Victoria's Secret & Co. (NYSE:VSCO) shares fell more than 12% after the retailer's third-quarter profit outlook came in below Wall Street estimates, overshadowing a second-quarter earnings beat and a raised full-year guidance.
The company reported second-quarter revenue of $1.61 billion, up 10% from a year earlier but slightly short of the $1.62 billion analysts had expected.
Adjusted earnings per share came in at $0.95, well above the $0.77 estimate and up 188% year-over-year. Adjusted operating income rose 125% to $124 million, topping forecasts of $101 million. Comparable sales grew 9%.
By segment, North America store revenue reached $897.9 million, up 9%, while direct revenue climbed 8.1% to $439.4 million. International revenue jumped 20% to $273.4 million.
Adjusted net income more than doubled to $80 million, ahead of the $65.7 million estimate, aided in part by $140.3 million in pre-tax recoveries from IEEPA tariff refunds.
For the third quarter, Victoria's Secret guided revenue of $1.57 billion to $1.60 billion, roughly in line with estimates, but projected operating income of just $10 million to $20 million, falling short of consensus.
The company raised its full-year revenue guidance to a range of $7.10 billion to $7.18 billion, up from a prior forecast of $7.03 billion to $7.13 billion, though still below the $7.2 billion analysts had projected. Full-year adjusted operating income guidance was lifted to $560 million to $590 million from $550 million to $580 million, while adjusted earnings per share guidance was set at $4.45 to $4.70.
Analysts at Jefferies said the results were solid but noted shares had entered the quarter trading around 15 times earnings, above historical norms, meaning investors had already priced in much of the improvement. The brokerage pointed to broad-based performance spanning brands, channels and international markets as evidence the recovery extends beyond any single initiative, while maintaining a Hold rating on the stock.