Victoria's Secret Sees Positive Sales Trend and Promising Outlook for Holiday Season

Shares of Victoria's Secret & Co. experienced a significant surge on Thursday, marking their best day in over two years. The intimate-apparel retailer shared positive sales trends during its fiscal third-quarter results and provided an optimistic outlook for the upcoming holiday season.

According to Chief Executive Martin Waters, sales in North America showed continuous improvement throughout the quarter, with October being the strongest month. However, November managed to surpass those expectations, making it the best monthly performance in nearly two years. This success was largely driven by the strong response to Victoria's Secret's holiday assortments, particularly giftable merchandise.

BMO Capital analyst Simeon Siegel emphasized that if the numbers continue to remain stable, the current undervaluation of the shares will likely be rectified.

As a result, the stock experienced a remarkable increase of 16.2% in afternoon trading, approaching its highest close since May 5, 2023. This surge represents the largest one-day gain since a rally of 20.1% on Aug. 9, 2021.

November has been an exceptionally fruitful month for Victoria's Secret, with the stock skyrocketing by 53.2%. This remarkable performance marks its best-ever monthly result since the company's separation from Bath & Body Works Inc. in August 2021.

However, the company reported a net loss of $71.2 million, or 92 cents per share, for the quarter ending Oct. 28. This is a stark contrast to the net income of $24.4 million, or 29 cents per share, recorded during the same period last year. Accounting for nonrecurring items, the adjusted per-share loss was recorded at 86 cents, wider than the consensus estimate of 78 cents provided by FactSet.

While sales decreased by 4% to $1.265 billion, falling just short of the FactSet consensus of $1.270 billion, same-store sales—referring to sales from stores open for at least a year—dropped by 7.0%. Despite this decline, it outperformed expectations of a 9.0% drop.

Looking ahead to the fourth quarter, Victoria's Secret anticipates sales growth of 2% to 4%. The current FactSet sales consensus of $2.071 billion implies a growth rate of 2.5%.

Despite the recent rally, the stock has undergone a notable decline of 23.4% year-to-date. In comparison, the SPDR S&P Retail ETF has gained 6.8%, while the S&P 500 index has advanced by 18.3%.