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Victoria's Secret (VSCO) Q4 Earnings Top Estimates, Stock Down
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Victoria’s Secret & Co. (VSCO - Free Report) posted fourth-quarter fiscal 2023 results, wherein the top line missed the Zacks Consensus Estimate, while the bottom line surpassed the same. Both metrics increased on a year-over-year basis.
VSCO benefited from strong international business. The company is also encouraged by improving sales trend in North America. Following the earnings, the company’s shares declined 26.1% in the after-hour trading session on Mar 6. Investors’ sentiment was hurt by dismal 2024 outlook.
Q4 in Detail
Victoria’s Secret reported adjusted earnings of $2.58 per share, beating the Zacks Consensus Estimate of $2.46. The figure increased from 29 cents in the year-ago quarter.
Net sales increased 3% year over year to $2,082.5 million. However, the metric lagged the Zacks Consensus Estimate of $2,092 million. The company’s comparable sales declined 6% on a year-over-year basis.
VSCO’s net sales from the Stores – North America channel came in at $1,154.2 million, up 3% year over year. Direct channel’s net sales increased 10.1% to $734 million. Net sales from International channel rose 23.8% to $194.3 million.
Victoria's Secret & Co. Price, Consensus and EPS Surprise
The gross profit increased 11% year over year to $427.4 million. Meanwhile, the gross margin increased 280 basis points (bps) to 39.6% in the quarter under review. Cost of sales came in at $1,256.6 million, down 1.6% year over year. Cost of sales, as a percentage of net sales, decreased 290 bps to 60.3% in the quarter.
General, administrative and store operating expenses increased 13.3% to $567.5 million. It reported net income of $181.1 million in fourth-quarter fiscal 2023 compared with $172.1 million in the year-ago quarter. It incurred interest expenses of $26.6 million, higher than $19.7 million in the prior-year quarter.
Outlook
For the first quarter of fiscal 2024, management expects net sales to decline mid-single digits. It registered net sales of $1.407 billion in the prior-year quarter. Adjusted operating income for first-quarter 2024 is forecast to fall in the range of $10-$35 million, based on the projected level of sales. It anticipates adjusted net income in the band of $2.20-$2.60 per share.
The company projects net sales for fiscal 2024 to reach approximately $6.0 billion, indicating a low-single-digit decrease compared with a year ago. Based on these anticipated sales figures, the adjusted operating income for fiscal 2024 is estimated to be between $250 million and $275 million.
Hyatt Hotels Corporation (H - Free Report) delivered decent fourth-quarter 2023 results, with earnings topping the Zacks Consensus Estimate but declining on a year-over-year basis. H's revenues surpassed the consensus mark and increased year over year.
Hyatt’s quarterly results reflected year-over-year growth in comparable system-wide revenue per available room, driven by an increase in occupancy and average daily rate. The uptrend is mainly driven by strong global travel demand, especially among leisure and business guests, and group customers. However, increased costs and expenses, and foreign currency risks partially offset the aforementioned tailwinds and hurt the bottom line.
Planet Fitness, Inc. (PLNT - Free Report) reported fourth-quarter 2023 results, with earnings and revenues beating the Zacks Consensus Estimate. Also, both metrics increased on a year-over-year basis.
However, management cited concerns about continued macroeconomic uncertainty and a slowing down of sales (owing to a transition toward more strength equipment over cardio). The company anticipates 2024 sales distribution to resemble that of 2023, showing a return to a standard quarterly rhythm.
Live Nation Entertainment, Inc. (LYV - Free Report) reported mixed fourth-quarter 2023 results, with earnings missing the Zacks Consensus Estimate and revenues beating the same. Revenues surpassed the consensus estimate for the seventh straight quarter.
LYV has been benefiting from pent-up demand for live events and robust ticket sales. It continues to benefit from the robust performance of Ticketmaster and an increase in fan spending. In 2023, 145 million fans attended more than 50,000 events.
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Victoria's Secret (VSCO) Q4 Earnings Top Estimates, Stock Down
Victoria’s Secret & Co. (VSCO - Free Report) posted fourth-quarter fiscal 2023 results, wherein the top line missed the Zacks Consensus Estimate, while the bottom line surpassed the same. Both metrics increased on a year-over-year basis.
VSCO benefited from strong international business. The company is also encouraged by improving sales trend in North America. Following the earnings, the company’s shares declined 26.1% in the after-hour trading session on Mar 6. Investors’ sentiment was hurt by dismal 2024 outlook.
Q4 in Detail
Victoria’s Secret reported adjusted earnings of $2.58 per share, beating the Zacks Consensus Estimate of $2.46. The figure increased from 29 cents in the year-ago quarter.
Net sales increased 3% year over year to $2,082.5 million. However, the metric lagged the Zacks Consensus Estimate of $2,092 million. The company’s comparable sales declined 6% on a year-over-year basis.
VSCO’s net sales from the Stores – North America channel came in at $1,154.2 million, up 3% year over year. Direct channel’s net sales increased 10.1% to $734 million. Net sales from International channel rose 23.8% to $194.3 million.
Victoria's Secret & Co. Price, Consensus and EPS Surprise
Victoria's Secret & Co. price-consensus-eps-surprise-chart | Victoria's Secret & Co. Quote
Margin & Costs
The gross profit increased 11% year over year to $427.4 million. Meanwhile, the gross margin increased 280 basis points (bps) to 39.6% in the quarter under review. Cost of sales came in at $1,256.6 million, down 1.6% year over year. Cost of sales, as a percentage of net sales, decreased 290 bps to 60.3% in the quarter.
General, administrative and store operating expenses increased 13.3% to $567.5 million. It reported net income of $181.1 million in fourth-quarter fiscal 2023 compared with $172.1 million in the year-ago quarter. It incurred interest expenses of $26.6 million, higher than $19.7 million in the prior-year quarter.
Outlook
For the first quarter of fiscal 2024, management expects net sales to decline mid-single digits. It registered net sales of $1.407 billion in the prior-year quarter. Adjusted operating income for first-quarter 2024 is forecast to fall in the range of $10-$35 million, based on the projected level of sales. It anticipates adjusted net income in the band of $2.20-$2.60 per share.
The company projects net sales for fiscal 2024 to reach approximately $6.0 billion, indicating a low-single-digit decrease compared with a year ago. Based on these anticipated sales figures, the adjusted operating income for fiscal 2024 is estimated to be between $250 million and $275 million.
Shares of this Zacks Rank #3 (Hold) company have increased 54.7% in the past six months compared with the industry’s growth of 5%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Recent Consumer Discretionary Releases
Hyatt Hotels Corporation (H - Free Report) delivered decent fourth-quarter 2023 results, with earnings topping the Zacks Consensus Estimate but declining on a year-over-year basis. H's revenues surpassed the consensus mark and increased year over year.
Hyatt’s quarterly results reflected year-over-year growth in comparable system-wide revenue per available room, driven by an increase in occupancy and average daily rate. The uptrend is mainly driven by strong global travel demand, especially among leisure and business guests, and group customers. However, increased costs and expenses, and foreign currency risks partially offset the aforementioned tailwinds and hurt the bottom line.
Planet Fitness, Inc. (PLNT - Free Report) reported fourth-quarter 2023 results, with earnings and revenues beating the Zacks Consensus Estimate. Also, both metrics increased on a year-over-year basis.
However, management cited concerns about continued macroeconomic uncertainty and a slowing down of sales (owing to a transition toward more strength equipment over cardio). The company anticipates 2024 sales distribution to resemble that of 2023, showing a return to a standard quarterly rhythm.
Live Nation Entertainment, Inc. (LYV - Free Report) reported mixed fourth-quarter 2023 results, with earnings missing the Zacks Consensus Estimate and revenues beating the same. Revenues surpassed the consensus estimate for the seventh straight quarter.
LYV has been benefiting from pent-up demand for live events and robust ticket sales. It continues to benefit from the robust performance of Ticketmaster and an increase in fan spending. In 2023, 145 million fans attended more than 50,000 events.