Victoria's Secret & Co. (VSXY) Earnings & Analysis

Latest quarter

Victoria’s Secret reported quarterly revenue of $1.6 billion, up 10.4% from $1.5 billion a year earlier. Revenue missed the consensus by −0.86%, while adjusted earnings per share of $0.95 exceeded the consensus estimate of $0.78.

The filing shows sales increased across North American stores, the direct channel and international operations. It attributed international growth primarily to China and franchise royalties, partly offset by lower sourcing sales to partners. The company also said a change in European order fulfillment shifted some sales reporting from the direct channel to international.

Gross margin rose to 47.1% from 35.6%, and operating margin increased to 16.0% from 2.81%. The filing attributed the gross margin improvement partly to IEEPA tariff refund recoveries, more regular-price selling and reduced promotional activity.

Victoria’s Secret reported diluted earnings per share of $2.18, compared with $0.20 a year earlier. The company reported quarterly free cash flow of $328.0 million, up from $88.0 million a year earlier.

Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.

What management said on the call

CEO Hillary Super said the customer file grew in the mid single digits from a year earlier, with new customer acquisition and retention contributing to growth. She said the bra business grew in the mid teens, supported by established products and new offerings, while PINK and beauty also grew.

Super said the company deliberately entered its semiannual sale with less sale inventory as it reduced its reliance on promotions. Initial demand exceeded expectations, she said, but “lower inventory pressured the June top line.” She plans to keep using the event to clear seasonal inventory while adding more new products and fashion.

Chief Financial and Operating Officer Scott Sekella said regular-price units grew in the high single digits while total units grew in the low single digits. He attributed adjusted gross margin improvement to a greater mix of regular-price sales, fewer promotions and the ability to spread buying and occupancy costs over higher sales. Sekella said the call’s non-GAAP results excluded tariff refunds.

Asked about bras, Super said recent launches at both Victoria’s Secret and PINK reflected customer feedback and that the company had more technical and fashion innovation planned. On stores, she described the PINK SoHo location as a place to experiment and said the company was considering opportunities for additional standalone PINK stores.

Chief Marketing and Customer Officer Elizabeth Preis said the company had shifted marketing spending toward digital and social channels to reach more new customers. She said those customers were returning faster and spending more when they returned. In response to questions about investment, Sekella said marketing spending would support the fashion show, Angels Among Us and customer growth across the second half.

On competition, Super said market-share data showed mass retailers losing share in the intimates category. Looking toward the next quarter, Sekella said regular-price core product sales were supporting the outlook, while promotional activity in the fourth quarter was planned to be flat to slightly down.

Guidance

Victoria’s Secret raised its fiscal 2026 sales outlook and its adjusted operating income forecast to $560.0 million–$590.0 million. Sekella said the outlook included plans to reinvest some of the outperformance in marketing.

The company also raised its fiscal 2026 adjusted diluted earnings-per-share forecast to $4.45–$4.70.