Victorias Secret 2026 Q2 Earnings Net Income Declines 43.9%

Victoria's Secret (VSCO) reported its fiscal 2026 Q2 earnings on August 28, 2025. The company demonstrated moderate revenue growth but experienced a significant drop in earnings per share and net income. Despite raising full-year sales guidance, the company’s profitability challenges and mixed market response highlight the complexities of its ongoing transformation.

Revenue

Victoria's Secret reported total revenue of $1.46 billion for Q2 2026, marking a 3.0% increase compared to $1.42 billion in Q2 2025. This growth reflects the company’s efforts to strengthen its brand and expand its international footprint, with international sales rising 22% year-over-year.

Earnings/Net Income

The company’s earnings per share (EPS) declined sharply by 50.2% to $0.20 for Q2 2026, down from $0.41 in the same period in 2025. Similarly, net income dropped to $18.03 million in Q2 2026, a 43.9% decline from $32.14 million in Q2 2025. The significant drop in profitability indicates increased operational costs and challenges in sustaining profit margins amid higher tariffs and strategic investments.

Price Action

Following the earnings report, Victoria's Secret's stock experienced a mixed response in the short term. The stock price declined 9.28% during the latest trading day but showed resilience with a 6.23% gain during the most recent full trading week and a 13.81% rise month-to-date. The stock’s volatility reflects investor uncertainty around the company’s earnings performance and long-term growth strategy.

Post-Earnings Price Action Review

The buy-and-hold strategy of purchasing VSCO after a positive earnings beat and holding for 30 days underperformed the benchmark, returning -59.24% versus the benchmark's 41.61%. This strategy was marked by high volatility (62.55%) and a negative Sharpe ratio (-0.34), underscoring the challenges of timing the market based solely on earnings results. The maximum drawdown of 0.00% suggests limited downside in the short term, but the overall strategy remains ineffective at managing risk or generating positive returns.

CEO Commentary

CEO Hillary Super highlighted the company’s Q2 2025 outperformance, with 3% sales growth and 4% comp sales growth, driven by disciplined execution, brand revitalization, and the Path to Potential strategy. She emphasized momentum from product innovation, improved store experiences, and regular price selling, particularly in bras and PINK apparel. International growth was attributed to strong global partnerships and brand relevance. Super underscored progress in margin expansion and customer acquisition, as well as the successful launch of collections like Body by Victoria and PINK x LoveShackFancy. She expressed confidence in the brand’s direction and the team’s ability to deliver sustained growth.

Guidance

Victoria’s Secret raised its full-year 2025 net sales guidance to $6.33–$6.41 billion, up from the previous range of $6.2–$6.3 billion. The company maintained its adjusted operating income target of $270–$320 million despite higher tariff pressures. For Q3 2025, the company expects net sales of $1.39–$1.42 billion, an adjusted operating loss of $35–$55 million, and an adjusted gross margin of ~34%. SG&A expenses are expected to rise modestly due to increased marketing and labor investments. Capital expenditures for 2025 are forecasted at ~$200 million, and adjusted net income per diluted share is projected at $1.80–$2.20.

Additional News

Three key non-earnings-related news items over the three weeks following August 28, 2025, included: (1) a strategic partnership with a global fashion brand to co-launch a new apparel line; (2) the appointment of a new Chief Marketing Officer to oversee brand transformation efforts; and (3) the company's announcement to enhance its digital presence through the rollout of a new e-commerce platform.