Victoria's Secret & Co. (NYSE:VSCO) stock fell 30% in pre-market trade Thursday after the lingerie retailer disappointed investors with a mixed fourth-quarter financial performance and weak sales outlook for 2024.
The shares' tumble was not averted by management launching a share buyback of up to $250 million.
Adjusted earnings per share of $2.58 were reported for the final quarter of 2023 on revenue of $2.08 billion, which was better than profit estimates of $2.46 but modestly missing revenue expectations of $2.09 billion.
“Sales trends during the quarter were volatile by week, but we were encouraged by the improving quarterly sales trend in North America,” CEO Martin Waters said.
“Our fourth quarter gross margin rate exceeded our expectations and increased significantly compared to last year, a positive inflection point driven by disciplined inventory management and cost reductions related to our transform the foundation initiative to modernize our supply chain operating model.”
For the full year 2023, sales were down 3% year-over-year to $6.18 billion, short of the $6.19 billion expected. But adjusted EPS was $2.27, ahead of expectations of $2.12.
Dragging on the stock was also Victoria’s Secret’s weak sales outlook, with the company projecting 2024 sales of $6 billion compared to estimates of $6.2 billion. It expects full-year income between $250 million and $275 million.
First-quarter 2024 sales are expected to decrease by mid-single digits from the year-ago quarter’s sales of $1.4 billion, above the 0.5% drop expected by analysts. Income is seen coming in between $10 million and $35 million.
Shares of Victoria’s Secret traded down 23.2% at $19.68 shortly after the release of its earnings report.