Victoria’s Secret, a leading global retailer of intimate apparel, is gearing up for a pivotal year, marked by the return of its renowned fashion show and the appointment of a new CEO.
In late August, Victoria’s Secret reported earnings per share of $0.40 for Q2 of the fiscal year 2024, surpassing analysts’ expectations of $0.38 by 5%. Despite this positive earnings surprise, the company’s financials reveal some troubling trends.
Net sales fell nearly 1% year-over-year to approximately $1.42 billion for Q2. Comparable sales also declined by 3% compared to the same quarter last year. While international sales grew by 6.4%, North American sales dropped by 2.1%.
Leadership Change and Fashion Show Comeback
Earlier this year, Victoria’s Secret appointed Hillary Super, former CEO of Rihanna’s Savage X Fenty, as its new CEO. Super will officially start her role on September 9. Her arrival comes at a challenging time, with the company struggling to recover from recent poor performance.
Adding to the excitement, the Victoria’s Secret Fashion Show will return on October 15 in New York City after a six-year break. The show was last held in 2018 before being canceled in 2019 due to negative publicity and controversies surrounding the brand, including accusations of misogyny and a lack of inclusivity.
Controversies and Legal Issues
The fashion show faced criticism for its exclusion of transgender and plus-size models, contributing to its cancellation. In May 2022, Victoria’s Secret settled a $90 million lawsuit over claims of sexual harassment and misogyny involving high-ranking company officials. Although the company resolved the legal matter, its reputation suffered significantly.
Future Outlook and Financial Guidance
Victoria’s Secret’s recent changes could be a last chance to turn the company’s fortunes around. For the remainder of fiscal year 2024, sales are expected to decline by 1% compared to the previous year. However, the company anticipates operating income to rise by $287.5 million, an increase of nearly 9% from earlier forecasts.
Despite the challenges faced in Q2, Victoria’s Secret’s stock has risen over 31% in the past year, indicating potential future growth. The company has seen improvements in North American sales over the past four quarters, driven by new products and better acceptance, particularly in the VS and PINK brands.
Chief Financial Officer Tim Johnson expressed optimism during the earnings call, stating, “The improvement is driven by newness and product acceptance. We expect North America business trends to continue improving. Although the market remains challenging, our business is showing positive sequential growth.”
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