Victoria’s Secret Tops Q4 Profit Estimates, but Signals Caution – WWD

Martin Waters said Victoria’s Secret & Co. is standing well on its own and is on the right path after its first full year as a public company. 

But that doesn’t mean it was an easy year. 

“In the holiday quarter, our teams controlled what they could control despite a challenging economic environment for our customer,” said Waters, who is chief executive officer of the intimates giant. 

Fourth-quarter net profits slid 29.7 percent to $173 million from $246.1 million a year earlier. However, adjusted profits of $2.47 a share topped the $2.34 analysts had penciled in.

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Sales for the three months ended Jan. 28 decreased 7.1 percent to $2 billion from $2.2 billion and were in line with Wall Street’s expectations. 

For the full year, net profits fell 46 percent to $348.1 million as sales declined 6.4 percent to $6.3 billion. 

Brands of all shapes and sizes have struggled to live up to comparisons with the consumer spending blitz that was 2021, but caution seems to be in order going forward. 

Waters noted that the company “exited the year with Victoria’s Secret and Pink inventory levels down double digits on an adjusted basis — prudently positioned to begin 2023.”

And the first quarter isn’t shaping up to be as strong as analysts hoped. 

The retailer said its first-quarter sales would decrease by a percentage in the mid-single-digit range where analysts were looking for a decline of just 0.7 percent. And adjusted profits were projected at 30 cents to 60 cents a share, below the 83 cents analysts anticipated.

Shares of the company slipped 2.7 percent to $36.75 in afterhours trading on Wall Street. 

“As we look into the new year, we recognize the environment will likely remain challenging for the foreseeable future,” Waters said. “However, we firmly believe our brand repositioning efforts are tracking well.

“Our strategic growth plan and our focus on strengthening our core, igniting growth and transforming the foundation is beginning to come to life,” the CEO said. “Several exciting examples of this strategy planned in 2023 include continuing to build on our core offerings as the leader in the intimates market through a pipeline of bra launches, the recent launch of our new Victoria’s Secret and Pink customer loyalty program, introducing Adore Me as part of the VS&Co family and leveraging Adore Me’s customer technology through our established market leading brands, and expanding our international footprint both in number of stores and number of countries.”