Victoria's Secret earnings crushed on inflation costs
Victoria's Secret & Co. announced on Tuesday revenues for the first quarter fell almost 5%, on the back of plummeting comparable sales, as earnings were slashed during the three-month period, coinciding with inflation costs.
The Ohio-based company reported net sales of $1.484 billion for the first quarter ending April 30, a decrease of 4.5%, compared to net sales of $1.554 billion in the prior-year first quarter. The owner of Victoria’s Secret Lingerie, Victoria’s Secret Beauty and the Pink brands said the result was at the high end of its previously communicated guidance of sales in the range of a decrease of 4% to 8%.
Likewise, total comparable sales for the first quarter fell 8%, compared to the first quarter of 2021. Excluding the estimated first quarter 2021 benefit of $75 million related to government stimulus payments, net sales were essentially flat year over year, the company added.
"Against the backdrop of significant global headwinds and a challenging inflationary environment, we delivered sales results at the high end of our guidance range and better than expected adjusted earnings per diluted share," said Victoria's Secret CEO Martin Waters.
"Our performance is a testament to the hard work and relentless focus of our team. Powered by our brand revolution, we have strengthened our emotional connection with our customer and further enhanced our leadership in bras through innovative product launches, while diligently focusing on the efficiency of our retail operations. As a result of our deliberate actions, we have stabilized the business and delivered over $1 billion in EBITDA for the trailing twelve-month period."
For the first quarter, the company clocked net income of $80.8 million, or earnings per diluted share of $0.93, more than halving its quarterly profit compared to net income of $174 million, or earnings per share of $1.97 in the prior-year quarter.
"Looking ahead, I believe we have the focused strategy, resilient and expert talent, and customer connection that we need to sustain and grow our dominant position as the market leader in the intimates merchandise category," said Waters.
"We are well prepared to continue to address macro challenges through merchandise and marketing that delights our customers, new business initiatives designed to expand our customer base and grow sales, and disciplined financial management. Our board and our entire team are aligned on our key priorities and are swiftly working together to advance them to create value for our shareholders and other stakeholders.”
Coinciding with its earnings update, Victoria’s Secret announced that Mariam Naficy has been elected to its board of directors, taking the company's board to eight. With more than 20 years of experience in digital and direct-to-consumer retailing, Naficay co-founded Minted, an online marketplace for creative and custom goods, in 2007, and currently serves as its chair of the board and co-CEO.
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