Victoria’s Secret Falls Most Ever in Faltering Turnaround

(Bloomberg) — Victoria’s Secret & Co. shares plunged as much as 28%, the most on record, after the beleaguered lingerie maker’s full-year sales guidance fell short of analysts’ expectations.

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Underscoring the retailer’s struggle to gain relevance with customers, the company said Wednesday it expects net sales of $6 billion this year, weaker than last year. Thursday’s share decline is Victoria’s Secret’s largest since its July 2021 initial public offering, according to data compiled by Bloomberg.

The company’s pledges to improve sales “did not come to fruition,” JP Morgan analyst Matthew Boss wrote in a note Wednesday, downgrading the stock to underweight from neutral.

Victoria’s Secret has been working to attract and retain customers through initiatives like a rebranded fashion show and the expansion of swim and apparel categories, but the efforts have yet to pay off.

In the quarter ended Feb. 3, which included the crucial holiday shopping season, comparable sales at Victoria’s Secret fell 6%. Profitability, meanwhile, beat expectations thanks in part to better inventory management.

The company has been highlighting strong performance in its international business, where total sales grew about 24% in the fourth quarter. But that segment makes up less than 10% of the overall business. “The single biggest challenge in the model right now is the North American sales trend,” Chief Financial Officer TJ Johnson said on a call with analysts.

Promotions in the fourth quarter were more aggressive than in prior years in a “very competitive environment” over the holiday period, Chief Executive Officer Martin Waters said on the call. He expects that to continue in the current quarter, especially in categories such as underwear where the company has struggled to capture market share.

“The burden of proof rests on management execution,” BMO analyst Simeon Siegel wrote in a note Wednesday, lowering his price target to $26 from $29. “The catalyst path is difficult.”

Through Wednesday’s close, the stock had fallen 26% in the past year.

(Updates with shares in first and second paragraphs.)

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