Victoria’s Secret & Co. Reports Third Quarter 2022 Results

Third quarter operating income and diluted EPS above guidance

Provides fourth quarter and reaffirms full year 2022 guidance

REYNOLDSBURG, Ohio, Nov. 30, 2022 (GLOBE NEWSWIRE) -- Victoria’s Secret & Co. (“Victoria’s Secret” or the “Company”) (NYSE: VSCO) today reported 2022 financial results for the third quarter ended October 29, 2022.

Chief Executive Officer Martin Waters commented, “After nearly a year and a half as an independent, publicly-traded company, we continue to make significant progress in our transformation and mission to celebrate and champion all women. We have created a solid financial platform with our new, more agile operating structure, and even in a very challenging macroeconomic environment, we were able to deliver third quarter operating income and earnings per diluted share results above our previous guidance. With our aligned focus on our customer and our strategic priorities, we are well positioned to continue to navigate and execute in a shifting consumer landscape.”

Martin continued, “At our Investor Day in October, we discussed our strategic growth plan which outlines significant runway ahead guided by our three key principles: strengthen our core, ignite growth, and transform the foundation. Led by our two category-defining brands and merchandise leadership positions in intimates and beauty, we remain confident in our ability to deliver our long-term financial targets, reinvest in our business, and return value to our shareholders. Further evidence of our commitment to drive long-term value, we recently announced our agreement to acquire AdoreMe, Inc. (“Adore Me”), a technology-led, digitally-native intimates brand … a move that strategically positions us for accelerated growth. We are excited for the opportunity to leverage Adore Me’s expertise and technology to improve our customer shopping experience and accelerate the modernization of our digital platform. This is just one example of how we are committed to executing on our strategic growth plan.”

Third Quarter Results
The Company reported net income of $24 million, or $0.29 per diluted share for the third quarter of 2022, which was above the high-end of our previously communicated guidance range of $0.00 to $0.25 per diluted share. This result compares to net income of $75 million, or $0.81 per diluted share for the third quarter of 2021.

Third quarter 2022 reported operating income was $43 million, which was above the high-end of our previously communicated guidance range of $10 million to $40 million. This result compares to operating income of $108 million in the third quarter of 2021.

The Company reported net sales of $1.318 billion for the third quarter of 2022, a decrease of 9% compared to net sales of $1.441 billion in the prior year third quarter. This result was in-line with our previously communicated guidance of down high-single digits compared to the third quarter last year. Total comparable sales for the third quarter of 2022 decreased 11% compared to the third quarter of 2021.

Capital Allocation
On March 2, 2022, the Company announced a share repurchase program providing for the repurchase of up to $250 million of the Company’s common stock during the year. During the third quarter, the Company invested $43 million to repurchase 1.2 million shares under this program. Year to date, the Company has invested $214 million to repurchase 5.1 million shares at an average price of $41.91 per share. The Company continues to expect to complete this share repurchase program by the end of fiscal year 2022.

Fourth Quarter and Full Year 2022 Outlook
The Company is forecasting fourth quarter 2022 net sales to decrease in the high-single digit range compared to last year’s fourth quarter net sales of $2.175 billion. At this forecasted level of sales, operating income is expected to be in the range of $240 million to $290 million. Net income for the fourth quarter 2022 is estimated to be in the range of $2.00 to $2.45 per diluted share.  

The Company is forecasting full year 2022 net sales to decrease 6% to 7% compared to last year’s full year net sales of $6.785 billion. At this forecasted level of sales, adjusted operating income is expected to be in the range of $525 million to $575 million, or approximately 8% to 9% of sales. Adjusted net income for the full year 2022 is estimated to be in the range of $4.50 to $4.95 per diluted share.

As previously announced, we expect the acquisition of Adore Me to close by the end of January 2023, subject to customary closing conditions and regulatory clearances. Because the Adore Me transaction has not yet closed, our fourth quarter and full year 2022 outlook excludes any financial impact related to this transaction.

At the conclusion of this press release, we have included a reconciliation of reported to adjusted results and forecasted results.

Victoria’s Secret & Co. will conduct its third quarter earnings call at 8:00 a.m. Eastern on Thursday, December 1, 2022. To listen, call 1-800-619-9066 (international dial-in number: 1-212-519-0836); conference ID 5358727. For an audio replay, call 1-866-363-1809 (international replay number: 1-203-369-0197); conference ID 55163 or log onto www.victoriassecretandco.com.  The materials accompanying the earnings call have been posted on the Investors section of the Company’s website. The audio replay will be available approximately two hours after the conclusion of the call.

About Victoria’s Secret & Co.
Victoria’s Secret & Co. (NYSE: VSCO) is a Fortune 500 specialty retailer of modern, fashion-inspired collections including signature bras, panties, lingerie, casual sleepwear, athleisure and swim, as well as award-winning prestige fragrances and body care.  VS&Co is comprised of market leading brands, Victoria’s Secret and Victoria’s Secret PINK, that share a common purpose of inspiring and uplifting our customers in every stage of their lives. We are committed to empowering our more than 30,000 associates across a global footprint of approximately 1,350 retail stores in approximately 70 countries. We provide our customers with products and experiences that make them feel good inside and out while driving positive change through the power of our products, platform and advocacy.

Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995

We caution that any forward-looking statements (as such term is defined in the U.S. Private Securities Litigation Reform Act of 1995) contained in this press release or made by us, our management, or our spokespeople involve risks and uncertainties and are subject to change based on various factors, many of which are beyond our control. Accordingly, our future performance and financial results may differ materially from those expressed or implied in any such forward-looking statements. Forward-looking statements include, without limitation, statements regarding our future operating results, the implementation and impact of our strategic plans, and our ability to meet environmental, social, and governance goals. Words such as “estimate,” “commit,” “target,” “goal,” “project,” “plan,” “believe,” “seek,” “strive,” “expect,” “anticipate,” “intend,” “potential” and any similar expressions may identify forward-looking statements. Risks associated with the following factors, among others, could affect our financial performance and cause actual results to differ materially from those expressed or implied in any forward-looking statements:

• the spin-off from Bath & Body Works, Inc. (f/k/a L Brands, Inc.) may not be tax-free for U.S. federal income tax purposes;
• we may not realize all of the expected benefits of the spin-off;
• general economic conditions, inflation, consumer confidence, consumer spending patterns and market disruptions including pandemics or significant health hazards, severe weather conditions, natural disasters, terrorist activities, financial crises, political crises or other major events, or the prospect of these events;
• the novel coronavirus (COVID-19) global pandemic has had and may continue to have an adverse effect on our business and results of operations;
• difficulties arising from turnover in company leadership or other key positions;
• our ability to attract, develop and retain qualified associates and manage labor-related costs;
• our dependence on mall traffic and the availability of suitable store locations on appropriate terms;
• our ability to successfully operate and expand internationally and related risks;
• our independent franchise, license, wholesale, and joint venture partners;
• our direct channel business;
• our ability to protect our reputation and the image of our brands;
• our ability to attract customers with marketing, advertising and promotional programs;
• the highly competitive nature of the retail industry and the segments in which we operate;
• consumer acceptance of our products and our ability to manage the life cycle of our brands, keep up with fashion trends, develop new merchandise and launch new product lines successfully;
• our ability to realize the potential benefits and synergies sought with the pending acquisition of AdoreMe, Inc.;
• our ability to source, distribute and sell goods and materials on a global basis, including risks related to:
  
  • political instability, environmental hazards or natural disasters;
  • significant health hazards or pandemics;
  • legal and regulatory matters;
  • delays or disruptions in shipping and transportation and related pricing impacts; and
  • disruption due to labor disputes;
• our geographic concentration of vendor and distribution facilities in central Ohio and Southeast Asia;
• the ability of our vendors to deliver products in a timely manner, meet quality standards and comply with applicable laws and regulations;
• fluctuations in freight, product input and energy costs, including those caused by inflation;
• our and our third-party service providers’ ability to implement and maintain information technology systems and to protect associated data and system availability;
• our ability to maintain the security of customer, associate, third-party and company information;
• stock price volatility;
• shareholder activism matters;
• our ability to maintain our credit rating;
• our ability to comply with regulatory requirements; and
• legal, tax, trade and other regulatory matters.
  

Except as may be required by law, we assume no obligation and do not intend to make publicly available any update or other revisions to any of the forward-looking statements contained in this press release to reflect circumstances existing after the date of this press release or to reflect the occurrence of future events, even if experience or future events make it clear that any expected results expressed or implied by those forward-looking statements will not be realized. Additional information regarding these and other factors can be found in “Item 1A. Risk Factors” in our Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 18, 2022.

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Total Sales (Millions):

¹ – Results include consolidated joint venture sales in China, royalties associated with franchised stores and wholesale sales.

Comparable Sales Increase (Decrease):

NOTE: Stores are excluded from the comparable sales calculation when they have been closed for four consecutive days or more. Therefore, comparable sales results exclude periods of time that stores were closed for four consecutive days or more as a result of the COVID-19 pandemic.  Please refer to our filings with the Securities and Exchange Commission for further discussion regarding our comparable sales calculation.
¹ – Results include company-operated stores in the U.S. and Canada, consolidated joint venture stores in China and direct sales.
² – Results include company-operated stores in the U.S. and Canada and consolidated joint venture stores in China.

Total Stores:

¹ – Includes nine partner-operated stores.