Victoria’s Secret & Co. recently announced its fiscal fourth-quarter results, revealing a mixed performance characterized by growing net sales but declining comparable sales.
The company’s weak sales forecast for fiscal 2024 has led to a significant 28% drop in its share price, marking the steepest decline since its initial public offering in 2021, as reported by Bloomberg.
CEO’s Outlook and Market Position
In a press release on March 6, CEO Martin Waters acknowledged the challenges facing Victoria’s Secret, citing a downturn in the broader intimates market in North America over the past four quarters.
Consequently, the company is adopting a conservative approach in its near-term business planning.
Despite the challenging market conditions, Victoria’s Secret maintains its position as a prominent player in the retail sector, ranking No. 52 in the Digital Commerce 360 Top 1000, which assesses North America’s leading retailers by online sales.
The company is categorized as an Apparel & Accessories retailer by Digital Commerce 360.
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Fourth Quarter Performance
In the fiscal fourth quarter, Victoria’s Secret reported a 3% increase in net sales, reaching $2.08 billion compared to $2.02 billion in the same period in 2022. Although this growth was within the retailer’s projected range of 2% to 4%, comparable sales experienced a notable 6% decline during the same period.
Despite the decline in comparable sales, net income rose to $182.5 million from $172.1 million in the previous year.
Digital Channel Performance and International Growth
While specific details about online sales in the fourth quarter were not disclosed, Victoria’s Secret noted that the digital channel outperformed stores during the period.
Additionally, the retailer highlighted growth in sales for its Adore Me online line, acquired in January 2023.
On the international front, the company experienced a 24% increase in sales year over year, with significant growth observed in China.
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Full-Year Performance and Holiday Sales
For the full fiscal year 2023, net sales declined approximately 3% to $6.18 billion compared to $6.34 billion in 2022. Comparable sales saw a more significant decline of 9%, while net income decreased by approximately 66% to $109.2 million.
Despite the overall decline in sales, Victoria’s Secret reported successful holiday sales, particularly during the early holiday season in November and the peak days leading up to Christmas.
The retailer managed strategic promotions effectively during key shopping days in December, contributing to its holiday success.
2024 Projections and Strategic Focus
Looking ahead to fiscal 2024, Victoria’s Secret anticipates total sales of $6 billion, representing a low-single-digit decline from 2023.
The company also expects a mid-single-digit decline in net sales for the first quarter of 2024. These conservative forecasts reflect the challenging economic environment and intense competition for consumers’ disposable income.
To address market challenges and maintain relevance, Victoria’s Secret plans to maintain its marketing expenditure at a similar level to 2023, focusing on personalization and attracting a younger consumer demographic.
Grappling with Headwinds
Victoria’s Secret & Co. faces headwinds as it grapples with declining comparable sales and a cautious outlook for fiscal 2024. Despite its strong brand presence and successful holiday sales, the company must navigate the challenges of a competitive market and shifting consumer preferences to drive future growth and profitability.
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Kris is a finance consultant, content marketer, and speaker specializing in helping brands and business owners navigate complex concepts and decisions. Since earning her Finance and Accounting degree, Kris has spent over half a decade writing about financial and technological concerns of brands spanning different life cycles.
