Group 1 - Victoria's Secret has reached an inflection point with returning revenue growth and improving profitability as of the end of 2024 [1] - The company has demonstrated significant performance over the last two quarters, indicating a positive trend in its financial health [1] Group 2 - The investment philosophy highlighted emphasizes the importance of high-quality stocks and businesses led by disciplined capital allocators [1]

Financial Data and Key Metrics Changes - The company reported a revenue guidance for the year between $6.2 billion and $6.3 billion, indicating a flat to slightly positive growth of $100 million or 1-2% year-over-year [32] - The company experienced higher transportation costs in the first part of the year but expects to lap these costs in the latter half [31] Business Line Data and Key Metrics Changes - The company is focusing on improving inventory productivity and reducing production lead times, particularly in underwear and Pink apparel [15][24] - The sport and swim categories are still relatively small but are seen as significant growth opportunities moving forward [55] Market Data and Key Metrics Changes - The warmer weather regions outperformed colder regions, indicating a weather impact on sales trends from late January through February [20] - International markets showed double-digit growth, with strong performance in franchise and travel retail markets, particularly in China [49][50] Company Strategy and Development Direction - The company is implementing a strategy to create separate tracks for product lines, aiming to reduce the traditional 52-week calendar for apparel [24] - Marketing strategies will differ between brands, with a focus on increasing consideration for Versus and improving customer engagement for Pink [41] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about gradual improvements in business performance, driven by strategic changes and marketing efforts [8][5] - The company anticipates a more promotional environment compared to the previous year, particularly in traffic-driving categories [45] Other Important Information - The company has largely completed its three-year cost savings goal ahead of schedule, achieving nearly $200 million in savings in 2024 [40] - Management is conducting research to better understand consumer preferences before finalizing marketing strategies [60] Q&A Session Summary Question: Drivers of gradual improvement and product pipeline - Management indicated that improvements will come from team placements and marketing differentiation, but specifics on product launches were not disclosed [7][8] Question: Inventory productivity and production lead times - Management stated that they are in good shape regarding production lead times, especially in underwear and some Pink apparel areas [15] Question: Regional performance and customer demographics - Management noted that warmer regions performed better than colder ones, reflecting weather impacts on sales [20] Question: Strategy for product lines and Valentine's Day performance - Management emphasized the importance of multiple tracks for product lines and noted that Valentine's Day promotions were successful [24][23] Question: Guidance for the year and promotional activity - Management expects the guidance to improve throughout the year, with a plan for reduced promotional activity compared to the previous year [31][45] Question: International growth expectations - Management reported strong international performance with double-digit growth and positive comps in various markets [49][50] Question: Size and growth opportunity in sport and swim businesses - Management acknowledged that while these categories are small, they present significant growth potential [55] Question: Marketing focus and consumer research - Management is working on understanding consumer preferences before finalizing marketing strategies for the brands [60]

Financial Data and Key Metrics Changes - Q4 sales increased year-over-year across all brands, with strong performance in Victoria's Secret, PINK, and Beauty [11][12] - Operating income and EPS exceeded expectations due to healthy margins, controlled costs, and effective inventory management [12][25] - North America saw positive year-over-year sales growth in both stores and digital channels [12][16] Business Line Data and Key Metrics Changes - Victoria's Secret's giftable holiday products, particularly in Sleep and Beauty, were top performers, with casual sleep being the leading category [13][15] - PINK apparel showed a significant trend change and strong performance in Q4, with modern reinventions and feminine styles being well-received [15][20] - The Beauty business excelled in Q4, focusing on higher average unit retail (AUR) items that were popular gifts [15][23] Market Data and Key Metrics Changes - The North American intimates market experienced a slight decline, but the company outperformed the market for two consecutive quarters [16][25] - International retail sales grew double-digits, driven by franchise and travel retail partners, particularly in China and the UK [18][131] Company Strategy and Development Direction - The company aims to drive value for stakeholders by focusing on Victoria's Secret and PINK as distinct growth brands, complemented by a strong Beauty business [28][35] - Strategies include recommitting to PINK, supercharging bras, fueling growth in lifestyle categories, and evolving brand projection and go-to-market strategies [28][33][34] - The company plans to create a best-in-class omnichannel experience and deepen customer connections while adapting to cultural and technological shifts [36][37] Management's Comments on Operating Environment and Future Outlook - Management acknowledged challenges such as shifting consumer confidence and a volatile economy but remains optimistic about the company's strong foundation and brand recognition [25][40] - The leadership structure is being revamped to enhance focus on brand-specific strategies and customer engagement [38][39] Other Important Information - The company is focused on reducing promotional activities while maintaining profitability, with expectations for lower promotional activity in the upcoming year [59][126] - The company is also working on improving product development processes to enhance agility and innovation across categories [39][76] Q&A Session Summary Question: Drivers of gradual improvement and product pipeline for the back half of the year - Management indicated that improvements will come from marketing differentiation and incremental enhancements in both PINK and Victoria's Secret, with significant tentpole moments planned for the latter half of the year [44][46] Question: Inventory productivity and production lead times - Management stated that they are in good shape regarding production lead times, with agility in underwear and some PINK apparel areas, and are working on optimizing product development processes [50][57] Question: Top line opportunity across brands and categories - Management highlighted significant opportunities in PINK and lifestyle categories, with a focus on recapturing lost revenue and improving customer acquisition [66][68] Question: Marketing strategies for PINK and Victoria's Secret - Management emphasized the need for differentiated marketing strategies, with Victoria's Secret focusing on consideration and PINK on awareness, while also optimizing the overall marketing spend [120][121] Question: International growth expectations - Management reported strong international performance, with double-digit growth and plans to expand into new countries, supported by a new European distribution center [131][132] Question: Size and growth opportunity in sport and swim businesses - Management acknowledged that while sport and swim are currently small segments, they see significant growth potential and are building on early momentum [140] Question: SG&A expectations for the year - Management expects SG&A to be largely flat year-on-year, with slight deleverage anticipated unless sales growth reaches 1% to 2% [142][143]

Core Viewpoint - Victoria's Secret & Co. (VSCO) reported strong fourth-quarter fiscal 2024 results, with earnings and revenues exceeding expectations and showing year-over-year growth [1][2]. Financial Performance - Adjusted earnings per share (EPS) for Q4 were $2.60, surpassing the Zacks Consensus Estimate of $2.30 by 13%, and increased 0.8% from $2.58 in the previous year [3]. - Quarterly revenues reached $2.1 billion, beating the consensus mark of $2.08 billion by 1.2%, and rose 1% year-over-year [3]. - Comparable sales increased by 5% year-over-year [3]. Sales Breakdown - North America channel net sales were $1.16 billion, up 0.5% year-over-year [4]. - Direct channel net sales rose 2.5% year-over-year to $752.2 million [4]. - International channel net sales decreased by 0.6% year-over-year to $193.2 million [4]. Margin and Costs - Gross profit declined 1.5% year-over-year to $813.4 million, with a gross margin of 38.6%, down from 39.7% in the prior year [5]. - Cost of sales increased by 2.8% year-over-year to $1.29 billion [5]. - General, administrative, and store operating expenses decreased by 3.8% year-over-year to $545.7 million [5]. Fiscal Year Highlights - Total revenues for fiscal 2024 were $6.22 billion, compared to $6.18 billion in fiscal 2023 [6]. - Operating income for fiscal 2024 was $309.6 million, up from $245.6 million in fiscal 2023 [6]. - Adjusted EPS for fiscal 2024 was $2.69, compared to $2.27 in the previous year [6]. Fiscal 2025 Outlook - For Q1 fiscal 2025, net sales are expected to range between $1.30 billion and $1.33 billion, with adjusted operating income forecasted between $10 million and $30 million [7]. - For fiscal 2025, net sales are projected to be between $6.2 billion and $6.3 billion, with adjusted operating income expected to range from $300 million to $350 million [8].

Financial Performance - Fourth Quarter 2024 - Net sales increased by $23 million, representing a 1% increase compared to the fourth quarter of 2023[6] - Comparable store sales increased by 3%[6] - Gross profit remained relatively flat at $835 million, with a gross profit margin of 397%, a decrease of 30 basis points[6] - Operating income increased by $159 million, a 6% increase, resulting in an operating margin of 142%, a 60 basis points increase[6] - Net income attributable to Victoria's Secret & Co increased by $128 million, a 6% increase[6] - Net income per diluted share attributable to Victoria's Secret & Co increased by $002 to $260, a 1% increase[6] Financial Performance - Full Year 2024 - Net sales increased by $478 million, representing a 1% increase compared to 2023[8] - Comparable store sales decreased by 2%[8] - Gross profit increased by $316 million, a 1% increase, with a gross profit margin of 370%, a 20 basis points increase[8] - Operating income increased by $462 million, a 14% increase, resulting in an operating margin of 60%, a 70 basis points increase[8] - Net income attributable to Victoria's Secret & Co increased by $394 million, a 22% increase[8] - Net income per diluted share attributable to Victoria's Secret & Co increased by $042 to $269, a 19% increase[8] Balance Sheet - Total assets decreased from $4600326 thousand to $4531587 thousand[10] - Total current assets decreased from $1533141 thousand to $1441221 thousand[10] - Total liabilities and equity decreased from $4600326 thousand to $4531587 thousand[10] 2025 Outlook - Net sales are projected to be approximately $130 billion to $133 billion for the first quarter and approximately $62 billion to $63 billion for the full year[11] - Adjusted operating income is expected to be approximately $10 million to $30 million for the first quarter and approximately $300 million to $350 million for the full year[11] - Adjusted net income (loss) per diluted share is projected to be approximately ($010) to $010 for the first quarter and approximately $200 to $245 for the full year[11] - Capital expenditures are estimated to be approximately $240 million for the full year[11] - Adjusted free cash flow is projected to be approximately $180 million to $220 million for the full year[11] Store Count - Company-operated US store count decreased by 26, a 3% decrease[12] - Company-operated Canada store count increased by 1, a 4% increase[12] - Partner-operated store count increased by 42, a 9% increase[12]

Core Insights - Victoria's Secret reported revenue of $2.11 billion for the quarter ended January 2025, a year-over-year increase of 1.1% [1] - The company's EPS for the same period was $2.60, slightly up from $2.58 a year ago, with a surprise of +13.04% compared to the consensus estimate of $2.30 [1] - The reported revenue exceeded the Zacks Consensus Estimate of $2.08 billion, resulting in a surprise of +1.22% [1] Financial Performance Metrics - Comparable Sales - Stores and Direct increased by 5%, outperforming the three-analyst average estimate of 2.8% [4] - Comparable Sales - Stores Only rose by 3%, compared to the average estimate of 1% from two analysts [4] - Total company-operated stores remained at 806, matching the average estimate [4] - Total stores in the China Joint Venture were 70, slightly above the average estimate of 69 [4] - Geographic Net Sales - Direct reached $752.20 million, which is lower than the estimated $775.43 million but represents a +2.5% change compared to the year-ago quarter [4] Stock Performance - Victoria's Secret shares have returned -31.5% over the past month, contrasting with the Zacks S&P 500 composite's -4.1% change [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market in the near term [3]

Group 1: Earnings Performance - Victoria's Secret reported quarterly earnings of $2.60 per share, exceeding the Zacks Consensus Estimate of $2.30 per share, and showing a slight increase from $2.58 per share a year ago, representing an earnings surprise of 13.04% [1] - The company posted revenues of $2.11 billion for the quarter ended January 2025, surpassing the Zacks Consensus Estimate by 1.22% and up from $2.08 billion year-over-year [2] - Over the last four quarters, Victoria's Secret has consistently surpassed consensus EPS estimates four times and topped revenue estimates three times [2] Group 2: Stock Performance and Outlook - Victoria's Secret shares have declined approximately 43.6% since the beginning of the year, contrasting with the S&P 500's decline of only 1.8% [3] - The company's future stock performance will largely depend on management's commentary during the earnings call and the sustainability of the stock's immediate price movement based on recent earnings numbers and future expectations [3][4] - The current consensus EPS estimate for the upcoming quarter is $0.26 on revenues of $1.39 billion, and for the current fiscal year, it is $2.83 on revenues of $6.33 billion [7] Group 3: Industry Context - The Retail - Apparel and Shoes industry, to which Victoria's Secret belongs, is currently ranked in the top 26% of over 250 Zacks industries, indicating a favorable outlook compared to the bottom 50% [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors or through tools like the Zacks Rank [5][6]

Core Viewpoint - Victoria's Secret & Co. anticipates that the upcoming year will "gradually get better," despite facing challenges such as shaky consumer confidence and sales forecasts that fell short of expectations [1] Company Summary - The company's shares increased by 2% in after-hours trading [1]

Financial Performance - The Company reported net sales of $2.106 billion for the fourth quarter of 2024, a 1% increase compared to $2.082 billion in the fourth quarter of 2023[5]. - Comparable sales for the fourth quarter of 2024 increased by 5%, while full year comparable sales were flat[11][24]. - Net income for the fourth quarter of 2024 was $193 million, or $2.33 per diluted share, compared to $181 million, or $2.29 per diluted share in the fourth quarter of 2023[6]. - Adjusted net income for the fourth quarter of 2024 was $216 million, or $2.60 per diluted share, compared to $204 million, or $2.58 per diluted share in the fourth quarter of 2023[7]. - Net income attributable to Victoria's Secret & Co. for the thirteen weeks ended February 1, 2025, was $193,412, compared to $181,087 in the same period of 2024, reflecting a 6.8% increase[27]. - Adjusted net income attributable to Victoria's Secret & Co. for the fourth quarter of 2024 was $216,428, compared to $203,580 in 2023, representing a 6.4% increase[32]. Sales Forecast - The Company forecasts first quarter 2025 net sales to be in the range of $1.30 billion to $1.33 billion, down from $1.359 billion in the first quarter of 2024[15]. - For fiscal year 2025, the Company projects net sales between $6.2 billion and $6.3 billion, compared to $6.204 billion in fiscal year 2024[16]. Operating Income - Adjusted operating income for the fourth quarter of 2024 was $299 million, compared to $283 million in the fourth quarter of 2023[7]. - The Company expects adjusted operating income for fiscal year 2025 to be in the range of $300 million to $350 million[16]. - The company reported an operating income of $309,601 for the fiscal year ended February 1, 2025, up from $245,566 in 2024, a significant increase of 25.9%[29]. - Operating income for the thirteen weeks ended February 1, 2025, increased to $267,686, up 3.1% from $258,366 in 2024[27]. Store Operations - Total stores increased from 1,370 on February 3, 2024, to 1,387 on February 1, 2025, with a net addition of 17 stores[25]. - The company operated 782 stores in the U.S. as of February 1, 2025, down from 808 stores on February 3, 2024, a decrease of 3.2%[25]. International Sales - The Company experienced a 10.7% increase in international sales for the full year 2024 compared to the previous year[23]. Accounting Adjustments - The Company recorded a cumulative adjustment of approximately $26 million in the fourth quarter of 2024 due to a change in accounting estimate related to outstanding gift cards[8]. - The company recognized pre-tax expenses of $21.6 million related to impairment and other charges for certain equity method investments in the fourth quarter of 2024[34]. Share Information - The weighted average shares outstanding increased to 83,148 for the thirteen weeks ended February 1, 2025, from 78,909 in the prior year[27]. Gross Profit - Gross profit for the thirteen weeks ended February 1, 2025, was $813,433, down 1.4% from $825,841 in the prior year[27].

Financial Performance - The company reported net sales of $2.106 billion for the fourth quarter of 2024, a 1% increase compared to $2.082 billion in the fourth quarter of 2023 [5] - Total comparable sales for the fourth quarter of 2024 increased by 5% [5][24] - The company achieved a net income of $193 million, or $2.33 per diluted share, for the fourth quarter of 2024, compared to $181 million, or $2.29 per diluted share, in the fourth quarter of 2023 [6][28] - For the full fiscal year 2024, net sales were $6.230 billion, a 1% increase from $6.182 billion in fiscal year 2023 [11] - The full year net income was $165 million, or $2.05 per diluted share, compared to $109 million, or $1.39 per diluted share, in fiscal year 2023 [12][30] Operational Highlights - The company experienced sales growth across both Victoria's Secret and PINK brands, as well as in the Beauty segment, during the holiday season [3] - The company effectively managed costs and inventory levels in a competitive holiday environment [3] - Adjusted net income for the fourth quarter of 2024 was $216 million, or $2.60 per diluted share, compared to $204 million, or $2.58 per diluted share, in the fourth quarter of 2023 [7][34] Future Guidance - The company forecasts first quarter 2025 net sales to be between $1.30 billion and $1.33 billion, down from $1.359 billion in the first quarter of 2024 [15] - For fiscal year 2025, net sales are expected to be in the range of $6.2 billion to $6.3 billion, compared to $6.204 billion in fiscal year 2024 [16] - Adjusted operating income for fiscal year 2025 is projected to be between $300 million and $350 million [16] Store Operations - As of February 1, 2025, the company operated a total of 1,387 stores, which includes 782 in the U.S. and 24 in Canada [26] - The company opened 84 new stores while closing 67 during the year [26]