Victoria’s Secret swings to net income despite lower sales

Victoria’s Secret swung to a net income despite lower sales in the fiscal second quarter, which an analyst attributes to better inventory management discipline and efficient cost control.

The lingerie and perfume brand’s net income stood at $32.1 million while net sales fell 0.7 per cent year over year to $1.42 billion.

North America store sales decreased 2.1 per cent to $800 million and direct sales slid 0.9 per cent to $430.2 million. International sales climbed 6.4 per cent to $187 million.

“Some better discipline around inventory management and strong cost control have both helped to boost the bottom line,” said Neil Saunders, GlobalData MD.

“The better financial health of the business means that when Hillary Super takes the reins as CEO in early September she will, at least, inherit a company that has been stabilised.”

The company forecasts net sales to increase low-single digits in the fiscal third quarter from the year-ago period.

“We are encouraged our North America business trends have continued to improve as we’ve moved through August and the start of the third quarter,” said Timothy Johnson, Victoria’s Secret interim CEO, and chief finance and administrative officer.

“While we are optimistic about the positive signs we’re seeing in our business, we recognize the consumer environment remains challenging and our customer is pressured economically.”

For the full fiscal year, the company expects net sales to be down by about 1 per cent.

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