Victoria's Secret sales miss on 'decelerated' customer traffic, comps plunge
Victoria's Secret & Co. announced on Wednesday revenues for the second quarter decreased by single digits during the three months ending July 30, on the back of lower consumer traffic during the quarter.
The Columbus, Ohio-based company said quarterly revenued dipped 6% to $1.521 billion, compared to $1.614 billion in the prior year second quarter. The sales result was below the company's previously communicated guidance, attributing "decelerated customer traffic trends across the retail environment throughout the quarter." Likewise, total comparable sales for the second quarter decreased 8%, compared to the second quarter of 2021.
The company reported net income of $70 million, or $0.83 per diluted share for the second quarter, compared to net income of $151 million, or $1.71 per share last year.
Victoria's Secret said its earnings results included a pre-tax charge of $29 million, principally severance, related to the previously announced restructuring actions to reorganize, streamline and improve its leadership structure. Excluding this, adjusted net income was $92 million, or $1.09 per diluted share, which was near the midpoint of the previously communicated guidance of $0.95 to $1.25 per diluted share, it added.
“As we celebrate our first year as an independent, publicly-traded company, I would like to express my deepest appreciation for the hard work and dedication of our team of associates and partners around the world. As a company, we undertook and committed to not simply an evolution, but a revolution of our strategy. We aspired to and are proud to be a different company today, with a new leadership team and a mission to welcome, celebrate, and champion all women. We have made much progress, but recognize this transformation is a journey, and our work continues to become the Victoria’s Secret our customers and associates deserve – where everyone feels seen, respected, and valued," said Martin Waters, chief executive officer.
“We continue to be the market leader in our category and our brand transformation continues to be well received by our customers. Even in a very difficult macroeconomic environment, thanks to our team’s relentless focus on execution, we were able to deliver second quarter adjusted operating income and adjusted earnings per diluted share results within our guidance range," added Waters.
"We expect customers will continue to be challenged by inflationary and other financial pressures for the balance of 2022, and we have adjusted our inventory position and cost structure accordingly while allowing for continued investment in growth initiatives. We are confident in our ability to navigate and execute in a shifting consumer landscape with our new, optimized leadership structure which allows for greater agility and focus on the customer and growth initiatives."
Looking ahead, the company is forecasting full year 2022 net sales to decrease in the mid to high single digit range compared to last year’s full year net sales of $6.785 billion. At this forecasted level of sales, adjusted operating income is expected to be in the range of $525 million to $575 million, or approximately 8% to 9% of sales.
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