victoria’s secret (VSCO -6.67%) is a staple of malls in the country and around the world, but only recently became an independent company. The reasons for this are, in some respects, less than desirable, but management has been able to focus all of its efforts on returning this iconic brand to growth.
Things may turn around.
good company bad company
Victoria’s Secret was part of L Brands, a retail conglomerate that owned Bath & Body Works. (L Brands changed company name bath and body works (BBWI -1.97%) After spinoff. ) or at least these were the ones he owned just before the two nameplates split.
The truth is that L Brands has owned quite a few different brands over the years. For example, Abercrombie & Fitch, Express, The Limited, Henri Bendel, Lane Bryant. Some of these nameplates are still open to the public. Others were closed.

Image Source: Getty Images.
The Victoria’s Secret break from Bath & Body Works was in some ways the final evolution. But it was really just a way to separate a struggling brand (Victoria’s Secret) from a relatively strong growing brand (Bath & Body Works).
This is a common move on Wall Street, and the logic has always been that struggling brands, once independent, can do everything in their power to improve their financial results. I have. sometimes not. These types of breakups are probably best seen as special circumstances, the type of investment only more aggressive investors should consider.
The spin-off is completed in August 2021. The timing of this move was complicated by the 2020 coronavirus pandemic. This led to the closure of non-essential businesses for a considerable period of time and a drop in sales for many retailers.
So a 50% year-over-year increase in sales in the second quarter of 2021 was not a reliable number when looking to the future. His next two quarters of 2021 saw sales grow 7% and 4% respectively, far more realistic numbers, even if the numbers were down.
But the big takeaway was that even if they didn’t turn Victoria’s Secret into a growth machine, management at least seemed to have stopped the bleeding. is expected to increase.
harsh new year
Sales in the first quarter of 2022 were down 4.5%, actually within management’s guidance. In fact, this was at the “upper end” of the offered 4% to 8% range.
But from here things get a little more complicated. Management led second-quarter sales to range from his low-single-digit sales growth to his low-single-digit sales decline.
When the final tally was made, Q2 2022 sales were down 6%, slightly below expectations. The top-line outlook for the third quarter income statement was pegged at high-single-digit sales declines.
The trend is clearly going in the wrong direction. This he revealed in the third quarter of 2022, with actual sales down his 9%. Sure, it was within guidance, but it was now on the ‘low end’ of the range.
The worst part of the quarterly update, however, is that Victoria’s Secret entered the year expecting flat to slightly increasing sales, but now sees full-year 2022 sales slip by 6% to 7%. We were asking for it to be reduced.
The lower end of the earnings guidance range is around $4.50 per share, so the retailer is still making a sizable profit. That’s good news, as sales trends show Victoria’s Secret is trying to attract the attention of consumers who have moved on to other lingerie retailers.
more time
Despite early signs of success after the spin-off, 2022 results suggest Victoria’s Secret still hasn’t got its business right. A lot has changed, including partnerships with new designers and acquisitions of competitors. This includes recent acquisitions of online lingerie retailers.
Still, most investors would want to see more sustained improvement before investing here. Good management intent alone is not enough to make this struggling retailer a good investment.