Victoria’s Secret shares dropped sharply on Thursday. This happened even though the company reported better-than-expected quarterly earnings. However, its turnaround seems to be slowing down, as sales were just below what analysts expected.
Victoria’s Secret reported adjusted earnings of 95 cents per share for the fiscal second quarter ending August 1. This is a big jump from 33 cents a year ago and higher than Wall Street’s estimate of 77 cents. Net sales increased by 10% to $1.61 billion, which was just below the consensus estimate of $1.62 billion, according to FactSet.
Comparable sales went up by 9%, which was slightly better than the 8.8% growth analysts expected. However, this was slower than the 13% growth seen in the previous quarter.
The company slightly raised its full-year sales outlook, which is now about what Wall Street expected. It also gave third-quarter sales guidance that is a bit higher than analysts’ estimates. Victoria’s Secret now expects full-year sales between $7.1 billion and $7.18 billion, up from its previous range of $7.03 billion to $7.13 billion. Third-quarter sales are expected to be between $1.57 billion and $1.6 billion, matching Wall Street’s forecast.
Guggenheim called the results a strong earnings beat, even though sales were just under expectations. However, the firm pointed out that the company’s fourth-quarter earnings guidance is lower than what Wall Street expected.
Even though the company beat earnings expectations, the results did not meet investors’ high hopes. Shares dropped 18% in premarket trading on Thursday, wiping out a small gain from Wednesday. The stock had risen sharply earlier in the year as investors became more hopeful about the company’s turnaround under CEO Hillary Super.
