Bath & Body Works, Inc 10-Q for FY2026 Q1
Bath & Body Works, Inc. (BBWI)
10-Q
2025-05-29
For: 2025-05-03
View Original
Added on
April 04, 2026
About this 10-Q
Bath & Body Works, Inc filed this 10-Q on May 29, 2025, covering the quarter ended May 3, 2025 (FY2026 Q1).
Headline figures
Quarter ended May 3, 2025, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $1.42B
- up 2.9% from $1.38B a year earlier
- Net income
- $105M
- up 20.7% from net income of $87M a year earlier
- Diluted EPS
- $0.49
- up 28.9% from $0.38 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________________________
FORM 10-Q
_________________________________
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the quarterly period ended May 3, 2025
OR
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the transition period from to
Commission file number 1-8344
_________________________________
(Exact name of registrant as specified in its charter)
_______________________________
| (State or other jurisdiction of incorporation or organization) | (IRS Employer Identification No.) | |||||||
| (Address of principal executive offices) | (Zip Code) | |||||||
| (Registrant’s Telephone Number, Including Area Code) | ||||||||
| (Former name, former address and former fiscal year, if changed since last report) | ||||||||
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| ☒ | Accelerated filer | ☐ | Smaller reporting company | Non-accelerated filer | ☐ | Emerging growth company | |||||||||||||||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.): Yes ☐ No ☒
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
As of May 23, 2025, the number of outstanding shares of the Registrant’s common stock was 211,611,794 shares.
BATH & BODY WORKS, INC. ®
TABLE OF CONTENTS
| Page No. | |||||
Item 1. Financial Statements * | |||||
Item 4. Controls and Procedures | |||||
Item 1. Legal Proceedings | |||||
Item 1A. Risk Factors | |||||
Item 3. Defaults Upon Senior Securities | |||||
Item 4. Mine Safety Disclosures | |||||
Item 5. Other Information | |||||
Item 6. Exhibits | |||||
| * | The Company’s fiscal year ends on the Saturday nearest to January 31. As used herein, “first quarter of 2025” and “first quarter of 2024” refer to the thirteen-week periods ended May 3, 2025 and May 4, 2024, respectively. | ||||
2
PART I—FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
BATH & BODY WORKS, INC.
CONSOLIDATED STATEMENTS OF INCOME
(in millions, except per share amounts)
(Unaudited)
| First Quarter | |||||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| Net Sales | $ | $ | |||||||||||||||||||||
| Costs of Goods Sold, Buying and Occupancy | ( | ( | |||||||||||||||||||||
| Gross Profit | |||||||||||||||||||||||
| General, Administrative and Store Operating Expenses | ( | ( | |||||||||||||||||||||
| Operating Income | |||||||||||||||||||||||
| Interest Expense | ( | ( | |||||||||||||||||||||
| Other Income, Net | |||||||||||||||||||||||
| Income Before Income Taxes | |||||||||||||||||||||||
| Provision for Income Taxes | ( | ( | |||||||||||||||||||||
| Net Income | $ | $ | |||||||||||||||||||||
| Net Income per Basic Share | $ | $ | |||||||||||||||||||||
| Net Income per Diluted Share | $ | $ | |||||||||||||||||||||
BATH & BODY WORKS, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in millions)
(Unaudited)
| First Quarter | |||||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| Net Income | $ | $ | |||||||||||||||||||||
| Other Comprehensive Income (Loss), Net of Tax: | |||||||||||||||||||||||
| Foreign Currency Translation | ( | ||||||||||||||||||||||
| Unrealized (Loss) Gain on Cash Flow Hedges | ( | ||||||||||||||||||||||
| Reclassification of Cash Flow Hedges to Earnings | ( | ||||||||||||||||||||||
| Total Other Comprehensive Income (Loss), Net of Tax | ( | ||||||||||||||||||||||
| Total Comprehensive Income | $ | $ | |||||||||||||||||||||
The accompanying Notes are an integral part of these Consolidated Financial Statements.
3
BATH & BODY WORKS, INC.
CONSOLIDATED BALANCE SHEETS
(in millions, except par value amounts)
| May 3, 2025 | February 1, 2025 | May 4, 2024 | |||||||||||||||
| (Unaudited) | (Unaudited) | ||||||||||||||||
| ASSETS | |||||||||||||||||
| Current Assets: | |||||||||||||||||
| Cash and Cash Equivalents | $ | $ | $ | ||||||||||||||
| Accounts Receivable, Net | |||||||||||||||||
| Inventories | |||||||||||||||||
| Easton Assets Held for Sale | |||||||||||||||||
| Other | |||||||||||||||||
| Total Current Assets | |||||||||||||||||
| Property and Equipment, Net | |||||||||||||||||
| Operating Lease Assets | |||||||||||||||||
| Goodwill | |||||||||||||||||
| Trade Name | |||||||||||||||||
| Deferred Income Taxes | |||||||||||||||||
| Other Assets | |||||||||||||||||
| Total Assets | $ | $ | $ | ||||||||||||||
| LIABILITIES AND EQUITY (DEFICIT) | |||||||||||||||||
| Current Liabilities: | |||||||||||||||||
| Accounts Payable | $ | $ | $ | ||||||||||||||
| Accrued Expenses and Other | |||||||||||||||||
| Current Operating Lease Liabilities | |||||||||||||||||
| Income Taxes | |||||||||||||||||
| Total Current Liabilities | |||||||||||||||||
| Deferred Income Taxes | |||||||||||||||||
| Long-term Debt | |||||||||||||||||
| Long-term Operating Lease Liabilities | |||||||||||||||||
| Other Long-term Liabilities | |||||||||||||||||
| Shareholders’ Equity (Deficit): | |||||||||||||||||
Preferred Stock - $ | |||||||||||||||||
Common Stock - $ | |||||||||||||||||
| Paid-in Capital | |||||||||||||||||
| Accumulated Other Comprehensive Income | |||||||||||||||||
| Retained Earnings (Accumulated Deficit) | ( | ( | ( | ||||||||||||||
Less: Treasury Stock, at Average Cost; | ( | ( | ( | ||||||||||||||
| Total Shareholders’ Equity (Deficit) | ( | ( | ( | ||||||||||||||
| Noncontrolling Interest | |||||||||||||||||
| Total Equity (Deficit) | ( | ( | ( | ||||||||||||||
| Total Liabilities and Equity (Deficit) | $ | $ | $ | ||||||||||||||
The accompanying Notes are an integral part of these Consolidated Financial Statements.
4
BATH & BODY WORKS, INC.
CONSOLIDATED STATEMENTS OF TOTAL EQUITY (DEFICIT)
(in millions, except per share amounts)
(Unaudited)
First Quarter 2025
| Common Stock | Paid-In Capital | Accumulated Other Comprehensive Income | Retained Earnings (Accumulated Deficit) | Treasury Stock, at Average Cost | Noncontrolling Interest | Total Equity (Deficit) | |||||||||||||||||||||||||||||||||||||||||
| Shares Outstanding | Par Value | ||||||||||||||||||||||||||||||||||||||||||||||
Balance, February 1, 2025 | $ | $ | $ | $ | ( | $ | ( | $ | $ | ( | |||||||||||||||||||||||||||||||||||||
| Net Income | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Other Comprehensive Income | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Total Comprehensive Income | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
Cash Dividends ($ | — | — | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||||
| Repurchases of Common Stock | ( | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||
| Treasury Share Retirement | — | ( | ( | ( | — | ||||||||||||||||||||||||||||||||||||||||||
| Share-based Compensation and Other | — | — | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||||
Balance, May 3, 2025 | $ | $ | $ | $ | ( | $ | ( | $ | $ | ( | |||||||||||||||||||||||||||||||||||||
First Quarter 2024
| Common Stock | Paid-In Capital | Accumulated Other Comprehensive Income | Retained Earnings (Accumulated Deficit) | Treasury Stock, at Average Cost | Noncontrolling Interest | Total Equity (Deficit) | |||||||||||||||||||||||||||||||||||||||||
| Shares Outstanding | Par Value | ||||||||||||||||||||||||||||||||||||||||||||||
Balance, February 3, 2024 | $ | $ | $ | $ | ( | $ | ( | $ | $ | ( | |||||||||||||||||||||||||||||||||||||
| Net Income | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Other Comprehensive Loss | — | — | — | ( | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||
| Total Comprehensive Income | — | — | — | ( | — | — | |||||||||||||||||||||||||||||||||||||||||
Cash Dividends ($ | — | — | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||||
| Repurchases of Common Stock | ( | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||
| Treasury Share Retirement | — | ( | ( | — | ( | — | |||||||||||||||||||||||||||||||||||||||||
| Share-based Compensation and Other | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Balance, May 4, 2024 | $ | $ | $ | $ | ( | $ | ( | $ | $ | ( | |||||||||||||||||||||||||||||||||||||
The accompanying Notes are an integral part of these Consolidated Financial Statements.
5
BATH & BODY WORKS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
(Unaudited)
| First Quarter | |||||||||||
| 2025 | 2024 | ||||||||||
| Operating Activities: | |||||||||||
| Net Income | $ | $ | |||||||||
| Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities: | |||||||||||
| Depreciation of Long-lived Assets | |||||||||||
| Share-based Compensation Expense | |||||||||||
| Changes in Assets and Liabilities: | |||||||||||
| Accounts Receivable | |||||||||||
| Inventories | ( | ( | |||||||||
| Accounts Payable, Accrued Expenses and Other | ( | ||||||||||
| Income Taxes Payable | |||||||||||
| Other Assets and Liabilities | ( | ( | |||||||||
| Net Cash Provided by Operating Activities | |||||||||||
| Investing Activities: | |||||||||||
| Capital Expenditures | ( | ( | |||||||||
| Other Investing Activities | ( | ||||||||||
| Net Cash Used for Investing Activities | ( | ( | |||||||||
| Financing Activities: | |||||||||||
| Payments for Long-term Debt | ( | ||||||||||
| Repurchases of Common Stock | ( | ( | |||||||||
| Dividends Paid | ( | ( | |||||||||
| Tax Payments Related to Share-based Awards | ( | ( | |||||||||
| Other Financing Activities | ( | ( | |||||||||
| Net Cash Used for Financing Activities | ( | ( | |||||||||
| Effects of Exchange Rate Changes on Cash and Cash Equivalents | |||||||||||
| Net Decrease in Cash and Cash Equivalents | ( | ( | |||||||||
| Cash and Cash Equivalents, Beginning of Year | |||||||||||
| Cash and Cash Equivalents, End of Period | $ | $ | |||||||||
The accompanying Notes are an integral part of these Consolidated Financial Statements.
6
BATH & BODY WORKS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Description of Business and Basis of Presentation
Description of Business
Bath & Body Works, Inc. (the “Company”) is a global omnichannel retailer focused on 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 websites and other channels, under the Bath & Body Works®, White Barn® and other brand names. The Company’s international business is conducted through franchise, license and wholesale partners.
Fiscal Year
The Company’s fiscal year ends on the Saturday nearest to January 31. As used herein, “first quarter of 2025” and “first quarter of 2024” refer to the thirteen-week periods ended May 3, 2025 and May 4, 2024, respectively, and references to “quarter” and “year” each refer to the fiscal calendar period.
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.
Interim Financial Statements
The Consolidated Financial Statements as of and for the periods ended May 3, 2025 and May 4, 2024 are unaudited and are presented pursuant to the rules and regulations of the Securities and Exchange Commission. These Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and Notes thereto contained in the Company’s 2024 Annual Report on Form 10-K.
In the opinion of management, the accompanying Consolidated Financial Statements reflect all adjustments that are of a normal recurring nature and necessary for a fair presentation of the results for the interim periods.
Seasonality of Business
The Company’s operations are seasonal in nature and consist of two principal selling seasons: Spring (the first and second quarters) and Fall (the third and fourth quarters). Typically, the Company’s sales are highest during the fourth quarter of the fiscal year due to seasonal and holiday-related sales patterns. Due to the seasonal variations in the retail industry, the results of operations for the interim periods are not necessarily indicative of the results expected for the full fiscal year.
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. 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
7
Flows. Amounts due under the SCF program were $52 million and $7 million as of May 3, 2025 and February 1, 2025, respectively.
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.
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. As of May 3, 2025 and February 1, 2025, 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. These investments, consisting primarily of undeveloped land, are reported at their carrying value, which was $97 million and $96 million as of May 3, 2025 and February 1, 2025, respectively, within Current Assets on the Consolidated Balance Sheets. The Company also had other Easton investments not presented as held for sale, with a carrying value of $24 million and $26 million as of May 3, 2025 and February 1, 2025, respectively.
The Company’s Easton investments totaled $121 million as of May 4, 2024, and are reported in Other Assets on the May 4, 2024 Consolidated Balance Sheet as they did not meet all of the required criteria for held for sale presentation as of that date.
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, that requires enhanced income tax disclosures, primarily related to standardization and disaggregation of rate reconciliation categories and income taxes paid by jurisdiction. This standard is effective for fiscal years beginning after December 15, 2024, with early adoption permitted, and may be applied either prospectively or retrospectively. The Company is currently evaluating the impact of adopting this standard on its disclosures.
In November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses, that requires disclosures of disaggregated information about certain prescribed expense categories within relevant income statement expense captions. This standard is effective for annual reporting of fiscal years beginning after December 15, 2026, and for interim periods in the following year, with early adoption permitted. This standard should be applied prospectively, with retrospective application permitted. The Company is currently evaluating the impact of adopting this standard on its disclosures.
2. Revenue Recognition
Accounts receivable, net from revenue-generating activities were $67 million as of May 3, 2025, $81 million as of February 1, 2025 and $74 million as of May 4, 2024. These accounts receivable primarily relate to amounts due from the Company’s franchise, license and wholesale partners. Under these arrangements, payment terms are typically 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 $177 million as of May 3, 2025, $197 million as of
8
February 1, 2025 and $178 million as of May 4, 2024. The Company recognized $64 million as revenue during the first quarter of 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 the first quarters of 2025 and 2024:
| First Quarter | |||||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| (in millions) | |||||||||||||||||||||||
| Stores - U.S. and Canada (a) | $ | $ | |||||||||||||||||||||
| Direct - U.S. and Canada | |||||||||||||||||||||||
| International (b) | |||||||||||||||||||||||
| Total Net Sales | $ | $ | |||||||||||||||||||||
(a)Results include fulfilled buy online pick up in store orders.
(b)Results include royalties associated with franchised stores and wholesale sales.
3. Net Income Per Share and Shareholders’ Equity (Deficit)
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 the first quarters of 2025 and 2024:
| First Quarter | |||||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| (in millions) | |||||||||||||||||||||||
| Common Shares | |||||||||||||||||||||||
| Treasury Shares | ( | ( | |||||||||||||||||||||
| Basic Shares | |||||||||||||||||||||||
| Effect of Dilutive Awards | |||||||||||||||||||||||
| Diluted Shares | |||||||||||||||||||||||
| Anti-dilutive Awards (a) | |||||||||||||||||||||||
(a)These awards were excluded from the calculation of Net Income per Diluted Share because their inclusion would have been anti-dilutive.
Common Stock Repurchases and Retirements
Under the authority of the Company’s Board of Directors, the Company repurchased shares of its common stock under the following repurchase programs during the first quarters of 2025 and 2024:
| Repurchase Program | Amount Authorized | Shares Repurchased | Amount Repurchased | Average Stock Price | ||||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||||||||||||||||||||||
| (in millions) | (in thousands) | (in millions) | ||||||||||||||||||||||||||||||||||||||||||
| February 2022 | $ | NA | NA | $ | NA | $ | ||||||||||||||||||||||||||||||||||||||
| January 2024 | $ | $ | ||||||||||||||||||||||||||||||||||||||||||
| January 2025 | NA | NA | NA | |||||||||||||||||||||||||||||||||||||||||
| Total | $ | $ | ||||||||||||||||||||||||||||||||||||||||||
9
Shares repurchased under these programs are retired and cancelled upon repurchase. As a result, the Company retired the 4.326 million and 2.171 million shares repurchased during the first quarters of 2025 and 2024, respectively.
The January 2024 Program had $139 million of remaining authority as of February 1, 2025. There were share repurchases of $1 million as of February 1, 2025 and $5 million as of May 4, 2024 reflected in Accounts Payable on the Consolidated Balance Sheets.
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 $382 million of remaining authority as of May 3, 2025.
Dividends
The Company paid the following dividends during the first quarters of 2025 and 2024:
| Ordinary Dividends | Total Paid | ||||||||||
| (per share) | (in millions) | ||||||||||
| 2025 | |||||||||||
| First Quarter | $ | $ | |||||||||
| 2024 | |||||||||||
| First Quarter | $ | $ | |||||||||
In May 2025, the Company declared its second quarter 2025 ordinary dividend of $0.20 per share payable on June 20, 2025 to shareholders of record at the close of business on June 6, 2025.
4. Inventories
The following table provides details of Inventories as of May 3, 2025, February 1, 2025 and May 4, 2024:
| May 3, 2025 | February 1, 2025 | May 4, 2024 | |||||||||||||||
| (in millions) | |||||||||||||||||
| Finished Goods Merchandise | $ | $ | $ | ||||||||||||||
| Raw Materials and Merchandise Components | |||||||||||||||||
| Total Inventories | $ | $ | $ | ||||||||||||||
Inventories are principally valued at the lower of cost or net realizable value, on an average cost basis.
5. Long-lived Assets
The following table provides details of Property and Equipment, Net as of May 3, 2025, February 1, 2025 and May 4, 2024:
| May 3, 2025 | February 1, 2025 | May 4, 2024 | |||||||||||||||
| (in millions) | |||||||||||||||||
| Property and Equipment, at Cost | $ | $ | $ | ||||||||||||||
| Accumulated Depreciation and Amortization | ( | ( | ( | ||||||||||||||
| Property and Equipment, Net | $ | $ | $ | ||||||||||||||
6. Income Taxes
The provision for income taxes is based on the current estimate of the annual effective tax rate and is adjusted as necessary for quarterly events.
For the first quarter of 2025, the Company’s effective tax rate was 28.4 % compared to 26.8 % in the first quarter of 2024. The 2025 and 2024 first quarter rates were higher than the Company’s combined estimated federal and state statutory rates primarily due to accrued interest expense related to unrecognized tax benefits.
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7. Long-term Debt and Borrowing Facility
The following table provides the Company’s outstanding Long-term Debt balances, net of unamortized debt issuance costs and discounts, as of May 3, 2025, February 1, 2025 and May 4, 2024:
| May 3, 2025 | February 1, 2025 | May 4, 2024 | |||||||||||||||
| (in millions) | |||||||||||||||||
| Senior Debt with Subsidiary Guarantee | |||||||||||||||||
$ | $ | $ | $ | ||||||||||||||
$ | |||||||||||||||||
$ | |||||||||||||||||
$ | |||||||||||||||||
$ | |||||||||||||||||
$ | |||||||||||||||||
$ | |||||||||||||||||
| Total Senior Debt with Subsidiary Guarantee | |||||||||||||||||
| Senior Debt | |||||||||||||||||
$ | |||||||||||||||||
$ | |||||||||||||||||
| Total Senior Debt | |||||||||||||||||
| Total Long-term Debt | $ | $ | $ | ||||||||||||||
Repurchases of Notes
The Company did not repurchase any outstanding senior notes during the first quarter of 2025.
During the first quarter of 2024, the Company repurchased in the open market and extinguished $109 million principal amount of its outstanding senior notes. The aggregate repurchase price for these notes was $110 million, resulting in a pre-tax loss of $1 million, including the write-off of unamortized issuance costs. This loss is included in Other Income, Net in the first quarter of 2024 Consolidated Statement of Income.
The following table provides details of the outstanding principal amounts of senior notes repurchased and extinguished during the first quarter of and the full year 2024:
| First Quarter | Full Year | ||||||||||||||||||||||||||||
| (in millions) | |||||||||||||||||||||||||||||
| 2025 Notes | $ | $ | |||||||||||||||||||||||||||
| 2027 Notes | |||||||||||||||||||||||||||||
| 2028 Notes | |||||||||||||||||||||||||||||
| 2029 Notes | |||||||||||||||||||||||||||||
| 2030 Notes | |||||||||||||||||||||||||||||
| 2033 Notes | |||||||||||||||||||||||||||||
| 2035 Notes | |||||||||||||||||||||||||||||
| 2036 Notes | |||||||||||||||||||||||||||||
| Total | $ | $ | |||||||||||||||||||||||||||
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. dollars, has aggregate commitments of $750 million and, as of May 3, 2025, had an expiration date in August 2026.
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
11
the extent of such excess. As of May 3, 2025, the Company’s borrowing base was $639 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 $11 million of outstanding letters of credit as of May 3, 2025 that reduced its availability under the ABL Facility. As of May 3, 2025, the Company’s availability under the ABL Facility was $628 million.
As of May 3, 2025, 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 % and a credit spread adjustment of 0.10 % 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 May 3, 2025, the Company was not required to maintain this ratio.
Subsequent to May 3, 2025, the Company entered into an amendment and restatement of the ABL Facility, which removed the interest rate credit spread adjustment of 0.10 %, extended the expiration date from August 2026 to May 2030 and included other technical amendments.
8. Fair Value Measurements
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 following table provides a summary of the principal value and estimated fair value of the Company’s outstanding Long-term debt as of May 3, 2025, February 1, 2025 and May 4, 2024:
| May 3, 2025 | February 1, 2025 | May 4, 2024 | |||||||||||||||
| (in millions) | |||||||||||||||||
| Principal Value | $ | $ | $ | ||||||||||||||
| Fair Value, Estimated (a) | |||||||||||||||||
_______________
(a)The estimated fair value of the Company’s Long-term debt is based on reported transaction prices, which are considered Level 2 inputs in accordance with Accounting Standards Codification 820, Fair Value Measurement. The estimates presented are not necessarily indicative of the amounts that the Company could realize in a current market exchange.
Management believes that the carrying values of the Company’s Accounts Receivable, Accounts Payable and Accrued Expenses approximate their fair values because of their short maturities.
9. 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 $227 million as of May 3, 2025 related to lease payments under the current terms of noncancelable leases, primarily related to office space, expiring at various dates through 2037. These obligations include minimum rent and additional payments covering taxes, common area costs and certain other expenses and relate to leases that commenced prior to the spin-off. The Company’s reserves related to these obligations were not significant for any period presented.
10. Segment Reporting
The Company is managed at the consolidated level and therefore operates and reports as a single segment. During the first quarter of 2025, the Company’s Chief Executive Officer was its Chief Operating Decision Maker (“CODM”), and the measure of profitability included in the financial information regularly provided to the CODM was total Company Operating Income. The Company’s CODM assesses 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.
12
The following table illustrates significant segment expenses that were regularly provided to the CODM for the first quarters of 2025 and 2024:
| First Quarter | |||||||||||
| 2025 | 2024 | ||||||||||
| (in millions) | |||||||||||
| Net Sales | $ | $ | |||||||||
| Cost of Goods Sold | ( | ( | |||||||||
| Buying and Occupancy | ( | ( | |||||||||
| Gross Profit | |||||||||||
| Selling Expenses | ( | ( | |||||||||
| Marketing Expenses | ( | ( | |||||||||
| General and Administrative Expenses | ( | ( | |||||||||
| Operating Income | $ | $ | |||||||||
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 was total consolidated assets.
11. Subsequent Events
Effective May 16, 2025, Gina Boswell ceased serving as the Company’s Chief Executive Officer, and resigned as a member of its Board. Also on May 16, 2025, the Company’s Board appointed Daniel Heaf to serve as the Company’s new Chief Executive Officer. Mr. Heaf will be appointed as a member of the Board effective as of immediately following the conclusion of the Company’s 2025 Annual Meeting of Shareholders.
On May 22, 2025, the Company entered into an amendment and restatement of the ABL Facility, which removed the interest rate credit spread adjustment of 0.10 %, extended the expiration date from August 2026 to May 2030 and included other technical amendments.
13
Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Directors of Bath & Body Works, Inc.
Results of Review of Interim Financial Statements
We have reviewed the accompanying consolidated balance sheets of Bath & Body Works, Inc. (the Company) as of May 3, 2025 and May 4, 2024, the related consolidated statements of income, comprehensive income, total equity (deficit), and cash flows for the thirteen-week periods ended May 3, 2025 and May 4, 2024, and the related notes (collectively referred to as the “consolidated interim financial statements”). Based on our reviews, we are not aware of any material modifications that should be made to the consolidated interim financial statements for them to be in conformity with U.S. generally accepted accounting principles.
We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheet of the Company as of February 1, 2025, and the related consolidated statements of income, comprehensive income, total equity (deficit), and cash flows for the year then ended, and the related notes (not presented herein); and in our report dated March 14, 2025, we expressed an unqualified audit opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying consolidated balance sheet as of February 1, 2025, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.
Basis for Review Results
These financial statements are the responsibility of the Company’s management. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the SEC and the PCAOB. We conducted our review in accordance with the standards of the PCAOB. A review of interim financial statements consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the PCAOB, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.
/s/ Ernst & Young LLP
Grandview Heights, Ohio
May 29, 2025
14
SAFE HARBOR STATEMENT UNDER THE PRIVATE
SECURITIES LITIGATION ACT OF 1995
We caution that any forward-looking statements (as such term is defined in the Private Securities Litigation Reform Act of 1995) contained in this report or made by our Company or our management involve risks and uncertainties and are subject to change based on various factors, many of which are beyond our control. Accordingly, our future performance and financial results may differ materially from those expressed or implied in any such forward-looking statements. Words such as “estimate,” “project,” “plan,” “believe,” “expect,” “anticipate,” “intend,” “planned,” “potential,” “target,” “goal” and any similar expressions may identify forward-looking statements. There are risks, uncertainties and other factors that in some cases have affected and, in the future, could affect our financial performance and actual results and could cause actual results to differ materially from those expressed or implied in any forward-looking statements included in this report or otherwise made by the Company or our management. These factors can be found in Item 1A. Risk Factors in our 2024 Annual Report on Form 10-K, and our subsequent filings.
We are not under any obligation and do not intend to make publicly available any update or other revisions to any of the forward-looking statements contained in this report to reflect circumstances existing after the date of this report or to reflect the occurrence of future events even if experience or future events make it clear that any expected results expressed or implied by those forward-looking statements will not be realized.
We announce material financial and operational information using our investor relations website, press releases, SEC filings and public conference calls and webcasts. Information about the Company, our business and our results of operations may also be announced by posts on our accounts on social media channels, including the following: Facebook, Instagram, X, LinkedIn, Pinterest, TikTok and YouTube. The information contained on, or that can be accessed through, our social media channels and our website is deemed not to be incorporated in this Quarterly Report on Form 10-Q or to be a part of this Quarterly Report on Form 10-Q. The information that we post through these social media channels and on our website may be deemed material. As a result, we encourage investors, the media and others interested in the Company to monitor these social media channels in addition to following our investor relations website, press releases, SEC filings and public conference calls and webcasts. The list of social media channels we use may be updated from time to time on our investor relations website.
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of financial condition and results of operations is based upon our Consolidated Financial Statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) as codified in the Accounting Standards Codification. The following information should be read in conjunction with our financial statements and the related notes included in Part I, Item 1. Financial Statements in this Quarterly Report on Form 10-Q.
Executive Overview
In the first quarter of 2025, consolidated Net Sales were $1,424 million, which increased $40 million, or 2.9%, compared to the first quarter of 2024. Total North American Net Sales increased $34 million, primarily due to increases in transactions and average dollar sales, and International Net Sales increased $6 million. Our first quarter Operating Income was $209 million, which increased $22 million, or 11.7%, compared to the first quarter of 2024, and our Operating Income rate (expressed as a percentage of Net Sales) increased to 14.7% from 13.5%. The Operating Income rate increase was primarily due to a higher Gross Profit rate, partially offset by an increase in General, Administrative and Store Operating Expenses.
For additional information related to our first quarter 2025 financial performance, see “Results of Operations.”
Outlook
We believe our strategy and actions position the Company to achieve sustainable, profitable growth and to drive long-term shareholder value. We believe our continued innovation across our core categories supported by compelling marketing and enhanced technology, building on innovation platforms we launched in 2024 and extending our reach through adjacencies and international expansion, will continue to accelerate Net Sales growth over the long term. Amid a challenging macroeconomic backdrop, we have remained disciplined and decisive in our actions which is evidenced in our current performance.
We expect consumers to continue value-seeking behavior and consumer sentiment to remain volatile as the broad-based tariffs imposed by the U.S. government, and threatened or imposed retaliatory measures by other countries, have increased macroeconomic uncertainty in global markets. We are actively monitoring the changes in shifting trade policies and related market disruptions and are leveraging our predominately U.S.-based supply chain to take proactive measures to mitigate global trade policy shifts and to offset our tariff exposure over time. Building on our current performance, proactive tariff mitigation strategies, and our strong, predominately U.S.-based supply chain, we believe we are well-positioned to absorb the impacts of tariffs currently in effect and levied. Continued changes in trade policies and disruptions could have substantial impacts on the global economy and may magnify the impact of the risks to our business described in our Annual Report on Form 10-K.
15
Company-operated Stores
The following table compares Company-operated U.S. store data for the first quarters of 2025 and 2024:
| First Quarter | |||||||||||||||||||||||||||||||||||
| 2025 | 2024 | % Change | |||||||||||||||||||||||||||||||||
| Sales per Average Selling Square Foot (a) | $ | 207 | $ | 204 | 1 | % | |||||||||||||||||||||||||||||
| Sales per Average Store (in thousands) (a) | $ | 588 | $ | 577 | 2 | % | |||||||||||||||||||||||||||||
| Average Store Size (selling square feet) | 2,845 | 2,831 | — | % | |||||||||||||||||||||||||||||||
| Total Selling Square Feet (in thousands) | 5,083 | 4,937 | 3 | % | |||||||||||||||||||||||||||||||
(a)Sales per average selling square foot and sales per average store, which are indicators of store productivity, are calculated based on store sales for the period divided by the average, including the beginning and end of period, of total selling square footage and store count, respectively.
The following table represents Company-operated store activity for the first quarter of 2025:
| Stores | Stores | ||||||||||||||||||||||
| February 1, 2025 | Opened | Closed | May 3, 2025 | ||||||||||||||||||||
| United States | 1,782 | 13 | (8) | 1,787 | |||||||||||||||||||
| Canada | 113 | — | — | 113 | |||||||||||||||||||
| Total | 1,895 | 13 | (8) | 1,900 | |||||||||||||||||||
Partner-operated Stores
The following table represents Partner-operated store activity for the first quarter of 2025:
| Stores | Stores | ||||||||||||||||||||||
| February 1, 2025 | Opened | Closed | May 3, 2025 | ||||||||||||||||||||
| International | 494 | 12 | (17) | 489 | |||||||||||||||||||
| International - Travel Retail | 35 | 2 | (2) | 35 | |||||||||||||||||||
| Total International (a) | 529 | 14 | (19) | 524 | |||||||||||||||||||
(a)Includes store locations only and does not include kiosks, shop-in-shops, gondola or beauty counter locations.
Results of Operations
First Quarter of 2025 Compared to the First Quarter of 2024
Net Sales
The following table provides Net Sales for the first quarter of 2025 in comparison to the first quarter of 2024:
| 2025 | 2024 | % Change | |||||||||||||||
| (in millions) | |||||||||||||||||
| Stores - U.S. and Canada (a) | $ | 1,110 | $ | 1,065 | 4.3 | % | |||||||||||
| Direct - U.S. and Canada | 250 | 261 | (4.3 | %) | |||||||||||||
| International (b) | 64 | 58 | 10.1 | % | |||||||||||||
| Total Net Sales | $ | 1,424 | $ | 1,384 | 2.9 | % | |||||||||||
(a)Results include fulfilled buy online pick up in store (“BOPIS”) orders.
(b)Results include royalties associated with franchised stores and wholesale sales.
For the first quarter of 2025, total Net Sales were $1,424 million and increased $40 million, or 2.9%, compared to the first quarter of 2024. Stores Net Sales increased $45 million, or 4.3%, primarily driven by an increase in transactions due to an increase in BOPIS fulfilled orders (which are recognized as store Net Sales) and new store growth, and an increase in average dollar sales. Direct Net Sales decreased $11 million, or 4.3%, driven by a decline in fulfilled orders, which was primarily due to our customers continuing to select our BOPIS option, partially offset by an increase in average order size. International Net Sales increased $6 million, or 10.1%, driven by timing of product shipments to our partners.
16
Gross Profit
For the first quarter of 2025, our Gross Profit increased $40 million to $646 million, and our Gross Profit rate (expressed as a percentage of Net Sales) increased to 45.4%, from 43.8% in the first quarter of 2024. Gross Profit dollars increased due to higher Net Sales and a 100 basis point improvement in the merchandise margin rate, which was primarily driven by strategic pricing and strong cost management. Category mix shifts drove both lower average unit retails and average unit costs during the quarter.
Gross Profit rate increased due to the merchandise margin rate improvement as well as leverage on Occupancy Expenses due to Net Sales growth.
General, Administrative and Store Operating Expenses
The following table provides detail for our General, Administrative and Store Operating Expenses for the first quarter of 2025 compared to the first quarter of 2024:
| 2025 | 2024 | Change | |||||||||||||||||||||||||||||||||
| (in millions) | % of Net Sales | (in millions) | % of Net Sales | (in millions) | % of Net Sales | ||||||||||||||||||||||||||||||
| Selling Expenses | $ | 256 | 18.0 | % | $ | 247 | 17.8 | % | $ | 9 | 0.2 | % | |||||||||||||||||||||||
| Marketing Expenses | 49 | 3.5 | % | 45 | 3.3 | % | 4 | 0.1 | % | ||||||||||||||||||||||||||
| General and Administrative Expenses | 132 | 9.3 | % | 127 | 9.2 | % | 5 | 0.1 | % | ||||||||||||||||||||||||||
| Total | $ | 437 | 30.7 | % | $ | 419 | 30.3 | % | $ | 18 | 0.4 | % | |||||||||||||||||||||||
For the first quarter of 2025, our total General, Administrative and Store Operating Expenses increased $18 million to $437 million, and the rate (expressed as a percentage of Net Sales) increased to 30.7% from 30.3% in the first quarter of 2024. Selling Expenses and General and Administrative Expenses both increased primarily due to higher payroll related costs, mainly driven by wage inflation, partially offset by the benefits of our cost optimization work.
The General, Administrative and Store Operating Expense rate increased primarily due to the increase in payroll related costs and incremental investments in marketing.
Other Income and Expenses
Interest Expense
The following table provides the average daily borrowings and average borrowing rates for the first quarters of 2025 and 2024:
| 2025 | 2024 | ||||||||||
| Average daily borrowings (in millions) | $ | 3,916 | $ | 4,386 | |||||||
| Average borrowing rate | 7.1 | % | 7.3 | % | |||||||
For the first quarter of 2025, our Interest Expense was $71 million, compared to $82 million in the first quarter of 2024. The decrease was due to lower average daily borrowings and borrowing rate, which were driven by the early extinguishment of outstanding notes.
Other Income, Net
For the first quarter of 2025, our Other Income, Net was $8 million, compared to $13 million in the first quarter of 2024. The decrease was primarily due to lower interest income on invested cash in the first quarter of 2025.
Provision for Income Taxes
For the first quarter of 2025, our effective tax rate was 28.4% compared to 26.8% in the first quarter of 2024. The 2025 and 2024 first quarter rates were higher than our combined estimated federal and state statutory rates primarily due to accrued interest expense related to unrecognized tax benefits.
17
FINANCIAL CONDITION
Liquidity and Capital Resources
Liquidity, or access to cash, is an important factor in determining our financial stability. We are committed to maintaining adequate liquidity. Cash generated from our operating activities provides the primary resources to support current operations, growth initiatives, seasonal funding requirements, future common stock and debt repurchases, and capital expenditures. Our cash provided from operations is impacted by our net income and working capital changes. Our net income is impacted by, among other things, sales volume, seasonal sales patterns, success of new product introductions and product and market expansions, profit margins, income taxes and inflationary pressures. Typically, our sales are highest during the fourth quarter of the fiscal year due to seasonal and holiday-related sales patterns. Generally, our need for working capital peaks during the summer and fall months as inventory builds in anticipation of the holiday period. Our cash and cash equivalents held by foreign subsidiaries were $182 million as of May 3, 2025.
During the first quarter of 2025, we repurchased 4.326 million shares of our common stock for $135 million. We may, from time to time, repurchase, or otherwise retire, additional debt or shares of our common stock, as applicable.
We believe that our current cash position, our cash flows generated from operations and our borrowing capacity under our asset-backed revolving credit facility (“ABL Facility”) will be sufficient to meet our liquidity needs, including capital expenditure requirements, for at least the next twelve months.
Cash Flows
The following table provides a summary of our cash flow activity during the first quarters of 2025 and 2024:
| 2025 | 2024 | ||||||||||
| (in millions) | |||||||||||
| Cash and Cash Equivalents, Beginning of Year | $ | 674 | $ | 1,084 | |||||||
| Net Cash Flows Provided by Operating Activities | 188 | 76 | |||||||||
| Net Cash Flows Used for Investing Activities | (39) | (46) | |||||||||
| Net Cash Flows Used for Financing Activities | (188) | (259) | |||||||||
| Effects of Exchange Rate Changes on Cash and Cash Equivalents | 1 | — | |||||||||
| Net Decrease in Cash and Cash Equivalents | (38) | (229) | |||||||||
| Cash and Cash Equivalents, End of Period | $ | 636 | $ | 855 | |||||||
Operating Activities
Net cash provided by operating activities in the first quarter of 2025 was $188 million, including net income of $105 million. Net income included depreciation of $64 million and share-based compensation expense of $10 million. Other changes in assets and liabilities represent items that had a current period cash flow impact, such as changes in working capital. The most significant items in working capital were the seasonal changes in Inventories and Accounts Receivable.
Net cash provided by operating activities in the first quarter of 2024 was $76 million, including net income of $87 million. Net income included depreciation of $71 million and share-based compensation expense of $12 million. Other changes in assets and liabilities represent items that had a current period cash flow impact, such as changes in working capital. The most significant items in working capital were the seasonal changes in Inventories, Accounts Receivable and Accounts Payable, Accrued Expenses and Other.
Investing Activities
Net cash used for investing activities in the first quarter of 2025 was $39 million, primarily related to capital expenditures. The capital expenditures included approximately $25 million related to new off-mall stores and remodels of existing stores and approximately $10 million for various technology projects primarily to support the growth and profitability of our business.
Net cash used for investing activities in the first quarter of 2024 was $46 million related to capital expenditures. The capital expenditures included approximately $35 million related to new, primarily off-mall stores and remodels of existing stores.
In 2025, our top priority remains driving sustainable, long-term, profitable growth through strategic investments in the business. To support this, we continue to plan capital expenditures of approximately $250 million to $270 million during the year, with a focus on real estate and technology.
Financing Activities
Net cash used for financing activities in the first quarter of 2025 was $188 million, primarily consisting of $136 million for share repurchases and dividend payments of $0.20 per share, or $43 million.
18
Net cash used for financing activities in the first quarter of 2024 was $259 million, primarily consisting of $110 million for open market debt repurchases, $96 million for share repurchases, dividend payments of $0.20 per share, or $45 million, and $7 million of tax payments related to share-based awards.
Common Stock and Debt Repurchases
Our Board of Directors (our “Board”) will determine share and debt repurchase authorizations, giving consideration to our levels of profit and cash flow, capital requirements, current and forecasted liquidity, the restrictions placed upon us by our borrowing arrangements as well as financial and other conditions existing at the time. We use cash flow generated from operating and financing activities to fund our share and debt repurchase programs. The timing and amount of any repurchases will be made at our discretion, taking into account a number of factors, including market conditions.
Common Stock Repurchases
Under the authority of our Board of Directors, we repurchased shares of our common stock under the following repurchase programs during the first quarters of 2025 and 2024:
| Repurchase Program | Amount Authorized | Shares Repurchased | Amount Repurchased | Average Stock Price | ||||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||||||||||||||||||||||
| (in millions) | (in thousands) | (in millions) | ||||||||||||||||||||||||||||||||||||||||||
| February 2022 | $ | 1,500 | NA | 842 | NA | $ | 39 | NA | $ | 46.08 | ||||||||||||||||||||||||||||||||||
| January 2024 | 500 | 460 | 1,329 | $ | 17 | 60 | $ | 37.67 | 45.32 | |||||||||||||||||||||||||||||||||||
| January 2025 | 500 | 3,866 | NA | 118 | NA | 30.47 | NA | |||||||||||||||||||||||||||||||||||||
| Total | 4,326 | 2,171 | $ | 135 | $ | 99 | ||||||||||||||||||||||||||||||||||||||
The January 2024 Program had $139 million of remaining authority as of February 1, 2025. There were share repurchases of $1 million as of February 1, 2025 and $5 million as of May 4, 2024 reflected in Accounts Payable on the Consolidated Balance Sheets.
On February 27, 2025, we 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 $382 million of remaining authority as of May 3, 2025.
Dividend Policy and Procedures
Our Board will determine future dividends after giving consideration to our levels of profit and cash flow, capital requirements, current and forecasted liquidity, the restrictions placed upon us by our borrowing arrangements as well as financial and other conditions existing at the time. We use cash flow generated from operating and financing activities to fund our dividends.
We paid the following dividends during the first quarters of 2025 and 2024:
| Ordinary Dividends | Total Paid | ||||||||||
| (per share) | (in millions) | ||||||||||
| 2025 | |||||||||||
| First Quarter | $ | 0.20 | $ | 43 | |||||||
| 2024 | |||||||||||
| First Quarter | $ | 0.20 | $ | 45 | |||||||
In May 2025, we declared our second quarter 2025 ordinary dividend of $0.20 per share payable on June 20, 2025 to shareholders of record at the close of business on June 6, 2025.
19
Long-term Debt and Borrowing Facility
The following table provides our outstanding Long-term Debt balances, net of unamortized debt issuance costs and discounts, as of May 3, 2025, February 1, 2025 and May 4, 2024:
| May 3, 2025 | February 1, 2025 | May 4, 2024 | |||||||||||||||
| (in millions) | |||||||||||||||||
| Senior Debt with Subsidiary Guarantee | |||||||||||||||||
$500 million, 9.375% Fixed Interest Rate Notes due July 2025 (“2025 Notes”) | $ | — | $ | — | $ | 313 | |||||||||||
$284 million, 6.694% Fixed Interest Rate Notes due January 2027 (“2027 Notes”) | 277 | 277 | 287 | ||||||||||||||
$444 million, 5.250% Fixed Interest Rate Notes due February 2028 (“2028 Notes”) | 443 | 443 | 450 | ||||||||||||||
$482 million, 7.500% Fixed Interest Rate Notes due June 2029 (“2029 Notes”) | 476 | 476 | 485 | ||||||||||||||
$844 million, 6.625% Fixed Interest Rate Notes due October 2030 (“2030 Notes”) | 839 | 838 | 893 | ||||||||||||||
$802 million, 6.875% Fixed Interest Rate Notes due November 2035 (“2035 Notes”) | 797 | 796 | 800 | ||||||||||||||
$575 million, 6.750% Fixed Interest Rate Notes due July 2036 (“2036 Notes”) | 571 | 571 | 571 | ||||||||||||||
| Total Senior Debt with Subsidiary Guarantee | 3,403 | 3,401 | 3,799 | ||||||||||||||
| Senior Debt | |||||||||||||||||
$284 million, 6.950% Fixed Interest Rate Debentures due March 2033 (“2033 Notes”) | 283 | 283 | 283 | ||||||||||||||
$201 million, 7.600% Fixed Interest Rate Notes due July 2037 (“2037 Notes”) | 200 | 200 | 200 | ||||||||||||||
| Total Senior Debt | 483 | 483 | 483 | ||||||||||||||
| Total Long-term Debt | $ | 3,886 | $ | 3,884 | $ | 4,282 | |||||||||||
Repurchases of Notes
We did not repurchase any outstanding senior notes during the first quarter of 2025.
During the first quarter of 2024, we repurchased in the open market and extinguished $109 million principal amount of our outstanding senior notes. The aggregate repurchase price for these notes was $110 million, resulting in a pre-tax loss of $1 million, including the write-off of unamortized issuance costs. This loss is included in Other Income, Net in the first quarter of 2024 Consolidated Statement of Income.
The following table provides details of the outstanding principal amounts of senior notes repurchased and extinguished during the first quarter of and the full year 2024:
| First Quarter | Full Year | ||||||||||||||||||||||||||||
| (in millions) | |||||||||||||||||||||||||||||
| 2025 Notes | $ | — | $ | 314 | |||||||||||||||||||||||||
| 2027 Notes | — | 14 | |||||||||||||||||||||||||||
| 2028 Notes | 10 | 17 | |||||||||||||||||||||||||||
| 2029 Notes | 7 | 17 | |||||||||||||||||||||||||||
| 2030 Notes | 38 | 94 | |||||||||||||||||||||||||||
| 2033 Notes | 10 | 10 | |||||||||||||||||||||||||||
| 2035 Notes | 6 | 10 | |||||||||||||||||||||||||||
| 2036 Notes | 38 | 38 | |||||||||||||||||||||||||||
| Total | $ | 109 | $ | 514 | |||||||||||||||||||||||||
Asset-backed Revolving Credit Facility
We and certain of our 100% owned subsidiaries guarantee and pledge collateral to secure the ABL Facility. The ABL Facility, which allows borrowings and letters of credit in U.S. dollars, has aggregate commitments of $750 million and, as of May 3, 2025, had an expiration date in August 2026.
Availability under the ABL Facility is the lesser of (i) the borrowing base, determined primarily based on our 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, we are required to repay the outstanding amounts under the ABL Facility to the extent of such excess. As of May 3, 2025, our borrowing base was $639 million, and we had no borrowings outstanding under the ABL Facility.
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The ABL Facility supports our letter of credit program. We had $11 million of outstanding letters of credit as of May 3, 2025 that reduced our availability under the ABL Facility. As of May 3, 2025, our availability under the ABL Facility was $628 million.
As of May 3, 2025, 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% and a credit spread adjustment of 0.10% per annum.
The ABL Facility requires us 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 May 3, 2025, we were not required to maintain this ratio.
Subsequent to May 3, 2025, we entered into an amendment and restatement of the ABL Facility, which removed the interest rate credit spread adjustment of 0.10%, extended the expiration date from August 2026 to May 2030 and included other technical amendments.
Credit Ratings
The following table provides our credit ratings as of May 3, 2025:
| Moody’s | S&P | ||||||||||
| Corporate | Ba2 | BB+ | |||||||||
| Senior Unsecured Debt with Subsidiary Guarantee | Ba2 | BB+ | |||||||||
| Senior Unsecured Debt | B1 | BB- | |||||||||
| Outlook | Stable | Stable | |||||||||
Guarantor Summarized Financial Information
Certain of our subsidiaries, which are listed on Exhibit 22 to this Quarterly Report on Form 10-Q, have guaranteed our obligations under the 2027 Notes, 2028 Notes, 2029 Notes, 2030 Notes, 2035 Notes and 2036 Notes (collectively, the “Notes”).
The Notes have been issued by Bath & Body Works, Inc. (the “Parent Company”). The Notes are its senior unsecured obligations and rank equally in right of payment with all of our existing and future senior unsecured obligations, are senior to any of our future subordinated indebtedness, are effectively subordinated to all of our existing and future indebtedness that is secured by a lien and are structurally subordinated to all existing and future obligations of each of our subsidiaries that do not guarantee the Notes.
The Notes are fully and unconditionally guaranteed on a joint and several basis by certain of our wholly-owned subsidiaries, including certain subsidiaries that also guarantee our obligations under our ABL Facility (such guarantees, the “Guarantees”; and, such guaranteeing subsidiaries, the “Subsidiary Guarantors”). The Guarantees of the Subsidiary Guarantors are subject to release in limited circumstances only upon the occurrence of certain customary conditions. Each Guarantee is limited, by its terms, to an amount not to exceed the maximum amount that can be guaranteed by the applicable Subsidiary Guarantor subject to avoidance under applicable fraudulent conveyance provisions of U.S. and non-U.S. law.
The following tables set forth summarized financial information for the Parent Company and the Subsidiary Guarantors on a combined basis after elimination of (i) intercompany transactions and balances among the Parent Company and the Subsidiary Guarantors and (ii) investments in and equity in the earnings of non-Guarantor subsidiaries.
| SUMMARIZED BALANCE SHEETS | May 3, 2025 | February 1, 2025 | |||||||||
| (in millions) | |||||||||||
| ASSETS | |||||||||||
| Current Assets (a) | $ | 2,069 | $ | 2,075 | |||||||
| Noncurrent Assets | 2,418 | 2,411 | |||||||||
| LIABILITIES | |||||||||||
| Current Liabilities (b) | $ | 2,469 | $ | 2,394 | |||||||
| Noncurrent Liabilities | 4,909 | 4,898 | |||||||||
_______________
(a)Includes amounts due from non-Guarantor subsidiaries of $583 million and $572 million as of May 3, 2025 and February 1, 2025, respectively.
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(b)Includes amounts due to non-Guarantor subsidiaries of $1.417 billion and $1.421 billion as of May 3, 2025 and February 1, 2025, respectively.
FIRST QUARTER OF 2025 SUMMARIZED STATEMENT OF INCOME | (in millions) | ||||||||||
| Net Sales (a) | $ | 1,355 | |||||||||
| Gross Profit | 602 | ||||||||||
| Operating Income | 193 | ||||||||||
| Income Before Income Taxes | 128 | ||||||||||
| Net Income | 91 | ||||||||||
_______________
(a)Includes Net Sales of $34 million to non-Guarantor subsidiaries.
Contingent Liabilities and Contractual Obligations
Lease Guarantees
In connection with the spin-off of Victoria’s Secret & Co., we had remaining contingent obligations of $227 million as of May 3, 2025 related to lease payments under the current terms of noncancelable leases, primarily related to office space, expiring at various dates through 2037. These obligations include minimum rent and additional payments covering taxes, common area costs and certain other expenses and relate to leases that commenced prior to the spin-off. Our reserves related to these obligations were not significant for any period presented.
Contractual Obligations
Our contractual obligations primarily consist of long-term debt and the related interest payments, operating leases, purchase orders for merchandise inventory and other long-term obligations. These contractual obligations impact our short-term and long-term liquidity and capital resource needs. There have been no material changes in our contractual obligations subsequent to February 1, 2025, as discussed in “Contingent Liabilities and Contractual Obligations” in our 2024 Annual Report on Form 10-K. Certain of our contractual obligations may fluctuate during the normal course of business (primarily changes in our merchandise inventory-related purchase obligations which fluctuate throughout the year as a result of the seasonal nature of our business).
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, that requires enhanced income tax disclosures, primarily related to standardization and disaggregation of rate reconciliation categories and income taxes paid by jurisdiction. This standard is effective for fiscal years beginning after December 15, 2024, with early adoption permitted, and may be applied either prospectively or retrospectively. We are currently evaluating the impact of adopting this standard on our disclosures.
In November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses, that requires disclosures of disaggregated information about certain prescribed expense categories within relevant income statement expense captions. This standard is effective for annual reporting of fiscal years beginning after December 15, 2026, and for interim periods in the following year, with early adoption permitted. This standard should be applied prospectively, with retrospective application permitted. We are currently evaluating the impact of adopting this standard on our disclosures.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
The preparation of financial statements in conformity with GAAP requires management to adopt accounting policies related to estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period, as well as the related disclosure of contingent assets and liabilities at the date of the financial statements. On an ongoing basis, management evaluates its accounting policies, estimates and judgments, including those related to inventories, valuation of long-lived store assets, claims and contingencies, income taxes and revenue recognition, including revenue associated with our loyalty program. Management bases our estimates and judgments on historical experience and various other factors that we believe are reasonable under the circumstances. Actual results may differ from these estimates.
There have been no material changes to the critical accounting policies and estimates disclosed in our 2024 Annual Report on Form 10-K.
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Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Market Risk
The market risk inherent in our financial instruments represents the potential loss in fair value, earnings or cash flows arising from adverse changes in foreign currency exchange rates or interest rates. We may use derivative financial instruments like foreign currency forward contracts, cross-currency swaps and interest rate swap arrangements to manage exposure to market risks. We do not use derivative financial instruments for trading purposes.
Foreign Exchange Rate Risk
Our Canadian dollar denominated earnings are subject to exchange rate risk as substantially all our merchandise sold in Canada is sourced through U.S. dollar transactions. Although we utilize foreign currency forward contracts to partially offset risks associated with our operations in Canada, these measures may not succeed in offsetting all the short-term impact of foreign currency rate movements and generally may not be effective in offsetting the long-term impact of sustained shifts in foreign currency rates.
Further, although our royalty arrangements with our international partners are denominated in U.S. dollars, the royalties we receive in U.S. dollars are calculated based on sales in the local currency. As a result, our royalties in these arrangements are exposed to foreign currency exchange rate fluctuations.
Interest Rate Risk
Our investment portfolio primarily consists of interest-bearing instruments that are classified as cash and cash equivalents based on their original maturities. Our investment portfolio is maintained in accordance with our investment policy, which specifies permitted types of investments, specifies credit quality standards and maturity profiles and limits credit exposure to any single issuer. The primary objectives of our investment activities are the preservation of principal, the maintenance of liquidity and the maximization of interest income while minimizing risk. Our investment portfolio is primarily composed of U.S. government obligations, U.S. Treasury and AAA-rated money market funds, commercial paper and bank deposits. Given the short-term nature and quality of investments in our portfolio, we do not believe there is any material risk to principal associated with increases or decreases in interest rates.
All of our outstanding Long-term Debt as of May 3, 2025 has fixed interest rates. We will from time to time adjust our exposure to interest rate risk by entering into interest rate swap arrangements. Our exposure to interest rate changes is limited to the fair value of the debt issued, which would not have a material impact on our earnings or cash flows.
Concentration of Credit Risk
We maintain cash and cash equivalents and derivative contracts with various major financial institutions. We monitor the relative credit standing of financial institutions with whom we transact and limit the amount of credit exposure with any one entity. Our investment portfolio is primarily composed of U.S. government obligations, U.S. Treasury and AAA-rated money market funds, commercial paper and bank deposits. We also periodically review the relative credit standing of franchise, license and wholesale partners and other entities to which we grant credit terms in the normal course of business.
Fair Value Measurements
The following table provides a summary of the principal value and estimated fair value of our outstanding Long-term debt as of May 3, 2025, February 1, 2025 and May 4, 2024:
_______________
| May 3, 2025 | February 1, 2025 | May 4, 2024 | |||||||||||||||
| (in millions) | |||||||||||||||||
| Principal Value | $ | 3,916 | $ | 3,916 | $ | 4,321 | |||||||||||
| Fair Value, Estimated (a) | 3,957 | 3,986 | 4,351 | ||||||||||||||
(a) The estimated fair values are based on reported transaction prices and are not necessarily indicative of the amounts that we could realize in a current market exchange.
As of May 3, 2025, we believe that the carrying values of our Accounts Receivable, Accounts Payable and Accrued Expenses approximate their fair values because of their short maturities.
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Item 4. CONTROLS AND PROCEDURES
Evaluation of disclosure controls and procedures. As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures, as such term is defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that as of the end of the period covered by this report, our disclosure controls and procedures were effective and designed to ensure that information required to be disclosed by us in reports we file or submit under the Exchange Act is (1) recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission (“SEC”) rules and forms, and (2) accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.
Changes in internal control over financial reporting. During the first quarter of 2025, we transitioned to new real-estate management systems to enhance operational efficiency in our lease administration and compliance with lease accounting and reporting standards. We updated our processes to align with the functionality of the new systems and ensured that adequate controls were designed and operating effectively throughout the transition process.
There were no other changes in our internal control over financial reporting that occurred in the first quarter of 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II—OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
We are a defendant in a variety of lawsuits 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. Although it is not possible to predict with certainty the eventual outcome of any litigation, in the opinion of management, our current legal proceedings are not expected to have a material adverse effect on our results of operations, financial condition or cash flows.
Item 1A. RISK FACTORS
The risk factors that affect our business and financial results are discussed in Item 1A. Risk Factors in our 2024 Annual Report on Form 10-K. We wish to caution the reader that the risk factors discussed in Item 1A. Risk Factors in our 2024 Annual Report on Form 10-K and those described elsewhere in this report or other SEC filings could cause actual results to differ materially from those stated in any forward-looking statements.
Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
The following table provides the repurchases of our common stock during the first quarter of 2025:
| Fiscal Period | Total Number of Shares Purchased (a) | Average Price Paid per Share (b) | Total Number of Shares Purchased as Part of Publicly Announced Programs (c) | Maximum Number of Shares (or Approximate Dollar Value) that May Yet be Purchased Under the Programs (c) | |||||||||||||||||||
| (in thousands) | (in thousands) | ||||||||||||||||||||||
| February 2025 | 776 | $ | 37.19 | 773 | $ | 488,593 | |||||||||||||||||
| March 2025 | 2,157 | 31.40 | 2,022 | 424,910 | |||||||||||||||||||
| April 2025 | 1,535 | 27.89 | 1,531 | 382,201 | |||||||||||||||||||
| Total | 4,468 | 4,326 | |||||||||||||||||||||
(a)The total number of shares repurchased includes shares repurchased as part of publicly announced programs, with the remainder relating to shares in connection with tax payments due upon vesting of associate restricted share and performance share unit awards and the use of our stock to pay the exercise price on associate stock options.
(b)The average price paid per share includes any broker commissions.
(c)For additional share repurchase program information, see Note 3, “Net Income Per Share and Shareholders’ Equity (Deficit)” included in Part I, Item 1. Financial Statements.
Item 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
Item 4. MINE SAFETY DISCLOSURES
Not applicable.
Item 5. OTHER INFORMATION
Securities Trading Plans of Directors and Executive Officers
None of our directors or executive officers adopted terminated
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Item 6. EXHIBITS
| Exhibits | ||||||||
| 101.INS | XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. | |||||||
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document. | |||||||
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document. | |||||||
| 101.DEF | Inline XBRL Taxonomy Definition Linkbase Document. | |||||||
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document. | |||||||
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document. | |||||||
| 104 | Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101). | |||||||
26
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
BATH & BODY WORKS, INC. | ||||||||
| (Registrant) | ||||||||
| By: | /s/ EVA C. BORATTO | |||||||
| Eva C. Boratto Chief Financial Officer * | ||||||||
Date: May 29, 2025
* Ms. Boratto is the principal financial officer and the principal accounting officer and has been duly authorized to sign on behalf of the Registrant.
27
Exhibit 10.1
February 24, 2025
Deon Riley
Address on file at the Company
Re: Separation from Service
Dear Deon:
This letter agreement (this “Letter Agreement”) sets forth the terms of your separation from service with the Company.
1.Separation of Service
Effective as of March 2, 2025 (the “Separation Date”), your service as a non-executive employee of Bath & Body Works, Inc. (the “Company”) will automatically terminate, and, effective as of the Separation Date, your service as an employee of the Company and its affiliates in all capacities will automatically terminate.
2.Severance Benefits
In connection with your termination of employment, and in consideration for (i) your service to the Company and its affiliates through the Separation Date, (ii) your compliance with the terms of this Letter Agreement, (iii) your satisfaction of the requirement to sign a Separation and General Release Agreement in the form provided by the Company (the “Release Agreement”) and your non-revocation of the Release Agreement prior to its becoming effective and irrevocable within sixty (60) days following the Separation Date (the “Release Requirement”) as contemplated by Section 6 of the Executive Severance Agreement between you and the Company, dated as of May 13, 2022 (the “Severance Agreement”) and your compliance with your obligations thereunder, and (iv) your continued compliance with your restrictive covenant obligations (including under the Covenant Agreement (as defined below)), you shall be eligible for (a) the “Severance Benefits” provided upon a “Qualifying Termination” not within the “Protection Period” pursuant to Section 4 of the Severance Agreement (as each such term is defined in the Severance Agreement), as set forth on the Schedule of Entitlements previously provided to you. You understand that if the Release Requirement is not satisfied, you will not be eligible to receive the Severance Benefits.
The Severance Benefits shall be in full satisfaction of the obligations of the Company and its affiliates to you under this Letter Agreement, the Severance Agreement and any other plan, agreement, policy or arrangement of the Company and its affiliates upon your termination of employment (other than any vested or other rights to which you may be entitled under any other Company employee benefit plan by reason of your employment with the Company that cannot legally be waived), and in no event shall you be entitled to any other compensation or severance pay or termination benefits beyond the Severance Benefits.
Nothing in this Letter Agreement shall prohibit the Company from terminating your employment prior to the Separation Date for “Cause” (as defined in the Severance Agreement) or you from voluntarily terminating your employment prior to the Separation Date; provided that, in each such case,
you shall be eligible only for the Accrued Amounts (as defined in the Severance Agreement) and any other vested rights to which you may be entitled under any other Company employee benefit plan by reason of your employment with the Company that cannot legally be waived and are not otherwise subject to forfeiture upon a termination for Cause.
3.Miscellaneous
You acknowledge and agree that the Confidentiality, Non-Competition and Intellectual Property Agreement between you and the Company, dated as of December 7, 2020 (the “Covenant Agreement”), the covenants applicable to you pursuant to the terms of the applicable equity award agreements between you and the Company, and any policies or rights of the Company that continue to apply following termination of service, including any clawback or recoupment policy or rights, will remain in full force and effect in accordance with their terms, and your rights under this Letter Agreement and to the payments and benefits under the Release Agreement are subject to and conditioned upon compliance therewith.
Following the Separation Date, you agree to reasonably cooperate with the Company and its counsel with respect to any matter (including, without limitation, any litigation, investigation or government proceeding) that relates to matters with which you are or were involved or about which you had knowledge during your employment with the Company.
No later than seven (7) days following the Separation Date, you will deliver to the Company (or, if requested by any member of the Company, destroy) all property made available to you in connection with your employment by the Company and its affiliates, including, without limitation, any and all records, manuals, customer lists, notebooks, cellphones, electronic devices, computers, computer programs, credit cards, and files, papers, electronically stored information and documents kept or made by you in connection with your employment.
This Letter Agreement and the Release Agreement set forth the entire agreement and understanding between you and the Company with respect to your transition and separation and supersedes any prior discussions with respect thereto. Sections 9 through 21 of the Severance Agreement are incorporated herein by reference and shall apply to this Letter Agreement as if set forth herein, with references to “this Agreement” to refer to this Letter Agreement, references to “the Executive” to refer to you and such other modifications as are necessary to give effect and meaning to such provisions as applicable to this Letter Agreement.
This Letter Agreement may be executed in two or more counterparts, each of which will be deemed an original, and all of which together will constitute one document. A facsimile or scanned (e.g., .PDF, .GIF, etc.) signature shall be deemed to be an original.
IN WITNESS WHEREOF, each of you and the Company has executed this Letter Agreement as of the date(s) set forth below.
/s/ Deon Riley
Deon Riley
Date: February 24, 2025
BATH & BODY WORKS, INC.
By: /s/ Michael C. Wu
Name: Michael C. Wu
Title: Chief Legal Officer & Corporate Secretary
Date: February 24, 2025
Exhibit 10.2
May 16, 2025
Daniel Heaf
Via E-mail
Dear Daniel,
On behalf of Bath & Body Works, Inc. (“BBW” or the “Company”), I am pleased to extend you an offer to join the Company as Chief Executive Officer based on the terms and conditions set forth below in this offer letter (this “Letter”).
| Position and Duties: | Chief Executive Officer, reporting directly to the Company’s Board of Directors (the “Board”). Following the Company’s Annual Meeting scheduled to occur on June 5, 2025, you will be appointed as a member of the Board and thereafter, while serving as Chief Executive Officer, the Board will nominate you for election to the Board. Upon your cessation of employment with the Company, your service on the Board will cease and you will resign from any and all positions with the Company and its affiliates. | ||||
| Start Date: | May 16, 2025 | ||||
| Location: | You will be based in the Company’s offices in Columbus, Ohio, subject to reasonable business travel from time to time. | ||||
| Annual Base Salary: | $1,350,000 | ||||
1 | Page | ||
| Annual Incentive Compensation: | Your target annual incentive opportunity under the Cash Incentive Compensation Performance Plan (adopted February 27, 2024), as it may be amended from time to time, or any successor plan (the “IC Plan”) will be 190% of your annual base salary (prorated for the 2025 fiscal year as described below). For the 2025 fiscal year, in calculating your earned annual incentive compensation, if any, pursuant to the IC Plan, the year is divided into two seasons, with 40% of your annual incentive compensation, if any, earned and paid with respect to the spring season, and 60% of your annual incentive compensation, if any, earned and paid with respect to the fall season; provided that, with respect to the spring season of the Company’s 2025 fiscal year, your target incentive opportunity under the IC Plan will be prorated for the period from your start date through the last day of the spring season incentive period. With respect to the 2026 fiscal year, the IC Plan will be based on an annual (not seasonal) performance period. Participation in the IC Plan does not guarantee or give rise to a legitimate expectation of any entitlement to a payout. All payments under the IC Plan will be determined by the Board or the Human Capital and Compensation Committee of the Board (the “Committee”) in its sole discretion consistent with the terms of the IC Plan and are based on BBW results and the achievement of the applicable performance goals during the applicable performance period. Any payouts made to you under the IC Plan will be payable in accordance with the Company’s customary practices and the terms of the IC Plan. | ||||
2 | Page | ||
| Annual Equity Awards: | Beginning with the 2026 fiscal year, you will be eligible to participate in the Company’s 2020 Stock Option and Performance Incentive Plan, as it may be amended from time to time, or any successor plan (the “Plan”). Your annual target equity award opportunity will have a grant date fair value of $8,000,000 (determined in the same manner as applies to the Company’s other executive officers). The terms and conditions of any equity-based awards, including the grant date, types of award(s), exercise price (if any), vesting schedules and applicable performance metrics, will be determined by the Committee in its sole discretion and will be set forth in the applicable award agreements and subject to the terms of the Plan; provided that, except as noted below, the terms and conditions of your awards with respect to the types of award(s), allocation among award types, exercise price (if any), vesting schedules, applicable performance metrics and treatment upon termination of employment will be no less favorable to you than those applicable to annual awards granted to the Company’s other executive officers in the same year (and will not supersede in any adverse manner the treatment of equity awards upon termination of employment as provided under the Executive Severance Agreement attached hereto, except as may be specifically agreed by you in an applicable award agreement). Notwithstanding the foregoing, up to 60% of your annual equity awards may consist of awards with performance-based vesting conditions, as determined by the Committee. Your annual equity awards will be granted at the same time as annual equity awards are granted to the Company’s other executive officers. | ||||
Sign-On Equity Awards: | On or as soon as reasonably practicable following your start date, you will be granted (i) a one-time award of restricted stock units with a grant date fair value of $2,500,000 (the “Sign-On RSUs”) and (ii) a one-time award of performance share units with a grant date fair value of $2,500,000 (the “Sign-On PSUs” together with the Sign-On RSUs, the “Sign-On Equity Awards”). The number of shares of BBW common stock subject to each of the Sign-On RSUs and the Sign-On PSUs will be determined by dividing $2,500,000 by the closing price of a share of BBW common stock on the date of grant. The Sign-On RSUs will vest 30% on the first anniversary of your start date, 30% on the second anniversary of your start date, and 40% on the third anniversary of your start date, subject to your continued employment through each applicable anniversary of your start date. The Sign-On PSUs will vest based on the level of achievement of the performance goals measured at the end of the performance period and subject to your continued employment through the vesting date. The performance goals applicable to the Sign-On PSUs will be the same as those that apply to the performance share awards granted to senior executives of the Company in March of 2025. The Sign-On Equity Awards will be settled in shares of BBW common stock as soon as reasonably practicable following the applicable vesting date and subject to the level of achievement of the applicable performance goals with respect to the Sign-On PSUs. The other terms and conditions of the Sign-On Equity Awards will be set forth in the applicable award agreement and subject to the terms of the Plan. | ||||
3 | Page | ||
| Relocation Benefits: | You will be eligible to receive relocation assistance in accordance with the provisions of the Company’s relocation policy; provided that, notwithstanding the terms of such policy, you shall be eligible for six (6) months of temporary housing prior to your relocation and the relocation benefits shall apply to your relocation occurring prior to June 30, 2027 without regard to a shorter time limit under the policy. To receive the relocation assistance, you must agree to the Company’s Relocation Policy, which provides that if you voluntarily resign or you are terminated for Cause prior to the first anniversary of your start date, you will reimburse the Company for all costs related to your relocation, and if said resignation or termination occurs after the first anniversary of your start date but prior to the second anniversary, you will reimburse the Company for an amount equal to one-half of all costs related to your relocation. | ||||
| Benefits: | We offer a comprehensive benefits program that is very competitive within the retail industry. During your employment, you will be eligible to participate in any health, welfare and retirement benefit programs adopted and maintained by the Company for its employees, subject to the terms and limitations of the applicable plan and the Company’s ability, in its sole discretion, at any time and from time to time, to change or terminate any of its employee benefit plans, programs or policies. More information will be provided to you prior to your start date. Until such time as your family has relocated to Columbus, Ohio (no later than June 30, 2027) to accommodate personal and family travel and related expenses, you will be entitled receive payment (either directly or through reimbursement, as applicable) for such expenses of up to $200,000 of aggregate cost to the Company per fiscal year (with any such amount for the 2025 fiscal year to be prorated based on the period of your employment between your start date and the last day of the fiscal year, and with any such amount for the 2027 fiscal year to be prorated based on the period of your employment between the first day of the fiscal year and the date of your relocation (no later than June 30, 2027)), with any costs in excess of this limit to be reimbursed by you to the Company. You will be responsible for the payment of any tax on any amounts paid or income imputed to you with respect to such costs. | ||||
| Severance: | Upon your start date, you and the Company will enter into an Executive Severance Agreement. | ||||
| Restrictive Covenants: | This Letter is based on your representation that you are under no legal or other impediment to accepting our offer and performing the anticipated services or carrying out your responsibilities for the Company, and is subject to your execution of the Confidentiality, Non-Competition and Intellectual Property Agreement, attached hereto as Annex A. | ||||
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| Taxes: | All payments and benefits provided for in this Letter are subject to withholding for applicable income and payroll taxes or otherwise as required by law. Any amounts payable under this Letter are intended to be exempt or excluded from the application of Section 409A of the Internal Revenue Code of 1986, as amended, and the regulations promulgated thereunder (“Section 409A”), or are otherwise intended to avoid the incurrence of tax penalties under Section 409A, and, with respect to amounts payable under this Letter that are subject to Section 409A, this Letter will in all respects be administered in accordance with Section 409A. For purposes of Section 409A, any right to a series of payments under this Letter, if any, will be treated as a right to a series of separate payments. In no event may you, directly or indirectly, designate the calendar year of payment of any amounts payable under this Letter. | ||||
| Indemnification | Upon your start date, you will enter into an Indemnification Agreement in the same form as applicable to other executive officers and directors of the Company. In addition, both during and after your employment by the Company, you will be entitled to the benefit of directors’ and officers’ insurance maintained by the Company, on terms no less favorable than any then-current directors and officers. | ||||
| Miscellaneous: | This Letter, together with the Annex attached hereto and the Executive Severance Agreement to be entered into with you, constitute the entire agreement between you and the Company regarding your employment with the Company and supersedes any and all oral or written employment or compensation agreements, term sheets or discussions between you and the Company or its affiliates. This Letter does not constitute an employment contract with you for any specific period of time. Your employment will be at-will and both you and the Company have the right to terminate your employment at any time for any reason or no reason. In addition, the Company reserves the right to prospectively amend or terminate any of its compensation or benefit plans or programs at any time, in the sole discretion of the Company; provided that, for avoidance of doubt, the Company may not amend this Letter, the Executive Severance Agreement, any outstanding equity award agreement or any other individual agreement between you and the Company without your consent. All compensation, benefit, bonus, equity award and other such programs are governed by and subject to the official plan documents, award agreements and the Board’s or the Committee’s discretion. You understand that you will be subject to and agree to comply fully with all policies and procedures in effect for employees and executives, in each case as currently in effect and as may be amended from time to time. This offer is contingent upon a successful completion of background checking and completion of references. This Letter will be construed in accordance with and governed by the laws of the State of Ohio without regard to conflicts of law principles. | ||||
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We are very much looking forward to you joining Bath & Body Works, Inc. We are excited about the important contributions that you will make to the Company and look forward to your acceptance of our offer. Please feel free call me with any questions. To accept, please sign below and return this Letter to me promptly.
Sincerely,
/s/ Sarah E. Nash
Sarah E. Nash
Chair of the Board of Directors
Bath & Body Works, Inc.
Accepted and agreed effective
as of May 16, 2025:
/s/ Daniel Heaf
Name: Daniel Heaf
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ANNEX A
Confidentiality, Non-Competition and Intellectual Property Agreement
CONFIDENTIALITY, NON-COMPETITION AND
INTELLECTUAL PROPERTY AGREEMENT
INTELLECTUAL PROPERTY AGREEMENT
As Chief Executive Officer of Bath & Body Works, Inc. (together with its subsidiaries and affiliates, the “Company”), I have access to or may develop trade secrets, intellectual property, and other confidential or proprietary information (“Confidential Information”) of the Company.
THEREFORE, in consideration of my employment or continued employment with the Company and my right to participate in certain Company incentive plans and in recognition of the highly competitive nature of the business conducted by the Company, I agree as follows:
1. I will at all times during and after my employment with the Company faithfully hold the Company’s Confidential Information in the strictest confidence, and I will use my best efforts and highest diligence to guard against its disclosure to anyone other than as required in the performance of my duties to the Company. I will not use Confidential Information for my personal benefit or for the benefit of any competitor of the Company or other person. I understand that Confidential Information includes all information and materials relating to Intellectual Property, as defined below, the Company’s trade secrets and all information relating to the Company that the Company has not made available to the public. By way of example, Confidential Information includes information about the Company’s products, formulas, designs, processes, advertising, marketing, promotional plans, technical procedures, strategies, financial information, and many other types of information and materials. Upon termination of my employment with the Company, regardless of the reason for such termination, I will return to the Company all documents and other materials of any kind that contain Confidential Information. I will not use any confidential information of any third party, including any prior employer, in the course of my work for the Company.
This provision does not prohibit me from cooperating with the EEOC or any other state or local fair employment practices agency; from reporting possible violations of federal or state law or regulations to any governmental entity, including but not limited to the Department of Justice and the Securities and Exchange Commission; from making other disclosures protected under applicable whistleblower provisions of federal or state law or regulations or receiving a monetary award with respect thereto; from communicating with any governmental entity, including providing documents or other information, without notice to the Company; or from disclosing the underlying facts and circumstances of allegations of discrimination, sexual harassment or retaliation. I acknowledge that, under the federal Defend Trade Secrets Act, 18 U.S.C. § 1833, (1) an individual shall not be held criminally or civilly liable under any Federal or State trade secret law for the disclosure of a trade secret that (i) is made in confidence to a Federal, State, or local government official, either directly or indirectly, or to an attorney; and made solely for the purpose of reporting or investigating a suspected violation of law; or (ii) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal; and (2) an individual who files a lawsuit for retaliation by an employer for reporting a suspected violation of law may disclose the trade secret to the attorney of the individual and use the trade secret information in the court proceeding, if the individual files any document containing the trade secret under seal and does not disclose the trade secret, except pursuant to court order.
2. During my employment with the Company, and if I leave the Company for any reason whatsoever, then for a period of twelve (12) months after my separation from the Company, I will not directly or indirectly solicit, induce or attempt to influence any associate to leave the employment of the Company, nor will I in any way assist anyone else in doing the things I myself cannot do. Further, I agree that during my employment with the Company, and for a period of twelve (12)
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months after my separation from the Company for any reason whatsoever, I will not directly or indirectly recruit, solicit or otherwise induce or attempt to influence any customer, supplier, sales representative, lender, lessor, lessee or any other person having a business relationship with the Company to discontinue or reduce the extent of that relationship, nor will I in any way assist anyone else in doing the things I myself cannot do.
3. I agree that all inventions, designs, original works of authorship, and ideas conceived, produced, created, or reduced to practice, either solely or jointly with others, during my employment with the Company, including those developed on my own time, which relate to or are useful in the Company’s business (“Intellectual Property”) shall be owned solely by the Company. I understand that whether in preliminary or final form, such Intellectual Property includes, for example, all ideas, inventions, discoveries, designs, creative works, formulas, innovations, improvements, trade secrets, and other intellectual property. All Intellectual Property is either work made for hire for the Company within the meaning of the U. S. Copyright Act, or, if such Intellectual Property is determined not to be work made for hire, then I hereby and herein irrevocably assign all right, title and interest in and to the Intellectual Property to the Company, including, but not limited to, all copyrights, patents, and/or trademarks. I agree it is in and will remain in the company’s sole discretion as to whether any or all of the Intellectual Property should be protected including, but not limited to, by registering it with any patent, trademark, and/or copyright office. I will, without any additional consideration, execute all documents and take all other actions needed to convey my complete ownership of the Intellectual Property to the Company so that the Company may own and protect such Intellectual Property and obtain patent, copyright and trademark registrations for it. I agree to provide reasonable assistance to the Company in the event the Company decides to pursue patent, trademark, and/or Copyright protection for the Intellectual Property or in the event the Company needs to engage in enforcement actions with respect to the Intellectual Property. I agree that the Company may alter or modify the Intellectual Property at the Company’s sole discretion, and I waive all right to claim or disclaim authorship. I represent and warrant that any Intellectual Property that I assign to the Company, except as otherwise disclosed in writing at the time of assignment, will be my sole, exclusive, original work. I confirm that I have not previously invented any Intellectual Property, or I have advised the Company in writing of any prior inventions or ideas.
4. If I leave the Company for any reason whatsoever, then for a period of twelve (12) months after my separation from the Company, I will not, directly or indirectly, work for or contribute to the efforts of any business organization that competes in the United States, or plans to compete in the United States, with the Company or its products. I understand that the Company at its sole discretion may waive this provision or shorten the twelve (12) month period by giving me a written waiver. I agree to notify the Company of any job offer I receive and wish to accept during the twelve (12) month noncompete period.
5. I understand that the Company is entitled, in addition to other remedies, to obtain an injunction against any potential or actual violation of this Agreement. Further, I understand that nothing in this Agreement shall cancel or modify any right I have to receive compensation upon my termination of employment that has been agreed to in any previous agreement.
6. I agree that the Company may assign this Agreement without my consent, and agree that the rights of the Company hereunder shall inure to the benefit of its successors and assigns. I may not assign this Agreement, as the obligations hereunder are personal to me.
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7. This Agreement cannot be modified unless the Company agrees in writing and this Agreement will be governed by and interpreted in accordance with Ohio law.
Date: May 16, 2025 /s/ Daniel Heaf
Daniel Heaf
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Exhibit 10.3
EXECUTIVE SEVERANCE AGREEMENT
THIS EXECUTIVE SEVERANCE AGREEMENT (this “Agreement”) is made and entered into effective as of May 16, 2025 (the “Effective Date”), by and between Bath & Body Works, Inc. and on behalf of all of its subsidiaries and affiliates (collectively, the “Company”) and Daniel Heaf (the “Executive”) (hereinafter collectively referred to as the “Parties”).
WHEREAS, the Executive will serve as a key employee of the Company and the Executive’s services and knowledge are valuable to the Company; and
WHEREAS, in consideration of the Executive’s commencement of employment, the Company has determined that it is in its best interests to provide the Executive with the severance protections in accordance with the terms and conditions of this Agreement.
NOW, THEREFORE, IN CONSIDERATION of the foregoing, and in view of the promises and other good and valuable consideration described in this Agreement (the sufficiency and receipt of which are hereby acknowledged), the Parties agree as follows:
1. Effective Date and Term of this Agreement. This Agreement shall be effective on the Effective Date and will remain in effect unless and until (i) the Executive’s employment with the Company is terminated by either Party in accordance with Section 2, and (ii) all payments and/or benefits to which the Executive is entitled under this Agreement, if any, have been made or provided to the Executive in accordance with the terms of this Agreement.
2. Termination of Employment. The Executive’s employment with the Company shall terminate upon the earlier of: (i) automatically sixty (60) days after the Executive provides a Notice of Termination of the Executive’s resignation for any reason other than for Good Reason; (ii) thirty (30) days following the Executive providing a Notice of Termination indicating the existence of a condition(s) constituting Good Reason other than to the extent that such condition is cured; (iii) immediately upon the Executive’s Total Disability or death; (iv) automatically thirty (30) days after the Executive receives Notice of Termination from the Company of the Executive’s Termination without Cause; or (v) the date set forth in the Notice of Termination from the Company of the Executive’s termination of employment with the Company for Cause (collectively, the earliest of being the “Termination Date”). The Company may, in its sole discretion, waive all or any part of the notice periods set forth in subsection (i) or (iv) in the immediately preceding sentence and pay the Executive in lieu of any such waived period the compensation and other benefits that the Executive would have otherwise received in such period, but in either case the Executive or the Company, as applicable, will deliver such Notice of Termination. If, on the Termination Date, the Executive is a member of the Board of Directors of the Company (the “Board”) or the board of directors of any of the Company’s subsidiaries, or holds any other position with the Company or its subsidiaries, the Executive shall be deemed to have resigned from all such positions as of the Termination Date. The Executive agrees to execute such documents and take such other actions as the Company may request to reflect such resignations.
3. Non-Qualifying Termination.
(a) Notwithstanding anything herein or in any other agreement to the contrary, if the Executive’s employment is terminated by the Company for Cause, the Company’s sole obligation shall be to pay the Executive the Accrued Amounts and the Executive shall not be entitled to severance
benefits under this Agreement or any other agreement or severance plan, policy or program of the Company.
(b) Notwithstanding anything herein or in any other agreement to the contrary, to the extent that the Executive experiences a Termination for any reason while a Company-led internal investigation into facts that could reasonably give rise to the Executive’s Termination for Cause is pending: (i) the Executive shall not be entitled to receive any severance benefits under this Agreement (other than the Accrued Amounts) or any other agreement or severance plan, policy or program of the Company; and (ii) the Executive shall not be entitled to vest in or receive any Variable Compensation in either case, unless and until the Company concludes its investigation with a finding that grounds for a Termination for Cause did not in fact exist, and only to the extent provided for under the terms of the applicable agreement, plan, policy or program.
(c) If the Executive experiences a Termination by reason of the Executive’s death or if the Executive gives the Company a Notice of Termination other than for Good Reason, the Company’s sole obligation shall be to pay the Executive the Accrued Amounts.
(d) If the Executive experiences a Termination by reason of the Executive’s Total Disability, the Company shall provide the Executive with the following: (i) the Accrued Amounts; and (ii) the Executive shall be entitled to receive disability benefits available under the Company’s long-term disability plan as then in effect, to the extent applicable.
4. Severance Upon a Qualifying Termination Not Within the Protection Period. If the Executive experiences a Qualifying Termination not within the Protection Period, then, subject to Section 6, the Company shall provide the Executive with the following (collectively, the “Severance Benefits”):
(a) The Accrued Amounts;
(b) The Company shall continue to pay the Executive’s Base Salary for a period of two (2) years following the Qualifying Termination, less applicable withholding, payable as follows: (i) on the Company’s first regularly scheduled pay date falling on or after sixty (60) days from the Executive’s Termination Date (the “First Payment Date”), the Company will pay the Executive, without interest, the number of missed payroll installments that would have been paid during the period beginning on the Termination Date and ending on the First Payment Date had the installments been paid on the Company’s regularly scheduled payroll dates, and (ii) each of the remaining installments shall be paid on the Company’s regularly scheduled pay dates during the remainder of such two (2)-year period;
(c) The Company shall pay the Executive an amount equal two (2) years’ of COBRA premiums (based on the premium rate in effect on the Termination Date for the Executive and his spouse and eligible dependents) in a single lump sum payment less applicable withholding (“COBRA Payment”). The COBRA Payment shall be paid (i) on the First Payment Date and (ii) regardless of whether the Executive elects COBRA continuation coverage under the Company’s group health plan;
(d) The Company shall pay the Executive any incentive compensation under the IC Plan as follows: (i) the incentive compensation under the IC Plan that the Executive would have received for the performance period which includes the Executive’s Termination Date (based on the applicable performance period construct under the IC Plan as of the Termination Date, which is seasonal for the 2025 fiscal year and is expected to be annual for fiscal years thereafter (except as otherwise established by the Human Capital and Compensation Committee of the Board (the “Committee”))) if the Executive had remained employed with the Company through the completion of such performance period (e.g., if the Termination Date occurs in the 2026 fiscal year, the 2026 annual performance
period), based on actual performance as determined by the Committee (but in no event greater than the amount equal to the Executive’s target incentive award opportunity under the IC Plan for the performance period that includes the Termination Date); and (ii) the incentive compensation under the IC Plan that the Executive would have received if the Executive had remained employed with the Company during the performance periods commencing during the two-year period following the Termination Date (e.g., if the Termination Date occurs in the 2026 fiscal year, the performance periods for the 2027 and 2028 fiscal years) based on actual performance for each such performance period as determined by the Committee (but in no event greater than the Executive’s target incentive award opportunity under the IC Plan for each such performance period), with such amount prorated for any performance period that begins prior to, and ends after, the second anniversary of the Termination Date based on a fraction, the numerator of which is the number of days elapsed in such performance period through the second anniversary of the Termination Date and the denominator of which is the total number of days in such performance period, less applicable withholding, subject to the terms of the IC Plan. The foregoing payments shall be paid at the same time as payments under the IC Plan are typically paid, but in no event later than March 15th of the year following the year in which the applicable performance period is completed; and
(e) The treatment of any outstanding equity awards shall be determined as follows:
(i) A pro-rata portion of the outstanding unvested equity awards that are held by the Executive as of the Termination Date and vest only based on the passage of time shall vest and be settled on the First Payment Date, which pro-rata vesting shall be determined by (A) multiplying (x) the number of shares subject to the award by (y) a fraction, the numerator of which is the number of complete months between the first day of the applicable time-based vesting period and the Termination Date, and the denominator of which is the aggregate number of months in the time-based vesting period, less (B) the number of shares subject to the award that had already vested pursuant to the award’s terms prior to the Termination Date, if any;
(ii) A pro-rata portion of the outstanding unvested equity awards that are held by the Executive as of the Termination Date and vest based, at least in part, on the satisfaction of performance goals shall vest and be settled promptly following the end of the performance period, but in any event not earlier than the First Payment Date or later than the end of the calendar year in which the performance period ends, which pro-rata vesting shall be determined by (A) multiplying the number of shares that the Executive would have earned for the entire performance period based on the level of performance determined in accordance with the applicable plan and award agreements by (B) a fraction, the numerator of which is the number of complete months between the first day of the applicable performance period and the Termination Date, and the denominator of which is the aggregate number of months in the performance period (or vesting period, if longer);
(iii) To the extent that any outstanding unvested equity award that is held by the Executive as of the Termination Date would vest at a greater percentage under the terms of the applicable plan and award agreement than as provided for under Sections 4(e)(i)-(ii), the terms of such award agreement shall instead determine the number of shares covered by such equity award that will vest under this Section 4(e), subject to Sections 4(e)(iv)-(v);
(iv) Notwithstanding the foregoing, no equity awards that are outstanding as of the Termination Date will be forfeited during the three (3)-month period commencing upon the Termination Date, provided, that, (x) to the extent a Change in Control occurs during such three (3)-month period, any such equity awards that are outstanding and unvested as of the Change in Control will instead be treated in accordance with Section 5; and (y) to the extent a Change in Control does not occur
during such three (3)-month period, any portion of the equity awards outstanding as of Termination Date that do not vest pursuant to Sections 4(e)(i)-(iii) shall be forfeited; and
(v) To the extent that the payment or settlement of any equity awards in accordance with the foregoing would constitute an impermissible change in the time or form of payment under Section 409A of the Code, then such portion shall be payable at a time that would be permitted under Section 409A of the Code and that is as near as possible to the payment timing contemplated by the foregoing.
5. Severance Upon a Qualifying Termination Within the Protection Period. If the Executive has a Qualifying Termination within the Protection Period, then, subject to Section 6, the Company will provide the Executive with the following (collectively, the “Change in Control Severance Benefits”):
(a) The payments and benefits described in Sections 4(a), (b), and (c);
(b) A payment equal to the product of (i) the greater of (A) the Executive’s total target incentive award opportunity under the IC Plan for the fiscal year that includes the Termination Date (determined, if applicable, by aggregating any seasonal incentive award opportunities for such fiscal year together) and (B) the average of the cash incentive compensation payouts that the Executive actually received under the IC Plan for the two completed fiscal years (with any seasonal payouts for a single fiscal year to be aggregated as a single payout and any such payout that is prorated due to the date of commencement of the Executive’s employment to be adjusted so as to reflect the amount earned for the full incentive period prior to such proration) immediately preceding the Termination Date (such greater amount, the “Applicable Bonus”), and (ii) two (2) (the “Bonus Amount”). The Bonus Amount shall be paid, less applicable withholding, in a lump sum cash payment on the First Payment Date;
(c) A payment equal to the product of (i) the Applicable Bonus, multiplied by (ii) a fraction, the numerator of which is the number of days in the applicable performance period (within the meaning of the IC Plan) in which the Termination Date occurs that elapsed through the Termination Date and the denominator of which is the total number of days in such performance period. The foregoing payment, less applicable withholding, shall be paid on the First Payment Date;
(d) If any action at law, in equity, or arbitration, including an action for declaratory relief, is brought by the Executive to obtain or enforce any rights provided by this Section 5, and the Executive prevails in such action, the Company shall reimburse the Executive for all documented legal fees and expenses reasonably incurred by the Executive in such action; provided that such reasonable legal fees and expenses incurred by the Executive within the first six (6) months following the Executive’s Termination Date shall be reimbursed by the Company during the seventh (7th) month after the Executive’s Termination Date. Expenses incurred thereafter shall be reimbursed on a monthly basis for expenses incurred in the preceding month by the Company in accordance with the Company’s expense policies applicable to employees; and
(e) All of the outstanding and unvested equity awards held by the Executive immediately before such Qualifying Termination will immediately become fully vested and payable on the First Payment Date, provided that, to the extent that paying any portion of such amount in accordance with the foregoing would constitute an impermissible change in the time or form of payment under Section 409A of the Code, then such portion shall be payable at a time that would be permitted under Section 409A of the Code and that is as near as possible to the payment timing contemplated by the foregoing. To the extent that an equity award vests based on the achievement of performance goals, performance goals will be deemed to be achieved at target levels if less than one-third of the applicable performance period has elapsed as of the date of the Change in Control, otherwise performance goals will be deemed to be achieved at maximum levels.
(f) In the event that the Termination Date occurs during the portion of the Protection Period that precedes a Change in Control and the Executive has already commenced receiving payments and/or benefits under Section 4 prior to the Change in Control, then (i) the Executive will be entitled to the payments and benefits under this Section 5 in lieu of any additional payments or benefits under Section 4, but only to the extent an equivalent payment and/or benefit has not already been paid or provided pursuant to Section 4, and (ii) any payments that the Executive would have otherwise been entitled to under this Section 5 that have not otherwise been paid to the Executive as of the Change in Control will be paid to the Executive in a single lump sum payment as soon as administratively practicable, but no later than sixty (60) calendar days following the occurrence of the Change in Control.
6. Release Requirement. Notwithstanding any other provisions of this Agreement to the contrary, the Company shall not make or provide the Severance Benefits or the Change in Control Severance Benefits (in each case, other than the Accrued Amounts) or waive its rights under Section 7(e) unless the Executive timely executes and delivers to the Company a release of claims in favor of the Company, its affiliates and their respective officers and directors in a form provided by the Company (the “Release”) and such Release becomes effective and irrevocable within sixty (60) days following the Executive’s Termination Date. If the foregoing requirements are not satisfied by the Executive, then no Severance Benefits nor Change in Control Severance Benefits (in each case, other than the Accrued Amounts) shall be due to the Executive pursuant to this Agreement.
7. Effect on Other Plans, Agreements and Benefits.
(a) Any severance benefits payable to the Executive under this Agreement will be in lieu of and not in addition to: (i) any severance benefits to which the Executive would otherwise be entitled under any general severance policy or severance plan maintained by the Company or any agreement between the Executive and the Company that provides for severance benefits (for the avoidance, other than any special written retention agreements); and (ii) any salary continuation provided for under the Confidentiality, Noncompetition and Intellectual Property Agreement.
(b) Any severance benefits payable to the Executive under this Agreement will not be counted as compensation for purposes of determining benefits under any other benefit policies or plans of the Company, except to the extent expressly provided therein.
(c) The Executive’s entitlement to any other benefits not expressly referenced herein shall be determined in accordance with the applicable employee benefit plans then in effect.
(d) The Executive expressly agrees that any amounts the Executive may owe to the Company as of the Termination Date may be deducted from the amounts that the Company would otherwise owe to the Executive under this Agreement, subject to the requirements of Section 409A of the Code.
(e) The Executive will be subject to the Company’s clawback policies in effect from time to time.
8. Section 280G of the Code.
(a) Notwithstanding anything in this Agreement to the contrary, if the Executive is a “disqualified individual” (as defined in Section 280G(c) of the Code) and the payments and benefits provided for in this Agreement, together with any other payments and benefits which the Executive has the right to receive from the Company or any other person, would constitute a “parachute payment” (as defined in Section 280G(b)(2) of the Code), then the payments and benefits provided for in this Agreement will be either (a) reduced (but not below zero) so that the present value of such total amounts
and benefits received by the Executive from the Company and/or such person(s) will be $1.00 less than three (3) times the Executive’s “base amount” (as defined in Section 280G(b)(3) of the Code) and so that no portion of such amounts and benefits received by the Executive will be subject to the excise tax imposed by Section 4999 of the Code or (b) paid in full, whichever produces the better “net after-tax” position to the Executive (taking into account any applicable excise tax under Section 4999 of the Code and any other applicable taxes).
(b) The reduction of payments and benefits hereunder, if applicable, will be made by reducing, first, payments or benefits to be paid in cash hereunder in the order in which such payment or benefit would be paid or provided (beginning with such payment or benefit that would be made last in time and continuing, to the extent necessary, through to such payment or benefit that would be made first in time) and, then, reducing any benefit to be provided in-kind hereunder in a similar order.
(c) The determination as to whether any such reduction in the amount of the payments and benefits provided hereunder is necessary will be made applying principles, assumptions and procedures consistent with Section 280G of the Code by an accounting firm or law firm of national reputation that is selected for this purpose by the Company in its sole discretion (the “280G Firm”). In order to assess whether payments under this Agreement or otherwise qualify as reasonable compensation that is exempt from being a parachute payment under Section 280G of the Code, the 280G Firm or the Company may retain the services of an independent valuation expert.
(d) If a reduced payment or benefit is made or provided and through error or otherwise that payment or benefit, when aggregated with other payments and benefits from the Company used in determining if a “parachute payment” exists, exceeds $1.00 less than three (3) times the Executive’s base amount, then the Executive must immediately repay such excess to the Company upon notification that an overpayment has been made. Nothing in this Section 8 will require the Company to be responsible for, or have any liability or obligation with respect to, the Executive’s excise tax liabilities under Section 4999 of the Code.
9. Arbitration and Class and Representative Action Waiver.
(a) The Parties agree that, subject to Section 9(b), any controversy or claim between the Company and the Executive arising out of or relating to this Agreement or its termination shall be settled and determined by a single arbitrator whose award shall be accepted as final and binding upon the Parties. If the Executive initiates arbitration, the Executive will be responsible for paying one-half of the filing fee. Each Party will be responsible for their own attorney’s fees, subject to Section 5(d). The Parties shall jointly select an arbitrator from JAMS, Inc. (“JAMS”) or the American Arbitration Association (“AAA”) with at least ten (10) years of experience in employment disputes. The arbitration shall be conducted on a confidential basis by the AAA or JAMS and administered under their Employment Arbitration Rules, which are currently available at http://www.adr.org and http://www.jamsadr.com, respectively. The arbitrator shall have the authority to allow for appropriate discovery and exchange of information before a hearing, including, but not limited to, production of documents, information requests, depositions and subpoenas. Unless the arbitrator determines additional discovery is necessary to adequately arbitrate Executive’s claims, discovery shall be conducted in accordance with the then-current version of the Federal Rules of Civil Procedure. Those rules can be found at https://www.law.cornell.edu/rules/frcp. The arbitration shall take place in Columbus, Ohio. Notwithstanding the AAA or JAMS rules, all parties to the arbitration shall have the right to file a dispositive motion and shall not be required to seek permission from the arbitrator to do so. Any decision or award as a result of any such arbitration proceeding shall be in writing and shall provide an explanation for all conclusions of law and fact and shall include the assessment of costs, expenses, and reasonable attorneys’ fees. Judgment on the award may be entered in any court having jurisdiction.
(b) This Arbitration provision does not include:
(i) Any claim arising under or related to the Confidentiality, Noncompetition and Intellectual Property Agreement;
(ii) A claim for workers’ compensation benefits;
(iii) A claim for unemployment compensation benefits;
(iv) A claim based upon the Company’s current (successor or future) employee benefits and/or welfare plans that contain an appeal procedure or other procedure for the resolution of disputes under this Agreement; and
(v) A claim of sexual harassment, including hostile work environment, “sexual assault” (defined as actual or threatened unwelcomed touching of a sexual nature), gender discrimination, and retaliation related to same.
(c) This Agreement also does not prevent the Executive from filing a claim or charge with a federal, state or local administrative agency, such as the Equal Employment Opportunity Commission, the National Labor Relations Board, or similar state or local agencies.
(d) This Agreement does not prohibit those limited circumstances under which either Party finds it necessary to seek emergency or temporary injunctive relief, such as a preliminary injunction or a temporary restraining order, from a court that may be necessary to protect any rights or property of either Party pending the establishment of the arbitral tribunal or its determination of the merits of the dispute.
(e) CLASS ACTION WAIVER. To the extent permissible by law, there shall be no right or authority for any dispute to be arbitrated as a class action or collective action (“Class Action Waiver”). THIS MEANS THAT, EXCEPT AS EXPLICITLY PROVIDED HEREIN, ALL DISPUTES BETWEEN THE PARTIES THAT ARISE, OR HAVE ARISEN, OUT OF EXECUTIVE’S EMPLOYMENT OR THE TERMINATION OF THE EXECUTIVE’S EMPLOYMENT SHALL PROCEED IN ARBITRATION SOLELY ON AN INDIVIDUAL BASIS, AND THAT THE ARBITRATOR’S AUTHORITY TO RESOLVE ANY DISPUTE AND TO MAKE WRITTEN AWARDS WILL BE LIMITED TO THE EXECUTIVE’S INDIVIDUAL CLAIMS.
(f) REPRESENTATIVE ACTION WAIVER. To the extent permissible by law, there shall be no right or authority for any dispute to be arbitrated as a representative action or as a private attorney general action, including but not limited to claims brought pursuant to the Private Attorney General Act of 2004, Cal. Lab. Code § 2698, et seq. (“Representative Action Waiver”). THIS MEANS THAT, TO THE EXTENT CONSISTENT WITH APPLICABLE LAW, THE EXECUTIVE MAY NOT SEEK RELIEF ON BEHALF OF OTHERS IN ARBITRATION, INCLUDING BUT NOT LIMITED TO SIMILARLY AGGRIEVED EMPLOYEES. THE ARBITRATOR’S AUTHORITY TO RESOLVE ANY DISPUTE AND TO MAKE WRITTEN AWARDS WILL BE LIMITED TO THE EXECUTIVE’S INDIVIDUAL CLAIMS.
(g) The Parties agree that only a court of competent jurisdiction may interpret this Section 9 and resolve challenges to its validity and enforceability, including but not limited to the validity, enforceability and interpretation of the Class Action Waiver and Representative Action Waiver. The arbitrator shall have no jurisdiction or power to make such determinations. The Federal Arbitration Act, 9 U.S.C. §§ 1-16, shall govern the interpretation and enforcement of the duty to arbitrate found in this Section 9 and all arbitration proceedings under this Agreement.
(h) Any conflict between the rules and procedures set forth in either the JAMS or AAA rules and those set forth in this Agreement shall be resolved in favor of those in this Agreement.
(i) The burden of proof at an arbitration shall at all times be on the Party seeking relief.
(j) In reaching a decision, the arbitrator shall apply the governing substantive law applicable to the claims, causes of action and defenses asserted by the Parties, as applicable in Ohio. The arbitrator shall have the power to award all remedies that could be awarded by a court or administrative agency in accordance with the governing and applicable substantive law, including, without limitation, Title VII, the Age Discrimination in Employment Act, and the Family and Medical Leave Act.
(k) The aggrieved Party must give written notice of any claim to the other Party as soon as possible after the aggrieved Party first knew or should have known of the facts giving rise to the claim. The written notice shall describe the nature of all claims asserted and the facts upon which those claims are based, and shall set forth the aggrieved Party’s intention to pursue arbitration. The notice shall be mailed to the other Party by certified or registered mail, return receipt requested.
10. Amendment. No provision of this Agreement may be modified, waived, or discharged unless such waiver, modification, or discharge is agreed to in writing and signed by the Executive and the Company.
11. At-Will Employment. This Agreement does not alter the status of the Executive as an at-will employee of the Company. Nothing contained herein shall be deemed to give the Executive the right to remain employed by the Company or to interfere with the rights of the Company to terminate the employment of the Executive at any time, with or without Cause.
12. Severability. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement. If any provision of this Agreement is held by a court of competent jurisdiction to be illegal, invalid, void or unenforceable, such provision shall be deemed modified, amended and narrowed to the extent necessary to render such provision legal, valid and enforceable, and the other remaining provisions of this Agreement shall not be affected but shall remain in full force and effect. If a court of competent jurisdiction finds the Class Action Waiver and/or Representative Action Waiver in Section 9 is unenforceable for any reason, then the unenforceable waiver provision shall be severable from this Agreement, and any claims covered by any deemed unenforceable waiver provision may only be litigated in a court of competent jurisdiction, but the remainder of the Agreement shall be binding and enforceable.
13. Headings and Subheadings. Headings and subheadings contained in this Agreement are intended solely for convenience and no provision of this Agreement is to be construed by reference to the heading or subheading of any section or paragraph.
14. Unfunded Obligations. The amounts to be paid to the Executive under this Agreement are unfunded obligations of the Company. The Company is not required to segregate any monies or other assets from its general funds with respect to these obligations. The Executive shall not have any preference or security interest in any assets of the Company other than as a general unsecured creditor.
15. Notice. For the purposes of this Agreement, notices and all other communications provided for in this Agreement (including the Notice of Termination and a notice of a claim for which a Party seeks arbitration) shall be in writing and shall be deemed to have been duly given when personally
delivered or sent by registered or certified mail, return receipt requested, postage prepaid, or upon receipt if overnight delivery service or facsimile is used, addressed as follows:
To the Executive:
At the most recent address contained in the Company’s personnel files.
To the Company:
Bath & Body Works, Inc.
Three Limited Parkway,
Columbus, Ohio 43230
Attn: Chief Legal Officer
16. Successors and Assigns. The Company may assign its rights and obligations under this Agreement without the Executive’s consent: to (a) an affiliate of the Company, or (b) in the event that the Company shall hereafter effect a reorganization, consolidate with, or merge into, any other entity or person, or transfer all or substantially all of its properties, stock, or assets to any other entity or person, to the acquirer or resulting entity in such transaction. This Agreement will be binding upon any successor of the Company (whether direct or indirect, by purchase, merger, consolidation or otherwise) in the same manner and to the same extent that the Company would be obligated under this Agreement if no succession had taken place. Neither this Agreement nor any right or interest hereunder shall be assignable or transferable by the Executive, the Executive’s beneficiaries or the Executive’s legal representatives, except by will or by the laws of descent and distribution. This Agreement shall inure to the benefit of and be enforceable by the Executive’s legal personal representative.
17. Waiver. Any Party’s failure to enforce any provision or provisions of this Agreement will not in any way be construed as a waiver of any such provision or provisions, nor prevent any Party from thereafter enforcing each and every other provision of this Agreement.
18. Counterparts. This Agreement may be executed in one or more counterparts, all of which taken together shall be deemed to constitute one and the same original.
19. Governing Law. Unless otherwise noted in this Agreement, this Agreement shall be construed in accordance with and governed by the laws of the State of Ohio without regard to conflicts of law principles.
20. Withholding. The Company shall have the right to withhold from any amount payable hereunder any Federal, state and local taxes in order for the Company to satisfy any withholding tax obligation it may have under any applicable law or regulation.
21. Section 409A of the Code. This Agreement is intended to either avoid the application of, or comply with, Section 409A of the Code. To that end, this Agreement shall at all times be interpreted in a manner that is consistent with Section 409A of the Code. Notwithstanding any other provision in this Agreement to the contrary, the Company shall have the right, in its sole discretion, to adopt such amendments to this Agreement or take such other actions (including amendments and actions with retroactive effect) as it determines is necessary or appropriate for this Agreement to comply with Section 409A of the Code. Further:
(a) Any reimbursement of any costs and expenses by the Company to the Executive under this Agreement shall be made by the Company in no event later than the close of the Executive’s taxable year following the taxable year in which the cost or expense is incurred by the Executive. The expenses incurred by the Executive in any calendar year that are eligible for reimbursement under this Agreement shall not affect the expenses incurred by the Executive in any other calendar year that are eligible for reimbursement hereunder and the Executive’s right to receive any reimbursement hereunder shall not be subject to liquidation or exchange for any other benefit.
(b) Any payment following a separation from service that would be subject to Section 409A(a)(2)(A)(i) of the Code as a distribution following a separation from service of a “specified employee” (as defined under Section 409A(a)(2)(B)(i) of the Code) shall be made on the first to occur of (i) ten (10) days after the expiration of the six (6)-month period following such separation from service, (ii) death, or (iii) such earlier date that complies with Section 409A of the Code.
(c) Each payment that the Executive may receive under this Agreement shall be treated as a “separate payment” for purposes of Section 409A of the Code.
(d) Payments under this Agreement are intended to be exempt from the requirements of Section 409A of the Code to the maximum extent possible, whether pursuant to the short-term deferral exception described in Treasury Regulation Section 1.409A-1(b)(4), the involuntary separation pay plan exception described in Treasury Regulation Section 1.409A-1(b)(9)(iii), or otherwise. Any payments and benefits provided under this Agreement may be accelerated in time or schedule by the Company, in its sole discretion, to the extent permitted by Section 409A of the Code.
(e) Notwithstanding anything in this Agreement to the contrary, in no event, shall the Company be liable for any tax, interest or penalty imposed on the Executive under Section 409A of the Code or any damages for failing to comply with Section 409A of the Code.
22. Definitions. Capitalized terms used but not otherwise defined herein have the meanings set forth in this Section 22.
(a) “2020 Stock Plan” means the Company’s 2020 Stock Option and Performance Incentive Plan, as amended from time to time.
(b) “Accrued Amounts” mean: (i) unpaid Base Salary through the Termination Date; (ii) unpaid amounts with respect to any incentive award opportunity earned under the IC Plan for the completed fiscal year immediately preceding the year that includes the Termination Date, except in the event of a termination for Cause; and (iii) unreimbursed business expenses incurred by the Executive on behalf of the Company during the term of their employment in accordance with the Company’s standard policies (including expense verification policies) regarding the reimbursement of business expenses, as the same may be modified from time to time.
(c) “Base Salary” means the Executive’s annual base salary in effect as of the Termination Date (without giving effect to any reduction resulting in a Qualifying Termination for Good Reason).
(d) “Cause” means, as determined by the Company, that the Executive (i) was grossly negligent in the performance of the Executive’s duties with the Company (other than a failure resulting from the Executive’s incapacity due to physical or mental illness); (ii) has pled “guilty” or “no contest” to, or has been convicted of, an act which is defined as a felony under federal or state law; (iii) engaged in misconduct in bad faith that could reasonably be expected to materially harm the Company’s business or its reputation; or (iv) commits or engages in Subject Conduct. In the event of any of the conditions
described above, the Company shall provide the Executive a Notice of Termination stating the grounds for immediate termination.
(e) “Change in Control” means a “Change in Control” under the 2020 Stock Plan.
(f) “Code” means the Internal Revenue Code of 1986, as amended. Any reference to a section of the Code shall be deemed to include a reference to any regulations promulgated thereunder.
(g) “Confidentiality, Noncompetition and Intellectual Property Agreement” means the written Confidentiality, Noncompetition and Intellectual Property Agreement or other similar agreement between the Executive and the Company as may be in effect from time to time.
(h) “Good Reason” means (i) a decrease in the Executive’s base salary (other than in connection with an across-the-board decrease applied to the Executive on the same basis as applied to similarly situated executives of the Company); (ii) a material diminution in the Executive’s position as of the Effective Date; (iii) the assignment to the Executive of any duties materially inconsistent with and that constitute a material adverse change to the Executive’s duties, authority, responsibilities or reporting requirements or structure, as of the Effective Date, including ceasing to report directly to the Board; (iv) the failure of the Company to obtain the assumption in writing of its obligation to perform this Agreement by any successor to all or substantially all of the assets of the Company within fifteen (15) days after a merger, consolidation, sale, or similar transaction; or (v) the Executive’s mandatory relocation to an office location more than fifty (50) miles from Executive’s principal office location in the Columbus, Ohio area on the Effective Date. “Good Reason” shall not include acts taken by the Company by reason of the Executive’s physical or mental infirmity which impairs the Executive’s ability to substantially perform their duties. Notwithstanding the foregoing provisions of this definition, any assertion by the Executive of a termination for Good Reason shall not be effective unless all of the following conditions are satisfied: (x) the Executive has provided a Notice of Termination to the Company indicating the existence of the condition(s) providing grounds for termination for Good Reason within sixty (60) days of the initial existence of such condition becoming known (or should have become known) to them; (y) the condition(s) specified in such notice must remain uncorrected by the Company for thirty (30) days following the Company’s receipt of such written notice; and (x) the Executive terminates employment within thirty (30) days following the expiration of such thirty-day (30) cure period.
(i) “IC Plan” means the incentive compensation plan of the Company in which the Executive participates as of the Termination Date.
(j) “Notice of Termination” means a written notice that (i) indicates the specific termination provision in this Agreement relied upon, if applicable, (ii) to the extent applicable, sets forth in reasonable detail the facts and circumstances claimed to provide a basis for the Executive’s Termination under the provision so indicated, and (iii) if the Termination Date is other than the date of receipt of such notice, specifies the Termination Date.
(k) “Protection Period” means, (i) the period beginning three (3) months prior to a Change in Control and ending twenty-four (24) months following a Change in Control.
(l) “Qualifying Termination” means the Executive’s Termination either: (i) by the Company without Cause; or (ii) by the Executive for Good Reason.
(m) “Subject Conduct” means sexual harassment (including creation of a hostile work environment), gender discrimination and retaliation related to the foregoing or a violation of any policy
of the Company relating to sexual harassment (including creation of a hostile work environment), gender discrimination and retaliation related to the foregoing.
(n) “Termination” means the Executive’s termination of employment with the Company, for any reason, whether voluntary or involuntary, provided that such termination constitutes a “separation from service” as defined and applied under Section 409A of the Code.
(o) “Total Disability” means “total disability” as defined in the Company’s long-term disability plan as in effect from time to time.
(p) “Variable Compensation” means any cash-based performance or incentive award paid by or any equity or equity-based compensation awarded by the Company, including, but not limited to, under the 2020 Stock Plan (and any successor thereto) and the IC Plan.
[Signature Page Follows]
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly authorized officer and the Executive has executed this Agreement as of the date(s) set forth below to be effective as of the Effective Date.
DATE
/s/ Daniel Heaf May 16, 2025
Daniel Heaf
BATH & BODY WORKS, INC. DATE
By: /s/ Sarah E. Nash May 16, 2025
Name: Sarah E. Nash
Title: Chair of the Board of Directors
[Signature Page to Executive Severance Agreement]
Exhibit 15
May 29, 2025
To the Shareholders and Board of Directors of Bath & Body Works, Inc.
We are aware of the incorporation by reference in the following Registration Statements of Bath & Body Works, Inc.:
(1)Registration Statement (Form S-3 ASR No. 333-285833) of Bath & Body Works, Inc.,
(2)Registration Statement (Form S-8 No. 333-265379) pertaining to the Bath & Body Works, Inc. Associate Stock Purchase Plan,
(3)Registration Statement (Form S-8 No. 333-251226) pertaining to the L Brands, Inc. 2020 Stock Option and Performance Incentive Plan, and
(4)Registration Statement (Form S-8 No. 333-206787) pertaining to the L Brands, Inc. 2015 Stock Option and Performance Incentive Plan;
of our report dated May 29, 2025 relating to the unaudited consolidated interim financial statements of Bath & Body Works, Inc. that are included in its Form 10-Q for the quarter ended May 3, 2025.
/s/ Ernst & Young LLP
Grandview Heights, Ohio
Exhibit 22
List of Guarantor Subsidiaries
The 2027 Notes, 2028 Notes, 2029 Notes, 2030 Notes, 2035 Notes and 2036 Notes are jointly and severally guaranteed on a full and unconditional basis by Bath & Body Works, Inc. (incorporated in Delaware) and the following 100% owned subsidiaries of Bath & Body Works, Inc. as of May 3, 2025:
| Entity | Jurisdiction of Incorporation or Organization | ||||
| Bath & Body Works, LLC | Delaware | ||||
| Bath & Body Works Brand Management, Inc. | Delaware | ||||
| Bath & Body Works Direct, Inc. | Delaware | ||||
| beautyAvenues, LLC | Delaware | ||||
| Beauty Specialty Holding, LLC | Delaware | ||||
| L Brands Service Company, LLC | Delaware | ||||
Exhibit 31.1
Section 302 Certification
I, Daniel Heaf, certify that:
1. I have reviewed this report on Form 10-Q of Bath & Body Works, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
| /s/ DANIEL HEAF | |||||
Daniel Heaf | |||||
| Chief Executive Officer | |||||
Date: May 29, 2025
Exhibit 31.2
Section 302 Certification
I, Eva C. Boratto, certify that:
1. I have reviewed this report on Form 10-Q of Bath & Body Works, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
| /s/ EVA C. BORATTO | |||||
| Eva C. Boratto | |||||
| Chief Financial Officer | |||||
Date: May 29, 2025
Exhibit 32
Section 906 Certification
Daniel Heaf, the Chief Executive Officer, and Eva C. Boratto, the Chief Financial Officer, of Bath & Body Works, Inc. (the “Company”), each certifies that, to the best of our knowledge:
(i)the Quarterly Report of the Company on Form 10-Q dated May 29, 2025 for the period ending May 3, 2025 (the “Form 10-Q”), fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(ii)the information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.
| /s/ DANIEL HEAF | |||||
| Daniel Heaf | |||||
| Chief Executive Officer | |||||
| /s/ EVA C. BORATTO | |||||
| Eva C. Boratto | |||||
| Chief Financial Officer | |||||
Date: May 29, 2025