balance Sheets. Unless otherwise noted, all amounts, percentages and discussions reflect only the results of operations and financial condition of our continuing operations.

Executive Overview

In the second quarter of ~~2021, our operating income increased to $599 million as compared to $44 million in 2020, and our operating income rate increased to 18.1% from 1.9%. These results were primarily driven by increases in~~2022, net sales at both Bath & Body Works and Victoria’s Secret, the increase in merchandise margin rate at Victoria's Secret and $117 million of Victoria's Secret store asset impairment charges in the prior year. Net sales increased $999decreased $86 million, or ~~43%~~5%, to ~~$3.318 billion. Sales were strong throughout~~$1.618 billion compared to the second quarter of 2021. In our stores and direct channels, net sales decreased 6% to $1.161 billion, and 10% to $367 million, respectively. These declines compared to 2021 ~~as customers responded positively to the merchandise assortments. Second quarter 2020 sales~~were driven by both a decrease in transactions and ~~operating results were negatively impacted by the COVID-19 related store closures for roughly half the quarter.~~

~~At Bath & Body Works,~~lower average dollar sale in both channels. In our international business, net sales increased ~~$451 million, or 36%,~~35% to ~~$1.704 billion and operating income increased $94 million, or 28%, to $431~~$90 million. ~~We delivered record sales and profitability in~~

In the second quarter as sales trends remained strong at continued healthy margin rates. Similar to the first quarter, we were able to be selective on promotional activity. We are optimistic about our Fall and Holiday product assortments and our continued ability to execute against our long-term growth strategy in stores and online. Risks related to COVID-19 persist, and we plan to continue to operate both of ~~our channels in a safe manner for our customers and associates.~~

~~At Victoria's Secret, net sales increased $548~~2022, operating income decreased $142 million, or ~~51%~~37%, to ~~$1.614 billion and operating income increased to $233~~$242 million, ~~as compared to a loss of $219~~from $384 million in the second quarter of ~~2020. Sales improved~~2021, and the operating income rate (expressed as ~~second quarter~~a percentage of ~~2020 sales~~sales) decreased to 15.0% from 22.5%. These decreases were negatively impacted by the closure of stores for approximately 70% of the quarter. Margin results improved during the second quarter of 2021 as we were able to reduce promotional activity, which drove significant improvementprimarily due to the ~~merchandise margin rate. Additionally, we recognized $117~~decline in net sales, incremental inflationary cost pressures totaling approximately $65 million ~~of store asset impairment charges in the prior year.~~and increased promotional activity.

For additional information related to our second quarter ~~2021~~2022 financial performance, see “Results of Operations.”

2220

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Global Supply Chain and Inflationary Impacts

There continues to be volatility and inflation in the global supply chain. We are continuing to experience increased costs in raw materials, transportation and wage rates. We estimate that our full year 2022 incremental inflation impact could range between $230 million and $240 million, with approximately $50 million to $55 million of ~~Victoria's Secret Spin-Off~~

The spin-off of the Victoria’s Secret business into an independent public company was completed on August 2, 2021 subsequent to the end of the second quarter. We believe the spin-off will enable us to maximize management focus and financial flexibility to thrive in an evolving retail environment and deliver long-term profitable growth. Beginningpressure expected in the third quarter of ~~fiscal 2021,~~2022. In the ~~historical financial results~~second half of 2022, we plan to increase promotional activity compared to the corresponding period last year given the current macro-environment. We expect these pressures to have a negative impact on our gross profit dollars and rate in 2022. Additionally, we are proactively pulling forward the purchase and delivery of certain inventory items to generate capacity during the third quarter of 2022 peak period, which we expect to provide us with additional agility in the second half of 2022.

Information Technology and Other Costs

Subsequent to the completion of the ~~Victoria's Secret business for periods prior to the spin-off will be reflected in our consolidated financial statements as discontinued operations.~~

~~In connection with the~~ Separation, we expect future capital and expense related to the implementation of new information technology platforms. Although our work is in the early stages and our estimates are preliminary, we currently estimate that our total expenditures could be $100 million to $150 million over the next several years. Such estimates are subject to change as our work continues. Victoria’s Secret & Co. ~~will provide~~has provided technology services and systems to us under a Transition Services ~~Agreement while~~Agreement. During the first quarter of 2022, we ~~create independent system environments,~~decided to accelerate the separation of our technology systems, which we now expect to be predominantly completed during 2023. We believe that completing technology separation on this accelerated basis will ~~help~~enable us to ~~minimize dis-synergies. The above estimates~~more quickly build additional technology capabilities to support our long-term growth.

Further, we expect to incur additional costs related to our Chief Executive Officer transition, including retention for key talent and other associated expenses. We expect these costs, the previously mentioned investments in information technology and increases in store wage rates to have a negative impact on our general, administrative and store operating expenses and rate in 2022.

Profit Improvement Initiatives and Organizational Realignment

We are ~~preliminary~~pursuing a number of initiatives to improve financial performance and better position the organization for long-term growth. These initiatives include organizational changes, additional cost control actions and merchandise margin improvement opportunities. As part of efforts to better position the organization for long-term growth and create organizational efficiencies, we simplified and realigned our operating structure in ~~nature, are based solely on information available to us as~~August 2022. These actions included the elimination of about 130 roles, the ~~date~~majority of ~~this quarterly report and are inherently uncertain and subject to change.~~which were leadership positions.

~~Impacts of~~ COVID-19

The ~~coronavirus~~COVID-19 pandemic has created significant public health concerns as well as economic disruption, uncertainty and volatility. Our operations and financial performance have been materially impacted by the COVID-19 pandemic. In the first quarter of 2020, all of our stores in North America were closed on March 17, 2020, but we were able to re-open the majority of our stores as of the end of the second quarter of 2020. Additionally, operations for Victoria’s Secret Direct were temporarily suspended for approximately one week in late March 2020, while Bath & Body Works Direct remained open for the duration of 2020.

~~During 2020, we took prudent actions to manage expenses and to maintain our cash position and financial flexibility.~~ We ~~also have adopted new operating models~~remain focused on providing a safe store environment for our customers and associates while ~~also~~ delivering an engaging shopping ~~experience. We remain focused on~~experience, and in establishing the necessary protocols to ensure the safe operations of our distribution and fulfillment centers and ~~call centers while maximizing~~corporate offices. As expected, we have experienced channel and product category shifts as customer mindset and needs have shifted coming out of the pandemic.

We continue to monitor the COVID-19 pandemic and the effects on our ~~direct businesses.~~operations and financial performance. There remains the potential for ~~COVID-related risks of closure~~future COVID-19-related closures or operating restrictions, which could materially impact our operations and financial performance in future periods.

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Adjusted Financial Information from Continuing Operations

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 ~~(loss)~~from continuing operations and earnings ~~(loss)~~from continuing operations per diluted share infor year-to-date 2021 ~~and 2020~~ on an adjusted basis, which ~~remove~~removes a certain special ~~items.~~item recorded in the first quarter of 2021. We believe that ~~these~~this special ~~items are~~item is not indicative of our ongoing operations due to ~~their~~its size and nature. 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 ~~definition~~definitions of adjusted financial information may differ from similarly titled measures used by other companies.

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The table below reconciles the year-to-date 2021 GAAP financial measures to the non-GAAP financial ~~measures.~~measures:

Second Quarter Year-to-Date
(in millions, except per share amounts) 2021 2020 2021 2020
Detail of Special Items - Income (Expense)
Victoria's Secret Asset Impairment (a) $ — $ (117) $ — $ (214)
Restructuring Charges (b) — (81) — (81)
Hong Kong Store Closure (c) — 36 — 36
Special Items included in Operating Income (Loss) — (162) — (258)
Loss on Extinguishment of Debt (d) — — (105) —
Special Items included in Other Income (Loss) — — (105) —
Tax Benefit from the Resolution of Certain Tax Matters (e) — 21 — 71
Tax Effect of Special Items included in Operating Income (Loss) and Other Income (Loss) — 22 25 47
Special Items included in Net Income (Loss) $ — $ (119) $ (80) $ (140)
Reconciliation of Reported Operating Income (Loss) to Adjusted Operating Income (Loss)
Reported Operating Income (Loss) $ 599 $ 44 $ 1,171 $ (274)
Special Items included in Operating Income (Loss) — 162 — 258
Adjusted Operating Income (Loss) $ 599 $ 206 $ 1,171 $ (15)
Reconciliation of Reported Net Income (Loss) to Adjusted Net Income (Loss)
Reported Net Income (Loss) $ 374 $ (49) $ 651 $ (346)
Special Items included in Net Income (Loss) — 119 80 140
Adjusted Net Income (Loss) $ 374 $ 69 $ 731 $ (206)
Reconciliation of Reported Earnings (Loss) Per Diluted Share to Adjusted Earnings (Loss) Per Diluted Share
Reported Earnings (Loss) Per Diluted Share $ 1.34 $ (0.18) $ 2.31 $ (1.25)
Special Items included in Earnings (Loss) Per Diluted Share — 0.42 0.28 0.50
Adjusted Earnings (Loss) Per Diluted Share $ 1.34 $ 0.25 $ 2.59 $ (0.74)



(in millions, except per share amounts)
Reconciliation of Reported Net Income from Continuing Operations to Adjusted Net Income from Continuing Operations
Reported Net Income from Continuing Operations	$	306
Loss on Extinguishment of Debt (a)	105
Tax Benefit of Loss on Extinguishment of Debt	(25)
Adjusted Net Income from Continuing Operations	$	386

Reconciliation of Reported Earnings from Continuing Operations Per Diluted Share to Adjusted Earnings from Continuing Operations Per Diluted Share
Reported Earnings from Continuing Operations Per Diluted Share	$	1.08
Loss on Extinguishment of Debt (a)	0.28
Adjusted Earnings from Continuing Operations Per Diluted Share	$	1.37

________________

(a)We recognized pre-tax impairment charges of $117 million ($99 million after tax) and $97 million ($72 million after tax) related to certain Victoria's Secret store and lease assets in the second and first quarter of 2020, respectively. For additional information see Note 6, "Long-Lived Assets" included in Item 1. Financial Statements.

~~(b)~~In the second quarter of 2020, we recognized pre-tax severance charges of $81 million ($65 million after tax) related to headcount reductions as a result of restructuring activities. For additional information, see Note 3, “Restructuring Activities" included in Item 1. Financial Statements.

~~(c)~~In the second quarter of 2020, we recognized a net pre-tax gain of $36 million ($25 million after tax) related to the closure of the Victoria’s Secret Hong Kong flagship store. For additional information see Note 6, "Long-Lived Assets" included in Item 1. Financial Statements.

~~(d)~~In the first quarter of 2021, we recognized a pre-tax loss of $105 million (after-tax loss of $80 million) due to the early extinguishment of outstanding notes. For additional information, see Note 9, "Long-term Debt and Borrowing Facilities" included in Item 1. Financial Statements.

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~~(e)~~In the second quarter of 2020, we recognized a $21 million income tax benefit related to recent changes in tax legislation included in the CARES Act. In the first quarter of 2020, we recognized a $50 million tax benefit related to the resolution of certain tax matters. For additional information see Note 8, "Income Taxes" included in Item 1. Financial Statements.

Company-Operated Store Data

The following table compares Company-operated U.S. store data for the second ~~quarter~~quarters of 2022 and 2021, ~~company-operated store data to the second quarter of 2020~~as well as year-to-date 2022 and ~~year-to-date 2021 store data to year-to-date 2020:~~2021:

Second Quarter Year-to-Date
2021 2020 % Change 2021 2020 % Change
Sales per Average Selling Square Foot (a)
Bath & Body Works U.S. $ 265 $ 148 79 % $ 493 $ 240 105 %
Victoria’s Secret U.S. 172 54 219 % 325 129 152 %
Sales per Average Store (in thousands) (a)
Bath & Body Works U.S. $ 709 $ 389 82 % $ 1,320 $ 634 108 %
Victoria’s Secret U.S. 1,183 364 225 % 2,245 867 159 %
Average Store Size (selling square feet)
Bath & Body Works U.S. 2,689 2,638 2 %
Victoria’s Secret U.S. 6,888 6,937 (1 %)
Total Selling Square Feet (in thousands)
Bath & Body Works U.S. 4,472 4,308 4 %
Victoria’s Secret U.S. 5,772 5,952 (3 %)

~~________________~~

~~(a)~~Sales per average selling square foot and sales per average store, 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. As a result of the COVID-19 pandemic, all our stores in the U.S. were closed on March 17, 2020 and almost all remained closed as of the beginning of the second quarter of 2020. The COVID-19 related store closures impacted our store operations for roughly half of the second quarter of 2020. As a result, comparisons of year-over-year trends are not a meaningful way to discuss our operating results in the current year.


	Second Quarter						Year-to-Date
	2022		2021		% Change		2022		2021		% Change
Sales per Average Selling Square Foot	$	241	$	265	(9	%)	$	462	$	493	(6	%)
Sales per Average Store (in thousands)	$	658	$	709	(7	%)	$	1,261	$	1,320	(4	%)
Average Store Size (selling square feet)	2,741		2,689		2	%
Total Selling Square Feet (in thousands)	4,574		4,472		2	%

The following table represents ~~company-operated~~Company-operated store data for year-to-date ~~2021:~~2022:

Stores at Stores at
January 30, 2021 Opened Closed July 31, 2021
Bath & Body Works U.S. 1,633 41 (11) 1,663
Bath & Body Works Canada 103 — — 103
Total Bath & Body Works 1,736 41 (11) 1,766
Victoria’s Secret U.S. 846 — (8) 838
Victoria’s Secret Canada 25 1 — 26
Victoria's Secret Beauty and Accessories Greater China 36 1 (1) 36
Victoria's Secret Greater China 26 — — 26
Total Victoria's Secret 933 2 (9) 926
Total Stores 2,669 43 (20) 2,692


	Stores			Stores
	January 29, 2022	Opened	Closed	July 30, 2022
United States	1,651	35	(17)	1,669
Canada	104	—	—	104
Total	1,755	35	(17)	1,773

~~Table of Contents~~

The following table represents ~~company-operated~~Company-operated store data for year-to-date ~~2020:~~2021:
Stores at Stores at
February 1, 2020 Opened Closed August 1, 2020
Bath & Body Works U.S. 1,637 10 (14) 1,633
Bath & Body Works Canada 102 — — 102
Total Bath & Body Works 1,739 10 (14) 1,735
Victoria’s Secret U.S. 1,053 3 (198) 858
Victoria’s Secret Canada 38 — (12) 26
Victoria's Secret U.K. / Ireland 26 — — 26
Victoria's Secret Beauty and Accessories Greater China 41 1 (3) 39
Victoria's Secret Greater China 23 3 (1) 25
Total Victoria's Secret 1,181 7 (214) 974
Total Stores 2,920 17 (228) 2,709


	Stores			Stores
	January 30, 2021	Opened	Closed	July 31, 2021
United States	1,633	41	(11)	1,663
Canada	103	—	—	103
Total	1,736	41	(11)	1,766

Partner-Operated Store Data

The following table represents partner-operated store data for year-to-date ~~2021:~~2022:

Stores at Stores at
January 30, 2021 Opened Closed July 31, 2021
Bath & Body Works 288 22 (5) 305
Victoria’s Secret Beauty & Accessories 338 7 (6) 339
Victoria's Secret 120 3 — 123
Total 746 32 (11) 767


	Stores			Stores
	January 29, 2022	Opened	Closed	July 30, 2022
International	317	31	(1)	347
International - Travel Retail	21	1	—	22
Total International	338	32	(1)	369

Table of Contents

The following table represents partner-operated store data for year-to-date ~~2020:~~2021:

Stores at Stores at
February 1, 2020 Opened Closed August 1, 2020
Bath & Body Works 278 7 (1) 284
Victoria’s Secret Beauty & Accessories 360 2 (13) 349
Victoria's Secret 84 4 — 88
Total 722 13 (14) 721


	Stores			Stores
	January 30, 2021	Opened	Closed	July 31, 2021
International	270	21	(5)	286
International - Travel Retail	18	1	—	19
Total International	288	22	(5)	305

Results of Operations

Second Quarter of ~~2021~~2022 Compared to Second Quarter of ~~2020~~2021

~~Operating Income (Loss)~~Net 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 second quarter of ~~2021~~2022 in comparison to the second quarter of ~~2020:~~2021:

Operating Income (Loss) Rate
2021 2020 2021 2020
Second Quarter (in millions)
Bath & Body Works $ 431 $ 337 25.3 % 26.9 %
Victoria’s Secret 233 (219) 14.4 % (20.5 %)
Other (a) (65) (74) — % — %
Total Operating Income (Loss) $ 599 $ 44 18.1 % 1.9 %

~~_______________~~

~~(a)Includes corporate infrastructure and governance functions, and other non-recurring items that are deemed to be corporate in nature.~~

For the second quarter of 2021, operating income increased $555 million, to $599 million, from $44 million in the second quarter of 2020, and the operating income rate increased to 18.1% from 1.9%. The drivers of the operating income results are discussed in the following sections.

~~Table of Contents~~

~~Net Sales~~

~~The following table provides net sales for the second quarter of 2021 in comparison to the second quarter of 2020:~~

2021 2020 % Change
Second Quarter (in millions)
Bath & Body Works Stores - U.S. and Canada $ 1,230 $ 678 81 %
Bath & Body Works Direct 407 519 (22 %)
Bath & Body Works International (a) 67 56 19 %
Total Bath & Body Works 1,704 1,253 36 %
Victoria’s Secret Stores - U.S. and Canada 1,037 364 185 %
Victoria’s Secret Direct 469 614 (24 %)
Victoria’s Secret International (b) 108 88 22 %
Total Victoria’s Secret 1,614 1,066 51 %
Total Net Sales $ 3,318 $ 2,319 43 %


	2022		2021		% Change
Second Quarter	(in millions)
Stores - U.S. and Canada	$	1,161	$	1,230	(6	%)
Direct - U.S. and Canada	367		407		(10	%)
International (a)	90		67		35	%
Total Net Sales	$	1,618	$	1,704	(5	%)

_______________

(a)Results include ~~royalties associated with franchised store and wholesale sales.~~

~~(b)Results include company-operated stores in the U.K. (pre-joint venture) and Greater China, and~~ royalties associated with franchised stores and wholesale sales.

The following table provides a reconciliation of ~~net sales~~Net Sales for the second quarter of ~~2021~~2022 to the second quarter of ~~2020:~~2021:
Bath &
Body Works Victoria’s
Secret Total
(in millions)
2020 Net Sales $ 1,253 $ 1,066 $ 2,319
Comparable Store Sales (150) 58 (92)
Sales Associated with New, Closed and Non-comparable Remodeled Stores, Net (a) 698 593 1,291
Direct Channels (112) (142) (254)
Private Label Credit Card — 3 3
International Wholesale, Royalty and Other 11 31 42
Foreign Currency Translation 4 5 9
2021 Net Sales $ 1,704 $ 1,614 $ 3,318

~~_______________~~

~~(a)Includes the increased sales from period over period due to the 2020 COVID-19 related stores closures.~~

~~The following table compares the second quarter of 2021 comparable sales to the second quarter of 2020:~~

2021 2020
Comparable Sales (Stores and Direct) (a)
Bath & Body Works (b) (22 %) 123 %
Victoria's Secret (c) (9 %) 24 %
Total Comparable Sales (16 %) 63 %
Comparable Store Sales (a)
Bath & Body Works (b) (23 %) 87 %
Victoria's Secret (c) 16 % (12 %)
Total Comparable Store Sales (9 %) 33 %

~~Table of Contents~~

~~________~~

~~(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. The change in comparable sales provides an indication of period over period growth (decline). A store is typically included in the calculation of comparable sales when it has been open 12 months or more and it has not had a change in selling square footage of 20% or more. Closed stores are excluded from the comparable sales calculation if they have been closed for four consecutive days or more. Upon re-opening, the stores are included in the calculation. Therefore, comparable sales results for the second quarter of 2021 and 2020 exclude the closure period of stores that were closed for four consecutive days or more as a result of the COVID-19 pandemic. 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. The percentage change in comparable sales is calculated on a comparable calendar period as opposed to a fiscal basis. Comparable sales attributable to our international stores are calculated on a constant currency basis.

~~(b)Includes company-operated stores in the U.S. and Canada.~~

~~(c)Includes company-operated stores in the U.S., Canada, the U.K. (pre-joint venture) and Greater China.~~

~~The results by segment are as follows:~~

~~Bath & Body Works~~


	(in millions)
2021 Net Sales	$	1,704
Comparable Store Sales	(110)
Sales Associated with New, Closed and Non-comparable Remodeled Stores, Net	43
Direct Channels	(40)
International Wholesale, Royalty and Other	23
Foreign Currency Translation	(2)
2022 Net Sales	$	1,618

For the second quarter of ~~2021,~~2022, net sales ~~increased $451~~decreased $86 million to ~~$1.704 billion.~~$1.618 billion compared to the second quarter of 2021. Net sales ~~increased~~decreased in the stores channel by ~~$552~~$69 million, or ~~81%~~6%, primarily due to ~~the COVID-19 related store closures~~both a decrease in ~~the second quarter of 2020.~~transactions and lower average dollar sale. Direct net sales decreased ~~$112~~$40 million, or ~~22%~~10%, partially due to last year's strong results as well as our customers continuing to select our buy online-pick up in store option (which is recognized as store net sales). These decreases were partially offset by a $23 million, or 35%, increase in international net sales primarily due to the ~~reopening~~new stores opened by our partners as well as timing of ~~stores this year, as compared to the prior year when stores were closed which drove an increase in sales in the direct channel.~~

Performance was strong throughout the quarter as we saw positive customer response to our merchandise. We experienced significant growth in fragrant body care, home fragrance and gifting. As expected, soaps and sanitizers declined versus last year’s significant growth.

~~The decrease in comparable sales was driven by a decrease in average dollar sales in the stores channel and a decline in direct traffic, given the impact from the store closures last year.~~

~~Victoria's Secret~~

For the second quarter of 2021, net sales increased $548 million to $1.614 billion. Net sales increased in U.S. and Canada stores by $673 million, or 185%, primarily due to the COVID-19 related store closures in the second quarter of 2020, partially offset by the impact of the permanent closure of 241 stores in North America in 2020. Direct net sales decreased $145 million, or 24%, primarily due to the reopening of stores this year, as compared to the prior year when stores were closed which drove an increase in sales in the direct channel.

The decrease in comparable sales was driven by a decline in direct traffic, given the impact from the store closures last year, partially offset by an increase in store traffic and average unit retail.wholesale shipments.

Gross Profit

For the second quarter of ~~2021,~~2022, our gross profit ~~increased $787~~decreased $168 million to ~~$1.498 billion,~~$660 million, and our gross profit rate (expressed as a percentage of net sales) ~~increased~~decreased to ~~45.2%~~40.8% from ~~30.7%, primarily driven by the following:~~

~~Bath & Body Works~~

~~For the second quarter of 2021, the gross~~48.6%. Gross profit ~~increase was~~decreased due to the ~~increase~~decline in net sales and a decline in merchandise margin dollars ~~related~~as a result of a significant decrease in our merchandise margin rate due to ~~the increase~~continued inflationary cost pressures and increased promotional activity. Additionally, our occupancy expenses increased as a result of direct channel fulfillment expenses and our investments in ~~net sales, partially offset~~store real estate.

The gross profit rate decline was driven by a significant decrease in the merchandise margin rate ~~in the direct business as we returned to a normalized semi-annual sale in June,~~ and ~~higher occupancy expenses due to the increase in net sales.~~

~~The gross profit rate increase was driven by~~ buying and occupancy ~~leverage on higher net sales partially offset by a decrease in the merchandise margin rate, reflecting a return to a normalized semi-annual sale and higher supply chain costs~~expense deleverage due to ~~market constraints and inflation.~~

~~Victoria's Secret~~

~~For the second quarter of 2021, the gross profit increase was due to the increase in merchandise margin dollars related to the increase in~~lower net sales and an increase in the merchandise margin rate driven by improved response to our merchandise assortments, disciplined management of inventory, as well as strong selling execution in stores and online, all of which enabled us to reduce promotional activity during the quarter. Occupancy expenses were lower, driven by store asset impairment charges of $117 million in the prior year and permanent store closures, partially offset by a $39 million gain related to the closure of our Hong Kong flagship store in the prior year.

~~Table of Contents~~

The gross profit rate increase was driven by buying and occupancy leverage on higher net sales, an increase in the merchandise margin rate reflecting a meaningful pullback in promotional activity and the store asset impairment charges in the prior year.sales.

General, Administrative and Store Operating Expenses

For the second quarter of ~~2021,~~2022, our general, administrative and store operating expenses ~~increased $232~~decreased $26 million to ~~$899~~$418 million, ~~due to an increase in store selling expenses~~and the rate (expressed as a ~~result~~percentage of ~~the increase in~~ net ~~sales, an increase in marketing investments due~~sales) decreased to brand repositioning at Victoria's Secret and the store closures in the prior year, and costs related to legal and separation fees. These increases were partially offset by severance and related costs associated with headcount reductions totaling $81 million in the prior year and savings realized as a result of cost reductions and the impact of the permanent store closures.

25.8% from 26.1%. The general, administrative and store operating ~~expense~~expenses and rate decreased ~~to 27.1% from 28.8%~~primarily due to ~~leverage on~~lower home office and stores bonus expense related to business performance, as well as certain legal fees and other discrete items totaling approximately $20 million that were incurred in the ~~increase in net sales.~~second quarter of 2021.

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Other Income and Expense

Interest Expense

The following table provides the average daily borrowings and average borrowing rates for the second ~~quarter~~quarters of ~~2021~~2022 and ~~2020:~~2021:


Second Quarter	Second Quarter	2021			2020			Second Quarter	2022			2021
Average daily borrowings (in millions)	Average daily borrowings (in millions)	$	5,528		$	6,173		Average daily borrowings (in millions)	$	4,915		$	5,414
Average borrowing rate (in percentages)		7.2		%	6.8		%
Average borrowing rate								Average borrowing rate	7.0		%	7.3		%

For the second quarter of ~~2021,~~2022, our interest expense decreased $5$11 million to ~~$99~~$86 million due to lower average daily borrowings ~~partially offset by~~and a ~~higher~~lower average borrowing rate.

Provision ~~(Benefit)~~ for Income Taxes

For the second quarter of ~~2021,~~2022, our effective tax rate was ~~25.1%~~23.9% compared to ~~17.7%~~25.1% in the second quarter of ~~2020.~~2021. The second quarter of ~~2021~~2022 rate was lower than our combined estimated federal and state statutory rate primarily due to the ~~recognition~~resolution of ~~excess~~certain tax ~~benefits recorded through~~matters during the ~~Consolidated Statement of Income on share-based awards that vested in the~~ quarter. ~~In the second quarter of 2020, we recognized a benefit for income taxes of $11 million on a loss before income taxes of $60 million.~~ The second quarter of ~~2020~~2021 rate was ~~lower than~~consistent with our combined estimated federal and state statutory rate primarily due to losses related to certain foreign subsidiaries, which generated no tax benefit, offset by changes in tax legislation included in the CARES Act, which resulted in a $21 million tax benefit.rate.

Results of Operations

Year-to-Date ~~2021~~2022 Compared to Year-to-Date ~~2020~~2021

~~Operating Income (Loss)~~

~~The following table provides our segment~~For year-to-date 2022, operating income ~~(loss)~~decreased $199 million to $522 million, from $721 million year-to-date 2021, and the operating income ~~(loss) rates~~rate (expressed as a percentage of ~~net~~ sales) ~~for year-to-date 2021 in comparison~~decreased to ~~year-to-date 2020:~~

Operating Income (Loss) Rate
2021 2020 2021 2020
Year-to-Date (in millions)
Bath & Body Works $ 811 $ 413 25.6 % 20.5 %
Victoria’s Secret 477 (573) 15.1 % (29.2 %)
Other (a) (117) (114) — % — %
Total Operating Income (Loss) $ 1,171 $ (274) 18.5 % (6.9 %)

~~_______________~~

~~(a)Includes corporate infrastructure and governance functions, and other non-recurring items that are deemed to be corporate in nature.~~

~~For year-to-date 2021, operating income increased $1.445 billion to operating income of $1.171 billion, and the operating income rate increased to 18.5%~~17.0% from ~~(6.9%)~~22.7%. The drivers of the year-to-date operating income results are discussed in the following sections.

~~Table of Contents~~

Net Sales

The following table provides ~~net sales~~Net Sales for year-to-date ~~2021~~2022 in comparison to year-to-date ~~2020:~~2021:

2021 2020 % Change
Year-to-Date (in millions)
Bath & Body Works Stores - U.S. and Canada $ 2,280 $ 1,102 107 %
Bath & Body Works Direct 756 807 (6 %)
Bath & Body Works International (a) 137 105 31 %
Total Bath & Body Works 3,173 2,014 58 %
Victoria’s Secret Stores - U.S. and Canada 1,970 877 124 %
Victoria’s Secret Direct 990 922 7 %
Victoria’s Secret International (b) 208 161 30 %
Total Victoria’s Secret 3,168 1,960 62 %
Total Net Sales $ 6,341 $ 3,974 60 %


	2022		2021		% Change
Year-to-Date	(in millions)
Stores - U.S. and Canada	$	2,220	$	2,280	(3	%)
Direct - U.S. and Canada	684		756		(10	%)
International (a)	163		137		19	%
Total Net Sales	$	3,067	$	3,173	(3	%)

_______________

(a)Results include ~~royalties associated with franchised store and wholesale sales.~~

~~(b)Results include company-operated stores in the U.K. (pre-joint venture) and Greater China, and~~ royalties associated with franchised stores and wholesale sales.

The following table provides a reconciliation of Net Sales for year-to-date 2022 to year-to-date 2021:


	(in millions)
2021 Net Sales	$	3,173
Comparable Store Sales	(149)
Sales Associated with New, Closed and Non-comparable Remodeled Stores, Net	91
Direct Channels	(72)
International Wholesale, Royalty and Other	26
Foreign Currency Translation	(2)
2022 Net Sales	$	3,067

For year-to-date 2022, net sales ~~for year-to-date 2021~~decreased $106 million to $3.067 billion compared to year-to-date ~~2020:~~
Bath &
Body Works Victoria's
Secret Total
(in millions)
2020 Net Sales $ 2,014 $ 1,960 $ 3,974
Comparable Store Sales (102) 70 (32)
Sales Associated with New, Closed and Non-comparable Remodeled Stores, Net (a) 1,274 994 2,268
Direct Channels (52) 70 18
Private Label Credit Card — 6 6
International Wholesale, Royalty and Other 33 60 93
Foreign Currency Translation 6 8 14
2021 Net Sales $ 3,173 $ 3,168 $ 6,341

~~_______________~~

~~(a)Includes~~2021. Net sales decreased in the ~~increased~~stores channel by $60 million, or 3%, primarily due to both a decrease in transactions and lower average dollar sale, partially offset by higher 2022 net sales ~~from period over period~~in Canada due to the ~~2020 COVID-19~~COVID-19-related store closures in 2021. Direct net sales decreased $72 million, or 10%, due to last year's strong results as well as our customers continuing to select our buy online-pick up in store option, partially offset by increased net sales in the Canada Direct business which launched in the third quarter of 2021. International net sales increased by $26 million, or 19%, primarily due to the new stores opened by our partners as well as timing of wholesale shipments.

Further, we estimate that year-to-date 2021 total Company net sales benefited by approximately $50 million related ~~stores closures.~~to government stimulus payments, which did not reoccur in year-to-date 2022.

3024

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~~The following table compares year-to-date 2021 comparable sales to year-to-date 2020:~~

2021 2020
Comparable Sales (Stores and Direct) (a)
Bath & Body Works (b) (8 %) 84 %
Victoria's Secret (c) 6 % 3 %
Total Comparable Sales (1 %) 32 %
Comparable Store Sales (a)
Bath & Body Works (b) (10 %) 54 %
Victoria's Secret (c) 9 % (16 %)
Total Comparable Store Sales (2 %) 12 %

~~________~~

~~(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. The change in comparable sales provides an indication of period over period growth (decline). A store is typically included in the calculation of comparable sales when it has been open 12 months or more and it has not had a change in selling square footage of 20% or more. Closed stores are excluded from the comparable sales calculation if they have been closed for four consecutive days or more. Upon re-opening, the stores are included in the calculation. Therefore, comparable sales results for 2021 and 2020 exclude the closure period of stores that were closed for four consecutive days or more as a result of the COVID-19 pandemic. 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. The percentage change in comparable sales is calculated on a comparable calendar period as opposed to a fiscal basis. Comparable sales attributable to our international stores are calculated on a constant currency basis.

~~(b)Includes company-operated stores in the U.S. and Canada.~~

~~(c)Includes company-operated stores in the U.S., Canada, the U.K. (pre-joint venture) and Greater China.~~

~~The results by segment are as follows:~~

~~Bath & Body Works~~

For year-to-date 2021, net sales increased $1.159 billion to $3.173 billion. Net sales increased in the stores channel by $1.178 billion, or 107%, primarily due to the COVID-19 related store closures in 2020. Direct net sales decreased $51 million, or 6%, primarily due to the reopening of stores this year, as compared to the prior year when stores were closed which drove an increase in sales in the direct channel.

Performance was strong throughout the period as we saw positive customer response to our merchandise. We experienced significant growth in fragrant body care, home fragrance and gifting. As expected, soaps and sanitizers declined versus last year’s significant growth.

The decrease in comparable sales was driven by a decline in store traffic and direct traffic, given the impact from store closures last year, partially offset by a higher average unit retail in the stores channel.

~~Victoria's Secret~~

For year-to-date 2021, net sales increased $1.208 billion to $3.168 billion. Net sales increased in U.S. and Canada stores by $1.093 billion, or 124%, primarily due to the COVID-19 related store closures in 2020, partially offset by the impact of the permanent closure of 241 stores in North America in 2020. Direct net sales increased $68 million, or 7%, due to improved customer response to our merchandise assortment as well as the temporary suspension of operations for approximately one week in March 2020. Direct sales last year were positively impacted by the COVID-19 related store closures.

~~The increase in comparable sales was driven by an increase in average unit retail and store conversion, partially offset by a decline in store and direct traffic.~~

Gross Profit

For year-to-date ~~2021,~~2022, our gross profit ~~increased $1.912 billion~~decreased $242 million to ~~$2.912~~$1.328 billion, and our gross profit rate (expressed as a percentage of net sales) ~~increased~~decreased to ~~45.9%~~43.3% from ~~25.2%, primarily driven by the following:~~

~~Table of Contents~~

~~Bath & Body Works~~

~~For year-to-date 2021, the gross~~49.5%. Gross profit ~~increase was~~decreased due to the ~~increase~~decline in net sales and a decline in merchandise margin dollars ~~related~~as a result of a significant decrease in our merchandise margin rate due to ~~the increase~~continued inflationary cost pressures and increased promotional activity. Additionally, our occupancy expenses increased as a result of direct channel fulfillment expenses and our investments in ~~net sales and an increase~~store real estate.

The gross profit rate decline was driven by a significant decrease in the merchandise margin rate driven by strong customer response to our merchandise assortment which allowed us to reduce our promotional activity. This was partially offset by higher occupancy expenses due to the increase in net sales.

~~The gross profit rate increase was driven by~~and buying and occupancy ~~leverage on higher net sales and an increase in the merchandise margin rate.~~

~~Victoria's Secret~~

~~For year-to-date 2021, the gross profit increase was~~expense deleverage due to ~~the increase in merchandise margin dollars related to the increase in~~lower net sales and an increase in the merchandise margin rate driven by improved response to our merchandise assortments, disciplined management of inventory, as well as strong selling execution in stores and online, all of which enabled us to reduce promotional activity during the period. Occupancy expenses were lower, driven by store asset impairment charges of $214 million in the prior year and permanent store closures, partially offset by a $39 million gain related to the closure of our Hong Kong flagship store in the prior year.

General, Administrative and Store Operating Expenses

For year-to-date ~~2021,~~2022, our general, administrative and store operating expenses ~~increased $467~~decreased $43 million to ~~$1.741 billion due to an increase in store selling expenses~~$806 million, and the rate (expressed as a ~~result~~percentage of ~~the increase in~~ net ~~sales, an increase in marketing investments, costs related~~sales) decreased to legal and separation fees, a $35 million charitable contribution to support philanthropic funds and an increase in incentive compensation given company performance. These increases were partially offset by severance and related costs associated with headcount reductions totaling $81 million in the prior year, and savings realized as a result of cost reductions and the impact of the permanent store closures.

26.3% from 26.7%. The general, administrative and store operating ~~expense~~expenses and rate decreased ~~to 27.4% from 32.1%~~primarily due to ~~leverage on~~lower home office and stores bonus expense related to business performance, charitable contributions made in the ~~increase~~first quarter of 2021, as well as certain legal fees and other discrete items totaling approximately $20 million that were incurred in ~~net sales.~~the second quarter of 2021.

Other Income and Expense

Interest Expense

The following table provides the average daily borrowings and average borrowing rates for year-to-date ~~2021~~2022 and ~~2020:~~2021:


Year-to-Date	Year-to-Date	2021			2020			Year-to-Date	2022			2021
Average daily borrowings (in millions)	Average daily borrowings (in millions)	$	5,859		$	6,125		Average daily borrowings (in millions)	$	4,915		$	5,803
Average borrowing rate (in percentages)		7.2		%	6.5		%
Average borrowing rate								Average borrowing rate	7.1		%	7.2		%

For year-to-date ~~2021,~~2022, our interest expense ~~increased $11~~decreased $35 million to ~~$212~~$175 million due to ~~a higher average borrowing rate partially offset by~~ lower average daily ~~borrowings.~~borrowings and a lower average borrowing rate.

Other ~~Loss~~Income (Loss)

For year-to-date 2021, our other loss was ~~$106~~$105 million ~~primarily~~ due to athe $105 million pre-tax loss associated with the early extinguishment of outstanding ~~notes recognized in the first quarter of 2021.~~notes.

Provision ~~(Benefit)~~ for Income Taxes

For year-to-date ~~2021,~~2022, our effective tax rate was ~~23.6%~~21.4% compared to ~~26.7%~~24.7% year-to-date ~~2020.~~2021. The year-to-date ~~2021~~2022 rate was lower than ~~the Company's~~our combined estimated federal and state statutory rate primarily due to the ~~recognition~~resolution of ~~excess~~certain tax ~~benefits recorded through~~matters during the ~~Consolidated Statements of Income on share-based awards that vested year-to-date.~~period. The ~~second quarter of 2020~~year-to-date 2021 rate was ~~generally~~ consistent with ~~the Company's~~our combined estimated federal and state statutory rate due to the resolution of certain tax matters, which resulted in a $50 million tax benefit and changes in tax legislation included in the CARES Act, which resulted in a $21 million tax benefit, offset by losses related to certain foreign subsidiaries, which generate no tax benefit.rate.

~~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 and capital expenditures. Our cash provided from operations is impacted by our net income ~~(loss)~~ and working capital changes. Our net income ~~(loss)~~ is impacted by, among other things, sales volume, seasonal sales patterns, success of new product introductions, profit margins and income taxes. 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. Our cash and cash equivalents held by foreign subsidiaries were ~~$286~~$104 million as of July ~~31, 2021.~~30, 2022.

We believe that our ~~available short-term~~current cash position, our cash flow generated from operations and ~~long-term capital resources are~~our borrowing capacity under our asset-backed revolving credit facility (“ABL Facility”) will be sufficient to ~~fund foreseeable requirements.~~meet our liquidity needs, including capital expenditure requirements, for at least the next twelve months.

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Working Capital and Capitalization

The following table provides a summary of our working capital position and capitalization as of July 30, 2022, January 29, 2022 and July 31, ~~2021, January 30, 2021 and August 1, 2020:~~2021:


		July 31, 2021		January 30, 2021		August 1, 2020			July 30, 2022		January 29, 2022		July 31, 2021
		(in millions)							(in millions)
Net Cash Provided by Operating Activities (a)		$	573	$	2,039	$	286
Capital Expenditures (a)		178		228		124
Working Capital (b)		1,889		2,753		1,072

Working Capital, Net of Assets and Liabilities from Discontinued Operations (a)								Working Capital, Net of Assets and Liabilities from Discontinued Operations (a)	$	496	$	1,719	$	1,363
Capitalization:	Capitalization:							Capitalization:
Long-term Debt ~~(b)~~(a)	Long-term Debt ~~(b)~~(a)	5,938		6,366		6,269		Long-term Debt ~~(b)~~(a)	4,858		4,854		5,346
Shareholders’ Equity (Deficit)	Shareholders’ Equity (Deficit)	(1,189)		(662)		(1,908)		Shareholders’ Equity (Deficit)	(2,663)		(1,518)		(1,189)
Total Capitalization	Total Capitalization	$	4,749	$	5,704	$	4,361	Total Capitalization	$	2,195	$	3,336	$	4,157
Amounts Available Under the ABL Facility ~~(c)~~(b)	Amounts Available Under the ABL Facility ~~(c)~~(b)	$	—	$	—	$	—	Amounts Available Under the ABL Facility ~~(c)~~(b)	$	714	$	479	$	—

_______________

(a)The ~~January 30, 2021 amounts represent a fifty-two-week period, and the~~balance as of July 31, 2021 excludes the carrying value of assets and ~~August 1, 2020 amounts represent twenty-six-week periods.~~liabilities reported as discontinued operations on the Consolidated Balance Sheet.

(b)As of July ~~31, 2021,~~30, 2022, our ~~Working Capital included $600~~borrowing base was $730 million ~~associated with Cash in Escrow related to~~and we had outstanding letters of credit, which reduce our availability under the ~~Victoria's Secret & Co. Spin-off~~ABL Facility, of $16 million. As of January 29, 2022, our borrowing base was $495 million and ~~our Long-term Debt included $592 million related to the Victoria's Secret & Co. Notes.~~

~~(c)~~we had outstanding letters of credit of $16 million. As of July 31, 2021, ~~our borrowing base was $1.045 billion but~~ we were unable to draw upon the ABL Facility as our consolidated cash balance exceeded $350 million. ~~We had~~In August 2021, we entered into an amendment and restatement of the ABL Facility to, among other things, remove the requirement to prepay outstanding ~~letters of credit, which reduce our availability~~amounts under the ABL Facility ~~of $58 million as of July 31, 2021, $63 million as of January 30, 2021, and $61 million as of August 1, 2020.~~

should our consolidated cash balance exceed $350 million.

Cash ~~Flow~~Flows

The cash flows related to discontinued operations have not been segregated. Accordingly, the 2021 Consolidated Statement of Cash Flows include the results of continuing and discontinued operations. We did not report any cash flows from discontinued operations year-to-date 2022.

The following table provides a summary of our cash flow activity ~~for~~during year-to-date ~~2021~~2022 and ~~2020:~~2021:

Year-to-Date
2021 2020
(in millions)
Cash and Cash Equivalents and Restricted Cash, Beginning of Period $ 3,933 $ 1,499
Net Cash Flows Provided by Operating Activities 573 286
Net Cash Flows Used for Investing Activities (168) (116)
Net Cash Flows Provided by (Used for) Financing Activities (1,752) 1,071
Effects of Exchange Rate Changes on Cash and Cash Equivalents and Restricted Cash 2 (1)
Net Increase (Decrease) in Cash and Cash Equivalents and Restricted Cash (1,345) 1,240
Cash and Cash Equivalents and Restricted Cash, End of Period $ 2,588 $ 2,739

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	2022		2021
	(in millions)
Cash and Cash Equivalents and Restricted Cash, Beginning of Period	$	1,979	$	3,933
Net Cash Flows Provided by Operating Activities	81		573
Net Cash Flows Used for Investing Activities	(162)		(168)
Net Cash Flows Used for Financing Activities	(1,446)		(1,752)
Effects of Exchange Rate Changes on Cash and Cash Equivalents and Restricted Cash	—		2
Net Decrease in Cash and Cash Equivalents and Restricted Cash	(1,527)		(1,345)
Cash and Cash Equivalents and Restricted Cash, End of Period	$	452	$	2,588

Operating Activities

Net cash provided by operating activities in 2022 was $81 million, including net income of $275 million. Net income included depreciation of $106 million and share-based compensation expense of $15 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, Income Taxes Payable, Accounts Receivable, and the change in Other Assets and Liabilities. Additionally, we proactively pulled forward the purchase and delivery of certain Inventory items to generate capacity during the third quarter of 2022 peak period, which we expect to provide us with additional agility in the second half of 2022.

Net cash provided by operating activities in 2021 was $573 million, including total net income of $651 ~~million.~~million (which included Income from Discontinued Operations, Net of Tax of $345 million). Net income included depreciation of $258 million (which included $158 million related to the Victoria's Secret business classified as discontinued operations), loss on extinguishment of debt of $105 million, share-based compensation expense of $30 million (which included $15 million related to the Victoria's Secret business classified as discontinued operations), and deferred tax expense of $16 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 Income Taxes Payable, and the change in Other Assets and Liabilities.

~~Net cash provided by operating activities in 2020 was $286 million, including a net loss~~

Table of $346 million. Net loss included depreciation of $266 million, store and lease asset impairment charges of $214 million, gain from Victoria's Secret Hong Kong store closure and lease termination of $39 million and share-based compensation expense of $28 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 and COVID-19 related changes in Accounts Payable, Accrued Expenses and Other, Inventories, Income Taxes Payable and Accounts Receivable.Contents

Investing Activities

Net cash used for investing activities in 2022 was $162 million primarily related to capital expenditures. The capital expenditures included $72 million related to new non-mall stores and remodels, $46 million for our new Company-operated direct channel fulfillment center and $18 million related to information technology projects.

Net cash used for investing activities in 2021 was $168 million consisting primarily of capital expenditures of $178 million, partially offset by proceeds from other investing activities of $10 million. The capital expenditures included $75 million related to the completion of 76 North American Bath & Body Works real estate ~~projects including 41 new non-mall stores and 35 remodels.~~projects. Remaining capital expenditures, which included $66 million related to the Victoria's Secret business classified as discontinued operations, were primarily related to technology and logistics to support growth and capabilities.

Net cash used for investing activities in 2020 was $116 million consisting primarily of capital expenditures of $124 million. The capital expenditures were primarily related to spending on technology and logistics to support our digital businesses and other retail capabilities. Capital expenditures of $45 million related to the opening of new stores or the remodeling and improving of existing stores, primarily for Bath & Body Works.

We ~~are estimating 2021~~estimate full year 2022 capital expenditures to be ~~between $345 million and $370 million for the total Company, or between $275 million and $300 million for the Bath & Body Works business.~~approximately $400 million. We are continuing our ~~investment~~investments in the remodeling and opening of new off-mall stores. We are forecasting approximately 100 new off-mall North American stores ~~and~~which, together with our planned remodels, are expected to result in net square footage growth of about 6% for full year 2022. Additionally, we are investing in technology, distribution and logistics capabilities to support our growth.

Financing Activities

Net cash used for financing activities in 2022 was $1.446 billion consisting of $1.312 billion in payments for share repurchases, including the payment of $1 billion related to our accelerated share repurchase program ("ASR"), dividend payments of $0.40 per share, or $94 million, and $31 million of tax payments related to share-based awards.

Net cash used for financing activities in 2021 was $1.752 billion consisting primarily of payments of $1.194 billion for share repurchases, $1.130 billion in payments for the early extinguishment of outstanding notes, $56 million of tax payments related to share-based awards and dividend payments of $0.15 per share, or $42 million. These decreases were partially offset by the ~~initial~~ $600 million ofinitial proceeds from the Victoria's Secret & Co. Notes ~~held in escrow for release upon completion of the Separation,~~classified as discontinued operations, and proceeds from stock option exercises of $76 million.

Net cash provided by financing activities in 2020 was $1.071 billion consisting primarily of net proceeds of $1.231 billion from the issuance of new notes, partially offset by dividend payments of $0.30 per share, or $83 million, and $52 million of net repayments under our Foreign Facilities. We also borrowed and repaid $950 million under our Credit Agreement during 2020.

On August 2, 2021, we completed the Separation of Victoria's Secret & Co. In connection with the Separation, Victoria's Secret & Co. made cash payments of approximately $976 million to us, which we intend to use to fund future share repurchases or dividends, or principal pay downs of debt. Additionally, the Victoria's Secret & Co. Notes became the obligations of Victoria's Secret & Co. concurrent with the Separation.

Subsequent to July 31, 2021, we announced that we had commenced tender offers to purchase for cash our outstanding 2023 Notes, 2025 Notes and 2027 Notes up to a maximum aggregate principal amount of $500 million. The maximum aggregate amount to be purchased by us for the 2025 Notes and 2027 Notes is limited to $180 million. On September 2, 2021, we announced that we had accepted for early settlement tender offers to purchase $270 million of outstanding 2023 Notes and $180 million of outstanding 2025 Notes for an aggregate purchase price of $532 million. We intend to make payment for these accepted notes on September 3, 2021. The tender offers will expire on September 16, 2021, unless extended or earlier terminated by us.

Common Stock Share Repurchases

Our Board of Directors (the "Board") will determine share 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 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.

2021 Repurchase Programs

In March 2021, ~~our~~the Board ~~of Directors~~ authorized a ~~new~~ $500 million share repurchase plan (the "March 2021 Program"), which replaced the $79 million remaining under ~~the~~a March 2018 repurchase program. ~~Pursuant to the Board's authorization, we entered into a Rule 10b5-1~~

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purchase plan to effectuate share repurchases for the first $250 million. In May 2021, we initiated a second $250 million Rule 10b5-1 purchase plan to effectuate the remaining share repurchases under the March 2021 repurchase plan.

In July 2021, ~~our~~the Board ~~of Directors~~ authorized a ~~new~~ $1.5 billion share repurchase program (the "July 2021 Program"), which replaced the $36 million remaining under the March 2021 ~~repurchase program.~~Program. Under the authorization of this program, we entered into a stock repurchase agreement with our former Chief Executive Officer and certain of his affiliated entities pursuant to which we repurchased 10 million shares of our common stock for an aggregate purchase price of $730 million in July 2021.

We repurchased the following shares of our common stock during year-to-date 2021:
Repurchase Program Amount
Authorized Shares
Repurchased Amount
Repurchased Average Stock Price
(in millions) (in thousands) (in millions)
March 2021 $ 500 6,996 $ 464 $ 66.30
July 2021 $ 1,500 10,000 $ 730 $ 73.01

~~The~~


Repurchase Program	Amount Authorized		Shares Repurchased	Amount Repurchased		Average Stock Price
	(in millions)		(in thousands)	(in millions)
March 2021 (a)	$	500	6,996	$	464	$	66.30
July 2021 (a)	1,500		10,000	730		73.01
Total			16,996	$	1,194

_______________

(a)Reflects repurchases of L Brands, Inc. common stock prior to the August 2, 2021 spin-off of Victoria's Secret & Co.

Under the July 2021 Program, ~~had $770 million remaining as of July 31, 2021.~~

~~Subsequent to July 31, 2021,~~ we repurchased an additional ~~1.0~~11 million shares of our common stock for ~~$65~~an aggregate purchase price of $770 million during the third and fourth quarters of 2021.

2022 Repurchase Program

In February 2022, the Board authorized a new $1.5 billion share repurchase program (the "February 2022 Program"). As part of the February 2022 Program, we entered into the ASR under which we repurchased $1 billion of our own outstanding common stock. The delivery of shares under the ~~July 2021 Program.~~ASR resulted in an immediate reduction of our outstanding shares used to

~~Common Stock Retirement~~

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~~In accordance with our Board of Directors' resolution,~~calculate the weighted-average common shares outstanding for basic and diluted net income per share. Pursuant to the Board's authorization, we made other share repurchases in the open market under the February 2022 Program during 2022.

On February 4, 2022, we delivered $1 billion to the ASR bank, and the bank delivered 13.6 million shares of common stock ~~repurchased~~to us (the "Initial Shares"). Pursuant to the terms of the ASR, the Initial Shares represented 80% of the number of shares determined by dividing the $1 billion Company payment by the closing price of our common stock on February 2, 2022.

In May 2022, we received an additional 6.7 million shares of our common stock from the ASR bank for the final settlement of the ASR. The final number of shares of common stock delivered under the ~~July 2021 Program will be automatically retired and cancelled~~ASR was based generally upon ~~repurchase. As~~ a ~~result, we retired~~discount to the ~~10 million~~average daily Rule 10b-18 volume-weighted average price at which the shares ~~repurchased under~~of common stock traded during the ~~July 2021 Program~~regular trading sessions on the NYSE during the term of the repurchase period. In connection with the final settlement, in the second quarter ~~of 2021, which resulted in a reduction of $5~~we reclassified the $200 million ~~in the par value of Common Stock, $32 million~~recorded in Paid-in Capital ~~and $693~~as of April 30, 2022.

We repurchased the following shares of our common stock during year-to-date 2022:


Repurchase Program	Amount Authorized		Shares Repurchased	Amount Repurchased		Average Stock Price
	(in millions)		(in thousands)	(in millions)
February 2022	$	1,500	6,401	$	312	$	48.77
February 2022 - Accelerated Share Repurchase Program			20,295	1,000		49.27
Total			26,696	$	1,312

The February 2022 Program had $188 million ~~in Retained Earnings.~~of remaining authority as of July 30, 2022.

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 and financing activities to fund our dividends.

Our Board ~~of Directors~~ suspended our quarterly cash dividend beginning in the second quarter of ~~2020 as a proactive measure to strengthen our financial flexibility and manage through the COVID-19 pandemic.~~2020. In March 2021, our Board ~~of Directors~~ reinstated ~~our~~the annual dividend at $0.60 per share, beginning with the quarterly dividend paid in June 2021.

~~Under the authority and declaration of~~ In February 2022, our Board ~~of Directors, we~~increased the annual dividend to $0.80 per share, beginning with the quarterly dividend paid in March 2022.

We paid the following dividends during ~~year-to-date 2021~~2022 and ~~2020:~~2021:


	Ordinary Dividends			Total Paid
	(per share)		(in millions)
2022
First Quarter	$	0.20		$	48
Second Quarter	0.20			46

Total	$	0.40		$	94
2021
First Quarter	$	—		$	—
Second Quarter	0.15			42

Total	$	0.15		$	42

Ordinary Dividends Total Paid
(per share) (in millions)
2021
Second Quarter $ 0.15 $ 42
First Quarter — —
Total $ 0.15 $ 42
2020
Second Quarter $ — $ —
First Quarter 0.30 83
Total $ 0.30 $ 83

~~In August 2021, our Board of Directors declared~~On September 2, 2022, we paid the third quarter ~~of 2021~~2022 ordinary dividend of ~~$0.15~~$0.20 per ~~share.~~share to shareholders of record at the close of business on August 19, 2022.

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Long-term Debt and Borrowing Facilities

The following table provides our outstanding long-term debt balance, net of unamortized debt issuance costs and discounts, as of July 30, 2022, January 29, 2022 and July 31, ~~2021, January 30, 2021 and August 1, 2020:~~2021:


	July 30, 2022		January 29, 2022		July 31, 2021
	(in millions)




Senior Debt with Subsidiary Guarantee


$500 million, 5.625% Fixed Interest Rate Notes due October 2023 (“2023 Notes”)	$	—	$	—	$	319
$320 million, 9.375% Fixed Interest Rate Notes due July 2025 ("2025 Notes")	317		316		494
$297 million, 6.694% Fixed Interest Rate Notes due January 2027 (“2027 Notes”)	282		281		279
$500 million, 5.250% Fixed Interest Rate Notes due February 2028 (“2028 Notes”)	497		497		497
$500 million, 7.500% Fixed Interest Rate Notes due June 2029 ("2029 Notes")	490		489		489
$1 billion, 6.625% Fixed Interest Rate Notes due October 2030 ("2030 Notes")	990		990		989
$1 billion, 6.875% Fixed Interest Rate Notes due November 2035 (“2035 Notes”)	993		992		991
$700 million, 6.750% Fixed Interest Rate Notes due July 2036 (“2036 Notes”)	694		694		694
Total Senior Debt with Subsidiary Guarantee	$	4,263	$	4,259	$	4,752
Senior Debt
$350 million, 6.950% Fixed Interest Rate Debentures due March 2033 (“2033 Notes”)	$	349	$	349	$	348
$247 million, 7.600% Fixed Interest Rate Notes due July 2037 (“2037 Notes”)	246		246		246
Total Senior Debt	595		595		594
Total Long-term Debt	$	4,858	$	4,854	$	5,346

Repurchases of Notes

In September 2021, we completed the tender offers to purchase $270 million of our outstanding 2023 Notes and $180 million of our outstanding 2025 Notes for an aggregate purchase price of $532 million. Additionally, in October 2021, we redeemed the remaining $50 million of our outstanding 2023 Notes for an aggregate purchase price of $54 million. We recognized a pre-tax loss related to this extinguishment of debt of $89 million (after-tax loss of $68 million), which included the write-offs of unamortized issuance costs, in the third quarter of 2021.

In April 2021, we ~~completed a make-whole call to repurchase~~redeemed the remaining $285 million of our outstanding 5.625% senior notes due February 2022 ~~Notes~~ and ~~the~~ $750 million of our outstanding ~~2025 Secured Notes.~~6.875% senior secured notes due July 2025. We recognized a pre-tax loss related to this extinguishment of debt of $105 million (after-tax loss of $80 million), which ~~includes~~included the write-offs of unamortized issuance costs. This loss is included in Other Income (Loss) in the year-to-date 2021 Consolidated Statement of Income.

Subsequent to July 31, 2021, we announced that we had commenced tender offers to purchase for cash our outstanding 2023 Notes, 2025 Notes and 2027 Notes up to a maximum aggregate principal amount of $500 million. The maximum aggregate amount to be purchased by us for the 2025 Notes and 2027 Notes is limited to $180 million. On September 2, 2021, we announced that we had accepted for early settlement tender offers to purchase $270 million of outstanding 2023 Notes and $180 million of outstanding 2025 Notes for an aggregate purchase price of $532 million. We intend to make payment for these accepted notes on September 3, 2021, and expect to recognize a pre-tax loss of approximately $84 million in the third quarter of 2021 related to these purchases. The tender offers will expire on September 16, 2021, unless extended or earlier terminated by us.

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~~Victoria's Secret & Co. Notes~~

In July 2021, Victoria’s Secret & Co., prior to the Separation and while a subsidiary of ours, issued $600 million of 4.625% notes due in July 2029 in a transaction exempt from registration under the Securities Act of 1933, as amended. As of July 31, 2021, the initial proceeds were held in escrow for release to Victoria's Secret & Co. upon satisfaction of certain conditions, including completion of the Separation. If the conditions for the release from escrow of the proceeds were not satisfied, the Victoria's Secret & Co. Notes would have been subject to mandatory redemption. The $600 million initial proceeds are included in Cash in Escrow related to Victoria's Secret & Co. Spin-Off on the July 31, 2021 Consolidated Balance Sheet. The Victoria's Secret & Co. Notes were not guaranteed at issuance by any guarantors or by Bath & Body Works, Inc. or any of our subsidiaries following the Separation.

~~Asset-Backed~~Asset-backed Revolving Credit Facility

We and certain of our 100% owned subsidiaries guarantee and pledge collateral to secure ~~a revolving credit facility. In April 2020, we entered into an amendment and restatement of the Credit Agreement to convert~~ our credit facility into an asset-backed revolving credit facility. During the first quarter of 2020, in an abundance of caution and as a proactive measure in response to the COVID-19 pandemic, we elected to borrow $950 million from its revolving facility. This borrowing was repaid during the first quarter of 2020 upon completion of the April amendment.

~~As of July 31, 2021, the~~ABL Facility. The ABL Facility, which ~~allowed~~allows borrowings and letters of credit in U.S. dollars or Canadian dollars, ~~had~~has aggregate commitments ~~at $1 billion~~of $750 million and an expiration date in August ~~2024.~~2026.

~~As of July 31, 2021, the availability~~Availability under the ABL Facility ~~was~~is the lesser of (i) the borrowing base, determined primarily based on our eligible U.S. and Canadian 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 ~~exceeded~~exceeds the lesser of (i) the borrowing base and (ii) the aggregate commitment, we ~~would have been~~are required to ~~prepay~~repay the ~~outstanding amounts under the ABL Facility to the extent of such excess. In addition, at any time that our consolidated cash balance exceeded $350 million, we would have been required to prepay~~ outstanding amounts under the ABL Facility to the extent of such excess. As of July ~~31, 2021,~~30, 2022, our borrowing base was ~~$1.045 billion, but~~$730 million, and we ~~were unable to draw upon~~had no borrowings outstanding under the ABL ~~Facility as our consolidated cash balance exceeded $350 million.~~Facility.

The ABL Facility supports our letter of credit program. We had ~~$58~~$16 million of outstanding letters of credit as of July ~~31, 2021~~30, 2022 that reduced our availability under the ABL Facility. As of July 30, 2022, our availability under the ABL Facility was $714 million.

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The ABL Facility ~~required~~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 ~~(1) $100~~(i) $70 million or ~~(2) 15%~~(ii) 10% of the maximum borrowing amount. As of July ~~31, 2021,~~30, 2022, we were not required to maintain this ratio.

~~As of July 31, 2021, there were no borrowings outstanding under the ABL Facility.~~

Subsequent to July 31, 2021, we entered into an amendment and restatement of the ABL Facility. The Amendment reduced the aggregate commitments under the ABL Facility to $750 million, reduced the interest rates on outstanding borrowings by 50 basis points, removed the requirement to prepay outstanding amounts under the ABL Facility should our consolidated cash balance exceed $350 million, extended the expiration date from August 2024 to August 2026 and released Victoria's Secret & Co. subsidiaries as guarantors, among other things.

~~Table of Contents~~

~~Foreign Facilities~~

Certain of our Victoria's Secret subsidiaries in China previously utilized revolving and term loan bank facilities to support their operations. During the second quarter of 2021, with no borrowings outstanding, we terminated the Foreign Facilities.

Credit Ratings

The following table provides our credit ratings as of July ~~31, 2021:~~30, 2022:


	Moody’s	S&P
Corporate	~~Ba3~~Ba2	~~BB-~~BB
Senior Unsecured Debt with Subsidiary Guarantee	~~Ba3~~Ba2	~~BB-~~BB
Senior Unsecured Debt	B2B1	BB+
Outlook	~~Stable~~Positive	Stable

Subsequent to July ~~31, 2021,~~30, 2022, Moody's ~~upgraded our Corporate and Senior Unsecured Debt with Subsidiary Guarantee ratings to Ba2 and our Senior Unsecured Debt rating to B1 and~~ changed our outlook to ~~Positive. Additionally, S&P upgraded our Corporate and Senior Unsecured Debt with Subsidiary Guarantee ratings to BB and our Senior Unsecured Debt rating to B+ and changed our outlook to Positive.~~Stable.

Guarantor Summarized Financial Information

~~As of July 31, 2021 certain~~Certain of our subsidiaries, which are listed on Exhibit 22 to this Quarterly Report on Form 10-Q, have guaranteed our obligations under the ~~2023 Notes,~~ 2025 Notes, 2027 Notes, 2028 Notes, 2029 Notes, 2030 Notes, 2035 Notes and ~~the~~ 2036 Notes (collectively, the "Notes"). ~~On August 2, 2021, the guarantees provided by subsidiaries which became subsidiaries of Victoria's Secret & Co. were released concurrently with the Separation.~~

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 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.

The Notes are fully and unconditionally guaranteed on a joint and several basis by certain of our wholly-owned subsidiaries, including ~~each subsidiary~~certain subsidiaries that also ~~guarantees~~guarantee our obligations under certain of our senior secured credit facilities (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 the 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 and equity in the earnings of non-Guarantor ~~subsidiaries:~~subsidiaries.


SUMMARIZED BALANCE SHEETS	SUMMARIZED BALANCE SHEETS	July 31, 2021		January 30, 2021		SUMMARIZED BALANCE SHEETS	July 30, 2022		January 29, 2022
		(in millions)					(in millions)
ASSETS	ASSETS					ASSETS
Current Assets (a)	Current Assets (a)	$	5,004	$	6,813	Current Assets (a)	$	2,115	$	3,365
Noncurrent Assets ~~(b)~~	Noncurrent Assets ~~(b)~~	4,550		4,795		Noncurrent Assets ~~(b)~~	2,498		2,481

LIABILITIES	LIABILITIES					LIABILITIES
Current Liabilities ~~(c)~~(b)	Current Liabilities ~~(c)~~(b)	$	4,716	$	5,038	Current Liabilities ~~(c)~~(b)	$	2,912	$	2,956
Noncurrent Liabilities ~~(d)~~(c)	Noncurrent Liabilities ~~(d)~~(c)	7,861		9,433		Noncurrent Liabilities ~~(d)~~(c)	6,166		6,155

_______________

(a)Includes amounts due from non-Guarantor subsidiaries of ~~$1.812 billion~~$565 million and ~~$1.933 billion~~$530 million as of July ~~31, 2021~~30, 2022 and January ~~30, 2021,~~29, 2022, respectively.

(b)Includes amounts due ~~from~~to non-Guarantor subsidiaries of ~~$117 million~~$1.899 billion and ~~$141 million~~$1.927 billion as of July ~~31, 2021~~30, 2022 and January ~~30, 2021,~~29, 2022, respectively.

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(c)Includes amounts due to non-Guarantor subsidiaries of ~~$2.949 billion and $3.096 billion as of July 31, 2021 and January 30, 2021, respectively.~~

~~(d)Includes amounts due to non-Guarantor subsidiaries of~~ $5 ~~million and $476~~ million as of both July ~~31, 2021~~30, 2022 and January 29, 2022.

30 ~~2021, respectively.~~

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YEAR-TO-DATE SUMMARIZED STATEMENT OF INCOME	~~Year-to-Date~~
	~~2021~~2022
	(in millions)
Net Sales (a)	$	~~6,123~~2,978
Gross Profit	~~2,775~~1,232
Operating Income	~~1,198~~474
Income Before Income Taxes	~~852~~300
Net Income (b)	~~656~~235

_______________

(a)Includes net sales of ~~$42~~$114 million to non-Guarantor subsidiaries.

(b)Includes net loss of ~~$62~~$2 million related to transactions with non-Guarantor subsidiaries.

In addition to the Subsidiary Guarantors, a certain subsidiary, which is listed on Exhibit 22 to this Quarterly Report on Form 10-Q, has only guaranteed our obligations under the 2025 Notes and 2030 Notes. This subsidiary had current assets of $15 million and noncurrent assets of $190 million, which included $18 million due from the Subsidiary Guarantors, as of July 31, 2021. Additionally, this subsidiary had assets, all of which were noncurrent, of $235 million as of January 30, 2021. Liabilities for this subsidiary were not material for either July 31, 2021 or January 30, 2021. Further, 2021 Statement of Income activity for this subsidiary was not material.

Contingent Liabilities and Contractual Obligations

~~La Senza~~Lease Guarantees

In connection with the spin-off of Victoria's Secret & Co. and the sale of the La Senza ~~in the fourth quarter of 2018, certain of our subsidiaries have~~business, we had remaining contingent obligations of ~~approximately $30~~$295 million as of July 30, 2022 related to lease payments under the current terms of noncancelable leases, primarily related to office space, expiring at various dates through ~~2028.~~2037. These obligations 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 ~~the business.~~these businesses. Our reserves related to these obligations were not significant as of July 30, 2022.

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. There have been no material changes in our contractual obligations ~~since~~subsequent to January ~~30, 2021,~~29, 2022, as discussed in “Contingent Liabilities and Contractual Obligations” in our ~~2020~~2021 Annual Report on Form 10-K, other than the issuance of the Victoria's Secret & Co. Notes, which became the obligations of Victoria's Secret & Co. concurrent with the Separation on August 2, 2021, and the repurchase of the 2022 Notes and 2025 Secured Notes.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

We did not adopt any new accounting standards ~~during the second quarter of 2021~~in 2022 that had a material impact on our consolidated results of operations, financial position or cash flows. In addition, as of September 2, 2022, there ~~are~~were no new accounting standards that we have not yet adopted that are expected to have a material impact on our consolidated results of operations, financial position or cash flows.

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. Management bases our estimates and judgments on historical experience and various other factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates.

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There have been no material changes to the critical accounting policies and estimates disclosed in our ~~2020~~2021 Annual Report on Form 10-K.

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 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.~~ Our Canadian dollar ~~and Chinese Yuan~~ denominated earnings are subject to exchange rate risk as substantially all our merchandise sold in Canada ~~and Greater China~~ is sourced through U.S. dollar transactions. Although we utilize foreign currency forward contracts to partially offset risks

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associated with our operations in Canada, these measures may not succeed in offsetting all 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 is the preservation of principal, the maintenance of liquidity and the maximization of interest income while minimizing risk. Our investment portfolio is primarily comprised 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.

All of our long-term debt as of July ~~31, 2021~~30, 2022 has fixed interest rates. We will from time to time adjust our exposure to interest rate risk by entering into interest rate swap arrangements. Our 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 July ~~31, 2021,~~30, 2022, we believe that the carrying values of accounts receivable, accounts payable and accrued expenses approximate fair value because of their short maturity.

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		July 31, 2021		January 30, 2021		August 1, 2020			July 30, 2022		January 29, 2022		July 31, 2021
		(in millions)							(in millions)
Principal Value	Principal Value	$	5,414	$	6,449	$	6,708	Principal Value	$	4,915	$	4,915	$	5,414
Fair Value, Estimated (a)	Fair Value, Estimated (a)	6,581		7,243		6,692		Fair Value, Estimated (a)	4,631		5,493		6,581

_______________

(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.

Concentration of Credit Risk

We maintain cash and cash equivalents ~~restricted cash~~ 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. Our investment portfolio is primarily comprised 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. 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 Interim 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 Interim 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 SEC rules and forms, and (2) accumulated and communicated to our management, including our Interim 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 second quarter of ~~2021~~2022 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. 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, customer, employment, data privacy, securities 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 results of operations, financial position or ~~results of operations.~~cash flows.

On May 19, 2020 and January 12, 2021, certain ~~shareholders~~ of ~~ours~~our stockholders filed derivative lawsuits in the Court of Common Pleas for Franklin County, Ohio (subsequently removed to the United States District Court for the Southern District of Ohio) and the Delaware Court of Chancery, respectively, naming as defendants certain current and former directors and officers of ours and alleging, among other things, breaches of fiduciary duty through asserted violations of law and failures to monitor workplace conduct (the ~~“Lawsuits”~~"Lawsuits"). In addition, we also received litigation and books-and-records demands from certain other ~~shareholders~~stockholders related to the same matters (together with the Lawsuits, the ~~“Actions”~~"Actions").

In July 2021, we announced the global settlement resolving the Actions. The settlement ~~resolves~~resolved all derivative claims that have been or could have been asserted in the Actions or that involve in any way the allegations referred to in the Actions and ~~releases~~released all such claims against us and our past and present employees, officers and directors, among others. As part of the settlement, we have agreed to implement certain management and governance measures, including the maintenance of a Diversity, Equity, and Inclusion Council. Following the August 2, 2021 spin-off of Victoria’s Secret & Co., the settlement terms ~~will~~ apply to both us and Victoria’s Secret & Co. Each company has committed to invest $45 million over at least five years to fund the management and governance measures. In May 2022, the U.S. District Court of the Southern District of Ohio granted final approval of the settlement.

Item 1A. RISK FACTORS

The ~~following information supplements the~~ risk factors ~~described~~that affect our business and financial results are discussed in ~~“Item 1A:~~Item 1A. Risk ~~Factors”~~Factors in our ~~2020 Annual Report on Form 10-K and should be read in conjunction with the risk factors described in the 2020~~2021 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 ~~2020~~2021 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.

Our recently completed spin-off of the Victoria’s Secret business and related operations could negatively impact our business, and contingent liabilities from the divestiture of such business could adversely affect our financial position and results of operations.

On August 2, 2021, we completed the spin-off of our Victoria’s Secret business. The spin-off poses risks and challenges that could negatively impact our business. The spin-off may impact our credit rating, dilute our earnings per share, have other adverse financial and accounting impacts and distract management. In addition, we may be required to indemnify the new Victoria’s Secret company against known and unknown contingent liabilities in connection with the spin-off of the Victoria’s Secret business. Further, we may not receive tax-free treatment for U.S. federal income tax purposes. The resolution of these contingencies may have a material effect on our financial position and results of operations. Uncertainty about the effect of the spin-off of the Victoria’s Secret business on employees, commercial partners and vendors may have an adverse effect on us. These uncertainties may impair our ability to retain and motivate key personnel and could cause commercial partners, vendors and others that deal with us to defer or decline entering into contracts with us or seek to change existing business relationships with us. In addition, if key employees depart because of uncertainty about their future roles, our business could be harmed. The spin-off may cause disruption in our business and that disruption could result in a loss of revenue. We may incur significant expenses and challenges in connection with the spin-off of the Victoria’s Secret business, which may include expenses and challenges related to the separation of Victoria's Secret from our current information technology environment. Further, the efforts related to the separation of the information technology environment will require significant resources that could impact our ability to keep pace with ongoing advancement of information technology needs of the business.

In addition, we may not be able to achieve the full strategic and financial benefits that are expected to result from the spin-off and the anticipated benefits of the spin-off are based on a number of assumptions, some of which may prove incorrect. For example, there is risk that as smaller, independent companies, the companies resulting from the spin-off will be less diversified with a narrower business focus and may be more vulnerable to changing market conditions as well as the risk of takeover by third parties. There may be a loss of synergies from separating the businesses that could negatively impact the balance sheet, profit margins or earnings of both businesses. Lastly, there is risk that that the combined value of the common stock of the two publicly-traded companies will not be equal to or greater than the value of the Company’s common stock had the spin-off not occurred.

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

The following table provides our repurchases of our common stock during the second quarter of ~~2021:~~2022:

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)
May 2021 1,556 $ 67.27 1,476 $ 235,508
June 2021 2,527 67.81 2,519 64,681
July 2021 10,624 72.93 10,393 769,900
Total 14,707 14,388


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)
May 2022	8,059	$	33.14	7,960	$	202,473
June 2022	394	37.54		392	187,775
July 2022	1	26.99		—	187,775
Total	8,454			8,352

_______________

(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~~associate restricted stock and performance share unit 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 4, “Earnings ~~(Loss)~~ Per Share and Shareholders' Equity (Deficit)” included in Part 1, Item 1. Financial Statements.

Item 3. DEFAULTS UPON SENIOR SECURITIES

Not applicable.

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Item 4. MINE SAFETY DISCLOSURES

Not applicable.

Item 5. OTHER INFORMATION

None.

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Item 6. EXHIBITS


Exhibits

10.1						~~Executive~~ ~~Letter~~ ~~Agreement between~~ Bath & Body Works, Inc. ~~and Wendy C. Arlin,~~Associate Stock Purchase Plan (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K dated ~~August 2, 2021.~~May 13, 2022).

10.2						Transition & General Release Agreement, dated as of May 4, 2022, by and between Bath & Body Works, Inc. and Andrew M. Meslow (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K dated May 5, 2022).

10.3						Executive ~~Retirement~~Severance Agreement, dated as of May 13, 2022, by and between Bath & Body Works, Inc. and Wendy C. Arlin.

10.4						Executive Severance Agreement, dated as of May 13, 2022, by and between Bath & Body Works, Inc. and Deon N. Riley.

10.5						Executive Severance Agreement, dated as of May 13, 2022, by and between Bath & Body Works, Inc. and Julie B. Rosen.

10.6						Executive Retention Agreement, dated as of May 13, 2022, by and between Bath & Body Works, Inc. and Wendy C. Arlin.

10.7						Executive Retention Agreement, dated as of May 13, 2022, by and between Bath & Body Works, Inc. and Deon N. Riley.

10.8						Executive Retention Agreement, dated as of May 13, 2022, by and between Bath & Body Works, Inc. and Julie B. Rosen.

10.9*						Amendment No. 1 to L Brands to VS Transition Services Agreement between Bath & Body Works, Inc. and Victoria’s Secret & Co., dated as of July 20, 2022.

10.10*						Amendment No. 1 to VS to L Brands Transition Services Agreement between Bath & Body Works, Inc. and ~~Stuart B. Burgdoerfer,~~Victoria’s Secret & Co., dated ~~August 2, 2021.~~as of July 20, 2022.

15						Letter ~~re:~~regarding Unaudited Interim Financial Information ~~re:~~regarding Incorporation of Report of Independent Registered Public Accounting Firm.

22						List of Guarantor Subsidiaries.

31.1						Section 302 Certification of CEO.

31.2						Section 302 Certification of CFO.

32						Section 906 Certification (by CEO and CFO).

101.INS						XBRL 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.SCH						Inline XBRL Taxonomy Extension Schema Document

101.CAL						Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF						Inline XBRL Taxonomy Definition Linkbase Document

101.LAB						Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE						Inline XBRL Taxonomy Extension Presentation Linkbase Document

104						Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)


* Certain exhibits and schedules have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The registrant hereby undertakes to furnish supplementally a copy of any omitted exhibit or schedule upon request by the Securities and Exchange Commission.

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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.


			BATH & BODY WORKS, INC.
			(Registrant)
			By:			/s/ WENDY C. ARLIN
						Wendy C. Arlin Executive Vice President and Chief Financial Officer *

Date: September 2, ~~2021~~2022

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

4535


Repurchase Program	Amount Authorized		Shares Repurchased	Amount Repurchased		Average Stock Price
	(in millions)		(in thousands)	(in millions)
March 2021	$	500	6,996	$	464	$	66.30
July 2021	$	1,500	10,000	$	730	$	73.01


	Bath & Body Works		Victoria’s Secret		Other		Total
	(in millions)
2021
Second Quarter:
Net Sales	$	1,704	$	1,614	$	—	$	3,318
Operating Income (Loss)	431		233		(65)		599
Year-to-Date:
Net Sales	$	3,173	$	3,168	$	—	$	6,341
Operating Income (Loss)	811		477		(117)		1,171
2020
Second Quarter:
Net Sales	$	1,253	$	1,066	$	—	$	2,319
Operating Income (Loss) (a)	337		(219)		(74)		44
Year-to-Date:
Net Sales	$	2,014	$	1,960	$	—	$	3,974
Operating Income (Loss) (a)	413		(573)		(114)		(274)


	Stores at			Stores at
	January 30, 2021	Opened	Closed	July 31, 2021
Bath & Body Works U.S.	1,633	41	(11)	1,663
Bath & Body Works Canada	103	—	—	103
Total Bath & Body Works	1,736	41	(11)	1,766
Victoria’s Secret U.S.	846	—	(8)	838
Victoria’s Secret Canada	25	1	—	26

Victoria's Secret Beauty and Accessories Greater China	36	1	(1)	36
Victoria's Secret Greater China	26	—	—	26
Total Victoria's Secret	933	2	(9)	926
Total Stores	2,669	43	(20)	2,692


	Stores at			Stores at
	February 1, 2020	Opened	Closed	August 1, 2020
Bath & Body Works U.S.	1,637	10	(14)	1,633
Bath & Body Works Canada	102	—	—	102
Total Bath & Body Works	1,739	10	(14)	1,735
Victoria’s Secret U.S.	1,053	3	(198)	858
Victoria’s Secret Canada	38	—	(12)	26
Victoria's Secret U.K. / Ireland	26	—	—	26
Victoria's Secret Beauty and Accessories Greater China	41	1	(3)	39
Victoria's Secret Greater China	23	3	(1)	25
Total Victoria's Secret	1,181	7	(214)	974
Total Stores	2,920	17	(228)	2,709


					Operating Income (Loss) Rate
	2021		2020		2021		2020
Second Quarter	(in millions)
Bath & Body Works	$	431	$	337	25.3	%	26.9	%
Victoria’s Secret	233		(219)		14.4	%	(20.5	%)
Other (a)	(65)		(74)		—	%	—	%
Total Operating Income (Loss)	$	599	$	44	18.1	%	1.9	%


	Bath & Body Works		Victoria’s Secret		Total
	(in millions)
2020 Net Sales	$	1,253	$	1,066	$	2,319
Comparable Store Sales	(150)		58		(92)
Sales Associated with New, Closed and Non-comparable Remodeled Stores, Net (a)	698		593		1,291
Direct Channels	(112)		(142)		(254)
Private Label Credit Card	—		3		3
International Wholesale, Royalty and Other	11		31		42
Foreign Currency Translation	4		5		9
2021 Net Sales	$	1,704	$	1,614	$	3,318


	2021		2020
Comparable Sales (Stores and Direct) (a)
Bath & Body Works (b)	(22	%)	123	%
Victoria's Secret (c)	(9	%)	24	%
Total Comparable Sales	(16	%)	63	%

Comparable Store Sales (a)
Bath & Body Works (b)	(23	%)	87	%
Victoria's Secret (c)	16	%	(12	%)
Total Comparable Store Sales	(9	%)	33	%


	Bath & Body Works		Victoria's Secret		Total
	(in millions)
2020 Net Sales	$	2,014	$	1,960	$	3,974
Comparable Store Sales	(102)		70		(32)
Sales Associated with New, Closed and Non-comparable Remodeled Stores, Net (a)	1,274		994		2,268
Direct Channels	(52)		70		18
Private Label Credit Card	—		6		6
International Wholesale, Royalty and Other	33		60		93
Foreign Currency Translation	6		8		14
2021 Net Sales	$	3,173	$	3,168	$	6,341