Victoria's Secret & Co. (NYSE:VSCO) ) stock dropped more than 5%, to $17.01, after its quarterly results flagged a substantial drop in operating income, declining sales and a somewhat nominal net loss of $1 million.
The company reported a net loss of $1 million for Q2 2023, in sharp contrast to the $70 million net income in Q2 2022.
Total revenue came in at $1.43 billion for the quarter, a decline of 6.2% year-over-year, which was in line with analyst expectations.
Operating income was $26 million, a staggering drop from the $98 million reported for the same quarter in 2022.
However, after adjusting for specific items, the company's financial performance looks slightly better. Adjusted net income was $19 million or $0.24 per share, in line with consensus estimates, while adjusted operating income was $49 million. These figures fall within the range of guidance provided by VSCO, indicating that they were able to manage costs and mitigate losses to some extent.
That wasn’t enough to appease shareholders, with Victoria’s Secret stock down more than 5% in Thursday's early deals.
Looking ahead, the retailer is forecasting 3Q net sales to decrease in the “low- to mid-single digit range” compared to last year’s third quarter net sales of $1.32 billion, which would mean an adjusted net loss of between $0.70 to $1 per diluted share.
Full year 2023 net sales are also expected to decrease approximately 2% compared to 2022’s levels, the company added.
Chief executive Martin Waters told shareholders that the outlook calls for improving sales trends throughout the fall season.
“We entered the third quarter with relatively lean inventory levels, and I am encouraged by August sales trends which were better than July, second quarter and the entirety of the spring season.”