Financial Analysis

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 Companys results of operations, financial condition or cash flows. IEEPA Tariff Refunds Beginning in February 2025, the U.S. administration imposed tariffs on a broad range of imported goods under the International Emergency Economic Powers Act (IEEPA). On February 20, 2026, the U.S. Supreme Court ruled tariffs imposed under the IEEPA were not authorized, and on March 4, 2026, the U.S. Court of International Trade directed U.S. Customs and Border Protection (CBP) to refund amounts previously collected, including applicable interest. The CBP established a phased administrative process for submitting refund claims for certain IEEPA tariffs. The Company has elected to apply a gain contingency model in accordance with ASC 450-30, Gain Contingencies, to account for the recoveries of previously paid IEEPA tariffs. Under this model, a gain contingency is not recognized in the financial statements until the gain is realized or realizable. The accounti …

CommitmentsAndContingenciesDisclosureTextBlock · excerpt; the full note is in the filing

The following table provides a disaggregation of Net Sales for the second quarter and year-to-date 2026 and 2025: Second Quarter Year-to-Date 2026 2025 2026 2025 (in millions) Stores North America $ 898 $ 825 $ 1,700 $ 1,546 Direct 439 406 909 840 International (a) 274 228 561 426 Total Net Sales $ 1,611 $ 1,459 $ 3,170 $ 2,812 _______________ (a) Results include consolidated China Joint Venture sales, royalties associated with franchise partners sales, wholesale sales, and beginning in the third quarter of 2025 direct sales in the European Union. Prior to the third quarter of 2025, direct sales in the European Union are reported in the Direct channel. Direct sales in the European Union reported in the International channel were $22 million in the second quarter of 2026 and $39 million year-to-date 2026. …

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Fair Value of Financial Instruments Cash and Cash Equivalents include cash on hand, deposits with financial institutions and highly liquid investments with original maturities of 90 days or less. The Companys Cash and Cash Equivalents are considered Level 1 fair value measurements as they are valued using unadjusted quoted prices in active markets for identical assets. The following table provides a summary of the principal value and estimated fair value of the Companys outstanding debt as of August 1, 2026, January 31, 2026 and August 2, 2025: August 1, 2026 January 31, 2026 August 2, 2025 (in millions) Principal Value $ 981 $ 983 $ 985 Fair Value, Estimated (a) 966 971 942 ________________ (a) The estimated fair value of the Companys publicly traded debt is based on reported transaction prices which are considered Level 2 inputs in accordance with Accounting Standards Codification (ASC) 820, Fair Value Measurement . The estimates presented are not necessarily indicative of the amounts that the Company could realize in a current market exchange. Management believes that the carrying values of accounts receivable, accounts payable and accrued expenses approximate fair value because of their short maturity. Management further believes the principal value of the outstanding debt under the ABL Facility as of August 2, 2025 approximates its fair value based on the terms of the borrowings from the ABL Facility. Recurring Fair Value Measurements The following table provides a summa …

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Income Taxes The provision for income taxes is based on the current estimate of the annual effective tax rate and is adjusted as necessary for quarterly events. For the second quarter of 2026, the Companys effective tax rate was 24.1% compared to 25.7% in the second quarter of 2025. The second quarter of 2026 rate differed from the Companys combined estimated federal and state statutory rate primarily due to the recognition of excess tax benefits related to share-based compensation awards that vested in the period. The second quarter of 2025 rate was consistent with the Companys combined estimated federal and state statutory rate. For year-to-date 2026, the Companys effective tax rate was 21.5% compared to 30.5% for year-to-date 2025. The year-to-date 2026 rate differed from the Companys combined estimated federal and state statutory rate primarily due to the recognition of excess tax benefits related to share-based compensation awards that vested in the period. The year-to-date 2025 rate differed from the Companys combined estimated federal and state statutory rate primarily due to additional tax expense from share-based compensation awards that vested in the period. The Company paid income taxes in the amount of $39 million and $42 million for the second quarter of 2026 and 2025, respectively, and $47 million and $46 million for year-to-date 2026 and 2025, respectively. …

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Long-term Debt and Borrowing Facilities The following table provides the Company s outstanding Long-term Debt balance, net of unamortized debt issuance costs and discounts and any current portion, as of August 1, 2026, January 31, 2026 and August 2, 2025: August 1, 2026 January 31, 2026 August 2, 2025 (in millions) Senior Secured Debt with Subsidiary Guarantee $381 million Term Loan due August 2028 (Term Loan Facility) $ 378 $ 379 $ 381 Asset-based Revolving Credit Facility due May 2030 (ABL Facility) 75 Total Senior Secured Debt with Subsidiary Guarantee 378 379 456 Senior Debt with Subsidiary Guarantee $600 million, 4.625% Fixed Interest Rate Notes due July 2029 (2029 Notes) 597 596 596 Total Senior Debt with Subsidiary Guarantee 597 596 596 Total 975 975 1,052 Current Debt (4) (4) (4) Total Long-term Debt, Net of Current Portion $ 971 $ 971 $ 1,048 Cash paid for interest was $28 million and $31 million for year-to-date 2026 and 2025, respectively. Issuance of 2029 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 the 2029 Notes is jointly and severally guaranteed on a full and unconditional basis by certain of the Companys wholly-owned subsidiaries. The issuance costs are being amortized through the maturity date and are included within Long-term Debt on the Consolidated Balance Sheets. Credit Facilities …

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Recently Issued Accounting Pronouncements The Company did not adopt any new accounting standards during the second quarter of 2026 that had a material impact on the Companys results of operations, financial position or cash flows. Disaggregation of Income Statement Expenses In November 2024, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses , which is intended to improve expense disclosures, primarily by requiring disclosure of disaggregated information about certain income statement expense line items on an annual and interim basis. This standard will be effective for annual reporting periods beginning in fiscal year 2027 and for interim periods beginning in fiscal year 2028, with early adoption permitted. The updates required by this standard should be applied prospectively, but retrospective application is permitted. The Company is currently evaluating the impact of adopting this standard on its disclosures. Internal-Use Software In September 2025, the FASB issued ASU 2025-06, Targeted Improvements to the Accounting for Internal-Use Software , which is intended to modernize the accounting for internal-use software costs, primarily by removing references to project stages from capitalization criteria and further clarifying the threshold entities apply to begin capitalizing costs. …

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Restructuring Activities In the first and second quarters of 2026, the Company continued to implement certain strategic leadership appointments and restructuring actions designed to further advance its Path to Potential strategy by continuing to restructure its executive leadership team and organizational structure. Pre-tax severance, relocation and other expenses related to these activities of $5 million are included in the second quarter of 2026 Consolidated Statement of Income, of which $3 million are included in General, Administrative and Store Operating Expenses and $2 million are included in Costs of Goods Sold, Buying and Occupancy. Pre-tax severance, relocation and other expenses related to these activities of $10 million are included in the Year-to-Date 2026 Consolidated Statement of Income, of which $6 million are included in General, Administrative and Store Operating Expenses and $4 million are included in Costs of Goods Sold, Buying and Occupancy. In the second quarter and throughout fiscal year 2025, the Company implemented a series of strategic leadership appointments and restructuring actions designed to advance its Path to Potential strategy and restructure its executive leadership team and organizational structure. The Company incurred severance, relocation and other expenses related to these activities in the second quarter and throughout fiscal year 2025. Year-to-date 2026, the Company made payments of $8 million related to severance and related costs ass …

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Revenue Recognition Accounts receivable, net from revenue-generating activities were $128 million as of August 1, 2026, $137 million as of January 31, 2026 and $134 million as of August 2, 2025. Accounts receivable primarily relate to amounts due from the Companys 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 credit card programs and direct channel shipments, which are all impacted by seasonal and holiday-related sales patterns. Deferred revenue was $211 million as of August 1, 2026, $257 million as of January 31, 2026 and $240 million as of August 2, 2025. The Company recognized $97 million as revenue year-to-date 2026 from amounts recorded as deferred revenue at the beginning of the fiscal year. As of August 1, 2026, the Company recorded deferred revenue of $204 million within Accrued Expenses and Other, and $7 million within Other Long-term Liabilities on the Consolidated Balance Sheet. The following table provides a disaggregation of Net Sales for the second quarter and year-to-date 2026 and 2025: Second Quarter Year-to-Date 2026 2025 2026 2025 (in millions) Stores North America $ 898 $ 825 $ 1,700 $ 1,546 Direct 439 406 909 840 International (a) 274 228 561 426 Total Net Sales $ 1,611 $ 1,459 $ 3,170 $ 2,812 ______________ …

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Segment Information The Companys segments are based on the financial information the Companys Chief Operating Decision Maker (CODM), who is the Chief Executive Officer, uses to evaluate performance and allocate resources. The Company has one reportable segment. The CODM assesses performance of the Companys single reportable segment and decides how to allocate resources based on Net Income Attributable to Victorias Secret & Co. as reported on the Consolidated Statements of Income. The following table provides the Companys segment information for the second quarter and year-to-date 2026 and 2025: Second Quarter Year-to-Date 2026 2025 2026 2025 (in millions) Net Sales $ 1,611 $ 1,459 $ 3,170 $ 2,812 Costs of Goods Sold (509) (610) (1,142) (1,168) Buying and Occupancy Expenses (343) (330) (684) (651) General, Administrative and Store Operating Expenses (a) (408) (394) (811) (751) Advertising and Marketing Expenses (94) (84) (200) (181) Operating Income $ 257 $ 41 $ 333 $ 61 Interest Expense (15) (18) (30) (35) Provision for Income Taxes (60) (6) (67) (9) Other Items (b) 1 (1) (5) (3) Net Income Attributable to Victorias Secret & Co. $ 183 $ 16 $ 231 $ 14 _______________ (a) Excludes Advertising and Marketing Expenses. (b) Other Items includes net income attributable to noncontrolling interest, interest income and other miscellaneous expense items. The Company derives revenue primarily from its sale of womens intimate and other apparel and beauty products. For additional i …

SegmentReportingDisclosureTextBlock · excerpt; the full note is in the filing

Net Income Per Share and Shareholders Equity Net Income Per Share Net income per basic share is computed based on the weighted-average number of common shares outstanding during the period. Net income per diluted share includes the weighted-average effect of dilutive restricted stock units, performance share units and options (collectively, Dilutive Awards) on the weighted-average shares outstanding. The following table provides the weighted-average shares utilized for the calculation of basic and diluted net income per share for the second quarter and year-to-date 2026 and 2025: Second Quarter Year-to-Date 2026 2025 2026 2025 (in millions) Common Shares 80 80 80 80 Treasury Shares Basic Shares 80 80 80 80 Effect of Dilutive Awards (a) 4 2 5 2 Diluted Shares 84 82 85 82 Anti-dilutive Awards (a) 1 1 _______________ (a) Shares underlying certain restricted stock units, performance share units and options were excluded from the calculation of net income per diluted share because their inclusion would have been anti-dilutive. Shareholders Equity March 2024 Share Repurchase Program In March 2024, the Board of Directors of the Company (the Board) approved a share repurchase program (March 2024 Share Repurchase Program), authorizing the repurchase of up to $250 million of the Companys common stock, subject to market conditions and other factors, through open market, accelerated share repurchase or privately negotiated transactions, including pursuant to one or more Rule 10b5-1 tradi …

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