Victoria's Secret's (NYSE:VSCO) Q1 Sales Top Estimates

Intimatewear and beauty retailer Victoria’s Secret (NYSE:VSCO) reported Q1 CY2025 results topping the market’s revenue expectations, but sales were flat year on year at $1.35 billion. On the other hand, next quarter’s revenue guidance of $1.40 billion was less impressive, coming in 1.1% below analysts’ estimates. Its non-GAAP profit of $0.09 per share was significantly above analysts’ consensus estimates.

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“I am proud of the team and their commitment to adapting and remaining flexible in this challenging and fast-changing environment. We focused on proactively managing the business ensuring we are remaining nimble and protecting investments in what matters most—the customer experience, brand health and product innovation. I am pleased with the strength the business demonstrated during the March and April timeframe, which included continued momentum in our powerhouse Beauty business, ongoing strength in PINK apparel, and newness in sport and swim as we reclaim our position as a full lifestyle brand,” said VS&Co CEO Hillary Super.

Company Overview

Spun off from L Brands in 2020, Victoria’s Secret (NYSE:VSCO) is an intimate clothing and beauty retailer that sells its own brands of lingerie, undergarments, and personal fragrances.

Sales Growth

A company’s long-term sales performance is one signal of its overall quality. Any business can put up a good quarter or two, but many enduring ones grow for years.

With $6.22 billion in revenue over the past 12 months, Victoria's Secret is a mid-sized retailer, which sometimes brings disadvantages compared to larger competitors benefiting from better economies of scale.

As you can see below, Victoria's Secret struggled to generate demand over the last five years (we compare to 2019 to normalize for COVID-19 impacts). Its sales dropped by 1.6% annually despite opening new stores. This implies its underperformance was driven by lower sales at existing, established locations.

This quarter, Victoria's Secret’s $1.35 billion of revenue was flat year on year but beat Wall Street’s estimates by 0.8%. Company management is currently guiding for a 1.6% year-on-year decline in sales next quarter.

Looking further ahead, sell-side analysts expect revenue to remain flat over the next 12 months. While this projection implies its newer products will catalyze better top-line performance, it is still below average for the sector.

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Store Performance

Number of Stores

Victoria's Secret sported 1,378 locations in the latest quarter. Over the last two years, it has generally opened new stores, averaging 1.1% annual growth. This was faster than the broader consumer retail sector.

When a retailer opens new stores, it usually means it’s investing for growth because demand is greater than supply, especially in areas where consumers may not have a store within reasonable driving distance.

Same-Store Sales

A company's store base only paints one part of the picture. When demand is high, it makes sense to open more. But when demand is low, it’s prudent to close some locations and use the money in other ways. Same-store sales provides a deeper understanding of this issue because it measures organic growth at brick-and-mortar shops for at least a year.

Victoria's Secret’s demand has been shrinking over the last two years as its same-store sales have averaged 3.1% annual declines. This performance is concerning - it shows Victoria's Secret artificially boosts its revenue by building new stores. We’d like to see a company’s same-store sales rise before it takes on the costly, capital-intensive endeavor of expanding its store base.

In the latest quarter, Victoria's Secret’s same-store sales fell by 1% year on year. This decrease was an improvement from its historical levels. It’s always great to see a business’s demand trends improve.

Key Takeaways from Victoria's Secret’s Q1 Results

We were impressed by how significantly Victoria's Secret blew past analysts’ adjusted operating income and EPS expectations this quarter. We were also happy its revenue narrowly outperformed Wall Street’s estimates. On the other hand, its gross margin missed and its EPS guidance for next quarter fell short. Overall, this was a weaker quarter. The stock traded down 2% to $21.75 immediately following the results.

So do we think Victoria's Secret is an attractive buy at the current price? If you’re making that decision, you should consider the bigger picture of valuation, business qualities, as well as the latest earnings. We cover that in our actionable full research report which you can read here, it’s free.