Victoria’s Secret & Co. (VSCO) reported its second-quarter earnings yesterday, exceeding analysts’ expectations on revenue but facing challenges in overall sales growth.
Revenue for the quarter reached $1.417 billion, slightly higher than the consensus estimate of $1.41 billion. However, total comparable sales, a key metric for retailers, declined by 3% year-over-year. This indicates that sales at stores open for at least a year were down compared to the same period last year.
Despite the decline in comparable sales, Victoria’s Secret achieved positive results in other areas. Adjusted operating income reached $62 million, a significant increase from $49 million in the same period last year. Adjusted earnings per share (EPS) also beat estimates, coming in at $0.40 compared to the consensus of $0.36.
Timothy (TJ) Johnson, the company’s Interim Chief Executive Officer and Chief Financial and Administrative Officer, expressed cautious optimism about the company’s performance. He noted that the North American business has shown improvement in recent months and early customer feedback on fall merchandise is positive for both the Victoria’s Secret and PINK brands. The beauty business has also continued to perform well and is attracting customers to stores.
Looking ahead, Victoria’s Secret expects net sales to increase slightly in the low-single digits year-over-year during the third quarter. However, the company anticipates a loss per share of $0.60 to $0.80, compared to an estimated loss of $0.66.
The company also revised its full-year outlook for net sales, now expecting a decrease of about 1%. This represents an improvement from the previous guidance of a decline in the low-single digits.
Victoria’s Secret recently appointed Hillary Super as its Chief Executive Officer, effective September 9. Investors interested in gaining exposure to the company can consider the SPDR S&P Retail ETF (XRT).
VSCO shares experienced a significant drop, falling by 8% to $22.88 at the close of trading on Thursday. This decline suggests that investors remain cautious about the company’s future despite the improved earnings and outlook.
