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DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant’s Proxy Statement for the Registrant’s 2026 Annual Meeting of Stockholders are incorporated by reference into Part III.
The Company has developed an information security program to address material risks from cybersecurity threats and incidents, which is integrated within its overall enterprise risk management (“ERM”) program. The Board oversees both programs, assisted by the Audit Committee, regularly reviewing the ERM program at the enterprise level and the information security program at the program level.
Program & Risk Management
The information security program includes policies and procedures that identify how security measures and controls are developed, implemented and maintained. Under the program, the Company performs one or more cyber risk assessments each year based on recognized industry best practices and standards and cyber threat intelligence. The risk assessments, together with risk-based analysis and judgment, are used to determine security measures and controls to address identified risks. The Company considers the following factors, among others, during its risk and control implementation assessments: the likelihood and severity of the risk; the impact on the Company, the Company’s customers, associates and stockholders, and others if a risk materializes; the feasibility and cost of security measures and controls; and the impact of security measures and controls on operations and others.
The Company’s information security program currently includes the following security measures and controls, which are deployed as the Company deems applicable:
•endpoint threat detection and response;
•identity and access management;
•privileged access management;
•logging and monitoring involving the use of security information and event management;
•multi-factor authentication;
•firewalls and intrusion detection and prevention;
•security testing;
•web application firewalls and bot security tools; and
•vulnerability and patch management.
All of the Company’s office-based associates and certain distribution and fulfillment center associates undergo mandatory security awareness training at the time of hiring and on an annual basis thereafter. The Company’s store-based associates receive ad hoc awareness communications and are provided with cybersecurity awareness materials as part of the store operating manual.
The Company uses third-party security firms in different capacities to provide or operate certain security measures and controls and technology systems, including cloud-based platforms and services. For example, third parties are used to conduct assessments, such as vulnerability scans and penetration testing. The Company also uses a variety of processes designed to address cybersecurity threats and incidents related to the use of third-party technology and services, including pre-acquisition diligence, imposition of contractual obligations and performance monitoring.
As part of the Company’s ERM program, the Company has developed business continuity and disaster recovery plans, which include measures designed to respond to potential disruptions to its information technology systems (or information technology systems of third parties on which it relies). The Company also maintains a written information security incident response plan and conducts tabletop exercises to enhance incident response preparedness. The Company is also a member of an industry cybersecurity intelligence and risk sharing organization.
The Company (or third parties on which it relies) may not be able to fully, continuously and effectively implement security measures and controls as designed or intended. As described above, the Company utilizes a risk-based approach and judgment to determine the security measures and controls to implement, and it is possible that the Company may not implement appropriate security measures and controls if management does not recognize, or underestimates, a particular risk. In addition, security measures and controls, no matter how well designed or implemented, may only partially mitigate, but not fully eliminate, risks. Cybersecurity threats and incidents, even when detected or foreseeable, may not always be immediately understood or acted upon by the Company (or by third parties on which it relies).
The Company, like many retailers, relies upon third-party service providers, such as payment processors, network providers and application providers, that have faced risks from threat actors and cybercriminal groups that seek to steal payment card data, consumer data, and other sensitive information; disrupt critical information technology systems; and/or demand ransom payments. Although the Company has implemented security measures and controls designed to address these risks, if these risks were to materialize, such as in the event of a cybersecurity incident causing the networks of a third-party payment processor to not be operational, the impact to the Company could be material.
The Company has not identified risks from cybersecurity threats, including as a result of any previous cybersecurity incidents, which have materially affected, or are reasonably likely to materially affect, the Company, including its business strategy, results of operations, or financial condition. However, the Company continues to face risks from cybersecurity threats and incidents that, if realized, may have such material effect. Despite its ongoing efforts, the Company cannot provide complete assurance that its information security program will be effective in detecting, preventing, or mitigating such cybersecurity risks. See also “We have undertaken a multi-year initiative to upgrade our digital and information technology systems and capabilities. We significantly rely on our, and our third-party service providers’, ability to successfully implement, upgrade and sustain information technology systems and to protect associated data and system availability” and “Any significant compromise or breach of our data security, including the security of customer, associate, third-party or Company information, could have a material adverse effect on our reputation, results of operations, financial condition and cash flows” in Item 1A. Risk Factors of this Annual Report on Form 10-K for a discussion of cybersecurity risks that could have a material impact on the Company, which sections should be read in conjunction with this Item 1C.
The Company has developed an information security program to address material risks from cybersecurity threats and incidents, which is integrated within its overall enterprise risk management (“ERM”) program. The Board oversees both programs, assisted by the Audit Committee, regularly reviewing the ERM program at the enterprise level and the information security program at the program level.
Program & Risk Management
The information security program includes policies and procedures that identify how security measures and controls are developed, implemented and maintained. Under the program, the Company performs one or more cyber risk assessments each year based on recognized industry best practices and standards and cyber threat intelligence. The risk assessments, together with risk-based analysis and judgment, are used to determine security measures and controls to address identified risks. The Company considers the following factors, among others, during its risk and control implementation assessments: the likelihood and severity of the risk; the impact on the Company, the Company’s customers, associates and stockholders, and others if a risk materializes; the feasibility and cost of security measures and controls; and the impact of security measures and controls on operations and others. true true true false
At the Board level, the Audit Committee assists the Board with overseeing the Company’s information security program. The Audit Committee, which is composed entirely of independent members of the Board, receives reports directly from the Company’s Chief Information Security Officer (“CISO”) at least three times per year. These reports address, among other things, cybersecurity policies and practices, program resources, third-party assessments, key risks, security measures and controls, and incident-response planning. The Company’s information security program is led by the CISO: a member of the management team with primary responsibility for the development, operation and maintenance of the program. The CISO holds a master of science degree in information assurance and has over 25 years of cybersecurity experience with Fortune 500 financial, defense, consulting and retail companies.
The Company’s executive management team oversees enterprise risk management, including cybersecurity risk, and regularly reviews the Company’s ERM program and information security program. The ERM team oversees the identification, prioritization and mitigation of enterprise risks, including cybersecurity, privacy and AI risks.
To support data stewardship and responsible technology use, the CISO, Chief Information Officer (“CIO”), and Chief Privacy Officer (“CPO”) co‑chair or participate in the Company’s Data Governance and Artificial Intelligence committees. These committees oversee and guide programs addressing data management, security, privacy and AI through unified frameworks that include monitoring, vendor management, assessment, testing, remediation and incident response. While the Data Governance and Artificial Intelligence committees address distinct subject matters, they are interrelated with the Company's information security program and inform each other on matters of shared concern. The executive management team regularly reviews matters addressed through these programs as part of the Company’s ERM oversight.
Incident Response
As described above, the Company maintains an information security incident response plan that includes processes and procedures for evaluating and escalating cybersecurity threats and incidents to, as determined to be appropriate, the Company’s executive management team and members of the Board. The initial impact level of each cybersecurity threat or incident is evaluated by a designated team of information security specialists using risk criteria that have been defined and approved by the Company’s executive management team and reviewed with the Audit Committee. If escalated, the threat or incident is evaluated by a cross-functional core and extended team, as applicable, of managers that includes the CISO, CIO and CPO, as well as identified associates from across the Company’s business and functions, as applicable. Cybersecurity threats and incidents are assigned incident impact levels based on the core team’s determination of potential impact to the Company. The core team employs defined risk criteria to classify incidents and escalate incidents accordingly. Based on the severity classification assigned by the core team, incidents may be escalated to, as applicable, representatives of the Company’s executive management team (which includes the Disclosure Committee), the Chairs of the Board and the Audit Committee, other members of the Audit Committee and/or the full Board.
The incident response plan is tested regularly. During 2025, the core team conducted four tabletop exercises across different areas and levels of the Company to test protocols for communication, decision making, remediation, escalation and reporting. One tabletop exercise focused on the senior management team. The results of all 2025 exercises were shared with, and reviewed by, the Audit Committee.
At the Board level, the Audit Committee assists the Board with overseeing the Company’s information security program. The Audit Committee, which is composed entirely of independent members of the Board, receives reports directly from the Company’s Chief Information Security Officer (“CISO”) at least three times per year. These reports address, among other things, cybersecurity policies and practices, program resources, third-party assessments, key risks, security measures and controls, and incident-response planning. The Company’s information security program is led by the CISO: a member of the management team with primary responsibility for the development, operation and maintenance of the program. The CISO holds a master of science degree in information assurance and has over 25 years of cybersecurity experience with Fortune 500 financial, defense, consulting and retail companies.
The Company’s executive management team oversees enterprise risk management, including cybersecurity risk, and regularly reviews the Company’s ERM program and information security program. The ERM team oversees the identification, prioritization and mitigation of enterprise risks, including cybersecurity, privacy and AI risks.
To support data stewardship and responsible technology use, the CISO, Chief Information Officer (“CIO”), and Chief Privacy Officer (“CPO”) co‑chair or participate in the Company’s Data Governance and Artificial Intelligence committees. These committees oversee and guide programs addressing data management, security, privacy and AI through unified frameworks that include monitoring, vendor management, assessment, testing, remediation and incident response. While the Data Governance and Artificial Intelligence committees address distinct subject matters, they are interrelated with the Company's information security program and inform each other on matters of shared concern. The executive management team regularly reviews matters addressed through these programs as part of the Company’s ERM oversight.
Incident Response
As described above, the Company maintains an information security incident response plan that includes processes and procedures for evaluating and escalating cybersecurity threats and incidents to, as determined to be appropriate, the Company’s executive management team and members of the Board. The initial impact level of each cybersecurity threat or incident is evaluated by a designated team of information security specialists using risk criteria that have been defined and approved by the Company’s executive management team and reviewed with the Audit Committee. If escalated, the threat or incident is evaluated by a cross-functional core and extended team, as applicable, of managers that includes the CISO, CIO and CPO, as well as identified associates from across the Company’s business and functions, as applicable. Cybersecurity threats and incidents are assigned incident impact levels based on the core team’s determination of potential impact to the Company. The core team employs defined risk criteria to classify incidents and escalate incidents accordingly. Based on the severity classification assigned by the core team, incidents may be escalated to, as applicable, representatives of the Company’s executive management team (which includes the Disclosure Committee), the Chairs of the Board and the Audit Committee, other members of the Audit Committee and/or the full Board.
The incident response plan is tested regularly. During 2025, the core team conducted four tabletop exercises across different areas and levels of the Company to test protocols for communication, decision making, remediation, escalation and reporting. One tabletop exercise focused on the senior management team. The results of all 2025 exercises were shared with, and reviewed by, the Audit Committee.
At the Board level, the Audit Committee assists the Board with overseeing the Company’s information security program. The Audit Committee, which is composed entirely of independent members of the Board, receives reports directly from the Company’s Chief Information Security Officer (“CISO”) at least three times per year. These reports address, among other things, cybersecurity policies and practices, program resources, third-party assessments, key risks, security measures and controls, and incident-response planning. The Company’s information security program is led by the CISO: a member of the management team with primary responsibility for the development, operation and maintenance of the program. The CISO holds a master of science degree in information assurance and has over 25 years of cybersecurity experience with Fortune 500 financial, defense, consulting and retail companies.
The Company’s executive management team oversees enterprise risk management, including cybersecurity risk, and regularly reviews the Company’s ERM program and information security program. The ERM team oversees the identification, prioritization and mitigation of enterprise risks, including cybersecurity, privacy and AI risks.
To support data stewardship and responsible technology use, the CISO, Chief Information Officer (“CIO”), and Chief Privacy Officer (“CPO”) co‑chair or participate in the Company’s Data Governance and Artificial Intelligence committees. These committees oversee and guide programs addressing data management, security, privacy and AI through unified frameworks that include monitoring, vendor management, assessment, testing, remediation and incident response. While the Data Governance and Artificial Intelligence committees address distinct subject matters, they are interrelated with the Company's information security program and inform each other on matters of shared concern. The executive management team regularly reviews matters addressed through these programs as part of the Company’s ERM oversight.
The CISO holds a master of science degree in information assurance and has over 25 years of cybersecurity experience with Fortune 500 financial, defense, consulting and retail companies.
As described above, the Company maintains an information security incident response plan that includes processes and procedures for evaluating and escalating cybersecurity threats and incidents to, as determined to be appropriate, the Company’s executive management team and members of the Board. The initial impact level of each cybersecurity threat or incident is evaluated by a designated team of information security specialists using risk criteria that have been defined and approved by the Company’s executive management team and reviewed with the Audit Committee. If escalated, the threat or incident is evaluated by a cross-functional core and extended team, as applicable, of managers that includes the CISO, CIO and CPO, as well as identified associates from across the Company’s business and functions, as applicable. Cybersecurity threats and incidents are assigned incident impact levels based on the core team’s determination of potential impact to the Company. The core team employs defined risk criteria to classify incidents and escalate incidents accordingly. Based on the severity classification assigned by the core team, incidents may be escalated to, as applicable, representatives of the Company’s executive management team (which includes the Disclosure Committee), the Chairs of the Board and the Audit Committee, other members of the Audit Committee and/or the full Board.
The incident response plan is tested regularly. During 2025, the core team conducted four tabletop exercises across different areas and levels of the Company to test protocols for communication, decision making, remediation, escalation and reporting. One tabletop exercise focused on the senior management team. The results of all 2025 exercises were shared with, and reviewed by, the Audit Committee.
42 Ernst & Young LLP Grandview Heights, Ohio 7291000000 7307000000 7429000000 4102000000 4073000000 4193000000 3189000000 3234000000 3236000000 2063000000 1968000000 1951000000 1126000000 1266000000 1285000000 276000000 312000000 345000000 32000000 74000000 81000000 882000000 1028000000 1021000000 233000000 230000000 143000000 649000000 798000000 878000000 3.12 3.62 3.86 3.11 3.61 3.84 649000000 798000000 878000000 8000000 -8000000 -2000000 -3000000 5000000 1000000 2000000 1000000 2000000 3000000 -4000000 -3000000 652000000 794000000 875000000 953000000 674000000 180000000 205000000 699000000 734000000 81000000 96000000 106000000 114000000 2019000000 1823000000 1127000000 1127000000 941000000 949000000 628000000 628000000 165000000 165000000 112000000 130000000 77000000 50000000 5069000000 4872000000 465000000 338000000 579000000 584000000 280000000 0 195000000 192000000 72000000 117000000 1591000000 1231000000 65000000 24000000 3612000000 3884000000 867000000 883000000 213000000 233000000 1.00 1.00 10000000 10000000 0 0 0 0 0.50 0.50 1000000000 1000000000 216000000 231000000 201000000 216000000 108000000 115000000 794000000 829000000 74000000 71000000 -1435000000 -1578000000 15000000 15000000 822000000 822000000 -1281000000 -1385000000 2000000 2000000 -1279000000 -1383000000 5069000000 4872000000 229000000 122000000 817000000 78000000 -2401000000 -822000000 1000000 -2205000000 878000000 878000000 -3000000 -3000000 -3000000 878000000 875000000 0.80 182000000 182000000 4000000 149000000 149000000 2000000 14000000 133000000 -149000000 0 35000000 35000000 225000000 120000000 838000000 75000000 -1838000000 -822000000 1000000 -1626000000 798000000 798000000 -4000000 -4000000 -4000000 798000000 794000000 0.80 177000000 177000000 10000000 400000000 400000000 5000000 34000000 361000000 -400000000 0 1000000 0 25000000 1000000 26000000 216000000 115000000 829000000 71000000 -1578000000 -822000000 2000000 -1383000000 649000000 649000000 3000000 3000000 3000000 649000000 652000000 0.80 167000000 167000000 15000000 400000000 400000000 7000000 54000000 339000000 -400000000 0 0 19000000 0 19000000 201000000 108000000 794000000 74000000 -1435000000 -822000000 2000000 -1279000000 649000000 798000000 878000000 254000000 282000000 269000000 31000000 40000000 43000000 8000000 0 0 0 39000000 0 0 -10000000 34000000 63000000 -112000000 -128000000 0 0 8000000 -25000000 -18000000 -2000000 -37000000 26000000 2000000 111000000 -50000000 -109000000 -57000000 -23000000 34000000 3000000 12000000 7000000 1102000000 886000000 954000000 237000000 226000000 298000000 9000000 0 0 0 40000000 0 -1000000 -24000000 -12000000 -227000000 -162000000 -286000000 0 522000000 447000000 401000000 401000000 148000000 167000000 177000000 182000000 14000000 17000000 15000000 8000000 16000000 11000000 -9000000 1000000 -12000000 -599000000 -1132000000 -815000000 3000000 -2000000 -1000000 279000000 -410000000 -148000000 674000000 1084000000 1232000000 953000000 674000000 1084000000 Description of Business and Summary of Significant Accounting Policies
Description of Business
Bath & Body Works, Inc. (the “Company”) is a global leader in personal care and home fragrance. The Company sells merchandise through its retail stores in the United States of America (“U.S.”) and Canada, and through its e-commerce sites and other channels. The Company’s international business is conducted through franchise, license and wholesale partners.
Fiscal Year
The Company utilizes the retail calendar for reporting and its fiscal year ends on the Saturday nearest to January 31. As a result, “2025” refers to the 52-week period ended January 31, 2026, “2024” refers to the 52-week period ended February 1, 2025 and “2023” refers to the 53-week period ended February 3, 2024.
Basis of Consolidation
The Consolidated Financial Statements include the accounts of the Company and its subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. 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 all unconsolidated entities is included in Other Income, Net in the Consolidated Statements of Income. 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.
Cash and Cash Equivalents
Cash and Cash Equivalents 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 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.
Concentration of Credit Risk
The Company maintains cash and cash equivalents and derivative contracts with various major financial institutions. The Company monitors the relative credit standing of financial institutions with whom it transacts and limits the amount of credit exposure with any one entity. The Company’s investment portfolio is primarily composed of U.S. government obligations, U.S. Treasury and AAA-rated money market funds, commercial paper and bank deposits.
The Company also periodically reviews the relative credit standing of franchise, license and wholesale partners and other entities to which it 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.
Inventories
Inventories are principally valued at the lower of cost or net realizable value, on an average cost basis.
The Company records valuation adjustments to its inventories if the cost of inventory on hand exceeds the amount it expects 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.
The Company also records 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.
Advertising Costs
Advertising and marketing costs are expensed at the time the promotion first appears in media, in the store or when the advertising is mailed. Advertising and marketing costs totaled $255 million for 2025, $242 million for 2024 and $180 million for 2023.
Property and Equipment
The Company’s Property and Equipment are recorded at cost and depreciation is computed on a straight-line basis using the following depreciable life ranges:
Category of Property and EquipmentDepreciable Life Range
Hardware and Software, including software developed for internal use
3 - 5 years
Store-related furniture, fixtures and equipment
3 - 10 years
Leasehold improvements
Shorter of lease term or 10 years
Non-store related building and site improvements, furniture, fixtures and equipment
5 - 15 years
Buildings30 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.
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 is determined using Level 3 inputs within the fair value hierarchy.
Cloud Computing Arrangements
Costs incurred to implement cloud computing service arrangements hosted by third-party vendors are capitalized when incurred during the application development phase and amortized on a straight-line basis over the expected term of the related cloud service, which is generally three years. Capitalized amounts related to such arrangements are recorded within Other Current Assets and Other Assets on the Consolidated Balance Sheets and changes in cloud computing arrangement implementation costs are classified within Operating Activities in the Consolidated Statements of Cash Flows. Cloud computing assets and related amortization were not significant for any period presented.
Leases and Leasehold Improvements
The Company leases retail space, office space, warehouse facilities, storage space, equipment and certain other items under operating leases. A substantial portion of the Company’s leases are operating leases for its stores, which generally have an initial term of 10 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.
The Company’s store leases often include options to extend the initial term or to terminate the lease prior to the end of the initial term. The exercise of these options is typically at the sole discretion of the Company. These options are included in determining the initial lease term at lease commencement if the Company is reasonably certain to exercise the option. Additionally, the Company may operate stores for a period of time on a month-to-month basis after the expiration of the lease term.
The Company also has leasehold improvements which are amortized over the shorter of their estimated useful lives or the period from the date the assets are placed in service to the end of the initial lease term. Leasehold improvements made after the
inception of the initial lease term are depreciated over the shorter of their estimated useful lives or the remaining lease term, including renewal periods, if reasonably assured.
Intangible Assets - Goodwill and Trade Name
The Company has recorded Goodwill and Trade Name intangible assets resulting from business combinations that are recorded at cost.
Goodwill is reviewed for impairment at the reporting unit level each year in the fourth quarter and may be reviewed more frequently if certain events occur or circumstances change. The Company has the option to either first perform a qualitative assessment to determine whether it is more likely than not that a reporting unit’s fair value is less than its carrying value (including goodwill), or to proceed directly to the quantitative assessment which requires a comparison of a reporting unit’s fair value to its carrying value (including goodwill). If the Company determines that the fair value of a reporting unit is less than its carrying value, it recognizes an impairment charge equal to the difference, not to exceed the total amount of goodwill allocated to a reporting unit. The Company’s reporting units are determined in accordance with the provisions of Accounting Standards Codification (“ASC”) 350, Intangibles - Goodwill and Other.
The Bath & Body Works Trade Name is an intangible asset with an indefinite life that is reviewed for impairment each year in the fourth quarter, and may be reviewed more frequently if certain events occur or circumstances change. The Company has the option to either first perform a qualitative assessment to determine whether it is more likely than not that the Trade Name is impaired, or to proceed directly to the quantitative assessment which requires a comparison of the fair value of the trade name to its carrying value. To determine if the fair value of the Trade Name is less than its carrying amount, the Company will estimate the fair value, usually determined by the relief from royalty method under the income approach, and compare that value with its carrying amount. If the carrying value of the Trade Name exceeds its fair value, the Company recognizes an impairment charge equal to the difference.
Foreign Currency Translation
The functional currency of the Company’s foreign operations is generally the applicable local currency. Assets and liabilities are translated into U.S. dollars using the current exchange rates in effect as of the balance sheet date, while revenues and expenses are translated at the average exchange rates for the period. The Company’s resulting translation adjustments comprise substantially all of Accumulated Other Comprehensive Income in Shareholders’ Equity (Deficit). Accumulated foreign currency translation adjustments are reclassified to Net Income when realized upon sale or upon complete, or substantially complete, liquidation of the investment in the foreign entity.
Derivative Financial Instruments
The Company’s Canadian dollar denominated earnings are subject to exchange rate risk as substantially all the Company’s merchandise sold in Canada is sourced through U.S. dollar transactions. The Company uses foreign currency forward contracts designated as cash flow hedges to mitigate this foreign currency exposure. Amounts are reclassified from Accumulated Other Comprehensive Income 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 Consolidated Statements of Income. All designated cash flow hedges are recorded on the Consolidated Balance Sheets at fair value. The fair value of designated cash flow hedges is not significant for any period presented. The Company does not use derivative financial instruments for trading purposes.
Supplier Finance Program
In the fourth quarter of 2024, the Company implemented a supply chain finance (“SCF”) program agreement with a third-party financial institution, whereby the Company’s merchandise suppliers have the opportunity to settle outstanding payment obligations early, at a discount, facilitated by the financial institution. Since implementation, merchandise suppliers have continued to join the program. The Company’s obligations to its suppliers, including amounts due and scheduled payment terms, are not impacted by suppliers’ participation in the arrangement and the Company provides no guarantees to any third parties under the SCF program. Amounts due under the SCF program are included in Accounts Payable in the Consolidated Balance Sheets and within Operating Activities in the Consolidated Statements of Cash Flows.
The following table provides the Company’s SCF program activity for the year ended January 31, 2026:
2025
(in millions)
Obligations Outstanding as of February 1, 2025
$7 
Invoices Confirmed during the Year753 
Confirmed Invoices Paid during the Year(645)
Obligations Outstanding as of January 31, 2026
$115 
Easton Investments
The Company has land and other investments in Easton, a planned community in Columbus, Ohio, that integrates office, hotel, retail, residential and recreational space. Beginning in the fourth quarter of 2024, certain of these investments met all of the required criteria for held for sale presentation, which requires assets to be reported at the lower of their carrying value or fair value less costs to sell. The investments classified as held for sale, consisting primarily of undeveloped land, are reported at their carrying value, which was $81 million and $96 million as of January 31, 2026 and February 1, 2025, respectively, within Current Assets on the Consolidated Balance Sheets.
During the second quarter of 2025, the Company changed its plan of sale for its Easton investments, causing certain of these investments to no longer meet the held for sale criteria. As a result of this change, the Company reclassified $17 million of carrying value from Current Assets to long-term Other Assets during the second quarter of 2025. The Company’s Easton investments not presented as held for sale and reported in Other Assets were $38 million and $26 million as of January 31, 2026 and February 1, 2025, respectively.
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. In the second quarter of 2024, the Company sold its entire interest in the business associated with EG and its entire interest in ETC. The Company received aggregate cash proceeds, net of fees paid, of $40 million as a result of these sales, and recognized an aggregate pre-tax gain of $39 million, which is included in Other Income, Net, in the 2024 Consolidated Statement of Income.
Fair Value
The authoritative guidance included in ASC 820, Fair Value Measurement, defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants. This authoritative guidance further establishes a three-level fair value hierarchy that prioritizes the inputs used to measure fair value. This hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows:
•Level 1 - Quoted market prices in active markets for identical assets or liabilities.
•Level 2 - Observable inputs other than quoted market prices included in Level 1, such as quoted prices of similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.
•Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets and liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.
The Company estimates the fair value of financial instruments, Property and Equipment, Net, Goodwill and its Trade Name in accordance with the provisions of ASC 820.
Income Taxes
The Company accounts 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 the Company’s 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.
In determining the Company’s provision for income taxes, the Company considers permanent differences between book and tax income and statutory income tax rates. The Company’s 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.
The Company follows 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.  The Company considers many factors when evaluating and estimating its tax positions and tax benefits, which may require periodic adjustments and for which actual outcomes may differ from forecasted outcomes. The Company’s policy is to include interest and penalties related to uncertain tax positions in income tax expense.
The Company’s income tax returns, like those of most companies, are periodically audited by domestic and foreign tax authorities. These audits include questions regarding the Company’s 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 the Company has established an accrual is audited and fully resolved or clarified. The Company adjusts its tax contingencies accrual and income tax provision in the period in which matters are effectively settled with tax authorities at amounts different from its established accrual, when the statute of limitations expires for the relevant taxing authority to examine the tax position or when more information becomes available. The Company includes its tax contingencies accrual, including accrued penalties and interest, in Other Long-term Liabilities on the Consolidated Balance Sheets unless the liability is expected to be paid within one year. Changes to the tax contingencies accrual, including accrued penalties and interest, are included in Provision for Income Taxes on the Consolidated Statements of Income.
Self-Insurance
The Company is self-insured for medical, workers’ compensation, property, general liability and automobile liability up to certain stop-loss limits in certain cases. Such costs are accrued based on known claims and an estimate of incurred but not reported (“IBNR”) claims. IBNR claims are estimated using historical claim information and actuarial estimates.
Noncontrolling Interest
Noncontrolling interest represents the portion of equity interests of consolidated affiliates not owned by the Company.
Share-based Compensation
The Company recognizes all share-based payments to associates and directors as compensation cost over the service period based on their estimated fair value on the date of grant. The Company estimates award forfeitures at the time awards are granted and adjusts, if necessary, in subsequent periods based on historical experience and expected future forfeitures.  As part of the Company’s determination of award fair value, it assesses the impact of material nonpublic information on the share price at the time of grant. There were no such fair value adjustments to awards granted in any period presented.
Compensation cost is recognized over the service period for the fair value of awards that actually vest. Compensation expense for awards without a performance condition is recognized, net of estimated forfeitures, using a single award approach (each award is valued as one grant, irrespective of the number of vesting tranches). Compensation expense for awards with a performance condition is recognized, net of estimated forfeitures, using a multiple award approach (each vesting tranche is valued as one grant).
Revenue Recognition
The Company recognizes revenue based on the amount it expects to receive when control of the goods or services is transferred to the customer. The Company recognizes 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. The Company’s 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. The Company also provides a reserve for projected merchandise returns based on historical experience. Net Sales exclude sales and other similar taxes collected from customers.
The Company offers 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. The Company allocates revenue to points earned on qualifying purchases and defers 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.
The Company sells gift cards with no expiration dates to customers. The Company does not charge administrative fees on unused gift cards. The Company recognizes revenue from gift cards when they are redeemed by the customer. In addition, the Company recognizes 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. The Company determines 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.
The Company also recognizes 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.
Costs of Goods Sold, Buying and Occupancy
The Company’s Costs of Goods Sold include merchandise costs, net of discounts and allowances, freight, tariffs and inventory shrinkage. The Company’s Buying and Occupancy Expenses primarily include; occupancy costs, including rent, common area maintenance, real estate taxes, utilities, maintenance, and fulfillment expenses; depreciation for the Company’s retail stores, warehouses, fulfillment facilities and equipment; and payroll, benefit costs and operating expenses for its buying departments and distribution network.
General, Administrative and Store Operating Expenses
The Company’s General, Administrative and Store Operating Expenses is comprised of Selling, Marketing, and General and Administrative expenses. Selling Expenses include payroll and benefit costs for the Company’s stores and other costs associated with operating stores and e-commerce sites. Marketing Expenses include costs associated with the Company’s marketing and advertising activities. General and Administrative Expenses include payroll and benefit costs for the Company’s administrative departments (including home office and corporate functions), general corporate expenses, and most of the Company’s technology expenses.
Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with U.S. generally accepted accounting principles 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.
Recently Issued Accounting Pronouncements
In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-09, Improvements to Income Tax Disclosures, which 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. The Company adopted this standard prospectively in the fourth quarter of 2025. Refer to Note 9 for the required disclosures.
In November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses, which 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. The Company is currently evaluating the impact of adopting this standard on its disclosures.
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 software costs by removing project stages from capitalization criteria and further clarifies the threshold entities apply to begin capitalizing costs. This standard is effective for annual reporting of fiscal years beginning after December 15, 2027, and for interim periods within those fiscal years, with early adoption permitted. This standard can be applied prospectively, retrospectively or through a modified transition approach. The Company is currently evaluating the impacts of adopting this standard.
Description of Business
Bath & Body Works, Inc. (the “Company”) is a global leader in personal care and home fragrance. The Company sells merchandise through its retail stores in the United States of America (“U.S.”) and Canada, and through its e-commerce sites and other channels. The Company’s international business is conducted through franchise, license and wholesale partners.
Fiscal Year
The Company utilizes the retail calendar for reporting and its fiscal year ends on the Saturday nearest to January 31. As a result, “2025” refers to the 52-week period ended January 31, 2026, “2024” refers to the 52-week period ended February 1, 2025 and “2023” refers to the 53-week period ended February 3, 2024.
Basis of Consolidation
The Consolidated Financial Statements include the accounts of the Company and its subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. 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 all unconsolidated entities is included in Other Income, Net in the Consolidated Statements of Income. 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.
Cash and Cash Equivalents
Cash and Cash Equivalents 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 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.
90
Concentration of Credit Risk
The Company maintains cash and cash equivalents and derivative contracts with various major financial institutions. The Company monitors the relative credit standing of financial institutions with whom it transacts and limits the amount of credit exposure with any one entity. The Company’s investment portfolio is primarily composed of U.S. government obligations, U.S. Treasury and AAA-rated money market funds, commercial paper and bank deposits.
The Company also periodically reviews the relative credit standing of franchise, license and wholesale partners and other entities to which it 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.
Inventories
Inventories are principally valued at the lower of cost or net realizable value, on an average cost basis.
The Company records valuation adjustments to its inventories if the cost of inventory on hand exceeds the amount it expects 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.
The Company also records 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.
Advertising Costs
Advertising and marketing costs are expensed at the time the promotion first appears in media, in the store or when the advertising is mailed. Advertising and marketing costs totaled $255 million for 2025, $242 million for 2024 and $180 million for 2023.
255000000 242000000 180000000
Property and Equipment
The Company’s Property and Equipment are recorded at cost and depreciation is computed on a straight-line basis using the following depreciable life ranges:
Category of Property and EquipmentDepreciable Life Range
Hardware and Software, including software developed for internal use
3 - 5 years
Store-related furniture, fixtures and equipment
3 - 10 years
Leasehold improvements
Shorter of lease term or 10 years
Non-store related building and site improvements, furniture, fixtures and equipment
5 - 15 years
Buildings30 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.
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 is determined using Level 3 inputs within the fair value hierarchy.
The Company’s Property and Equipment are recorded at cost and depreciation is computed on a straight-line basis using the following depreciable life ranges:
Category of Property and EquipmentDepreciable Life Range
Hardware and Software, including software developed for internal use
3 - 5 years
Store-related furniture, fixtures and equipment
3 - 10 years
Leasehold improvements
Shorter of lease term or 10 years
Non-store related building and site improvements, furniture, fixtures and equipment
5 - 15 years
Buildings30 years
P3Y P5Y P3Y P10Y P10Y P5Y P15Y P30Y
Cloud Computing Arrangements
Costs incurred to implement cloud computing service arrangements hosted by third-party vendors are capitalized when incurred during the application development phase and amortized on a straight-line basis over the expected term of the related cloud service, which is generally three years. Capitalized amounts related to such arrangements are recorded within Other Current Assets and Other Assets on the Consolidated Balance Sheets and changes in cloud computing arrangement implementation costs are classified within Operating Activities in the Consolidated Statements of Cash Flows. Cloud computing assets and related amortization were not significant for any period presented.
Leases and Leasehold Improvements
The Company leases retail space, office space, warehouse facilities, storage space, equipment and certain other items under operating leases. A substantial portion of the Company’s leases are operating leases for its stores, which generally have an initial term of 10 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.
The Company’s store leases often include options to extend the initial term or to terminate the lease prior to the end of the initial term. The exercise of these options is typically at the sole discretion of the Company. These options are included in determining the initial lease term at lease commencement if the Company is reasonably certain to exercise the option. Additionally, the Company may operate stores for a period of time on a month-to-month basis after the expiration of the lease term.
The Company also has leasehold improvements which are amortized over the shorter of their estimated useful lives or the period from the date the assets are placed in service to the end of the initial lease term. Leasehold improvements made after the
inception of the initial lease term are depreciated over the shorter of their estimated useful lives or the remaining lease term, including renewal periods, if reasonably assured.
P10Y
Intangible Assets - Goodwill and Trade Name
The Company has recorded Goodwill and Trade Name intangible assets resulting from business combinations that are recorded at cost.
Goodwill is reviewed for impairment at the reporting unit level each year in the fourth quarter and may be reviewed more frequently if certain events occur or circumstances change. The Company has the option to either first perform a qualitative assessment to determine whether it is more likely than not that a reporting unit’s fair value is less than its carrying value (including goodwill), or to proceed directly to the quantitative assessment which requires a comparison of a reporting unit’s fair value to its carrying value (including goodwill). If the Company determines that the fair value of a reporting unit is less than its carrying value, it recognizes an impairment charge equal to the difference, not to exceed the total amount of goodwill allocated to a reporting unit. The Company’s reporting units are determined in accordance with the provisions of Accounting Standards Codification (“ASC”) 350, Intangibles - Goodwill and Other.
The Bath & Body Works Trade Name is an intangible asset with an indefinite life that is reviewed for impairment each year in the fourth quarter, and may be reviewed more frequently if certain events occur or circumstances change. The Company has the option to either first perform a qualitative assessment to determine whether it is more likely than not that the Trade Name is impaired, or to proceed directly to the quantitative assessment which requires a comparison of the fair value of the trade name to its carrying value. To determine if the fair value of the Trade Name is less than its carrying amount, the Company will estimate the fair value, usually determined by the relief from royalty method under the income approach, and compare that value with its carrying amount. If the carrying value of the Trade Name exceeds its fair value, the Company recognizes an impairment charge equal to the difference.
Foreign Currency Translation
The functional currency of the Company’s foreign operations is generally the applicable local currency. Assets and liabilities are translated into U.S. dollars using the current exchange rates in effect as of the balance sheet date, while revenues and expenses are translated at the average exchange rates for the period. The Company’s resulting translation adjustments comprise substantially all of Accumulated Other Comprehensive Income in Shareholders’ Equity (Deficit). Accumulated foreign currency translation adjustments are reclassified to Net Income when realized upon sale or upon complete, or substantially complete, liquidation of the investment in the foreign entity.
Derivative Financial Instruments
The Company’s Canadian dollar denominated earnings are subject to exchange rate risk as substantially all the Company’s merchandise sold in Canada is sourced through U.S. dollar transactions. The Company uses foreign currency forward contracts designated as cash flow hedges to mitigate this foreign currency exposure. Amounts are reclassified from Accumulated Other Comprehensive Income 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 Consolidated Statements of Income. All designated cash flow hedges are recorded on the Consolidated Balance Sheets at fair value. The fair value of designated cash flow hedges is not significant for any period presented. The Company does not use derivative financial instruments for trading purposes.
Supplier Finance Program
In the fourth quarter of 2024, the Company implemented a supply chain finance (“SCF”) program agreement with a third-party financial institution, whereby the Company’s merchandise suppliers have the opportunity to settle outstanding payment obligations early, at a discount, facilitated by the financial institution. Since implementation, merchandise suppliers have continued to join the program. The Company’s obligations to its suppliers, including amounts due and scheduled payment terms, are not impacted by suppliers’ participation in the arrangement and the Company provides no guarantees to any third parties under the SCF program. Amounts due under the SCF program are included in Accounts Payable in the Consolidated Balance Sheets and within Operating Activities in the Consolidated Statements of Cash Flows.
The following table provides the Company’s SCF program activity for the year ended January 31, 2026:
2025
(in millions)
Obligations Outstanding as of February 1, 2025
$7 
Invoices Confirmed during the Year753 
Confirmed Invoices Paid during the Year(645)
Obligations Outstanding as of January 31, 2026
$115 
7000000 753000000 645000000 115000000
Easton Investments
The Company has land and other investments in Easton, a planned community in Columbus, Ohio, that integrates office, hotel, retail, residential and recreational space. Beginning in the fourth quarter of 2024, certain of these investments met all of the required criteria for held for sale presentation, which requires assets to be reported at the lower of their carrying value or fair value less costs to sell. The investments classified as held for sale, consisting primarily of undeveloped land, are reported at their carrying value, which was $81 million and $96 million as of January 31, 2026 and February 1, 2025, respectively, within Current Assets on the Consolidated Balance Sheets.
During the second quarter of 2025, the Company changed its plan of sale for its Easton investments, causing certain of these investments to no longer meet the held for sale criteria. As a result of this change, the Company reclassified $17 million of carrying value from Current Assets to long-term Other Assets during the second quarter of 2025. The Company’s Easton investments not presented as held for sale and reported in Other Assets were $38 million and $26 million as of January 31, 2026 and February 1, 2025, respectively.
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. In the second quarter of 2024, the Company sold its entire interest in the business associated with EG and its entire interest in ETC. The Company received aggregate cash proceeds, net of fees paid, of $40 million as a result of these sales, and recognized an aggregate pre-tax gain of $39 million, which is included in Other Income, Net, in the 2024 Consolidated Statement of Income.
81000000 96000000 -17000000 17000000 38000000 26000000 40000000 39000000
Fair Value
The authoritative guidance included in ASC 820, Fair Value Measurement, defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants. This authoritative guidance further establishes a three-level fair value hierarchy that prioritizes the inputs used to measure fair value. This hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows:
•Level 1 - Quoted market prices in active markets for identical assets or liabilities.
•Level 2 - Observable inputs other than quoted market prices included in Level 1, such as quoted prices of similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.
•Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets and liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.
The Company estimates the fair value of financial instruments, Property and Equipment, Net, Goodwill and its Trade Name in accordance with the provisions of ASC 820.
Income Taxes
The Company accounts 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 the Company’s 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.
In determining the Company’s provision for income taxes, the Company considers permanent differences between book and tax income and statutory income tax rates. The Company’s 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.
The Company follows 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.  The Company considers many factors when evaluating and estimating its tax positions and tax benefits, which may require periodic adjustments and for which actual outcomes may differ from forecasted outcomes. The Company’s policy is to include interest and penalties related to uncertain tax positions in income tax expense.
The Company’s income tax returns, like those of most companies, are periodically audited by domestic and foreign tax authorities. These audits include questions regarding the Company’s 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 the Company has established an accrual is audited and fully resolved or clarified. The Company adjusts its tax contingencies accrual and income tax provision in the period in which matters are effectively settled with tax authorities at amounts different from its established accrual, when the statute of limitations expires for the relevant taxing authority to examine the tax position or when more information becomes available. The Company includes its tax contingencies accrual, including accrued penalties and interest, in Other Long-term Liabilities on the Consolidated Balance Sheets unless the liability is expected to be paid within one year. Changes to the tax contingencies accrual, including accrued penalties and interest, are included in Provision for Income Taxes on the Consolidated Statements of Income.
Self-Insurance
The Company is self-insured for medical, workers’ compensation, property, general liability and automobile liability up to certain stop-loss limits in certain cases. Such costs are accrued based on known claims and an estimate of incurred but not reported (“IBNR”) claims. IBNR claims are estimated using historical claim information and actuarial estimates.
Noncontrolling Interest
Noncontrolling interest represents the portion of equity interests of consolidated affiliates not owned by the Company.
Share-based Compensation
The Company recognizes all share-based payments to associates and directors as compensation cost over the service period based on their estimated fair value on the date of grant. The Company estimates award forfeitures at the time awards are granted and adjusts, if necessary, in subsequent periods based on historical experience and expected future forfeitures.  As part of the Company’s determination of award fair value, it assesses the impact of material nonpublic information on the share price at the time of grant. There were no such fair value adjustments to awards granted in any period presented.
Compensation cost is recognized over the service period for the fair value of awards that actually vest. Compensation expense for awards without a performance condition is recognized, net of estimated forfeitures, using a single award approach (each award is valued as one grant, irrespective of the number of vesting tranches). Compensation expense for awards with a performance condition is recognized, net of estimated forfeitures, using a multiple award approach (each vesting tranche is valued as one grant).
Revenue Recognition
The Company recognizes revenue based on the amount it expects to receive when control of the goods or services is transferred to the customer. The Company recognizes 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. The Company’s 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. The Company also provides a reserve for projected merchandise returns based on historical experience. Net Sales exclude sales and other similar taxes collected from customers.
The Company offers 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. The Company allocates revenue to points earned on qualifying purchases and defers 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.
The Company sells gift cards with no expiration dates to customers. The Company does not charge administrative fees on unused gift cards. The Company recognizes revenue from gift cards when they are redeemed by the customer. In addition, the Company recognizes 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. The Company determines 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.
The Company also recognizes 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.
Costs of Goods Sold, Buying and Occupancy
The Company’s Costs of Goods Sold include merchandise costs, net of discounts and allowances, freight, tariffs and inventory shrinkage. The Company’s Buying and Occupancy Expenses primarily include; occupancy costs, including rent, common area maintenance, real estate taxes, utilities, maintenance, and fulfillment expenses; depreciation for the Company’s retail stores, warehouses, fulfillment facilities and equipment; and payroll, benefit costs and operating expenses for its buying departments and distribution network.
General, Administrative and Store Operating Expenses
The Company’s General, Administrative and Store Operating Expenses is comprised of Selling, Marketing, and General and Administrative expenses. Selling Expenses include payroll and benefit costs for the Company’s stores and other costs associated with operating stores and e-commerce sites. Marketing Expenses include costs associated with the Company’s marketing and advertising activities. General and Administrative Expenses include payroll and benefit costs for the Company’s administrative departments (including home office and corporate functions), general corporate expenses, and most of the Company’s technology expenses.
Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with U.S. generally accepted accounting principles 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.
Recently Issued Accounting Pronouncements
In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-09, Improvements to Income Tax Disclosures, which 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. The Company adopted this standard prospectively in the fourth quarter of 2025. Refer to Note 9 for the required disclosures.
In November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses, which 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. The Company is currently evaluating the impact of adopting this standard on its disclosures.
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 software costs by removing project stages from capitalization criteria and further clarifies the threshold entities apply to begin capitalizing costs. This standard is effective for annual reporting of fiscal years beginning after December 15, 2027, and for interim periods within those fiscal years, with early adoption permitted. This standard can be applied prospectively, retrospectively or through a modified transition approach. The Company is currently evaluating the impacts of adopting this standard.
Revenue Recognition
Accounts receivable, net from revenue-generating activities were $66 million as of January 31, 2026 and $81 million as of February 1, 2025. These accounts receivable primarily relate to amounts due from the Company’s franchise, license and wholesale partners. Under these arrangements, payment terms are typically 45 to 75 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 $223 million as of January 31, 2026 and $197 million as
of February 1, 2025. The Company recognized $125 million as revenue in 2025 from amounts recorded as deferred revenue at the beginning of the Company’s fiscal year.
The following table provides a disaggregation of Net Sales for 2025, 2024 and 2023:
202520242023
(in millions)
Stores - U.S. and Canada (a)$5,582 $5,534 $5,507 
Direct - U.S. and Canada1,395 1,474 1,582 
International (b)314 299 340 
Total Net Sales$7,291 $7,307 $7,429 
_______________
(a)Results include fulfilled buy online pick up in store orders.
(b)Results include royalties associated with franchised stores and wholesale sales.
The Company’s Net Sales outside of the U.S. include sales from Company-operated stores and its e-commerce site in Canada, royalties associated with franchised stores and wholesale sales. 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 $707 million in 2025, $691 million in 2024 and $723 million in 2023. 66000000 81000000 P45D P75D 223000000 197000000 125000000
The following table provides a disaggregation of Net Sales for 2025, 2024 and 2023:
202520242023
(in millions)
Stores - U.S. and Canada (a)$5,582 $5,534 $5,507 
Direct - U.S. and Canada1,395 1,474 1,582 
International (b)314 299 340 
Total Net Sales$7,291 $7,307 $7,429 
_______________
(a)Results include fulfilled buy online pick up in store orders.
(b)Results include royalties associated with franchised stores and wholesale sales. 5582000000 5534000000 5507000000 1395000000 1474000000 1582000000 314000000 299000000 340000000 7291000000 7307000000 7429000000 707000000 691000000 723000000 Net Income Per Share
Net Income per Basic Share is computed based on the weighted-average number of common shares outstanding. Net Income per Diluted Share includes the weighted-average effect of dilutive restricted share units, performance share units and stock options (collectively, “Dilutive Awards”) on the weighted-average common shares outstanding.
The following table provides the weighted-average shares utilized for the calculation of Net Income per Basic and Diluted Share for 2025, 2024 and 2023:
202520242023
(in millions)
Common Shares223 235 243 
Treasury Shares(15)(15)(15)
Basic Shares208 220 228 
Effect of Dilutive Awards1 1 1 
Diluted Shares209 221 229 
Anti-dilutive Awards (a)— 1 — 
________________
(a)These awards were excluded from the calculation of Net Income per Diluted Share because their inclusion would have been anti-dilutive.
The following table provides the weighted-average shares utilized for the calculation of Net Income per Basic and Diluted Share for 2025, 2024 and 2023:
202520242023
(in millions)
Common Shares223 235 243 
Treasury Shares(15)(15)(15)
Basic Shares208 220 228 
Effect of Dilutive Awards1 1 1 
Diluted Shares209 221 229 
Anti-dilutive Awards (a)— 1 — 
________________
(a)These awards were excluded from the calculation of Net Income per Diluted Share because their inclusion would have been anti-dilutive. 223000000 235000000 243000000 15000000 15000000 15000000 208000000 220000000 228000000 1000000 1000000 1000000 209000000 221000000 229000000 0 1000000 0 Inventories
The following table provides details of Inventories as of January 31, 2026 and February 1, 2025:
January 31,
2026		February 1,
2025
(in millions)
Finished Goods Merchandise$545 $589 
Raw Materials and Merchandise Components154 145 
Total Inventories$699 $734 
The following table provides details of Inventories as of January 31, 2026 and February 1, 2025:
January 31,
2026		February 1,
2025
(in millions)
Finished Goods Merchandise$545 $589 
Raw Materials and Merchandise Components154 145 
Total Inventories$699 $734 
545000000 589000000 154000000 145000000 699000000 734000000 Long-lived Assets
The following table provides details of Property and Equipment, Net as of January 31, 2026 and February 1, 2025:
January 31,
2026		February 1,
2025
(in millions)
Land and Improvements$92 $87 
Buildings and Improvements327 323 
Furniture, Fixtures, Software and Equipment1,974 1,879 
Leasehold Improvements934 891 
Construction in Progress36 37 
Total3,363 3,217 
Accumulated Depreciation and Amortization(2,236)(2,090)
Property and Equipment, Net$1,127 $1,127 
Depreciation expense was $254 million in 2025, $282 million in 2024 and $269 million in 2023. Capital Expenditures of $34 million and $24 million remained unpaid as of January 31, 2026 and February 1, 2025, respectively.
The Company’s internationally-based long-lived assets, including operating lease assets, were $138 million as of January 31, 2026 and $131 million as of February 1, 2025.
The following table provides details of Property and Equipment, Net as of January 31, 2026 and February 1, 2025:
January 31,
2026		February 1,
2025
(in millions)
Land and Improvements$92 $87 
Buildings and Improvements327 323 
Furniture, Fixtures, Software and Equipment1,974 1,879 
Leasehold Improvements934 891 
Construction in Progress36 37 
Total3,363 3,217 
Accumulated Depreciation and Amortization(2,236)(2,090)
Property and Equipment, Net$1,127 $1,127 
92000000 87000000 327000000 323000000 1974000000 1879000000 934000000 891000000 36000000 37000000 3363000000 3217000000 2236000000 2090000000 1127000000 1127000000 254000000 282000000 269000000 34000000 24000000 138000000 131000000 Leases
The following table provides the components of lease cost for operating leases for 2025, 2024 and 2023:
202520242023
(in millions)
Operating Lease Costs$280 $267 $254 
Variable Lease Costs108 108 107 
Short-term Lease Costs49 43 41 
Total Lease Cost$437 $418 $402 
The following table provides future maturities of operating lease liabilities as of January 31, 2026:
Fiscal Year(in millions)
2026$250 
2027228 
2028191 
2029158 
2030126 
Thereafter317 
Total Lease Payments1,270 
Less: Interest(208)
Present Value of Operating Lease Liabilities$1,062 
The Company accounts for all fixed consideration in a lease as a single lease component. Therefore, the payments used to measure the lease liability include fixed minimum rentals along with fixed operating costs such as common area maintenance and utilities.
As of January 31, 2026, the Company had additional operating lease commitments that have not yet commenced of $43 million.
The following table provides the weighted-average remaining lease term and discount rate for operating lease liabilities as of January 31, 2026 and February 1, 2025:
January 31,
2026		February 1,
2025
Weighted-average Remaining Lease Term (years)6.26.1
Weighted-average Discount Rate5.7%5.8%
The following table provides supplemental cash flow information related to the Company’s operating leases for 2025, 2024 and 2023:
202520242023
(in millions)
Cash paid for Operating Lease Liabilities (a)$287 $279 $280 
Lease Assets obtained as a result of new or modified Lease Liabilities, net of terminations193 91 185 
 ________________
(a)These payments are included within the Operating Activities section of the Consolidated Statements of Cash Flows.
Finance Leases
The Company leases certain fulfillment equipment under finance leases that expire at various dates through 2030. The Company records finance lease assets, net of accumulated amortization, in Property and Equipment, Net on the Consolidated Balance Sheets. Additionally, the Company records finance lease liabilities in Accrued Expenses and Other and Other Long-term Liabilities on the Consolidated Balance Sheets. Finance lease costs are comprised of the straight-line amortization of the lease asset and the accretion of interest expense under the effective interest method. The Company’s finance lease costs, assets and liabilities were not significant for any period presented.
Leases
The following table provides the components of lease cost for operating leases for 2025, 2024 and 2023:
202520242023
(in millions)
Operating Lease Costs$280 $267 $254 
Variable Lease Costs108 108 107 
Short-term Lease Costs49 43 41 
Total Lease Cost$437 $418 $402 
The following table provides future maturities of operating lease liabilities as of January 31, 2026:
Fiscal Year(in millions)
2026$250 
2027228 
2028191 
2029158 
2030126 
Thereafter317 
Total Lease Payments1,270 
Less: Interest(208)
Present Value of Operating Lease Liabilities$1,062 
The Company accounts for all fixed consideration in a lease as a single lease component. Therefore, the payments used to measure the lease liability include fixed minimum rentals along with fixed operating costs such as common area maintenance and utilities.
As of January 31, 2026, the Company had additional operating lease commitments that have not yet commenced of $43 million.
The following table provides the weighted-average remaining lease term and discount rate for operating lease liabilities as of January 31, 2026 and February 1, 2025:
January 31,
2026		February 1,
2025
Weighted-average Remaining Lease Term (years)6.26.1
Weighted-average Discount Rate5.7%5.8%
The following table provides supplemental cash flow information related to the Company’s operating leases for 2025, 2024 and 2023:
202520242023
(in millions)
Cash paid for Operating Lease Liabilities (a)$287 $279 $280 
Lease Assets obtained as a result of new or modified Lease Liabilities, net of terminations193 91 185 
 ________________
(a)These payments are included within the Operating Activities section of the Consolidated Statements of Cash Flows.
Finance Leases
The Company leases certain fulfillment equipment under finance leases that expire at various dates through 2030. The Company records finance lease assets, net of accumulated amortization, in Property and Equipment, Net on the Consolidated Balance Sheets. Additionally, the Company records finance lease liabilities in Accrued Expenses and Other and Other Long-term Liabilities on the Consolidated Balance Sheets. Finance lease costs are comprised of the straight-line amortization of the lease asset and the accretion of interest expense under the effective interest method. The Company’s finance lease costs, assets and liabilities were not significant for any period presented.
The following table provides the components of lease cost for operating leases for 2025, 2024 and 2023:
202520242023
(in millions)
Operating Lease Costs$280 $267 $254 
Variable Lease Costs108 108 107 
Short-term Lease Costs49 43 41 
Total Lease Cost$437 $418 $402 
280000000 267000000 254000000 108000000 108000000 107000000 49000000 43000000 41000000 437000000 418000000 402000000
The following table provides future maturities of operating lease liabilities as of January 31, 2026:
Fiscal Year(in millions)
2026$250 
2027228 
2028191 
2029158 
2030126 
Thereafter317 
Total Lease Payments1,270 
Less: Interest(208)
Present Value of Operating Lease Liabilities$1,062 
250000000 228000000 191000000 158000000 126000000 317000000 1270000000 208000000 1062000000 43000000
The following table provides the weighted-average remaining lease term and discount rate for operating lease liabilities as of January 31, 2026 and February 1, 2025:
January 31,
2026		February 1,
2025
Weighted-average Remaining Lease Term (years)6.26.1
Weighted-average Discount Rate5.7%5.8%
P6Y2M12D P6Y1M6D 0.057 0.058
The following table provides supplemental cash flow information related to the Company’s operating leases for 2025, 2024 and 2023:
202520242023
(in millions)
Cash paid for Operating Lease Liabilities (a)$287 $279 $280 
Lease Assets obtained as a result of new or modified Lease Liabilities, net of terminations193 91 185 
 ________________
(a)These payments are included within the Operating Activities section of the Consolidated Statements of Cash Flows. 287000000 279000000 280000000 193000000 91000000 185000000 Intangible Assets
Goodwill
The Company’s Goodwill was $628 million as of January 31, 2026 and February 1, 2025.
The Company performed its qualitative goodwill impairment assessments as of January 31, 2026 and February 1, 2025 and determined that it was not more likely than not that fair value was less than carrying value (including goodwill) as of both dates.
Trade Name
The Company’s Trade Name was $165 million as of January 31, 2026 and February 1, 2025.
The Company performed its impairment assessments of the Trade Name as of January 31, 2026 and February 1, 2025, utilizing the relief from royalty method under the income approach, and determined that its fair value was greater than its carrying value as of both dates.
628000000 628000000 165000000 165000000 Other Assets and Liabilities
The following table provides additional information about the composition of Other Current Assets as of January 31, 2026 and February 1, 2025:
January 31,
2026		February 1,
2025
(in millions)
Prepaid Expenses$81 $79 
Other25 35 
Total Other Current Assets$106 $114 
The following table provides additional information about the composition of Accrued Expenses and Other as of January 31, 2026 and February 1, 2025:
January 31,
2026		February 1,
2025
(in millions)
Deferred Revenue$223 $197 
Compensation, Payroll Taxes and Benefits63 78 
Interest62 63 
Taxes, Other than Income22 23 
Rent25 29 
Accrued Claims on Self-insured Activities34 34 
Accrued Marketing9 33 
Other141 127 
Total Accrued Expenses and Other$579 $584 
Other Assets and Liabilities
The following table provides additional information about the composition of Other Current Assets as of January 31, 2026 and February 1, 2025:
January 31,
2026		February 1,
2025
(in millions)
Prepaid Expenses$81 $79 
Other25 35 
Total Other Current Assets$106 $114 
The following table provides additional information about the composition of Accrued Expenses and Other as of January 31, 2026 and February 1, 2025:
January 31,
2026		February 1,
2025
(in millions)
Deferred Revenue$223 $197 
Compensation, Payroll Taxes and Benefits63 78 
Interest62 63 
Taxes, Other than Income22 23 
Rent25 29 
Accrued Claims on Self-insured Activities34 34 
Accrued Marketing9 33 
Other141 127 
Total Accrued Expenses and Other$579 $584 
The following table provides additional information about the composition of Other Current Assets as of January 31, 2026 and February 1, 2025:
January 31,
2026		February 1,
2025
(in millions)
Prepaid Expenses$81 $79 
Other25 35 
Total Other Current Assets$106 $114 
81000000 79000000 25000000 35000000 106000000 114000000
The following table provides additional information about the composition of Accrued Expenses and Other as of January 31, 2026 and February 1, 2025:
January 31,
2026		February 1,
2025
(in millions)
Deferred Revenue$223 $197 
Compensation, Payroll Taxes and Benefits63 78 
Interest62 63 
Taxes, Other than Income22 23 
Rent25 29 
Accrued Claims on Self-insured Activities34 34 
Accrued Marketing9 33 
Other141 127 
Total Accrued Expenses and Other$579 $584 
223000000 197000000 63000000 78000000 62000000 63000000 22000000 23000000 25000000 29000000 34000000 34000000 9000000 33000000 141000000 127000000 579000000 584000000 Income Taxes
Current income tax expense represents the amounts expected to be reported on the Company’s income tax returns, and deferred tax expense or benefit represents the change in net deferred tax assets and liabilities. Deferred tax assets and liabilities are determined based on the difference between the financial statement and tax bases of assets and liabilities as measured by the enacted tax rates that will be in effect when these differences reverse. Valuation allowances are recorded as appropriate to reduce deferred tax assets to the amount considered likely to be realized.
The following table provides the components of the Company’s Income Before Income Taxes for 2025, 2024 and 2023:
202520242023
(in millions)
U.S. $817 $962 $937 
Non-U.S. 65 66 84 
Income Before Income Taxes$882 $1,028 $1,021 
The following table provides the components of the Company’s Provision for Income Taxes for 2025, 2024 and 2023:
202520242023
 (in millions)
Current:
U.S. Federal$127 $281 $214 
U.S. State35 54 49 
Non-U.S.8 8 7 
Total170 343 270 
Deferred:
U.S. Federal41 (121)(19)
U.S. State2 (6)(2)
Non-U.S.20 14 (106)
Total63 (113)(127)
Provision for Income Taxes$233 $230 $143 
The following table provides the reconciliation between the statutory federal income tax rate and the effective tax rate for 2025:
2025
(in millions)%
Provision for Income Taxes at U.S. Federal Statutory Tax Rate$185 21.0%
State and Local Income Taxes, Net of Federal Income Tax Effect (a)34 3.8%
Foreign Tax Effects14 1.6%
Effect of Cross-Border Tax Laws(3)(0.3%)
Tax Credits(3)(0.3%)
Changes in Valuation Allowances1 0.1%
Nontaxable or Nondeductible Items5 0.5%
Changes in Unrecognized Tax Benefits— —%
Effective Tax Rate$233 26.4%
 ________________
(a) State and local taxes in California, New York, Illinois, New Jersey, Tennessee, Florida, and Pennsylvania contributed to the majority of the tax effect in this category.
The following table provides the reconciliation between the statutory federal income tax rate and the effective tax rate for 2024 and 2023:
20242023
Federal Income Tax Rate21.0%21.0%
State Income Taxes, Net of Federal Income Tax Effect4.4%4.0%
Impact of Non-U.S. Operations0.9%0.2%
Change in Valuation Allowance(4.2%)(11.0%)
Share-based Compensation —%0.1%
Uncertain Tax Positions0.3%—%
Other Items, Net—%(0.4%)
Effective Tax Rate22.4%13.9%
Deferred Taxes
Deferred tax assets and liabilities represent the future effects on income taxes resulting from temporary differences and carryforwards at the end of the respective year.
The following table provides the effect of temporary differences that cause deferred income taxes as of January 31, 2026 and February 1, 2025:
 January 31, 2026February 1, 2025
AssetsLiabilitiesTotalAssetsLiabilitiesTotal
(in millions)
Loss Carryforwards$338 $— $338 $367 $— $367 
Leases248 (236)12 260 (247)13 
Capitalized Research and Development— — — 37 — 37 
Share-based Compensation8 — 8 8 — 8 
Property and Equipment10 (130)(120)7 (122)(115)
Trade Names — (38)(38)— (38)(38)
Other, Net62 (12)50 55 (11)44 
Valuation Allowance(203)— (203)(210)— (210)
Total Deferred Income Taxes$463 $(416)$47 $524 $(418)$106 
As of January 31, 2026, the Company had loss carryforwards of $338 million, of which $237 million had an indefinite carryforward. The remainder of the U.S. and non-U.S. carryforwards, if unused, will expire at various dates from 2026 through 2040 and 2033 through 2041, respectively. For certain jurisdictions where the Company has determined that it is more likely
than not that the loss carryforwards will not be realized, a valuation allowance has been provided on those loss carryforwards as well as other net deferred tax assets.
The following table provides the components of the Company's income tax payments (net of refunds received) for 2025, 2024 and 2023:
202520242023
(in millions)
U.S. Federal$177 $294 $181 
U.S. State36 50 45 
Non-U.S.10 7 5 
Income Tax Payments$223 $351 $231 
Uncertain Tax Positions
The following table summarizes the activity related to the Company’s unrecognized tax benefits for U.S. federal, state and non-U.S. tax jurisdictions for 2025, 2024 and 2023, without interest and penalties:
202520242023
(in millions)
Gross Unrecognized Tax Benefits, as of the Beginning of the Fiscal Year$149 $145 $149 
Increases to Unrecognized Tax Benefits for Prior Years— 1 1 
Decreases to Unrecognized Tax Benefits for Prior Years— (3)(7)
Increases to Unrecognized Tax Benefits as a Result of Current Year Activity4 12 5 
Decreases to Unrecognized Tax Benefits Relating to Settlements with Taxing Authorities(14)— (1)
Decreases to Unrecognized Tax Benefits as a Result of a Lapse of the Applicable Statute of Limitations(8)(6)(2)
Gross Unrecognized Tax Benefits, as of the End of the Fiscal Year$131 $149 $145 
Of the total gross unrecognized tax benefits, approximately $75 million, $91 million and $131 million, at January 31, 2026, February 1, 2025, and February 3, 2024, respectively, represent the amount of unrecognized tax benefits that, if recognized, would favorably affect the effective income tax rate in future periods. These amounts are net of the offsetting tax effects from other tax jurisdictions.
The Company recognizes interest and penalties related to unrecognized tax benefits as components of income tax expense. The Company recognized an income tax expense from interest and penalties of approximately $6 million for 2025, $11 million for 2024 and $9 million for 2023. The Company had accrued $36 million and $30 million for the payment of interest and penalties as of January 31, 2026 and February 1, 2025, respectively. Accrued interest and penalties are included within Other Long-term Liabilities on the Consolidated Balance Sheets.
The Company files U.S. federal income tax returns as well as income tax returns in various states and in non-U.S. jurisdictions. The Company is a participant in the Compliance Assurance Process, which is a program made available by the Internal Revenue Service (“IRS”) to certain qualifying large taxpayers, under which participants work collaboratively with the IRS to identify and resolve potential tax issues through open, cooperative and transparent interaction prior to the annual filing of their federal income tax returns. The IRS is currently examining the Company’s 2020 to 2025 consolidated U.S. federal income tax returns.
The Company is also subject to various state and local income tax examinations for the years 2018 to 2024. Finally, the Company is subject to multiple non-U.S. tax jurisdiction examinations for the years 2021 to 2023. In some situations, the Company determines that it does not have a filing requirement in a particular tax jurisdiction. Where no return has been filed, no statute of limitations applies. Accordingly, if a tax jurisdiction reaches a conclusion that a filing requirement does exist, additional years may be reviewed by the tax authority. The Company believes it has appropriately accounted for uncertainties related to this issue.
The following table provides the components of the Company’s Income Before Income Taxes for 2025, 2024 and 2023:
202520242023
(in millions)
U.S. $817 $962 $937 
Non-U.S. 65 66 84 
Income Before Income Taxes$882 $1,028 $1,021 
817000000 962000000 937000000 65000000 66000000 84000000 882000000 1028000000 1021000000
The following table provides the components of the Company’s Provision for Income Taxes for 2025, 2024 and 2023:
202520242023
 (in millions)
Current:
U.S. Federal$127 $281 $214 
U.S. State35 54 49 
Non-U.S.8 8 7 
Total170 343 270 
Deferred:
U.S. Federal41 (121)(19)
U.S. State2 (6)(2)
Non-U.S.20 14 (106)
Total63 (113)(127)
Provision for Income Taxes$233 $230 $143 
127000000 281000000 214000000 35000000 54000000 49000000 8000000 8000000 7000000 170000000 343000000 270000000 41000000 -121000000 -19000000 2000000 -6000000 -2000000 20000000 14000000 -106000000 63000000 -113000000 -127000000 233000000 230000000 143000000
The following table provides the reconciliation between the statutory federal income tax rate and the effective tax rate for 2025:
2025
(in millions)%
Provision for Income Taxes at U.S. Federal Statutory Tax Rate$185 21.0%
State and Local Income Taxes, Net of Federal Income Tax Effect (a)34 3.8%
Foreign Tax Effects14 1.6%
Effect of Cross-Border Tax Laws(3)(0.3%)
Tax Credits(3)(0.3%)
Changes in Valuation Allowances1 0.1%
Nontaxable or Nondeductible Items5 0.5%
Changes in Unrecognized Tax Benefits— —%
Effective Tax Rate$233 26.4%
 ________________
(a) State and local taxes in California, New York, Illinois, New Jersey, Tennessee, Florida, and Pennsylvania contributed to the majority of the tax effect in this category.
The following table provides the reconciliation between the statutory federal income tax rate and the effective tax rate for 2024 and 2023:
20242023
Federal Income Tax Rate21.0%21.0%
State Income Taxes, Net of Federal Income Tax Effect4.4%4.0%
Impact of Non-U.S. Operations0.9%0.2%
Change in Valuation Allowance(4.2%)(11.0%)
Share-based Compensation —%0.1%
Uncertain Tax Positions0.3%—%
Other Items, Net—%(0.4%)
Effective Tax Rate22.4%13.9%
185000000 0.210 34000000 0.038 14000000 0.016 -3000000 -0.003 3000000 0.003 1000000 0.001 5000000 0.005 0 0 233000000 0.264 0.210 0.210 0.044 0.040 0.009 0.002 -0.042 -0.110 0 0.001 0.003 0 0 -0.004 0.224 0.139
The following table provides the effect of temporary differences that cause deferred income taxes as of January 31, 2026 and February 1, 2025:
 January 31, 2026February 1, 2025
AssetsLiabilitiesTotalAssetsLiabilitiesTotal
(in millions)
Loss Carryforwards$338 $— $338 $367 $— $367 
Leases248 (236)12 260 (247)13 
Capitalized Research and Development— — — 37 — 37 
Share-based Compensation8 — 8 8 — 8 
Property and Equipment10 (130)(120)7 (122)(115)
Trade Names — (38)(38)— (38)(38)
Other, Net62 (12)50 55 (11)44 
Valuation Allowance(203)— (203)(210)— (210)
Total Deferred Income Taxes$463 $(416)$47 $524 $(418)$106 
338000000 338000000 367000000 367000000 248000000 236000000 12000000 260000000 247000000 13000000 37000000 37000000 8000000 8000000 8000000 8000000 10000000 130000000 -120000000 7000000 122000000 -115000000 38000000 -38000000 38000000 -38000000 62000000 12000000 50000000 55000000 11000000 44000000 203000000 203000000 210000000 210000000 463000000 416000000 47000000 524000000 418000000 106000000 338000000 237000000
The following table provides the components of the Company's income tax payments (net of refunds received) for 2025, 2024 and 2023:
202520242023
(in millions)
U.S. Federal$177 $294 $181 
U.S. State36 50 45 
Non-U.S.10 7 5 
Income Tax Payments$223 $351 $231 
177000000 294000000 181000000 36000000 50000000 45000000 10000000 7000000 5000000 223000000 351000000 231000000
The following table summarizes the activity related to the Company’s unrecognized tax benefits for U.S. federal, state and non-U.S. tax jurisdictions for 2025, 2024 and 2023, without interest and penalties:
202520242023
(in millions)
Gross Unrecognized Tax Benefits, as of the Beginning of the Fiscal Year$149 $145 $149 
Increases to Unrecognized Tax Benefits for Prior Years— 1 1 
Decreases to Unrecognized Tax Benefits for Prior Years— (3)(7)
Increases to Unrecognized Tax Benefits as a Result of Current Year Activity4 12 5 
Decreases to Unrecognized Tax Benefits Relating to Settlements with Taxing Authorities(14)— (1)
Decreases to Unrecognized Tax Benefits as a Result of a Lapse of the Applicable Statute of Limitations(8)(6)(2)
Gross Unrecognized Tax Benefits, as of the End of the Fiscal Year$131 $149 $145 
149000000 145000000 149000000 0 1000000 1000000 0 3000000 7000000 4000000 12000000 5000000 14000000 0 1000000 8000000 6000000 2000000 131000000 149000000 145000000 75000000 91000000 131000000 6000000 11000000 9000000 36000000 30000000 Long-term Debt and Borrowing Facility
The following table provides the Company’s outstanding debt balances, net of unamortized debt issuance costs and discounts, as of January 31, 2026 and February 1, 2025:
January 31,
2026		February 1,
2025
(in millions)
Senior Debt with Subsidiary Guarantee
$284 million, 6.694% Fixed Interest Rate Notes due January 2027 (“2027 Notes”)
$280 $277 
$444 million, 5.250% Fixed Interest Rate Notes due February 2028 (“2028 Notes”)
444 443 
$482 million, 7.500% Fixed Interest Rate Notes due June 2029 (“2029 Notes”)
477 476 
$844 million, 6.625% Fixed Interest Rate Notes due October 2030 (“2030 Notes”)
839 838 
$802 million, 6.875% Fixed Interest Rate Notes due November 2035 (“2035 Notes”)
797 796 
$575 million, 6.750% Fixed Interest Rate Notes due July 2036 (“2036 Notes”)
571 571 
Total Senior Debt with Subsidiary Guarantee3,408 3,401 
Senior Debt
$284 million, 6.950% Fixed Interest Rate Debentures due March 2033 (“2033 Notes”)
284 283 
$201 million, 7.600% Fixed Interest Rate Notes due July 2037 (“2037 Notes”)
200 200 
Total Senior Debt484 483 
Total Debt3,892 3,884 
Current Debt(280)— 
Total Long-term Debt, Net of Current Portion$3,612 $3,884 
The following table provides principal payments due on outstanding debt in the next five fiscal years and the remaining years thereafter:
Fiscal Year(in millions)
2026$284 
2027— 
2028444 
2029482 
2030844 
Thereafter1,862 
Cash paid for interest was $263 million in 2025, $289 million in 2024 and $346 million in 2023.
Repurchases of Notes
The losses and gains on the extinguishment of debt, which include the write-offs of unamortized issuance costs and discounts, are included in Other Income, Net in the Consolidated Statements of Income. There were no repurchases of outstanding senior notes in 2025.
2024 Repurchases
During 2024, the Company repurchased in the open market and extinguished $200 million principal amount of its outstanding senior notes. The aggregate repurchase price for these notes was $202 million, resulting in an aggregate pre-tax loss of $3 million, including the write-off of unamortized issuance costs and discounts.
During 2024, the Company also completed a make-whole call to repurchase the remaining $314 million principal amount of its outstanding 2025 Notes. The repurchase price for these notes was $320 million, resulting in a pre-tax loss of $7 million, including the write-off of unamortized issuance costs and discounts.
The following table provides details of the outstanding principal amounts of senior notes repurchased and extinguished during 2024:
2024
(in millions)
2025 Notes$314 
2027 Notes14 
2028 Notes17 
2029 Notes17 
2030 Notes94 
2033 Notes10 
2035 Notes10 
2036 Notes38 
Total$514 
Asset-backed Revolving Credit Facility
The Company and certain of the Company’s 100% owned subsidiaries guarantee and pledge collateral to secure an asset-backed revolving credit facility (“ABL Facility”). The ABL Facility, which allows borrowings and letters of credit in U.S. and Canadian dollars, has aggregate commitments of $750 million.
In May 2025, the Company entered into an amendment and restatement (“Amendment”) of the ABL Facility. The Amendment removed the interest rate credit spread adjustment of 0.10%, extended the expiration date from August 2026 to May 2030 and included certain other technical amendments.
Availability under the ABL Facility is the lesser of (i) the borrowing base, determined primarily based on the Company’s eligible U.S. and Canadian credit card receivables, accounts receivable, inventory and eligible real property, or (ii) the aggregate commitment. If at any time the outstanding amount under the ABL Facility exceeds the lesser of (i) the borrowing base and (ii) the aggregate commitment, the Company is required to repay the outstanding amounts under the ABL Facility to the extent of such excess. As of January 31, 2026, the Company’s borrowing base was $482 million and it had no borrowings outstanding under the ABL Facility.
The ABL Facility supports the Company’s letter of credit program. The Company had $9 million of outstanding letters of credit as of January 31, 2026 that reduced its availability under the ABL Facility. As of January 31, 2026, the Company’s availability under the ABL Facility was $473 million.
As of January 31, 2026, the ABL Facility fees related to committed and unutilized amounts were 0.30% per annum, and the fees related to outstanding letters of credit were 1.25% per annum. In addition, the interest rate on outstanding U.S. dollar borrowings was the Term Secured Overnight Financing Rate plus 1.25% per annum. The interest rate on outstanding Canadian dollar-denominated borrowings was the Canadian Overnight Repo Rate Average plus 1.25% per annum.
The ABL Facility requires the Company to maintain a fixed charge coverage ratio of not less than 1.00 to 1.00 during an event of default or any period commencing on any day when specified excess availability is less than the greater of (i) $70 million or (ii) 10% of the maximum borrowing amount. As of January 31, 2026, the Company was not required to maintain this ratio.
The following table provides the Company’s outstanding debt balances, net of unamortized debt issuance costs and discounts, as of January 31, 2026 and February 1, 2025:
January 31,
2026		February 1,
2025
(in millions)
Senior Debt with Subsidiary Guarantee
$284 million, 6.694% Fixed Interest Rate Notes due January 2027 (“2027 Notes”)
$280 $277 
$444 million, 5.250% Fixed Interest Rate Notes due February 2028 (“2028 Notes”)
444 443 
$482 million, 7.500% Fixed Interest Rate Notes due June 2029 (“2029 Notes”)
477 476 
$844 million, 6.625% Fixed Interest Rate Notes due October 2030 (“2030 Notes”)
839 838 
$802 million, 6.875% Fixed Interest Rate Notes due November 2035 (“2035 Notes”)
797 796 
$575 million, 6.750% Fixed Interest Rate Notes due July 2036 (“2036 Notes”)
571 571 
Total Senior Debt with Subsidiary Guarantee3,408 3,401 
Senior Debt
$284 million, 6.950% Fixed Interest Rate Debentures due March 2033 (“2033 Notes”)
284 283 
$201 million, 7.600% Fixed Interest Rate Notes due July 2037 (“2037 Notes”)
200 200 
Total Senior Debt484 483 
Total Debt3,892 3,884 
Current Debt(280)— 
Total Long-term Debt, Net of Current Portion$3,612 $3,884 
284000000 0.06694 280000000 277000000 444000000 0.05250 444000000 443000000 482000000 0.07500 477000000 476000000 844000000 0.06625 839000000 838000000 802000000 0.06875 797000000 796000000 575000000 0.06750 571000000 571000000 3408000000 3401000000 284000000 0.06950 284000000 283000000 201000000 0.07600 200000000 200000000 484000000 483000000 3892000000 3884000000 280000000 0 3612000000 3884000000
The following table provides principal payments due on outstanding debt in the next five fiscal years and the remaining years thereafter:
Fiscal Year(in millions)
2026$284 
2027— 
2028444 
2029482 
2030844 
Thereafter1,862 
284000000 0 444000000 482000000 844000000 1862000000 263000000 289000000 346000000 200000000 202000000 -3000000 314000000 320000000 -7000000
The following table provides details of the outstanding principal amounts of senior notes repurchased and extinguished during 2024:
2024
(in millions)
2025 Notes$314 
2027 Notes14 
2028 Notes17 
2029 Notes17 
2030 Notes94 
2033 Notes10 
2035 Notes10 
2036 Notes38 
Total$514 
314000000 14000000 17000000 17000000 94000000 10000000 10000000 38000000 514000000 750000000 0.0010 482000000 0 9000000 473000000 0.0030 0.0125 0.0125 0.0125 1.00 70000000 0.10 Fair Value Measurements
The following table provides a summary of the principal value and estimated fair value of the Company’s outstanding debt as of January 31, 2026 and February 1, 2025:
January 31,
2026		February 1,
2025
 (in millions)
Principal Value$3,916 $3,916 
Fair Value, Estimated (a)3,964 3,986 
________________
(a)The estimated fair value of the Company’s debt is based on reported transaction prices, which are considered Level 2 inputs in accordance with ASC 820. 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 the Company’s Accounts Receivable, Accounts Payable and Accrued Expenses approximate their fair values as of January 31, 2026 because of their short maturities.
The following table provides a summary of the principal value and estimated fair value of the Company’s outstanding debt as of January 31, 2026 and February 1, 2025:
January 31,
2026		February 1,
2025
 (in millions)
Principal Value$3,916 $3,916 
Fair Value, Estimated (a)3,964 3,986 
________________
(a)The estimated fair value of the Company’s debt is based on reported transaction prices, which are considered Level 2 inputs in accordance with ASC 820. The estimates presented are not necessarily indicative of the amounts that the Company could realize in a current market exchange.
3916000000 3916000000 3964000000 3986000000 Commitments and Contingencies
The Company is subject to various claims and contingencies related to lawsuits, taxes, insurance, regulatory and other matters arising in the ordinary course of business. Actions filed against the Company from time to time may include commercial, tort, intellectual property, tax, customer, employment, wage and hour, data privacy, securities, anti-corruption 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.
Lease Guarantees
In connection with the spin-off of Victoria’s Secret & Co., the Company had remaining contingent obligations of $215 million as of January 31, 2026 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 spin-off. The Company’s reserves related to these obligations were not significant for any period presented.
215000000 Shareholders’ Equity (Deficit)
Common Stock Repurchases and Retirements
Under the authority of the Company’s Board, the Company repurchased shares of its common stock under the following repurchase programs during 2025 and 2024:

Repurchase
Program		Amount
Authorized		Shares
Repurchased		Amount
Repurchased		Average Stock Price
202520242025202420252024
(in millions)(in thousands)(in millions)
February 2022$1,500 NA842 NA$39 NA$46.08 
January 2024500 460 9,583 $17 361 $37.67 37.70 
January 2025500 14,612 NA383 NA26.19NA
Total15,072 10,425 $400 $400 

There were share repurchases of $1 million reflected in Accounts Payable on the Consolidated Balance Sheet as of February 1, 2025. On February 27, 2025, the Company cancelled the remaining $121 million authorization available under the January 2024 Program and began repurchasing shares under the January 2025 Program.
The January 2025 Program had $117 million and $500 million of remaining authority as of January 31, 2026 and February 1, 2025, respectively. There were no share repurchases reflected in Accounts Payable on the Consolidated Balance Sheet as of January 31, 2026.
Shares repurchased under these programs are retired and cancelled upon repurchase. As a result, the Company retired the 15.072 million and 10.425 million shares repurchased during 2025 and 2024, respectively.
Dividends
The Company paid the following dividends during 2025, 2024 and 2023:
Ordinary DividendsTotal Paid
(per share)(in millions)
2025
First Quarter$0.20 $43 
Second Quarter0.20 42 
Third Quarter0.20 41 
Fourth Quarter0.20 41 
2025 Total
$0.80 $167 
2024
First Quarter$0.20 $45 
Second Quarter0.20 45 
Third Quarter0.20 44 
Fourth Quarter0.20 43 
2024 Total
$0.80 $177 
2023
First Quarter$0.20 $46 
Second Quarter0.20 46 
Third Quarter0.20 45 
Fourth Quarter0.20 45 
2023 Total
$0.80 $182 
On March 6, 2026, the Company paid its first quarter 2026 ordinary dividend of $0.20 per share to stockholders of record at the close of business on February 20, 2026.
Under the authority of the Company’s Board, the Company repurchased shares of its common stock under the following repurchase programs during 2025 and 2024:

Repurchase
Program		Amount
Authorized		Shares
Repurchased		Amount
Repurchased		Average Stock Price
202520242025202420252024
(in millions)(in thousands)(in millions)
February 2022$1,500 NA842 NA$39 NA$46.08 
January 2024500 460 9,583 $17 361 $37.67 37.70 
January 2025500 14,612 NA383 NA26.19NA
Total15,072 10,425 $400 $400 
1500000000 842000 39000000 46.08 500000000 460000 9583000 17000000 361000000 37.67 37.70 500000000 14612000 383000000 26.19 15072000 10425000 400000000 400000000 1000000 121000000 117000000 500000000 15072000.000 10425000
The Company paid the following dividends during 2025, 2024 and 2023:
Ordinary DividendsTotal Paid
(per share)(in millions)
2025
First Quarter$0.20 $43 
Second Quarter0.20 42 
Third Quarter0.20 41 
Fourth Quarter0.20 41 
2025 Total
$0.80 $167 
2024
First Quarter$0.20 $45 
Second Quarter0.20 45 
Third Quarter0.20 44 
Fourth Quarter0.20 43 
2024 Total
$0.80 $177 
2023
First Quarter$0.20 $46 
Second Quarter0.20 46 
Third Quarter0.20 45 
Fourth Quarter0.20 45 
2023 Total
$0.80 $182 
0.20 43000000 0.20 42000000 0.20 41000000 0.20 41000000 0.80 167000000 0.20 45000000 0.20 45000000 0.20 44000000 0.20 43000000 0.80 177000000 0.20 46000000 0.20 46000000 0.20 45000000 0.20 45000000 0.80 182000000 0.20 Share-based Compensation
Plan Summary
In 2020, the Company’s stockholders approved the 2020 Stock Option and Performance Incentive Plan (“2020 Plan”). The 2020 Plan replaced the 2015 Stock Option and Performance Incentive Plan (together with the 2020 Plan, the “Plans”). The Plans provide for the grant of incentive stock options, non-qualified stock options, stock appreciation rights, restricted stock units, restricted stock, performance share units and unrestricted shares. Historically, the Company granted stock options at a price equal to the fair market value of the stock on the date of grant. Stock options have a maximum term of 10 years. Stock options and restricted stock units generally vest over three-to-five-years. Performance share units generally cliff vest at the end of a three-year performance period based upon the Company’s achievement of pre-established goals over the performance period.
Under the Plans, 206 million options, restricted and unrestricted shares have been authorized to be granted to associates and directors. There were 10 million shares of common stock available for future issuance under the Plans as of January 31, 2026.
Income Statement Impacts
The following table provides Share-based Compensation Expense included in the Consolidated Statements of Income for 2025, 2024 and 2023:
202520242023
 (in millions)
Costs of Goods Sold, Buying and Occupancy$9 $11 $13 
General, Administrative and Store Operating Expenses22 29 30 
Total Share-based Compensation Expense$31 $40 $43 
The Company recognized incremental tax expense associated with share-based compensation of $2 million in 2025 and $1 million for 2023. There was no incremental tax expense associated with share-based compensation in 2024.
Restricted Stock Units and Performance Share Units
The following table provides the Company’s restricted stock unit and performance share unit activity on a combined basis for the year ended January 31, 2026:
Number of
Shares		Weighted-average
Grant Date Fair Value
 (in thousands) 
Unvested as of February 1, 2025
2,195 $41.69 
Granted1,762 27.80 
Vested(904)41.86 
Cancelled(638)35.92 
Unvested as of January 31, 2026
2,415 $33.06 
The fair value of restricted stock unit and performance share unit awards is generally based on the market value of the Company’s common stock on the grant date adjusted for anticipated dividend yields. The weighted-average estimated fair value of awards granted was $27.80 per share for 2025, $44.65 per share for 2024 and $35.93 per share for 2023.
The Company’s total intrinsic value of awards that vested was $28 million for 2025, $50 million for 2024 and $31 million for 2023. The Company’s total fair value at grant date of awards that vested was $38 million for 2025, $48 million for 2024 and $36 million 2023.
Tax benefits realized from tax deductions associated with awards that vested were $4 million for 2025, $8 million for 2024 and $6 million for 2023.
As of January 31, 2026, there was $29 million of total unrecognized compensation cost, net of estimated forfeitures, related to unvested restricted stock and performance share units. This cost is expected to be recognized over a weighted-average period of 1.9 years.
P10Y P5Y P3Y 206000000 10000000
The following table provides Share-based Compensation Expense included in the Consolidated Statements of Income for 2025, 2024 and 2023:
202520242023
 (in millions)
Costs of Goods Sold, Buying and Occupancy$9 $11 $13 
General, Administrative and Store Operating Expenses22 29 30 
Total Share-based Compensation Expense$31 $40 $43 
9000000 11000000 13000000 22000000 29000000 30000000 31000000 40000000 43000000 -2000000 -1000000 0
The following table provides the Company’s restricted stock unit and performance share unit activity on a combined basis for the year ended January 31, 2026:
Number of
Shares		Weighted-average
Grant Date Fair Value
 (in thousands) 
Unvested as of February 1, 2025
2,195 $41.69 
Granted1,762 27.80 
Vested(904)41.86 
Cancelled(638)35.92 
Unvested as of January 31, 2026
2,415 $33.06 
2195000 41.69 1762000 27.80 904000 41.86 638000 35.92 2415000 33.06 27.80 44.65 35.93 28000000 50000000 31000000 38000000 48000000 36000000 4000000 8000000 6000000 29000000 P1Y10M24D Segment Reporting
The Company is managed at the consolidated level and therefore operates and reports as a single segment. The Company’s Chief Executive Officer is its Chief Operating Decision Maker (“CODM”), and the measure of profitability included in the financial information regularly provided to the CODM is total Company Adjusted Operating Income, or Operating Income in periods where there are no adjustments. The Company’s CODM assesses Adjusted Operating Income performance in comparison to forecasts and historical results to make decisions on the reinvestment of profits into the business and capital allocation strategies.
The following table illustrates significant segment expenses that were regularly provided to the CODM in 2025, 2024, and 2023:

202520242023
 (in millions)
Net Sales$7,291 $7,307 $7,429 
Adjusted Costs of Goods Sold (2,930)(2,880)(2,970)
Buying and Occupancy(1,171)(1,193)(1,223)
Selling Expenses (1,238)(1,191)(1,177)
Marketing Expenses (255)(242)(189)
Adjusted General and Administrative Expenses(541)(535)(585)
Adjusted Operating Income1,156 1,266 1,285 
Business Transformation Activities (a)(15)— — 
Leadership Transition Costs (b)(15)— — 
Reported Operating Income$1,126 $1,266 $1,285 
________________
(a)In 2025, the Company recognized aggregate pre-tax costs of $15 million, resulting from business transformation activities, and primarily related to severance benefits, in connection with the Consumer First Formula, of which $1 million and $14 million were excluded from Costs of Goods Sold and General and Administrative Expenses, respectively, in the Adjusted Operating Income details provided to the CODM.
(b)In 2025, the Company recognized aggregate pre-tax costs of $15 million due to the transition of certain members of the leadership team, primarily related to severance benefits, which were excluded from General and Administrative Expenses in the Adjusted Operating Income details provided to the CODM.
As a single reportable segment entity, the other disclosures required by ASC 280, Segment Reporting, can be found in the Company’s Consolidated Financial Statements and the Notes thereto, including the Company’s measure of segment assets,
which is total consolidated assets.
The following table illustrates significant segment expenses that were regularly provided to the CODM in 2025, 2024, and 2023:

202520242023
 (in millions)
Net Sales$7,291 $7,307 $7,429 
Adjusted Costs of Goods Sold (2,930)(2,880)(2,970)
Buying and Occupancy(1,171)(1,193)(1,223)
Selling Expenses (1,238)(1,191)(1,177)
Marketing Expenses (255)(242)(189)
Adjusted General and Administrative Expenses(541)(535)(585)
Adjusted Operating Income1,156 1,266 1,285 
Business Transformation Activities (a)(15)— — 
Leadership Transition Costs (b)(15)— — 
Reported Operating Income$1,126 $1,266 $1,285 
________________
(a)In 2025, the Company recognized aggregate pre-tax costs of $15 million, resulting from business transformation activities, and primarily related to severance benefits, in connection with the Consumer First Formula, of which $1 million and $14 million were excluded from Costs of Goods Sold and General and Administrative Expenses, respectively, in the Adjusted Operating Income details provided to the CODM.
(b)In 2025, the Company recognized aggregate pre-tax costs of $15 million due to the transition of certain members of the leadership team, primarily related to severance benefits, which were excluded from General and Administrative Expenses in the Adjusted Operating Income details provided to the CODM.
7291000000 7307000000 7429000000 2930000000 2880000000 2970000000 1171000000 1193000000 1223000000 1238000000 1191000000 1177000000 255000000 242000000 189000000 541000000 535000000 585000000 1156000000 1266000000 1285000000 15000000 0 0 15000000 0 0 1126000000 1266000000 1285000000 15000000 1000000 14000000 15000000 Subsequent Events
Subsequent to January 31, 2026, the Company received cash proceeds of $88 million, net of legal fees, related to the favorable settlement of payment card interchange fee litigation.
Subsequent to January 31, 2026, the Company issued notice of redemption for any and all outstanding of its 6.694% Senior Notes due January 2027. The Company expects the aggregate redemption price to be approximately $289 million, and to recognize a pre-tax loss of approximately $9 million in the first quarter of fiscal 2026 as a result of this redemption.
Subsequent to January 31, 2026, the Company recognized a tax benefit of $62 million, due to the resolution of certain tax matters.
88000000 0.06694 289000000 -9000000 62000000 false false false false true Results include fulfilled buy online pick up in store orders. Results include royalties associated with franchised stores and wholesale sales. These awards were excluded from the calculation of Net Income per Diluted Share because their inclusion would have been anti-dilutive. These payments are included within the Operating Activities section of the Consolidated Statements of Cash Flows. The estimated fair value of the Company’s debt is based on reported transaction prices, which are considered Level 2 inputs in accordance with ASC 820. The estimates presented are not necessarily indicative of the amounts that the Company could realize in a current market exchange.