Citing a lackluster beginning to 2024 as consumers in North America seek more affordable options, Victoria's Secret & Co anticipates a subdued performance for the year ahead.
Known for its popular Pink brand of intimate wear, the company predicts fiscal 2024 net sales to fall to $6 billion, marking the third consecutive year of declining sales and falling short of LSEG estimates of $6.14 billion.
The company expressed a cautious outlook for the first half of the year, citing continued pressure on the broader intimates market in North America. However, it expects sales trends to improve in the latter part of 2024.
First-quarter net sales are forecasted to decline in the mid-single-digit range, contrasting with analysts' expectations of a 2.5 per cent decrease. To support its stock in the short term, the company announced a share repurchase program worth up to $250 million. However, analysts remain skeptical about the company's ability to drive operational improvements.
Despite a 240 basis point increase in fourth-quarter margins, attributed to factors such as lower freight costs and merchandising strategies, the company faced challenges due to shifting consumer preferences. Demand shifted towards value and online platforms like Amazon, while sportswear brands like Lululemon gained traction in the sports bra category with lower-priced options.
Victoria's Secret, with sports bras priced between $45 and $88, faces competition from Lululemon, whose offerings range from $29 to $78.
In 2024, Victoria's Secret plans to open approximately 15 new stores in North America, primarily in off-mall locations, despite sluggish demand. However, it also plans to close 35 stores, mainly consolidating co-located Victoria's Secret and Pink stores.
