Victoria’s Secret is latest retailer to cut its 2022 outlook

Victoria’s Secret & Co. stock fell more than 12% in the extended session Wednesday after the company reported second-quarter profits above Wall Street expectations, but joined several other retailers in calling for lower sales this year due to consumers spooked by inflation.

Victoria’s Secret
said it earned $70 million, or 83 cents a share, in the quarter, compared with $151 million, or $1.71 a share, in the second quarter of 2021. Adjusted for one-time items, the company earned $1.09 a share.

Sales fell 6% to $1.52 billion, from $1.61 billion a year ago.

Analysts polled by FactSet expected the retailer to report adjusted earnings of 95 cents a share on sales of $1.56 billion.

“We expect customers will continue to be challenged by inflationary and other financial pressures for the balance of 2022, and we have adjusted our inventory position and cost structure accordingly while allowing for continued investment in growth initiatives,” Chief Executive Martin Waters said in a statement.

Victoria’s Secret became a standalone company a year ago.

“We are confident in our ability to navigate and execute in a shifting consumer landscape with our new, optimized leadership structure which allows for greater agility and focus on the customer and growth initiatives,” the company said.

The retailer said it expects a mid- to high-single-digit percentage decline in 2022 sales, compared with 2021 sales of $6.785 billion.

In March, Victoria’s Secret said it expected 2022 sales to be in a range between flat to low-single-digit percentage.

The company guided for third-quarter sales to fall by a high-single-digit percentage, compared with sales of $1.44 billion in the third quarter of last year.

It estimated earnings to be between flat and 25 cents a share, contrasting with earnings of 81 cents a share in the third quarter of last year. The analysts surveyed by FactSet expect GAAP earnings of 64 cents for the quarter.

Late Tuesday, Nordstrom Inc.
stock also fell more than 10% in the extended session after the retailer similarly beat expectations for its second quarter but called for lower sales and profit for the year.

Inflation fears, low foot traffic in physical stores and ongoing supply-chain snags wreaking havoc on inventories have dragged retailer shares in recent months.

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