Victoria's Secret Sales Surge 15% as Turnaround Gains Momentum
The lingerie retailer swung to a $48 million profit as adjusted earnings per share of $0.60 more than tripled Wall Street expectations.
Victoria's Secret & Co. (VSCO) posted a 15% jump in first-quarter net sales to $1.560 billion, the strongest top-line growth the lingerie retailer has delivered in years and a sharp acceleration from the 8% pace recorded in the holiday quarter. The results prompted management to lift full-year guidance for both revenue and profit.
Comparable sales rose 13%, marking the fourth consecutive quarter of positive comps and building on the 8% gain in the prior quarter. The acceleration suggests the brand's product refresh and marketing overhaul are pulling in shoppers at a faster clip than even the company had projected; first-quarter revenue exceeded its own guidance range of $1.490 billion to $1.525 billion.
The top-line momentum flowed directly to the bottom line. Operating income reached $76 million, nearly quadrupling the $20 million recorded a year earlier, while adjusted operating income of $80 million was 150% above the prior-year figure and blew past the guided range of $32 million to $42 million. Net income swung to a profit of $48 million, or $0.56 per diluted share, from a net loss of $2 million in the year-ago period. On an adjusted basis, earnings per share of $0.60 represented a 567% increase from $0.09 a year earlier and came in roughly double the midpoint of guidance.
The earnings beat extends a pattern that began in the back half of fiscal 2025. In the fourth quarter, adjusted operating income of $316 million topped the company's own forecast of $265 million to $290 million and grew 6% from the prior year, while adjusted EPS of $2.77 exceeded guidance of $2.20 to $2.45. For the full year, adjusted operating income reached $403 million despite roughly $85 million in tariff headwinds, and adjusted EPS of $3.00 grew 22% excluding a prior-year gift-card breakage adjustment.
Management responded to the first-quarter strength by raising its full-year outlook. The company now expects fiscal 2026 net sales of $7.030 billion to $7.130 billion, up from its prior forecast, and adjusted operating income of $550 million to $580 million. The revised guidance implies continued margin expansion even as the company invests in product and brand initiatives.
Victoria's Secret also continued to return capital to shareholders, repurchasing 2.2 million shares for $100 million at an average price of $45.27 during the quarter, with $150 million remaining under its current authorization. The buyback underscores management's confidence that the sales recovery has further room to run.
The first-quarter results cap a fiscal year in which the retailer has steadily rebuilt credibility after a prolonged period of traffic declines and brand erosion. Four straight quarters of positive comparable sales, accelerating revenue growth, and a profit trajectory that has moved from red ink to nearly $50 million in net income in twelve months mark a meaningful inflection. Whether the momentum can hold as tariff costs and promotional pressures persist will be tested in the quarters ahead, but the raised guidance signals the company expects the gains to stick.