Victoria’s Secret Stock Jumps as Turnaround Effort Lifts Sales

Victoria’s Secret apparel is displayed for sale in Austin, Texas, in 2023. (Brandon Bell/Getty Images)

Key Points

• Victoria’s Secret reported a 9% increase in third-quarter sales to $1.5 billion, surpassing analysts’ expectations.
• The company’s adjusted loss per share was 27 cents, narrower than the 59 cents projected by analysts.
• Management raised its full fiscal year net sales forecast to $6.450 billion-$6.480 billion and adjusted earnings per share to $2.40-$2.65.

Victoria’s Secret stock got a jolt Friday as a better-than-expected third-quarter earnings report showed the company’s turnaround plan is working.

Sales rose 9% year over year to $1.5 billion, compared with the $1.4 billion consensus call among analysts surveyed by FactSet. The outperformance was driven by strength in both the Victoria’s Secret and PINK brands, CEO Hillary Super said Friday.

“These outstanding results reflect disciplined execution of our Path to Potential strategy,” she said, adding that the company is “Well positioned for a successful holiday season.”

Super, who joined Victoria’s Secret last year, has been trying to bring the lingerie retailer back in touch with its “sexy” roots in a bid to turn sales around. The Path to Potential strategy also aims to accelerate the company’s growth abroad, increase brand value by reducing markdowns, and trimming operational costs while investing in innovation.

“In our view, the leadership team and strategies are beginning to bear fruit through an evolving assortment across brands, supported by improved messaging and brand storytelling,” wrote Dana Telsey, CEO of Telsey Advisory Group, in a note Friday.

Victoria’s Secret stock jumped 17% in premarket trading Friday to $48.41. Shares are up about 0.4% this year, trailing behind the S&P 500 ’s roughly 16% gain.

The company still posted an adjusted loss for the quarter, albeit a narrower one than Wall Street was forecasting. On a per share basis, the company lost 27 cents a share, compared with analysts’ projections for a loss of 59 cents.

Management raised its financial forecasts for the fiscal year. It now sees net sales ranging from $6.450 billion to $6.480 billion, compared with prior guidance for $6.330 billion to $6.410 billion.

Adjusted earnings per share will range between $2.40 to $2.65, compared with the company’s earlier call for $1.80 to $2.20.

Analysts had penciled in adjusted earnings of $2.13 a share from $6.4 billion of revenue.

Victoria’s Secret outlook includes an estimated tariff impact of about $90 million for the full fiscal year. Earlier, it had pegged the number at $100 million.

Write to Sabrina Escobar at sabrina.escobar@barrons.com