Operating Activities
Net cash provided by operating activities in 2024 was $886 million, including net income of $798 million. Net income included depreciation of $282 million, a deferred income tax benefit of $112 million, share-based compensation expense of $40 million and an aggregate pre-tax gain on sales of certain Easton investments of $39 million. Other changes in assets and liabilities represent items that had a current period cash flow impact, such as changes in working capital. The most significant items in working capital were the $50 million decrease associated with Accounts Payable, Accrued Expenses and Other, the $26 million decrease associated with Inventory and the $23 million decrease associated with Income Taxes Payable.
Net cash provided by operating activities in 2023 was $954 million, including net income of $878 million. Net income included depreciation of $269 million, a deferred income tax benefit of $128 million, share-based compensation expense of $43 million and pre-tax gains on extinguishment of debt of $34 million. Other changes in assets and liabilities represent items that had a current period cash flow impact, such as changes in working capital. The most significant items in working capital were the $109 million decrease associated with Accounts Payable, Accrued Expenses and Other and the $34 million increase associated with Income Taxes Payable.
Investing Activities
Net cash used for investing activities in 2024 was $162 million, primarily related to capital expenditures of $226 million, partially offset by aggregate cash proceeds, net of fees, of $40 million related to the sales of certain Easton investments. The capital expenditures included approximately $140 million related to new off-mall stores and remodels of existing stores, approximately $45 million for various IT projects, primarily to support the growth and profitability of our business, and approximately $25 million related to distribution and logistics capabilities.
Net cash used for investing activities in 2023 was $286 million, primarily related to capital expenditures. The capital expenditures included approximately $155 million related to new off-mall stores and remodels of existing stores, approximately $85 million for various IT projects, primarily supporting the separation of our IT systems from Victoria’s Secret’s IT systems, and approximately $40 million related to distribution and logistics capabilities.
In 2025, we expect to invest between $250 million and $270 million in capital expenditures with a continued focus on real estate and technology.
Financing Activities
Net cash used for financing activities in 2024 was $1.132 billion, primarily consisting of $522 million for debt repurchases, $401 million for share repurchases, dividend payments of $0.80 per share, or $177 million, $17 million for payments on finance leases and tax payments of $16 million related to share-based awards.
Net cash used for financing activities in 2023 was $815 million, primarily consisting of $447 million for debt repurchases, dividend payments of $0.80 per share, or $182 million, $148 million for share repurchases, $15 million for payments on finance leases and tax payments of $11 million related to share-based awards.
Common Stock and Debt Repurchases
Our Board will determine share and debt repurchase authorizations, giving consideration to our levels of profit and cash flow, capital requirements, current and forecasted liquidity, the restrictions placed upon us by our borrowing arrangements as well as financial and other conditions existing at the time. We use cash flow generated from operating and financing activities to fund our share and debt repurchase programs. The timing and amount of any repurchases will be made at our discretion, taking into account a number of factors, including market conditions.
Common Stock Repurchases
2022 Share Repurchase Program
In February 2022, our Board authorized a $1.5 billion share repurchase program (the “February 2022 Program”). Under the February 2022 Program, we repurchased the following shares of our common stock during 2024 and 2023:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Amount
Repurchased | | Average Stock Price |
| 2023 | | 2024 | | 2023 | | 2024 | | 2023 |
| (in millions) | | | | |
| | 4,096 | | | $ | 39 | | | $ | 149 | | | $ | 46.08 | | | $ | 36.38 | |
| | | | | | | | | | | | | |
The February 2022 Program had no remaining authority as of May 4, 2024. There were share repurchases of $1 million reflected in Accounts Payable on the February 3, 2024 Consolidated Balance Sheet.
2024 Share Repurchase Program
In January 2024, our Board authorized a $500 million share repurchase program (the “January 2024 Program”). Under the January 2024 Program, we repurchased the following shares of our common stock during 2024:
| | | | | | | | | | | | | | | | | | | |
| Amount
Repurchased | | Average Stock Price |
| (in millions) | | |
| | $ | 361 | | | $ | 37.70 | |
| | | | | | | |
_______________
(a)Includes Net Sales of $189 million to non-Guarantor subsidiaries.
(b)Includes a Net Loss of $15 million related to transactions with non-Guarantor subsidiaries.
Contingent Liabilities and Contractual Obligations
The following table provides our contractual obligations, aggregated by type, including the maturity profile as of February 1, 2025:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Payments Due by Period |
| | Total | | Less
Than 1
Year | | 1-3
Years | | 4-5
Years | | More
Than 5
Years | | Other |
| | (in millions) |
| Long-term Debt (a) | $ | 5,933 | | | $ | 252 | | | $ | 791 | | | $ | 1,362 | | | $ | 3,528 | | | $ | — | |
| Future Lease Obligations (b) | 1,404 | | | 267 | | | 474 | | | 321 | | | 342 | | | — | |
| Purchase Obligations (c) | 662 | | | 536 | | | 89 | | | 31 | | | 6 | | | — | |
| Other Liabilities (d) | 189 | | | 153 | | | — | | | — | | | — | | | 36 | |
| Total | $ | 8,188 | | | $ | 1,208 | | | $ | 1,354 | | | $ | 1,714 | | | $ | 3,876 | | | $ | 36 | |
________________
(a)Long-term Debt obligations relate to our principal and interest payments for outstanding notes and debentures. Interest payments have been estimated based on the coupon rate for fixed rate obligations. Interest obligations exclude amounts which have been accrued through February 1, 2025. For additional information, see Note 10 to the Consolidated Financial Statements included in Item 8. Financial Statements and Supplementary Data.
(b)Future lease obligations primarily represent minimum payments due under operating lease agreements. For additional information, see Note 6 to the Consolidated Financial Statements included in Item 8. Financial Statements and Supplementary Data.
(c)Purchase obligations primarily include purchase orders for merchandise inventory and other agreements to purchase goods or services that are enforceable and legally binding and that specify all significant terms, including: fixed or minimum quantities to be purchased; fixed, minimum or variable price provisions; and the approximate timing of the transactions.
(d)Other liabilities include future estimated payments associated with unrecognized tax benefits. The “Less Than 1 Year” category includes $136 million of these tax items because it is reasonably possible that the amounts could change in the next 12 months due to audit settlements or resolution of uncertainties. In addition, we have a liability of $17 million related to the deemed repatriation tax on our undistributed foreign earnings resulting from the Tax Cuts and Jobs Act, expected to be paid in 2025. The remaining portion, totaling $36 million, is included in the “Other” category as it is not reasonably possible that the amounts could change in the next 12 months. For additional information, see Note 9 to the Consolidated Financial Statements in Item 8. Financial Statements and Supplementary Data.
Lease Guarantees
In connection with the spin-off of Victoria’s Secret and the disposal of a certain other business, we had remaining contingent obligations of $232 million as of February 1, 2025 related to lease payments under the current terms of noncancelable leases, primarily related to office space, expiring at various dates through 2037. These obligations include minimum rent and additional payments covering taxes, common area costs and certain other expenses and relate to leases that commenced prior to the disposition of these businesses. Our reserves related to these obligations were not significant for any period presented.
Recently Issued Accounting Pronouncements
In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, Improvements to Reportable Segment Disclosures, that expands reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses and information used to assess segment performance, and applies to companies with a single reportable segment. We adopted this standard in the fourth quarter of 2024. Refer to Note 15, “Segment Reporting,” to the Consolidated Financial Statements included in Item 8. Financial Statements and Supplementary Data for required disclosures.
In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures, that requires enhanced income tax disclosures, primarily related to standardization and disaggregation of rate reconciliation categories and income taxes paid by jurisdiction. This standard is effective for fiscal years beginning after December 15, 2024, with early adoption permitted, and may be applied either prospectively or retrospectively. We are currently evaluating the impact of adopting this standard on our disclosures.
In November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses, that requires disclosures of disaggregated information about certain prescribed expense categories within relevant income statement expense captions. This standard is effective for annual reporting of fiscal years beginning after December 15, 2026, and for interim periods in the following year, with early adoption permitted. This standard should be applied prospectively, with retrospective application permitted. We are currently evaluating the impact of adopting this standard on our disclosures.
Critical Accounting Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to adopt accounting policies related to estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period, as well as the related disclosure of contingent assets and liabilities at the date of the financial statements. On an ongoing basis, management evaluates its accounting policies, estimates and judgments, including those related to inventories, valuation of long-lived store assets, claims and contingencies, income taxes and revenue recognition. Management bases our estimates and judgments on historical experience and various other factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates. Management has discussed the development and selection of our critical accounting policies and estimates with the Audit Committee of our Board and believes the following assumptions and estimates are most significant to reporting our results of operations and financial position.
Inventories
Inventories are principally valued at the lower of cost or net realizable value, on an average cost basis.
We record valuation adjustments to our inventories if the cost of inventory on hand exceeds the amount we expect to realize from the ultimate sale or disposal of the inventory. These estimates are based on management’s judgment regarding future demand and market conditions and analysis of historical experience. If actual demand or market conditions are different than those projected by management, future period merchandise margin rates may be unfavorably or favorably affected by adjustments to these estimates.
We also record inventory loss adjustments for estimated physical inventory losses that have occurred since the date of the last physical inventory. These estimates are based on management’s analysis of historical results and current operating trends.
Management believes that the assumptions used in these estimates are reasonable and appropriate. A 10% increase or decrease in the inventory valuation adjustment would have impacted Net Income by approximately $2 million for 2024. A 10% increase or decrease in the estimated physical inventory loss adjustment would have impacted Net Income by approximately $2 million for 2024.
Valuation of Long-lived Store Assets
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, we recognize 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, we determine 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 is determined using Level 3 inputs within the fair value hierarchy.
When a decision has been made to dispose of property and equipment prior to the end of the previously estimated useful life, depreciation estimates are revised to reflect the use of the asset over the shortened estimated useful life.
Claims and Contingencies
We are subject to various claims and contingencies related to lawsuits, taxes, insurance, regulatory and other matters arising out of the normal course of business. Our determination of the treatment of claims and contingencies in the Consolidated Financial Statements is based on management’s view of the expected outcome of the applicable claim or contingency. We consult with legal counsel on matters related to litigation and seek input from both internal and external experts with respect to matters in the ordinary course of business. We accrue a liability if the likelihood of an adverse outcome is probable and the amount is reasonably estimable. If the likelihood of an adverse outcome is only reasonably possible (as opposed to probable) or if an estimate is not reasonably determinable, disclosure of a material claim or contingency is disclosed in the Notes to the Consolidated Financial Statements included in Item 8. Financial Statements and Supplementary Data.
Income Taxes
We account for income taxes under the asset and liability method. Under this method, taxes currently payable or refundable are accrued, and deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets are also recognized for realizable operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted income tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in income tax rates is recognized in our Consolidated Statements of Income in the period that includes the enactment date. A valuation allowance is recorded to reduce the carrying amounts of deferred tax assets if it is more likely than not that such assets will not be realized.
Significant judgment is required in determining the provision for income taxes and related accruals, deferred tax assets and liabilities. In determining our provision for income taxes, we consider permanent differences between book and tax income and statutory income tax rates. Our effective income tax rate is affected by items including changes in tax law, the tax jurisdiction of the Company’s operations and the level of earnings.
A number of countries have enacted legislation to implement the Organization for Economic Cooperation and Development’s 15% global minimum tax regime (Pillar Two) with effect from January 1, 2024. These changes did not have a material impact on our effective tax rate, results of operations or financial position for 2024. We continue to evaluate the impacts of proposed and enacted legislation for the jurisdictions in which we operate.
We follow the authoritative guidance included in ASC 740, Income Taxes, which contains a two-step approach to recognize and measure uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if the available
evidence indicates it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount which is more than 50% likely of being realized upon ultimate settlement. We consider many factors when evaluating and estimating our tax positions and tax benefits, which may require periodic adjustments and for which actual outcomes may differ from forecasted outcomes. Our policy is to include interest and penalties related to uncertain tax positions in income tax expense.
Our income tax returns, like those of most companies, are periodically audited by domestic and foreign tax authorities. These audits include questions regarding our tax filing positions, including the timing and amount of deductions and the allocation of income among various tax jurisdictions. At any one time, multiple tax years are subject to audit by the various tax authorities. A number of years may elapse before a particular matter for which we have established an accrual is audited and fully resolved or clarified. We adjust our tax contingencies accrual and income tax provision in the period in which matters are effectively settled with tax authorities at amounts different from our established accrual, when the statute of limitations expires for the relevant taxing authority to examine the tax position or when more information becomes available.
Revenue Recognition
We recognize revenue based on the amount we expect to receive when control of the goods or services is transferred to our customer. We recognize sales upon customer receipt of merchandise, which for direct channel revenues reflects an estimate of shipments that have not yet been received by the customer based on shipping terms and historical delivery times. Our shipping and handling revenues are included in Net Sales with the related costs included in Costs of Goods Sold, Buying and Occupancy in the Consolidated Statements of Income. We also provide a reserve for projected merchandise returns based on historical experience. Net Sales exclude sales and other similar taxes collected from customers.
We offer a loyalty program that allows customers to earn points based on purchasing activity. As customers accumulate points and reach point thresholds, points are converted to rewards that may be used to purchase merchandise in stores or online. Points expire if a loyalty account is inactive for a certain period of time, while rewards expire if unused after approximately three months. We allocate revenue to points earned on qualifying purchases and defer recognition of revenue until the rewards are redeemed. The amount of revenue deferred is based on the relative stand-alone selling price method, which includes an estimate for points and rewards not expected to be redeemed based on historical experience.
We sell gift cards with no expiration dates to customers. We do not charge administrative fees on unused gift cards. We recognize revenue from gift cards when they are redeemed by the customer. In addition, we recognize revenue on unredeemed gift cards when the likelihood of the gift cards being redeemed is remote and there is no legal obligation to remit the unredeemed gift cards to relevant jurisdictions (gift card breakage). Gift card breakage revenue is recognized in proportion to, and over the same period as, actual gift card redemptions. We determine the gift card breakage rate based on historical redemption patterns. Gift card breakage revenue is included in Net Sales in the Consolidated Statements of Income.
We also recognize revenues associated with franchise, license, wholesale and sourcing arrangements. Revenue recognized under franchise and license arrangements generally consists of royalties earned and recognized upon sale of merchandise by franchise and license partners to retail customers. Revenue is generally recognized under wholesale and sourcing arrangements at the time the title passes to the partner.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Market Risk
The market risk inherent in our financial instruments represents the potential loss in fair value, earnings or cash flows arising from adverse changes in foreign currency exchange rates or interest rates. We may use derivative financial instruments like foreign currency forward contracts, cross-currency swaps and interest rate swap arrangements to manage exposure to market risks. We do not use derivative financial instruments for trading purposes.
Foreign Exchange Rate Risk
Our Canadian dollar denominated earnings are subject to exchange rate risk as substantially all our merchandise sold in Canada is sourced through U.S. dollar transactions. Although we utilize foreign currency forward contracts to partially offset risks associated with our operations in Canada, these measures may not succeed in offsetting all the short-term impact of foreign currency rate movements and generally may not be effective in offsetting the long-term impact of sustained shifts in foreign currency rates.
Further, although our royalty arrangements with our international partners are denominated in U.S. dollars, the royalties we receive in U.S. dollars are calculated based on sales in the local currency. As a result, our royalties in these arrangements are exposed to foreign currency exchange rate fluctuations.
Interest Rate Risk
Our investment portfolio primarily consists of interest-bearing instruments that are classified as cash and cash equivalents based on their original maturities. Our investment portfolio is maintained in accordance with our investment policy, which specifies permitted types of investments, specifies credit quality standards and maturity profiles and limits credit exposure to any single issuer. The primary objectives of our investment activities are the preservation of principal, the maintenance of liquidity and the maximization of interest income while minimizing risk. Our investment portfolio is primarily composed of U.S. government obligations, U.S. Treasury and AAA-rated money market funds, commercial paper and bank deposits. Given the short-term nature and quality of investments in our portfolio, we do not believe there is any material risk to principal associated with increases or decreases in interest rates.
All of our Long-term Debt as of February 1, 2025 has fixed interest rates. We will from time to time adjust our exposure to interest rate risk by entering into interest rate swap arrangements. Our exposure to interest rate changes is limited to the fair value of the debt issued, which would not have a material impact on our earnings or cash flows.
Concentration of Credit Risk
We maintain cash and cash equivalents and derivative contracts with various major financial institutions. We monitor the relative credit standing of financial institutions with whom we transact and limit the amount of credit exposure with any one entity. Our investment portfolio is primarily composed of U.S. government obligations, U.S. Treasury and AAA-rated money market funds, commercial paper and bank deposits. We also periodically review the relative credit standing of franchise, license and wholesale partners and other entities to which we grant credit terms in the normal course of business.
Fair Value Measurements
The following table provides a summary of the principal value and estimated fair value of outstanding Long-term Debt as of February 1, 2025 and February 3, 2024: | | | | | | | | | | | |
| February 1, 2025 | | February 3, 2024 |
| | (in millions) |
| Principal Value | $ | 3,916 | | | $ | 4,430 | |
| Fair Value, Estimated (a) | 3,986 | | | 4,456 | |
|
|
|
|
/s/
We have served as the Company’s auditor since 2003.
March 14, 2025
BATH & BODY WORKS, INC.
CONSOLIDATED STATEMENTS OF INCOME
(in millions except per share amounts)
| | | | | | | | | | | | | | | | | |
| 2024 | | 2023 | | 2022 |
| Net Sales | $ | | | | $ | | | | $ | | |
| Costs of Goods Sold, Buying and Occupancy | () | | | () | | | () | |
| Gross Profit | | | | | | | | |
| General, Administrative and Store Operating Expenses | () | | | () | | | () | |
| Operating Income | | | | | | | | |
| Interest Expense | () | | | () | | | () | |
| Other Income | | | | | | | | |
| Income from Continuing Operations Before Income Taxes | | | | | | | | |
| Provision for Income Taxes | | | | | | | | |
| Net Income from Continuing Operations | | | | | | | | |
| Income from Discontinued Operations, Net of Tax | | | | | | | | |
| Net Income | $ | | | | $ | | | | $ | | |
| | | | | |
| Net Income per Basic Share | | | | | |
| Continuing Operations | $ | | | | $ | | | | $ | | |
| Discontinued Operations | | | | | | | | |
| Total Net Income per Basic Share | $ | | | | $ | | | | $ | | |
| | | | | |
| Net Income per Diluted Share | | | | | |
| Continuing Operations | $ | | | | $ | | | | $ | | |
| Discontinued Operations | | | | | | | | |
| Total Net Income per Diluted Share | $ | | | | $ | | | | $ | | |
| |
| |
BATH & BODY WORKS, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in millions)
| | | | | | | | | | | | | | | | | |
| 2024 | | 2023 | | 2022 |
| Net Income | $ | | | | $ | | | | $ | | |
| Other Comprehensive Income (Loss), Net of Tax: | | | | | |
| Foreign Currency Translation | () | | | () | | | () | |
| |
| Unrealized Gain on Cash Flow Hedges | | | | | | | | |
| Reclassification of Cash Flow Hedges to Earnings | () | | | () | | | () | |
| Total Other Comprehensive Loss, Net of Tax | () | | | () | | | () | |
| Total Comprehensive Income | $ | | | | $ | | | | $ | | |
The accompanying Notes are an integral part of these Consolidated Financial Statements.
BATH & BODY WORKS, INC.
CONSOLIDATED BALANCE SHEETS
(in millions except par value amounts)
| | | | | | | | | | | |
| February 1,
2025 | | February 3,
2024 |
| ASSETS | | | |
| Current Assets: | | | |
| Cash and Cash Equivalents | $ | | | | $ | | |
| Accounts Receivable, Net | | | | | |
| Inventories | | | | | |
| Easton Assets Held for Sale | | | | | |
| Other | | | | | |
| Total Current Assets | | | | | |
| Property and Equipment, Net | | | | | |
| Operating Lease Assets | | | | | |
| Goodwill | | | | | |
| Trade Name | | | | | |
| Deferred Income Taxes | | | | | |
| Other Assets | | | | | |
| Total Assets | $ | | | | $ | | |
| LIABILITIES AND EQUITY (DEFICIT) | | | |
| Current Liabilities: | | | |
| Accounts Payable | $ | | | | $ | | |
| Accrued Expenses and Other | | | | | |
|
| Current Operating Lease Liabilities | | | | | |
| Income Taxes | | | | | |
| Total Current Liabilities | | | | | |
| Deferred Income Taxes | | | | | |
| Long-term Debt | | | | | |
| Long-term Operating Lease Liabilities | | | | | |
| Other Long-term Liabilities | | | | | |
| Shareholders’ Equity (Deficit): | | | |
Preferred Stock—$ par value; shares authorized; issued | | | | | |
Common Stock—$ par value; shares authorized; and shares issued; and shares outstanding, respectively | | | | | |
| Paid-in Capital | | | | | |
| Accumulated Other Comprehensive Income | | | | | |
| Retained Earnings (Accumulated Deficit) | () | | | () | |
Less: Treasury Stock, at Average Cost; and shares, respectively | () | | | () | |
| Total Shareholders’ Equity (Deficit) | () | | | () | |
| Noncontrolling Interest | | | | | |
| Total Equity (Deficit) | () | | | () | |
| Total Liabilities and Equity (Deficit) | $ | | | | $ | | |
The accompanying Notes are an integral part of these Consolidated Financial Statements.
BATH & BODY WORKS, INC.
CONSOLIDATED STATEMENTS OF TOTAL EQUITY (DEFICIT)
(in millions except per share amounts)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Common Stock | | Paid-In
Capital | | Accumulated
Other
Comprehensive
Income | | Retained
Earnings (Accumulated Deficit) | | Treasury
Stock, at
Average
Cost | | Noncontrolling Interest | | Total Equity (Deficit) |
Shares
Outstanding | | Par
Value | | |
| Balance, January 29, 2022 | | | | $ | | | | $ | | | | $ | | | | $ | () | | | $ | () | | | $ | | | | $ | () | |
| Net Income | — | | | — | | | — | | | — | | | | | | — | | | — | | | | |
| Other Comprehensive Loss | — | | | — | | | — | | | () | | | — | | | — | | | — | | | () | |
| Total Comprehensive Income | — | | | — | | | — | | | () | | | | | | — | | | — | | | | |
Cash Dividends ($ per share) | — | | | — | | | — | | | — | | | () | | | — | | | — | | | () | |
| Repurchases of Common Stock | () | | | — | | | — | | | — | | | — | | | () | | | — | | | () | |
| Accelerated Share Repurchase Program | () | | | — | | | — | | | — | | | — | | | () | | | — | | | () | |
| Treasury Share Retirement | — | | | () | | | () | | | — | | | () | | | | | | — | | | | |
| Share-based Compensation and Other | | | | | | | | | | — | | | — | | | — | | | — | | | | |
| Balance, January 28, 2023 | | | | $ | | | | $ | | | | $ | | | | $ | () | | | $ | () | | | $ | | | | $ | () | |
| Net Income | — | | | — | | | — | | | — | | | | | | — | | | — | | | | |
| Other Comprehensive Loss | — | | | — | | | — | | | () | | | — | | | — | | | — | | | () | |
| Total Comprehensive Income | — | | | — | | | — | | | () | | | | | | — | | | — | | | | |
Cash Dividends ($ per share) | — | | | — | | | — | | | — | | | () | | | — | | | — | | | () | |
| Repurchases of Common Stock | () | | | — | | | — | | | — | | | — | | | () | | | — | | | () | |
| Treasury Share Retirement | — | | | () | | | () | | | — | | | () | | | | | | — | | | | |
| Share-based Compensation and Other | | | | | | | | | | — | | | — | | | — | | | — | | | | |
| Balance, February 3, 2024 | | | | $ | | | | $ | | | | $ | | | | $ | () | | | $ | () | | | $ | | | | $ | () | |
| Net Income | — | | | — | | | — | | | — | | | | | | — | | | — | | | | |
| Other Comprehensive Loss | — | | | — | | | — | | | () | | | — | | | — | | | — | | | () | |
| Total Comprehensive Income | — | | | — | | | — | | | () | | | | | | — | | | — | | | | |
Cash Dividends ($ per share) | — | | | — | | | — | | | — | | | () | | | — | | | — | | | () | |
| Repurchases of Common Stock | () | | | — | | | — | | | — | | | — | | | () | | | — | | | () | |
| | | | | | | | | | | |
| Treasury Share Retirement | — | | | () | | | () | | | — | | | () | | | | | | — | | | | |
| Share-based Compensation and Other | | | | | | | | | | — | | | — | | | — | | | | | | | |
| Balance, February 1, 2025 | | | | $ | | | | $ | | | | $ | | | | $ | () | | | $ | () | | | $ | | | | $ | () | |
The accompanying Notes are an integral part of these Consolidated Financial Statements.
BATH & BODY WORKS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions) | | | | | | | | | | | | | | | | | |
| 2024 | | 2023 | | 2022 |
| Operating Activities | | | | | |
| Net Income | $ | | | | $ | | | | $ | | |
| Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities: | | | | | |
| Depreciation of Long-lived Assets | | | | | | | | |
| Share-based Compensation Expense | | | | | | | | |
| Gain on Sales of Easton Investments | () | | | | | | | |
| Loss (Gain) on Extinguishment of Debt | | | | () | | | | |
| Deferred Income Taxes | () | | | () | | | | |
| Impairment of Equity Method Investment | | | | | | | | |
| Changes in Assets and Liabilities: | | | | | |
| Accounts Receivable | | | | | | | | |
| Inventories | () | | | () | | | | |
| Accounts Payable, Accrued Expenses and Other | () | | | () | | | | |
| Income Taxes Payable | () | | | | | | | |
| Other Assets and Liabilities | () | | | () | | | () | |
| Net Cash Provided by Operating Activities | $ | | | | $ | | | | $ | | |
| | | | | |
| Investing Activities | | | | | |
| Capital Expenditures | $ | () | | | $ | () | | | $ | () | |
| Proceeds from Sales of Easton Investments, Net of Fees Paid | | | | | | | | |
| Other Investing Activities | | | | | | | | |
| Net Cash Used for Investing Activities | $ | () | | | $ | () | | | $ | () | |
| | | | | |
| Financing Activities | | | | | |
| |
| Payments for Long-term Debt | $ | () | | | $ | () | | | $ | | |
| Net Payments to Victoria’s Secret & Co. related to Spin-Off | () | | | () | | | () | |
| Repurchases of Common Stock | () | | | () | | | () | |
| Dividends Paid | () | | | () | | | () | |
| |
| Tax Payments related to Share-based Awards | () | | | () | | | () | |
| Payments of Finance Lease Obligations | () | | | () | | | () | |
| Other Financing Activities | | | | () | | | | |
| Net Cash Used for Financing Activities | $ | () | | | $ | () | | | $ | () | |
| | | | | |
| Effects of Exchange Rate Changes on Cash and Cash Equivalents | $ | () | | | $ | () | | | $ | () | |
| Net Decrease in Cash and Cash Equivalents | () | | | () | | | () | |
| Cash and Cash Equivalents, Beginning of Year | | | | | | | | |
| Cash and Cash Equivalents, End of Year | $ | | | | $ | | | | $ | | |
The accompanying Notes are an integral part of these Consolidated Financial Statements.
BATH & BODY WORKS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1.
million tax benefit, reported in Income from Discontinued Operations, Net of Tax, related to an adjustment to the previously recorded tax expense from the spin-off. days. The Company’s Cash and Cash Equivalents are considered Level 1 fair value measurements as they are valued using unadjusted quoted prices in active markets for identical assets. The Company’s outstanding checks are included in Accounts Payable on the Consolidated Balance Sheets.
million for 2024, $ million for 2023 and $ million for 2022. - years
| Store related assets | | - years |
| Leasehold improvements | | Shorter of lease term or years |
| Non-store related building and site improvements | | - years |
| Other property and equipment | | years |
| Buildings | | years |
When a decision has been made to dispose of property and equipment prior to the end of the previously estimated useful life, depreciation estimates are revised to reflect the use of the asset over the shortened estimated useful life. The Company’s cost of assets sold or retired and the related accumulated depreciation are removed from the accounts with any resulting gain or loss included in net income. Maintenance and repairs are charged to expense as incurred. Major renewals and betterments that extend useful lives are capitalized.
years. Annual store rent consists of a fixed minimum amount and/or variable rent based on a percentage of sales exceeding a stipulated amount. Store lease terms generally also require additional payments covering certain operating costs such as common area maintenance, utilities, insurance and taxes. Certain leases contain predetermined fixed escalations of minimum rentals or require periodic adjustments of minimum rentals depending on an index or rate. Additionally, certain leases contain incentives, such as construction allowances from landlords and/or rent abatements subsequent to taking possession of the leased property.At lease commencement, the Company recognizes an asset for the right to use the leased asset and a liability based on the present value of the unpaid fixed lease payments. Operating lease costs are recognized on a straight-line basis as lease expense over the lease term. Variable lease payments associated with the Company’s leases are recognized upon occurrence of the event or circumstance on which the payments are assessed. Short-term leases with an initial term of 12 months or less are not recorded on the balance sheet, and lease expense is recognized on a straight-line basis over the lease term. The Company uses its incremental borrowing rate, adjusted for collateral, to determine the present value of its unpaid lease payments.
million, and within Current Assets on the February 1, 2025 Consolidated Balance Sheet. The Company also had other Easton investments not presented as held for sale, with a carrying value of $ million, reported in Other Assets on the February 1, 2025 Consolidated Balance Sheet. Previously included in the Company’s Easton investments were equity interests in Easton Town Center, LLC (“ETC”) and Easton Gateway, LLC (“EG”), entities that own and develop commercial entertainment and shopping centers. The Company’s investments in ETC and EG were accounted for using the equity method of accounting. On May 10, 2024, the Company sold its entire interest in the business associated with EG, and on August 1, 2024, the Company sold its entire interest in ETC. Net of fees, the Company recognized a pre-tax gain of $ million, included in Other Income in the 2024 Consolidated Statement of Income, and received cash proceeds of $ million, included in Investing Activities in the 2024 Consolidated Statement of Cash Flows, related to these sales.
The Company’s Easton investments totaled $ million as of February 3, 2024, and are reported in Other Assets on the February 3, 2024 Consolidated Balance Sheet.
2.
million as of February 1, 2025 and $ million as of February 3, 2024. These accounts receivable primarily relate to amounts due from the Company’s franchise, license and wholesale partners. Under these arrangements, payment terms are typically to days. The Company records deferred revenue when cash payments are received in advance of transfer of control of goods or services. Deferred revenue primarily relates to gift cards, loyalty points and rewards, and direct channel shipments not received by the customer, which are all impacted by seasonal and holiday-related sales patterns. Deferred revenue, which is recorded within Accrued Expenses and Other on the Consolidated Balance Sheets, was $ million as of February 1, 2025 and $ million as of February 3, 2024. The Company recognized $ million as revenue in 2024 from amounts recorded as deferred revenue at the beginning of the Company’s fiscal year.
| | $ | | | | $ | | |
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