Victoria’s Secret Prepares for Q4 2024 Earnings Release
Victoria’s Secret & Co. (VSCO) will announce its fourth-quarter 2024 earnings on March 5, following the market close.
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In the last quarter, Victoria’s Secret exceeded the Zacks Consensus Estimate by 21.9%. The company has consistently outperformed earnings estimates over the past four quarters, with an average positive surprise of 10.3%, as illustrated below.
Image Source: Zacks Investment Research
Earnings Estimates for Q4 2024
The Zacks Consensus Estimate for fourth-quarter adjusted earnings is $2.30 per share, reflecting a 10.9% decrease from the prior year. Over the past week, earnings estimates have been adjusted downward by 1 cent per share. Expectations for revenue stand at $2.08 billion, indicating a slight 0.1% year-over-year decline.
Zacks Model Insights for VSCO
The Zacks model forecasts an earnings beat for Victoria’s Secret this quarter. A favorable Earnings ESP combined with a Zacks Rank of #1 (Strong Buy), #2 (Buy), or #3 (Hold) enhances the probability of a positive earnings surprise.
VSCO’s Earnings ESP: Currently, Victoria’s Secret has an Earnings ESP of +0.01%. Utilize our Earnings ESP Filter to identify the best stocks to buy or sell ahead of their earnings announcements.
Zacks Rank of Victoria’s Secret: The company currently holds a Zacks Rank of #3.
You can view today’s Zacks #1 Rank stocks here.
Key Factors Affecting Q4 Performance
Victoria’s Secret’s fourth-quarter results likely benefitted from strong brand momentum, ongoing digital growth, and effective marketing strategies. Solid sales momentum in North America persisted from the third quarter into the holiday season. The consensus forecast for North American sales is $1.19 billion, indicating a 3% year-over-year increase.
On January 29, the company reported satisfaction with its holiday performance, noting a significant rise in foot traffic in physical stores and increased digital engagement. This growth correlates with a revamped product assortment and heightened brand visibility from the Victoria’s Secret Fashion Show in late October.
Expectations are high for robust growth in the beauty segment and notable performances in both the sports bra and PINK apparel categories. Furthermore, advancements in the customer loyalty program should positively influence results. Nevertheless, the intimate apparel market’s softness and prevailing economic uncertainties may have adversely affected revenue.
On the downside, increasing transportation costs and heightened employee incentive expenses could negatively impact the quarter’s bottom line.
VSCO Stock Price Trends and Valuation
Over the past year, VSCO shares have appreciated by 2%, which is below the industry average. However, the stock has outperformed peers like American Eagle Outfitters (AEO), which saw a 45.7% decline, The Buckle, Inc. (BKE), down 2.8%, and Capri Holdings (CPRI), which experienced a 52% decrease.
VSCO Stock Price Performance
Image Source: Zacks Investment Research
Evaluating VSCO’s investment potential reveals the company is currently trading at a discount relative to its industry based on a forward 12-month price-to-sales (P/S) ratio. Currently, its P/S ratio stands at 0.33, substantially lower than both the industry and the S&P 500, which have ratios of 5.18.
VSCO P/S Ratio (Forward 12 Months)
Image Source: Zacks Investment Research
Investment Considerations for Victoria’s Secret
Victoria’s Secret has maintained resilience through consistent earnings surprises, strong brand traction, digital expansion, and product creativity. The increase in store traffic and digital interaction during the holiday period, along with the revitalized fashion show, fortifies its brand position. The growth in beauty and apparel, supported by a functioning loyalty program, remains a positive driver.
Despite these strengths, challenges like a faltering intimate apparel market, surging transportation costs, and rising incentive expenses present ongoing risks.
Although VSCO’s stock trades at a valuation discount compared to its industry peers, its performance has lagged, hinting at limited short-term upside. Given these considerations, investors may find it prudent to hold current positions while seeking clearer indicators of consistent profitability and market rebounds before pursuing new investments.
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This article originally published on Zacks Investment Research (zacks.com).
The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
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