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NEW YORK - Victoria's Secret & Co (NYSE:VSCO) shares jumped over 4% in premarket trading Friday after the lingerie retailer reported better-than-expected third-quarter results and raised its full-year guidance.
The company posted an adjusted loss of $0.50 per share for the quarter ended November 2, beating analyst estimates of a $0.65 loss. Revenue rose 7% YoY to $1.35 billion, surpassing the consensus forecast of $1.29 billion.
Victoria's Secret's sales growth marked its best quarterly performance since 2021, with broad-based strength across all regions, channels, and major merchandise categories. North American sales increased by mid-single digits, while international business grew over 20%.
"I am very encouraged by the strength of our third quarter business and the positive, early customer response to our holiday merchandise assortments," said CEO Hillary Super. She noted that the company's momentum continued through Black Friday and Cyber Monday.
Total (EPA:TTEF) comparable sales for the quarter increased 3% YoY. The company's disciplined inventory management and cost control efforts helped improve margins compared to the previous year.
Gross margin rose 45 basis points (bps) year-over-year to 34.8% but was 10 bps below the Street's view.
Looking ahead, Victoria's Secret raised its full-year 2024 outlook. The company now expects net sales to grow 1% to 2%, up from its previous guidance of a 1% decline. Adjusted operating income is forecast between $315 million and $345 million, higher than the prior range of $275 million to $300 million.
For the fourth quarter, Victoria's Secret projects earnings per share of $2.00 to $2.30, compared to analyst estimates of $2.09. The company anticipates Q4 net sales to increase 2% to 4% YoY.
It anticipates full-year EBIT in the range of $315 million to $345 million, which implies a 5.1-5.5% margin, missing the consensus estimate of 4.9%.
"While the out-of-the-ordinary below-Street GM guide should be worth monitoring, we are encouraged by the top-line strength," BMO analysts noted. [We] expect ongoing improvement, particularly at PINK."
Also commenting on the report, UBS analysts said the Q3 print was "solid, but unlikely a big stock catalyst."
"We note VSCO’s stock has jumped 23% in the two weeks heading into the print, suggesting expectations probably were already high," analysts led by Mauricio Serna said in a note.
"Plus, VSCO's Q3 gross margin slightly missed consensus and its Q4 gross margin outlook also came below the Street's view. These factors will likely limit stock price upside despite a beat and raise report."
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