Victoria’s Secret Q2 sales fall amid ‘decelerated’ customer traffic trends

Victoria’s Secret & Co. has joined the growing list of retailers whose second-quarter results were affected by inflation and economic uncertainty — and excess inventory.

The lingerie and beauty company lowered its sales guidance, saying that it expects consumers will continue to be challenged by inflationary and other financial pressures for the balance of the year.

“We have adjusted our inventory position and cost structure accordingly while allowing for continued investment in growth initiatives,” stated CEO Martin Waters.

Victoria’s Secret net income totaled  $70 million, or $0.83 per share, in the quarter ended July 30, compared with $151 million, or $1.71 a share, in the year-ago quarter.  

The company said its earnings results included a pre-tax charge of $29 million, principally severance, related to restructuring actions to reorganize, streamline and improve its leadership structure.   Adjusted earnings came to $1.09 a share. 

Sales fell 6% to $1.52 billion as customer traffic trends decelerated across the retail environment throughout the quarter, the company said. Total comp sales declined 8%.

“As we celebrate our first year as an independent, publicly-traded company, I would like to express my deepest appreciation for the hard work and dedication of our team of associates and partners around the world,” Waters said. “As a company, we undertook and committed to not simply an evolution, but a revolution of our strategy. We aspired to and are proud to be a different https://chainstoreage.com/victorias-secret-steps-turnaround-totally-new-look  company today, with a new leadership team and a mission to welcome, celebrate, and champion all women.”

Waters added that the company’s continues to be the market leader in its category, and that “our brand transformation continues to be well received by our customers.” 

“We are confident in our ability to navigate and execute in a shifting consumer landscape with our new, optimized leadership structure which allows for greater agility and focus on the customer and growth initiatives,” he said.

During the quarter, and in keeping with its transformation efforts, Victoria’s Secret launched an online marketplace focused on brands that are owned or led by women.

The company is forecasting full year 2022 net sales to decrease in the mid to high single digit range compared to last year’s full year net sales of $6.785 billion. At this forecasted level of sales, adjusted operating income is expected to be in the range of $525 million to $575 million, or approximately 8% to 9% of sales.

Third quarter net sales are expected to decrease in the high single digit range compared to last year’s third quarter net sales of $1.441 billion.  Earnings are estimated to be in the range of $0.00 to $0.25 per diluted share compared to earnings of $0.81 per share last year.

Victoria’s Secret operates nearly 1,350 retail stores in approximately 70 countries, including 808 in the U.S. and 26 in Canada. It became a standalone company a year ago.