Victoria’s Secret & (VSCO) - 2026 Q2 - Quarterly Results

Executive Summary This section highlights Victoria's Secret & Co.'s strong Q2 2025 performance, exceeding expectations in sales, operating income, and EPS, driven by comparable sales growth Q2 2025 Performance Highlights Victoria's Secret & Co. reported strong second-quarter 2025 results, exceeding sales, operating income, and EPS expectations. The company achieved a 4% increase in comparable sales across Victoria's Secret and PINK brands, both in North America and globally, and across store and online channels - Second quarter sales, operating income, and EPS exceeded expectations[1] - Second quarter comparable sales increased by 4%[1][5] Management Commentary CEO Hillary Super highlighted continued momentum, disciplined execution, and the strength of evolving brands, attributing success to product innovation and evolved storytelling. CFO Scott Sekella noted gross margin rate expansion despite tariff headwinds, driven by inventory management and promotional strategy. The refreshed leadership team's impact was evident in sharper execution and reenergized culture - Momentum continued with results beating sales and operating income guidance, driven by disciplined execution and the power of evolving Victoria's Secret and PINK brands[3] - Gross margin rate expanded in the quarter despite tariff headwinds, supported by disciplined inventory management and an evolving promotional approach[4] - The first full quarter under the refreshed leadership team showed sharper execution, reenergized culture, and high-emotion storytelling, delivering significant momentum[4] Second Quarter 2025 Financial Results This section details Victoria's Secret & Co.'s financial performance for Q2 2025, covering both GAAP and adjusted metrics GAAP Financial Performance For the second quarter of 2025, Victoria's Secret & Co. reported a 3% increase in net sales to $1.459 billion. However, operating income decreased to $41 million from $62 million in Q2 2024, and net income attributable to Victoria's Secret & Co. fell to $16 million, or $0.20 per diluted share, from $32 million, or $0.40 per diluted share, in the prior year Second Quarter GAAP Financial Performance (2025 vs. 2024) | Metric | Q2 2025 (Millions) | Q2 2024 (Millions) | Change (%) | | :----------------------------------- | :----------------- | :----------------- | :--------- | | Net Sales | $1,459.1 | $1,417.2 | 3.0% | | Operating Income | $41.0 | $62.3 | (34.3%) | | Net Income Attributable to VS&Co | $16.2 | $31.8 | (49.0%) | | Net Income Per Diluted Share | $0.20 | $0.40 | (50.0%) | Adjusted Financial Performance Adjusted operating income for Q2 2025 was $55 million, exceeding the guidance range of $15 million to $35 million, though it was lower than $62 million in Q2 2024. Adjusted net income per diluted share was $0.33, also above the guidance range of $0.00 to $0.15, compared to $0.40 in Q2 2024 Second Quarter Adjusted Financial Performance (2025 vs. 2024) | Metric | Q2 2025 (Millions) | Q2 2024 (Millions) | Guidance Range (Q2 2025) | | :----------------------------------- | :----------------- | :----------------- | :----------------------- | | Adjusted Operating Income | $55 | $62 | $15 - $35 | | Adjusted Net Income Per Diluted Share | $0.33 | $0.40 | $0.00 - $0.15 | Full Year and Third Quarter 2025 Outlook This section provides Victoria's Secret & Co.'s financial guidance for the full year and the upcoming third quarter of 2025 Full Year 2025 Guidance The company raised its full-year net sales outlook to a range of $6.330 billion to $6.410 billion, up from the prior guidance of $6.2 billion to $6.3 billion. The full-year adjusted operating income outlook was reiterated at $270 million to $320 million, which now includes an updated estimated net tariff impact of approximately $100 million, $50 million higher than previous estimates Full Year 2025 Guidance Update | Metric | New Guidance | Prior Guidance | | :-------------------------- | :--------------------- | :--------------------- | | Net Sales | $6.330B - $6.410B | $6.2B - $6.3B | | Adjusted Operating Income | $270M - $320M | $270M - $320M | - The full-year outlook includes an updated estimated net tariff impact of approximately $100 million, which is $50 million higher than the previous estimate[8] Third Quarter 2025 Guidance For the third quarter of 2025, Victoria's Secret & Co. forecasts net sales in the range of $1.390 billion to $1.420 billion, compared to $1.347 billion in the prior year's third quarter. The company expects an adjusted operating loss of $35 million to $55 million and an adjusted net loss per share of $0.55 to $0.75 for the quarter Third Quarter 2025 Guidance | Metric | Q3 2025 Forecast | Q3 2024 Actual | | :-------------------------- | :--------------------- | :--------------------- | | Net Sales | $1.390B - $1.420B | $1.347B | | Adjusted Operating Loss | $35M - $55M | N/A | | Adjusted Net Loss Per Share | $0.55 - $0.75 | N/A | Company Information This section provides an overview of Victoria's Secret & Co., its brands, product offerings, and global operational footprint About Victoria's Secret & Co. Victoria's Secret & Co. is a specialty retailer offering fashion-inspired collections including lingerie, apparel, fragrances, and body care. It comprises market-leading brands Victoria's Secret and PINK, and the technology-led intimates brand Adore Me. The company operates approximately 1,380 retail stores in nearly 70 countries with over 30,000 associates - Victoria's Secret & Co. is a specialty retailer of modern, fashion-inspired collections including bras, panties, lingerie, apparel, sleepwear, swim, lounge, sport, fragrances, and body care[12] - The company is comprised of market-leading brands Victoria's Secret and PINK, and Adore Me, a technology-led, digital-first innovative intimates brand[12] - Global footprint includes approximately 1,380 retail stores in nearly 70 countries and over 30,000 associates[12] Supplemental Financial Data and Reconciliations This section provides detailed breakdowns of net sales by channel, comparable sales performance, store count, and GAAP/non-GAAP financial reconciliations Net Sales Breakdown by Channel For Q2 2025, North America Stores sales increased by 3.1% to $824.8 million, while Direct sales decreased by 5.5% to $406.5 million. International sales saw significant growth of 21.8% to $227.8 million. Year-to-date, total net sales increased by 1.3% to $2,812.1 million Total Net Sales by Channel (Millions) | Channel | Q2 2025 | Q2 2024 | % Inc/(Dec) | YTD 2025 | YTD 2024 | % Inc/(Dec) | | :------------------- | :-------- | :-------- | :---------- | :--------- | :--------- | :---------- | | Stores - North America | $824.8 | $800.0 | 3.1% | $1,546.1 | $1,529.1 | 1.1% | | Direct | $406.5 | $430.2 | (5.5%) | $839.7 | $879.0 | (4.5%) | | International | $227.8 | $187.0 | 21.8% | $426.3 | $368.5 | 15.7% | | Total | $1,459.1 | $1,417.2 | 3.0% | $2,812.1 | $2,776.6 | 1.3% | Comparable Sales Performance Total comparable sales (Stores and Direct) increased by 4% in Q2 2025, a significant improvement from a 3% decrease in Q2 2024. Stores Only comparable sales also rose by 4% in Q2 2025, compared to a 5% decrease in the prior year. Year-to-date, comparable sales for Stores and Direct increased by 1%, and Stores Only by 2% Comparable Sales Increase (Decrease) | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :------------------ | :------ | :------ | :------- | :------- | | Stores and Direct | 4% | (3%) | 1% | (4%) | | Stores Only | 4% | (5%) | 2% | (6%) | Total Store Count As of August 2, 2025, the total number of stores was 1,376, a slight decrease from 1,387 at February 1, 2025. During the quarter, 41 stores were opened and 52 were closed. Company-operated stores decreased from 806 to 787, while partner-operated stores increased from 505 to 521 Total Store Count (as of August 2, 2025) | Category | Stores at 2/1/25 | Opened | Closed | Stores at 8/2/25 | | :---------------------- | :--------------- | :----- | :----- | :--------------- | | Company-Operated | 806 | 6 | (25) | 787 | | China Joint Venture | 70 | — | (7) | 63 | | Partner-Operated | 505 | 35 | (19) | 521 | | Adore Me | 6 | — | (1) | 5 | | Total | 1,387 | 41 | (52) | 1,376 | Consolidated Statements of Income (GAAP) The consolidated statements of income provide detailed GAAP financial results for the thirteen and twenty-six weeks ended August 2, 2025, and August 3, 2024, showing net sales, gross profit, operating income, and net income Consolidated Statements of Income (GAAP) - Thirteen Weeks Ended (in thousands) | Metric | 2025 | 2024 | | :------------------------------------------ | :--------- | :--------- | | Net Sales | $1,459,137 | $1,417,193 | | Costs of Goods Sold, Buying and Occupancy | (940,121) | (915,827) | | Gross Profit | 519,016 | 501,366 | | General, Administrative and Store Operating Expenses | (478,057) | (439,042) | | Operating Income | 40,959 | 62,324 | | Interest Expense | (17,804) | (21,363) | | Other Income | 1,121 | 465 | | Income Before Income Taxes | 24,276 | 41,426 | | Provision for Income Taxes | 6,249 | 9,285 | | Net Income | 18,027 | 32,141 | | Less: Net Income Attributable to Noncontrolling Interest | 1,799 | 340 | | Net Income Attributable to Victoria's Secret & Co. | $16,228 | $31,801 | | Net Income Per Diluted Share Attributable to Victoria's Secret & Co. | $0.20 | $0.40 | | Weighted Average Shares Outstanding | 82,205 | 79,595 | Consolidated Statements of Income (GAAP) - Twenty-Six Weeks Ended (in thousands) | Metric | 2025 | 2024 | | :------------------------------------------ | :--------- | :--------- | | Net Sales | $2,812,086 | $2,776,635 | | Costs of Goods Sold, Buying and Occupancy | (1,818,844) | (1,773,954) | | Gross Profit | 993,242 | 1,002,681 | | General, Administrative and Store Operating Expenses | (932,497) | (914,089) | | Operating Income | 60,745 | 88,592 | | Interest Expense | (34,893) | (43,099) | | Other Income | 4,078 | 794 | | Income Before Income Taxes | 29,930 | 46,287 | | Provision for Income Taxes | 9,128 | 16,630 | | Net Income | 20,802 | 29,657 | | Less: Net Income Attributable to Noncontrolling Interest | 6,230 | 1,498 | | Net Income Attributable to Victoria's Secret & Co. | $14,572 | $28,159 | | Net Income Per Diluted Share Attributable to Victoria's Secret & Co. | $0.18 | $0.35 | | Weighted Average Shares Outstanding | 82,085 | 79,330 | Non-GAAP Financial Information and Reconciliation The company provides non-GAAP financial measures to present adjusted operating income, net income, and diluted EPS, excluding certain non-recurring or unusual items like intangible asset amortization, restructuring charges, and Adore Me acquisition-related items, to offer a clearer view of ongoing operations - Non-GAAP financial measures are used to present adjusted operating income, net income, and diluted EPS, excluding non-recurring, infrequent, or unusual items not indicative of ongoing operations[24] Reconciliation of Reported to Adjusted Financial Measures (Q2 & YTD, in thousands) | Metric | Q2 2025 (GAAP) | Q2 2025 (Adj.) | Q2 2024 (GAAP) | Q2 2024 (Adj.) | YTD 2025 (GAAP) | YTD 2025 (Adj.) | YTD 2024 (GAAP) | YTD 2024 (Adj.) | | :---------------------------------------------------------------- | :------------- | :------------- | :------------- | :------------- | :-------------- | :-------------- | :-------------- | :-------------- | | Reported Operating Income | $40,959 | $55,124 | $62,324 | $62,265 | $60,745 | $86,791 | $88,592 | $101,870 | | Reported Net Income Attributable to VS&Co | $16,228 | $26,883 | $31,801 | $31,462 | $14,572 | $34,097 | $28,159 | $40,567 | | Reported Net Income Per Diluted Share Attributable to VS&Co | $0.20 | $0.33 | $0.40 | $0.40 | $0.18 | $0.42 | $0.35 | $0.51 | - Adjustments include amortization of intangible assets, restructuring and other one-time charges, and Adore Me acquisition-related items[25][26][27] Legal and Investor Information This section provides details on the upcoming earnings conference call and important disclosures regarding forward-looking statements and risk factors Quarterly Earnings Conference Call Victoria's Secret & Co. will host its second-quarter earnings call on Thursday, August 28, 2025, at 8:30 a.m. Eastern. Dial-in and replay information, along with website access for materials, are provided - Earnings call scheduled for Thursday, August 28, 2025, at 8:30 a.m. Eastern[11] - Dial-in: 1-800-619-9066 (international: 1-212-519-0836), passcode 5358727. Audio replay: 1-800-839-2204 (international: 1-203-369-3032), passcode 2485654[11] - Materials available on the Investors section of www.victoriassecretandco.com[11](index=11&type=chunk) Safe Harbor Statement and Risk Factors The Safe Harbor Statement cautions that forward-looking statements involve risks and uncertainties, and actual results may differ materially. It lists various factors that could affect operations and financial performance, including general economic conditions, market disruptions, trade environment uncertainty, strategic plan implementation, leadership changes, labor costs, store traffic, international operations, brand reputation, competition, consumer acceptance, acquisitions, AI integration, supply chain issues, geographic concentration, vendor performance, costs, IT security, stock price volatility, shareholder activism, credit rating, and regulatory/legal matters - Forward-looking statements are subject to change based on various factors beyond the company's control, and future performance may differ materially from expectations[13] - Key risk factors include general economic conditions, market disruptions, global trade environment uncertainty (tariffs), ability to implement strategic plans, leadership changes, labor costs, store traffic, international expansion, brand reputation, competitive landscape, consumer acceptance, successful integration of acquisitions, and the ability to incorporate AI[13][15] - Additional risks relate to supply chain (political instability, natural disasters, shipping disruptions, currency fluctuations, labor disputes), geographic concentration of facilities, vendor performance, freight/product/energy costs, IT systems and cybersecurity, data security, stock price volatility, shareholder activism, credit rating, and regulatory/legal compliance[15]