Victoria's Secret Lifts FY24 Guidance After Strong Q3: Sees Holiday Momentum

Victoria's Secret & Co. VSCO shares are trading higher after the company reported third-quarter results yesterday.

Revenue rose 7% year over year (Y/Y) to $1.347 billion, beating the consensus of $1.294 billion. Total comparable sales for the quarter increased 3% Y/Y.

Sales was led by mid-single digit growth in North America and 20+% growth from the International business.

Adjusted operating loss stood at $28 million vs. loss of $60 million a year ago quarter.

Adjusted EPS loss of $(0.50) beat the consensus of $(0.63), vs. guidance for adjusted EPS loss of $(0.60) – $(0.80).

“Our strength for the quarter was broad-based across all regions, all channels, all major merchandise categories and importantly all brands — Victoria’s Secret, PINK and Adore Me — were up to last year,” CEO Hillary Super said.

”We won the major moments during the quarter, starting with PINK back to campus in August, followed by our VSX sport launch in September and finishing the quarter with the return of the VS Fashion Show in October.”

Super noted the company’s strength in sales and disciplined inventory management translated to strong margins which were up to last year, “and our teams continue to be relentless on controlling costs in our business.”

”We are excited to see our momentum from the third quarter continue through Black Friday and Cyber Monday. Our merchandise offering and giftable product assortments are resonating with the customer and driving traffic both in stores and online. The strong product acceptance supported by our best-in-mall store experience and dozens of digital enhancements are driving solid conversion and basket size,” Super added.

Outlook: For the fourth quarter, Victoria's Secret expects net sales growth of 2%-4% and adjusted EPS of $2.00-$2.30 vs. estimate of $2.10.

Victoria’s Secret revised its FY24 projections, increasing net sales growth to 1%-2% (from a decline of 1% prior) and raised its operating income forecast to $315 million-$345 million (from $275 million-$300 million earlier).

Investors can gain exposure to the stock via Tremblant Global ETF TOGA and SPDR S&P Retail ETF XRT.

VSCO Price Action: Victoria’s Secret & Co. shares are up 10.51% at $47.54 premarket at publication Friday.

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Photo: Courtesy Victoria’s Secret