Fourth Quarter 2023 Performance Unveiled by Victoria’s Secret & Co.

Victoria’s Secret & Co. (NYSE: VSCO) disclosed its financial performance for the fourth quarter and fiscal year concluding on February 3, 2024. CEO Martin Waters expressed gratitude for the global team’s dedication, emphasizing successful strategies, customer satisfaction, and strong financial outcomes during the crucial holiday quarter. Despite weekly sales fluctuations, the North American market showed improvement, with early holiday sales and strong responses to giftable merchandise driving positive results. International sales soared by 24%, supporting ambitious growth plans for global expansion.

Waters highlighted the fourth quarter’s positive inflection point, attributing it to disciplined inventory management and cost reductions from the transformative initiative to modernize the supply chain. The CEO affirmed the commitment to long-term business health through strategic priorities: accelerating the core, igniting growth, and transforming the foundation.

Fourth Quarter 2023 Highlights:

  • Net income reached $181 million, or $2.29 per diluted share, exceeding the previous year’s figures.
  • Operating income for Q4 2023 was $258 million, up from $243 million in Q4 2022.
  • Adjusted net income and adjusted operating income for Q4 2023 were $204 million and $283 million, respectively, aligning with the high end of the guidance range.
  • Net sales for the quarter were $2.082 billion, a 3% increase compared to Q4 2022, with total comparable sales decreasing by 6%.

Full Year 2023 Overview:

  • Net income for the fiscal year 2023 was $109 million, or $1.39 per diluted share, a decline from the previous fiscal year.
  • Adjusted net income and adjusted operating income for FY 2023 were $178 million and $327 million, respectively, compared to $416 million and $566 million in FY 2022.
  • Net sales for FY 2023 totaled $6.182 billion, a 3% decrease from FY 2022, with total comparable sales down by 9%.

Liquidity and Capital Allocation:

  • Operating cash flow for Q4 2023 was $589 million, contributing to a reduction of $410 million in the ABL credit facility.
  • Cash balance at the end of FY 2023 was $270 million, with an outstanding ABL credit facility balance of $145 million, down 51% from the previous year.

Share Repurchase Program:

  • The Board of Directors approved a new March 2024 Share Repurchase Program, authorizing the repurchase of up to $250 million of common stock to offset dilution and for general corporate purposes.

Outlook for Full Year and Q1 2024:

  • Anticipated FY 2024 net sales around $6.0 billion, reflecting a low-single-digit decrease compared to FY 2023.
  • Expected adjusted operating income for FY 2024 is $250 million to $275 million.
  • Q1 2024 net sales are forecasted to decrease mid-single digits, with adjusted operating income expected in the range of $10 million to $35 million.

The company’s forward-looking outlook excludes certain purchase accounting items related to the Adore Me acquisition. Victoria’s Secret & Co. will conduct its fourth-quarter earnings call on March 7, 2024, at 8:00 a.m. Eastern.

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