Victoria’s Secret & Co. (NYSE: $VSCO) is an American upscale retailer that sells clothing, lingerie, and beauty products. Founded in 1977 by Roy Raymond, it has grown to become the world’s largest high-end fashion retailer.
On Wednesday evening, March 6, 2024, Victoria’s Secret released its fourth quarter and fiscal 2023 results to a negative marketing reception after disappointing guidance.
Victoria’s Secret Q4 Results
The company reported a net income of $181 million, or a diluted EPS of $2.29, above the $171 million income and diluted EPS of $2.10 the previous year. It reported an operating income of $258 million, above the $243 million operating income reported last year.
Victoria’s Secret reported an adjusted EPS of $2.58 on an adjusted net income of $204 million, beating analysts’ estimate of a $2.46 adjusted EPS. Its adjusted operating income in Q4 came in at $283 million, above the $280 million reported last year.
Fourth quarter revenue grew 3% Y/Y to $2.08 billion, matching analysts’ estimates. Meanwhile, same-store sales fell 6%, in line with estimates of a 6.3% decline.
Fiscal 2023 Highlights
For the full year, Victoria’s Secret reported an adjusted net income of $178 million, or an adjusted EPS of $2.27, compared to an adjusted net income of $416 million, or $4.95 per share the previous year. It reported an adjusted operating income of $327 million, compared to $566 million the previous year.
Net sales in fiscal 2023 came in at $6.18 billion, a 3% Y/Y decline compared to fiscal 2022. Meanwhile, total comparable sales declined 9% Y/Y.
Balance Sheet
Victoria’s Secret reported that it had generated $589 million in operating cash flow in Q4. It also reported that it ended fiscal 2023 with $270 million in cash, as well as $145 million in outstanding cash balance owed under its ABL credit facility.
Victoria’s Secret Share Buyback Program
The company revealed an open-ended program to repurchase up to $250 million of its shares starting in March 2024. In fiscal 2023, the company allocated $125 million to a share repurchase program, which expired at the end of fiscal 2023.
Weak Guidance
The company forecast net sales of around $6 billion in fiscal 2024, below analysts’ estimates of $6.19 billion. In Q124, the company expects sales to drop by mid-single digits compared to Q123 sales of $1.41 billion, whiles analysts estimate $1.39 billion.
According to CEO Martin Waters, the forecast was based on subdued demand in North America. Waters stated, “As we look into the new year, we recognize the broader intimates market in North America has been down for four consecutive quarters and we are planning the business appropriately conservative in the near term.”
Victoria’s Secret Stock Performance
Victoria’s Secret (VSCO) fell nearly 30% in premarket trading after the release of its Q4 results and fiscal 2024 guidance on Wednesday. Those losses held during the regular trading session, and as of 10:08 AM EST, the stock was down 29.04% at $18.18 per share on Thursday, March 7, 2024.
The stock is down 21.19% in the past 12 months and below its 50-day moving average of $26.66 and its 200-day moving average of $21.45. It is currently valued at a 48.01% discount to its 52-week high of $34.97. Year-to-date, it has lost 33.22% of its value.
The stock has fallen below the critical support zone of $20-$21.50, which could see it retest its 52-week low of $13.62.
Victoria’s Secret Stock Outlook
Following the release of its Q4 results, JP Morgan downgraded its forecast for the stock from Neutral to Underweight. According to 11 Wall Street analysts, VSCO stock has an overall moderate buy rating. The stock’s average price target is $27.18, with the highest forecast being $35 while the lowest is $15. The average price target is a 33.11% upside based on the most recent price.
Should You Buy VSCO Stock?
Victoria’s Secret has ramped up its marketing efforts in recent months to attract new customers, including expansion into new categories. However, its efforts have not paid off; while international sales have grown, North American sales continue to falter.
Based on its downbeat outlook for fiscal 2024, waiting on the sidelines for management to turn things around might be the best play in the near term.
Click Here for Updates on Victoria’s Secret – It’s FREE to Sign Up for Text Message Notifications!
Disclaimer: This website provides information about cryptocurrency and stock market investments. This website does not provide investment advice and should not be used as a replacement for investment advice from a qualified professional. This website is for educational and informational purposes only. The owner of this website is not a registered investment advisor and does not offer investment advice. You, the reader / viewer, bear responsibility for your own investment decisions and should seek the advice of a qualified securities professional before making any investment.
