Victoria's Secret (VSXY) Q2 2025 earnings summary

Executive summary

• Q2 2024 operating income grew year-over-year for the first time since 2021, reaching $62 million, with margin up to 4.4% from 1.8% and net income at $32 million ($0.40 per share), reversing a prior-year loss.

• 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, offsetting North American softness.

• Product launches, such as the Dream Bra Collection and PINK Friday Back to Campus event, drove strong customer response.

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

Financial highlights

• Q2 adjusted gross margin improved 80 bps to 35.4%, with gross profit at $501 million; operating income margin up 100 bps to 4.4%.

• Adjusted SG&A expense rate was 31.0% (down 20 bps); general, administrative, and store operating expenses fell 5% to $439 million.

• Adjusted EPS for Q2 was $0.40, up from $0.24 last year; adjusted net income rose 67% to $31.5 million.

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

• Interest expense decreased $3 million to $21 million in Q2 due to lower average debt.

Outlook and guidance

• FY2024 net sales now expected to be down ~1%, improved from prior guidance of low-single-digit decline.

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

• Q3 2024 net sales expected to increase low single digits year-over-year; Q3 adjusted operating loss forecasted at $40M–$60M; adjusted net loss per share projected at $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.