Victoria’s Secret lowers FY22 forecast despite 25% sales surge

Victoria’s Secret and Co. has lowered its Q1 FY22 operating income forecast to be in the range of $80m (£59.78m) to $110m (£82.19m), compared to $225.7m (£168.65m) in 2021, amid supply chain cost pressures and anniversarying last year’s federal stimulus benefits.

Overall, its operating income increased to $869.5m (£649.73m) in the full year ending 29 January 2022, up from an operating loss of $101.5m (£75.84m) and adjusted operating income of $97.5m (£72.85m) in 2020.

The company reported 25% net sales growth of $6.78bn (£5.07bn) in 2021, an increase of 25% compared to $5.41bn (£4.04bn) in 2020. Additionally, total comparable sales for the full year 2021 increased 3% compared to 2020.

Meanwhile, fourth quarter 2021 (Q4) operating income was $333.2m (£248.98m), which was consistent with the high end of the previous guidance of $295m (£220.44m) to $335m (£250.33m), and compares to $387.9m (£289.86m) in the fourth quarter of 2020. 

Additionally, the company reported net sales of $2.175bn (£1.62bn) for Q4, up year-on-year by 4% compared to $2.1bn (£1.56bn). This result was slightly above the previous sales guidance in the range of flat to up 3%. Total comparable sales for Q4 2021 also increased 1% compared to Q4 2020.

Overall, Victoria’s Secret is forecasting its Q1 2022 sales to be in the range of $1.42bn (£1.06bn) to $1.495bn (£11.17bn), compared to Q1 2021 sales of $1.55bn (£1.16bn).The company also estimates operating income to be in line with its 2021 operating income of $869.5m (£649.73m).

Victoria’s Secret also announced that its board of directors approved a new share repurchase program, providing for the repurchase of up to $250m (£186.81m) of the company’s common stock. It is expected to be utilised to repurchase shares in the open market, subject to market conditions and other factors.

Martin Waters, CEO, said: “I am pleased with our fourth quarter performance in a challenging retail environment. Our associates across the globe focused on execution and delivered upon all of our financial expectations while continuing to transform our brand, enhance our customer experience, and strengthen our dominant merchandise positioning.

“We are keenly aware 2022 will present continued challenges for retailers in this inflationary environment. However, we have a very resilient, dedicated team and strategy prepared to meet these challenges head-on.”