Victoria’s Secret & Co. (VSCO) has revealed its first-quarter fiscal 2024 results, exceeding both earnings and revenue projections set by Zacks. This marks the second consecutive quarter where the company has outperformed expectations.
During the first quarter, Victoria’s Secret observed a significant upturn in sales across its physical retail outlets and online platforms in North America. Both the Victoria’s Secret and PINK brands experienced positive traction amidst a challenging retail environment and intense promotional competition, showcasing improved gross margin rates through efficient inventory management and strategic customer engagement.
Strong Quarter Performance
Victoria’s Secret recorded adjusted earnings of 12 cents per share, surpassing the Zacks Consensus Estimate of 11 cents but showing a decline from 28 cents in the same period last year.
The net sales dipped 3.4% year-over-year to $1,359.4 million, beating the Zacks Consensus Estimate of $1,346 million. Comparable sales fell by 5% compared to the previous year.
Sales from the Stores – North America segment reached $729.1 million, down 7.2% year over year, while the Direct channel saw a decrease of 3.4% to $448.8 million. On the other hand, net sales from the International channel surged by 15.6% to $181.5 million.
Profit Margin and Expenditures
The company’s gross profit decreased by 0.2% to $501.3 million, despite an increase in gross margin by 120 basis points to 36.9%. Cost of sales dropped by 5.2% year over year to $858.1 million.
General, administrative and store operating expenses rose slightly by 0.2% to $475.1 million, while interest expenses reduced to $21.7 million from $22.5 million in the same quarter last year.
Outlook and Future Projections
For the second quarter of fiscal 2024, Victoria’s Secret anticipates a slight decline in net sales. Adjusted operating income is projected to fall within a range of $30-$45 million, with adjusted net income expected to be between 5 cents and 20 cents per share.
Looking ahead to the full fiscal year, the company estimates net sales to reach around $6 billion, signaling a minor drop compared to the previous year. Adjusted operating income for fiscal 2024 is predicted to range between $250 million and $275 million.
Despite some challenges, VSCO’s stock has surged by 26.2% over the last month, outperforming the industry’s growth of 5.9%.
Investment Opportunities
Within the Consumer Discretionary sector, there are notable investment options:
Strategic Education, Inc. (STRA) currently holds a Zacks Rank #1 (Strong Buy) with impressive earnings surprises and stock growth. The company anticipates positive sales and earnings trends for 2024.
Netflix, Inc. (NFLX) demonstrates strong performance and a Zacks Rank of 1, showcasing consistent earnings surprises and significant stock appreciation.
AMC Entertainment Holdings, Inc. (AMC) is rated a Zacks Rank of 2 (Buy) with notable earnings surprises and substantial stock growth.
For investors seeking the best returns, Bitcoin stands out as the most lucrative investment, historically outperforming other asset classes. Its remarkable performance in recent years has exceeded expectations, with Zacks predicting further growth in the near future.