vsco-20210731

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_________________________________

FORM 10-Q

_________________________________


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

For the quarterly period ended July 31, 2021


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

For the transition period from to

Commission file number 001-40515

_________________________________

VICTORIA'S SECRET & CO.

(Exact name of registrant as specified in its charter)

_______________________________

Delaware

86-3167653

(State or other jurisdiction of
incorporation or organization)

(IRS Employer Identification No.)

4 Limited Parkway East

Reynoldsburg,

Ohio

43068

(Address of principal executive offices)

(Zip Code)

(614)

577-7000

(Registrant's Telephone Number, Including Area Code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☐ No ☒

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☐

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

		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

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

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


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 Par Value	VSCO	The New York Stock Exchange

As of September 3, 2021, the number of outstanding shares of the Registrant’s common stock, was 88,355,930 shares.

Table of Contents

VICTORIA'S SECRET & CO.

TABLE OF CONTENTS


			Page No.
Part I. Financial Information

Item 1. Financial Statements *

Combined Statements of Income (Loss) for the Thirteen-Weeks and Twenty-Six-Weeks Ended July 31, 2021 and August 1, 2020 (Unaudited)			3

Combined Statements of Comprehensive Income (Loss) for the Thirteen-Weeks and Twenty-Six-Weeks Ended July 31, 2021 and August 1, 2020 (Unaudited)			3

Combined Balance Sheets as of July 31, 2021 (Unaudited), January 30, 2021 and August 1, 2020 (Unaudited)			4

Combined Statements of Equity for the Thirteen-Weeks and Twenty-Six-Weeks Ended July 31, 2021 and August 1, 2020 (Unaudited)			5

Combined Statements of Cash Flows for the Twenty-Six-Weeks Ended July 31, 2021 and August 1, 2020 (Unaudited)			7

Notes to Combined Financial Statements (Unaudited)			8

Report of Independent Registered Public Accounting Firm			19

Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995			20

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			21

Item 3. Quantitative and Qualitative Disclosures About Market Risk			32

Item 4. Controls and Procedures			33

Part II. Other Information			34

Item 1. Legal Proceedings			34

Item 1A. Risk Factors			34

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			34

Item 3. Defaults Upon Senior Securities			34

Item 4. Mine Safety Disclosures			34

Item 5. Other Information			34

Item 6. Exhibits			35

Signature			37


*			Victoria's Secret & Co.'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.

Table of Contents

PART I—FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS

VICTORIA'S SECRET & CO.

COMBINED STATEMENTS OF INCOME (LOSS)

(in millions except per share amounts)

(Unaudited)


	Second Quarter				Year-to-Date
	2021		2020		2021		2020
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)		—		(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	$	1.71	$	(2.26)	$	3.68	$	(5.64)
Net Income (Loss) Per Dilutive Share	$	1.71	$	(2.26)	$	3.68	$	(5.64)

VICTORIA'S SECRET & CO.

COMBINED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(in millions)

(Unaudited)


	Second Quarter				Year-to-Date
	2021		2020		2021		2020
Net Income (Loss)	$	151	$	(200)	$	325	$	(498)
Other Comprehensive Income (Loss), Net of Tax:
Foreign Currency Translation	—		2		4		(3)
Unrealized Gain (Loss) on Cash Flow Hedges	1		(1)		—		2
Reclassification of Cash Flow Hedges to Earnings	—		(1)		—		(1)
Total Other Comprehensive Income (Loss), Net of Tax	1		—		4		(2)
Total Comprehensive Income (Loss)	$	152	$	(200)	$	329	$	(500)

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

Table of Contents

VICTORIA'S SECRET & CO.

COMBINED BALANCE SHEETS

(in millions)


	July 31, 2021		January 30, 2021		August 1, 2020
	(Unaudited)				(Unaudited)
ASSETS
Current Assets:
Cash and Cash Equivalents	$	293	$	335	$	165
Cash in Escrow related to the Spin-Off	600		—		—
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
LIABILITIES AND EQUITY
Current Liabilities:
Accounts Payable	$	371	$	338	$	494
Accrued Expenses and Other	702		776		614
Current Debt	—		—		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		—
Long-term Debt	592		—		89
Long-term Debt due to Related Party	97		97		—
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	—		—		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

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

Table of Contents

VICTORIA'S SECRET & CO.

COMBINED STATEMENTS OF EQUITY

(in millions)

(Unaudited)

Second Quarter 2021


	Net Investment by L Brands, Inc.		Accumulated Other Comprehensive Income (Loss)		Noncontrolling Interest		Total Equity
Balance, May 1, 2021	$	1,000	$	7	$	—	$	1,007
Net Income	151		—		—		151
Other Comprehensive Income	—		1		—		1
Total Comprehensive Income	151		1		—		152
Net Transfers to L Brands, Inc.	(275)		—		—		(275)
Balance, July 31, 2021	$	876	$	8	$	—	$	884

Second Quarter 2020


	Net Investment by L Brands, Inc.		Accumulated Other Comprehensive Income (Loss)		Noncontrolling Interest		Total Equity
Balance, May 2, 2020	$	1,351	$	(31)	$	3	$	1,323
Net Loss	(200)		—		—		(200)
Other Comprehensive Income	—		—		—		—
Total Comprehensive Loss	(200)		—		—		(200)
Net Transfers to L Brands, Inc.	(137)		—		—		(137)
Balance, August 1, 2020	$	1,014	$	(31)	$	3	$	986

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

Table of Contents

VICTORIA'S SECRET & CO.

COMBINED STATEMENTS OF EQUITY

(in millions)

(Unaudited)

Year-to-Date 2021

Net Investment by L Brands, Inc.

Accumulated
Other
Comprehensive
Income (Loss)

Noncontrolling Interest

Total Equity

Balance, January 30, 2021

SEC Form 10-Q filed by Victorias Secret & Co.