Victoria Secret : Q42023 Commentary

Fourth

Quarter

Earnings

March 6, 2024

Forward Looking Statements

•	Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995
•	We caution that any forward-looking statements (as such term is defined in the
	U.S. Private Securities Litigation Reform Act of 1995) contained in this presentation
	or made by us, our management, or our spokespeople involve risks and
	uncertainties and are subject to change based on various factors, many of which

•	our ability to successfully operate and expand internationally and related	•	our geographic concentration of production and distribution facilities in
	risks;		central Ohio and Southeast Asia;
•	the operations and performance of our franchisees, licensees, wholesalers,	•	the ability of our vendors to manufacture and deliver products in a timely
	and joint venture partners;		manner, meet quality standards and comply with applicable laws and
			regulations;

are beyond our control. Accordingly, our future performance and financial results

may differ materially from those expressed or implied in any such forward-looking

statements, and any future performance or financial results expressed or implied

by such forward-looking statements are not guarantees of future performance.

Forward-looking statements include, without limitation, statements regarding our

future operating results, the implementation and impact of our strategic plans, and

our ability to meet environmental, social, and governance goals. Words such as

"estimate," "commit," "will," "target," "goal," "project," "plan," "believe," "seek,"

"strive," "expect," "anticipate," "intend," "continue," "potential" and any similar

expressions are intended to identify forward-looking statements. Risks associated

with the following factors, among others, could affect our results of operations and

financial performance and cause actual results to differ materially from those

expressed or implied in any forward-looking statements:

• we may not realize all of the expected benefits of the spin-off from Bath &

Body Works, Inc. (f/k/a L Brands, Inc.);

• our ability to successfully operate and grow our direct channel business;
• our ability to protect our reputation and the image and value of our brands;
• our ability to attract customers with marketing, advertising and promotional programs;
• the highly competitive nature of the retail industry and the segments in which we operate;
• consumer acceptance of our products and our ability to manage the life cycle of our brands, remain current with fashion trends, and develop and launch new merchandise, product lines and brands successfully;
• our ability to realize the potential benefits and synergies sought with the acquisition of AdoreMe, Inc.;

• fluctuations in freight, product input and energy costs;
• our and our third-party service providers' ability to implement and maintain information technology systems and to protect associated data and system availability;
• our ability to maintain the security of customer, associate, third-party and company information;
• stock price volatility;
• shareholder activism matters;
• our ability to maintain our credit rating;

• general economic conditions, inflation, and changes in consumer

confidence, and consumer spending patterns;

• market disruptions including pandemics or significant health hazards, severe

weather conditions, natural disasters, terrorist activities, financial crises,

political crises or other major events, or the prospect of these events;

• our ability to successfully implement our strategic plan;

• difficulties arising from turnover in company leadership or other key

positions;

• our ability to attract, develop and retain qualified associates and manage

labor-related costs;

• our dependence on traffic to our stores and the availability of suitable store

locations on satisfactory terms;

• our ability to incorporate artificial intelligence into our business operations	• our ability to comply with regulatory requirements; and
successfully and ethically while effectively managing the associated risks;	• legal, tax, trade and other regulatory matters.
• our ability to source materials and produce, distribute and sell merchandise	• Except as may be required by law, we assume no obligation and do not intend to
on a global basis, including risks related to:	make publicly available any update or other revisions to any of the forward-looking
	statements contained in this presentation to reflect circumstances existing after the
• political instability and geopolitical conflicts;	date of this presentation or to reflect the occurrence of future events, even if
	experience or future events make it clear that any expected results expressed or
• environmental hazards and natural disasters;	implied by those forward-looking statements will not be realized. Additional
	information regarding these and other factors can be found in "Item 1A. Risk
• significant health hazards and pandemics;	Factors" in our Annual Report on Form 10-K filed with the Securities and Exchange
• delays or disruptions in shipping and transportation and related	Commission on March 17, 2023.
pricing impacts; and
• disruption due to labor disputes;

2

Fourth Quarter Earnings

March 6, 2024

Adjusted1 Consolidated Statements of Income

Fourteen Weeks Ended February 3, 2024 & Thirteen Weeks Ended January 28, 2023 (Unaudited - In millions except per share amounts)

	2023	2022	Increase (Decrease)	% Increase (Decrease)
Net Sales	$2,082.5	$2,021.2	$61.3	3%
Comparable Store Sales	-8%	-7%
Comparable Sales	-6%	-6%
Gross Profit	833.0	760.3	72.7	10%
% of Sales	40.0%	37.6%	240 bps
General, Administrative and Store Operating Expenses	549.6	479.8	69.8	15%
% of Sales	26.4%	23.7%	270 bps
Operating Income	283.4	280.5	2.9	1%
% of Sales	13.6%	13.9%	(30 bps)
Interest Expense and Other	24.5	17.5	7.0	40%
Income Before Income Taxes	258.9	263.0	(4.1)	-2%
Provision for Income Taxes	52.9	60.9	(8.0)	-13%
% of Pre-Tax Income	20.4%	23.2%
Net Income	206.0	202.1	3.9	2%
% of Sales	9.9%	10.0%	(10 bps)
Less: Net Income (Loss) Attributable to Noncontrolling Interest	2.4	(0.9)	3.3	367%
Net Income Attributable to Victoria's Secret & Co.	$203.6	$203.0	$0.6	0%
% of Sales	9.8%	10.0%	(20 bps)
Net Income Per Diluted Share Attributable to Victoria's Secret & Co.	$2.58	$2.47	$0.11	4%
Weighted Average Shares Outstanding	78.9	82.3

1 2023 and 2022 results are on an adjusted basis.

Refer to Non-GAAP Financial Information table in the Appendix for additional information including a reconciliation to the most directly comparable GAAP financial measure.

3

Fourth Quarter Earnings

March 6, 2024

Adjusted1 Consolidated Statements of Income

Fifty-Three Weeks Ended February 3, 2024 & Fifty-Two Weeks Ended January 28, 2023 (Unaudited - In millions except per share amounts)

	2023	2022	Increase (Decrease)	% Increase (Decrease)
Net Sales	$6,181.8	$6,344.3	($162.5)	-3%
Comparable Store Sales	-11%	-7%
Comparable Sales	-9%	-8%
Gross Profit	2,274.4	2,309.3	(34.9)	-2%
% of Sales	36.8%	36.4%	40 bps
General, Administrative and Store Operating Expenses	1,947.5	1,743.6	203.9	12%
% of Sales	31.5%	27.5%	400 bps
Operating Income	326.9	565.7	(238.8)	-42%
% of Sales	5.3%	8.9%	(360 bps)
Interest Expense and Other	93.7	60.8	32.9	54%
Income Before Income Taxes	233.2	504.9	(271.7)	-54%
Provision for Income Taxes	48.5	99.0	(50.5)	-51%
% of Pre-Tax Income	20.8%	19.6%
Net Income	184.7	405.9	(221.2)	-54%
% of Sales	3.0%	6.4%	(340 bps)
Less: Net Income (Loss) Attributable to Noncontrolling Interest	6.6	(10.5)	17.1	163%
Net Income Attributable to Victoria's Secret & Co.	$178.1	$416.4	($238.3)	-57%
% of Sales	2.9%	6.6%	(370 bps)
Net Income Per Diluted Share Attributable to Victoria's Secret & Co.	$2.27	$4.95	($2.68)	-54%
Weighted Average Shares Outstanding	78.6	84.1

1 2023 and 2022 results are on an adjusted basis.

Refer to Non-GAAP Financial Information table in the Appendix for additional information including a reconciliation to the most directly comparable GAAP financial measure.

4

Fourth Quarter Earnings

March 6, 2024

Consolidated Balance Sheets

(Unaudited - In thousands)

	February 3, 2024	January 28, 2023
ASSETS
Current Assets
Cash and Cash Equivalents	$269,645	$426,801
Accounts Receivable, Net	152,174	141,053
Inventories	985,093	1,052,100
Other	126,229	117,261
Total Current Assets	1,533,141	1,737,215
Property and Equipment, Net	842,665	846,123
Operating Lease Assets	1,351,344	1,231,971
Goodwill	366,960	364,731
Trade Names	284,460	288,700
Other Intangible Assets, Net	116,102	137,000
Deferred Income Taxes	19,912	17,627
Other Assets	85,742	87,839
TOTAL ASSETS	$4,600,326	$4,711,206
LIABILITIES AND EQUITY
Current Liabilities
Accounts Payable	$512,287	$480,539
Accrued Expenses and Other	810,407	737,344
Current Debt	4,070	4,065
Current Operating Lease Liabilities	267,018	309,707
Income Taxes	19,881	46,955
Total Current Liabilities	1,613,663	1,578,610
Deferred Income Taxes	36,978	53,310
Long-Term Debt	1,119,749	1,271,379
Long-Term Operating Lease Liabilities	1,311,815	1,200,974
Other Long-Term Liabilities	80,353	205,892
Victoria's Secret & Co. Shareholders' Equity	417,251	383,641
Noncontrolling Interest	20,517	17,400
TOTAL LIABILITIES AND EQUITY	$4,600,326	$4,711,206

5

Fourth Quarter Earnings

March 6, 2024

2024 Outlook

(As of March 6, 2024)

Net Sales

Adjusted Gross Margin Rate

Adjusted SG&A Expense Rate

Adjusted Operating Income

Adjusted Net Non-Operating Expense

Adjusted Tax Rate / Expense (before discrete items)

Weighted Average Diluted Shares Outstanding

Adjusted Net Income (Loss) Per Diluted Share Attributable to VS&Co

Capital Expenditures

Free Cash Flow 1

1 Defined as operating cash flow less capital expenditures.

First Quarter		Full Year
Decrease mid-single digits compared to $1.407 billion in 2023		Approximately $6.0 billion, decrease low-single digits
	compared to 2023 excluding the extra week
Approximately 36.5% to 37.5%, flat to up compared to 2023 rate		-
of 36.5%
Approximately 35.0% to 36.0%, deleveraging compared to 2023		-
rate of 32.6%
Approximately $10 million to $35 million		Approximately $250 million to $275 million
Approximately $20 million		Approximately $85 million
Approximately $5 million		Approximately 25% to 26%
Approximately 80 million		Approximately 81 million
Approximately ($0.15) to $0.10		-
-		Approximately $230 million
-		Approximately $175 million to $200 million

6

Fourth Quarter Earnings

March 6, 2024

Store Count & Selling Sq Ft - 2023 Actuals

				Total
	Beginning of	New Stores	Closures	Reconstructions	End of Year	Increase / (Decrease)
	Year	and Change in
				SSF
Company-Operated
U.S.
Store Count	812	15	(19)	55	808	(4)	0%
Selling Sq Ft 000's	5,617	63	(68)	(70)	5,542	(75)	(1%)
Canada
Store Count	25	-	(2)	2	23	(2)	(8%)
Selling Sq Ft 000's	246	-	(28)	(6)	212	(34)	(14%)
Subtotal Company-Operated
Store Count	837	15	(21)	57	831	(6)	(1%)
Selling Sq Ft 000's	5,863	63	(96)	(76)	5,754	(109)	(2%)
China Joint Venture
Beauty & Accessories Store Count	39	2	(7)	-	34	(5)	(13%)
Full Assortment Store Count	33	4	(1)	-	36	3	9%
Subtotal China Joint Venture Store Count	72	6	(8)	-	70	(2)	(3%)
Partner-Operated
Beauty & Accessories Store Count	308	31	(32)	-	307	(1)	0%
Full Assortment Store Count	135	33	(12)	-	156	21	16%
Subtotal Partner-Operated Store Count	443	64	(44)	-	463	20	5%
Adore Me
Store Count	6	-	-	-	6	-	-
Selling Sq Ft 000's	23	-	-	-	23	-	-
Total Store Count	1,358	85	(73)	-	1,370	12	1%

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Fourth Quarter Earnings

March 6, 2024

Store Count & Selling Sq Ft - 2024 Forecast

				Total
	Beginning of	New Stores	Closures	Reconstructions	End of Year	Increase / (Decrease)
	Year	and Change in
				SSF
Company-Operated
U.S.
Store Count	808	14	(35)	50 to 57	787	(21)	(3%)
Selling Sq Ft 000's	5,542	78	(137)	(39 to 43)	5,440 to 5,444	(102 to 98)	(2%) to (1%)
Canada
Store Count	23	1	-	3	24	1	4%
Selling Sq Ft 000's	212	5	-	(6)	211	(1)	0%
Subtotal Company-Operated
Store Count	831	15	(35)	53 to 60	811	(20)	(2%)
Selling Sq Ft 000's	5,754	83	(137)	(45 to 49)	5,651 to 5,655	(103 to 99)	(2%) to (1%)
China Joint Venture
Beauty & Accessories Store Count	34	0 to 2	(2 to 4)	-	30 to 34	(4) to 0	(12%) to 0%
Full Assortment Store Count	36	2 to 4	(2 to 3)	-	35 to 38	(1) to 2	(3%) to 6%
Subtotal China Joint Venture Store Count	70	2 to 6	(4 to 7)	-	65 to 72	(5) to 2	(7%) to 3%
Partner-Operated
Beauty & Accessories Store Count	307	43 to 52	(28 to 32)	-	318 to 331	11 to 24	4% to 8%
Full Assortment Store Count	156	30 to 37	(6 to 9)	-	177 to 187	21 to 31	13% to 20%
Subtotal Partner-Operated Store Count	463	73 to 89	(34 to 41)	-	495 to 518	32 to 55	7% to 12%
Adore Me							`
Store Count	6	-	-	-	6	-	-
Selling Sq Ft 000's	23	-	-	-	23	-	-
Total Store Count	1,370	90 to 110	(73 to 83)	-	1,377 to 1,407	7 to 37	1% to 3%

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Fourth Quarter Earnings

March 6, 2024

APPENDIX

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Fourth Quarter Earnings

March 6, 2024

Consolidated Statements of Income

Fourteen Weeks Ended February 3, 2024 & Thirteen Weeks Ended January 28, 2023 (Unaudited - In thousands except per share amounts)

	2023	2022
Net Sales	$2,082,452	$2,021,206
Costs of Goods Sold, Buying and Occupancy	(1,256,611)	(1,276,938)
Gross Profit	825,841	744,268
General, Administrative and Store Operating Expenses	(567,475)	(500,857)
Operating Income	258,366	243,411
Interest Expense	(26,586)	(19,666)
Other Income	956	2,236
Income Before Income Taxes	232,736	225,981
Provision for Income Taxes	49,200	53,890
Net Income	183,536	172,091
Less: Net Income (Loss) Attributable to Noncontrolling Interest	2,449	(898)
Net Income Attributable to Victoria's Secret & Co.	$181,087	$172,989
Net Income Per Diluted Share Attributable to Victoria's Secret & Co.	$2.29	$2.10
Weighted Average Shares Outstanding	78,909	82,299

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Fourth Quarter Earnings

March 6, 2024