Dive Brief:
- Victoria’s Secret & Co. on Wednesday reported Q2 net sales of $1.4 billion, down 6.2% year over year. Total comparable sales fell 11% compared to the year-ago quarter, according to a company press release.
- The company recorded a net loss of $1.4 million, compared to a quarterly net income of $70 million last year.
- Sales performance was “particularly challenging” in North America, which impacted the company’s Victoria’s Secret and Pink brands during the quarter, according to CEO Martin Waters. In contrast, the international business grew more than 25% year over year.
Dive Insight:
Victoria’s Secret in Q2 pointed to multiple signs of movement in its transformation plan as indicators that it's on the correct trajectory.
On a call with analysts on Thursday, Waters said the company is delivering on initiatives on multiple fronts. That includes the debut this month of its Icon collection featuring models Gisele Bündchen, Naomi Campbell, Adriana Lima and Hailey Bieber, among others. The retailer’s recently refreshed loyalty program has amassed more than 16 million members in three months, accounting for over 70% of the company’s weekly sales. The company also expanded its product assortment on Amazon this summer to include apparel and lingerie.
Additionally, the launch of new Pink merchandise on Tuesday has seen favorable response after going through testing at select stores, according to Waters. Still, the beauty segment at Victoria's Secret continues to be the best performing category, followed by bras, sleepwear and panties.
“The teams have been working tirelessly on multiple growth initiatives designed to change our sales trends in the third quarter and the all-important holiday season,” Waters said.
Yet, analysts aren’t so sure about the retailer’s efforts.
Although the company’s numbers aligned with guidance, the results are “dismal,” according to Neil Saunders, managing director of GlobalData. “In our view the brand reinvention — which is both sensible and needed — has become muddled and confused.”
Wells Fargo analysts led by Ike Boruchow pointed to growing uncertainty on the company’s ability to execute on that strategic plan. Victoria’s Secret “has cut their top-line plan every quarter since the beginning of 2022 … which points to a brand turnaround that is simply not gaining traction,” they wrote.
“While the macro has been largely to blame for the past several quarters, the magnitude of comp decline today and number of misses points to a more idiosyncratic problem,” Wells Fargo stated.
Meanwhile, the company is leaning heavily into its Victoria’s Secret World Tour ‘23, a re-imagined fashion show that will be available for streaming on Prime Video in late September and marks the largest marketing investment by the company in the past five years. The event — which is part documentary and part fashion show — features Grammy Award-winning artist Doja Cat and will embody the “mission of Victoria’s Secret to uplift and champion women on a global scale,” Waters said.
“Of course, we recognize that neither our brand revolution nor our strategy will return their full potential overnight, we’re on a journey,” Waters said. “We also believe there is a clear path to growth during the current turbulent environment and into the future.”
