Victoria’s Secret affirms Q3 guidance, unveils strategic growth plan

Victoria’s Secret affirms Q3 guidance, unveils strategic growth plan

Victoria’s Secret & Co announced on Wednesday that third-quarter operating income and earnings per share are expected to fall at the high-end of its previously announced guidance, despite a high single-digit sales dip.

Victoria’s Secret

The Columbus, Ohio-based company said it now estimates third-quarter operating income to be towards the high end of its previously communicated guidance range of $10 million to $40 million, and earnings are estimated to be towards the high end of the previously communicated guidance range of $0.00 to $0.25 per diluted share.  

The updated operating income and earnings per diluted share guidance is based on a net sales decline in the high single digit range compared to last year, which is consistent with the company’s previously communicated guidance.

The lingerie giant made the announcement ahead of its investor day on October 13, wherein the company will outline its strategic growth plans for the near future, as well as providing investors with an in-depth look at the last year’s business.

“We have been looking forward to tomorrow’s event and the opportunity to present our strategy and outlook for the future to the investor community. Led by our two category-defining brands and a global business positioned to increase market share, our goal is clear – to be the world’s leading fashion retailer of intimate apparel,” said chief executive officer, Martin Waters.

“Our market position atop the domestic intimates category is a key strength and growth opportunity for our business. We are energized by our customer’s response to our brand transformation and remain committed to becoming the Victoria’s Secret our customers and associates deserve.”  

Ahead of the presentation, Victoria’s Secret outlined three strategic growth pillars, including ‘Strengthen the Core’: growing market share in key categories of bras, intimates and beauty, while being more inclusive and attracting a broader customer base with more compelling storytelling in stores and on digital platforms; and ‘Ignite Growth’: building the global footprint through international partners, while adding new brands, with a focus on categories and customer groups that underrepresented in the firm’s portfolio. Finally, the company said it plans to ‘Transform the Foundation’, by building a modern, high-performing organization to deliver efficiencies and to invest in people and culture.

“We have created a solid financial platform during the last 15 months as a public company. With our new operating structure in place, we now have even greater agility and an aligned focus on our customer and our strategic priorities,” added Waters.

“We are positioned to deliver sustainable long-term sales growth and mid-teens operating margin rates over time, and we expect the power of our model will generate significant cash flow to invest in growth and also return value to shareholders through our capital allocation strategy.”

In its most recent trading update, Victoria’s Secret said revenues for the second quarter decreased by 6% to ​$1.521 billion during the three months ending July 30, on the back of lower consumer traffic during the quarter. 

The sales result was below the company’s previously communicated guidance, attributing “decelerated customer traffic trends across the retail environment throughout the quarter,” according to the company, at the time of reporting in August.

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