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Dive Brief:
Victoria’s Secret & Co. on Thursday reported better-than-expected Q2 operating income — a 34% year-on-year decline — despite the drag from a security breach earlier this year that was expected to siphon millions from that metric.
Gross margin expanded by 20 basis points to 35.6%, Chief Financial Officer Scott Sekella told analysts Thursday. Net income fell 44% to $18 million.
Net sales in the period rose nearly 3% to $1.5 billion, also above company expectations, despite a $20 million impact from the outage, Sekella said. Excluding the outage, comps rose 4%. Comps also rose 4% at physical stores after falling 5% a year ago, and were up at both the namesake brand and Pink.
Dive Insight:
With this report, Victoria’s Secret & Co.’s CEO Hillary Super answered a financier’s criticism of her leadership — and her diction — early this summer with the first clear evidence of a turnaround at the lingerie giant in years.
Super arrived nearly a year ago after serving as Savage x Fenty CEO, and Q2 was the first full quarter under her refreshed leadership team, she said in a statement. In April, Super brought on Adam Selman, previously chief design officer for Savage X Fenty, to be executive creative director.
“There’s real momentum in our business,” she told analysts, adding later, “We are firmly in growth mode.”
Both Victoria’s Secret and Pink are releasing new styles more often, with Pink emphasizing weekly drops and collabs, Super said. More broadly, the namesake brand has been reinvigorated, she said.
“We got a little serious — and this brand should be joyful, and it should be fun and it should be youthful,” she said. “And so you’ll start seeing more of that … especially as we move into 2026.”
Executives said the company relied less on its semi-anniversary sale, in part because the breach scuttled its event to a great extent this year. There were fewer discounts and higher full-priced sales in Q2, helping lift average unit retail, Sekella said.
Tariffs also took a bite out of profits, and, unlike the outage, that will continue.
Victoria’s Secret & Co. is anticipating a $100 million tariff impact this year, after finding ways to mitigate the impact by $70 million, Sekella said. The company is maintaining its adjusted operating income guidance for the year, despite anticipating an estimated incremental net tariff pressure of $50 million.
To mitigate tariffs, the company has been working with vendors, further diversifying its sourcing, ensuring the most efficient mix of air versus ocean freight and adjusting prices with more targeted promotions and being strategic about price “where we see a value proposition gap in the marketplace,” Sekella said.
Victoria’s Secret will host its fashion show again this year, on Oct. 15, with Super promising that it will “build on last year’s success and serve as a key brand moment that both honors our heritage and solidifies our position as a brand that shapes, not just follows, the future of fashion.”