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✅ Main takeaway:
Key takeaways
- Victoria’s Secret shares rose on Friday after reporting a smaller third-quarter loss and higher revenue than analysts expected.
- The lingerie retailer reported strong in-store sales and raised its full-year forecast, resulting in lower promotional activity and higher prices.
Victoria’s Secret (VSCO) shares jumped on Friday after the lingerie retailer reported better-than-expected results and boosted its guidance as it cut promotions and raised prices.
The company reported a third-quarter loss of $0.46 per share, $0.13 below Visible Alpha’s forecast. Revenue rose 9.2% to $1.47 billion, also better than expected. Comparable store sales increased 5%. When direct-to-consumer sales are included, they rose 8%.
Why is this news important?
Victoria’s Secret has spent the past two years trying to recover from declining sales and deep discounts. The lingerie company’s turnaround strategy, which includes fewer promotions and more full-price selling, appears to be gaining momentum. Comparable sales growth, strong margins, and higher guidance are all signs of stability for the retailer.
Sales in North America rose 5.4% to $778 million, and direct-to-consumer sales rose 4.3% to $428.5 million. International sales jumped 33.5% to $264.8 million.
Adjusted gross margin grew 170 basis points, “driven by a reduced promotional approach and higher regular-priced sales, while leveraging the strength of our business model,” CFO Scott Sikela said. Victoria’s Secret remains “focused on cost management while prioritizing investments in product innovation, brand strength and customer experience,” he said.
The company raised its full-year adjusted earnings per share forecast to between $2.40 and $2.65, and revenues to $6.45 billion to $6.48 billion. Previously, it expected adjusted EPS of $1.80 to $2.20, and revenue of $6.33 billion to $6.41 billion.
Victoria’s Secret shares are up nearly 13% in recent trading, giving the stock’s year-to-date return at 13%.
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