Victoria’s Secret & Co. on the New York Stock Exchange, September 7, 2021.
Source: NYSE
Victoria’s Secret Shares plunged about 29% in premarket Thursday after the lingerie brand forecast weaker annual sales following a sluggish begin to the 12 months as shoppers shift to cheaper options in its key North American market.
The company, known for its lingerie brand PINK, forecast net sales of $6 billion for fiscal 2024, indicating a 3rd consecutive annual sales decline and below LSEG estimates of $6.14 billion .
“The broader lingerie market in North America will remain under pressure in the first and second quarters, with sales trends improving in the second half of 2024,” the corporate said, forecasting a dismal first quarter.
Net sales are expected to say no mid-single digits in the primary quarter, compared with analysts’ expectation of two.5%.
However, the corporate announced the repurchase of shares price as much as $250 million.
“While the newly announced share repurchase program may help support the stock in the near term, ultimate visibility of operational improvements remains a challenge,” said Dana Telsey of Telsey Advisory Group.
Shares of the corporate, which has struggled with slowing demand, lost nearly 26% of their value last 12 months and have lost 3.5% to date this 12 months.
While the corporate’s fourth-quarter margins rose 240 basis points attributable to lower freight costs, merchandising strategies and easing inflation, they reflected difficult demand.
The quarter “reflected a shift toward value and Amazon … in addition to sporting goods players like Lululemon taking market share in the sports bra category,” JPMorgan analyst Matthew Boss said in a note.
Prices for Victoria’s sports bras ranged from $45 to $88, while Lululemon’s ranged from $29 to $78, the web sites show.
In 2024, Victoria’s Secret plans to open roughly 15 recent stores in North America, primarily in non-mall locations, and shut 35 stores, primarily attributable to the consolidation of adjoining Victoria’s Secret and PINK stores, despite weak demand.
