Buyers are seen at a shopping center in Bethesda, Maryland on February 17, 2022.
Mandel Ngan | AFP | Getty Images
Victoria’s Secret shook after-hours trading on Wednesday after a lingerie retailer published bad forecasts for the next quarter, warning that challenges still lie ahead – including inflation and “global unrest”, a reference to Russia’s war against Ukraine.
He reported earnings and sales for the fourth fiscal quarter, which slightly exceeded analysts’ expectations, after confirming the forecast for the holidays in December.
However, his performance in the near future may be overshadowed by global headwinds. Victoria’s Secret said the first half of this year could be harder, given the continuing supply chain problems, but that it needs to return to operating revenue growth in the last half. Victoria’s Secret called the third quarter an expected turning point.
Here’s how Victoria’s Secret fared in its fourth fiscal quarter compared to what Wall Street expected, based on a survey by analysts at Refinitiv:
- Earnings per share: $ 2.70 vs. $ 2.63 expected
- Income: $ 2.18 billion versus the expected $ 2.14 billion
Net income for the quarter ended January 29 fell to $ 246 million from $ 282 million a year earlier. Revenue rose about 4% to $ 2.18 billion from $ 2.1 billion a year earlier.
The company said its beauty products have helped attract customers online and in its regular stores, while its international business has grown tremendously compared to operations in North America. Victoria’s Secret also said they are pleased with the recent launch of a new collection called Love Cloud, which focuses on comfort and inclusion.
Of course, in the coming months, Victoria’s Secret sees a challenging retail environment with rising inflation and “potential for consumer uncertainty with the latest global unrest.”
The company expects to incur additional costs and supply chain costs related to inflation in the first half of the year of about $ 140 million, roughly similar to reports in the last half of 2021. Oil prices rose during Russia’s invasion of Ukraine, which raises fears that already high inflation will continue and rise at an even higher rate.
The retailer saw first-quarter sales in the range of $ 1.43 billion to $ 1.5 billion, down 4% to 8% from a year earlier. That’s also less than analysts’ estimates of $ 1.52 billion.
He sees earnings per share for the first quarter in the range of 70 to 95 cents. According to Refinitiv, analysts were looking for $ 1.32 per share.
The retailer said in prepared remarks that it expects to face continued pressure on supply chain costs and is also ending the benefits of an incentive of about $ 50 million in the first quarter of 2021.
He expects revenues in 2022 to be equal to low single digits compared to 2021 levels. Analysts forecast an increase of 2.9% on an annual basis.
Victoria’s Secret said it continues to assess the size of its real estate footprint as it tests a concept outside the mall and remodels existing stores to make them lighter and more attractive to buyers. It envisions the closure of somewhere between 10 and 30 stores in 2022.
“We continue to see a positive response to the news and the opportunity to maintain a lower level of promotional activity,” management said in prepared notes.
Shares of Victoria’s Secret fell about 2% this year after closing on Wednesday. This brings the market capitalization of the retailer to $ 4.8 billion.
Read full information about Victoria’s Secret winnings here. The company will hold a live conference call with analysts on Thursday morning.