Victoria’s Secret & Co. on Wednesday said it was “encouraged” by demand for its bras, sleepwear and other clothing in May, but the company said it was exercising restraint amid continued caution more broadly among the U.S. consumer.
The company said it expected a “low-single-digit” year-over-year decline for the second quarter overall. However, it called for an adjusted per-share profit of 5 cents to 20 cents, with the midpoint of that forecast above Wall Street’s expectations for 8 cents a share. Victoria’s Secret stuck with its full-year sales outlook for a dip in sales.
Shares slipped 2% in premarket trading on Thursday.
“With some caution around the broader retail environment in North America, we are planning the business appropriately conservative in the near term, but are encouraged by the start to May and the second quarter,” Chief Executive Martin Waters said in a statement.
The remarks were made after the lingerie maker last month offered up a more upbeat forecast for its first-quarter results, saying that the improvement was particularly pronounced in April. Newer products helped draw customers, management said, and it pointed to better results in its digital business and in its Victoria’s Secret and Pink lines.
Still, the company faces competition from brands from celebrities like Kim Kardashian and Rihanna. And management last month left its sales outlook for the year unchanged. Retailers are still running bigger sales to draw cautious consumers, who over the past two years have faced tougher spending decisions due to higher prices for basics.
During the first quarter, Victoria’s Secret reported a net loss of $4 million, or 5 cents a share, contrasting with a $1 million profit, or 1 cent per share, in the same quarter last year.
Excluding the impacts from last year’s acquisition of the intimates brand Adore Me and the amortization of intangible assets, Victoria’s Secret earned 12 cents a share. Revenue fell 3% year over year to $1.359 billion.
Analysts polled by FactSet expected Victoria’s Secret to report adjusted earnings per share of 9 cents, on revenue of $1.358 billion.
“We experienced sequential improvement in quarterly sales trends in North America in both our stores and digital business for both the Victoria’s Secret and Pink brands,” Waters said.
“We delivered meaningful newness in merchandise and brand projection during the quarter and our customers responded, particularly in April, which was our strongest month of the quarter.”
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