VS Q3 Sales Rise 6.5%

Victoria’s Secret Q3 sales rose 6.5% to $1.347 billion, but the company still lost $54.75 million in the period. There were improvements over last year. In the three months ended October 28, 2023 the company lost $70.67 million on sales of $1.265 billion.

Comparable stores and direct sales were up 3% in the 13 weeks ended November 2, following a 7% decline in the same period last year. Stores only comps were up 2%, following an 11% decline last year. (Comparable sales reflect company owned stores in the U.S. and Canada, as well as joint venture stores in China).

New CEO Hillary Super pointed to “mid-single digit growth in North America and 20 plus percent growth from our international business” noting that “our sales performance was well ahead of our expectations, and our best quarterly sales growth since 2021. Our strength for the quarter was broad based across all regions, all channels, all major merchandise categories and importantly all brands: Victoria’s Secret, Pink and Adore Me were up to last year.” She added, “we are excited to see our momentum from the third quarter continue through Black Friday and Cyber Monday.”

In the conference call to explain the results, Super claimed that “third-party market data indicates that sales in the overall intimates market in North America was down low single digits in the quarter, though our intimates business was positive in the quarter, which was encouraging.”

During the call, CFO Tim Johnson revealed the ongoing strategy to reduce the overall VS store footprint, pointing to an eventual “reduction in square footage of, could be, 25%, 30%, 35%.” He continued that this, combined with new store designs (including the so called “Store of the Future” concept) for both VS and Pink, could be “a productivity improvement that is larger than that, and a profit improvement that’s meaningful, and an operational improvement” that “also shouldn’t be overlooked.”

Victoria’s Secret projected that by the end of the full year 2024 it will have opened “17 new stores in North America, mostly in the Store of the Future design in off-mall locations. We estimate 42 store closures which will mostly be consolidations of co-located Victoria’s Secret and Pink stores. We also expect about 35 renovations in the Store of the Future design in 2024, with approximately 90% consisting of square footage reductions or consolidations of co-located Victoria’s Secret and PINK stores. Square footage in our North America stores in 2024 is expected to decrease approximately 2% to 3% compared to 2023. At the end of 2024, our Store of the Future presence will be approximately 135 stores (or approximately 17% of the fleet) in North America. Internationally, our Store of the Future presence at the end of 2024 is expected to be approximately 155 to 165 stores (or approximately 30% of the international fleet). As of November 2, there were 789 VS and Pink stores in the U.S. and 24 in Canada.

Johnson also spoke about the company’s shift from China manufacturing. “The large, large, large majority of our product comes from three countries, Vietnam, Sri Lanka and Indonesia,” he began, adding, “China, that’s a single-digit number for us. Which includes some apparel and some beauty. It also includes some China for China product. So even all of that product that’s being made in China isn’t necessarily even coming to the U.S.” He also revealed that “both Canada and Mexico are less than 1%,” noting that “over time, the teams have done a very effective job of deemphasizing the impact of where product comes from.” 

While Pink had suffered sales declines in recent years and seemed to be receiving less attention from the parent company, CEO Super affirmed her commitment to the label. “Speaking of Pink, I’m all in. And I see a lot of white space with the brand. An opportunity to reclaim our market share in apparel. I’m impressed with the work the team has done already to improve the Pink business, and I see opportunity for even more brand clarity and elevation, as well as a go-to-market strategy that is mobile first and culturally connected."

She claimed that “Pink sales trends also improved significantly in the quarter with sales for the brand increasing compared to last year. Specifically in apparel, we were encouraged by improving customer response to our Pink back-to-campus event in August and early holiday selling in October and Q4 to-date. Apparel experienced a significant trend change in the last four months and is a key opportunity to reinvigorate the Pink brand going forward.” She concluded, “we need to continue to differentiate Pink and Victoria’s Secret in every way, from product to marketing to in-store and online experiences.”

Super emphatically presented her concept of Victoria’s Secret. “Our brand is about sexy, glamorous, accessible luxury. And I think that we were building towards that with the new team that was put in place about 12, 18 months ago.” She added, “I think the fashion show really doubled down on that.” Super opined that “the fashion show introduced us to a new generation of consumers. We weren’t on that radar. We hadn’t been in the cultural conversation. And I think we came in and surprised her, and she was like, oh, I’m going to pay attention to this. And so we are engaging with an entirely new generation of young women who are saying to us, we want big hair, we want more glamour. We want more shine. We want more of it. We want all of it. And that’s exciting because we know how to do that.”

At another point in the call, Super spoke about the company’s return to the active category. “Our sports bra launch, we launched this year, was very successful. We’ve picked up some market share this year, and we’re really happy with that. But we think we just scratched the surface. We pulled back as a brand on sports bras, when sports bras were taking off. And so we have some market share that’s due to us, and we intend to claim it.” 

Looking ahead, the company said it expects “sales for the 52-week fiscal year 2024 to be up approximately 1% to 2%, versus prior guidance of down approximately 1%, to a comparative 52-weeks from fiscal year 2023. Net sales for the 53-week fiscal year 2023 were $6.182 billion.”

Above, new from Victoria’s Secret’s new VSX collection: the Featherweight Max Front-Close Sports Bra and Featherweight Max Sports Bra.