Victoria’s Secret & Co. Reports Strong Q3 Earnings

Victoria’s Secret & Company ((VSCO)) has held its Q3 earnings call. Read on for the main highlights of the call.

Victoria’s Secret & Co. recently held its third-quarter earnings call, revealing a positive sentiment overall. The company reported strong growth in sales, market share, and customer base, driven by the success of the Victoria’s Secret Fashion Show and robust international performance. Despite some challenges with tariffs and anticipated margin pressures, the highlights of the quarter significantly outweighed the lowlights, indicating a promising outlook.

Record-Breaking Third Quarter Results

Victoria’s Secret & Co. achieved record-breaking results in the third quarter, with net sales reaching $1.47 billion, marking a 9% increase from the previous year. The company also saw an adjusted gross margin expansion of 170 basis points and an impressive earnings growth of 45%.

Intimates Business Growth

The Intimates business returned to growth, with sales increasing by mid-single digits and gaining over 1% market share in the U.S. This resurgence highlights the brand’s successful strategies in revitalizing its core offerings.

Strong International Performance

Internationally, Victoria’s Secret continued to shine, marking its third consecutive quarter of double-digit retail sales growth. Sales were up over 30%, largely driven by exceptional performance in China, showcasing the brand’s expanding global footprint.

Victoria’s Secret Fashion Show Success

The iconic Victoria’s Secret Fashion Show played a significant role in the company’s success, achieving 61 million streaming views, a 60% increase from last year. Additionally, the show attracted 9 million new social media followers, with total media impressions rising by over 30%.

PINK’s Double-Digit Sales Growth

The PINK brand also contributed to the positive results, delivering double-digit sales growth. This success was fueled by strategic collaborations and increased apparel penetration, reinforcing PINK’s position in the market.

Raised Full-Year Outlook

Victoria’s Secret raised its full-year outlook, now expecting net sales between $6.45 billion and $6.48 billion, with adjusted operating income projected to be between $350 million and $375 million. This optimistic guidance reflects the company’s confidence in its ongoing strategies and market position.

Tariff Impact

The company faced a $15 million impact from tariffs in the third quarter, equivalent to 100 basis points. This challenge underscores the external pressures affecting the business environment.

SG&A Rate Challenges

Despite better-than-expected adjusted SG&A rates, Victoria’s Secret had to carefully manage increased store labor and other costs, highlighting the need for efficient operational strategies.

Fourth Quarter Margin Pressure

Looking ahead, the company anticipates a decline in the fourth-quarter gross margin rate by 90 to 190 basis points year over year, primarily due to estimated net tariff pressure of approximately 300 basis points.

Forward-Looking Guidance

Victoria’s Secret & Co. has set an optimistic tone for the future, raising its full-year guidance with expectations of net sales between $6.45 billion and $6.48 billion and adjusted operating income ranging from $350 million to $375 million. The company is focused on enhancing its bra authority, recommitting to the PINK brand, and evolving its brand projection to ensure a strong finish to fiscal 2025.

In summary, Victoria’s Secret & Co.’s third-quarter earnings call highlighted a strong performance with significant growth across various segments. Despite some challenges, the company’s positive outlook and strategic initiatives position it well for continued success. Investors and market enthusiasts will be keenly watching how these strategies unfold in the coming quarters.