Victoria’s Secret & Company ((VSCO)) has held its Q2 earnings call. Read on for the main highlights of the call.
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Victoria’s Secret & Co. recently held its second quarter 2025 earnings call, revealing a generally optimistic outlook despite some challenges. The company reported strong sales growth, improved gross margins, and positive international performance. However, issues such as a digital outage and increased tariff impacts were also discussed. Overall, the positive developments slightly outweighed the negatives, suggesting a promising future for the company.
Net Sales Growth
Victoria’s Secret & Co. reported a 3% year-over-year increase in net sales, reaching $1.459 billion. Comparable sales rose by 4% across both the Victoria’s Secret and PINK brands, indicating strong consumer demand and effective sales strategies.
International Expansion
The company’s international segment was a standout performer, with net sales growing by 22% year-over-year. This growth was driven by high single-digit retail comparable sales gains and continued new store openings, highlighting the brand’s successful global expansion efforts.
Improved Gross Margins
Gross margins improved to 35.6%, surpassing last year’s figures by 20 basis points and exceeding guidance by 60 basis points. This improvement was attributed to reduced promotions and an increase in higher regular-priced sales.
Bra Market Share Gain
Victoria’s Secret successfully increased its market share in the bra category by approximately 0.5 points, with nearly a full point gain in traditional bras. This growth underscores the brand’s strong position in the intimate apparel market.
Successful Product Launches
The launch of the Body by Victoria collection’s new FlexFactor bra and the PINK x LoveShackFancy collaboration were well-received, driving significant customer engagement and boosting sales.
Impact of Digital Outage
A digital outage in May negatively impacted net sales by approximately $20 million. This incident highlighted the challenges of maintaining digital infrastructure and the potential financial repercussions of outages.
Increased Tariff Impact
The company faced an estimated $50 million increase in net tariff impact for fiscal year 2025 due to incremental tariff exposure. This challenge underscores the ongoing complexities of international trade and its impact on business operations.
Adjusted Operating Loss Forecast
Victoria’s Secret projected an adjusted operating loss for the third quarter of 2025, ranging from $35 million to $55 million, compared to a $28 million loss in the same quarter of 2024. This forecast reflects the company’s cautious approach amidst ongoing challenges.
Forward-Looking Guidance
Looking ahead, Victoria’s Secret & Co. maintained its full-year operating income guidance despite anticipating a $100 million net tariff impact. The company plans to mitigate this through strategic pricing, sourcing, and promotional strategies, alongside a focus on driving top-line growth with enhanced product assortments and major brand initiatives.
In summary, Victoria’s Secret & Co.’s earnings call painted a picture of a company navigating both opportunities and challenges. While strong sales growth and international expansion were key highlights, the impact of digital outages and tariffs posed significant hurdles. Nevertheless, the overall sentiment was positive, with the company poised to leverage its strengths for continued success.