Shares of Victoria’s Secret, a specialty retailer of women’s intimate and other apparel and beauty products (NYSE:VSCO), fell over 26% in Wednesday’s after-hours trading. While the company’s Q4 EPS exceeded analysts’ estimates, its management offered weaker-than-expected 2024 guidance that irked investors, leading to a decline in its share price.
VSCO’s leadership adopted a cautious stance due to the ongoing downturn in the broader intimate-wear market across North America. The strain on consumers’ discretionary spending has impacted demand.
With this backdrop, let’s delve into VSCO’s Q4 performance.
A Brief Look at VSCO’s Q4 Financials
VSCO reported net sales of $2.082 billion in the fourth quarter of 2023, up 3% year over year. Further, its top line was in line with the Street’s estimate. However, the company’s total comparable sales for Q4 decreased 6% year over year.
Victoria’s Secret reported adjusted earnings of $2.58 per share in Q4 compared to $2.47 in the prior-year quarter. Its EPS exceeded analysts’ expectations of $2.46.
Conservative 2024 Outlook
Given the ongoing weakness in the intimate-wear market in North America, VSCO expects to deliver net sales of about $6 billion in 2024, down low-single digits compared to 2023. Further, the forecast fell short of analysts’ estimate of $6.19 billion.
As for Q1 of 2024, the company expects net sales to decrease by mid-single digits year-over-year.
Nonetheless, VSCO is taking measures to accelerate growth. The company is focusing on product improvements, new launches, and inventory management to support its sales and earnings.
What is the Future of Victoria’s Secret Stock?
VSCO stock has two Buy and two Hold recommendations for a Moderate Buy consensus rating. Its stock has decreased by over 26% in one year. Analysts’ average price target of $29 implies 13.19% upside potential from current levels.
It’s worth noting that VSCO’s price targets were set before the Q4 earnings report. This raises the possibility that analysts might adjust their price targets downward due to the weak guidance.
