Victoria's Secret, one of the world's largest intimate specialty retailers, is set to have its biggest year yet amid the return of its iconic fashion show and a new CEO.
The company's important upcoming steps could be Victoria's Secret's last chance to regain its wings and strut its way back into its customer's hearts.
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In late August, Victoria's Secret (VSCO) reported earnings per share of $0.40, beating analysts' expectations of $0.38 by 5% for Q2 of fiscal year 2024.
However, deeper examination of the print reveals a Q2 earnings report with some issues.
The company's net sales dropped nearly 1% year over year to approximately $1.42 billion in Q2. Total comparable sales declined by 3% compared to Q2 of last fiscal year.
Net sales increased by 6.4% internationally, but net sales in North American stores alone declined by 2.1% compared to the previous fiscal year's Q2.
New CEO and a fashion show return
Earlier this year, Victoria’s Secret named Hillary Super, former CEO of Rihanna's Savage X Fenty, as its new CEO.
The company's lackluster performance in Q2 will do little to ease the transition for its new CEO, who is set to begin her new role on September 9th of this year.
This year will also mark the return of the infamous Victoria's Secret Fashion Show, set to take place October 15 in New York City after a 6-year hiatus.
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The cancellation of the Victoria's Secret Fashion Show
After a 17-year run, the iconic fashion was officially canceled in 2019, making the 2018 Victoria's Secret fashion show its last one until now.
This cancelation came after a run of bad press involving allegations of misogyny and other controversies.
The company landed itself into even muddier waters when the former Marketing Chief stated that transgender and plus-size models did not align with the brand.
However, Victoria's Secret's lack of inclusivity, perfect body interpretations, and encouragement of diet culture were only some of the multiple reasons why the fashion show reached its end.
In May 2022, the company landed itself in court for alleged claims of sexual harassment and misogyny against the models by high-power men in the company. The company ultimately reached a $90 million settlement with the models, but Victoria's Secret's reputation remained damaged.
According to Victoria's Secret announcement, the 2024 fashion show will reflect 'who the company is today' and revive everything it's iconically known for.
Victoria's Secret guidance
With so many big changes within the company's executive suite and events calendar, this refreshing new era could be Victoria's Secret's last chance to turn the year around.
According to Victoria's Secret's outlook, sales for the rest of fiscal year 2024 are forecast to decline by 1% compared to fiscal year 2023.
The company expects operating income to increase by an average of $287.5 million for the rest of fiscal year 2024, increasing nearly 9% from the prior guidance average for the same year.
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Despite the company's performance in Q2 of fiscal year 2024, its stock is still over 31% higher than a year ago, signaling a strong potential incline in the upcoming months.
Net sales in North America declined compared to a year ago, but have been improving for the past four quarters.
"The improvement is driven by newness and product acceptance, particularly in the VS and PINK brands. We expect North America business trends to continue improving. While the overall market may remain challenging, our business is showing sequential improvement," said Chief Finance and Administrative Officer Tim Johnson at the earnings call.
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