Victoria's Secret (VSCO) Stock Up on Revised Q3 Outlook
Victoria's Secret & Co. VSCO recently announced a revision in its third-quarter outlook. The news follows on the heels of sequential sales improvement for the third quarter to date (through Oct 11, 2023). Also, momentum concerning footprint expansion and digital capabilities bode well. Following the announcement, shares of the company gained 2.5% during after hour trading session on Oct 11.
Q3 & FY’23 Outlook
For the third quarter of 2023, the company anticipates adjusted operating loss in the range of $45-$65 million compared with the previous guidance of $45-$75 million. It expects adjusted net loss per share to be in the range of $0.70-$0.90, compared to prior expectations of a loss of $0.70-$1.00.
The company expects third quarter net sales to decline 3% to 5% year over year compared with the previous guidance of the low- to mid-single-digit range fall.
For 2023, the company expects net sales to decline in the low-single-digit range year over year. It expects adjusted operating income rate to be in the range of 5-6% of net sales.
Other updates
The company emphasizes its three core pillars — strengthen the core, ignite growth and transform the foundation — to drive growth.
To strengthen the core, the company emphasized growth strategies, including new bra launches, reimagining merchandise positioning for PINK, loyalty program digital initiatives and the Victoria's Secret World Tour. In terms of ignite growth, the company emphasized partner expansion plans to open more than 100 new stores over the next two years.
The company emphasizes operating margin expansion by modernizing the operating model. With a target cost savings of $250 million, the company expects to achieve more than two-thirds of the total savings in 2024 and 2025.
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In the past three months, shares of Victoria's Secret have declined 22.2% compared with the industry’s 23.8% fall.
Zacks Rank & Key Picks
Victoria's Secret currently has a Zacks Rank #5 (Strong Sell).
Some better-ranked stocks in the Zacks Consumer Discretionary sector are as follows:
Live Nation Entertainment, Inc. LYV sports a Zacks Rank #1 (Strong Buy). The company has a trailing four-quarter earnings surprise of 34.6% on average. Shares of LYV have increased by 12.4% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for LYV’s 2023 sales and EPS indicates a rise of 21.6% and 59.4%, respectively, from the year-ago period’s levels.
OneSpaWorld Holdings Limited OSW carries a Zacks Rank #2 (Buy). OSW has a trailing four-quarter earnings surprise of 42.6% on average. Shares of OSW have increased by 33.5% in the past year.
The Zacks Consensus Estimate for OSW’s 2023 sales and EPS indicates a rise of 44.5% and 117.9%, respectively, from the year-ago period’s levels.
Hilton Worldwide Holdings Inc. HLT carries a Zacks Rank #2. HLT has a trailing four-quarter earnings surprise of 12.5% on average. Shares of the company have gained 24.9% in the past year.
The Zacks Consensus Estimate for HLT’s 2023 sales and EPS indicates a rise of 14.8% and 23.7%, respectively, from the year-ago period’s levels.
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Victoria's Secret & Co. (VSCO) : Free Stock Analysis Report
