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Key Takeaways
- Victoria’s Secret stock popped Friday after posting a smaller third-quarter loss and higher revenue than analysts expected.
- The lingerie retailer posted strong comparable store sales and lifted its full-year outlook, crediting less promotional activity and price hikes.
Victoria’s Secret (VSCO) shares jumped on Friday after the lingerie retailer posted better-than-expected results and boosted its guidance as it cut back on promotions and raised prices.
The company reported a third-quarter loss of $0.46 per share, $0.13 lower than forecasts from Visible Alpha. Revenue increased 9.2% to $1.47 billion, also better than expected. Comparable store sales were up 5%. When including direct-to-consumer sales, they gained 8%.
Why This News Is Significant
Victoria’s Secret has spent the past two years trying to recover from falling sales and heavy discounting. The lingerie company’s turnaround strategy, which includes fewer promotions and more full-price selling, appears to be gaining traction. Comparable sales growth, stronger margins, and higher guidance are all signs of stability for the retailer.
Sales in North America increased 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.
CFO Scott Sekella said adjusted gross margin grew 170 basis points, “driven by a reduced promotional approach and higher regular-priced selling, while leveraging the strength of our business model.” Victoria’s Secret remains “focused on managing costs while prioritizing investments in product innovation, brand strength, and customer experience,” he said.
The company raised its outlook for full-year adjusted EPS to between $2.40 and $2.65, and revenue to $6.45 billion to $6.48 billion. Previously, it anticipated adjusted EPS of $1.80 to $2.20, and revenue of $6.33 billion to $6.41 billion.
Shares of Victoria’s Secret were up nearly 13% in recent trading, putting the stock’s year-to-date return at 13%.
