Victoria’s Secret swings to loss; sales trends improving

Victoria’s Secret & Co. reported a third-quarter loss amid increased marketing and technology investments and declining sales, but sounded an upbeat note about its early holiday sales performance.

“We are excited with early holiday sales trends in November in North America both in our stores and through our digital experiences online,” stated CEO Martin Waters. “The November sales and margin result was our best monthly performance in nearly two years and further evidence our initiatives are working.”

The intimate apparel giant swung to a net loss of $71.2 million, or $0.92 a share, for the quarter ended Oct. 28, from net income of $24.4 million, or $0.29 a share, in the year-ago period. the adjusted per-share loss was $0.86, more than the $0.78 loss analysts had expected.

Net sales fell 4% to $1.265 billion, just below analysts estimates of $1.270 billion. Same-store sales fell 7.0%, less than expected.

“We are encouraged by the improving sales trend as we transition into the all-important holiday season,” Waters stated. “Our sales trend in North America continued to improve as planned each month throughout the third quarter with October being our strongest month. Our teams have been resiliently focused on what is within our control and working tirelessly on multiple growth initiatives designed to create momentum.”

On the earnings call, Waters said the company has seen strong results from its new loyalty program, which now has more than 22 million members. He also noted improvements in the online customer experience online and product improvements. 

“We believe our evolving strategies will position the business to deliver the potential of our category-defining Victoria’s Secret and Pink brands, and I believe we have the right leadership team in place at the right time for our business to be successful,” Walters said.

For the fourth quarter, the retailer expects sales growth of 2% to 4% compared to last year’s fourth quarter net sales of $2.021 billion.

For the full year,  net sales are expected to decrease in the range of 2% to 3% compared to last year. Adjusted net income for the full year 2023 is estimated to be in the range of $1.85 to $2.25 per diluted share.

Victoria’s Secret has a global footprint of more than 1,350 retail stores in nearly 70 countries.