Though in line with previous guidance, Q2 sales at Victoria’s Secret & Co fell to $1.43bn from $1.52bn for the same period a year earlier.

Victoria's Secret has challenging Q2

Operating income fell to $26m from $97.5m a year earlier while the intimates retailer sank to a loss of $872m from a $67.2m profit a year earlier.

Sales in North America were particularly strained through its international division and sales at its recently acquired Adore Me brand.

Chief executive officer Martin Waters commented: “We delivered second-quarter sales, adjusted operating income and adjusted diluted earnings per share within our guidance range, while the macro environment continues to put pressure on our customer base and our core, intimates categories. As anticipated, and what was a continuation of first quarter trends, sales performance in the second quarter was particularly challenging in the overall stores and digital intimates market in North America which impacted both our Victoria’s Secret and PINK businesses in the quarter.”

“Our teams were resiliently focused on what was within our control, managing selling margins, diligently controlling costs, and delivering inventory levels at our Victoria’s Secret and PINK businesses down low-double digits compared to last year.

“With our second quarter results in-line with our guidance, our outlook calls for improving sales trends throughout the fall season. We entered the third quarter with relatively lean inventory levels, and I am encouraged by August sales trends which were better than July, second quarter and the entirety of the spring season. The teams have been working tirelessly on multiple growth initiatives designed to change our sales trends in the third quarter and the all-important holiday season.

“We remain confident in our brand repositioning efforts and our strategic plans for growth and are committed to delivering our long-term financial targets and returning value to our shareholders.”

Q3 outlook in brief

• Net sales to decrease in the low- to mid-single digit range compared to last year’s third quarter net sales of $1.3bn.
• Adjusted operating loss for the third quarter of 2023 is expected to be in the range of $45m to $75m
• Adjusted net loss for the third quarter of 2023 is estimated to be in the range of $0.70 to $1.00 per diluted share.

FY outlook in brief

• Net sales to decrease in the low-single digit range compared to last year
• Adjusted operating income rate to be in the range of 5% to 6% of net sales.