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Important points
- Shares of Victoria’s Secret fell 26% in after-hours trading after the company issued cautious sales guidance that was lower than analysts expected amid a downturn in North America’s intimate apparel market.
- The company announced a new stock repurchase program that will allow it to repurchase up to $250 million of its common stock.
- A close below the key support zone between $20 and $21.50 could open the door for the stock to retest its all-time low of $13.62.
Shares of Victoria’s Secret (VSCO) fell 26% in after-hours trading Wednesday night after the lingerie retailer issued a cautious sales outlook amid weak apparel demand in the North American market.
The company said it expects net sales to be about $6 billion in fiscal 2024, short of the $6.19 billion that Wall Street had expected. Victoria’s Secret’s first-quarter sales are expected to be down mid-single digits from $1.407 billion in the first quarter of last year. Analysts, on the other hand, expect the lingerie retailer to post sales of $1.39 billion in the same period.
The intimate apparel maker cited a weak outlook in North America as the reason for its cautious guidance. Victoria’s Secret CEO Martin Waters said: “As we enter the new year, we recognize that the broader North American underwear market has been weak for four consecutive quarters, and that we believe we have an appropriate short-term outlook. “We have a conservative business plan,” the company said in its financial results announcement. .
For its fiscal fourth quarter, which ended Feb. 3, the company reported adjusted earnings of $2.58 per share, beating analysts’ estimates of $2.46 per share. Revenue for the period was $2.08 billion, an increase of 3% year-over-year, consistent with consensus view. The company estimates that the extra week increased revenue by about $80 million in the quarter. Meanwhile, same-store sales fell 6% during the same period, compared with a 6.3% decline in the Wall Street model.
The apparel maker said its gift-friendly product selection, improved customer experience and marketing efforts boosted sales during the holiday season. The company also announced a new stock repurchase program that allows for the repurchase of up to $250 million of its common stock.
Despite a bullish golden cross pattern forming on Victoria’s Secret’s charts in late December, the stock has traded nearly flat since then. Amid the earnings-related weakness, it’s worth keeping an eye on the key support zone between $20 and $21.50. A close below this important technical area could open the door to a retest of the stock’s all-time low of $13.62, set last October.
Victoria’s Secret stock fell 26.2% to $18.90 in after-hours trading.
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