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Earnings Results: Victoria’s Secret says inflation likely to hurt women’s-wear shoppers for rest of the year

Shares of Victoria’s Secret & Co. fell after hours on Wednesday after the maker of lingerie and women’s wear forecast declines in fourth-quarter sales and profit that were below analysts’ expectations, with management saying they expected the pain customers have felt from higher prices to continue for the rest of the year.

The company’s third quarter also suffered from weaker-than-expected sales trends.

“We expect customers will continue to be challenged by inflationary and other financial pressures for the balance of 2022, and we have adjusted our inventory position and cost structure accordingly while allowing for continued investment in growth initiatives,” Chief Executive Martin Waters said in a statement.

Management said they expected Victoria’s Secret
VSCO,
+1.14%

to earn between $2.00 and $2.45 a share for the fourth quarter, with the midpoint of that range below FactSet forecasts for $2.32 a share.

Victoria’s Secret executives said they expected fourth-quarter sales to fall “in the high-single-digit range” when compared to the $2.175 billion recorded in the same quarter last year. FactSet forecast fourth-quarter sales of $2.021 billion.

Victoria’s Secret stuck with its full 2022 forecasts for a 6% to 7% year-over-year drop in sales and adjusted earnings of between $2.00 and $2.45 a share. The company forecast adjusted earnings of $4.50 to $4.95 a share.

Shares fell 2.4% after hours.

Retailers across the country have been trying to revamp their inventories, after rising prices forced customers to prioritize groceries and other basics over things like clothing. The sector’s forecasts for the fourth quarter, which includes the key holiday shopping period, have been mixed.

For the third quarter, Victoria’s Secret reported net income of $24 million, or 29 cents a share, compared with $75 million, or 81 cents a share, in the same quarter last year. The company reported sales of $1.318 billion, a 9% decrease from $1.441 billion in the quarter a year ago. Same-store sales fell 11%.

Analysts polled by FactSet expected earnings per share of 23 cents, on revenue of $1.324 billion. They expected same-store sales to fall 9.7%.

Victoria’s Secret stock is down 18% so far this year. By comparison, the S&P 500 Index
SPX,
+3.09%

has fallen 14% over that time.

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