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Victoria’s Secret’s stock rallies on more upbeat third-quarter forecast, but retailer says its products don’t stand out enough

Shares of Victoria’s Secret & Co. rose after hours on Wednesday after the maker of bras, lingerie and sleepwear said it could lose less than previously thought during the third quarter, as plans to boost growth help it navigate weaker demand for intimate wear.

Shares of Victoria’s Secret
VSCO,
-8.69%
were up 3.2% after hours.

The company said it expected a third-quarter adjusted net loss per share of 70 cents to 90 cents, compared with a prior outlook for a loss of 70 cents to $1 a share.

Victoria’s Secret said it expected sales to fall between 3% to 5% in the third quarter, compared with an earlier forecast for a drop in the “low- to mid-single-digit range.” And it said sales trends in North America had improved over the period.

Victoria’s Secret said it was sticking to its full-year outlook for a sales decline in the “low-single-digit range.”

Executives made the forecast ahead of an investor meeting set for Thursday. They said that their efforts to jump-start growth were “tracking well ahead of our plan as evidenced by significant growth in our international business and the acquisition of the Adore Me brand.” Victoria’s Secret bought Adore Me, an online intimates brand, early this year.

The company made the upbeat forecast after outlining plans last year to revive growth, after rising prices for basic goods led to weaker clothing demand. Chief Executive Martin Waters said the company’s costs were falling but difficulties persisted.

“The strategic priority to strengthen our core business in North America has been our most challenged work over the past year as the macroeconomic environment has become more uncertain, the domestic intimates market has softened, and our merchandise assortment has been insufficiently differentiated,” he said.

Last year, Victoria’s Secret leadership outlined plans to capture more of the market for bras, intimate wear and beauty products, along with efforts to be “more inclusive” and draw a broader audience. It also tried to strengthen its position internationally, and bring new brands under its umbrella, either “organically or through investments.”

Management said that at the meeting on Thursday, it would detail multi-year plans to boost sales and profits, plans to expand into new regions globally, and how Adore Me, which it said functioned as a “tech powerhouse,” can help grow sales.

Shares of Victoria’s Secret are down 54.7% so far this year. The S&P 500 Index
SPX
is up 14.5% over that period.

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