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 October ~~29, 2022~~28, 2023


☐			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~~Registrant’s Telephone Number, Including Area Code)
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) 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

☐

Non-accelerated filer

☐

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 November ~~25, 2022,~~24, 2023, the number of outstanding shares of the Registrant’s common stock was ~~228,414,615~~225,940,592 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 ~~for the Thirteen-Weeks and Thirty-Nine-Weeks Ended October 29, 2022 and October 30, 2021~~ (Unaudited)			3

Consolidated Statements of Comprehensive Income ~~for the Thirteen-Weeks and Thirty-Nine-Weeks Ended October 29, 2022 and October 30, 2021~~ (Unaudited)			3

Consolidated Balance Sheets as of October ~~29, 2022~~28, 2023 (Unaudited), January ~~29, 2022~~28, 2023 and October ~~30, 2021~~29, 2022 (Unaudited)			4

Consolidated Statements of Total Equity (Deficit) ~~for the Thirteen-Weeks and Thirty-Nine-Weeks Ended October 29, 2022 and October 30, 2021~~ (Unaudited)			5

Consolidated Statements of Cash Flows ~~for the Thirty-Nine-Weeks Ended October 29, 2022 and October 30, 2021~~ (Unaudited)			7

Notes to Consolidated Financial Statements (Unaudited)			8

Report of Independent Registered Public Accounting Firm			1714

Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995			1815

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			1916

Item 3. Quantitative and Qualitative Disclosures About Market Risk			3027

Item 4. Controls and Procedures			3128

Part II. Other Information			3229

Item 1. Legal Proceedings			3229

Item 1A. Risk Factors			3229

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			3229

Item 3. Defaults Upon Senior Securities			3229

Item 4. Mine Safety Disclosures			3229

Item 5. Other Information			3229

Item 6. Exhibits			3330

Signature			3431


*			The ~~Company's~~Company’s fiscal year ends on the Saturday nearest to January 31. As used herein, “third quarter of ~~2022”~~2023” and “third quarter of ~~2021”~~2022” refer to the thirteen-week periods ended October 28, 2023 and October 29, 2022, ~~and October 30, 2021, respectively,~~respectively. “Year-to-date 2023” and “year-to-date 2022” ~~and “year-to-date 2021”~~ refer to the thirty-nine-week periods ended October ~~29, 2022~~28, 2023 and October ~~30, 2021,~~29, 2022, respectively.

Table of Contents

PART I—FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS

BATH & BODY WORKS, INC.

CONSOLIDATED STATEMENTS OF INCOME

(in millions, except per share amounts)

(Unaudited)

Third Quarter Year-to-Date
2022 2021 2022 2021
Net Sales $ 1,604 $ 1,681 $ 4,672 $ 4,854
Costs of Goods Sold, Buying and Occupancy (926) (842) (2,666) (2,445)
Gross Profit 678 839 2,006 2,409
General, Administrative and Store Operating Expenses (476) (430) (1,282) (1,279)
Operating Income 202 409 724 1,130
Interest Expense (86) (91) (262) (301)
Other Income (Loss) 3 (91) 7 (196)
Income from Continuing Operations Before Income Taxes 119 227 469 633
Provision for Income Taxes 28 50 103 150
Net Income from Continuing Operations 91 177 366 483
Income (Loss) from Discontinued Operations, Net of Tax — (89) — 256
Net Income $ 91 $ 88 $ 366 $ 739
Net Income (Loss) per Basic Share
Continuing Operations $ 0.40 $ 0.67 $ 1.57 $ 1.77
Discontinued Operations — (0.34) — 0.94
Total Net Income per Basic Share $ 0.40 $ 0.33 $ 1.57 $ 2.71
Net Income (Loss) per Diluted Share
Continuing Operations $ 0.40 $ 0.66 $ 1.56 $ 1.74
Discontinued Operations — (0.33) — 0.92
Total Net Income per Diluted Share $ 0.40 $ 0.33 $ 1.56 $ 2.67


	Third Quarter				Year-to-Date
	2023		2022		2023		2022
Net Sales	$	1,562	$	1,604	$	4,517	$	4,672
Costs of Goods Sold, Buying and Occupancy	(880)		(926)		(2,618)		(2,666)
Gross Profit	682		678		1,899		2,006
General, Administrative and Store Operating Expenses	(461)		(476)		(1,310)		(1,282)
Operating Income	221		202		589		724
Interest Expense	(84)		(86)		(259)		(262)
Other Income	22		3		68		7
Income Before Income Taxes	159		119		398		469
Provision for Income Taxes	40		28		99		103
Net Income	$	119	$	91	$	299	$	366
Net Income per Basic Share	$	0.52	$	0.40	$	1.31	$	1.57
Net Income per Diluted Share	$	0.52	$	0.40	$	1.31	$	1.56

BATH & BODY WORKS, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in millions)

(Unaudited)


		Third Quarter				Year-to-Date					Third Quarter				Year-to-Date
		2022		2021		2022		2021			2023		2022		2023		2022
Net Income	Net Income	$	91	$	88	$	366	$	739	Net Income	$	119	$	91	$	299	$	366
Other Comprehensive Income (Loss), Net of Tax:	Other Comprehensive Income (Loss), Net of Tax:									Other Comprehensive Income (Loss), Net of Tax:
Foreign Currency Translation	Foreign Currency Translation	(4)		1		(4)		4		Foreign Currency Translation	(4)		(4)		(4)		(4)
Unrealized Gain (Loss) on Cash Flow Hedges		3		(1)		3		(1)
Unrealized Gain on Cash Flow Hedges										Unrealized Gain on Cash Flow Hedges	3		3		2		3
Reclassification of Cash Flow Hedges to Earnings	Reclassification of Cash Flow Hedges to Earnings	—		1		—		2		Reclassification of Cash Flow Hedges to Earnings	(1)		—		(1)		—
Total Other Comprehensive Income (Loss), Net of Tax		(1)		1		(1)		5
Total Other Comprehensive Loss, Net of Tax										Total Other Comprehensive Loss, Net of Tax	(2)		(1)		(3)		(1)
Total Comprehensive Income	Total Comprehensive Income	$	90	$	89	$	365	$	744	Total Comprehensive Income	$	117	$	90	$	296	$	365

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)


		October 29, 2022		January 29, 2022		October 30, 2021			October 28, 2023		January 28, 2023		October 29, 2022
		(Unaudited)				(Unaudited)			(Unaudited)				(Unaudited)
ASSETS	ASSETS							ASSETS
Current Assets:	Current Assets:							Current Assets:
Cash and Cash Equivalents	Cash and Cash Equivalents	$	295	$	1,979	$	1,441	Cash and Cash Equivalents	$	412	$	1,232	$	295
Accounts Receivable, Net	Accounts Receivable, Net	242		240		242		Accounts Receivable, Net	197		226		242
Inventories	Inventories	1,269		709		1,149		Inventories	1,205		709		1,269
Other	Other	142		81		153		Other	145		99		142

Total Current Assets	Total Current Assets	1,948		3,009		2,985		Total Current Assets	1,959		2,266		1,948
Property and Equipment, Net	Property and Equipment, Net	1,121		1,009		1,017		Property and Equipment, Net	1,244		1,193		1,121
Operating Lease Assets	Operating Lease Assets	1,074		1,021		1,023		Operating Lease Assets	1,067		1,050		1,074
Goodwill	Goodwill	628		628		628		Goodwill	628		628		628
Trade Names		165		165		165
Trade Name								Trade Name	165		165		165
Deferred Income Taxes	Deferred Income Taxes	41		45		62		Deferred Income Taxes	35		37		41
Other Assets	Other Assets	156		149		151		Other Assets	145		155		156

Total Assets	Total Assets	$	5,133	$	6,026	$	6,031	Total Assets	$	5,243	$	5,494	$	5,133
LIABILITIES AND EQUITY (DEFICIT)	LIABILITIES AND EQUITY (DEFICIT)							LIABILITIES AND EQUITY (DEFICIT)
Current Liabilities:	Current Liabilities:							Current Liabilities:
Accounts Payable	Accounts Payable	$	632	$	435	$	655	Accounts Payable	$	627	$	455	$	632
Accrued Expenses and Other	Accrued Expenses and Other	645		651		636		Accrued Expenses and Other	590		673		645

Current Operating Lease Liabilities	Current Operating Lease Liabilities	175		170		143		Current Operating Lease Liabilities	192		177		175
Income Taxes	Income Taxes	—		34		1		Income Taxes	—		74		—

Total Current Liabilities	Total Current Liabilities	1,452		1,290		1,435		Total Current Liabilities	1,409		1,379		1,452
Deferred Income Taxes	Deferred Income Taxes	158		157		146		Deferred Income Taxes	167		168		158
Long-term Debt	Long-term Debt	4,860		4,854		4,852		Long-term Debt	4,497		4,862		4,860
Long-term Operating Lease Liabilities	Long-term Operating Lease Liabilities	1,039		989		993		Long-term Operating Lease Liabilities	1,020		1,014		1,039
Other Long-term Liabilities	Other Long-term Liabilities	232		253		280		Other Long-term Liabilities	274		276		232

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; 243, 269 and 275 shares issued; 228, 254 and 260 shares outstanding, respectively		122		134		137
Common Stock - $0.50 par value; 1,000 shares authorized; 242, 244 and 243 shares issued; 227, 229 and 228 shares outstanding, respectively								Common Stock - $0.50 par value; 1,000 shares authorized; 242, 244 and 243 shares issued; 227, 229 and 228 shares outstanding, respectively	120		122		122
Paid-in Capital	Paid-in Capital	801		893		904		Paid-in Capital	831		817		801
Accumulated Other Comprehensive Income	Accumulated Other Comprehensive Income	79		80		80		Accumulated Other Comprehensive Income	75		78		79
Retained Earnings (Accumulated Deficit)	Retained Earnings (Accumulated Deficit)	(2,789)		(1,803)		(1,975)		Retained Earnings (Accumulated Deficit)	(2,329)		(2,401)		(2,789)
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)		Less: Treasury Stock, at Average Cost; 15, 15 and 15 shares, respectively	(822)		(822)		(822)
Total Shareholders’ Equity (Deficit)	Total Shareholders’ Equity (Deficit)	(2,609)		(1,518)		(1,676)		Total Shareholders’ Equity (Deficit)	(2,125)		(2,206)		(2,609)
Noncontrolling Interest	Noncontrolling Interest	1		1		1		Noncontrolling Interest	1		1		1
Total Equity (Deficit)	Total Equity (Deficit)	(2,608)		(1,517)		(1,675)		Total Equity (Deficit)	(2,124)		(2,205)		(2,608)
Total Liabilities and Equity (Deficit)	Total Liabilities and Equity (Deficit)	$	5,133	$	6,026	$	6,031	Total Liabilities and Equity (Deficit)	$	5,243	$	5,494	$	5,133

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)

Third Quarter ~~2022~~2023


		Common Stock			Paid-In Capital		Accumulated Other Comprehensive Income		Retained Earnings (Accumulated Deficit)		Treasury Stock, at Average Cost		Noncontrolling Interest		Total Equity (Deficit)			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															Shares Outstanding	Par Value
Balance, July 30, 2022		228	$	122	$	791	$	80	$	(2,834)	$	(822)	$	1	$	(2,662)
Balance, July 29, 2023																	Balance, July 29, 2023	228	$	121	$	827	$	77	$	(2,358)	$	(822)	$	1	$	(2,154)
Net Income	Net Income	—	—		—		—		91		—		—		91		Net Income	—	—		—		—		119		—		—		119
Other Comprehensive Loss	Other Comprehensive Loss	—	—		—		(1)		—		—		—		(1)		Other Comprehensive Loss	—	—		—		(2)		—		—		—		(2)
Total Comprehensive Income	Total Comprehensive Income	—	—		—		(1)		91		—		—		90		Total Comprehensive Income	—	—		—		(2)		119		—		—		117
Cash Dividends ($0.20 per share)	Cash Dividends ($0.20 per share)	—	—		—		—		(46)		—		—		(46)		Cash Dividends ($0.20 per share)	—	—		—		—		(45)		—		—		(45)
Repurchases of Common Stock																	Repurchases of Common Stock	(1)	—		—		—		—		(50)		—		(50)

Treasury Share Retirement																	Treasury Share Retirement	—	(1)		(4)		—		(45)		50		—		—
Share-based Compensation and Other	Share-based Compensation and Other	—	—		10		—		—		—		—		10		Share-based Compensation and Other	—	—		8		—		—		—		—		8
Balance, October 29, 2022		228	$	122	$	801	$	79	$	(2,789)	$	(822)	$	1	$	(2,608)
Balance, October 28, 2023																	Balance, October 28, 2023	227	$	120	$	831	$	75	$	(2,329)	$	(822)	$	1	$	(2,124)

Third 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, July 31, 2021 265 $ 140 $ 911 $ 87 $ (1,505) $ (822) $ 1 $ (1,188)
Net Income — — — — 88 — — 88
Other Comprehensive Income — — — 1 — — — 1
Total Comprehensive Income — — — 1 88 — — 89
Victoria's Secret Spin-Off — — — (8) (175) — — (183)
Cash Dividends ($0.15 per share) — — — — (39) — — (39)
Repurchases of Common Stock (5) — — — — (365) — (365)
Treasury Share Retirement — (3) (18) — (344) 365 — —
Share-based Compensation and Other — — 11 — — — — 11
Balance, October 30, 2021 260 $ 137 $ 904 $ 80 $ (1,975) $ (822) $ 1 $ (1,675)


	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, July 30, 2022	228	$	122	$	791	$	80	$	(2,834)	$	(822)	$	1	$	(2,662)
Net Income	—	—		—		—		91		—		—		91
Other Comprehensive Loss	—	—		—		(1)		—		—		—		(1)
Total Comprehensive Income	—	—		—		(1)		91		—		—		90

Cash Dividends ($0.20 per share)	—	—		—		—		(46)		—		—		(46)



Share-based Compensation and Other	—	—		10		—		—		—		—		10
Balance, October 29, 2022	228	$	122	$	801	$	79	$	(2,789)	$	(822)	$	1	$	(2,608)

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 ~~2022~~2023


		Common Stock			Paid-In Capital		Accumulated Other Comprehensive Income		Retained Earnings (Accumulated Deficit)		Treasury Stock, at Average Cost		Noncontrolling Interest		Total Equity (Deficit)			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															Shares Outstanding	Par Value
Balance, January 29, 2022		254	$	134	$	893	$	80	$	(1,803)	$	(822)	$	1	$	(1,517)
Balance, January 28, 2023																	Balance, January 28, 2023	229	$	122	$	817	$	78	$	(2,401)	$	(822)	$	1	$	(2,205)
Net Income	Net Income	—	—		—		—		366		—		—		366		Net Income	—	—		—		—		299		—		—		299
Other Comprehensive Loss	Other Comprehensive Loss	—	—		—		(1)		—		—		—		(1)		Other Comprehensive Loss	—	—		—		(3)		—		—		—		(3)
Total Comprehensive Income	Total Comprehensive Income	—	—		—		(1)		366		—		—		365		Total Comprehensive Income	—	—		—		(3)		299		—		—		296
Cash Dividends ($0.60 per share)	Cash Dividends ($0.60 per share)	—	—		—		—		(140)		—		—		(140)		Cash Dividends ($0.60 per share)	—	—		—		—		(137)		—		—		(137)
Repurchases of Common Stock	Repurchases of Common Stock	(7)	—		—		—		—		(312)		—		(312)		Repurchases of Common Stock	(3)	—		—		—		—		(100)		—		(100)
Accelerated Share Repurchase Program		(20)	—		—		—		—		(1,000)		—		(1,000)

Treasury Share Retirement	Treasury Share Retirement	—	(13)		(87)		—		(1,212)		1,312		—		—		Treasury Share Retirement	—	(2)		(8)		—		(90)		100		—		—
Share-based Compensation and Other	Share-based Compensation and Other	1	1		(5)		—		—		—		—		(4)		Share-based Compensation and Other	1	—		22		—		—		—		—		22
Balance, October 29, 2022		228	$	122	$	801	$	79	$	(2,789)	$	(822)	$	1	$	(2,608)
Balance, October 28, 2023																	Balance, October 28, 2023	227	$	120	$	831	$	75	$	(2,329)	$	(822)	$	1	$	(2,124)

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)			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															Shares Outstanding	Par Value
Balance, January 30, 2021		278	$	143	$	891	$	83	$	(1,421)	$	(358)	$	1	$	(661)
Balance, January 29, 2022																	Balance, January 29, 2022	254	$	134	$	893	$	80	$	(1,803)	$	(822)	$	1	$	(1,517)
Net Income	Net Income	—	—		—		—		739		—		—		739		Net Income	—	—		—		—		366		—		—		366
Other Comprehensive Income		—	—		—		5		—		—		—		5
Other Comprehensive Loss																	Other Comprehensive Loss	—	—		—		(1)		—		—		—		(1)
Total Comprehensive Income	Total Comprehensive Income	—	—		—		5		739		—		—		744		Total Comprehensive Income	—	—		—		(1)		366		—		—		365
Victoria's Secret Spin-Off		—	—		—		(8)		(175)		—		—		(183)
Cash Dividends ($0.30 per share)		—	—		—		—		(81)		—		—		(81)
Cash Dividends ($0.60 per share)																	Cash Dividends ($0.60 per share)	—	—		—		—		(140)		—		—		(140)
Repurchases of Common Stock	Repurchases of Common Stock	(22)	—		—		—		—		(1,559)		—		(1,559)		Repurchases of Common Stock	(7)	—		—		—		—		(312)		—		(312)
Accelerated Share Repurchase Program																	Accelerated Share Repurchase Program	(20)	—		—		—		—		(1,000)		—		(1,000)
Treasury Share Retirement	Treasury Share Retirement	—	(8)		(50)		—		(1,037)		1,095		—		—		Treasury Share Retirement	—	(13)		(87)		—		(1,212)		1,312		—		—
Share-based Compensation and Other	Share-based Compensation and Other	4	2		63		—		—		—		—		65		Share-based Compensation and Other	1	1		(5)		—		—		—		—		(4)
Balance, October 30, 2021		260	$	137	$	904	$	80	$	(1,975)	$	(822)	$	1	$	(1,675)
Balance, October 29, 2022																	Balance, October 29, 2022	228	$	122	$	801	$	79	$	(2,789)	$	(822)	$	1	$	(2,608)

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
		2022		2021 (a)			2023		2022
Operating Activities:	Operating Activities:					Operating Activities:
Net Income	Net Income	$	366	$	739	Net Income	$	299	$	366
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:	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	162		310		Depreciation of Long-lived Assets	199		162
Loss on Extinguishment of Debt		—		195
Share-based Compensation Expense	Share-based Compensation Expense	26		38		Share-based Compensation Expense	29		26
Deferred Income Taxes		1		19
Gain on Extinguishment of Debt						Gain on Extinguishment of Debt	(28)		—

Changes in Assets and Liabilities:	Changes in Assets and Liabilities:					Changes in Assets and Liabilities:
Accounts Receivable	Accounts Receivable	(3)		(61)		Accounts Receivable	29		(3)
Inventories	Inventories	(563)		(617)		Inventories	(499)		(563)
Accounts Payable, Accrued Expenses and Other	Accounts Payable, Accrued Expenses and Other	185		132		Accounts Payable, Accrued Expenses and Other	117		185
Income Taxes Payable	Income Taxes Payable	(57)		(149)		Income Taxes Payable	(114)		(57)
Other Assets and Liabilities	Other Assets and Liabilities	(50)		(159)		Other Assets and Liabilities	(4)		(49)
Net Cash Provided by Operating Activities	Net Cash Provided by Operating Activities	67		447		Net Cash Provided by Operating Activities	28		67
Investing Activities:	Investing Activities:					Investing Activities:
Capital Expenditures	Capital Expenditures	(252)		(241)		Capital Expenditures	(250)		(252)
Other Investing Activities	Other Investing Activities	—		13		Other Investing Activities	11		—
Net Cash Used for Investing Activities	Net Cash Used for Investing Activities	(252)		(228)		Net Cash Used for Investing Activities	(239)		(252)
Financing Activities:	Financing Activities:					Financing Activities:

Payments of Long-term Debt						Payments of Long-term Debt	(343)		—

Payments of Long-term Debt		—		(1,716)
Proceeds from Spin-Off of Victoria's Secret & Co.		—		976
Transfers and Payments to Victoria's Secret & Co. related to Spin-Off		(9)		(362)

Repurchases of Common Stock	Repurchases of Common Stock	(1,312)		(1,544)		Repurchases of Common Stock	(99)		(1,312)
Dividends Paid	Dividends Paid	(140)		(81)		Dividends Paid	(137)		(140)
Tax Payments related to Share-based Awards		(32)		(58)
Proceeds from Stock Option Exercises		2		81
Tax Payments Related to Share-based Awards						Tax Payments Related to Share-based Awards	(10)		(32)

Other Financing Activities	Other Financing Activities	(8)		(9)		Other Financing Activities	(20)		(15)
Net Cash Used for Financing Activities	Net Cash Used for Financing Activities	(1,499)		(2,713)		Net Cash Used for Financing Activities	(609)		(1,499)
Effects of Exchange Rate Changes on Cash and Cash Equivalents	Effects of Exchange Rate Changes on Cash and Cash Equivalents	—		2		Effects of Exchange Rate Changes on Cash and Cash Equivalents	—		—
Net Decrease in Cash and Cash Equivalents	Net Decrease in Cash and Cash Equivalents	(1,684)		(2,492)		Net Decrease in Cash and Cash Equivalents	(820)		(1,684)
Cash and Cash Equivalents, Beginning of Period		1,979		3,933
Cash and Cash Equivalents, Beginning of Year						Cash and Cash Equivalents, Beginning of Year	1,232		1,979
Cash and Cash Equivalents, End of Period	Cash and Cash Equivalents, End of Period	$	295	$	1,441	Cash and Cash Equivalents, End of Period	$	412	$	295

~~_______________~~

~~(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

Bath & Body Works, Inc. (the ~~"Company"~~“Company”) is a ~~specialty~~global omnichannel retailer ~~of home fragrance, body~~focused on personal care and ~~soap and sanitizer products.~~home fragrance. The Company sells merchandise through its ~~specialty~~ retail stores in the United States of America ("(“U.S."”) and Canada, and through its websites and other channels, under the Bath & Body Works, White Barn and other brand names. The ~~Company's~~Company’s international business is ~~primarily~~ conducted through franchise, license and wholesale partners. The Company operates as and reports a single ~~segment that includes all of its continuing operations.~~

On August 2, 2021, the Company completed the tax-free spin-off of its Victoria's Secret business, which included the Victoria's Secret and PINK brands, into an independent publicly traded company (the "Separation"). Accordingly, the operating results of, and costs to separate, the Victoria's Secret business are reported in Income (Loss) from Discontinued Operations, Net of Tax in the Consolidated Statements of Income for all periods presented. 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, "Discontinued Operations."

On August 2, 2021, in connection with the Separation, 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 on the New York Stock Exchange (the "NYSE") under the stock symbol "BBWI."

~~COVID-19~~

The coronavirus ("COVID-19") pandemic has created significant public health concerns as well as economic disruption, uncertainty and volatility. The Company remains focused on providing a safe store environment for its customers and associates while delivering an engaging shopping experience, and in establishing the necessary protocols to ensure the safe operations of its distribution and fulfillment centers and 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 operations and financial performance. There remains the potential for future COVID-19-related closures or operating restrictions, which could materially impact the Company's operations and financial performance in future periods.segment.

Fiscal Year

The Company’s fiscal year ends on the Saturday nearest to January 31. As used herein, “third quarter of ~~2022”~~2023” and “third quarter of ~~2021”~~2022” refer to the thirteen-week periods ended October 28, 2023 and October 29, 2022, ~~and October 30, 2021, respectively,~~respectively. “Year-to-date 2023” and “year-to-date 2022” ~~and “year-to-date 2021”~~ refer to the thirty-nine-week periods ended October 28, 2023 and October 29, 2022, ~~and October 30, 2021,~~ respectively.

The Company utilizes the retail calendar for reporting. As a result, the Company’s fiscal 2023 will include 53 weeks, with the fourth quarter representing the 14-week period ending February 3, 2024.

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.

Interim Financial Statements

The Consolidated Financial Statements as of and for the periods ended October ~~29, 2022~~28, 2023 and October ~~30, 2021~~29, 2022 are unaudited and are presented pursuant to the rules and regulations of the Securities and Exchange ~~Commission (“SEC”).~~Commission. These Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and Notes thereto contained in the Company’s ~~2021~~2022 Annual Report on Form 10-K.

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

Seasonality of Business

The Company’s operations are seasonal in nature and consist of two principal selling seasons: Spring (the first and second quarters) and Fall (the third and fourth quarters). Historically, the Company's sales are higher during the fourth quarter of the fiscal year due to seasonal and holiday-related sales patterns. Due to the seasonal variations in the retail industry, the results of operations for the interim periods are not necessarily indicative of the results expected for the full fiscal year.

~~Table of Contents~~

Derivative Financial Instruments

The ~~Company's~~Company’s Canadian dollar denominated earnings are subject to exchange rate risk as substantially all the ~~Company's~~Company’s merchandise sold in Canada is sourced through U.S. dollar transactions. The Company uses foreign currency forward contracts designated as cash flow hedges to mitigate this foreign currency exposure. Amounts are reclassified from Accumulated Other Comprehensive Income upon sale of the hedged merchandise to the customer. These gains and losses are recognized in Costs of Goods Sold, Buying and Occupancy in the Consolidated Statements of Income. All designated cash flow hedges are recorded on the Consolidated Balance Sheets at fair value. The fair value of designated cash flow hedges is not significant for any period presented. The Company does not use derivative financial instruments for trading purposes.

Concentration of Credit Risk

The Company maintains cash and cash equivalents and derivative contracts with various major financial institutions. The Company monitors the relative credit standing of financial institutions with whom the Company transacts and limits the amount of credit exposure with any one entity. The Company’s investment portfolio is primarily ~~comprised~~composed 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

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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.

Easton Investments

The Company has land and other investments in Easton, a planned community in Columbus, Ohio, that integrates office, hotel, retail, residential and recreational space. These investments, totaling $127 million as of October 28, 2023, $124 million as of January 28, 2023 and $125 million as of October 29, 2022, ~~$126 million as of January 29, 2022 and $125 million as of October 30, 2021,~~ 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 majority financial interests in ETC and EG, but another unaffiliated member manages them, and certain significant decisions regarding ETC and EG require the consent of unaffiliated members in addition to the Company.

Under the equity method of accounting, the Company recognizes its share of the ~~investee's~~investee’s net income or loss. Losses are only recognized to the extent the Company has positive carrying value related to the investee. Carrying values are only reduced below zero if the Company has an obligation to provide funding to the investee. The Company’s share of net income or loss of all unconsolidated entities is included in Other Income ~~(Loss)~~ in the Consolidated Statements of Income. The Company’s equity method investments are required to be reviewed for impairment when it is determined there may be an other-than-temporary loss in value.

Use of Estimates in the Preparation of Financial Statements

The preparation of financial statements in conformity with U.S. generally accepted accounting principles 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 ~~in 2022~~year-to-date 2023 that had a material impact on its consolidated results of operations, financial position or cash flows. In addition, as of ~~November 30, 2022,~~December 1, 2023, there were no new accounting standards that the Company has not yet adopted that are expected to have a material impact on 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 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

~~Table of Contents~~

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 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. On August 2, 2021, the Victoria's Secret & Co. Notes became the obligations of Victoria's Secret & Co. concurrent with the Separation. Upon Separation, the net proceeds from the Victoria's Secret & Co. Notes were used to partially fund cash payments of $976 million to the Company in connection with the Separation.

In the third quarter of 2021, the Company recognized a net reduction to Retained Earnings (Accumulated Deficit) of $175 million as a result of the Separation, primarily related to the transfer of certain assets and liabilities associated with its Victoria's Secret business to Victoria's Secret & Co., net of the $976 million of cash payments received from Victoria's Secret & Co. in connection with the Separation. Assets transferred to Victoria's Secret & Co. included Cash and Cash Equivalents of $282 million held by Victoria's Secret subsidiaries on the Distribution Date. Additionally, the Company reclassified out of Accumulated Other Comprehensive Income $8 million of accumulated foreign currency translation adjustments related to the Victoria's Secret business.

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 Separation, including the Separation and Distribution Agreement, the Transition Services 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 and customer marketing 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. is recorded within the 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 Consolidated Statements of Income based on the nature of the service.

~~The following table summarizes the consideration received and costs recognized pursuant to the Transition Service Agreements recorded in the Consolidated Statements of Income:~~

Third Quarter Year-to-Date
2022 2021 2022 2021
(in millions)
Consideration Received $ 17 $ 20 $ 55 $ 20
Costs Recognized 16 24 56 24

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. is recorded within Costs of Goods Sold, Buying and Occupancy in the Consolidated Statements of Income and as an offset to expenses incurred to provide the services.

~~The following table summarizes the consideration received pursuant to the Domestic Transportation Services Agreement recorded in the Consolidated Statements of Income:~~
Third Quarter Year-to-Date
2022 2021 2022 2021
(in millions)
Consideration Received $ 23 $ 18 $ 62 $ 18

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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 10, "Commitments and Contingencies."

~~Financial Information of Discontinued Operations~~

~~The Company did not report any assets or liabilities classified as discontinued operations for any period presented.~~

Income (Loss) 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 (Loss) from Discontinued Operations, Net of Tax in the third quarter of and year-to-date 2021 Consolidated Statements of Income:
Third Quarter Year-to-Date
(in millions)
Net Sales $ 25 $ 3,194
Costs of Goods Sold, Buying and Occupancy (14) (1,841)
General, Administrative and Store Operating Expenses (a) (83) (975)
Interest Expense — (2)
Other Loss — (1)
Income (Loss) from Discontinued Operations Before Income Taxes (72) 375
Provision for Income Taxes 17 119
Income (Loss) from Discontinued Operations, Net of Tax $ (89) $ 256
~~_______________~~

~~(a)~~The third quarter of 2021 includes Separation-related costs of $76 million. Year-to-date 2021 includes Separation-related costs of $104 million. Prior to the Separation, these costs were reported in the Other category under the Company's previous segment reporting.

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 and Capital Expenditures of discontinued operations for year-to-date 2021:~~


	~~(in millions)~~
~~Depreciation of Long-lived Assets~~	$	~~158~~
~~Share-based Compensation Expense~~	15
~~Capital Expenditures~~	~~(66)~~

3. Revenue Recognition

Accounts receivable, net from revenue-generating activities were $84 million as of October 28, 2023, $79 million as of January 28, 2023 and $103 million as of October 29, ~~2022, $64 million as of January 29, 2022 and $86 million as of October 30, 2021. Accounts~~2022. These accounts receivable primarily relate to amounts due from the ~~Company's~~Company’s franchise, license and wholesale partners. Under these arrangements, payment terms are typically 45 to 75 days.

The Company records deferred revenue when cash payments are received in advance of transfer of control of goods or services. Deferred revenue primarily relates to gift cards, loyalty points and rewards 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 $163 million as of October 28, 2023, $195 million as of January 28, 2023 and $147 million as of October 29, ~~2022, $148 million as of January 29, 2022 and $123 million as of October 30, 2021.~~2022. The Company recognized ~~$86~~$123 million as revenue year-to-date ~~2022~~2023 from amounts recorded as deferred revenue at the beginning of the ~~Company's 2022~~Company’s fiscal year.

~~Table of~~ ~~Contents~~

The following table provides a disaggregation of Net Sales for the third quarters of and year-to-date ~~2022~~2023 and ~~2021:~~2022:


		Third Quarter				Year-to-Date					Third Quarter				Year-to-Date
		2022		2021		2022		2021			2023		2022		2023		2022
		(in millions)									(in millions)
Stores - U.S. and Canada	Stores - U.S. and Canada	$	1,178	$	1,238	$	3,398	$	3,518	Stores - U.S. and Canada	$	1,168	$	1,178	$	3,345	$	3,398
Direct - U.S. and Canada	Direct - U.S. and Canada	345		369		1,030		1,126		Direct - U.S. and Canada	317		345		926		1,030
International (a)	International (a)	81		74		244		210		International (a)	77		81		246		244
Total Net Sales	Total Net Sales	$	1,604	$	1,681	$	4,672	$	4,854	Total Net Sales	$	1,562	$	1,604	$	4,517	$	4,672

_______________

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

The Company’s net sales outside of the U.S. include sales from Company-operated stores and its e-commerce site in Canada, royalties associated with franchised stores and wholesale sales. Certain of these sales are subject to the impact of fluctuations in

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foreign currency. The Company’s net sales outside of the U.S. totaled ~~$160~~$161 million and ~~$159~~$160 million for the third quarters of 2023 and 2022, respectively, and ~~2021, respectively,~~$468 million and $462 million ~~and $397 million~~ for year-to-date ~~2022~~2023 and ~~2021,~~2022, respectively.

~~4. Earnings~~3. Net Income Per Share and Shareholders’ Equity (Deficit)

~~Earnings~~Net Income Per Share

~~Earnings~~Net Income per ~~basic share~~Basic Share is computed based on the weighted-average number of common shares outstanding. ~~Earnings~~Net Income per ~~diluted share~~Diluted Share includes the weighted-average effect of dilutive restricted ~~stock~~share units, performance share units and stock options (collectively, ~~"Dilutive Awards"~~“Dilutive Awards”) on the weighted-average common shares outstanding.

The following table provides the weighted-average shares utilized for the calculation of ~~basic~~Net Income per Basic and ~~diluted earnings per share~~Diluted Share for the third quarters of and year-to-date ~~2022~~2023 and ~~2021:~~2022:


		Third Quarter		Year-to-Date			Third Quarter		Year-to-Date
		2022	2021	2022	2021		2023	2022	2023	2022
		(in millions)					(in millions)

Common Shares	Common Shares	243	278	248	285	Common Shares	242	243	243	248
Treasury Shares	Treasury Shares	(15)	(15)	(15)	(13)	Treasury Shares	(15)	(15)	(15)	(15)
Basic Shares	Basic Shares	228	263	233	272	Basic Shares	227	228	228	233
Effect of Dilutive Awards	Effect of Dilutive Awards	1	4	2	5	Effect of Dilutive Awards	1	1	1	2
Diluted Shares	Diluted Shares	229	267	235	277	Diluted Shares	228	229	229	235
Anti-dilutive Awards (a)	Anti-dilutive Awards (a)	1	1	1	1	Anti-dilutive Awards (a)	—	1	1	1

_______________

(a)~~The~~These awards were excluded from the calculation of ~~diluted earnings~~Net Income per ~~share~~Diluted Share because their inclusion would have been anti-dilutive.

Common Stock ~~Share~~ Repurchases

~~2021~~2022 Share Repurchase ~~Programs~~Program

In ~~March 2021,~~February 2022, the Company’s Board ~~authorized a $500 million share repurchase plan (the "March 2021 Program"), which replaced the $79 million remaining under a March 2018 share repurchase program.~~

~~In July 2021, the Board~~of Directors authorized a $1.5 billion share repurchase program (the ~~"July 2021 Program"~~“February 2022 Program”)~~, which replaced the $36 million remaining under the March 2021 Program.~~. Under the ~~authorization of this program,~~February 2022 Program, the Company entered into a stock 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.

~~Table of~~ ~~Contents~~

~~The~~ Company repurchased the following shares of its common stock during year-to-date ~~2021:~~2023:

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
July 2021 (b) 5,510 365 66.21
Total 22,506 $ 1,559
~~_______________~~


Repurchase Program	Amount Authorized		Shares Repurchased	Amount Repurchased		Average Stock Price
	(in millions)		(in thousands)	(in millions)
February 2022	$	1,500	2,765	$	100	$	36.16

~~(a)Reflects~~The February 2022 Program had $88 million of remaining authority as of October 28, 2023. There were share repurchases of ~~L Brands, Inc. common stock prior to the August 2, 2021 spin-off of Victoria's Secret & Co.~~

~~(b)Reflects repurchases of Bath & Body Works, Inc. common stock subsequent to the August 2, 2021 spin-off of Victoria's Secret & Co.~~

~~There were $15~~$1 million ~~of share repurchases~~ reflected in Accounts Payable on the October ~~30, 2021~~28, 2023 Consolidated Balance Sheet. ~~Under the July 2021 Program,~~Subsequent to October 28, 2023 through December 1, 2023, the Company repurchased an additional ~~6 million~~569 thousand shares of its common stock for ~~an aggregate purchase price of $405~~$17 million ~~during the fourth quarter 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 shares used to calculate the weighted-average common shares outstanding for net income per basic and diluted 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.

~~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 October 29, 2022.~~Program.

Common Stock Retirement

Shares of common stock repurchased under the ~~July 2021~~February 2022 Program ~~were~~are retired and cancelled upon repurchase. As a result, the Company retired the 16 million shares repurchased under the July 2021 Program during year-to-date 2021, which resulted in reductions of $8 million in the par value of Common Stock, $50 million in Paid-in Capital and $1.037 billion in Retained Earnings (Accumulated Deficit).

Shares of common stock repurchased under the February 2022 Program were retired and cancelled upon repurchase, including shares repurchased under the ASR. As a result, the Company retired the 27 million2,765 thousand shares repurchased under the February 2022 Program during year-to-date ~~2022,~~2023, which resulted in reductions of ~~$13~~$2 million in the par value of Common Stock, ~~$87~~$8 million in Paid-in Capital and ~~$1.212 billion~~$90 million in Retained Earnings (Accumulated Deficit).

1310

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Dividends

In connection with the onset of the COVID-19 pandemic, the Board suspended the Company's quarterly cash dividend beginning in the second quarter of 2020. In March 2021, the Board reinstated the annual dividend at $0.60 per share, beginning with the quarterly dividend paid in June 2021. In February 2022, the Board increased the annual dividend to $0.80 per share, beginning with the quarterly dividend paid in March 2022.

The Company paid the following dividends during year-to-date ~~2022~~2023 and ~~2021:~~2022:


		Ordinary Dividends					Total Paid			Ordinary Dividends		Total Paid
		(per share)		(in millions)	(per share)	(in millions)
2023									2023
First Quarter									First Quarter	$	0.20	$	46
Second Quarter									Second Quarter	0.20		46
Third Quarter									Third Quarter	0.20		45
Total									Total	$	0.60	$	137
2022	2022								2022
First Quarter	First Quarter	$	0.20				$	48	First Quarter	$	0.20	$	48
Second Quarter	Second Quarter	0.20					46		Second Quarter	0.20		46
Third Quarter	Third Quarter	0.20					46		Third Quarter	0.20		46
Total	Total	$	0.60				$	140	Total	$	0.60	$	140
2021
First Quarter		$	—				$	—
Second Quarter		0.15					42
Third Quarter		0.15					39
Total		$	0.30				$	81

In November ~~2022,~~2023, the ~~Board~~Company declared the fourth quarter ~~2022~~2023 ordinary dividend of $0.20 per share payable on December ~~2, 2022~~1, 2023 to ~~shareholders~~stockholders of record at the close of business on November ~~18, 2022.~~17, 2023.

5.4. Inventories

The following table provides details of Inventories as of October ~~29, 2022,~~28, 2023, January ~~29, 2022~~28, 2023 and October ~~30, 2021:~~29, 2022:


		October 29, 2022		January 29, 2022		October 30, 2021			October 28, 2023		January 28, 2023		October 29, 2022
		(in millions)							(in millions)
Finished Goods Merchandise	Finished Goods Merchandise	$	1,066	$	521	$	941	Finished Goods Merchandise	$	1,035	$	538	$	1,066
Raw Materials and Merchandise Components	Raw Materials and Merchandise Components	203		188		208		Raw Materials and Merchandise Components	170		171		203
Total Inventories	Total Inventories	$	1,269	$	709	$	1,149	Total Inventories	$	1,205	$	709	$	1,269

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

6.5. Long-Lived Assets

The following table provides details of Property and Equipment, Net as of October ~~29, 2022,~~28, 2023, January ~~29, 2022~~28, 2023 and October ~~30, 2021:~~29, 2022:


		October 29, 2022		January 29, 2022		October 30, 2021			October 28, 2023		January 28, 2023		October 29, 2022
		(in millions)							(in millions)
Property and Equipment, at Cost	Property and Equipment, at Cost	$	2,809	$	2,583	$	2,569	Property and Equipment, at Cost	$	3,121	$	2,915	$	2,809
Accumulated Depreciation and Amortization	Accumulated Depreciation and Amortization	(1,688)		(1,574)		(1,552)		Accumulated Depreciation and Amortization	(1,877)		(1,722)		(1,688)
Property and Equipment, Net	Property and Equipment, Net	$	1,121	$	1,009	$	1,017	Property and Equipment, Net	$	1,244	$	1,193	$	1,121

Depreciation expense ~~from continuing operations~~ was ~~$56~~$70 million and ~~$52~~$56 million for the third quarters of ~~2022~~2023 and ~~2021,~~2022, respectively. Depreciation expense ~~from continuing operations~~ was ~~$162~~$199 million and ~~$152~~$162 million for year-to-date ~~2022~~2023 and ~~2021,~~2022, respectively.

7.6. Income Taxes

The provision for income taxes is based on the current estimate of the annual effective tax rate and is adjusted as necessary for quarterly events.

For the third quarter of ~~2022,~~2023, the Company’s effective tax rate was ~~23.3%~~25.3% compared to ~~22.0%~~23.3% in the third quarter of ~~2021.~~2022. The 2023 third quarter ofrate was consistent with the Company’s combined estimated federal and state statutory rates. The 2022 ~~and 2021 rates were~~third quarter rate was lower than the ~~Company's~~Company’s combined estimated federal and state statutory rates primarily due to the resolution of certain tax matters during the ~~periods.~~

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quarter.

For year-to-date ~~2022,~~2023, the Company’s effective tax rate was ~~21.9%~~24.9% compared to ~~23.7%~~21.9% for year-to-date ~~2021.~~2022. The 2023 year-to-date ~~2022~~ rate was ~~lower than~~consistent with the ~~Company's~~Company’s combined estimated federal and state statutory rates. The 2022 year-to-date rate was lower than the Company’s combined estimated federal and state statutory rates primarily due to the resolution of certain tax matters during the period. ~~The year-to-date 2021 rate was lower than the Company's combined federal and state statutory rate primarily due to recognition~~

Table of ~~excess tax benefits recorded through the Consolidated Statements of Income on share-based awards that vested during the period.~~Contents

Income taxes paid were ~~$18~~$45 million and ~~$73~~$18 million for the third quarters of ~~2022~~2023 and ~~2021,~~2022, respectively. Income taxes paid were ~~$170~~$213 million and ~~$403~~$170 million for year-to-date ~~2022~~2023 and ~~2021,~~2022, respectively.

8.7. Long-term Debt and Borrowing ~~Facilities~~Facility

The following table provides the Company’s outstanding ~~long-term debt~~Long-term Debt balance, net of unamortized debt issuance costs and discounts, as of October ~~29, 2022,~~28, 2023, January ~~29, 2022~~28, 2023 and October ~~30, 2021:~~29, 2022:

October 29,
2022 January 29,
2022 October 30,
2021
(in millions)
Senior Debt with Subsidiary Guarantee
$320 million, 9.375% Fixed Interest Rate Notes due July 2025 ("2025 Notes") $ 317 $ 316 $ 316
$297 million, 6.694% Fixed Interest Rate Notes due January 2027 (“2027 Notes”) 283 281 280
$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") 991 990 989
$1 billion, 6.875% Fixed Interest Rate Notes due November 2035 (“2035 Notes”) 993 992 992
$700 million, 6.750% Fixed Interest Rate Notes due July 2036 (“2036 Notes”) 694 694 694
Total Senior Debt with Subsidiary Guarantee $ 4,265 $ 4,259 $ 4,257
Senior Debt
$350 million, 6.950% Fixed Interest Rate Debentures due March 2033 (“2033 Notes”) $ 349 $ 349 $ 349
$247 million, 7.600% Fixed Interest Rate Notes due July 2037 (“2037 Notes”) 246 246 246
Total Senior Debt 595 595 595
Total Long-term Debt $ 4,860 $ 4,854 $ 4,852


	October 28, 2023		January 28, 2023		October 29, 2022
	(in millions)
Senior Debt with Subsidiary Guarantee

$314 million, 9.375% Fixed Interest Rate Notes due July 2025 (“2025 Notes”)	$	312	$	317	$	317
$297 million, 6.694% Fixed Interest Rate Notes due January 2027 (“2027 Notes”)	286		283		283
$486 million, 5.250% Fixed Interest Rate Notes due February 2028 (“2028 Notes”)	483		498		497
$500 million, 7.500% Fixed Interest Rate Notes due June 2029 (“2029 Notes”)	492		491		490
$958 million, 6.625% Fixed Interest Rate Notes due October 2030 (“2030 Notes”)	950		991		991
$861 million, 6.875% Fixed Interest Rate Notes due November 2035 (“2035 Notes”)	855		993		993
$614 million, 6.750% Fixed Interest Rate Notes due July 2036 (“2036 Notes”)	609		694		694
Total Senior Debt with Subsidiary Guarantee	$	3,987	$	4,267	$	4,265
Senior Debt
$311 million, 6.950% Fixed Interest Rate Debentures due March 2033 (“2033 Notes”)	$	310	$	349	$	349
$201 million, 7.600% Fixed Interest Rate Notes due July 2037 (“2037 Notes”)	200		246		246
Total Senior Debt	510		595		595
Total Long-term Debt	$	4,497	$	4,862	$	4,860

Repurchases of Notes

~~In April 2021,~~During the third quarter of and year-to-date 2023, the Company ~~redeemed~~repurchased in the ~~remaining $285~~open market and extinguished $174 million and $373 million principal amounts of its outstanding ~~5.625%~~ senior notes, ~~due February 2022~~respectively. The aggregate repurchase prices for these notes were $161 million and ~~$750~~$343 million for the third quarter of ~~its outstanding 6.875% senior secured notes due July 2025. The Company recognized a~~and year-to-date 2023, respectively, resulting in pre-tax ~~loss related to this extinguishment~~gains of ~~debt~~$12 million and $28 million, net of ~~$105 million (after-tax loss of $80 million), which included~~ the ~~write-offs~~write-off of unamortized issuance ~~costs. This loss is~~costs, during the third quarter of and year-to-date 2023, respectively. These gains are included in Other Income ~~(Loss)~~ in the ~~year-to-date 2021 Consolidated Statement of Income.~~

~~In September 2021, the Company completed the tender offers to purchase $270 million of its outstanding 5.625% senior notes due October~~ 2023 (the "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. This loss is included in Other Income (Loss) in the 2021 Consolidated Statements of Income.

The following table provides details of the outstanding principal amount of senior notes repurchased and extinguished during the third quarter of and year-to-date 2023:


	Third Quarter		Year-to-Date
	(in millions)
2025 Notes	$	—	$	6
2028 Notes	14		14
2030 Notes	35		42
2033 Notes	31		39
2035 Notes	78		139
2036 Notes	3		86
2037 Notes	13		47
Total	$	174	$	373

Subsequent to October 28, 2023 through December 1, 2023, the Company repurchased in the open market and extinguished $93 million principal amount of its outstanding senior notes for an aggregate repurchase price of $86 million.

Asset-backed Revolving Credit Facility

The Company and certain of the ~~Company's~~Company’s 100% owned subsidiaries guarantee and pledge collateral to secure an asset-backed revolving credit facility (“ABL Facility”). The ABL Facility, which allows borrowings and letters of credit in U.S. dollars or Canadian dollars, has aggregate commitments of $750 million and an expiration date in August 2026.

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In the second quarter of 2023, the Company amended its ABL Facility to replace the London Interbank Offer Rate (“LIBOR”) based rate with a Secured Overnight Financing Rate (“SOFR”) based rate as the interest rate benchmark on U.S. dollar borrowings. This amendment made no other material changes to the terms of the ABL Facility.

Availability under the ABL Facility is the lesser of (i) the borrowing base, determined primarily based on the ~~Company's~~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 exceeds the lesser of (i) the borrowing base and (ii) the aggregate commitment, the Company is required to repay the outstanding amounts under the ABL Facility to the extent of such excess. As of October ~~29, 2022,~~28, 2023, the ~~Company's~~Company’s borrowing base was ~~$1.214~~$1.169 billion, and it had no borrowings outstanding under the ABL Facility.

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The ABL Facility supports the Company’s letter of credit program. The Company had ~~$16~~$10 million of outstanding letters of credit as of October ~~29, 2022~~28, 2023 that reduced its availability under the ABL Facility. As of October ~~29, 2022,~~28, 2023, the ~~Company's~~Company’s availability under the ABL Facility was ~~$734~~$740 million.

As of October ~~29, 2022,~~28, 2023, the ABL Facility fees related to committed and unutilized amounts were 0.30% per annum, and the fees related to outstanding letters of credit were 1.25% per annum. In addition, the interest rate on outstanding U.S. dollar borrowings was the ~~London Interbank Offered Rate~~Term SOFR plus 1.25% and a credit spread adjustment of 0.10% per annum. The interest rate on outstanding Canadian dollar-denominated borrowings was the Canadian Dollar Offered Rate plus 1.25% per annum.

The ABL Facility requires 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 (i) $70 million or (ii) 10% of the maximum borrowing amount. As of October ~~29, 2022,~~28, 2023, the Company was not required to maintain this ratio.

9.8. Fair Value Measurements

Cash and Cash Equivalents include cash on hand, deposits with financial institutions and highly liquid investments with original maturities of less than 90 days. The ~~Company's~~Company’s Cash and Cash Equivalents are considered Level 1 fair value measurements as they are valued using unadjusted quoted prices in active markets for identical assets.

The following table provides a summary of the principal value and estimated fair value of the Company’s outstanding ~~debt~~Long-term Debt as of October ~~29, 2022,~~28, 2023, January ~~29, 2022~~28, 2023 and October ~~30, 2021:~~29, 2022:


		October 29, 2022		January 29, 2022		October 30, 2021			October 28, 2023		January 28, 2023		October 29, 2022
		(in millions)							(in millions)
Principal Value	Principal Value	$	4,915	$	4,915	$	4,915	Principal Value	$	4,542	$	4,915	$	4,915
Fair Value, Estimated (a)	Fair Value, Estimated (a)	4,367		5,493		5,720		Fair Value, Estimated (a)	4,122		4,707		4,367

_______________

(a)The estimated fair value of the Company’s ~~debt~~Long-term Debt is based on reported transaction prices, which are considered Level 2 inputs in accordance with 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.

Management believes that the carrying values of ~~accounts receivable, accounts payable~~the Company’s Accounts Receivable, Accounts Payable and ~~accrued expenses~~Accrued Expenses approximate their fair ~~value~~values because of their short ~~maturity.~~maturities.

~~10.~~9. Commitments and Contingencies

The Company is subject to various claims and contingencies related to lawsuits, taxes, insurance, regulatory and other matters arising ~~out of~~in the ~~normal~~ordinary course of business. Actions filed against the Company may from time to time include commercial, tort, intellectual property, tax, customer, employment, wage and hour, data privacy, securities, anti-corruption and other claims, including purported class action lawsuits. 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 ~~position~~condition or cash flows.

~~Settlement of Derivative Shareholder Actions~~

In May 2022, the U.S. District Court of the Southern District of Ohio approved a global settlement regarding certain shareholder actions that were filed in 2020 and 2021. See Note 12, “Commitments and Contingencies” in the Company’s Quarterly Report on Form 10-Q for the quarter ended July 30, 2022 for additional information. Pursuant to the settlement terms, the Company committed to, among other things, invest $45 million over at least five years to fund certain management and governance measures required under the settlement agreement.

Lease Guarantees

In connection with the spin-off of ~~Victoria's~~Victoria’s Secret & Co. and the ~~sale~~disposal of ~~the La Senza~~a certain other business, the Company had remaining contingent obligations of ~~$287~~$267 million as of October ~~29, 2022~~28, 2023 related to lease payments under the current terms of noncancelable leases, primarily related to office space, expiring at various dates through 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 these businesses. The ~~Company's~~Company’s reserves related to these obligations were not significant for any period presented.

~~11. Subsequent Event~~

In November 2022, the Board appointed Gina R. Boswell as Chief Executive Officer of the Company and as a member of the Board, effective December 1, 2022. Sarah E. Nash, who has served as Executive Chair of the Board and Interim Chief Executive Officer since May 2022 and as Executive Chair of the Board from February 2022 to May 2022, will remain Executive Chair through the end of the Company’s fiscal year on January 28, 2023. Following the end of the Company's fiscal year, Ms. Nash will serve as a non-employee member and Chair of the Board.

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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 October ~~29, 2022~~28, 2023 and October ~~30, 2021, and~~29, 2022, the related consolidated statements of income, comprehensive income, and total equity (deficit) for the thirteen and thirty-nine week periods ended October ~~29, 2022~~28, 2023 and October ~~30, 2021, and~~29, 2022, the consolidated statements of cash flows for the thirty-nine week periods ended October ~~29, 2022~~28, 2023 and October ~~30, 2021,~~29, 2022, and the related notes (collectively referred to as the “consolidated interim financial statements”). Based on our reviews, we are not aware of any material modifications that should be made to the consolidated interim financial statements 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 ~~29, 2022,~~28, 2023, and the related consolidated statements of income, comprehensive income, total equity (deficit), and cash flows for the year then ended, and the related notes (not presented herein); and in our report dated March ~~18, 2022,~~17, 2023, we expressed an unqualified audit opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying consolidated balance sheet as of January ~~29, 2022,~~28, 2023, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

Basis for Review Results

These financial statements are the responsibility of the Company’s management. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the SEC and the PCAOB. We conducted our review in accordance with the standards of the PCAOB. A review of interim financial 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

~~November 30, 2022~~December 1, 2023

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SAFE HARBOR STATEMENT UNDER THE PRIVATE

SECURITIES LITIGATION 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 or our management involve risks and uncertainties and are subject to change based on various factors, many of which are beyond our control. Accordingly, our future performance and financial results may differ materially from those expressed or implied in any such forward-looking statements. Words such as “estimate,” “project,” “plan,” “believe,” “expect,” “anticipate,” “intend,” “planned,” ~~“potential”~~“potential,” “target,” “goal” and any similar expressions may identify forward-looking statements. Risks associated with the following factors, among others, in some cases have affected and in the future could affect our financial performance and actual results and could cause actual results to differ materially from those expressed or implied in any forward-looking statements included in this report or otherwise made by our Company or our management:

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

•the ~~COVID-19 pandemic has had and may continue to have an adverse effect on our business and results of operations;~~

•~~the~~ seasonality of our business;

•the anticipated benefits from the ~~Victoria's~~Victoria’s Secret & Co. (“Victoria’s Secret”) 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~~Victoria’s Secret ~~& Co.~~ for information technology ~~services;~~

•~~difficulties arising from turnover in Company leadership~~services and the transition of such services to our own information technology systems or ~~other key positions;~~to those of third-party technology service providers;

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

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

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

•our 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 business;

•our ability to protect our reputation and our brand image;

•our ability to successfully complete environmental, social and governance initiatives, and associated costs thereof;

•our ability to successfully achieve expected annual cost savings in connection with our profit optimization efforts to reduce expenses and improve operating efficiency in the business;

•our ability to attract customers with marketing, advertising and promotional programs;

•our ability to maintain, enforce and protect our trade names, trademarks and patents;

•the highly competitive nature of the retail industry and the segments in which we operate;

•consumer acceptance of our products and our ability to manage the life cycle of our ~~brands,~~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, such as the COVID-19 pandemic, which could result in closed factories and/or stores, reduced workforces, scarcity of raw materials, and scrutiny or embargoing of goods produced in impacted areas;

•duties, taxes and other charges;

•legal and regulatory matters;

•volatility in currency exchange rates;

•local business practices and political issues;

•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;

•our reliance on a limited number of 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;

•fluctuations in energy costs;

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

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

•claims arising from our self-insurance;

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•our and our third-party service ~~providers'~~providers’, including ~~Victoria's~~Victoria’s Secret ~~& Co.~~ during the term of the Transition Services Agreement between us and ~~Victoria's~~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 information;

•stock price volatility;

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

•shareholder activism matters;

•our ability to maintain our credit ratings;

•our ability to service, repurchase or 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 1A. Risk Factors in our ~~2021~~2022 Annual Report on Form 10-K.

Item 2.~~MANAGEMENT'S~~ 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~~is based upon our Consolidated Financial Statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America ~~("GAAP"~~(“GAAP”) as codified in the ~~ASC.~~Accounting Standards Codification. The following information should be read in conjunction with our financial statements and the related notes included in Part I, Item 1. Financial Statements 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 (Loss) from Discontinued Operations, Net of Tax in the Consolidated Statements of Income for all periods presented. 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 third quarter of ~~2022, net sales~~2023, Net Sales decreased ~~$77~~$42 million, or 5%3%, to ~~$1.604~~$1.562 billion compared to the third quarter of ~~2021.~~2022, primarily due to a decrease in both average dollar sale and total transactions. In our stores and direct channels, ~~net sales~~Net Sales decreased 5%1% to ~~$1.178~~$1.168 billion, and 6%8% to ~~$345~~$317 million, respectively. ~~These declines compared to 2021 were primarily driven by decreases in both average dollar sales and transactions.~~ In our international business, ~~net sales increased 10%~~Net Sales decreased 5% to ~~$81~~$77 million.

In the third quarter of ~~2022, operating income decreased $207~~2023, Operating Income increased $19 million, or ~~51%~~9%, to ~~$202~~$221 million, from ~~$409~~$202 million in the third quarter of ~~2021,~~2022, and the ~~operating income~~Operating Income rate (expressed as a percentage of ~~sales) decreased~~Net Sales) increased to ~~12.6%~~14.1% from ~~24.3%~~12.6%. These ~~decreases~~increases were primarily due to ~~the decline~~a 200-basis point increase in ~~net sales, incremental inflationary~~our merchandise margin rate, driven by approximately $40 million of deflation in our cost ~~pressures, increased promotional activities~~structure, lower product costs and ~~strategic investments in technology, in connection with~~reduced transportation costs, and General, Administrative and Store Operating Expense and rate (expressed as a percentage of Net Sales) improvement resulting from our ~~information technology ("IT") separation and transformation, and our associates, including increased wage rates and retention for key talent.~~cost optimization work (discussed below).

For additional information related to our third quarter ~~2022~~2023 financial performance, see “Results of Operations.”

Cost Optimization

We are enhancing our operations and efficiency by targeting an aggregate of $200 million of planned annual cost savings across both Gross Profit and General, Administrative and Store Operating Expenses. Our cost optimization work delivered benefits of approximately $45 million in the third quarter of 2023, and we expect to deliver approximately $50 million of cost savings in the fourth quarter of 2023 and $150 million of total cost savings in fiscal 2023. We expect to realize the remaining benefits in fiscal 2024.

Outlook

We anticipate continued macroeconomic uncertainty, soft customer spending and category normalization following the COVID-19 pandemic in our candles and sanitizers categories to pressure Net Sales in the fourth quarter of 2023 and potentially continuing into fiscal 2024. We expect our merchandise margin rate to improve in the fourth quarter of 2023 compared to the fourth quarter of 2022, driven by anticipated deflation in our cost structure and expected reductions in expenses resulting from our cost optimization work, partially offset by our continued investment in product formulation and packaging upgrades. General, Administrative and Store Operating Expenses are expected to deleverage in the fourth quarter of 2023 compared to the fourth quarter of 2022, as we expect higher marketing spend and technology investments. We are investing in a brand campaign and personalized marketing to activate new programs to drive customer awareness, acquisition and retention. Following the information technology (“IT”) separation from Victoria’s Secret that we substantially completed in the second quarter of 2023,

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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 $220 million and $230 million, with approximately $70 million of pressure expected in the fourth quarter of 2022. These pressures have had a negative impact on our Gross Profit dollars and rate for the third quarter of and year-to-date 2022, and we expect ~~this trend~~technology investments to ~~continue in~~remain elevated to drive future growth. We anticipate continued cost deflation and the ~~fourth quarter of 2022.~~

~~Information Technology and Other Costs~~

Subsequent to the completion of the Separation, Victoria’s Secret & Co. has provided technology services and systems to us under a Transition Services Agreement. During the first quarter of 2022, we decided to accelerate the separationbenefits 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 enable us to more quickly build additional technology capabilitiescost optimization work to support our ~~long-term growth.~~

Further, we have incurred additional costs related to our Chief Executive Officer transition, including retention for key talent and other associated expenses. These costs, the previously mentioned investmentsoperating income rate in IT and increases in wage rates have had a negative impact on our General, Administrative and Store Operating Expenses and rate for the third quarter of and year-to-date 2022, and we expect this trend to continue in the fourth quarter of 2022.

~~Profit Improvement Initiatives and Organizational Realignment~~

We are taking rigorous actions to improve profitability, including revisiting promotions, pricing and product costing to improve merchandise margin. We are being strategic with our pricing architecture through the balance of the year, given that our consumers are price sensitive, while continuing to look at opportunities. We are also working to improve product costing by actively working with our vendor base and streamlining our operations to combat inflationary pressures and improve our results.

Additionally, we implemented several expense reduction actions during the third quarter including optimization of corporate overhead and store selling expenses. As part of these actions, we simplified and realigned our operating structure in August 2022 resulting in the elimination of about 130 roles, the majority of which were leadership positions.

~~As a result of these initiatives, we realized a benefit of approximately $15 million in the third quarter of 2022, excluding severance and related charges of approximately $6 million.~~

~~COVID-19~~

The COVID-19 pandemic has created significant public health concerns as well as economic disruption, uncertainty and volatility. We remain focused on providing a safe store environment for our customers and associates while delivering an engaging shopping experience, and in establishing the necessary protocols to ensure the safe operations of our distribution and fulfillment centers and 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 operations and financial performance. There remains the potential for future COVID-19-related closures or operating restrictions, which could materially impact our operations and financial performance in future periods.fiscal 2024.

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 from continuing operations~~Net Income and ~~earnings from continuing operations per diluted share~~Net Income Per Diluted Share for the third quarter of and year-to-date ~~2021~~2023 on an adjusted basis, ~~which~~to remove certain special items recorded in ~~2021.~~2023. We believe that these special items are not indicative of our ~~ongoing~~ operations due to their size and nature. We did not make any adjustments to our results in the third quarter of or year-to-date 2022. We use adjusted financial information as key performance measures ~~of results of operations~~ for the purpose of evaluating performance internally. These non-GAAP measurements are not intended to replace the presentation of our financial results in accordance with GAAP. Instead, we believe that the presentation of adjusted financial information provides additional information to investors to facilitate the comparison of past and present operations. Further, our definitions of adjusted financial information may differ from similarly titled measures used by other companies.

~~Table of~~ ~~Contents~~

The table below reconciles the third quarter of and year-to-date ~~2021~~2023 GAAP financial measures to the non-GAAP financial measures:

(in millions, except per share amounts) Third Quarter Year-to-Date
Reconciliation of Reported Net Income from Continuing Operations to Adjusted Net Income from Continuing Operations
Reported Net Income from Continuing Operations $ 177 $ 483
Loss on Extinguishment of Debt (a) 89 195
Tax Benefit of Loss on Extinguishment of Debt (21) (47)
Adjusted Net Income from Continuing Operations $ 245 $ 631
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 $ 0.66 $ 1.74
Loss on Extinguishment of Debt (a) 0.25 0.53
Adjusted Earnings from Continuing Operations Per Diluted Share $ 0.92 $ 2.28


(in millions, except per share amounts)	Third Quarter		Year-to-Date
Reconciliation of Reported Net Income to Adjusted Net Income
Reported Net Income	$	119	$	299
Gain on Extinguishment of Debt (a)	(12)		(28)
Tax Effect of Gain on Extinguishment of Debt (a)	3		7
Adjusted Net Income	$	110	$	278

Reconciliation of Reported Net Income Per Diluted Share to Adjusted Net Income Per Diluted Share
Reported Net Income Per Diluted Share	$	0.52	$	1.31
Gain on Extinguishment of Debt (a)	(0.05)		(0.12)
Tax Effect of Gain on Extinguishment of Debt (a)	0.01		0.03
Adjusted Net Income Per Diluted Share	$	0.48	$	1.21

________________

(a)In the third quarter of and ~~first quarters of 2021,~~year-to-date 2023, we recognized pre-tax ~~losses~~gains of ~~$89 million and $105~~$12 million (after-tax ~~losses~~gain of ~~$68~~$9 million) and $28 million ~~and $80~~(after-tax gain of $21 million), respectively, ~~due~~related to the ~~early extinguishments~~repurchase and extinguishment of outstanding notes. For additional information, see Note ~~8, "Long-term~~7, “Long-term Debt and Borrowing ~~Facilities"~~Facility” included in Part I, Item 1. Financial Statements.

Company-Operated Store Data

The following table compares Company-operated U.S. store data for the third quarters of and year-to-date ~~2022~~2023 and ~~2021:~~2022:


		Third Quarter						Year-to-Date							Third Quarter						Year-to-Date
		2022		2021		% Change		2022		2021		% Change			2023		2022		% Change		2023		2022		% Change
Sales per Average Selling Square Foot(a)	Sales per Average Selling Square Foot(a)	$	240	$	257	(7	%)	$	701	$	751	(7	%)	Sales per Average Selling Square Foot(a)	$	226	$	240	(6	%)	$	656	$	701	(6	%)
Sales per Average Store (in thousands)(a)	Sales per Average Store (in thousands)(a)	$	660	$	692	(5	%)	$	1,920	$	2,014	(5	%)	Sales per Average Store (in thousands)(a)	$	634	$	660	(4	%)	$	1,837	$	1,920	(4	%)
Average Store Size (selling square feet)	Average Store Size (selling square feet)	2,764		2,700		2	%							Average Store Size (selling square feet)	2,817		2,764		2	%
Total Selling Square Feet (in thousands)	Total Selling Square Feet (in thousands)	4,646		4,514		3	%							Total Selling Square Feet (in thousands)	4,879		4,646		5	%

________________

(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 selling square footage and store count, respectively.

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The following table represents Company-operated store data for year-to-date ~~2022:~~2023:

Stores Stores
January 29, 2022 Opened Closed October 29, 2022
United States 1,651 64 (34) 1,681
Canada 104 2 — 106
Total 1,755 66 (34) 1,787

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


		Stores			Stores		Stores			Stores
		January 30, 2021	Opened	Closed	October 30, 2021		January 28, 2023	Opened	Closed	October 28, 2023
United States	United States	1,633	50	(11)	1,672	United States	1,693	70	(31)	1,732
Canada	Canada	103	—	—	103	Canada	109	2	—	111
Total	Total	1,736	50	(11)	1,775	Total	1,802	72	(31)	1,843

Partner-Operated Store Data

The following table represents partner-operated store data for year-to-date ~~2022:~~2023:

Stores Stores
January 29, 2022 Opened Closed October 29, 2022
International 317 59 (3) 373
International - Travel Retail 21 1 (1) 21
Total International 338 60 (4) 394

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

Stores Stores
January 30, 2021 Opened Closed October 30, 2021
International 270 30 (7) 293
International - Travel Retail 18 1 — 19
Total International 288 31 (7) 312


	Stores			Stores
	January 28, 2023	Opened	Closed	October 28, 2023
International	401	39	(10)	430
International - Travel Retail	26	2	—	28
Total International	427	41	(10)	458

Results of Operations

Third Quarter of ~~2022~~2023 Compared to Third Quarter of ~~2021~~2022

Net Sales

The following table provides Net Sales for the third quarter of ~~2022~~2023 in comparison to the third quarter of ~~2021:~~2022:


		2022		2021		% Change			2023		2022		% Change
		(in millions)							(in millions)
Stores - U.S. and Canada	Stores - U.S. and Canada	$	1,178	$	1,238	(5	%)	Stores - U.S. and Canada	$	1,168	$	1,178	(1	%)
Direct - U.S. and Canada	Direct - U.S. and Canada	345		369		(6	%)	Direct - U.S. and Canada	317		345		(8	%)
International (a)	International (a)	81		74		10	%	International (a)	77		81		(5	%)
Total Net Sales	Total Net Sales	$	1,604	$	1,681	(5	%)	Total Net Sales	$	1,562	$	1,604	(3	%)

_______________

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

The following table provides a reconciliation of Net Sales for the third quarter of ~~2022~~2023 to the third quarter of ~~2021:~~2022:


	(in millions)
~~2021~~2022 Net Sales	$	~~1,681~~1,604
Comparable Store Sales	~~(59)~~(68)
Sales Associated with New, Closed and Non-comparable Remodeled Stores, Net	459
Direct Channels	~~(24)~~(28)
International Wholesale, Royalty and Other	7 (4)
Foreign Currency Translation	~~(5)~~(1)
~~2022~~2023 Net Sales	$	~~1,604~~1,562

For the third quarter of ~~2022, net sales~~2023, Net Sales decreased ~~$77~~$42 million, to ~~$1.604~~$1.562 billion, compared to the third quarter of ~~2021.~~2022. Net ~~sales~~Sales decreased in the stores channel by ~~$60~~$10 million, or 5%1%, ~~primarily~~ due to a ~~decrease~~decline in ~~both~~ average dollar ~~sales and transactions.~~sale, partially offset by Net Sales from new store growth. Direct ~~net sales~~Net Sales decreased ~~$24~~$28 million, or 6%8%, due to a decline in orders, which was partially due to ~~last year's strong results as well as~~ our customers continuing to select our buy online-pick up in store (“BOPIS”) option (which is recognized as store ~~net sales).~~Net Sales) as we completed our rollout of BOPIS capabilities to our U.S. stores in the first quarter of 2023. International ~~net sales increased $7~~Net Sales decreased $4 million, or ~~10%~~5%, ~~primarily~~ due to lower orders and shipments, partially offset by new stores opened by our ~~partners partially~~partners.

In terms of category performance, Net Sales in candles and sanitizers both declined compared to the third quarter of 2022 driven by category normalization following the COVID-19 pandemic. Both soaps and wallflowers increased compared to the third quarter of 2022. Body care was approximately flat compared to the third quarter of 2022, as growth in our men’s business and fine fragrance mist was offset by ~~timing shifts related to product shipments.~~declines in wellness and travel.

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Gross Profit

For the third quarter of ~~2022,~~2023, our ~~gross profit decreased $161~~Gross Profit increased $4 million to ~~$678~~$682 million, and our ~~gross profit~~Gross Profit rate (expressed as a percentage of ~~net sales) decreased~~Net Sales) increased to ~~42.2%~~43.6% from ~~49.9%~~42.2%. Gross ~~profit decreased~~Profit increased due to ~~the decline in net sales and~~ a ~~decline in merchandise margin dollars as a result of a significant decrease~~200-basis point increase in our merchandise margin rate ~~due to~~driven by approximately $40 million of deflation in our cost structure, lower product costs and reduced transportation costs, partially offset by our continued ~~inflationary cost pressures~~investment in product formulations and packaging innovation. The improvement in merchandise margin was partially offset by increased ~~promotional activity. Additionally, occupancy expenses increased~~Buying and Occupancy Expense primarily due to ~~higher distribution costs.~~new store growth.

The ~~gross profit~~Gross Profit rate ~~decline~~increase was driven by ~~a significant decrease~~the increase in the merchandise margin rate due to the factors discussed above, partially offset by the Buying and ~~buying and occupancy expense~~Occupancy Expense deleverage due to lower ~~net sales.~~Net Sales and increased occupancy expenses.

General, Administrative and Store Operating Expenses

The following table provides detail for our General, Administrative and Store Operating Expenses for the third quarter of 2023 compared to the third quarter of 2022:


	2023				2022				Change
	(in millions)		% of Net Sales		(in millions)		% of Net Sales		(in millions)		% of Net Sales
Selling Expenses	$	283	18.1	%	$	300	18.7	%	$	(17)	(0.6	%)
Home Office and Marketing Expenses	178		11.4	%	176		11.0	%	2		0.4	%
Total	$	461	29.5	%	$	476	29.7	%	$	(15)	(0.2	%)

For the third quarter of ~~2022,~~2023, our ~~general, administrative~~General, Administrative and ~~store operating expenses increased $46~~Store Operating Expenses decreased $15 million to ~~$476~~$461 million, and the rate (expressed as a percentage of ~~net sales) increased~~Net Sales) decreased to ~~29.7%~~29.5% from ~~25.6%~~29.7%. ~~The general, administrative~~Our Selling Expenses decreased primarily due to our cost optimization work related to efficiency in store labor and ~~store operating expenses~~selling productivity, reduced expense as we optimized our call center and ~~rate~~the decline in Net Sales. Our Home Office Expenses increased primarily due to higher technology expense, principally related to IT separation costs as well as strategic investments to drive future growth, partially offset by severance and related charges of approximately $6 million recognized in the third quarter of 2022.

The General, Administrative and Store Operating Expense rate decreased primarily due to the benefits of our ~~strategic~~cost optimization work related to Selling Expenses, partially offset by our investments in technology ~~in connection with our IT separation and transformation and our associates.~~

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as well as deleverage on lower Net Sales.

Other Income and ~~Expense~~Expenses

Interest Expense

The following table provides the average daily borrowings and average borrowing rates for the third quarters of ~~2022~~2023 and ~~2021:~~2022:


		2022			2021				2023			2022
Average daily borrowings (in millions)	Average daily borrowings (in millions)	$	4,915		$	5,116		Average daily borrowings (in millions)	$	4,658		$	4,915
Average borrowing rate	Average borrowing rate	7.1		%	7.2		%	Average borrowing rate	7.4		%	7.1		%

For the third quarter of ~~2022,~~2023, our ~~interest expense decreased $5~~Interest Expense was $84 million, compared to $86 million ~~due to~~in the third quarter of 2022. Our lower average daily borrowings, which were driven by the repurchase and early extinguishment of outstanding notes, were partially offset by a ~~lower~~higher average borrowing rate.

Other Income ~~(Loss)~~

For the third quarter of ~~2021,~~2023, our ~~other loss~~Other Income was ~~$91~~$22 million, primarily due to ~~the $89~~pre-tax gains of $12 million ~~pre-tax loss~~ associated with the repurchase and early ~~extinguishment~~extinguishments of outstanding ~~notes.~~notes and interest income on cash balances.

Provision for Income Taxes

For the third quarter of ~~2022,~~2023, our effective tax rate was ~~23.3%~~25.3% compared to ~~22.0%~~23.3% in the third quarter of ~~2021.~~2022. The 2023 third quarter ofrate was consistent with our combined estimated federal and state statutory rates. The 2022 ~~and 2021 rates were~~ third quarter rate was lower than our combined estimated federal and state statutory rates primarily due to the resolution of certain tax matters during the ~~periods.~~quarter.

Results of Operations

Year-to-Date ~~2022~~2023 Compared to Year-to-Date ~~2021~~2022

For year-to-date ~~2022, operating income~~2023, Operating Income decreased ~~$406~~$135 million to $589 million, from $724 million ~~from $1.130 billion~~ year-to-date ~~2021,~~2022, and the ~~operating income~~Operating Income rate (expressed as a percentage of ~~sales)~~Net Sales) decreased to ~~15.5%~~13.0% from ~~23.3%~~15.5%. The drivers of the year-to-date ~~operating income~~Operating Income results are discussed in the following sections.

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Net Sales

The following table provides Net Sales for year-to-date ~~2022~~2023 in comparison to year-to-date ~~2021:~~2022:


		2022		2021		% Change			2023		2022		% Change
		(in millions)							(in millions)
Stores - U.S. and Canada	Stores - U.S. and Canada	$	3,398	$	3,518	(3	%)	Stores - U.S. and Canada	$	3,345	$	3,398	(2	%)
Direct - U.S. and Canada	Direct - U.S. and Canada	1,030		1,126		(9	%)	Direct - U.S. and Canada	926		1,030		(10	%)
International (a)	International (a)	244		210		16	%	International (a)	246		244		1	%
Total Net Sales	Total Net Sales	$	4,672	$	4,854	(4	%)	Total Net Sales	$	4,517	$	4,672	(3	%)

_______________

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

The following table provides a reconciliation of Net Sales for year-to-date ~~2022~~2023 to year-to-date ~~2021:~~2022:


	(in millions)
~~2021~~2022 Net Sales	$	~~4,854~~4,672
Comparable Store Sales	~~(208)~~(188)
Sales Associated with New, Closed and Non-comparable Remodeled Stores, Net	95143
Direct Channels	~~(96)~~(104)
International Wholesale, Royalty and Other	342
Foreign Currency Translation	~~(7)~~(8)
~~2022~~2023 Net Sales	$	~~4,672~~4,517

For year-to-date ~~2022, net sales~~2023, Net Sales decreased ~~$182~~$155 million, to ~~$4.672~~$4.517 billion, compared to year-to-date ~~2021.~~2022. Net ~~sales~~Sales decreased in the stores channel by ~~$120~~$53 million, or 3%2%, ~~primarily~~ due to a ~~decrease~~decline in ~~both~~ average dollar ~~sales and transactions,~~sale, partially offset by ~~higher 2022 net sales in Canada due to the COVID-19-related~~Net Sales from new store ~~closures in 2021.~~growth. Direct ~~net sales~~Net Sales decreased ~~$96~~$104 million, or 9%10%, due to ~~last year's strong results as well as~~a decline in orders, which was partially due to our customers continuing to select our ~~buy online-pick up in store~~BOPIS option (which is recognized as store ~~net sales), partially offset by increased net sales~~Net Sales) as we completed our rollout of BOPIS capabilities to our U.S. stores in the ~~Canada Direct business that launched in the third~~first quarter of ~~2021.~~2023. International ~~net sales~~Net Sales increased by ~~$34~~$2 million, or ~~16%~~1%, primarily due to new stores opened by our partners.

~~Further, we estimate that~~In terms of category performance, Net Sales in candles, sanitizers and soaps declined compared to year-to-date ~~2021~~2022 driven by category normalization following the COVID-19 pandemic. Though total ~~Company net sales benefited by approximately $50 million related~~body care Net Sales decreased slightly compared to ~~government stimulus payments, which did not reoccur~~year-to-date 2022, Net Sales in ~~year-to-date 2022.~~

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our men’s business increased during the period.

Gross Profit

For year-to-date ~~2022,~~2023, our ~~gross profit~~Gross Profit decreased ~~$403~~$107 million to ~~$2.006~~$1.899 billion, and our ~~gross profit~~Gross Profit rate (expressed as a percentage of ~~net sales)~~Net Sales) decreased to ~~42.9%~~42.0% from ~~49.6%~~42.9%. Gross ~~profit~~Profit decreased due to the decline in ~~net sales~~Net Sales and ~~a decline~~an increase in ~~merchandise margin dollars as a result of a significant decrease~~occupancy expenses primarily associated with store growth. These decreases were partially offset by an increase in our merchandise margin rate ~~due to continued inflationary~~driven by deflation in our cost ~~pressures and increased promotional activity. Additionally, occupancy expenses increased as a result of direct channel fulfillment expenses, higher distribution~~structure, lower product costs, reduced transportation costs and slightly increased average unit retails, partially offset by our ~~investments~~continued investment in ~~store real estate.~~product formulations and packaging innovation.

The ~~gross profit~~Gross Profit rate decline was driven by ~~a significant decrease~~increased occupancy expenses and Buying and Occupancy Expense deleverage due to lower Net Sales, partially offset by the increase in the merchandise margin rate ~~and buying and occupancy expense deleverage~~ due to ~~lower net sales.~~the factors discussed above.

General, Administrative and Store Operating Expenses

The following table provides detail for our General, Administrative and Store Operating Expenses for year-to-date 2023 compared to year-to-date 2022:


	2023				2022				Change
	(in millions)		% of Net Sales		(in millions)		% of Net Sales		(in millions)		% of Net Sales
Selling Expenses	$	779	17.2	%	$	814	17.4	%	$	(35)	(0.2	%)
Home Office and Marketing Expenses	531		11.8	%	468		10.0	%	63		1.8	%
Total	$	1,310	29.0	%	$	1,282	27.4	%	$	28	1.6	%

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For year-to-date ~~2022,~~2023, our ~~general, administrative~~General, Administrative and ~~store operating expenses~~Store Operating Expenses increased $3$28 million to ~~$1.282~~$1.310 billion, and the rate (expressed as a percentage of ~~net sales)~~Net Sales) increased to ~~27.4%~~29.0% from ~~26.3%~~27.4%. Our Home Office Expenses increased primarily due to higher technology expense, principally related to IT separation costs as well as strategic investments to drive future growth, and other corporate expenses. Our Selling Expenses decreased primarily due to our cost optimization work related to efficiency in store labor and selling productivity, reduced expense as we optimized our call center and the decline in Net Sales.

The ~~general, administrative~~General, Administrative and ~~store operating expenses and~~Store Operating Expense rate increased primarily due to our ~~strategic~~ investments in technology ~~in connection with our IT separation and transformation and our associates. These increases were~~as well as deleverage on lower Net Sales, partially offset by ~~charitable contributions made in~~ the ~~first quarter~~benefits of 2021, certain legal fees and other discrete items totaling approximately $20 million that were incurred in the second quarter of 2021 and lower home office and stores bonus expense in year-to-date 2022our cost optimization work related to ~~business performance.~~Selling Expenses.

Other Income and ~~Expense~~Expenses

Interest Expense

The following table provides the average daily borrowings and average borrowing rates for year-to-date ~~2022~~2023 and ~~2021:~~2022:


		2022			2021				2023			2022
Average daily borrowings (in millions)	Average daily borrowings (in millions)	$	4,915		$	5,577		Average daily borrowings (in millions)	$	4,774		$	4,915
Average borrowing rate	Average borrowing rate	7.1		%	7.2		%	Average borrowing rate	7.3		%	7.1		%

For year-to-date ~~2022,~~2023, our ~~interest expense decreased $39~~Interest Expense was $259 million, compared to $262 million ~~due to~~for year-to-date 2022. Our lower average daily borrowings, which were driven by the repurchase and early extinguishment of outstanding notes, were partially offset by a ~~lower~~higher average borrowing rate.

Other Income ~~(Loss)~~

For year-to-date ~~2021,~~2023, our ~~other loss~~Other Income was ~~$196~~$68 million, primarily due to ~~$195~~interest income on cash balances and pre-tax gains of $28 million ~~of pre-tax losses~~ associated with the repurchase and early extinguishments of outstanding notes.

Provision for Income Taxes

For year-to-date ~~2022,~~2023, our effective tax rate was ~~21.9%~~24.9% compared to ~~23.7%~~21.9% for year-to-date ~~2021.~~2022. The 2023 year-to-date rate was consistent with our combined estimated federal and state statutory rates. The 2022 year-to-date rate was lower than our combined estimated federal and state statutory ~~rate~~rates primarily due to the resolution of certain tax matters during the period. The year-to-date 2021 rate was lower than our combined federal and state statutory rate primarily due to recognition of excess tax benefits recorded through the Consolidated Statements of Income on share-based awards that vested during the period.

FINANCIAL CONDITION

Liquidity and Capital Resources

Liquidity, or access to cash, is an important factor in determining our financial stability. We are committed to maintaining adequate liquidity. Cash generated from our operating activities provides the primary resources to support current operations, growth initiatives, seasonal funding requirements, future common stock and debt repurchases, and capital expenditures. Our cash provided from operations is impacted by our net income and working capital changes. Our net income is impacted by, among other things, sales volume, seasonal sales patterns, success of new product introductions and product expansions, profit margins, income taxes and inflationary pressures. Historically, our sales are higher during the fourth quarter of the fiscal year due to seasonal and holiday-related sales patterns. Generally, our need for working capital peaks during the summer and fall months as inventory builds in anticipation of the holiday period. Our cash and cash equivalents held by foreign subsidiaries were ~~$36~~$79 million as of October ~~29, 2022.~~28, 2023.

During year-to-date 2023, we repurchased and extinguished $373 million principal amount of our outstanding senior notes for an aggregate price of $343 million. Additionally, we also repurchased 2,765 thousand shares of our common stock for $100 million. We may, from time to time, repurchase, or otherwise retire, additional debt or shares of our common stock, as applicable.

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

2421

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Working Capital and Capitalization

The following table provides a summary of our working capital position and capitalization as of October ~~29, 2022,~~28, 2023, January ~~29, 2022~~28, 2023 and October ~~30, 2021:~~29, 2022:


		October 29, 2022		January 29, 2022		October 30, 2021			October 28, 2023		January 28, 2023		October 29, 2022
		(in millions)							(in millions)

Net Cash Provided by Operating Activities (a)								Net Cash Provided by Operating Activities (a)	$	28	$	1,144	$	67
Capital Expenditures (a)								Capital Expenditures (a)	250		328		252
Working Capital	Working Capital	$	496	$	1,719	$	1,550	Working Capital	550		887		496
Capitalization:	Capitalization:							Capitalization:
Long-term Debt	Long-term Debt	4,860		4,854		4,852		Long-term Debt	4,497		4,862		4,860
Shareholders’ Equity (Deficit)	Shareholders’ Equity (Deficit)	(2,609)		(1,518)		(1,676)		Shareholders’ Equity (Deficit)	(2,125)		(2,206)		(2,609)
Total Capitalization	Total Capitalization	$	2,251	$	3,336	$	3,176	Total Capitalization	$	2,372	$	2,656	$	2,251
Amounts Available Under the ABL Facility ~~(a)~~(b)	Amounts Available Under the ABL Facility ~~(a)~~(b)	$	734	$	479	$	734	Amounts Available Under the ABL Facility ~~(a)~~(b)	$	740	$	509	$	734

_______________

(a)The January 28, 2023 amounts represent a fifty-two-week period, and the October 28, 2023 and October 29, 2022 amounts represent thirty-nine-week periods.

(b)As of both October ~~29, 2022~~28, 2023 and October ~~30, 2021,~~29, 2022, our borrowing base exceeded the aggregate ~~commitments and the amount available under the ABL was reduced by outstanding letters of credit of $16 million. As of January 29, 2022, our~~commitments. Our borrowing base was ~~$495~~$525 million ~~and we~~as of January 28, 2023. We had outstanding letters of credit, which reduce our availability under the ABL Facility, of $10 million as of October 28, 2023, and $16 ~~million.~~million as of both January 28, 2023 and October 29, 2022.

Cash Flows

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. 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 during year-to-date ~~2022~~2023 and ~~2021:~~2022:


		2022		2021			2023		2022
		(in millions)					(in millions)
Cash and Cash Equivalents, Beginning of Period		$	1,979	$	3,933
Cash and Cash Equivalents, Beginning of Year						Cash and Cash Equivalents, Beginning of Year	$	1,232	$	1,979
Net Cash Flows Provided by Operating Activities	Net Cash Flows Provided by Operating Activities	67		447		Net Cash Flows Provided by Operating Activities	28		67
Net Cash Flows Used for Investing Activities	Net Cash Flows Used for Investing Activities	(252)		(228)		Net Cash Flows Used for Investing Activities	(239)		(252)
Net Cash Flows Used for Financing Activities	Net Cash Flows Used for Financing Activities	(1,499)		(2,713)		Net Cash Flows Used for Financing Activities	(609)		(1,499)
Effects of Exchange Rate Changes on Cash and Cash Equivalents	Effects of Exchange Rate Changes on Cash and Cash Equivalents	—		2		Effects of Exchange Rate Changes on Cash and Cash Equivalents	—		—
Net Decrease in Cash and Cash Equivalents	Net Decrease in Cash and Cash Equivalents	(1,684)		(2,492)		Net Decrease in Cash and Cash Equivalents	(820)		(1,684)
Cash and Cash Equivalents, End of Period	Cash and Cash Equivalents, End of Period	$	295	$	1,441	Cash and Cash Equivalents, End of Period	$	412	$	295

Operating Activities

Net cash provided by operating activities for year-to-date 2023 was $28 million, including net income of $299 million. Net income included depreciation of $199 million, share-based compensation expense of $29 million and pre-tax gains on extinguishment of debt 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 changes in Inventories (and related increases in Accounts Payable), as we build our inventory levels in anticipation of the holiday season, which generates a substantial portion of our operating cash flow for the year, and Income Taxes Payable due to seasonal tax payments.

Net cash provided by operating activities for year-to-date 2022 was $67 million, including net income of $366 million. Net income included depreciation of $162 million and share-based compensation expense of $26 million. Other changes in assets and liabilities represent items that had a current period cash flow impact, such as changes in working capital. The most significant items in working capital were the seasonal changes in Inventories (and related increases in Accounts Payable), as we build our inventory levels in anticipation of the holiday season, which generates a substantial portion of our operating cash flow for the year, and Income Taxes Payable due to seasonal tax payments.

Net cash provided by operating activities in 2021 was $447 million, including net income of $739 million (which included Income from Discontinued Operations, Net of Tax of $256 million). Net income included depreciation of $310 million (which included $158 million related to the Victoria's Secret business classified as discontinued operations), loss on extinguishment of debt of $195 million, share-based compensation expense of $38 million (which included $15 million related to the Victoria's Secret business classified as discontinued operations) and deferred tax expense of $19 million. Other changes in assets and liabilities represent items that had a current period cash flow impact, such as changes in working capital. The most significant items in working capital were the seasonal changes in Inventories (and related increases in Accounts Payable) and Income Taxes Payable.

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Investing Activities

Net cash used for investing activities infor year-to-date 2023 was $239 million, primarily related to capital expenditures. The capital expenditures included approximately $125 million related to new, off-mall stores and remodels of existing stores, approximately $75 million for various IT projects primarily supporting the separation of our IT systems from Victoria’s Secret and approximately $35 million related to distribution and logistics capabilities.

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Net cash used for investing activities for year-to-date 2022 was $252 million related to capital expenditures. The capital expenditures included approximately $130 million related to new, ~~non-mall~~off-mall stores and remodels of existing stores. The remaining capital expenditures were primarily related to our new Company-operated direct channel fulfillment center and IT projects.

~~Net cash used~~We continue to plan for ~~investing activities in 2021 was $228~~approximately $300 million ~~consisting primarily~~to $350 million of capital expenditures ~~of $241 million, partially offset by proceeds from other investing activities of $13 million. The capital expenditures included $105 million related~~in 2023, focused on investments to support long-term growth. We are prioritizing investments in select remodels to the White Barn store design and new off-mall stores and remodels of existing stores. The 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.

~~We estimate full year 2022 capital expenditures to be approximately $400 million.~~store openings. We are continuing our investments in the opening of new, off-mall stores and the remodeling of existing stores. We are forecasting approximately 100 new, off-mall North American stores which, together with our planned remodels, are expected to result in net square footage growth of about 6% for full year 2022. Additionally, we arealso investing in our technology, distribution and logistics capabilities to ~~support~~better serve our ~~long-term growth.~~customers.

Financing Activities

Net cash used for financing activities infor year-to-date 2023 was $609 million, primarily consisting of $343 million for open market debt repurchases, dividend payments of $0.60 per share, or $137 million, $99 million for share repurchases and $10 million of tax payments related to share-based awards.

Net cash used for financing activities for year-to-date 2022 was $1.499 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 $0.60 per share, or $140 million, and $32 million of tax payments related to share-based awards.

Net cash used for financing activities in 2021 was $2.713 billion consisting of $1.716 billion in payments for the early extinguishment of outstanding notes, payments of $1.544 billion for share repurchases, transfers and payments to Victoria's Secret & Co. related to the spin-off of $362 million, dividend payments of $0.30 per share, or $81 million, and $58 million of tax payments related to share-based awards. These uses were partially offset by proceeds of $976 million from the Victoria's Secret & Co. spin-off and proceeds from stock option exercises of $81 million.

Common Stock ~~Share~~and Debt Repurchases

Our Board of Directors ~~(the "Board"~~(our “Board”) will determine share and debt repurchase authorizations, giving consideration to our levels of profit and cash flow, capital requirements, current and forecasted liquidity, the restrictions placed upon us by our borrowing arrangements as well as financial and other conditions existing at the time. We use cash flow generated from operating and financing activities to fund our share and debt repurchase programs. The timing and amount of any repurchases will be made at our discretion, taking into account a number of factors, including market conditions.

~~2021~~Common Stock Repurchases

2022 Share Repurchase ~~Programs~~Program

In ~~March 2021, the Board authorized a $500 million share repurchase plan (the "March 2021 Program"), which replaced the $79 million remaining under a March 2018 share repurchase program.~~

~~In July 2021, the~~February 2022, our Board authorized a $1.5 billion share repurchase program (the ~~"July 2021 Program"~~“February 2022 Program”)~~, which replaced the $36 million remaining under the March 2021 Program.~~. Under the ~~authorization of this program,~~February 2022 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:~~2023:


Repurchase Program	Amount Authorized		Shares Repurchased	Amount Repurchased		Average Stock Price
	(in millions)		(in thousands)	(in millions)
February 2022	$	1,500	2,765	$	100	$	36.16

~~(b)Reflects repurchases of Bath & Body Works, Inc. common stock subsequent to the August 2, 2021 spin-off of Victoria's Secret & Co.~~

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~~There were $15~~$1 million ~~of share repurchases~~ reflected in Accounts Payable on the October ~~30, 2021~~28, 2023 Consolidated Balance Sheet. ~~Under the July 2021 Program,~~Subsequent to October 28, 2023 through December 1, 2023, we repurchased an additional ~~6 million~~569 thousand shares of our common stock for ~~an aggregate purchase price of $405~~$17 million ~~during the fourth quarter 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 ASR resulted in an immediate reduction of the shares used to calculate the weighted-average common shares outstanding for net income per basic and diluted 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 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 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.

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

~~The February 2022 Program had $188 million of remaining authority as of October 29, 2022.~~Program.

Dividend Policy and Procedures

Our Board 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.

~~In connection with the onset~~

Table of the COVID-19 pandemic, our Board suspended our quarterly cash dividend beginning in the second quarter of 2020. In March 2021, our Board reinstated the annual dividend at $0.60 per share, beginning with the quarterly dividend paid in June 2021. In February 2022, our Board increased the annual dividend to $0.80 per share, beginning with the quarterly dividend paid in March 2022.Contents

We paid the following dividends during year-to-date ~~2022~~2023 and ~~2021:~~2022:


		Ordinary Dividends					Total Paid			Ordinary Dividends		Total Paid
		(per share)		(in millions)	(per share)	(in millions)
2023									2023
First Quarter									First Quarter	$	0.20	$	46
Second Quarter									Second Quarter	0.20		46
Third Quarter									Third Quarter	0.20		45
Total									Total	$	0.60	$	137
2022	2022								2022
First Quarter	First Quarter	$	0.20				$	48	First Quarter	$	0.20	$	48
Second Quarter	Second Quarter	0.20					46		Second Quarter	0.20		46
Third Quarter	Third Quarter	0.20					46		Third Quarter	0.20		46
Total	Total	$	0.60				$	140	Total	$	0.60	$	140
2021
First Quarter		$	—				$	—
Second Quarter		0.15					42
Third Quarter		0.15					39
Total		$	0.30				$	81

In November ~~2022, the Board~~2023, we declared ~~the~~our fourth quarter ~~2022~~2023 ordinary dividend of $0.20 per share payable on December ~~2, 2022~~1, 2023 to ~~shareholders~~stockholders of record at the close of business on November ~~18, 2022.~~

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17, 2023.

Long-term Debt and Borrowing ~~Facilities~~Facility

The following table provides our outstanding ~~long-term debt~~Long-term Debt balance, net of unamortized debt issuance costs and discounts, as of October ~~29, 2022,~~28, 2023, January ~~29, 2022~~28, 2023 and October ~~30, 2021:~~29, 2022:


	October 28, 2023		January 28, 2023		October 29, 2022
	(in millions)
Senior Debt with Subsidiary Guarantee

$314 million, 9.375% Fixed Interest Rate Notes due July 2025 (“2025 Notes”)	$	312	$	317	$	317
$297 million, 6.694% Fixed Interest Rate Notes due January 2027 (“2027 Notes”)	286		283		283
$486 million, 5.250% Fixed Interest Rate Notes due February 2028 (“2028 Notes”)	483		498		497
$500 million, 7.500% Fixed Interest Rate Notes due June 2029 (“2029 Notes”)	492		491		490
$958 million, 6.625% Fixed Interest Rate Notes due October 2030 (“2030 Notes”)	950		991		991
$861 million, 6.875% Fixed Interest Rate Notes due November 2035 (“2035 Notes”)	855		993		993
$614 million, 6.750% Fixed Interest Rate Notes due July 2036 (“2036 Notes”)	609		694		694
Total Senior Debt with Subsidiary Guarantee	$	3,987	$	4,267	$	4,265
Senior Debt
$311 million, 6.950% Fixed Interest Rate Debentures due March 2033 (“2033 Notes”)	$	310	$	349	$	349
$201 million, 7.600% Fixed Interest Rate Notes due July 2037 (“2037 Notes”)	200		246		246
Total Senior Debt	510		595		595
Total Long-term Debt	$	4,497	$	4,862	$	4,860

Repurchases of Notes

~~In April 2021,~~During the third quarter of and year-to-date 2023, we ~~redeemed~~repurchased in the ~~remaining $285~~open market and extinguished $174 million and $373 million principal amounts of our outstanding ~~5.625%~~ senior notes, ~~due February 2022~~respectively. The aggregate repurchase prices for these notes were $161 million and ~~$750~~$343 million for the third quarter of ~~our outstanding 6.875% senior secured notes due July 2025. We recognized a~~and year-to-date 2023, respectively, resulting in pre-tax ~~loss related to this extinguishment~~gains of ~~debt~~$12 million and $28 million, net of ~~$105 million (after-tax loss of $80 million), which included~~ the ~~write-offs~~write-off of unamortized issuance ~~costs. This loss is~~costs, during the third quarter of and year-to-date 2023, respectively. These gains are included in Other Income ~~(Loss)~~ in the ~~year-to-date 2021 Consolidated Statement of Income.~~

~~In September 2021, we completed the tender offers to purchase $270 million of our outstanding 5.625% senior notes due October~~ 2023 (the "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. This loss is included in Other Income (Loss) in the 2021 Consolidated Statements of Income.

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The following table provides details of the outstanding principal amount of senior notes repurchased and extinguished during the third quarter of and year-to-date 2023:


	Third Quarter		Year-to-Date
	(in millions)
2025 Notes	$	—	$	6
2028 Notes	14		14
2030 Notes	35		42
2033 Notes	31		39
2035 Notes	78		139
2036 Notes	3		86
2037 Notes	13		47
Total	$	174	$	373

Subsequent to October 28, 2023 through December 1, 2023, we repurchased in the open market and extinguished $93 million principal amount of our outstanding senior notes for an aggregate repurchase price of $86 million.

Asset-backed Revolving Credit Facility

We and certain of our 100% owned subsidiaries guarantee and pledge collateral to secure our ABL Facility. The ABL Facility, which allows borrowings and letters of credit in U.S. dollars or Canadian dollars, has aggregate commitments of $750 million and an expiration date in August 2026.

In the second quarter of 2023, we amended our ABL Facility to replace the LIBOR-based rate with a SOFR-based rate as the interest rate benchmark on U.S. dollar borrowings. This amendment made no other material changes to the terms of the ABL Facility.

Availability under the ABL Facility 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 exceeds the lesser of (i) the borrowing base and (ii) the aggregate commitment, we are required to repay the outstanding amounts under the ABL Facility to the extent of such excess. As of October ~~29, 2022,~~28, 2023, our borrowing base was ~~$1.214~~$1.169 billion, and we had no borrowings outstanding under the ABL Facility.

The ABL Facility supports our letter of credit program. We had ~~$16~~$10 million of outstanding letters of credit as of October ~~29, 2022~~28, 2023 that reduced our availability under the ABL Facility. As of October ~~29, 2022,~~28, 2023, our availability under the ABL Facility was ~~$734~~$740 million.

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The ABL Facility requires us to maintain a fixed charge coverage ratio of not less than 1.00 to 1.00 during an event of default or any period commencing on any day when specified excess availability is less than the greater of (i) $70 million or (ii) 10% of the maximum borrowing amount. As of October ~~29, 2022,~~28, 2023, we were not required to maintain this ratio.

Credit Ratings

The following table provides our credit ratings as of October ~~29, 2022:~~28, 2023:


	Moody’s	S&P
Corporate	Ba2	BB
Senior Unsecured Debt with Subsidiary Guarantee	Ba2	BB
Senior Unsecured Debt	B1	B+
Outlook	Stable	Stable

Guarantor Summarized Financial Information

Certain of our subsidiaries, which are listed on Exhibit 22 to this Quarterly Report on Form 10-Q, have guaranteed our obligations under the 2025 Notes, 2027 Notes, 2028 Notes, 2029 Notes, 2030 Notes, 2035 Notes and 2036 Notes (collectively, the ~~"Notes"~~“Notes”).

The Notes have been issued by Bath & Body Works, Inc. (the “Parent Company”). The Notes are its senior unsecured obligations and rank equally in right of payment with all of our existing and future senior unsecured obligations, are senior to

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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 certain subsidiaries that also guarantee our obligations under ~~certain of~~ our ~~senior secured credit facilities~~ABL Facility (such guarantees, the “Guarantees”; and, such guaranteeing subsidiaries, the “Subsidiary Guarantors”). The Guarantees of the Subsidiary Guarantors are subject to release in limited circumstances only upon the occurrence of certain customary conditions. Each Guarantee is limited, by its terms, to an amount not to exceed the maximum amount that can be guaranteed by the applicable Subsidiary Guarantor subject to avoidance under applicable fraudulent conveyance provisions of U.S. and non-U.S. law.

The following tables set forth summarized financial information for 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.


SUMMARIZED BALANCE SHEETS	SUMMARIZED BALANCE SHEETS	October 29, 2022		January 29, 2022		SUMMARIZED BALANCE SHEETS	October 28, 2023		January 28, 2023
		(in millions)					(in millions)
ASSETS	ASSETS					ASSETS
Current Assets (a)	Current Assets (a)	$	2,345	$	3,365	Current Assets (a)	$	2,347	$	2,642
Noncurrent Assets (b)	Noncurrent Assets (b)	2,524		2,481		Noncurrent Assets (b)	2,597		2,561

LIABILITIES	LIABILITIES					LIABILITIES
Current Liabilities (c)	Current Liabilities (c)	$	3,166	$	2,956	Current Liabilities (c)	$	3,000	$	3,084
Noncurrent Liabilities ~~(d)~~	Noncurrent Liabilities ~~(d)~~	6,140		6,155		Noncurrent Liabilities ~~(d)~~	5,814		6,143

_______________

(a)Includes amounts due from non-Guarantor subsidiaries of ~~$566~~$596 million and ~~$530~~$589 million as of October ~~29, 2022~~28, 2023 and January ~~29, 2022,~~28, 2023, respectively.

(b)Includes amounts due from non-Guarantor subsidiaries of ~~$20~~$40 million as of ~~October 29, 2022.~~January 28, 2023.

(c)Includes amounts due to non-Guarantor subsidiaries of ~~$1.999~~$1.860 billion and ~~$1.927~~$1.987 billion as of October ~~29, 2022~~28, 2023 and January ~~29, 2022,~~28, 2023, respectively.

~~(d)Includes amounts due to non-Guarantor subsidiaries of $13 million and $5 million as of October 29, 2022 and January 29, 2022, respectively.~~

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YEAR-TO-DATE 2023 SUMMARIZED STATEMENT OF INCOME
	~~2022~~
	(in millions)
Net Sales (a)	$	~~4,580~~4,436
Gross Profit	~~1,857~~1,761
Operating Income	~~648~~527
Income Before Income Taxes	~~393~~323
Net Income (b)	~~304~~235

_______________

(a)Includes net sales of ~~$223~~$248 million to non-Guarantor subsidiaries.

(b)Includes a net loss of $8$14 million related to transactions with non-Guarantor subsidiaries.

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Contingent Liabilities and Contractual Obligations

Lease Guarantees

In connection with the spin-off of ~~Victoria's~~Victoria’s Secret ~~& Co.~~ and the ~~sale~~disposal of ~~the La Senza~~a certain other business, we had remaining contingent obligations of ~~$287~~$267 million as of October ~~29, 2022~~28, 2023 related to lease payments under the current terms of noncancelable leases, primarily related to office space, expiring at various dates through 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 these businesses. Our reserves related to these obligations were not significant for any period presented.

Contractual Obligations

Our contractual obligations primarily consist of long-term debt and the related interest payments, operating leases, purchase orders for merchandise inventory and other long-term obligations. These contractual obligations impact our short-term and long-term liquidity and capital resource needs. ~~There~~Other than the repurchase of $373 million principal amount of our outstanding senior notes through year-to-date 2023, there have been no material changes in our contractual obligations subsequent to January ~~29, 2022,~~28, 2023, as discussed in “Contingent Liabilities and Contractual Obligations” in our ~~2021~~2022 Annual Report on Form 10-K. Certain of our contractual obligations may fluctuate during the normal course of business (primarily changes in our merchandise inventory-related purchase obligations which fluctuate throughout the year as a result of the seasonal nature of our business).

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

We did not adopt any new accounting standards ~~in 2022~~year-to-date 2023 that had a material impact on our consolidated results of operations, financial position or cash flows. In addition, as of ~~November 30, 2022,~~December 1, 2023, there 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.~~recognition, including revenue associated with our loyalty program. Management bases our estimates and judgments on historical experience and various other factors that we believe are ~~believed to be~~ reasonable under the circumstances. Actual results may differ from these estimates.

There have been no material changes to the critical accounting policies and estimates disclosed in our ~~2021~~2022 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

Our Canadian dollar denominated earnings are subject to exchange rate risk as substantially all our merchandise sold in Canada 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.

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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~~composed 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~~Long-term Debt as of October ~~29, 2022~~28, 2023 has fixed interest rates. We will from time to time adjust our exposure to interest rate risk by entering into interest rate swap arrangements. 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 October 29, 2022, we believe that the carrying values of accounts receivable, accounts payable and accrued expenses approximate fair value because of their short maturity.~~

The following table provides a summary of the principal value and estimated fair value of our outstanding ~~debt~~Long-term Debt as of October ~~29, 2022,~~28, 2023, January ~~29, 2022~~28, 2023 and October ~~30, 2021:~~29, 2022:


		October 29, 2022		January 29, 2022		October 30, 2021			October 28, 2023		January 28, 2023		October 29, 2022
		(in millions)							(in millions)
Principal Value	Principal Value	$	4,915	$	4,915	$	4,915	Principal Value	$	4,542	$	4,915	$	4,915
Fair Value, Estimated (a)	Fair Value, Estimated (a)	4,367		5,493		5,720		Fair Value, Estimated (a)	4,122		4,707		4,367

_______________

(a) The estimated fair ~~value is~~values are based on reported transaction ~~prices. The estimates presented~~prices and are not necessarily indicative of the amounts that we could realize in a current market exchange.

As of October 28, 2023, we believe that the carrying values of our Accounts Receivable, Accounts Payable and Accrued Expenses approximate their fair values because of their short maturities.

Concentration of Credit Risk

We maintain cash and cash equivalents and derivative contracts with various major financial institutions. We monitor the relative credit standing of financial institutions with whom we transact and limit the amount of credit exposure with any one entity. Our investment portfolio is primarily ~~comprised~~composed 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 of 1934, as amended (the ~~"Exchange Act"~~“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~~Securities and Exchange Commission (“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 third quarter of ~~2022~~2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II—OTHER INFORMATION

Item 1. 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 may include commercial, tort, intellectual property, tax, customer, employment, wage and hour, data privacy, securities, anti-corruption and other claims, including purported class action lawsuits. Although it is not possible to predict with certainty the eventual outcome of any litigation, in the opinion of management, our current legal proceedings are not expected to have a material adverse effect on our results of operations, financial ~~position~~condition or cash flows.

Fair and Accurate Credit Transactions Act Cases

We were named as a defendant in three putative class actions: Smidga, et al. v. Bath & Body Works, LLC in the Allegheny County, Pennsylvania Court of Common Pleas; Dahlin v. Bath & Body Works, LLC in the Santa Barbara County, California Superior Court; and Blanco v. Bath & Body Works, LLC in the Cook County, Illinois Circuit Court. The complaints each allege that we violated the Fair and Accurate Credit Transactions Act by printing more than the last five digits of credit or debit card numbers on customers’ receipts and, among other things, seek statutory damages, attorneys’ fees and costs. We have reached an agreement in principle with the plaintiffs in the Smidga and Dahlin cases that will resolve those matters, which is subject to court approval. The Blanco case was sent to individual arbitration by court order, and we have reached an agreement in principle with the plaintiff that will resolve the Blanco arbitration and lawsuit. The resolutions of these claims are not expected to have a material adverse effect on our results of operations, financial condition or cash flows.

Item 1A. RISK FACTORS

The risk factors that affect our business and financial results are discussed in Item 1A. Risk Factors in our ~~2021~~2022 Annual Report on Form 10-K. We wish to caution the reader that the risk factors discussed in Item 1A. Risk Factors in our ~~2021~~2022 Annual Report on Form 10-K and those described elsewhere in this report or other SEC filings could cause actual results to differ materially from those stated in any forward-looking statements.

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

The following table provides ~~our~~the repurchases of our common stock during the third quarter of ~~2022:~~2023:

Period Total
Number of
Shares
Purchased (a) Average Price
Paid per
Share (b) Total Number of Shares Purchased as Part of Publicly Announced Programs (c) Maximum Number of Shares (or Approximate Dollar Value) that May Yet be Purchased Under the Programs (c)
(in thousands) (in thousands)
August 2022 13 $ 38.36 — $ 187,775
September 2022 6 37.90 — 187,775
October 2022 9 34.92 — 187,775
Total 28 —


Fiscal Period	Total Number of Shares Purchased (a)	Average Price Paid per Share (b)		Total Number of Shares Purchased as Part of Publicly Announced Programs (c)	Maximum Number of Shares (or Approximate Dollar Value) that May Yet be Purchased Under the Programs (c)
	(in thousands)			(in thousands)
August 2023	414	$	36.66	407	$	122,956
September 2023	678	35.74		661	99,288
October 2023	385	30.99		371	87,787
Total	1,477			1,439

_______________

(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 associate restricted ~~stock~~share and performance share unit awards and the use of our stock to pay the exercise price on ~~employee~~associate stock options.

(b)The average price paid per share includes any broker commissions.

(c)For additional share repurchase program information, see Note ~~4, “Earnings~~3, “Net Income Per Share and ~~Shareholders'~~Shareholders’ Equity (Deficit)” included in Part I, Item 1. Financial Statements.

Item 3. DEFAULTS UPON SENIOR SECURITIES

Not applicable.

Item 4. MINE SAFETY DISCLOSURES

Not applicable.

Item 5. OTHER INFORMATION

~~None.~~Securities Trading Plans of Directors and Executive Officers

None of our directors or executive officers adopted or terminated a “Rule 10b5-1 trading arrangement” or a “non-Rule 10b5-1 trading arrangement” (as such terms are defined in Item 408(c) of Regulation S-K) during the third quarter of 2023.

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Item 6. EXHIBITS


Exhibits

10.1						~~Bath & Body Works, Inc. Amended~~Confidentiality, Non-Competition and ~~Restated 2015 Cash Incentive Compensation Performance Plan.~~Intellectual Property Agreement between the Company and Eva Boratto, dated as of August 1, 2023, incorporated by reference to Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q for the quarter ended July 29, 2023.

10.2						Executive Severance Agreement between the Company and Eva Boratto, dated as of August 1, 2023, incorporated by reference to Exhibit 10.5 to the Company’s Quarterly Report on Form 10-Q for the quarter ended July 29, 2023.

15						Letter regarding Unaudited Interim Financial Information 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)

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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~~EVA C. ~~ARLIN~~BORATTO
						~~Wendy~~Eva C. ~~Arlin~~Boratto ~~Executive Vice President and~~ Chief Financial Officer *

Date: ~~November 30, 2022~~December 1, 2023

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

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	Stores			Stores
	January 29, 2022	Opened	Closed	October 29, 2022
United States	1,651	64	(34)	1,681
Canada	104	2	—	106
Total	1,755	66	(34)	1,787


Period	Total Number of Shares Purchased (a)	Average Price Paid per Share (b)		Total Number of Shares Purchased as Part of Publicly Announced Programs (c)	Maximum Number of Shares (or Approximate Dollar Value) that May Yet be Purchased Under the Programs (c)
	(in thousands)			(in thousands)
August 2022	13	$	38.36	—	$	187,775
September 2022	6	37.90		—	187,775
October 2022	9	34.92		—	187,775
Total	28			—