Victoria's Secret's stock having best day in 2 years as sales keep improving

By Tomi Kilgore

October was the intimate-apparel seller's best month of the year, until it was 'happily exceeded' by November

Shares of Victoria's Secret & Co. were having their best day in more than two years on Thursday, after the intimate-apparel retailer said sales trends kept getting better and provided an upbeat outlook for the holiday season.

On the company's (VSCO) conference call with analysts following the release of fiscal third-quarter results, Chief Executive Martin Waters said sales trends in North America continued to improve "each month through the quarter," with October being the strongest month of the year, until it was "happily exceeded" by November.

Both in stores and online, Waters said the November sales and margins results were the "best monthly performance in nearly two years," led by a strong response to its holiday assortments, such as giftable merchandise, according to an AlphaSense transcript.

As BMO Capital analyst Simeon Siegel put it: "If numbers aren't going lower, shares are undervalued."

The stock shot up 16.2% in afternoon trading, toward the highest close since May 5, 2023, and was headed for the biggest one-day gain since a 20.1% rally on Aug. 9, 2021.

The stock has rocketed 53.2% in November, which would be its best-ever monthly performance since the company's separation from Bath & Body Works Inc. (BBWI) was completed in August 2021.

The company reported late Wednesday that for the quarter to Oct. 28, it swung to a net loss of $71.2 million, or 92 cents a share, from net income of $24.4 million, or 29 cents a share, in the same period a year ago.

Excluding nonrecurring items, the adjusted per-share loss was 86 cents, wider than the FactSet loss consensus of 78 cents.

Sales fell 4% to $1.265 billion, just shy of the FactSet consensus of $1.270 billion. Meanwhile, same-store sales, or sales from stores open at least a year, declined 7.0% to beat expectations of a 9.0% drop.

For the fourth quarter, the company said it expects sales growth of 2% to 4%. The current FactSet sales consensus of $2.071 billion implies 2.5% growth.

Despite the stock's recent rally, it has still tumbled 23.4% year to date, while the SPDR S&P Retail ETF XRT has gained 6.8% and the S&P 500 index SPX has advanced 18.3%.

-Tomi Kilgore

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11-30-23 1342ET

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