The US lingerie supplier Victoria’s Secret & Co. was unable to meet market expectations in the first quarter of the 2022/23 financial year. The company had to report surprisingly significant declines in sales and profits on Wednesday evening. At the same time, the group lowered its forecasts for the full year. The company’s share price immediately fell by more than ten percent in view of the sobering prospects.
In the 13 weeks ended April 29, sales were $1.41 billion. It thus missed the level of the same quarter of the previous year by 5.1 percent. In a statement, CEO Martin Waters blamed the “uncertain macroeconomic environment” for the decline and admitted that business had become “more difficult” during the quarter.
In North America in particular, the unfavorable framework conditions made themselves felt. The sales in the local boutiques fell compared to the same period last year by 15.6 percent and only reached a height of 785.8 million US dollars. Online sales, on the other hand, grew by 10.4 percent to USD 464.5 million, not least thanks to the takeover of the lingerie label Adore Me. International sales increased 18.7 percent to $157.1 million.
In addition to the decline in sales, higher discounts weighed on the result. The operating profit shrank by 70.0 percent to 28.3 million US dollars. Net income attributable to shareholders fell from $80.8 million to $0.73 million. Adjusted for special effects, the quarterly surplus shrank by 77.4 percent to 21.9 million US dollars.
In view of the recent negative trend, management no longer expects sales growth in the current financial year. While it previously held out the prospect of an increase by a mid-single-digit percentage, at best revenues are now expected to be at the level of the previous year or even losses in the low single-digit percentage range. According to the updated forecast, the operating margin adjusted for special effects will probably only be five to six percent in the current year.