Victoria’s Secret beats on earnings but forecasts net sales decrease for Q1

Yahoo Finance Live anchors Julie Hyman and Brad Smith discuss the rise in stock for Victoria’s Secret & Co. following its quarterly earnings release.

Video Transcript

[AUDIO LOGO]

BRAD SMITH: All right, well, a company that needs no translation at all, Victoria's Secret.

JULIE HYMAN: It's true.

BRAD SMITH: They beat out with an earnings beat. However, the retailer forecasting trouble ahead with the first quarter 2023 net sales expected to decrease in the mid-single-digit range there. You're taking a look at some of the actuals versus the estimates. It was in line on the revenue front. But beat there on EPS here.

And in the very much kind of WYSIWYG or What You See Is What You Get type of company here, that's just what you got here with Victoria's Secret. One of the things that they did note, looking back on 2022, their first full year as an independent, publicly-traded company, we should remind folks this was a company that used to be tied in with one that dealt with soaps. So at the end of the day, this is-- this is a big year to be lapping for themselves.

JULIE HYMAN: Yeah, I guess it is a big one for-- I mean, when you look at those comp sales numbers, they were just not good. I mean, there's no other way to slice it, right? When you see comps that are down by 6%, store-only comp sales down by 7%.

And the first-quarter forecast is also just really lousy. There's no other way to put it. Adjusted earnings per share in the fiscal first quarter gonna be $0.30 to $0.60. Analysts were looking for $0.84. So you know, there's still some supporters I think of this company in the analyst community, who have looked at the company sort of getting itself in shape, closing a lot of stores, improving the footprint. But it's not-- it doesn't feel like it's quite there yet.

BRAD SMITH: And improving inventory, too. And if there is one thing that we might be able to extrapolate or at least the common denominator that we can draw through a couple of the retail or clothing manufacturers over the course of this earnings period-- and you heard this talked about on Costco's call last night, too-- was how inventory is improving right now, at least their management of it. And understanding even coming off of the holiday season period, where consumers were taking inventory at select prices or where they would not.

And Walmarts-- in Walmart's case, try to chase price for promotions and whatnot. And so within some of those more discretionary categories, that inventory acknowledgment is gonna be key to watch as we get more into some of the sneaker companies, too, in the footwear category.