Victoria’s Secret Losses Soften in Q2
Story was updated at 4:16 p.m. Aug. 29.
Victoria’s Secret & Co. beat Wall Street forecasts on the top and bottom lines, but it wasn’t enough to stop its stock price from falling Thursday after the company reported results.
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Shares dipped 3.7 percent to $23.96.
Net sales for the second quarter were $1.41 billion, down 1 percent from $1.3 billion the year prior. Adjusted net income was $31 million, or 40 cents per diluted share.
“Second-quarter results exceeded or met our expectations for the quarter on all key financial metrics and we delivered year-over-year quarterly operating income growth for the first time since 2021,” said chief financial officer and interim chief executive officer Tim Johnson on a call with analysts Thursday.
“We were encouraged by the continued sequential improvement in quarterly sales results in North America for the fourth consecutive quarter, as sales trends improved in both our stores and our digital channels,” Johnson continued.
Beauty performed the best for the company, and Johnson said Victoria’s Secret and Pink maintained a combined market share of 20 percent. Since the second quarter ended, the company named Hillary Super CEO, effective Sept. 9.
The company also narrowed its guidance from a low-single-digit sales dip to a 1 percent decline in sales for the fiscal year.
“The good news from Victoria’s Secret is that for the first time since 2021 the company has delivered growth in operating income,” said Neil Saunders, managing director of GlobalData. “On the sales lines, things do not look quite so rosy, even though some progress has been made.…This stands in marked contrast to the whole intimates market in the U.S., where spending has increased by 18.7 percent over the same period.”
“Second-quarter sales came slightly better than the higher end of [Victoria’s Secret & Co.’s] updated outlook and beat the Street’s forecast,” read a UBS note from analyst Mauricio Serna. “Third-quarter sales guide implies further acceleration and return to positive year-over-year growth for the first time since the fourth quarter 2021.”
The note continued that misses on gross margins, as well as predicted inventory levels for the third quarter could “limit stock price upside despite a more bullish sales outlook.”
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