Shoppers may be feeling gloomy about high prices at the pump, but they’re still shelling out for new bras and underwear at Victoria’s Secret.
The lingerie retailer raised its full-year guidance on Tuesday after blowing past earnings estimates in its fiscal first quarter, citing lower tariff costs and more customers willing to spend full price on its products.
There was “very consistent, double-digit [sales] increases across Victoria’s Secret, Pink, beauty channels, digital, stores and international, all very positive,” CEO Hillary Super told CNBC in an interview. “Supercharging bras being one of our most important initiatives, double-digit [comparable sales growth] there, and I think the loyalty that bras creates and the anchor that it is in the business is just so important.”
Super added the company grew sales with “significantly” fewer promotions and gained market share during the quarter, particularly with shoppers ages 18 to 24.
During the first quarter, some retailers saw strong growth that they attributed partially to higher tax refunds. While Victoria’s Secret finance chief Scott Sekella said some customers used that extra stimulus to go shopping at its stores, it was a “normal amount,” and trends have remained consistent so far this quarter, even with tax refunds having dried up for many people.
Victoria’s Secret is now expecting full-year sales to be between $7.03 billion and $7.13 billion, up from a previous range of between $6.85 billion to $6.95 billion and well ahead of estimates of $6.99 billion, according to LSEG.
The company also raised its full-year guidance for adjusted opening income by more than $100 million. It’s now expecting adjusted operating income to be between $550 million to $580 million, up from a previous range of between $430 million to $460 million.
Sekella said the company hiked its outlook because better-than-expected sales led to stronger leverage on fixed costs, and it also factored in lower tariff rates now that many of President Donald Trump‘s sweeping duties have been ruled illegal.
“All of this is predicated on the Q1 that we had, the momentum we see into Q2 and how we feel about our back half launches,” said Sekella.
The company also issued rosy guidance for the current quarter, even as some peers released conservative outlooks as they monitor whether consumers pull back on spending without the boost from tax refunds. It said it’s expecting sales to be between $1.59 billion and $1.62 billion, beating expectations of $1.56 billion, according to LSEG.
Here’s how Victoria’s Secret performed during the fiscal first quarter compared with what Wall Street was anticipating, based on a survey of analysts by LSEG:
Earnings per share: 60 cents adjusted vs. 30 cents expected Revenue: $1.56 billion vs. $1.52 billion expectedThe company’s reported net income for the three-month period that ended May 2 was $47.7 million, or 56 cents per share, compared with a loss of $1.66 million, or 2 cents per share, a year earlier. Excluding one-time restructuring costs, Victoria’s Secret saw earnings per share of 60 cents.
Sales rose to $1.56 billion, up about 15% from $1.35 billion a year earlier. Comparable sales, including stores and e-commerce revenue, grew 13%, beating expectations of 11.4%, according to StreetAccount.
Victoria’s Secrets’ results represent a new milestone for the company. While Super has been with the retailer for almost two years, she said the executive team she put in place is reaching their one-year anniversary and the results of the turnaround they’ve been working on are coming to life.
“Once you hit that year you start compounding your contributions, because you see the patterns, you see where things are going, and you’re able to really, I think, have a multiplier effect in the work you do,” said Super. “We are early innings. I think we very much know where we’re going, and if anything, as we build these strategies out, and as we continue to grow these businesses, we see new opportunities, and so it’s a matter of staging those and making sure that we are getting all the juice for the squeeze of the things that we are doing.”
During the quarter, Super said the company saw sales increases across all income cohorts but crucially, the most growth came from those making under $50,000 annually and those making over $200,000 annually – showing that its products are what’s winning, not price or discounts.
Since Super took over, she’s worked to reconnect Victoria’s Secret with its core identity — a sexy lingerie brand that isn’t sexy at the expense of comfort but offers products that are more emotional than utilitarian. She’s worked to grow its beauty business, reignite the Pink brand and build back its bra line, which serves as an anchor for the overall company.
Over the last few years, Victoria’s Secret has faced a range of savvy, upstart competitors, shifting views and criticisms over its models and for perpetuating unrealistic stereotypes.
Super has worked to unwind some of those issues, while also building a business that can win over a new generation of shoppers.
One thing that’s helped the company is its large store footprint in malls, which is something it had been criticized for in the past.
“We are very, very good at that in real life experience, and our stores have proven to be a competitive advantage,” said Super. “They are a place where she wants to be and wants to have an experience that’s for her.”
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