Victoria's Secret & Co. Q2 Earnings Call: Strong Sales Growth, Improved Margins, and International Expansion

Victoria's Secret & Co. reported Q2 net sales growth of 3% YoY to $1.459 billion, driven by 4% comparable sales gains across both Victoria's Secret and PINK brands. International sales grew 22% YoY, with improved gross margins at 35.6%. The company also gained 0.5 points in market share for bras. However, a digital outage and increased tariff impacts were noted as challenges. Victoria's Secret projects an adjusted operating loss for Q3 2025.

Victoria's Secret & Co. (VSCO) delivered a robust second quarter, with net sales growing 3% year-over-year to $1.459 billion, driven by 4% comparable sales gains across both Victoria's Secret and PINK brands. The company's international sales surged 22% year-over-year, reflecting strong global partnerships and brand relevance. Gross margins improved to 35.6%, a 20 basis point increase from the previous year, indicating reduced reliance on promotions and increased regular price selling.

The company's success was further underscored by a 0.5-point gain in market share for bras. However, these positive results were tempered by a digital outage in May, which negatively impacted net sales by approximately $20 million, and increased tariff pressures. The company projects an adjusted operating loss for Q3 2025 due to these challenges and ongoing macroeconomic uncertainties.

Key Metrics and Performance Highlights

- Net Sales: $1.459 billion, up 3% YoY [1]
- Comparable Sales: Increased by 4% [1]
- International Sales Growth: 22% YoY [1]
- Gross Margin: 35.6% [1]
- Market Share Gain: 0.5 points for bras [1]
- Adjusted Operating Income: $55 million, exceeding guidance by $20 million [1]
- Adjusted Net Income per Diluted Share: $0.33 [1]

Challenges and Outlook

Despite the strong performance, Victoria's Secret & Co. faced several challenges. The digital outage in May had a significant impact on net sales, and increased tariff pressures are expected to have a net impact of approximately $100 million for fiscal year 2025. The company's CFO, Scott Sekella, noted that the de minimis exemption is not a significant factor for the business, as their e-commerce distribution centers are primarily located in Columbus [1].

Looking ahead, Victoria's Secret & Co. remains focused on executing key brand moments and product launches. The company anticipates a third-quarter adjusted operating loss, reflecting ongoing challenges and macroeconomic uncertainties. However, management remains confident in the company's ability to deliver value for shareholders amid a dynamic environment.

References

[1] https://seekingalpha.com/news/4490137-victorias-secret-raises-full-year-net-sales-guidance-to-6_41b-amid-strong-q2-and-strategic
[2] https://finance.yahoo.com/news/victorias-secret-co-vsco-q2-070643920.html