Second quarter sales, operating income and EPS exceed expectations Second quarter comparable sales up 4% Company raises full year 2025 sales guidance REYNOLDSBURG, Ohio, Aug. 28, 2025 (GLOBE NEWSWIRE) -- Victoria’s Secret & Co. (“VS&Co” or the “Company”) (NYSE: VSCO) today reported financial results for the second quarter ended August 2, 2025. “I am excited to share that our momentum continued building in the second quarter, once again delivering results that beat our sales and operating income guidance. We ...

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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]

Financial Data and Key Metrics Changes - For the full year 2024, total sales were approximately $611 million, with comparable sales growth of 1.5% [24] - Gross margin was reported at 70.4%, while adjusted EBITDA was $107 million [25] - Adjusted net income per diluted share increased to $3.47, reflecting a 4% rise compared to the previous year [38] Business Line Data and Key Metrics Changes - In Q4 2024, total company sales were $143 million, down approximately 5% compared to Q4 2023 [31] - Store sales for Q4 decreased by 3%, primarily due to calendar impacts, while direct sales as a percentage of total sales were 50.5% [33] - The company saw strength in categories such as bottoms, outerwear, knit tops, and sleepwear during the quarter [12][110] Market Data and Key Metrics Changes - The company experienced challenges in traffic, which was reflected in the overall sales performance [76] - The direct-to-consumer channel showed a shift towards markdowns, contrasting with the full-price orientation of store sales [101] Company Strategy and Development Direction - The company plans to continue expanding its store count, with expectations to grow by 5 to 10 stores by the end of fiscal 2025 [51] - Investments in new stores and technology systems are prioritized to enhance the omni-channel experience [19][45] - The implementation of a new order management system (OMS) is expected to unlock new capabilities and improve operational efficiency [20][45] Management's Comments on Operating Environment and Future Outlook - The management noted that fiscal 2025 has started slowly, with consumer sentiment and adverse weather impacting performance [21] - The company is taking a prudent approach to its outlook for Q1 and the remainder of the year, considering the current economic uncertainties [21][49] - Management expressed confidence in the brand's growth potential and the effectiveness of its operating model despite challenges [22][53] Other Important Information - The company ended the year with a healthy cash position, supporting a recently announced dividend increase [15] - Total reported inventories were up about 15% compared to the end of Q4 last year, primarily due to strategic shipping decisions [41] Q&A Session Summary Question: Can you elaborate on the Q1 headwinds? - Management identified three main headwinds: adverse weather, consumer sentiment concerns, and the OMS implementation [59][60] Question: What benefits do you expect from the OMS? - The OMS is expected to provide operational efficiencies and enhance omni-channel capabilities, starting with ship-from-store functionalities [64][66] Question: How do you view gross margin trends for the year? - Management indicated that Q1 will be the most challenging comparison, with expectations for flat gross margins overall [73] Question: What are the promotional strategies moving forward? - The company aims to maintain a disciplined promotional approach while responding to consumer price sensitivity [92][95] Question: How did store and digital channels perform differently? - Store sales remained more full-price oriented, while digital channels shifted more towards markdowns [101]

Financial Data and Key Metrics Changes - For the full year 2024, total sales were approximately $611 million, with comparable sales growth of 1.5% and a gross margin of 70.4% [18][26] - Adjusted EBITDA for the year was $107 million, while adjusted net income per diluted share was $3.47, reflecting a 4% increase [26][27] - Free cash flow for the year was $47 million, with a cash position of $35.4 million at the end of Q4 [27][28] Business Line Data and Key Metrics Changes - In Q4, total company sales were $143 million, down approximately 5% compared to the previous year [21] - Direct sales accounted for 50.5% of total sales in Q4, down 6.8% year-over-year due to a shift into markdown selling [24] - The company saw strength in bottoms, outerwear, knit tops, and sleepwear during the quarter, supported by marketing campaigns [9][10] Market Data and Key Metrics Changes - The retail channel drove a 1.9% increase in comparable sales for Q4, while store sales were down 3% due to calendar impacts [22] - The best customer cohort continued to show consistent growth, contributing to overall performance despite traffic headwinds [10][11] - The company experienced challenges in traffic, particularly in Q4 and early Q1, attributed to broader macroeconomic conditions and consumer sentiment [40][72] Company Strategy and Development Direction - The company plans to continue investing in new store growth, with a target of opening 20 to 25 net new stores by the end of 2026 [34] - The implementation of a new order management system (OMS) is expected to enhance omnichannel capabilities and improve customer experience [31][32] - Marketing efforts are being diversified, including geo-targeted campaigns to drive store traffic and customer engagement [12][55] Management's Comments on Operating Environment and Future Outlook - Management noted that fiscal 2025 has started slowly, with consumer sentiment and adverse weather impacting performance [14][15] - The company is taking a prudent approach to its outlook for Q1 and the remainder of the year, considering the ongoing macroeconomic uncertainties [15][19] - Despite challenges, management remains confident in the brand's potential for growth and the effectiveness of its operating model [16][35] Other Important Information - The company ended the year with a healthy cash position and announced a quarterly dividend increase [10][28] - Inventory levels were reported to be elevated due to strategic shipping decisions, but are expected to normalize in the coming quarters [29][82] - The company has initiated a share buyback program, with $24.5 million remaining under the authorization as of the end of Q4 [28][74] Q&A Session Summary Question: Can you elaborate on the Q1 headwinds? - Management identified three main headwinds: adverse weather, consumer sentiment concerns, and the OMS implementation [40][41] Question: What benefits do you expect from the OMS implementation? - The OMS is expected to provide operational efficiencies and enhance sales through new omnichannel capabilities, starting in the back half of the year [43][45] Question: How do you view gross margin trends for the year? - Management expects gross margins to be flat, with Q1 facing the most difficult comparisons due to prior strong performance [50][52] Question: What are the trends in store versus digital sales? - Stores are performing better in full-price sales compared to digital, which has shifted more towards markdowns [72] Question: How are you managing promotions in the current environment? - The company is focused on maintaining a disciplined promotional strategy while responding to consumer price sensitivity [65][68]

Financial Data and Key Metrics Changes - The company achieved record revenue of $5.3 billion, reflecting a 4% comparable sales growth [6][9] - Adjusted operating profit reached $445 million, marking a 19% increase from the previous year [27][28] - Fourth quarter operating income was $142 million, the highest in over a decade [8][28] - Full year cash flow from operations exceeded $470 million, with over $280 million returned to shareholders through buybacks and dividends [9][31] Business Line Data and Key Metrics Changes - American Eagle's comparable sales rose 1%, while Aerie's comparable sales increased by 6% [7][10] - Aerie crossed $1.7 billion in revenue, with strong performance in soft apparel and activewear [10][20] - Women's apparel saw high single-digit comps, while men's apparel showed sequential improvement [17][19] Market Data and Key Metrics Changes - The company noted that warmer markets performed better than colder ones, with specific categories like sweaters outperforming in colder climates [25][107] - The first quarter of 2025 is expected to see a mid-single-digit revenue decline due to a less robust consumer environment and cold weather [12][33] Company Strategy and Development Direction - The company launched the "Powering Profitable Growth" strategy, focusing on amplifying brands, optimizing operations, and executing with financial discipline [6][9] - There is a heightened emphasis on improving operating capabilities and building speed in the supply chain [11][32] - The company plans to increase share repurchase authorization, reflecting confidence in long-term growth prospects [14][31] Management's Comments on Operating Environment and Future Outlook - Management indicated that 2025 has started off softer than anticipated, with ongoing consumer uncertainty and external factors like tariffs impacting operations [12][33] - The management remains optimistic about long-term growth opportunities despite current challenges [26][37] - The company is taking proactive actions to drive additional expense savings and improve top-line growth [13][32] Other Important Information - The company reported a strong balance sheet with approximately $359 million in cash and investments [31] - Capital expenditures for the year are expected to be around $300 million, including investments in digital platforms and automation [37] Q&A Session Summary Question: Differences in performance between warmer and colder markets - Management noted that warmer markets have seen better comps, but specific figures were not disclosed [40][42] Question: Control over SG&A expenses moving forward - Management expressed confidence in maintaining expense controls and leveraging SG&A for future growth [41][43][46] Question: Early spring selling trends and revenue outlook - Management acknowledged headwinds in early spring but emphasized readiness to adjust inventory and respond to market demands [49][51] Question: Gross margin outlook and assumptions - Management indicated that gross margin is expected to be down in the first quarter due to markdowns and product costs, with improvements anticipated in the second half [52][70] Question: Tariff exposure and mitigation strategies - Management reported a reduction in tariff exposure from China and Vietnam, with plans to further mitigate impacts [76][82] Question: Performance of digital and store channels - Digital channels outperformed stores in the fourth quarter, with plans for continued investment in both areas [102][104]