Victoria’s Secret & Co., which is already in the midst of a brand reinvention, is now caught up in the consumer malaise and feeling the pain — on its bottom line, on Wall Street and in its outlook for this year.
Shares of the lingerie company fell 10.9 percent to $18.20 in after-market trading on Thursday following a first-quarter report that spoke to a more-challenging consumer landscape.
The company’s first-quarter net income fell to $725,000, or 1 cent per share, from $80.8 million, or 93 cents, a year earlier.
Excluding costs tied to restructuring and last year’s Adore Me acquisition, Victoria’s Secret logged adjusted earnings of 28 cents a share — below the 30 to 60 cents the company projected as well as the 54 cents analysts expected on average, according to Yahoo Finance.
Sales for the three months ended April 29 decreased 5.2 percent to $1.4 billion from $1.5 billion a year earlier, with comparable sales off 11 percent.
“The first quarter continued to be a volatile macro environment for our customer and as the quarter progressed business became more challenging,” said Martin Waters, chief executive officer, in a statement. “Sales were in-line with our original expectations; however, we were more promotional than planned.”
The CEO said the company’s North American business saw a “significant decline” in its core categories both in stores and online.
“Inventory levels in our Victoria’s Secret and Pink business ended the quarter down low-double digits compared to last year and we are prudently positioned as we move forward,” he said. “Our international business continued its stellar growth around the globe with China as a particular bright spot, and our recent acquisition, Adore Me, met our expectations during its first quarter as a part of Victoria’s Secret & Co.”
Waters said the challenging environment was “likely to continue for the balance of 2023” but that the company is focused on its long-term plans to transform its foundation, strengthen its core business and push growth.
“We recognize we’re on a journey and our brand repositioning efforts will take time, and while the environment creates some turbulence, we remain confident in our repositioning efforts and our strategic plans for growth,” Waters said.
Long known for its racy brand image that pushed a narrow vision of feminine beauty, Victoria’s Secret has been broadening out, most recently laying out plans for a new kind of fashion show that specifically aims to give voice to women from around the world.
It’s been a long, steady process and now the company is trying to push through a tougher consumer landscape.
Accordingly, Victoria’s Secret cut its outlook for this year. The company is now looking for sales to range from flat to down by low-single digits, a significant step back from the mid-single digit increase projected in March.