Why Victoria's Secret (VSCO) Stock Is Trading Lower Today

What Happened:

Shares of intimatewear and beauty retailer Victoria’s Secret (NYSE:VSCO) fell 7.2% in the morning session after the company reported second-quarter earnings results. Its earnings forecast for next quarter missed analysts' expectations, and its gross margin missed Wall Street's estimates. On the other hand, VSCO slightly beat analysts' revenue guidance expectations. Overall, this quarter was a mixed but weaker quarter.

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What is the market telling us:

Victoria's Secret’s shares are quite volatile and over the last year have had 47 moves greater than 5%. In context of that, today’s move is indicating the market considers this news meaningful but not something that would fundamentally change its perception of the business. 

The previous big move we wrote about was 16 days ago, when the stock gained 21.8% on the news that the company announced the appointment of Hillary Super as Chief Executive Officer and Board Member, effective September 9, 2024. Timothy (TJ) Johnson, VSCO's Chief Financial and Administrative Officer, will serve as interim CEO through September 8, 2024. Most recently, Super served as CEO of Savage X Fenty. Prior to that, she was Global CEO of Anthropologie Group, an Urban Outfitters Company. 

Separately, the company provided preliminary guidance for the Q2 2024 quarter. Management expects net sales, adjusted operating income, and adjusted diluted earnings per share to "fall within or exceed the previously issued guidance range." This suggests there will be no major surprises when the company officially reports earnings for the second quarter.

Victoria's Secret is down 15.2% since the beginning of the year, and at $23.01 per share it is trading 24.5% below its 52-week high of $30.50 from February 2024. Investors who bought $1,000 worth of Victoria's Secret’s shares at the IPO in July 2021 would now be looking at an investment worth $540.96.

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