Core Insights - Victoria's Secret & Co. reported a strong third quarter for fiscal year 2025, with net sales of $1.472 billion, a 9% increase from $1.347 billion in the same quarter of 2024, exceeding previous guidance [3][7] - The company is raising its full-year outlook for net sales and adjusted operating income, indicating confidence in continued growth and a successful holiday season [6][7] Financial Performance - Net sales for the third quarter of 2025 were $1.472 billion, up 9% from $1.347 billion in Q3 2024, and total comparable sales increased by 8% [3][4] - The operating loss for Q3 2025 was $19 million, an improvement from a loss of $47 million in Q3 2024, while the net loss was $37 million, or $0.46 per diluted share, compared to a net loss of $56 million, or $0.71 per diluted share, in the prior year [4][23] - Adjusted operating income for Q3 2025 was breakeven at $0 million, better than the previously communicated guidance of an adjusted operating loss of $35 million to $55 million [5][27] Outlook - The company raised its full-year net sales forecast to a range of $6.450 billion to $6.480 billion, up from the previous guidance of $6.330 billion to $6.410 billion [6] - For Q4 2025, net sales are expected to be between $2.170 billion and $2.200 billion, compared to $2.106 billion in Q4 2024, with adjusted operating income projected to be between $265 million and $290 million [7][31] Strategic Initiatives - The CEO emphasized the execution of the "Path to Potential" strategy, which focuses on global growth, brand distinctiveness, and enhancing customer experience [2][6] - The company is prioritizing investments in product innovation and brand strength while managing costs effectively [2][4]

Financial Data and Key Metrics Changes - For Q3 fiscal 2025, the company reported sales of $235 million, down from $263.8 million in the prior year, reflecting a decline of 10.5% [15][16] - Adjusted EBITDA was $9.8 million, representing a margin of 4.2%, compared to $19.6 million and a margin of 7.4% a year ago [18] - Net loss for the quarter was $6.4 million, or $0.06 per share, compared to a net loss of $1.2 million, or $0.01 per share last year [18] Business Line Data and Key Metrics Changes - Strong performance was noted in denim, non-denim, dresses, and intimates, all generating positive comparable growth, while tops and jackets categories faced significant challenges [5][6] - Tops accounted for approximately half of the year-over-year sales miss, with a shift towards fashion-forward designs impacting core assortments [5][6] - The footwear category experienced an estimated $12.5 million in lost sales due to a strategic pause, with plans to scale back to historical sales levels of approximately $40 million in 2026 [8][9] Market Data and Key Metrics Changes - Comparable sales declined by 8.3%, with the tariff-related pause in the shoe category contributing approximately 400 basis points to this decline [16] - The company noted that 70% of demand is now originating online, reflecting a shift in consumer preferences towards digital channels [19] Company Strategy and Development Direction - The company is focused on enhancing product offerings through sub-brands and an opening price point strategy to increase market share and customer acquisition [9][10] - A comprehensive review of the spring-summer 2026 buying strategy has been completed, with a commitment to balance investments across categories [7][10] - The store optimization strategy remains a cornerstone of the company's transformation, with plans to close approximately 180 stores in fiscal 2025 [13][19] Management's Comments on Operating Environment and Future Outlook - Management expressed disappointment with overall performance but highlighted corrective actions being taken to address assortment issues [4][5] - The company expects to see sequential improvement in knit and woven performance by the end of Q4, with confidence in returning categories to growth [7][10] - Full-year net sales are now expected in the range of $995 million to $1.002 billion, with Adjusted EBITDA projected between $59 million and $62 million [20] Other Important Information - The company has implemented enhanced guardrails in the merchandising process and is actively addressing near-term assortment gaps [6][7] - Marketing investments increased by $2.7 million to $15.7 million, supporting customer acquisition and brand visibility [17] Q&A Session Summary Question: Can you elaborate on some of the product missteps? - Management identified tops as the primary area of revenue miss, with corrective actions being implemented to address the issue [22][23] Question: What changes are being made to ensure a balanced assortment? - The company is embedding a balanced approach into the assortment architecture, focusing on both opening price points and core products [33][35] Question: What is the outlook for sub-brands? - The sub-brand strategy remains unchanged, with positive momentum expected to continue into 2026 [42][45] Question: How will store closures impact the leverage profile? - Store closures are expected to create a more flexible expense profile, leading to substantial EBITDA margin expansion in 2026 [46][47] Question: What are the competitive landscape observations? - Management noted that the challenges faced were largely self-inflicted, with opportunities to recapture customer interest through improved product offerings [56][57]

Core Insights - The company reported strong second quarter results, with net sales of $1.459 billion, a 3% increase from $1.417 billion in the same quarter of 2024, exceeding previous guidance [5][6] - Comparable sales for the second quarter increased by 4%, indicating growth in both Victoria's Secret and PINK brands across various channels [3][5] - The company raised its full-year 2025 sales guidance to a range of $6.330 billion to $6.410 billion, up from the previous range of $6.2 billion to $6.3 billion [8] Financial Performance - Operating income for the second quarter was reported at $41 million, down from $62 million in the same quarter of 2024 [6][23] - Adjusted operating income for the second quarter was $55 million, surpassing the guidance range of $15 million to $35 million, although it was lower than last year's adjusted operating income of $62 million [7][29] - Net income for the second quarter was $16 million, or $0.20 per diluted share, compared to $32 million, or $0.40 per diluted share, in the same quarter of 2024 [6][23] Sales Breakdown - North American store sales increased by 3.1% to $824.8 million, while direct sales decreased by 5.5% to $406.5 million [16] - International sales saw a significant increase of 21.8%, reaching $227.8 million [16] - Year-to-date total net sales reached $2.812 billion, a 1.3% increase from $2.776 billion in the previous year [16] Future Outlook - The company expects third quarter net sales to be in the range of $1.390 billion to $1.420 billion, compared to $1.347 billion in the same quarter of 2024 [9] - Adjusted operating loss for the third quarter is anticipated to be between $35 million and $55 million, with an estimated adjusted net loss per share ranging from $0.55 to $0.75 [9] - The company has updated its estimated net tariff impact for fiscal year 2025 to approximately $100 million, which is $50 million higher than previously estimated [8]

Core Viewpoint - Victoria's Secret & Co. is set to release its first quarter 2025 financial results on June 11, 2025, following a delay due to a security incident involving its IT systems [1] Group 1: Earnings Release Information - The earnings release will occur before market open on June 11, 2025, with a live webcast scheduled for 8:30 a.m. ET [1][2] - Financial information will be available on the company's investor relations website approximately one hour prior to the webcast [1] Group 2: Company Overview - Victoria's Secret & Co. is a specialty retailer offering a range of products including bras, lingerie, apparel, and fragrances, with a commitment to empowering over 30,000 associates across approximately 1,380 retail stores in nearly 70 countries [3]