VS Q1 Profit Plummets 54% As Sales Slip 4.5%

Victoria’s Secret Q1 Sales fell 4.5% while net income plummeted 56.2%, with CEO Martin Waters pointing to “significant global headwinds and a challenging inflationary environment.”

The firm earned $76.144 million on sales of $1.484 billion in the three months ended April 30, compared to a profit of $174.032 million on sales of $1.554 billion in the same period last year. Victoria’s Secret pointed out that, “excluding the estimated first quarter 2021 benefit of $75 million related to government stimulus payments, net sales were essentially flat year over year,” and added that its “decrease in operating income compared to last year reflects incremental supply chain cost pressures and anniversarying last year’s federal stimulus benefits.”

North American store sales declined slightly in the period, from $932.9 million in the first quarter of 2021, to $930.9 million this year. Meanwhile, direct sales dropped sharply, from $520.9 million in the three months ended May 1, 2021, to $420.6 million in the same period in 2022. International sales rose from $100.4 million to $132.3 million. (The international component includes “consolidated joint venture sales in China, royalties associated with franchised stores and wholesale sales).

The company reported that as of April 30 it was operating 805 Victoria’s Secret and Pink stores in the U.S. (down 3 from the end of January), as well as 26 locations in Canada. By comparison, as of February 3, 2018, there were a combined 1,124 Victoria’s Secret and Pink stores operating in the U.S., as well as a combined 46 of those lingerie shops in Canada.

At the end of April there were also 71 Victoria’s Secret shops in China, operated under a joint venture with Regina Miracle (that was announced in January). And a combination of 455 full assortment and smaller beauty and accessories shops, operated by partners around the world.

Looking ahead, “the company is forecasting second quarter 2022 sales to be up low-single digits to down low-single digits compared to last year’s second quarter 2021 sales of $1.614 billion. At this forecasted level of sales, operating income is expected to be in the range of $125 million to $155 million compared to $202.7 million in 2021.” — NM