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Victoria’s Secret (VSCO) Q1 2022 earnings beat

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Shoppers are seen inside a shopping center in Bethesda, Maryland on February 17, 2022.

Mandel Ngan | AFP | Getty Images

Victoria’s Secret reported a quarterly profit that topped Wall Street expectations on Tuesday, but warned that it could proceed to face supply chain and sales challenges for the rest of the 12 months.

The Ohio-based lingerie retailer noted that it faced “supply chain headwinds” within the three-month period ended April 30 while also lapping the sales bump it got within the year-ago period from people spending their federal stimulus money.

“If the primary quarter sales trends adjusted for stimulus were to proceed for the balance of the 12 months, it could challenge our ability to deliver full 12 months operating income consistent with last 12 months,” the corporate said in a news release.

Sales within the quarter were down 4.5% from a 12 months ago, but consistent with Wall Street estimates. The corporate noted that federal stimulus advantages lifted sales by about $75 million in the identical period in 2021.

For probably the most recent quarter, the corporate reported strength in its bras and sweetness businesses as its international segment recovered from heavy Covid restrictions.

The corporate’s shares rose around 7% in prolonged trading.

Here’s how Victoria’s Secret did in its fiscal first quarter compared with what Wall Street was expecting, based on Refinitiv estimates:

  • Earnings per share: $1.11 adjusted vs 84 cents expected
  • Revenue: $1.48 billion vs. $1.48 billion expected

For the three-month period ended April 30, net income was $76.14 million, or 93 cents per share, compared with net income of $174 million, or $1.97 per share, a 12 months earlier.

Excluding one-time items, Victoria’s Secret earned $1.11 per share, ahead of the 84 cents that analysts expected.

Sales fell 4.5% to $1.48 billion from $1.55 billion a 12 months earlier, but were consistent with Wall Street forecasts.

Same-store sales were down 8% within the quarter from 2021. Adjusting for last 12 months’s stimulus profit, the corporate said same-store sales were down 3%.

Victoria’s Secret ended the quarter with inventory levels up 37% from the prior 12 months, which it said was primarily attributable to longer transportation times and better cost of products stemming from inflation.

For its fiscal second quarter, Victoria’s Secret expects to earn between 95 cents per share to $1.25 a share, on an adjusted basis. Analysts were searching for $1.19 per share.

The corporate forecast sales to be down low-single digits to up low-single digits on a year-over-year basis. Analysts were searching for a 0.8% decline.

For the 12 months, Victoria’s Secret said Tuesday it still expects total sales to be flat to up low-single digits from 2021. Analysts were projecting a year-over-year increase of 1.7%, in keeping with Refinitiv data.

“We’ve got proactively anticipated and are managing supply chain and inflationary pressures,” the corporate said in prepared remarks. “Nevertheless, we understand there could possibly be volatility in our results.”

Victoria’s Secret shares have fallen about 26% 12 months to this point, as of Tuesday’s market close.

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