Victoria's Secret (VSCO) Q2 2025 earnings summary

Executive summary

• Q2 2024 operating income grew year-over-year for the first time since 2021, with net income reaching $32 million ($0.40 per share) versus a $1 million loss in Q2 2023, and sequential sales improvement in North America for the fourth consecutive quarter.

• Net sales for Q2 2024 were $1.417–$1.42 billion, down 1% year-over-year but at the high end of guidance; comparable sales dropped 3%.

• International and Adore Me segments delivered high single-digit sales growth, with international sales up 6–6.4% in Q2 and 10.7–11% year-to-date.

• Adjusted results exclude impacts from the Adore Me acquisition, intangible amortization, and prior-year restructuring charges.

• New product launches and events, such as the Dream Bra Collection and PINK Friday, drove customer engagement and sales.

Financial highlights

• Q2 adjusted gross margin improved 80 bps to 35.4%, with gross profit at $501 million; operating income margin rose to 4.4% from 1.8% year-over-year.

• Q2 adjusted operating income increased 28% to $62–$62.3 million; net income margin rose to 2.2%.

• Adjusted EPS for Q2 was $0.40, up from $0.24 last year; year-to-date adjusted EPS was $0.51.

• Adjusted SG&A expense rate was 31.0% in Q2, down 20 bps year-over-year, aided by disciplined expense management.

• Inventory ended Q2 down 2% year-over-year, in line with guidance.

Outlook and guidance

• Full-year 2024 net sales now expected to be down approximately 1%, improved from prior guidance of a low-single-digit decline.

• Adjusted operating income forecast raised to $275–$300 million (prior: $250–$275 million); adjusted free cash flow forecast raised to $200–$225 million.

• Q3 2024 net sales expected to increase low single digits year-over-year, with an adjusted operating loss of $40–$60 million and adjusted net loss per share of $0.60–$0.80.

• Q3 adjusted gross margin rate guided at 34.3%–35.0%; SG&A rate to leverage versus prior year.

• Capital expenditures for 2024 projected at ~$200 million, focused on store programs and technology investments.