Future Of Victoria’s Secret Is More Uncertain Than Ever?
Victoria's Secret was well on its way to making a successful comeback, but new challenges serve to leave the retailers future in question.
This article is more than 2 years old
Though the underwear and lingerie brand has had a tumultuous few years, the company is starting to bounce back financially. In its latest fiscal quarterly report, general profits were above Wall Street and other analysts’ expectations. But, continuous supply chain demands may lead to further complications for Victoria’s Secret.
Though profits were seemingly up for the lingerie company, Victoria’s Secret suffered months of supply chain back-ups. Despite that, the company had an impressive year, lapping its remarkable jump in sales last year due to stimulus-check induced spending. This may be the start of an upward trajectory trend for the brand, but it’s still reconciling with inventory complications. Even though Victoria’s Secret surpassed economic expectations, the brand hasn’t climbed in stock market value just yet.
General sales were down by 4.5% from last year, as disclosed in Victoria’s Secret latest quarterly report. The company did identify specific categories that excelled in customer sales, like bras and beauty supplies. It also saw an uptick in international consumers since the lofty COVID restrictions were lifted from various countries where Victoria’s Secret operates. In extended trading, the lingerie brand received a slight boost, rising 7% by the market’s close.
Unfortunately for the lingerie brand, its net income was considerably lower than a year prior. The April 30th fiscal report showed that Victoria’s Secret currently has a net income of $76.14 million, which is half of the income amount in 2021. Shares for the company are 93 cents per share now but were at $1.97 per share in 2021. Overall sales fell from $1.55 billion last year to $1.48 billion. This decline was in line with Wall Street’s expectations but wasn’t as drastic as many others expected.
Same-store sales have had a slow decline over the last few years. Same-store sales in 2021 were down by 8% more than the previous year and declined by 3% throughout the first few months of 2022. For the next fiscal quarter, Victoria’s Secret hopes to increase its share price by anywhere from 95 cents to $1.25. Analysts forecasted that the brand could get a share price increase of $1.19 each. Though Victoria’s Secret expects a decline in sales over the next year, it could increase slightly by a single-digit percentage. Analysts are expecting the brand to have continuously declining sales by 0.8% through 2022.
A public statement was made alongside the latest fiscal report’s disclosure to assure shareholders that the company would address the devaluation. A spokesperson for Victoria’s Secret said the brand is “managing supply chain and inflationary pressures” but didn’t elaborate on a strategy. With supply chain interruptions occurring in every industry, it’s inevitable for companies like Victoria’s Secret to continue suffering from inventory deficiencies.
Between 2021 and 2022, shares for Victoria’s Secret have fallen drastically. As of Tuesday’s market close, the company has dropped by 26% in share value. Since the company’s shares have been slowly declining, it was expected for Victoria’s Secret to continue its market value plummet. With specific sales demographics receiving more customer purchases, Victoria’s Secret has a chance to regain its financial apex. For now, the company will resume its economic struggle due to supply chain interferences and inflation.
