Cover
Cover - shares | 6 Months Ended | |
Jul. 31, 2021 | Sep. 03, 2021 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Jul. 31, 2021 | |
Document Transition Report | false | |
Entity File Number | 001-40515 | |
Entity Registrant Name | VICTORIA'S SECRET & CO. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 86-3167653 | |
Entity Address, Address Line One | 4 Limited Parkway East | |
Entity Address, City or Town | Reynoldsburg, | |
Entity Address, State or Province | OH | |
Entity Address, Postal Zip Code | 43068 | |
City Area Code | (614) | |
Local Phone Number | 577-7000 | |
Entity Current Reporting Status | No | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Title of 12(b) Security | Common Stock, $0.01 Par Value | |
Trading Symbol | VSCO | |
Security Exchange Name | NYSE | |
Entity Common Stock, Shares Outstanding | 88,355,930 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2021 | |
Document Fiscal Period Focus | Q2 | |
Entity Central Index Key | 0001856437 | |
Current Fiscal Year End Date | --01-29 |
COMBINED STATEMENTS OF INCOME (
COMBINED STATEMENTS OF INCOME (LOSS) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jul. 31, 2021 | Aug. 01, 2020 | Jul. 31, 2021 | Aug. 01, 2020 | |
Income Statement [Abstract] | ||||
Net Sales | $ 1,614 | $ 1,066 | $ 3,168 | $ 1,960 |
Costs of Goods Sold, Buying and Occupancy | (944) | (914) | (1,826) | (1,787) |
Gross Profit | 670 | 152 | 1,342 | 173 |
General, Administrative and Store Operating Expenses | (467) | (395) | (914) | (790) |
Operating Income (Loss) | 203 | (243) | 428 | (617) |
Interest Expense | (3) | (1) | (4) | (4) |
Other Income (Loss) | (1) | (1) | 0 | (1) |
Income (Loss) Before Income Taxes | 199 | (245) | 424 | (622) |
Provision (Benefit) for Income Taxes | 48 | (45) | 99 | (124) |
Net Income (Loss) | $ 151 | $ (200) | $ 325 | $ (498) |
Net Income (Loss) Per Basic Share (in usd per share) | $ 1.71 | $ (2.26) | $ 3.68 | $ (5.64) |
Net Income (Loss) Per Diluted Share (in usd per share) | $ 1.71 | $ (2.26) | $ 3.68 | $ (5.64) |
COMBINED STATEMENTS OF COMPREHE
COMBINED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jul. 31, 2021 | Aug. 01, 2020 | Jul. 31, 2021 | Aug. 01, 2020 | |
Statement of Comprehensive Income [Abstract] | ||||
Net Income (Loss) | $ 151 | $ (200) | $ 325 | $ (498) |
Other Comprehensive Income (Loss), Net of Tax: | ||||
Foreign Currency Translation | 0 | 2 | 4 | (3) |
Unrealized Gain (Loss) on Cash Flow Hedges | 1 | (1) | 0 | 2 |
Reclassification of Cash Flow Hedges to Earnings | 0 | (1) | 0 | (1) |
Current-period Other Comprehensive Income (Loss) | 1 | 0 | 4 | (2) |
Total Comprehensive Income (Loss) | $ 152 | $ (200) | $ 329 | $ (500) |
COMBINED BALANCE SHEETS
COMBINED BALANCE SHEETS - USD ($) $ in Millions | Jul. 31, 2021 | Jan. 30, 2021 | Aug. 01, 2020 |
Current Assets: | |||
Cash and Cash Equivalents | $ 293 | $ 335 | $ 165 |
Cash in Escrow related to the Spin-Off | 600 | 0 | 0 |
Accounts Receivable, Net | 99 | 121 | 118 |
Inventories | 745 | 701 | 923 |
Other | 90 | 82 | 78 |
Total Current Assets | 1,827 | 1,239 | 1,284 |
Property and Equipment, Net | 999 | 1,078 | 1,208 |
Operating Lease Assets | 1,513 | 1,590 | 1,759 |
Trade Name | 246 | 246 | 246 |
Deferred Income Taxes | 12 | 20 | 62 |
Other Assets | 61 | 56 | 56 |
Total Assets | 4,658 | 4,229 | 4,615 |
Current Liabilities: | |||
Accounts Payable | 371 | 338 | 494 |
Accrued Expenses and Other | 702 | 776 | 614 |
Current Debt | 0 | 0 | 10 |
Current Operating Lease Liabilities | 332 | 421 | 455 |
Income Taxes | 28 | 15 | 35 |
Due to Related Parties | 2 | 6 | 2 |
Total Current Liabilities | 1,435 | 1,556 | 1,610 |
Deferred Income Taxes | 70 | 19 | 0 |
Long-term Debt | 592 | 0 | 89 |
Long-term Debt due to Related Party | 97 | 97 | 0 |
Long-term Operating Lease Liabilities | 1,457 | 1,553 | 1,833 |
Other Long-term Liabilities | 123 | 113 | 97 |
Total Liabilities | 3,774 | 3,338 | 3,629 |
Equity | |||
Noncontrolling Interest | 0 | 0 | 3 |
Accumulated Other Comprehensive Income (Loss) | 8 | 4 | (31) |
Net Investment by L Brands, Inc. | 876 | 887 | 1,014 |
Total Equity | 884 | 891 | 986 |
Total Liabilities and Equity | $ 4,658 | $ 4,229 | $ 4,615 |
COMBINED STATEMENTS OF EQUITY
COMBINED STATEMENTS OF EQUITY - USD ($) $ in Millions | Total | Net Investment by L Brands, Inc. | Accumulated Other Comprehensive Income (Loss) | Noncontrolling Interest |
Beginning Balance at Feb. 01, 2020 | $ 1,314 | $ 1,341 | $ (29) | $ 2 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Net Income (Loss) | (498) | (498) | ||
Other Comprehensive Income (Loss) | (2) | (2) | ||
Total Comprehensive Income (Loss) | (500) | (498) | (2) | |
Other | 1 | 1 | ||
Net Transfers to L Brands, Inc. | 171 | 171 | ||
Ending Balance at Aug. 01, 2020 | 986 | 1,014 | (31) | 3 |
Beginning Balance at May. 02, 2020 | 1,323 | 1,351 | (31) | 3 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Net Income (Loss) | (200) | (200) | ||
Other Comprehensive Income (Loss) | 0 | 0 | ||
Total Comprehensive Income (Loss) | (200) | (200) | 0 | |
Net Transfers to L Brands, Inc. | (137) | (137) | ||
Ending Balance at Aug. 01, 2020 | 986 | 1,014 | (31) | 3 |
Beginning Balance at Jan. 30, 2021 | 891 | 887 | 4 | 0 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Net Income (Loss) | 325 | 325 | ||
Other Comprehensive Income (Loss) | 4 | 4 | ||
Total Comprehensive Income (Loss) | 329 | 325 | 4 | |
Net Transfers to L Brands, Inc. | (336) | (336) | ||
Ending Balance at Jul. 31, 2021 | 884 | 876 | 8 | 0 |
Beginning Balance at May. 01, 2021 | 1,007 | 1,000 | 7 | 0 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Net Income (Loss) | 151 | 151 | ||
Other Comprehensive Income (Loss) | 1 | 1 | ||
Total Comprehensive Income (Loss) | 152 | 151 | 1 | |
Net Transfers to L Brands, Inc. | (275) | (275) | ||
Ending Balance at Jul. 31, 2021 | $ 884 | $ 876 | $ 8 | $ 0 |
COMBINED STATEMENTS OF CASH FLO
COMBINED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions | 6 Months Ended | |
Jul. 31, 2021 | Aug. 01, 2020 | |
Operating Activities: | ||
Net Income (Loss) | $ 325 | $ (498) |
Adjustments to Reconcile Net Income (Loss) to Net Cash Provided by (Used for) Operating Activities: | ||
Depreciation of Long-lived Assets | 158 | 171 |
Asset Impairment Charges | 0 | 214 |
Share-based Compensation Expense | 15 | 16 |
Deferred Income Taxes | 59 | (126) |
Gain from Hong Kong Store Closure and Lease Termination | 0 | (39) |
Changes in Assets and Liabilities: | ||
Accounts Receivable | 22 | 39 |
Inventories | (44) | (68) |
Accounts Payable, Accrued Expenses and Other | (86) | 50 |
Income Taxes | 12 | 3 |
Other Assets and Liabilities | (72) | 128 |
Net Cash Provided by (Used for) Operating Activities | 389 | (110) |
Investing Activities: | ||
Capital Expenditures | (66) | (70) |
Other Investing Activities | 0 | (2) |
Net Cash Used for Investing Activities | (66) | (72) |
Financing Activities: | ||
Proceeds from Issuance of Long-Term Debt | 600 | 0 |
Borrowings from Foreign Facilities | 0 | 33 |
Repayments of Foreign Facilities | 0 | (85) |
Net Transfers from (to) L Brands, Inc. | (367) | 155 |
Net Cash Provided by Financing Activities | 233 | 103 |
Effects of Exchange Rate Changes on Cash and Cash Equivalents and Restricted Cash | 2 | (1) |
Net Increase (Decrease) in Cash and Cash Equivalents and Restricted Cash | 558 | (80) |
Cash and Cash Equivalents and Restricted Cash, Beginning of Period | 335 | 245 |
Cash and Cash Equivalents and Restricted Cash, End of Period | $ 893 | $ 165 |
Description of Business, Basis
Description of Business, Basis of Presentation, and Summary of Significant Accounting Policies | 6 Months Ended |
Jul. 31, 2021 | |
Description Of Business And Basis Of Presentation [Abstract] | |
Description of Business, Basis of Presentation, and Summary of Significant Accounting Policies | Description of Business, Basis of Presentation, and Summary of Significant Accounting Policies Victoria's Secret & Co. Spin-Off On July 9, 2021, L Brands, Inc. (“L Brands” or the “Parent”) announced that its Board of Directors approved the previously announced separation of the Victoria's Secret business, including PINK, into an independent, publicly traded company (the "Separation"). Prior to the Separation, L Brands operated the Bath & Body Works, Victoria’s Secret and PINK retail brands. On August 2, 2021 (the “Distribution Date”), after the New York Stock Exchange ("NYSE") market closing, the Separation of the Victoria's Secret business ("Victoria’s Secret & Co." or the "Company") was completed. On August 3, 2021, Victoria's Secret & Co. became an independent, publicly-traded company trading on the NYSE under the stock symbol "VSCO." The Separation was achieved through the Parent’s distribution (the “Distribution”) of 100% of the shares of the Company's common stock to holders of the Parent's common stock as of the close of business on the record date of July 22, 2021. The Parent's stockholders of record received one share of the Company's common stock for every three shares of the Parent's common stock. In connection with the Separation, the Company made a cash payment of approximately $976 million to the Parent on August 2, 2021 from the issuances of certain debt (discussed in Note 9, "Long-term Debt and Borrowing Facilities"). The Parent retained no ownership interest in the Company following the Separation. In connection with the Separation, L Brands, Inc. changed its name to Bath & Body Works, Inc. The Parent is referred to as "L Brands" throughout this Form 10-Q as that was its name during all time periods presented. Description of Business The Company is a specialty retailer of women's intimate and other apparel and beauty products marketed under the Victoria's Secret and PINK brand names. The Company operates more than 925 Victoria’s Secret and PINK stores in the U.S., Canada and Greater China as well as online at www.VictoriasSecret.com and www.PINK.com and other online channels worldwide. Additionally, Victoria’s Secret and PINK have more than 460 stores in more than 70 countries operating under franchise, license and wholesale arrangements. The Company also includes the Victoria's Secret and PINK merchandise sourcing and production function serving the Company and its international partners. The Company manages and evaluates its business activities based on geography and, as a result, determined that its Victoria’s Secret North America and Victoria’s Secret International businesses are its operating segments. The North America and International operating segments both sell women's intimate and other apparel and beauty products under the Victoria's Secret and PINK brand names and serve customers through stores and online channels. The operating segments share similar economic and other qualitative characteristics, and therefore the results are aggregated into one reportable segment. Fiscal Year The Company’s fiscal year ends on the Saturday nearest to January 31. As used herein, “second quarter of 2021” and “second quarter of 2020” refer to the thirteen-week periods ended July 31, 2021 and August 1, 2020, respectively. “Year-to-Date 2021” and “year-to-date 2020” refer to the twenty-six-week periods ending July 31, 2021 and August 1, 2020, respectively. Basis of Presentation The Combined Financial Statements have been derived from the consolidated financial statements and accounting records of L Brands and have been prepared in conformity with accounting principles generally accepted in the United States (“GAAP”). The Combined Financial Statements may not be indicative of the Company’s future performance and do not necessarily reflect what the financial position, results of operations, and cash flows would have been had it operated as an independent company during the periods presented. Intracompany transactions have been eliminated. Transactions between the Company and L Brands have been included in these combined financial statements. For those transactions between the Company and L Brands that have been historically settled in cash, the Company has reflected such balances in the Combined Balance Sheets as Due from Related Parties or Due to Related Parties. The aggregate net effect of transactions between the Company and related parties that have been historically settled other than in cash are reflected in the Combined Balance Sheets as Net Investment by L Brands, Inc. and in the Combined Statements of Cash Flows as Net Transfers from (to) L Brands, Inc. For additional information, see Note 2, "Transactions with Related Parties." The Combined Balance Sheets include certain L Brands' assets and liabilities that are specifically identifiable or otherwise attributable to the Company. L Brands' third-party long-term notes payable and the related interest expense have not been allocated to the Company for any of the periods presented as the Company was not the legal obligor of such debt. Except for Long-term Debt due to Related Party, the debt reflected in the Combined Balance Sheets relate to third-party borrowings specifically attributable to, and legal obligations of, the Company. L Brands utilizes a centralized approach to cash management and financing its operations. The Cash and Cash Equivalents held by L Brands at the corporate level are not specifically identifiable to the Company and, therefore, have not been reflected in the Company’s Combined Balance Sheets. Cash transfers between L Brands and the Company are accounted for through Net Investment by L Brands, Inc. Cash and Cash Equivalents in the Combined Balance Sheets represent cash and cash equivalents held by the Company at period-end prior to any potential transfer to the centralized cash management pool of L Brands. The Combined Statements of Income (Loss) include costs for certain functions, including information technology, human resources and store design and construction, that historically were provided and administered on a centralized basis by L Brands. Starting in the third quarter of 2020, as part of the steps to prepare the Company to operate as a separate, standalone company, these functions were transitioned to the business and are now operated and administered as part of Victoria’s Secret & Co. For additional information, see Note 4, "Restructuring Activities." Costs applicable to the Company related to these functions are included in the Combined Statements of Income (Loss) for all periods presented. Prior to the transition of these functions, these costs were directly charged to the Company by L Brands. In addition, for purposes of preparing these combined financial statements on a “carve-out” basis, a portion of L Brands' corporate expenses have been allocated to the Company. These expense allocations include the cost of corporate functions and resources that continue to be provided by, or administered by, L Brands including, but not limited to, executive management and other corporate and governance functions, such as corporate finance, internal audit, tax and treasury. The related employee payroll and benefit costs associated with such functions, such as share-based compensation, are included in the expense allocations. Corporate expenses of $30 million in the second quarter of 2021 and $25 million in the second quarter of 2020 were allocated and included within General, Administrative and Store Operating Expenses in the Combined Statements of Income (Loss). For year-to-date 2021 and year-to-date 2020, corporate expenses of $49 million and $45 million, respectively, were allocated and included within General, Administrative, and Store Operating Expenses in the Combined Statements of Income (Loss). Costs were allocated to the Company based on direct usage when identifiable or, when not directly identifiable, on the basis of proportional net sales. Management considers the basis on which the expenses have been allocated to reasonably reflect the utilization of services provided to, or the benefit received by, the Company during the periods presented. However, the allocations may not reflect the expenses the Company would have incurred if the Company had been a standalone company for the periods presented. Actual costs that may have been incurred if the Company had been a standalone company would depend on a number of factors, including the organizational structure, whether functions were outsourced or performed by employees, and strategic or capital decisions. Going forward, the Company may perform these functions using its own resources or outsourced services. For a period following the Separation, however, some of these functions will continue to be provided by L Brands under a transition services agreement, and the Company will provide some services to L Brands under a transition services agreement. The Company has also entered into certain commercial arrangements with L Brands in connection with the Separation. During the periods presented in these Combined Financial Statements, the Company's income tax expense (benefit) and deferred tax balances have been included in the L Brands' income tax returns. Income tax expense (benefit) and deferred tax balances contained in the Combined Financial Statements are presented on a separate return basis, as if the Company had filed its own income tax returns. As a result, actual tax transactions included in the consolidated financial statements of L Brands may or may not be included in the Combined Financial Statements of the Company. Similarly, the tax treatment of certain items reflected in the Combined Financial Statements of the Company may or may not be reflected in the consolidated financial statements and income tax returns of L Brands. The taxes recorded in the Combined Statements of Income (Loss) are not necessarily representative of the taxes that may arise in the future when the Company files its income tax returns independent from L Brands' returns. Interim Financial Statements The Combined Financial Statements as of and for the periods ended July 31, 2021 and August 1, 2020 are unaudited. These Combined Financial Statements should be read in conjunction with the audited Combined Financial Statements and Notes thereto for the fiscal years ended January 30, 2021, February 1, 2020 and February 2, 2019, and the unaudited Combined Financial Statements and Notes thereto for the thirteen-week periods ended May 1, 2021 and May 2, 2020, included in our Registration Statement on Form 10, as amended and filed with the Securities and Exchange Commission on July 9, 2021. In the opinion of management, the accompanying Combined Financial Statements reflect all adjustments, which are of a normal recurring nature and necessary for a fair presentation of the results for the interim periods. Impacts of COVID-19 The coronavirus pandemic ("COVID-19") has created significant public health concerns as well as economic disruption, uncertainty and volatility. The Company's operations and financial performance have been materially impacted by the COVID-19 pandemic. In the first quarter of 2020, all the Company's stores in North America were closed on March 17, 2020, but the Company was able to re-open the majority of its stores as of the end of the second quarter of 2020. Operations in the direct channel were temporarily suspended for approximately one week in late March 2020. The Company has adopted new operating models focused on providing a safe store environment for its customers and associates, while also delivering an engaging shopping experience. The Company remains focused on the safe operations of its distribution, fulfillment and call centers while maximizing its direct channel. There remains the potential for COVID-19-related risks of closure or operating restrictions, which could materially impact the Company's operations and financial performance in future periods. Seasonality of Business Due to the seasonal variations in the retail industry, the results of operations for the interim period is not necessarily indicative of the results expected for the full fiscal year. Restricted Cash In July 2021, the Company issued $600 million of 4.625% notes due in July 2029 (the "2029 Notes") in a transaction exempt from registration under the Securities Act of 1933, as amended. As of July 31, 2021, the proceeds were held in escrow for release to the Company upon satisfaction of certain conditions, including completion of the Separation. If the conditions for the release from escrow of the proceeds of this offering were not satisfied, the 2029 Notes would have been subject to mandatory redemption. The $600 million initial gross proceeds are included in Cash in Escrow related to the Spin-Off on the July 31, 2021 Combined Balance Sheet. For additional information, see Note 9, “Long-term Debt and Borrowing Facilities.” As of July 31, 2021, the Company's Cash and Cash Equivalents and restricted cash totaled $893 million. Equity Method Investments The Company accounts for investments in unconsolidated entities where it exercises significant influence, but does not have control, using the equity method. Under the equity method of accounting, the Company recognizes its share of the investee's net income or loss. Losses are only recognized to the extent the Company has positive carrying value related to the investee. Carrying values are only reduced below zero if the Company has an obligation to provide funding to the investee. The Company’s share of net income or loss of unconsolidated entities from which the Company purchases merchandise or merchandise components is included in Costs of Goods Sold, Buying and Occupancy in the Combined Statements of Income (Loss). The Company’s share of net income or loss from its investment in the Victoria's Secret U.K. joint venture is included in General, Administrative and Store Operating Expenses in the Combined Statements of Income (Loss). 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. The carrying values of equity method investments were $32 million as of July 31, 2021, $35 million as of January 30, 2021 and $32 million as of August 1, 2020. These investments are recorded in Other Assets on the Combined Balance Sheets. Net Investment by L Brands, Inc. Net investment by L Brands, Inc. in the Combined Balance Sheets is presented in lieu of shareholders' equity and represents L Brands' historical investment in the Company, the accumulated net earnings after taxes and the net effect of the transactions with and allocations from L Brands. All transactions reflected in Net Investment by L Brands, Inc. in the accompanying Combined Balance Sheets have been considered as financing activities for purposes of the Combined Statements of Cash Flows. For additional information, see Basis of Presentation above and Note 2, "Transactions with Related Parties." Fair Value Cash and Cash Equivalents and restricted cash include cash on hand, deposits with financial institutions and highly liquid investments with original maturities of less than 90 days. The Company's Cash and Cash Equivalents and restricted cash are considered Level 1 fair value measurements as they are valued using unadjusted quoted prices in active markets for identical assets. As of July 31, 2021, the fair value of the Company's outstanding third-party debt approximated its principal value. The estimated fair value of the Company’s outstanding third-party debt is based on reported transaction prices, which are considered Level 2 inputs in accordance with ASC 820, Fair Value Measurement . The estimate is not necessarily indicative of the amounts that the Company could realize in a current market exchange. Derivative Financial Instruments The Company from time to time uses derivative financial instruments to manage exposure to foreign currency exchange rates. The Company does not use derivative instruments for trading purposes. All derivative instruments are recorded on the Combined Balance Sheets at fair value. The earnings of the Company’s foreign operations are subject to exchange rate risk as substantially all the merchandise is sourced through U.S. dollar transactions. The Company from time to time utilizes foreign currency forward contracts designated as cash flow hedges to mitigate this foreign currency exposure. Amounts for these designated cash flow hedges are reclassified from accumulated other comprehensive income (loss) upon sale of the hedged merchandise to the customer. These gains and losses are recognized in Costs of Goods Sold, Buying and Occupancy in the Combined Statements of Income (Loss). During the second quarter of 2021, the Company terminated its foreign currency forward contracts designated as cash flow hedges that were used to mitigate foreign currency exposure for its Canadian operations. The fair value of designated cash flow hedges is not significant for any period presented. Concentration of Credit Risk The Company maintains cash and cash equivalents and restricted cash with various major financial institutions. L Brands, on behalf of the Company, monitored the relative credit standing of financial institutions with whom the Company transacted with and limited the amount of credit exposure with any one entity. The Company also periodically reviews the relative credit standing of franchise, license and wholesale partners and other entities to which the Company grants credit terms in the normal course of business. The Company determines the required allowance for expected credit losses using information such as customer credit history and financial condition. Amounts are recorded to the allowance when it is determined that expected credit losses may occur. Use of Estimates in the Preparation of Financial Statements The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period, as well as the related disclosure of contingent assets and liabilities at the date of the financial statements. Actual results may differ from those estimates, and the Company revises its estimates and assumptions as new information becomes available. Earnings (Loss) Per Share Earnings (loss) per share was calculated based on the 88 million shares of the Company's common stock distributed to the L Brands shareholders on August 2, 2021. The same number of shares is being utilized for the calculation of basic and diluted earnings per share for all periods presented prior to the Separation. Recently Issued Accounting Pronouncements The Company did not adopt any new accounting standards during the second quarter of 2021 that had a material impact on the Company's combined results of operations, financial position or cash flows. In addition, there are no new accounting standards not yet adopted that are expected to have a material impact on the Company's combined results of operations, financial position or cash flows. |
Transactions with Related Parti
Transactions with Related Parties | 6 Months Ended |
Jul. 31, 2021 | |
Related Party Transactions [Abstract] | |
Transactions with Related Parties | Transactions with Related Parties The combined financial statements have been prepared on a standalone basis and are derived from the consolidated financial statements and accounting records of L Brands. The following discussion summarizes activity between the Company and L Brands. Allocation of General Corporate Expenses For purposes of preparing these combined financial statements on a "carve-out" basis, we have allocated a portion of L Brands' total corporate expenses to the Company. See Note 1 for a discussion of the methodology used to allocate corporate-related costs for purposes of preparing these financial statements on a "carve-out" basis. Due from and Due to Related Parties Balances between the Company and L Brands, Inc. or its affiliates that are derived from transactions that have been historically cash settled are reflected in the Combined Balance Sheets as Due from and Due to Related Parties. Balances between the Company and L Brands, Inc. or its affiliates derived from transactions that have been historically settled other than in cash are included in Net Investment by L Brands, Inc. within Equity on the Combined Balance Sheets. Long-term Debt due to Related Party During 2020, the Company borrowed $97 million from L Brands to pay down outstanding debt with external parties. This borrowing is due in September 2025 and has a variable interest rate based on the China Loan Prime Rate, which was 3.85% as of July 31, 2021. The Company recognized $2 million of interest expense year-to-date 2021 related to this borrowing. Subsequent to July 31, 2021, the Company no longer has this Long-term Debt due to Related Party as a result of the Separation. Net Transfers From (To) L Brands, Inc. The following table presents the components of Net Transfers from (to) L Brands, Inc. in the second quarter and year-to-date 2021 and 2020 Combined Statements of Equity: Second Quarter Year-to-Date 2021 2020 2021 2020 (in millions) Cash Pooling and General Financing Activities, Net $ (322) $ (171) $ (431) $ 102 Long-lived Assets (a) (4) — 16 — Corporate Expense Allocations 30 25 49 45 Share-based Compensation Expense 8 7 15 16 Assumed Income Tax Payments $ 13 $ 2 15 8 Total Net Transfers from (to) L Brands, Inc. $ (275) $ (137) $ (336) $ 171 _______________ (a) Represents long-lived assets transferred between the Company and L Brands, Inc. as a result of asset allocation decisions made during the period. Victoria's Secret Guarantees As of July 31, 2021, the L Brands' asset-backed revolving credit facility ("L Brands ABL Facility") had aggregate commitments at $1 billion and no borrowings outstanding. Certain of the Company's subsidiaries, along with other wholly-owned subsidiaries of L Brands, Inc., guaranteed and pledged collateral to secure the L Brands ABL Facility. On August 2, 2021, L Brands amended the facility which, among other things, released the Company's subsidiaries as guarantors thereunder. Certain of the Company's subsidiaries, along with other wholly-owned subsidiaries of L Brands, Inc., also guaranteed L Brands' obligations under certain of L Brands' long-term notes. The guarantees were full and unconditional on a joint and several basis. The Company's guarantees of obligations under L Brands' long-term notes terminated concurrently with the Separation. The following table provides the outstanding principal balance for these notes as of July 31, 2021: (in millions) 5.625% Fixed Interest Rate Notes due October 2023 $ 320 9.375% Fixed Interest Rate Notes due July 2025 500 6.694% Fixed Interest Rate Notes due January 2027 297 5.25% Fixed Interest Rate Notes due February 2028 500 7.50% Fixed Interest Rate Notes due June 2029 500 6.625% Fixed Interest Rate Notes due October 2030 1,000 6.875% Fixed Interest Rate Notes due November 2035 1,000 6.75% Fixed Interest Rate Notes due July 2036 700 Total $ 4,817 |
Revenue Recognition
Revenue Recognition | 6 Months Ended |
Jul. 31, 2021 | |
Revenue Recognition and Deferred Revenue [Abstract] | |
Revenue Recognition | Revenue RecognitionAccounts receivable, net from revenue-generating activities were $73 million as of July 31, 2021, $74 million as of January 30, 2021 and $72 million as of August 1, 2020. Accounts receivable primarily relate to amounts due from the Company's franchise, license and wholesale partners. Under these arrangements, payment terms are typically 60 to 90 days. The Company records deferred revenue when cash payments are received in advance of transfer of control of goods or services. Deferred revenue primarily relates to gift cards, loyalty and private label credit card programs and direct channel shipments, which are all impacted by seasonal and holiday-related sales patterns. Deferred revenue was $219 million as of July 31, 2021, $256 million as of January 30, 2021 and $217 million as of August 1, 2020. The Company recognized $110 million as revenue year-to-date 2021 from amounts recorded as deferred revenue at the beginning of the year. As of July 31, 2021, the Company recorded deferred revenue of $210 million within Accrued Expenses and Other, and $9 million within Other Long-term Liabilities on the Combined Balance Sheet. The following table provides a disaggregation of Net Sales for the second quarter and year-to-date 2021 and 2020: Second Quarter Year-to-Date 2021 2020 2021 2020 (in millions) Stores – North America $ 1,037 $ 364 $ 1,970 $ 877 Direct 469 614 990 922 International (a) 108 88 208 161 Total Net Sales $ 1,614 $ 1,066 $ 3,168 $ 1,960 _______________ (a) Results include Greater China, royalties associated with franchised stores, wholesale sales and company-operated stores in the U.K. (before our joint venture with Next). The Company recognized Net Sales of $31 million and $28 million for the second quarter of 2021 and 2020, respectively, related to revenue earned in connection with its U.S. private label credit card arrangement. The Company recognized Net Sales of $59 million and $53 million for year-to-date 2021 and 2020, respectively, related to revenue earned in connection with its U.S. private label credit card arrangement. The Company’s international net sales include sales from company-operated stores, royalty revenue from franchise and license arrangements, wholesale revenues and direct sales shipped internationally. Certain of these sales are subject to the impact of fluctuations in foreign currency. The Company’s net sales outside of the U.S. totaled $167 million and $137 million for the second quarter of 2021 and 2020, respectively. The Company’s net sales outside of the U.S. totaled $330 million and $243 million for year-to-date 2021 and 2020, respectively. |
Restructuring Activities
Restructuring Activities | 6 Months Ended |
Jul. 31, 2021 | |
Restructuring and Related Activities [Abstract] | |
Restructuring Activities | Restructuring Activities During the second quarter of 2020, management of L Brands and the Company reduced home office head count as a result of completing a comprehensive review of the home office organizations in order to achieve meaningful reductions in overhead expenses and to decentralize significant shared functions and services to support the creation of standalone companies. Pre-tax severance and related costs associated with these reductions, totaling $51 million, are included in General, Administrative and Store Operating Expenses in the 2020 Combined Statements of Loss. During year-to-date 2021, the Company made payments of $10 million related to severance and related costs associated with these reductions. As of July 31, 2021, a liability of $4 million related to these reductions is included in Accrued Expenses and Other on the Combined Balance Sheet. Victoria's Secret U.K. |
Inventories
Inventories | 6 Months Ended |
Jul. 31, 2021 | |
Inventory, Net [Abstract] | |
Inventories | Inventories The following table provides details of inventories as of July 31, 2021, January 30, 2021 and August 1, 2020: July 31, January 30, August 1, (in millions) Finished Goods Merchandise $ 694 $ 663 $ 872 Raw Materials and Merchandise Components 51 38 51 Total Inventories $ 745 $ 701 $ 923 Inventories are principally valued at the lower of cost or net realizable value, on an average cost basis. |
Long-Lived Assets
Long-Lived Assets | 6 Months Ended |
Jul. 31, 2021 | |
Property, Plant and Equipment [Abstract] | |
Long-Lived Assets | Long-Lived Assets The following table provides details of property and equipment, net as of July 31, 2021, January 30, 2021 and August 1, 2020: July 31, January 30, August 1, (in millions) Property and Equipment, at Cost $ 3,755 $ 3,792 $ 3,883 Accumulated Depreciation and Amortization (2,756) (2,714) (2,675) Property and Equipment, Net $ 999 $ 1,078 $ 1,208 Depreciation expense was $78 million and $81 million for the second quarter of 2021 and 2020, respectively. Depreciation expense was $158 million and $171 million for year-to-date 2021 and 2020, respectively. Long-lived store assets, which include leasehold improvements, store related assets and operating lease assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. Store assets are grouped at the lowest level for which they are largely independent of other assets or asset groups. If the estimated undiscounted future cash flows related to the asset group are less than the carrying value, the Company recognizes a loss equal to the difference between the carrying value and the estimated fair value, determined by the estimated discounted future cash flows of the asset group. For operating lease assets, the Company determines the fair value of the assets by comparing the contractual rent payments to estimated market rental rates. An individual asset within an asset group is not impaired below its estimated fair value. The fair value of long-lived store assets are determined using Level 3 inputs within the fair value hierarchy. As a result of the Company's fleet rationalization executed during 2020 and the negative operating results of certain stores, the Company determined that the estimated undiscounted future cash flows were less than the carrying values for certain asset groups and, as a result, determined the estimated fair values of the store asset groups using estimated discounted future cash flows and estimated market rental rates. Long-lived store asset impairment charges are included within Costs of Goods Sold, Buying and Occupancy in the 2020 Combined Statements of Loss. The following table provides pre-tax long-lived store asset impairment charges included in the 2020 Combined Statements of Loss: 2020 Second Quarter Year-to-Date (in millions) Store Asset Impairment $ 14 $ 111 Operating Lease Asset Impairment 103 103 Total Impairment $ 117 $ 214 Victoria's Secret Hong Kong During the second quarter of 2020, the Company closed its unprofitable Victoria's Secret flagship store in Hong Kong. As a result of the store closure, the Company recognized a non-cash pre-tax gain of $39 million, primarily due to terminating the store lease and the related write-off of the operating lease liability in excess of the operating lease asset, which was partially impaired in fiscal 2019. This gain is included in Costs of Goods Sold, Buying and Occupancy in the 2020 Combined Statements of Loss. The Company also recorded $3 million of severance and related costs, included in General, Administrative and Store Operating Expenses in the 2020 Combined Statements of Loss. |
Accrued Expenses and Other
Accrued Expenses and Other | 6 Months Ended |
Jul. 31, 2021 | |
Accrued Liabilities, Current [Abstract] | |
Accrued Expenses and Other | Accrued Expenses and Other The following table provides additional information about the composition of Accrued Expenses and Other as of July 31, 2021, January 30, 2021 and August 1, 2020: July 31, January 30, August 1, (in millions) Deferred Revenue on Gift Cards $ 158 $ 178 $ 147 Compensation, Payroll Taxes and Benefits 145 173 70 Rent 80 22 15 Accrued Marketing 39 44 29 Deferred Revenue on Loyalty and Private Label Credit Card 37 38 32 Taxes, Other than Income 37 45 43 Returns Reserve 20 26 28 Deferred Revenue on Direct Shipments not yet Delivered 15 30 26 Accrued Claims on Self-insured Activities 15 17 18 Supplemental Retirement Plan — 66 60 Other 156 137 146 Total Accrued Expenses and Other $ 702 $ 776 $ 614 |
Income Taxes
Income Taxes | 6 Months Ended |
Jul. 31, 2021 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes For purposes of our combined financial statements, income taxes have been calculated as if we file income tax returns for the Company on a standalone basis. The Company's U.S. operations and certain of its non-U.S. operations historically have been included in the income tax returns of L Brands or its subsidiaries that may not be part of the Company. The Company believes the assumptions supporting its allocation and presentation of income taxes on a separate return basis are reasonable. However, the Company's tax results, as presented in the combined financial statements, may not be reflective of the results that the Company expects to generate in the future. For the second quarter of 2021, the Company calculated the provision for income taxes on the current estimate of the annual effective tax rate and adjusted as necessary for quarterly events. Due to the impacts of the COVID-19 pandemic, the income tax expense for the second quarter of 2020 was computed on a year-to-date effective tax rate. For the second quarter of 2021, the Company’s effective tax rate was 24.1% compared to 18.5% in the second quarter of 2020. The second quarter of 2021 rate was lower than the Company's combined estimated federal and state statutory rate primarily due to the recognition of excess tax benefits recorded through the 2021 Combined Statements of Income on share-based awards that vested in the quarter. The second quarter of 2020 rate was lower than the Company's combined federal and state statutory rate primarily due to losses related to certain foreign subsidiaries, which generated no tax benefit. For year-to-date 2021, the Company's effective tax rate was 23.2% compared to 19.9% year-to-date 2020. The year-to-date 2021 rate was lower than the Company's combined estimated federal and state statutory rate primarily due to the recognition of excess tax benefits recorded through the 2021 Combined Statements of Income on share-based awards that vested year-to-date. The year-to-date 2020 rate was lower than the Company's combined estimated federal and state statutory rate primarily due to losses related to certain foreign subsidiaries, which generated no tax benefit. The Company would have paid $13 million and $2 million for the second quarter of 2021 and 2020, respectively, had it filed its own separate returns in those years. Year-to-date income taxes paid would have been $15 million and $8 million for 2021 and 2020, respectively. |
Long-term Debt and Borrowing Fa
Long-term Debt and Borrowing Facilities | 6 Months Ended |
Jul. 31, 2021 | |
Long-term Debt, by Current and Noncurrent [Abstract] | |
Long-term Debt and Borrowing Facilities | Long-term Debt and Borrowing Facilities Issuance of Notes In July 2021, the Company issued $600 million of 4.625% notes due in July 2029 in a transaction exempt from registration under the Securities Act of 1933, as amended. The obligation to pay principal and interest on these notes is jointly and severally guaranteed on a full and unconditional basis by certain of the Company's 100% owned subsidiaries in connection with the Separation. As of July 31, 2021, the proceeds were held in escrow for release to the Company upon satisfaction of certain conditions, including completion of the Separation. If the conditions for the release from escrow of the proceeds of this offering were not satisfied, the 2029 Notes would have been subject to mandatory redemption. The $600 million initial gross proceeds are included in Cash in Escrow related to the Spin-Off on the July 31, 2021 Combined Balance Sheet. On August 2, 2021, the Company used cash proceeds of $592 million, which were net of issuance costs of $8 million, from the 2029 Notes, to partially fund the approximately $976 million cash payment to L Brands in connection with the Separation. Credit Facilities On August 2, 2021, the Company entered into a term loan B credit facility in an aggregate principal amount of $400 million (the "Term Loan Facility"), which will mature in August 2028. Interest under the Term Loan Facility will be calculated by reference to the London Interbank Offered Rate (“LIBOR”) or an alternative base rate, plus an interest rate margin equal to (i) in the case of LIBOR loans, 3.25% and (ii) in the case of alternate base rate loans, 2.25%. The LIBOR rate applicable to the Term Loan Facility will be subject to a floor of 0.50%. The obligation to pay principal and interest on the loans under the Term Loan Facility is jointly and severally guaranteed on a full and unconditional basis by certain of the Company's wholly-owned domestic restricted subsidiaries. The loans under the Term Loan Facility are secured on a first-priority lien basis by certain assets of the Company and guarantors that do not constitute priority collateral of the asset-based revolving credit facility and on a second-priority lien basis by priority collateral of the asset-based revolving credit facility, subject to customary exceptions. On August 2, 2021, the Company also entered into a senior secured asset-based revolving credit facility (the “ABL Facility"). The ABL Facility allows for borrowings and letters of credit in U.S. dollars or Canadian dollars, and has aggregate commitments of $750 million and an expiration date of August 2026. The availability under the ABL Facility will be the lesser of (i) the borrowing base, determined primarily based on the Company's eligible U.S. and Canadian credit card receivables, eligible accounts receivable, eligible inventory and eligible real property, and (ii) the aggregate commitment. Interest on the loans under the ABL Facility will be calculated by reference to (i) LIBOR or an alternative base rate and (ii) in the case of loans denominated in Canadian dollars, Canadian Dollar Offered Rate (“CDOR”) or a Canadian base rate, plus an interest rate margin based on average daily excess availability ranging from (x) in the case of LIBOR and CDOR loans, 1.50% to 2.00% and (y) in the case of alternate base rate loans and Canadian base rate loans, 0.50% to 1.00%. Unused commitments under the ABL Facility will accrue an unused commitment fee ranging from 0.25% to 0.30%. The ABL Facility was undrawn at the Separation. The Company used the net cash proceeds from the credit facilities of $384 million, which were net of issuance and financing costs of $10 million for the Term Loan Facility and $6 million for the ABL Facility, to partially fund the approximately $976 million cash payment to L Brands in connection with the Separation. Foreign Facilities Certain of the Company's China subsidiaries previously utilized revolving and term loan bank facilities to support their operations ("Foreign Facilities"). During the second quarter of 2021, with no borrowings outstanding, the Company terminated the Foreign Facilities. |
Comprehensive Income
Comprehensive Income | 6 Months Ended |
Jul. 31, 2021 | |
OCI, Net of Tax [Abstract] | |
Comprehensive Income | Comprehensive Income The following table provides the rollforward of accumulated other comprehensive income for year-to-date 2021: Foreign Currency Translation Cash Flow Hedges Accumulated Other Comprehensive Income (in millions) Balance as of January 30, 2021 $ 4 $ — $ 4 Other Comprehensive Income (Loss) Before Reclassifications 4 — 4 Amounts Reclassified from Accumulated Other Comprehensive Income (Loss) — — — Tax Effect — — — Current-period Other Comprehensive Income (Loss) 4 — 4 Balance as of July 31, 2021 $ 8 $ — $ 8 The following table provides the rollforward of accumulated other comprehensive income for year-to-date 2020: Foreign Currency Translation Cash Flow Hedges Accumulated Other Comprehensive Income (Loss) (in millions) Balance as of February 1, 2020 $ (29) $ — $ (29) Other Comprehensive Income (Loss) Before Reclassifications (3) 2 (1) Amounts Reclassified from Accumulated Other Comprehensive Income (Loss) — (1) (1) Tax Effect — — — Current-period Other Comprehensive Income (Loss) (3) 1 (2) Balance as of August 1, 2020 $ (32) $ 1 $ (31) |
Retirement Benefits
Retirement Benefits | 6 Months Ended |
Jul. 31, 2021 | |
Retirement Benefits [Abstract] | |
Retirement Benefits | Retirement Benefits Certain Company employees who meet certain age and service requirements participate in a tax-qualified defined contribution retirement plan sponsored by L Brands. The qualified plan permits participating associates to elect contributions up to the maximum limits allowable under the Internal Revenue Code. L Brands matches associate contributions according to a predetermined formula and contributes additional amounts based on a percentage of the associates' eligible annual compensation and years of service. Associate contributions and L Brands matching contributions vest immediately. Additional L Brands contributions and the related investment earnings are subject to vesting based on years of service. Total expense recognized related to the qualified plan was $9 million for both the second quarter of 2021 and 2020. Total expense recognized related to the qualified plan was $19 million and $18 million for year-to-date 2021 and 2020, respectively. L Brands previously sponsored a non-qualified supplemental retirement plan. The non-qualified plan was an unfunded plan which provides benefits beyond the Internal Revenue Code limits for qualified defined contribution plans. On June 27, 2020 (the “Termination Date”), the Human Capital and Compensation Committee of the L Brands' Board of Directors authorized the termination of the non-qualified plan. As of July 31, 2021, all benefits and obligations due under the non-qualified plan were fully paid. Total expense recognized related to the non-qualified plan was not significant for any period presented. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jul. 31, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies The Company is subject to various claims and contingencies related to lawsuits, taxes, insurance and other matters arising out of the normal course of business. Actions filed against the Company from time to time include commercial, tort, intellectual property, customer, employment, data privacy and other claims, including purported class action lawsuits. Management believes that the ultimate liability arising from such claims and contingencies, if any, is not likely to have a material adverse effect on the Company’s results of operations, financial condition or cash flows. As previously disclosed by L Brands, on May 19, 2020 and January 12, 2021, L Brands shareholders filed derivative lawsuits in the Court of Common Pleas for Franklin County, Ohio (subsequently removed to the United States District Court for the Southern District of Ohio) and the Delaware Court of Chancery, respectively, naming as defendants certain current and former directors and officers of L Brands and alleging, among other things, breaches of fiduciary duty through asserted violations of law and failures to monitor workplace conduct (the “Lawsuits”). In addition, L Brands also received litigation and books-and-records demands from other shareholders related to the same matters (together with the Lawsuits, the “Actions”). In July 2021, L Brands announced the global settlement resolving the Actions. The settlement resolves all derivative claims that have been or could have been asserted in the Actions or that involve in any way the allegations referred to in the Actions and releases all such claims against L Brands (and its subsidiaries, including the Company) and past and present employees, officers and directors, among others. As part of the settlement, L Brands (and its subsidiaries, including the Company) has agreed to implement certain management and governance measures, including the maintenance of a Diversity, Equity, and Inclusion Council. Following the Separation, the settlement terms will apply to both L Brands and the Company. Each company has committed to invest $45 million over at least five years to fund the management and governance measures. The settlement was preliminarily approved on August 25, 2021, with a fairness hearing currently scheduled for January 18, 2022. |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jul. 31, 2021 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events Victoria's Secret & Co. Spin-Off On August 2, 2021, the Separation was completed through L Brands' distribution of 100% of the shares of Victoria's Secret & Co. to holders of L Brands common stock as of the close of business on the record date of July 22, 2021. As a result of the Distribution, L Brands stockholders of record received one share of the Company's common stock for every three shares of L Brands common stock. On August 3, 2021, Victoria’s Secret & Co. began trading as an independent, publicly traded company under the stock symbol “VSCO" on the NYSE. L Brands retained no ownership interest in the Company as of the completion of the Separation. In connection with the Separation, the Company made an approximately $976 million cash payment to L Brands on August 2, 2021 from the proceeds of the issuances of certain debt (discussed further below). For additional information, see Note 1, "Description of Business, Basis of Presentation and Summary of Significant Accounting Policies." Leadership Appointments As previously announced, effective as of August 2, 2021, the Company appointed Amy Hauk as the Chief Executive Officer of PINK, Gregory Unis as Chief Executive Officer of Victoria's Secret Beauty and Dein Boyle as Chief Operating Officer of Victoria's Secret & Co. Martin Waters, Chief Executive Officer of Victoria’s Secret & Co., and Timothy Johnson, Chief Financial Officer of Victoria’s Secret & Co., who had been appointed to their respective positions effective July 16, 2021, continue to serve as Chief Executive Officer and Chief Financial Officer, respectively, upon completion of the Separation. Proceeds from 2029 Notes On August 2, 2021, the Company received from escrow cash proceeds of $592 million, which were net of issuance costs of $8 million, from the 2029 Notes. The Company used the net proceeds to partially fund the approximately $976 million cash payment to L Brands in connection with the Separation. For more information, see Note 9, "Long-term Debt and Borrowing Facilities." Credit Facilities On August 2, 2021, the Company entered into the Term Loan Facility in an aggregate principal amount of $400 million, which will mature in August 2028. On August 2, 2021, the Company also entered into a senior secured asset-based revolving credit facility. The ABL Facility allows for borrowings and letters of credit in U.S. dollars or Canadian dollars, has aggregate commitments of $750 million and an expiration date of August 2026. The ABL Facility was undrawn at the Separation. The Company used the net cash proceeds from the credit facilities of $384 million, which were net of issuance and financing costs of $10 million for the Term Loan Facility and $6 million for the ABL Facility, to partially fund the approximately $976 million cash payment to L Brands in connection with the Separation. For more information, see Note 9, "Long-term Debt and Borrowing Facilities." |
Description of Business, Basi_2
Description of Business, Basis of Presentation, and Summary of Significant Accounting Policies (Policy) | 6 Months Ended |
Jul. 31, 2021 | |
Description Of Business And Basis Of Presentation [Abstract] | |
Description of Business | Description of Business The Company is a specialty retailer of women's intimate and other apparel and beauty products marketed under the Victoria's Secret and PINK brand names. The Company operates more than 925 Victoria’s Secret and PINK stores in the U.S., Canada and Greater China as well as online at www.VictoriasSecret.com and www.PINK.com and other online channels worldwide. Additionally, Victoria’s Secret and PINK have more than 460 stores in more than 70 countries operating under franchise, license and wholesale arrangements. The Company also includes the Victoria's Secret and PINK merchandise sourcing and production function serving the Company and its international partners. The Company manages and evaluates its business activities based on geography and, as a result, determined that its Victoria’s Secret North America and Victoria’s Secret International businesses are its operating segments. The North America and International operating segments both sell women's intimate and other apparel and beauty products under the Victoria's Secret and PINK brand names and serve customers through stores and online channels. The operating segments share similar economic and other qualitative characteristics, and therefore the results are aggregated into one reportable segment. |
Fiscal Year | Fiscal Year The Company’s fiscal year ends on the Saturday nearest to January 31. As used herein, “second quarter of 2021” and “second quarter of 2020” refer to the thirteen-week periods ended July 31, 2021 and August 1, 2020, respectively. “Year-to-Date 2021” and “year-to-date 2020” refer to the twenty-six-week periods ending July 31, 2021 and August 1, 2020, respectively. |
Basis of Presentation | Basis of Presentation The Combined Financial Statements have been derived from the consolidated financial statements and accounting records of L Brands and have been prepared in conformity with accounting principles generally accepted in the United States (“GAAP”). The Combined Financial Statements may not be indicative of the Company’s future performance and do not necessarily reflect what the financial position, results of operations, and cash flows would have been had it operated as an independent company during the periods presented. Intracompany transactions have been eliminated. Transactions between the Company and L Brands have been included in these combined financial statements. For those transactions between the Company and L Brands that have been historically settled in cash, the Company has reflected such balances in the Combined Balance Sheets as Due from Related Parties or Due to Related Parties. The aggregate net effect of transactions between the Company and related parties that have been historically settled other than in cash are reflected in the Combined Balance Sheets as Net Investment by L Brands, Inc. and in the Combined Statements of Cash Flows as Net Transfers from (to) L Brands, Inc. For additional information, see Note 2, "Transactions with Related Parties." The Combined Balance Sheets include certain L Brands' assets and liabilities that are specifically identifiable or otherwise attributable to the Company. L Brands' third-party long-term notes payable and the related interest expense have not been allocated to the Company for any of the periods presented as the Company was not the legal obligor of such debt. Except for Long-term Debt due to Related Party, the debt reflected in the Combined Balance Sheets relate to third-party borrowings specifically attributable to, and legal obligations of, the Company. L Brands utilizes a centralized approach to cash management and financing its operations. The Cash and Cash Equivalents held by L Brands at the corporate level are not specifically identifiable to the Company and, therefore, have not been reflected in the Company’s Combined Balance Sheets. Cash transfers between L Brands and the Company are accounted for through Net Investment by L Brands, Inc. Cash and Cash Equivalents in the Combined Balance Sheets represent cash and cash equivalents held by the Company at period-end prior to any potential transfer to the centralized cash management pool of L Brands. The Combined Statements of Income (Loss) include costs for certain functions, including information technology, human resources and store design and construction, that historically were provided and administered on a centralized basis by L Brands. Starting in the third quarter of 2020, as part of the steps to prepare the Company to operate as a separate, standalone company, these functions were transitioned to the business and are now operated and administered as part of Victoria’s Secret & Co. For additional information, see Note 4, "Restructuring Activities." Costs applicable to the Company related to these functions are included in the Combined Statements of Income (Loss) for all periods presented. Prior to the transition of these functions, these costs were directly charged to the Company by L Brands. In addition, for purposes of preparing these combined financial statements on a “carve-out” basis, a portion of L Brands' corporate expenses have been allocated to the Company. These expense allocations include the cost of corporate functions and resources that continue to be provided by, or administered by, L Brands including, but not limited to, executive management and other corporate and governance functions, such as corporate finance, internal audit, tax and treasury. The related employee payroll and benefit costs associated with such functions, such as share-based compensation, are included in the expense allocations. Corporate expenses of $30 million in the second quarter of 2021 and $25 million in the second quarter of 2020 were allocated and included within General, Administrative and Store Operating Expenses in the Combined Statements of Income (Loss). For year-to-date 2021 and year-to-date 2020, corporate expenses of $49 million and $45 million, respectively, were allocated and included within General, Administrative, and Store Operating Expenses in the Combined Statements of Income (Loss). Costs were allocated to the Company based on direct usage when identifiable or, when not directly identifiable, on the basis of proportional net sales. Management considers the basis on which the expenses have been allocated to reasonably reflect the utilization of services provided to, or the benefit received by, the Company during the periods presented. However, the allocations may not reflect the expenses the Company would have incurred if the Company had been a standalone company for the periods presented. Actual costs that may have been incurred if the Company had been a standalone company would depend on a number of factors, including the organizational structure, whether functions were outsourced or performed by employees, and strategic or capital decisions. Going forward, the Company may perform these functions using its own resources or outsourced services. For a period following the Separation, however, some of these functions will continue to be provided by L Brands under a transition services agreement, and the Company will provide some services to L Brands under a transition services agreement. The Company has also entered into certain commercial arrangements with L Brands in connection with the Separation. During the periods presented in these Combined Financial Statements, the Company's income tax expense (benefit) and deferred tax balances have been included in the L Brands' income tax returns. Income tax expense (benefit) and deferred tax balances contained in the Combined Financial Statements are presented on a separate return basis, as if the Company had filed its own income tax returns. As a result, actual tax transactions included in the consolidated financial statements of L Brands may or may not be included in the Combined Financial Statements of the Company. Similarly, the tax treatment of certain items reflected in the Combined Financial Statements of the Company may or may not be reflected in the consolidated financial statements and income tax returns of L Brands. The taxes recorded in the Combined Statements of Income (Loss) are not necessarily representative of the taxes that may arise in the future when the Company files its income tax returns independent from L Brands' returns. |
Interim Financial Statements | Interim Financial Statements The Combined Financial Statements as of and for the periods ended July 31, 2021 and August 1, 2020 are unaudited. These Combined Financial Statements should be read in conjunction with the audited Combined Financial Statements and Notes thereto for the fiscal years ended January 30, 2021, February 1, 2020 and February 2, 2019, and the unaudited Combined Financial Statements and Notes thereto for the thirteen-week periods ended May 1, 2021 and May 2, 2020, included in our Registration Statement on Form 10, as amended and filed with the Securities and Exchange Commission on July 9, 2021. In the opinion of management, the accompanying Combined Financial Statements reflect all adjustments, which are of a normal recurring nature and necessary for a fair presentation of the results for the interim periods. |
Impacts of COVID-19 | Impacts of COVID-19 The coronavirus pandemic ("COVID-19") has created significant public health concerns as well as economic disruption, uncertainty and volatility. The Company's operations and financial performance have been materially impacted by the COVID-19 pandemic. In the first quarter of 2020, all the Company's stores in North America were closed on March 17, 2020, but the Company was able to re-open the majority of its stores as of the end of the second quarter of 2020. Operations in the direct channel were temporarily suspended for approximately one week in late March 2020. |
Seasonality of Business | Seasonality of Business Due to the seasonal variations in the retail industry, the results of operations for the interim period is not necessarily indicative of the results expected for the full fiscal year. |
Equity Method Investments | Equity Method InvestmentsThe Company accounts for investments in unconsolidated entities where it exercises significant influence, but does not have control, using the equity method. Under the equity method of accounting, the Company recognizes its share of the investee's net income or loss. Losses are only recognized to the extent the Company has positive carrying value related to the investee. Carrying values are only reduced below zero if the Company has an obligation to provide funding to the investee. The Company’s share of net income or loss of unconsolidated entities from which the Company purchases merchandise or merchandise components is included in Costs of Goods Sold, Buying and Occupancy in the Combined Statements of Income (Loss). The Company’s share of net income or loss from its investment in the Victoria's Secret U.K. joint venture is included in General, Administrative and Store Operating Expenses in the Combined Statements of Income (Loss). 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. |
Net Investment by L Brands, Inc. | Net Investment by L Brands, Inc. Net investment by L Brands, Inc. in the Combined Balance Sheets is presented in lieu of shareholders' equity and represents L Brands' historical investment in the Company, the accumulated net earnings after taxes and the net effect of the transactions with and allocations from L Brands. All transactions reflected in Net Investment by L Brands, Inc. in the accompanying Combined Balance Sheets have been considered as financing activities for purposes of the Combined Statements of Cash Flows. |
Fair Value | Fair Value Cash and Cash Equivalents and restricted cash include cash on hand, deposits with financial institutions and highly liquid investments with original maturities of less than 90 days. The Company's Cash and Cash Equivalents and restricted cash are considered Level 1 fair value measurements as they are valued using unadjusted quoted prices in active markets for identical assets. As of July 31, 2021, the fair value of the Company's outstanding third-party debt approximated its principal value. The estimated fair value of the Company’s outstanding third-party debt is based on reported transaction prices, which are considered Level 2 inputs in accordance with ASC 820, Fair Value Measurement . The estimate is not necessarily indicative of the amounts that the Company could realize in a current market exchange. |
Derivative Financial Instruments | Derivative Financial Instruments The Company from time to time uses derivative financial instruments to manage exposure to foreign currency exchange rates. The Company does not use derivative instruments for trading purposes. All derivative instruments are recorded on the Combined Balance Sheets at fair value. The earnings of the Company’s foreign operations are subject to exchange rate risk as substantially all the merchandise is sourced through U.S. dollar transactions. The Company from time to time utilizes foreign currency forward contracts designated as cash flow hedges to mitigate this foreign currency exposure. Amounts for these designated cash flow hedges are reclassified from accumulated other comprehensive income (loss) upon sale of the hedged merchandise to the customer. These gains and losses are recognized in Costs of Goods Sold, Buying and Occupancy in the Combined Statements of Income (Loss). During the second quarter of 2021, the Company terminated its foreign currency forward contracts designated as cash flow hedges that were used to mitigate foreign currency exposure for its Canadian operations. The fair value of designated cash flow hedges is not significant for any period presented. |
Concentration of Credit Risk | Concentration of Credit Risk The Company maintains cash and cash equivalents and restricted cash with various major financial institutions. L Brands, on behalf of the Company, monitored the relative credit standing of financial institutions with whom the Company transacted with and limited the amount of credit exposure with any one entity. The Company also periodically reviews the relative credit standing of franchise, license and wholesale partners and other entities to which the Company grants credit terms in the normal course of business. The Company determines the required allowance for expected credit losses using information such as customer credit history and financial condition. Amounts are recorded to the allowance when it is determined that expected credit losses may occur. |
Use of Estimates in the Preparation of Financial Statements | Use of Estimates in the Preparation of Financial Statements The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period, as well as the related disclosure of contingent assets and liabilities at the date of the financial statements. Actual results may differ from those estimates, and the Company revises its estimates and assumptions as new information becomes available. |
Earnings (Loss) Per Share | Earnings (Loss) Per Share Earnings (loss) per share was calculated based on the 88 million shares of the Company's common stock distributed to the L Brands shareholders on August 2, 2021. The same number of shares is being utilized for the calculation of basic and diluted earnings per share for all periods presented prior to the Separation. |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements The Company did not adopt any new accounting standards during the second quarter of 2021 that had a material impact on the Company's combined results of operations, financial position or cash flows. In addition, there are no new accounting standards not yet adopted that are expected to have a material impact on the Company's combined results of operations, financial position or cash flows. |
Inventory | Inventories are principally valued at the lower of cost or net realizable value, on an average cost basis. |
Transactions with Related Par_2
Transactions with Related Parties (Tables) | 6 Months Ended |
Jul. 31, 2021 | |
Related Party Transactions [Abstract] | |
Schedule of Net Transfers from (to) Related Party | The following table presents the components of Net Transfers from (to) L Brands, Inc. in the second quarter and year-to-date 2021 and 2020 Combined Statements of Equity: Second Quarter Year-to-Date 2021 2020 2021 2020 (in millions) Cash Pooling and General Financing Activities, Net $ (322) $ (171) $ (431) $ 102 Long-lived Assets (a) (4) — 16 — Corporate Expense Allocations 30 25 49 45 Share-based Compensation Expense 8 7 15 16 Assumed Income Tax Payments $ 13 $ 2 15 8 Total Net Transfers from (to) L Brands, Inc. $ (275) $ (137) $ (336) $ 171 _______________ (a) Represents long-lived assets transferred between the Company and L Brands, Inc. as a result of asset allocation decisions made during the period. |
Schedule of Outstanding Principal Balance of Notes | The following table provides the outstanding principal balance for these notes as of July 31, 2021: (in millions) 5.625% Fixed Interest Rate Notes due October 2023 $ 320 9.375% Fixed Interest Rate Notes due July 2025 500 6.694% Fixed Interest Rate Notes due January 2027 297 5.25% Fixed Interest Rate Notes due February 2028 500 7.50% Fixed Interest Rate Notes due June 2029 500 6.625% Fixed Interest Rate Notes due October 2030 1,000 6.875% Fixed Interest Rate Notes due November 2035 1,000 6.75% Fixed Interest Rate Notes due July 2036 700 Total $ 4,817 |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 6 Months Ended |
Jul. 31, 2021 | |
Revenue Recognition and Deferred Revenue [Abstract] | |
Disaggregation of Revenue | The following table provides a disaggregation of Net Sales for the second quarter and year-to-date 2021 and 2020: Second Quarter Year-to-Date 2021 2020 2021 2020 (in millions) Stores – North America $ 1,037 $ 364 $ 1,970 $ 877 Direct 469 614 990 922 International (a) 108 88 208 161 Total Net Sales $ 1,614 $ 1,066 $ 3,168 $ 1,960 _______________ |
Inventories (Tables)
Inventories (Tables) | 6 Months Ended |
Jul. 31, 2021 | |
Inventory, Net [Abstract] | |
Summary of Inventories | The following table provides details of inventories as of July 31, 2021, January 30, 2021 and August 1, 2020: July 31, January 30, August 1, (in millions) Finished Goods Merchandise $ 694 $ 663 $ 872 Raw Materials and Merchandise Components 51 38 51 Total Inventories $ 745 $ 701 $ 923 |
Long-Lived Assets (Tables)
Long-Lived Assets (Tables) | 6 Months Ended |
Jul. 31, 2021 | |
Property, Plant and Equipment [Abstract] | |
Summary of Property And Equipment, Net | The following table provides details of property and equipment, net as of July 31, 2021, January 30, 2021 and August 1, 2020: July 31, January 30, August 1, (in millions) Property and Equipment, at Cost $ 3,755 $ 3,792 $ 3,883 Accumulated Depreciation and Amortization (2,756) (2,714) (2,675) Property and Equipment, Net $ 999 $ 1,078 $ 1,208 |
Impairment of Long-Lived Assets Held and Used | The following table provides pre-tax long-lived store asset impairment charges included in the 2020 Combined Statements of Loss: 2020 Second Quarter Year-to-Date (in millions) Store Asset Impairment $ 14 $ 111 Operating Lease Asset Impairment 103 103 Total Impairment $ 117 $ 214 |
Accrued Expenses and Other (Tab
Accrued Expenses and Other (Tables) | 6 Months Ended |
Jul. 31, 2021 | |
Accrued Liabilities, Current [Abstract] | |
Schedule of Accrued Liabilities | The following table provides additional information about the composition of Accrued Expenses and Other as of July 31, 2021, January 30, 2021 and August 1, 2020: July 31, January 30, August 1, (in millions) Deferred Revenue on Gift Cards $ 158 $ 178 $ 147 Compensation, Payroll Taxes and Benefits 145 173 70 Rent 80 22 15 Accrued Marketing 39 44 29 Deferred Revenue on Loyalty and Private Label Credit Card 37 38 32 Taxes, Other than Income 37 45 43 Returns Reserve 20 26 28 Deferred Revenue on Direct Shipments not yet Delivered 15 30 26 Accrued Claims on Self-insured Activities 15 17 18 Supplemental Retirement Plan — 66 60 Other 156 137 146 Total Accrued Expenses and Other $ 702 $ 776 $ 614 |
Comprehensive Income (Tables)
Comprehensive Income (Tables) | 6 Months Ended |
Jul. 31, 2021 | |
OCI, Net of Tax [Abstract] | |
Components of Accumulated Other Comprehensive Income | The following table provides the rollforward of accumulated other comprehensive income for year-to-date 2021: Foreign Currency Translation Cash Flow Hedges Accumulated Other Comprehensive Income (in millions) Balance as of January 30, 2021 $ 4 $ — $ 4 Other Comprehensive Income (Loss) Before Reclassifications 4 — 4 Amounts Reclassified from Accumulated Other Comprehensive Income (Loss) — — — Tax Effect — — — Current-period Other Comprehensive Income (Loss) 4 — 4 Balance as of July 31, 2021 $ 8 $ — $ 8 The following table provides the rollforward of accumulated other comprehensive income for year-to-date 2020: Foreign Currency Translation Cash Flow Hedges Accumulated Other Comprehensive Income (Loss) (in millions) Balance as of February 1, 2020 $ (29) $ — $ (29) Other Comprehensive Income (Loss) Before Reclassifications (3) 2 (1) Amounts Reclassified from Accumulated Other Comprehensive Income (Loss) — (1) (1) Tax Effect — — — Current-period Other Comprehensive Income (Loss) (3) 1 (2) Balance as of August 1, 2020 $ (32) $ 1 $ (31) |
Description of Business, Basi_3
Description of Business, Basis of Presentation, and Summary of Significant Accounting Policies (Details) $ in Millions | Aug. 02, 2021USD ($)shares | Jul. 31, 2021USD ($)storecountry | Aug. 01, 2020USD ($) | Jul. 31, 2021USD ($)storecountry | Aug. 01, 2020USD ($) | Aug. 03, 2021 | Jan. 30, 2021USD ($) | Feb. 01, 2020USD ($) |
Spinoff Transactions [Line Items] | ||||||||
Number of countries in which stores operating (more than) | country | 70 | 70 | ||||||
Cash in Escrow related to the Spin-Off | $ 600 | $ 0 | $ 600 | $ 0 | $ 0 | |||
Cash, cash equivalents, restricted cash and restricted cash equivalents | $ 893 | 165 | $ 893 | 165 | 335 | $ 245 | ||
Stores in the U.S., Canada and Greater China and Stores Online | ||||||||
Spinoff Transactions [Line Items] | ||||||||
Number of stores (more than) | store | 925 | 925 | ||||||
Stores Operating under Franchise, License and Wholesale Arrangements | ||||||||
Spinoff Transactions [Line Items] | ||||||||
Number of stores (more than) | store | 460 | 460 | ||||||
Restricted Cash Related to Spin Off | ||||||||
Spinoff Transactions [Line Items] | ||||||||
Cash in Escrow related to the Spin-Off | $ 600 | $ 600 | ||||||
4.625% Fixed Interest Rate Secured Notes due July 2029 | With Subsidiary Guarantee | ||||||||
Spinoff Transactions [Line Items] | ||||||||
Principal Value | $ 600 | $ 600 | ||||||
Fixed interest rate | 4.625% | 4.625% | ||||||
Victoria's Secret U.K. and Other | ||||||||
Spinoff Transactions [Line Items] | ||||||||
Equity method investments | $ 32 | 32 | $ 32 | 32 | $ 35 | |||
L Brands, Inc. | Affiliated Entity | ||||||||
Spinoff Transactions [Line Items] | ||||||||
Allocated corporate expense | $ 30 | $ 25 | $ 49 | $ 45 | ||||
Subsequent Event | Victoria's Secret & Co. | L Brands, Inc. | ||||||||
Spinoff Transactions [Line Items] | ||||||||
Ownership percent | 0.00% | |||||||
Subsequent Event | L Brands, Inc. | Affiliated Entity | ||||||||
Spinoff Transactions [Line Items] | ||||||||
Spinoff transactions, common stock distributed, percentage | 100.00% | |||||||
Spinoff transaction, shares of parent exchanged for each share of company | shares | 3 | |||||||
Spinoff transactions, cash payment to parent | $ 976 | |||||||
Subsequent Event | L Brands, Inc. | Common Stock | Affiliated Entity | ||||||||
Spinoff Transactions [Line Items] | ||||||||
Common shares distributed (in shares) | shares | 88,000,000 |
Transactions with Related Par_3
Transactions with Related Parties - Narrative (Details) - USD ($) | 3 Months Ended | 6 Months Ended | |||||
Jul. 31, 2021 | Aug. 01, 2020 | Jul. 31, 2021 | Aug. 01, 2020 | Sep. 10, 2021 | Jan. 30, 2021 | Dec. 31, 2020 | |
Debt Instrument [Line Items] | |||||||
Long-term Debt due to Related Party | $ 97,000,000 | $ 0 | $ 97,000,000 | $ 0 | $ 97,000,000 | ||
Interest expense | 3,000,000 | $ 1,000,000 | 4,000,000 | $ 4,000,000 | |||
Financial Guarantee | Certain Subsidiaries and Other Subsidiaries of Parent | |||||||
Debt Instrument [Line Items] | |||||||
Guaranteed obligations, outstanding principal balance | 4,817,000,000 | 4,817,000,000 | |||||
Asset-backed Revolving Credit Facility | Financial Guarantee | Certain Subsidiaries and Other Subsidiaries of Parent | |||||||
Debt Instrument [Line Items] | |||||||
Aggregate commitments | 1,000,000,000 | 1,000,000,000 | |||||
Guaranteed obligations, outstanding principal balance | $ 0 | 0 | |||||
Affiliated Entity | L Brands, Inc. | |||||||
Debt Instrument [Line Items] | |||||||
Long-term Debt due to Related Party | $ 97,000,000 | ||||||
Interest expense | $ 2,000,000 | ||||||
Subsequent Event | Affiliated Entity | L Brands, Inc. | |||||||
Debt Instrument [Line Items] | |||||||
Long-term Debt due to Related Party | $ 0 | ||||||
China Loan Prime Rate | Affiliated Entity | L Brands, Inc. | |||||||
Debt Instrument [Line Items] | |||||||
Percentage spread over variable base rate | 3.85% |
Transactions with Related Par_4
Transactions with Related Parties - Schedule of Net Transfers from (to) Related Party (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jul. 31, 2021 | Aug. 01, 2020 | Jul. 31, 2021 | Aug. 01, 2020 | |
Related Party Transaction [Line Items] | ||||
Net Transfers to L Brands, Inc. | $ (275) | $ (137) | $ (336) | $ 171 |
L Brands, Inc. | Affiliated Entity | ||||
Related Party Transaction [Line Items] | ||||
Net Transfers to L Brands, Inc. | (275) | (137) | (336) | 171 |
L Brands, Inc. | Affiliated Entity | Cash Pooling and General Financing Activities, Net | ||||
Related Party Transaction [Line Items] | ||||
Net Transfers to L Brands, Inc. | (322) | (171) | (431) | 102 |
L Brands, Inc. | Affiliated Entity | Long-lived Assets | ||||
Related Party Transaction [Line Items] | ||||
Net Transfers to L Brands, Inc. | (4) | 0 | 16 | 0 |
L Brands, Inc. | Affiliated Entity | Corporate Expense Allocations | ||||
Related Party Transaction [Line Items] | ||||
Net Transfers to L Brands, Inc. | 30 | 25 | 49 | 45 |
L Brands, Inc. | Affiliated Entity | Share-based Compensation Expense | ||||
Related Party Transaction [Line Items] | ||||
Net Transfers to L Brands, Inc. | 8 | 7 | 15 | 16 |
L Brands, Inc. | Affiliated Entity | Assumed Income Tax Payments | ||||
Related Party Transaction [Line Items] | ||||
Net Transfers to L Brands, Inc. | $ 13 | $ 2 | $ 15 | $ 8 |
Transactions with Related Par_5
Transactions with Related Parties - Schedule of Outstanding Principal Balance of Notes (Details) $ in Millions | Jul. 31, 2021USD ($) |
5.625% Fixed Interest Rate Notes due October 2023 | |
Guarantor Obligations [Line Items] | |
Fixed interest rate | 5.625% |
9.375% Fixed Interest Rate Notes due July 2025 | |
Guarantor Obligations [Line Items] | |
Fixed interest rate | 9.375% |
6.694% Fixed Interest Rate Notes due January 2027 | |
Guarantor Obligations [Line Items] | |
Fixed interest rate | 6.694% |
5.25% Fixed Interest Rate Notes due February 2028 | |
Guarantor Obligations [Line Items] | |
Fixed interest rate | 5.25% |
7.50% Fixed Interest Rate Notes due June 2029 | |
Guarantor Obligations [Line Items] | |
Fixed interest rate | 7.50% |
6.625% Fixed Interest Rate Notes due October 2030 | |
Guarantor Obligations [Line Items] | |
Fixed interest rate | 6.625% |
6.875% Fixed Interest Rate Notes due November 2035 | |
Guarantor Obligations [Line Items] | |
Fixed interest rate | 6.875% |
6.75% Fixed Interest Rate Notes due July 2036 | |
Guarantor Obligations [Line Items] | |
Fixed interest rate | 6.75% |
Financial Guarantee | Certain Subsidiaries and Other Subsidiaries of Parent | |
Guarantor Obligations [Line Items] | |
Guaranteed obligations, outstanding principal balance | $ 4,817 |
Financial Guarantee | Certain Subsidiaries and Other Subsidiaries of Parent | 5.625% Fixed Interest Rate Notes due October 2023 | |
Guarantor Obligations [Line Items] | |
Guaranteed obligations, outstanding principal balance | 320 |
Financial Guarantee | Certain Subsidiaries and Other Subsidiaries of Parent | 9.375% Fixed Interest Rate Notes due July 2025 | |
Guarantor Obligations [Line Items] | |
Guaranteed obligations, outstanding principal balance | 500 |
Financial Guarantee | Certain Subsidiaries and Other Subsidiaries of Parent | 6.694% Fixed Interest Rate Notes due January 2027 | |
Guarantor Obligations [Line Items] | |
Guaranteed obligations, outstanding principal balance | 297 |
Financial Guarantee | Certain Subsidiaries and Other Subsidiaries of Parent | 5.25% Fixed Interest Rate Notes due February 2028 | |
Guarantor Obligations [Line Items] | |
Guaranteed obligations, outstanding principal balance | 500 |
Financial Guarantee | Certain Subsidiaries and Other Subsidiaries of Parent | 7.50% Fixed Interest Rate Notes due June 2029 | |
Guarantor Obligations [Line Items] | |
Guaranteed obligations, outstanding principal balance | 500 |
Financial Guarantee | Certain Subsidiaries and Other Subsidiaries of Parent | 6.625% Fixed Interest Rate Notes due October 2030 | |
Guarantor Obligations [Line Items] | |
Guaranteed obligations, outstanding principal balance | 1,000 |
Financial Guarantee | Certain Subsidiaries and Other Subsidiaries of Parent | 6.875% Fixed Interest Rate Notes due November 2035 | |
Guarantor Obligations [Line Items] | |
Guaranteed obligations, outstanding principal balance | 1,000 |
Financial Guarantee | Certain Subsidiaries and Other Subsidiaries of Parent | 6.75% Fixed Interest Rate Notes due July 2036 | |
Guarantor Obligations [Line Items] | |
Guaranteed obligations, outstanding principal balance | $ 700 |
Revenue Recognition - Narrative
Revenue Recognition - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | |||
Jul. 31, 2021 | Aug. 01, 2020 | Jul. 31, 2021 | Aug. 01, 2020 | Jan. 30, 2021 | |
Accounts receivable, net from revenue-generating activities | $ 73 | $ 72 | $ 73 | $ 72 | $ 74 |
Deferred revenue | 219 | 217 | 219 | 217 | $ 256 |
Contract with customer, revenue recognized | 110 | ||||
Net sale | 1,614 | 1,066 | 3,168 | 1,960 | |
U.S. Private Label Credit Card Arrangement | |||||
Net sale | 31 | 28 | 59 | 53 | |
Net Sale Outside of the U.S. | |||||
Net sale | 167 | $ 137 | 330 | $ 243 | |
Accrued Liabilities | |||||
Deferred revenue | 210 | 210 | |||
Other Long-term Liabilities | |||||
Deferred revenue | $ 9 | $ 9 |
Revenue Recognition - Schedule
Revenue Recognition - Schedule of Disaggregation of Revenue (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jul. 31, 2021 | Aug. 01, 2020 | Jul. 31, 2021 | Aug. 01, 2020 | |
Disaggregation of Revenue [Line Items] | ||||
Net Sales | $ 1,614 | $ 1,066 | $ 3,168 | $ 1,960 |
Stores – North America | ||||
Disaggregation of Revenue [Line Items] | ||||
Net Sales | 1,037 | 364 | 1,970 | 877 |
Direct | ||||
Disaggregation of Revenue [Line Items] | ||||
Net Sales | 469 | 614 | 990 | 922 |
International | ||||
Disaggregation of Revenue [Line Items] | ||||
Net Sales | $ 108 | $ 88 | $ 208 | $ 161 |
Restructuring (Details)
Restructuring (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | |
Aug. 01, 2020 | Jul. 31, 2021 | Oct. 31, 2020 | |
Restructuring Cost and Reserve [Line Items] | |||
Payments for Restructuring | $ 10 | ||
Severance and Related Cost | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring charges | $ 51 | ||
Victoria's Secret U.K. | |||
Restructuring Cost and Reserve [Line Items] | |||
Ownership percentage | 49.00% | ||
Victoria's Secret U.K. | Next PLC | |||
Restructuring Cost and Reserve [Line Items] | |||
Ownership percentage | 51.00% | ||
Accrued Expenses and Other | |||
Restructuring Cost and Reserve [Line Items] | |||
Accrued termination payable | $ 4 |
Inventories (Details)
Inventories (Details) - USD ($) $ in Millions | Jul. 31, 2021 | Jan. 30, 2021 | Aug. 01, 2020 |
Inventory, Net [Abstract] | |||
Finished Goods Merchandise | $ 694 | $ 663 | $ 872 |
Raw Materials and Merchandise Components | 51 | 38 | 51 |
Total Inventories | $ 745 | $ 701 | $ 923 |
Long-Lived Assets - Summary of
Long-Lived Assets - Summary of Property And Equipment, Net (Details) - USD ($) $ in Millions | Jul. 31, 2021 | Jan. 30, 2021 | Aug. 01, 2020 |
Property, Plant and Equipment [Abstract] | |||
Property and Equipment, at Cost | $ 3,755 | $ 3,792 | $ 3,883 |
Accumulated Depreciation and Amortization | (2,756) | (2,714) | (2,675) |
Property and Equipment, Net | $ 999 | $ 1,078 | $ 1,208 |
Long-Lived Assets - Narrative (
Long-Lived Assets - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jul. 31, 2021 | Aug. 01, 2020 | Jul. 31, 2021 | Aug. 01, 2020 | |
Property, Plant and Equipment [Abstract] | ||||
Depreciation | $ 78 | $ 81 | $ 158 | $ 171 |
Gain from Hong Kong Store Closure and Lease Termination | 39 | $ 0 | $ 39 | |
Severance Costs | $ 3 |
Long-Lived Assets - Impairment
Long-Lived Assets - Impairment of Long-Lived Assets Held and Used (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended |
Aug. 01, 2020 | Aug. 01, 2020 | |
Impaired Long-Lived Assets Held and Used [Line Items] | ||
Impairment | $ 117 | $ 214 |
Store Asset Impairment | ||
Impaired Long-Lived Assets Held and Used [Line Items] | ||
Impairment | 14 | 111 |
Operating Lease Asset Impairment | ||
Impaired Long-Lived Assets Held and Used [Line Items] | ||
Impairment | $ 103 | $ 103 |
Accrued Expenses and Other (Det
Accrued Expenses and Other (Details) - USD ($) $ in Millions | Jul. 31, 2021 | Jan. 30, 2021 | Aug. 01, 2020 |
Disaggregation of Revenue [Line Items] | |||
Compensation, Payroll Taxes and Benefits | $ 145 | $ 173 | $ 70 |
Rent | 80 | 22 | 15 |
Accrued Marketing | 39 | 44 | 29 |
Taxes, Other than Income | 37 | 45 | 43 |
Returns Reserve | 20 | 26 | 28 |
Accrued Claims on Self-insured Activities | 15 | 17 | 18 |
Supplemental Retirement Plan | 0 | 66 | 60 |
Other | 156 | 137 | 146 |
Total Accrued Expenses and Other | 702 | 776 | 614 |
Sales Channel, Gift Cards | |||
Disaggregation of Revenue [Line Items] | |||
Deferred Revenue | 158 | 178 | 147 |
Sales Channel, Loyalty and Private Label Credit Card | |||
Disaggregation of Revenue [Line Items] | |||
Deferred Revenue | 37 | 38 | 32 |
Sales Channel, Direct Shipment | |||
Disaggregation of Revenue [Line Items] | |||
Deferred Revenue | $ 15 | $ 30 | $ 26 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jul. 31, 2021 | Aug. 01, 2020 | Jul. 31, 2021 | Aug. 01, 2020 | |
Income Tax Disclosure [Abstract] | ||||
Effective income tax rate | 24.10% | 18.50% | 23.20% | 19.90% |
Income taxes paid | $ 13 | $ 2 | $ 15 | $ 8 |
Long-term Debt and Borrowing _2
Long-term Debt and Borrowing Facilities - (Details) - USD ($) $ in Millions | Aug. 02, 2021 | Jul. 31, 2021 | Jan. 30, 2021 | Aug. 01, 2020 |
Cash in Escrow related to the Spin-Off | $ 600 | $ 0 | $ 0 | |
Restricted Cash Related to Spin Off | ||||
Cash in Escrow related to the Spin-Off | 600 | |||
Subsequent Event | L Brands, Inc. | Affiliated Entity | ||||
Spinoff transactions, cash payment to parent | $ 976 | |||
Credit Facility | Subsequent Event | ||||
Proceeds from issuance of notes | 384 | |||
Term Loan B | Subsequent Event | Term Loan | ||||
Debt issuance costs | 10 | |||
Term loan B credit facility | $ 400 | |||
Term Loan B | Subsequent Event | London Interbank Offered Rate (LIBOR) | Term Loan | ||||
Percentage spread over variable base rate | 3.25% | |||
Term Loan B | Subsequent Event | Base Rate | Term Loan | ||||
Percentage spread over variable base rate | 2.25% | |||
Term Loan B | Subsequent Event | Interest Rate Floor | Term Loan | ||||
Percentage spread over variable base rate | 0.50% | |||
Revolving Credit Expiring August 2026 | Subsequent Event | Revolving Credit Facility | ||||
Debt issuance costs | $ 6 | |||
Maximum borrowing capacity | $ 750 | |||
Revolving Credit Expiring August 2026 | Subsequent Event | Revolving Credit Facility | Minimum | ||||
Commitment fee percentage, unused capacity | 0.25% | |||
Revolving Credit Expiring August 2026 | Subsequent Event | Revolving Credit Facility | Maximum | ||||
Commitment fee percentage, unused capacity | 0.30% | |||
Revolving Credit Expiring August 2026 | Subsequent Event | Revolving Credit Facility | Average Daily Excess Availability | LIBOR and CDOR Loans | Minimum | ||||
Percentage spread over variable base rate | 1.50% | |||
Revolving Credit Expiring August 2026 | Subsequent Event | Revolving Credit Facility | Average Daily Excess Availability | LIBOR and CDOR Loans | Maximum | ||||
Percentage spread over variable base rate | 2.00% | |||
Revolving Credit Expiring August 2026 | Subsequent Event | Revolving Credit Facility | Average Daily Excess Availability | Alternate Base Rate Loans and Canadian Base Rate Loans | Minimum | ||||
Percentage spread over variable base rate | 0.50% | |||
Revolving Credit Expiring August 2026 | Subsequent Event | Revolving Credit Facility | Average Daily Excess Availability | Alternate Base Rate Loans and Canadian Base Rate Loans | Maximum | ||||
Percentage spread over variable base rate | 1.00% | |||
With Subsidiary Guarantee | 4.625% Fixed Interest Rate Secured Notes due July 2029 | ||||
Principal Value | $ 600 | |||
Fixed interest rate | 4.625% | |||
With Subsidiary Guarantee | 4.625% Fixed Interest Rate Secured Notes due July 2029 | Subsequent Event | ||||
Proceeds from issuance of notes | $ 592 | |||
Debt issuance costs | $ 8 |
Comprehensive Income - Componen
Comprehensive Income - Components of Accumulated Other Comprehensive Income (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jul. 31, 2021 | Aug. 01, 2020 | Jul. 31, 2021 | Aug. 01, 2020 | |
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||
Beginning balance | $ 4 | $ (29) | ||
Other Comprehensive Income (Loss) Before Reclassifications | 4 | (1) | ||
Amounts Reclassified from Accumulated Other Comprehensive Income (Loss) | 0 | (1) | ||
Tax Effect | 0 | 0 | ||
Current-period Other Comprehensive Income (Loss) | $ 1 | $ 0 | 4 | (2) |
Ending balance | 8 | (31) | 8 | (31) |
Foreign Currency Translation | ||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||
Beginning balance | 4 | (29) | ||
Other Comprehensive Income (Loss) Before Reclassifications | 4 | (3) | ||
Amounts Reclassified from Accumulated Other Comprehensive Income (Loss) | 0 | 0 | ||
Tax Effect | 0 | 0 | ||
Current-period Other Comprehensive Income (Loss) | 4 | (3) | ||
Ending balance | 8 | (32) | 8 | (32) |
Cash Flow Hedges | ||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||||
Beginning balance | 0 | 0 | ||
Other Comprehensive Income (Loss) Before Reclassifications | 0 | 2 | ||
Amounts Reclassified from Accumulated Other Comprehensive Income (Loss) | 0 | (1) | ||
Tax Effect | 0 | 0 | ||
Current-period Other Comprehensive Income (Loss) | 0 | 1 | ||
Ending balance | $ 0 | $ 1 | $ 0 | $ 1 |
Retirement Benefits (Details)
Retirement Benefits (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jul. 31, 2021 | Aug. 01, 2020 | Jul. 31, 2021 | Aug. 01, 2020 | |
Affiliated Entity | L Brands, Inc. | ||||
Defined Contribution Plan Disclosure [Line Items] | ||||
Expense related to the qualified plan | $ 9 | $ 9 | $ 19 | $ 18 |
Commitments and Contingencies (
Commitments and Contingencies (Details) - Management and Governance Investments $ in Millions | 6 Months Ended |
Jul. 31, 2021USD ($) | |
Other Commitments [Line Items] | |
Investment commitment, amount | $ 45 |
Investment commitment, period | 5 years |
L Brands, Inc. | |
Other Commitments [Line Items] | |
Investment commitment, amount | $ 45 |
Investment commitment, period | 5 years |
Subsequent Events (Details)
Subsequent Events (Details) - Subsequent Event - USD ($) $ in Millions | Aug. 02, 2021 | Aug. 03, 2021 |
Victoria's Secret & Co. | L Brands, Inc. | ||
Subsequent Event [Line Items] | ||
Ownership percent | 0.00% | |
4.625% Fixed Interest Rate Secured Notes due July 2029 | With Subsidiary Guarantee | ||
Subsequent Event [Line Items] | ||
Proceeds from issuance of notes | $ 592 | |
Debt issuance costs | 8 | |
Credit Facility | ||
Subsequent Event [Line Items] | ||
Proceeds from issuance of notes | 384 | |
Term Loan B | Term Loan | ||
Subsequent Event [Line Items] | ||
Debt issuance costs | 10 | |
Term loan B credit facility | 400 | |
Revolving Credit Expiring August 2026 | Revolving Credit Facility | ||
Subsequent Event [Line Items] | ||
Debt issuance costs | 6 | |
Maximum borrowing capacity | $ 750 | |
L Brands, Inc. | Affiliated Entity | ||
Subsequent Event [Line Items] | ||
Spinoff transactions, common stock distributed, percentage | 100.00% | |
Spinoff transaction, shares of parent exchanged for each share of company | 3 | |
Spinoff transactions, cash payment to parent | $ 976 |