Victoria’s Secret & Co. (“Victoria’s Secret” or the “Company”)
(NYSE: VSCO) today reported 2022 financial results for the third
quarter ended October 29, 2022.
Chief Executive Officer Martin Waters commented,
“After nearly a year and a half as an independent, publicly-traded
company, we continue to make significant progress in our
transformation and mission to celebrate and champion all women. We
have created a solid financial platform with our new, more agile
operating structure, and even in a very challenging macroeconomic
environment, we were able to deliver third quarter operating income
and earnings per diluted share results above our previous guidance.
With our aligned focus on our customer and our strategic
priorities, we are well positioned to continue to navigate and
execute in a shifting consumer landscape.”
Martin continued, “At our Investor Day in
October, we discussed our strategic growth plan which outlines
significant runway ahead guided by our three key principles:
strengthen our core, ignite growth, and transform the foundation.
Led by our two category-defining brands and merchandise leadership
positions in intimates and beauty, we remain confident in our
ability to deliver our long-term financial targets, reinvest in our
business, and return value to our shareholders. Further evidence of
our commitment to drive long-term value, we recently announced our
agreement to acquire AdoreMe, Inc. (“Adore Me”), a technology-led,
digitally-native intimates brand … a move that strategically
positions us for accelerated growth. We are excited for the
opportunity to leverage Adore Me’s expertise and technology to
improve our customer shopping experience and accelerate the
modernization of our digital platform. This is just one example of
how we are committed to executing on our strategic growth
plan.”
Third Quarter ResultsThe
Company reported net income of $24 million, or $0.29 per diluted
share for the third quarter of 2022, which was above the high-end
of our previously communicated guidance range of $0.00 to $0.25 per
diluted share. This result compares to net income of $75 million,
or $0.81 per diluted share for the third quarter of 2021.
Third quarter 2022 reported operating income was
$43 million, which was above the high-end of our previously
communicated guidance range of $10 million to $40 million. This
result compares to operating income of $108 million in the third
quarter of 2021.
The Company reported net sales of $1.318 billion
for the third quarter of 2022, a decrease of 9% compared to net
sales of $1.441 billion in the prior year third quarter. This
result was in-line with our previously communicated guidance of
down high-single digits compared to the third quarter last year.
Total comparable sales for the third quarter of 2022 decreased 11%
compared to the third quarter of 2021.
Capital AllocationOn March 2,
2022, the Company announced a share repurchase program providing
for the repurchase of up to $250 million of the Company’s
common stock during the year. During the third quarter, the Company
invested $43 million to repurchase 1.2 million shares under this
program. Year to date, the Company has invested $214 million to
repurchase 5.1 million shares at an average price of $41.91 per
share. The Company continues to expect to complete this share
repurchase program by the end of fiscal year 2022.
Fourth Quarter and Full Year 2022
OutlookThe Company is forecasting fourth quarter 2022 net
sales to decrease in the high-single digit range compared to last
year’s fourth quarter net sales of $2.175 billion. At this
forecasted level of sales, operating income is expected to be in
the range of $240 million to $290 million. Net income for the
fourth quarter 2022 is estimated to be in the range of $2.00 to
$2.45 per diluted share.
The Company is forecasting full year 2022 net
sales to decrease 6% to 7% compared to last year’s full year net
sales of $6.785 billion. At this forecasted level of sales,
adjusted operating income is expected to be in the range of $525
million to $575 million, or approximately 8% to 9% of sales.
Adjusted net income for the full year 2022 is estimated to be in
the range of $4.50 to $4.95 per diluted share.
As previously announced, we expect the
acquisition of Adore Me to close by the end of January 2023,
subject to customary closing conditions and regulatory clearances.
Because the Adore Me transaction has not yet closed, our fourth
quarter and full year 2022 outlook excludes any financial impact
related to this transaction.
At the conclusion of this press release, we have
included a reconciliation of reported to adjusted results and
forecasted results.
Victoria’s Secret & Co. will conduct its
third quarter earnings call at 8:00 a.m. Eastern on
Thursday, December 1, 2022. To listen, call 1-800-619-9066
(international dial-in number: 1-212-519-0836); conference ID
5358727. For an audio replay, call 1-866-363-1809 (international
replay number: 1-203-369-0197); conference ID 55163 or log onto
www.victoriassecretandco.com. The materials accompanying the
earnings call have been posted on the Investors section of the
Company’s website. The audio replay will be available approximately
two hours after the conclusion of the call.
About Victoria’s
Secret & Co.Victoria’s Secret & Co. (NYSE: VSCO)
is a Fortune 500 specialty retailer of modern, fashion-inspired
collections including signature bras, panties, lingerie, casual
sleepwear, athleisure and swim, as well as award-winning
prestige fragrances and body care. VS&Co is
comprised of market leading brands, Victoria’s Secret and
Victoria’s Secret PINK, that share a common purpose of inspiring
and uplifting our customers in every stage of their lives. We are
committed to empowering our more than 30,000 associates across a
global footprint of approximately 1,350 retail stores in
approximately 70 countries. We provide our customers with products
and experiences that make them feel good inside and out while
driving positive change through the power of our products, platform
and advocacy.
Safe Harbor Statement Under the Private
Securities Litigation Reform Act of 1995
We caution that any forward-looking statements
(as such term is defined in the U.S. Private Securities Litigation
Reform Act of 1995) contained in this press release or made by us,
our management, or our spokespeople involve risks and uncertainties
and are subject to change based on various factors, many of which
are beyond our control. Accordingly, our future performance and
financial results may differ materially from those expressed or
implied in any such forward-looking statements. Forward-looking
statements include, without limitation, statements regarding our
future operating results, the implementation and impact of our
strategic plans, and our ability to meet environmental, social, and
governance goals. Words such as “estimate,” “commit,” “target,”
“goal,” “project,” “plan,” “believe,” “seek,” “strive,” “expect,”
“anticipate,” “intend,” “potential” and any similar expressions may
identify forward-looking statements. Risks associated with the
following factors, among others, could affect our financial
performance and cause actual results to differ materially from
those expressed or implied in any forward-looking statements:
- the spin-off from Bath & Body
Works, Inc. (f/k/a L Brands, Inc.) may not be tax-free for U.S.
federal income tax purposes;
- we may not realize all of the
expected benefits of the spin-off;
- general economic conditions,
inflation, consumer confidence, consumer spending patterns and
market disruptions including pandemics or significant health
hazards, severe weather conditions, natural disasters, terrorist
activities, financial crises, political crises or other major
events, or the prospect of these events;
- the novel coronavirus (COVID-19)
global pandemic has had and may continue to have an adverse effect
on our business and results of operations;
- difficulties arising from turnover
in company leadership or other key positions;
- our ability to attract, develop and
retain qualified associates and manage labor-related costs;
- our dependence on mall traffic and
the availability of suitable store locations on appropriate
terms;
- our ability to successfully operate
and expand internationally and related risks;
- our independent franchise, license,
wholesale, and joint venture partners;
- our direct channel business;
- our ability to protect our
reputation and the image of our brands;
- our ability to attract customers
with marketing, advertising and promotional programs;
- the highly competitive nature of
the retail industry and the segments in which we operate;
- consumer acceptance of our products
and our ability to manage the life cycle of our brands, keep up
with fashion trends, develop new merchandise and launch new product
lines successfully;
- our ability to realize the
potential benefits and synergies sought with the pending
acquisition of AdoreMe, Inc.;
- our ability to source, distribute
and sell goods and materials on a global basis, including risks
related to:
- political instability,
environmental hazards or natural disasters;
- significant health hazards or
pandemics;
- legal and regulatory matters;
- delays or disruptions in shipping
and transportation and related pricing impacts; and
- disruption due to labor
disputes;
- our geographic concentration of
vendor and distribution facilities in central Ohio and Southeast
Asia;
- the ability of our vendors to
deliver products in a timely manner, meet quality standards and
comply with applicable laws and regulations;
- fluctuations in freight, product
input and energy costs, including those caused by inflation;
- our and our third-party service
providers’ ability to implement and maintain information technology
systems and to protect associated data and system
availability;
- our ability to maintain the
security of customer, associate, third-party and company
information;
- stock price volatility;
- shareholder activism matters;
- our ability to maintain our credit
rating;
- our ability to comply with
regulatory requirements; and
- legal, tax, trade and other
regulatory matters.
Except as may be required by law, we assume no
obligation and do not intend to make publicly available any update
or other revisions to any of the forward-looking statements
contained in this press release to reflect circumstances existing
after the date of this press release or to reflect the occurrence
of future events, even if experience or future events make it clear
that any expected results expressed or implied by those
forward-looking statements will not be realized. Additional
information regarding these and other factors can be found in “Item
1A. Risk Factors” in our Annual Report on Form 10-K filed with the
Securities and Exchange Commission on March 18, 2022.
For further information, please contact:
Victoria’s Secret & Co.: |
|
Investor Relations: |
Media Relations: |
Kevin Wynk |
Brooke Wilson |
investorrelations@victoria.com |
communications@victoria.com |
Total Sales (Millions):
|
ThirdQuarter2022 |
|
ThirdQuarter2021 |
|
%Inc/(Dec) |
|
Year-to-Date2022 |
|
Year-to-Date2021 |
|
%Inc/(Dec) |
|
|
|
|
|
|
|
|
|
|
|
|
Stores – North America |
$ |
812.7 |
|
$ |
920.3 |
|
(11.7 |
%) |
|
$ |
2,712.1 |
|
$ |
2,890.0 |
|
(6.2 |
%) |
Direct |
|
341.9 |
|
|
406.3 |
|
(15.9 |
%) |
|
|
1,176.1 |
|
|
1,396.0 |
|
(15.8 |
%) |
International1 |
|
163.5 |
|
|
114.5 |
|
42.8 |
% |
|
|
434.9 |
|
|
323.2 |
|
34.6 |
% |
Total |
$ |
1,318.1 |
|
$ |
1,441.1 |
|
(8.5 |
%) |
|
$ |
4,323.1 |
|
$ |
4,609.2 |
|
(6.2 |
%) |
1 – Results include consolidated
joint venture sales in China, royalties associated with franchised
stores and wholesale sales.
Comparable Sales Increase (Decrease):
|
ThirdQuarter2022 |
|
ThirdQuarter2021 |
|
Year-to-Date2022 |
|
Year-to-Date2021 |
|
|
|
|
|
|
|
|
Stores and Direct1 |
(11%) |
|
0% |
|
(9%) |
|
3% |
Stores Only2 |
(10%) |
|
7% |
|
(7%) |
|
8% |
NOTE: Stores are excluded from
the comparable sales calculation when they have been closed for
four consecutive days or more. Therefore, comparable sales results
exclude periods of time that stores were closed for four
consecutive days or more as a result of the COVID-19 pandemic.
Please refer to our filings with the Securities and Exchange
Commission for further discussion regarding our comparable sales
calculation.1 – Results include company-operated stores in the U.S.
and Canada, consolidated joint venture stores in China and direct
sales.2 – Results include company-operated stores in the U.S. and
Canada and consolidated joint venture stores in China.
Total Stores:
|
Stores at 1/29/22 |
Opened |
Closed |
Reclassed to Joint Venture |
Stores at 10/29/22 |
|
|
|
|
|
|
Company-Operated: |
|
|
|
|
|
U.S. |
808 |
11 |
(7) |
- |
812 |
Canada |
26 |
- |
- |
- |
26 |
Subtotal
Company-Operated |
834 |
11 |
(7) |
- |
838 |
|
|
|
|
|
|
China Joint
Venture: |
|
|
|
|
|
Beauty &
Accessories1 |
35 |
2 |
(6) |
8 |
39 |
Full
Assortment |
30 |
2 |
(1) |
- |
31 |
Subtotal China
Joint Venture |
65 |
4 |
(7) |
8 |
70 |
|
|
|
|
|
|
Partner-Operated: |
|
|
|
|
|
Beauty &
Accessories |
335 |
10 |
(30) |
(8) |
307 |
Full
Assortment |
128 |
16 |
(8) |
- |
136 |
Subtotal
Partner-Operated |
463 |
26 |
(38) |
(8) |
443 |
|
|
|
|
|
|
Total |
1,362 |
41 |
(52) |
- |
1,351 |
1 – Includes nine partner-operated stores.
VICTORIA'S
SECRET & CO. |
CONSOLIDATED
STATEMENTS OF INCOME |
THIRTEEN
WEEKS ENDED OCTOBER 29, 2022 AND OCTOBER 30, 2021 |
(Unaudited) |
(In
thousands except per share amounts) |
|
|
|
|
|
|
2022 |
|
|
|
2021 |
|
Net
Sales |
$ |
1,318,077 |
|
|
$ |
1,441,134 |
|
Costs of
Goods Sold, Buying and Occupancy |
|
(860,705 |
) |
|
|
(876,067 |
) |
Gross
Profit |
|
457,372 |
|
|
|
565,067 |
|
General,
Administrative and Store Operating Expenses |
|
(414,784 |
) |
|
|
(457,153 |
) |
Operating
Income |
|
42,588 |
|
|
|
107,914 |
|
Interest
Expense |
|
(15,329 |
) |
|
|
(11,917 |
) |
Other
Income |
|
2,383 |
|
|
|
632 |
|
Income
Before Income Taxes |
|
29,642 |
|
|
|
96,629 |
|
Provision
for Income Taxes |
|
7,425 |
|
|
|
21,416 |
|
Net
Income |
|
22,217 |
|
|
|
75,213 |
|
Less: Net
Loss Attributable to Noncontrolling Interest |
|
(2,151 |
) |
|
|
- |
|
Net Income
Attributable to Victoria's Secret & Co. |
$ |
24,368 |
|
|
$ |
75,213 |
|
Net Income
Per Diluted Share Attributable to Victoria's Secret & Co. |
$ |
0.29 |
|
|
$ |
0.81 |
|
Weighted
Average Shares Outstanding |
|
82,628 |
|
|
|
92,449 |
|
VICTORIA'S
SECRET & CO. |
CONSOLIDATED
AND COMBINED STATEMENTS OF INCOME |
THIRTY-NINE
WEEKS ENDED OCTOBER 29, 2022 AND OCTOBER 30, 2021 |
(Unaudited) |
(In
thousands except per share amounts) |
|
|
|
|
|
|
|
|
2022 |
|
|
|
2021 |
|
Net Sales |
$ |
4,323,091 |
|
|
$ |
4,609,201 |
|
Costs of Goods Sold, Buying and Occupancy |
|
(2,808,963 |
) |
|
|
(2,702,408 |
) |
Gross Profit |
|
1,514,128 |
|
|
|
1,906,793 |
|
General, Administrative and Store Operating Expenses |
|
(1,279,906 |
) |
|
|
(1,370,462 |
) |
Operating Income |
|
234,222 |
|
|
|
536,331 |
|
Interest Expense |
|
(40,710 |
) |
|
|
(15,659 |
) |
Other Loss |
|
(2,655 |
) |
|
|
(465 |
) |
Income Before Income Taxes |
|
190,857 |
|
|
|
520,207 |
|
Provision for Income Taxes |
|
25,285 |
|
|
|
119,878 |
|
Net Income |
|
165,572 |
|
|
|
400,329 |
|
Less: Net Loss Attributable to Noncontrolling Interest |
|
(9,545 |
) |
|
|
- |
|
Net Income Attributable to Victoria's Secret & Co. |
$ |
175,117 |
|
|
$ |
400,329 |
|
Net Income
Per Diluted Share Attributable to Victoria's Secret & Co. |
|
$ |
2.07 |
|
|
$ |
4.46 |
|
Weighted Average Shares Outstanding 1 |
|
84,659 |
|
|
|
89,685 |
|
|
|
|
|
|
1 - Reported Weighted
Average Shares Outstanding reflects diluted shares in the first,
second and third quarters of 2022. For periods prior to the
separation in the third quarter of 2021, basic shares at the
separation date are being utilized for the calculation of basic and
diluted net income per share. |
|
VICTORIA'S
SECRET & CO. |
NON-GAAP
FINANCIAL INFORMATION |
(Unaudited) |
(In
thousands except per share amounts) |
|
The non-GAAP financial
information presented in this press release should not be construed
as an alternative to the reported results determined in accordance
with generally accepted accounting principles. Further, the
Company’s definition of such non-GAAP financial measures may differ
from similarly titled measures used by other companies. Management
believes that the presentation of adjusted financial information
provides additional information to investors to facilitate the
comparison of past and present operations. While it is not possible
to predict future results, management believes the adjusted
financial information is useful for the assessment of the ongoing
operations of the Company because the adjusted items are not
indicative of our ongoing operations due to their size and nature.
Management uses adjusted financial information as key performance
measures of results of operations for the purpose of evaluating
performance internally. The non-GAAP financial information should
be read in conjunction with the Company’s historical financial
statements and notes thereto contained in our Annual Report on Form
10-K and our Quarterly Reports on Form 10-Q filed with the
Securities and Exchange Commission. The table below reconciles the
non-GAAP financial measures to their most directly comparable GAAP
financial measures. |
|
|
|
|
|
|
Third Quarter |
|
Year-to-Date |
|
|
|
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
|
2021 |
|
Reconciliation of Reported to Adjusted Operating
Income |
|
|
|
|
|
|
|
|
|
Reported Operating Income - GAAP |
|
$ |
42,588 |
|
$ |
107,914 |
|
$ |
234,222 |
|
|
$ |
536,331 |
|
Occupancy-related Legal Matter (a) |
|
|
- |
|
|
- |
|
|
21,679 |
|
|
|
- |
|
Restructuring Charge (b) |
|
|
- |
|
|
- |
|
|
29,348 |
|
|
|
- |
|
Adjusted Operating Income |
|
$ |
42,588 |
|
$ |
107,914 |
|
$ |
285,249 |
|
|
$ |
536,331 |
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Reported to Adjusted Net Income
Attributable to Victoria's Secret & Co. |
|
|
|
|
|
|
|
Reported Net Income Attributable to Victoria's Secret & Co. -
GAAP |
|
$ |
24,368 |
|
$ |
75,213 |
|
$ |
175,117 |
|
|
$ |
400,329 |
|
Occupancy-related Legal Matter (a) |
|
|
- |
|
|
- |
|
|
21,679 |
|
|
|
- |
|
Restructuring Charge (b) |
|
|
- |
|
|
- |
|
|
29,348 |
|
|
|
- |
|
Tax Effect of Adjusted Items |
|
|
- |
|
|
- |
|
|
(12,755 |
) |
|
|
- |
|
Adjusted Net Income Attributable to Victoria's Secret &
Co. |
|
$ |
24,368 |
|
$ |
75,213 |
|
$ |
213,389 |
|
|
$ |
400,329 |
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Reported to Adjusted Net Income Per
Diluted Share Attributable to Victoria's Secret &
Co. |
|
|
|
|
Reported Net
Income Per Diluted Share Attributable to Victoria's Secret &
Co. - GAAP |
|
|
$ |
0.29 |
|
$ |
0.81 |
|
$ |
2.07 |
|
|
$ |
4.46 |
|
Occupancy-related Legal Matter (a) |
|
|
- |
|
|
- |
|
|
0.19 |
|
|
|
- |
|
Restructuring Charge (b) |
|
|
- |
|
|
- |
|
|
0.26 |
|
|
|
- |
|
Adjusted Net Income Per Diluted Share Attributable to Victoria's
Secret & Co. |
|
$ |
0.29 |
|
$ |
0.81 |
|
$ |
2.52 |
|
|
$ |
4.46 |
|
|
|
|
|
|
|
|
|
|
|
|
(a) In the first
quarter of 2022, we recognized a $21.7 million charge ($16.2
million net of tax of $5.5 million), included in buying and
occupancy expense, related to a legal matter with a landlord
regarding a high-profile store that we surrendered to the landlord
prior to separation. |
|
|
|
(b) In the second
quarter of 2022, we recognized a $29.3 million charge ($22.1
million net of tax of $7.2 million), $16.2 million included in
general, administrative and store operating expense and $13.1
million included in buying and occupancy expense, related to
restructuring activities to reorganize our leadership
structure. |
VICTORIA'S
SECRET & CO. |
NON-GAAP
FINANCIAL INFORMATION |
FORECASTED
FULL YEAR ENDING JANUARY 28, 2023 |
(Unaudited,
in millions) |
|
|
|
|
|
|
|
Forecasted |
|
|
|
Full Year
Ending |
|
|
|
January 28, 2023 |
|
Reconciliation of GAAP to Adjusted Operating
Income |
|
|
Operating Income - GAAP |
$ |
474 to 524 |
|
|
Occupancy-related Legal Matter (a) |
|
22 |
|
|
Restructuring Charge (b) |
|
29 |
|
|
Adjusted Operating Income |
$ |
525 to 575 |
|
|
|
|
|
|
Reconciliation of GAAP to Adjusted Net Income Attributable
to Victoria's Secret & Co. |
|
Net Income Attributable to Victoria's Secret & Co. - GAAP |
$ |
341 to
379 |
|
|
Occupancy-related Legal Matter (a) |
|
22 |
|
|
Restructuring Charge (b) |
|
29 |
|
|
Tax Effect of Adjusted Items |
|
(13 |
) |
|
Adjusted Net Income Attributable to Victoria's Secret &
Co. |
$ |
379 to 417 |
|
|
|
|
|
|
Reconciliation of GAAP to Adjusted Net Income Per Diluted
Share Attributable to Victoria's Secret & Co. |
|
Net Income Per Diluted Share Attributable to Victoria's Secret
& Co. - GAAP |
$ |
4.05 to
4.50 |
|
|
Occupancy-related Legal Matter (a) |
|
0.19 |
|
|
Restructuring Charge (b) |
|
0.26 |
|
|
Adjusted Net Income Per Diluted Share Attributable to Victoria's
Secret & Co. |
$ |
4.50 to 4.95 |
|
|
|
|
|
|
(a) In the first quarter of 2022, we recognized a $21.7 million
charge ($16.2 million net of tax of $5.5 million), included in
buying and occupancy expense, related to a legal matter with a
landlord regarding a high-profile store that we surrendered to the
landlord prior to separation. |
|
|
|
(b) In the second quarter of 2022, we recognized a $29.3 million
charge ($22.1 million net of tax of $7.2 million), $16.2 million
included in general, administrative and store operating expense and
$13.1 million included in buying and occupancy expense, related to
restructuring activities to reorganize our leadership
structure. |
Victoria's Secret (NYSE:VSCO)
Historical Stock Chart
From Jun 2024 to Jul 2024
Victoria's Secret (NYSE:VSCO)
Historical Stock Chart
From Jul 2023 to Jul 2024