On June 5, 2024, Victoria's Secret & Co (VSCO, Financial) released its 8-K filing for the first quarter ended May 4, 2024. Victoria's Secret & Co is a specialty retailer of lingerie, pajamas, and beauty products with prestige fragrances and body care. It serves customers at its Lingerie and Beauty stores around the globe and online, enabling them to shop the brand anywhere and anytime. The company operates as a single segment designed to serve customers worldwide seamlessly through stores and online channels.
Performance and Challenges
Victoria's Secret & Co reported a net loss of $4 million, or $0.05 per diluted share, for the first quarter of 2024. This compares to net income of $1 million, or $0.01 per diluted share, for the first quarter of 2023. The company’s operating income was $26 million, slightly down from $28 million in the same period last year. Despite the challenging retail environment in North America, the company managed to achieve a gross margin rate above last year by effectively managing inventory and being disciplined with traffic-driving offerings.
Financial Achievements
Victoria's Secret & Co's first quarter 2024 adjusted net income was $9 million, or $0.12 per diluted share, aligning with the high-end of the preliminary results range. Adjusted operating income was $40 million. The company reported net sales of $1.359 billion, a 3% decrease compared to $1.407 billion in the first quarter of 2023. Total comparable sales for the first quarter of 2024 decreased by 5%.
Key Financial Metrics
| Metric | Q1 2024 | Q1 2023 |
|---|---|---|
| Net Sales | $1.359 billion | $1.407 billion |
| Operating Income | $26 million | $28 million |
| Net Income (Loss) | $(4) million | $1 million |
| Adjusted Net Income | $9 million | $22 million |
| Adjusted EPS | $0.12 | $0.28 |
Commentary and Analysis
"I am encouraged by our results in the quarter which were at the high-end of our previously announced preliminary results calling for adjusted operating income up to $40 million. We experienced sequential improvement in quarterly sales trends in North America in both our stores and digital business for both the Victoria’s Secret and PINK brands." - Martin Waters, CEO
The company’s digital sales performance outpaced stores, reflecting the investments made to improve the customer experience. Additionally, international business growth continued with net sales increasing in the mid-teens. Despite the competitive promotional environment, the company managed to improve its gross margin rate compared to last year.
Income Statement Highlights
Victoria's Secret & Co's gross profit for Q1 2024 was $501 million, slightly down from $502 million in Q1 2023. General, administrative, and store operating expenses were $475 million, compared to $474 million in the same period last year. The company’s interest expense decreased slightly to $21.7 million from $22.5 million.
Outlook
For the second quarter of 2024, Victoria's Secret & Co forecasts net sales to decrease in the low-single digit range compared to last year’s second quarter net sales of $1.427 billion. Adjusted operating income for Q2 2024 is expected to be in the range of $30 million to $45 million, with adjusted net income estimated to be between $0.05 and $0.20 per diluted share. The company reaffirms its full-year 2024 outlook, forecasting net sales of about $6.0 billion and adjusted operating income of $250 million to $275 million.
For more detailed information, visit the 8-K filing.
Explore the complete 8-K earnings release (here) from Victoria's Secret & Co for further details.
