Victoria's Secret & Co. Q2 Earnings Call Highlights

Key Points

• Victoria’s Secret exceeded Q2 guidance: Net sales rose 10% to $1.611 billion, comparable sales increased 9%, and adjusted operating income surged 125% to $124 million. Adjusted diluted EPS nearly tripled to $0.95.
• Growth and profitability were broad-based: Bras, PINK and Beauty led sales gains, while higher regular-price selling and fewer promotions expanded adjusted gross margin by 320 basis points to 38.8%.
• The company raised its fiscal 2026 outlook: Victoria’s Secret now expects $7.10 billion to $7.18 billion in sales, adjusted operating income of $560 million to $590 million, and adjusted diluted EPS of $4.45 to $4.70.

Victoria's Secret & Co. NYSE: VSXY reported second-quarter results that exceeded its guidance, as growth in bras, PINK and Beauty supported higher regular-price sales, reduced promotional activity and improved profitability.

For the quarter ended Aug. 1, 2026, net sales rose 10% year over year to $1.611 billion, while comparable sales increased 9%. Adjusted operating income increased 125% to $124 million, exceeding the company’s guided range of $90 million to $100 million. Adjusted diluted earnings per share nearly tripled to $0.95 from $0.33 a year earlier.

Chief Executive Officer Hillary Super said the quarter marked the company’s fifth consecutive period of positive comparable sales growth. She attributed the performance to gains across Victoria’s Secret, PINK and Beauty, as well as North American and international channels.

Bras, PINK and Beauty Drive Broad-Based Growth

Bras remained the company’s largest growth driver, with sales up in the mid-teens during the quarter. Super said bras accounted for about half of the Victoria’s Secret brand’s mid-teens growth. The category benefited from core franchises as well as product innovation, including the FlexFactor Balconette and the launch of the Very Sexy Envy bra.

“When we win in bras, we create a halo across the broader Victoria’s Secret business,” Super said, noting that the bra momentum contributed to high-teens growth in panties and mid-teens growth in sleep.

PINK sales increased in the high single digits, representing the brand’s fifth consecutive quarter of growth. The company cited strength in bras, panties and apparel. PINK apparel has now posted eight consecutive quarters of sales growth, according to Super.

The company highlighted its Marshmallow bra collection, PINK’s first new bra pillar in two years. Super said the launch was “100% incremental” and did not prevent the brand’s other bra franchises from growing. The collection includes wireless, easy-sizing styles designed around all-day comfort.

Beauty sales increased in the mid-single digits, extending the category’s growth streak to 12 straight quarters. Regular-price Beauty selling rose in the high single digits, led by fine fragrance and mist products. Victoria’s Secret introduced six incremental scents during the year and said it is increasingly integrating fragrance launches with larger seasonal campaigns and gifting events.

The company said its returning PINK Square bottle fragrances sold out digitally in less than a day during PINK Friday. Super also cited early strength in the Tease Strawberry Bisou launch and plans to extend shimmer offerings within the Bombshell fragrance franchise.

Higher Regular-Price Selling Lifts Margins

Chief Financial and Operating Officer Scott Sekella said sales growth was accompanied by improved product sell-through and a reduced reliance on discounts. Regular-price selling increased in the low double digits during the second quarter, while average unit retail, or AUR, rose in the high single digits. Total units increased in the low single digits, while regular-price units increased in the high single digits.

Adjusted gross margin expanded 320 basis points year over year to 38.8%. About two-thirds of the improvement came from higher merchandise margins, driven by a greater mix of regular-price selling and fewer promotions, Sekella said. The remaining improvement reflected buying and occupancy leverage from the sales increase.

Adjusted selling, general and administrative expense totaled $502 million, and the SG&A rate improved 70 basis points to 31.1%. The company said it achieved expense leverage despite higher North American flex costs tied to stronger demand and investments in marketing and store experiences.

Victoria’s Secret received more than $140 million in IEEPA tariff refunds during the quarter, representing more than 95% of the IEEPA tariffs it had paid. Sekella said those refunds were excluded from the company’s non-GAAP results discussed on the call.

Inventory was up 8% from a year earlier, which management characterized as a healthy level to support demand. The company ended the quarter with $522 million in cash and no outstanding borrowings on its asset-based lending facility.

Customer Growth and Marketing Investment

The company’s customer file grew by the mid-single digits for the fourth consecutive quarter, while new-customer acquisition rose in the high single digits. Management said gains occurred across both brands, channels, income groups and age groups, with particularly strong acquisition among consumers ages 18 to 24.

Chief Marketing and Customer Officer Elizabeth Preis said the company’s digital-first and social-focused marketing approach has helped customers return more frequently and spend more upon returning. Paid social was the company’s strongest customer-acquisition channel during the quarter, she said.

Victoria’s Secret plans to increase marketing spending over time. Sekella said marketing currently represents the low 7% range as a percentage of sales, and the company sees an opportunity to move that level into the high single digits over the next several years.

Planned second-half initiatives include the Angels Among Us docuseries, which is set to premiere globally on YouTube on Sept. 27, and a broader Fashion Show presence incorporating watch parties and distribution through YouTube and social live-streaming platforms.

International Momentum and Raised Outlook

International reported net sales increased 20% in the second quarter, including low-teens retail comparable-sales growth. China and the company’s European digital business led the gains. Adjusting for a reporting shift involving European digital sales, international sales grew 10%.

Sekella said international growth is expected to moderate somewhat in the second half as the company faces more difficult comparisons, though it continues to forecast approximately 20% international net sales growth for the full year. China remains the company’s largest international growth market, supported by social selling, digital demand and improving store comparable sales.

For fiscal 2026, Victoria’s Secret raised its net sales outlook to $7.10 billion to $7.18 billion, implying growth of 8% to 10% from fiscal 2025. It now expects adjusted operating income of $560 million to $590 million and adjusted diluted EPS of $4.45 to $4.70.

For the third quarter, the company projected net sales of $1.57 billion to $1.60 billion, up approximately 7% to 9% from the prior year. It expects operating income of $10 million to $20 million and adjusted diluted EPS ranging from a loss of $0.09 to income of $0.01. Management said the forecast includes continued sales momentum, though it also reflects higher marketing, transportation and incentive-compensation costs.

About Victoria's Secret & Co. (NYSE:VSXY)

Victoria’s Secret & Co is a leading designer, manufacturer and marketer of intimate apparel, beauty products and accessories for women. The company operates a portfolio of brands that includes Victoria’s Secret, renowned for its lingerie, bras and sleepwear; PINK, a line targeting younger consumers with activewear and lifestyle products; and Victoria’s Secret Beauty, offering fragrances, cosmetics and personal care items. Products are sold through retail stores as well as direct-to-consumer channels, including e-commerce platforms and mobile applications.

The origins of Victoria’s Secret date back to 1977, when founders Roy and Gaye Raymond opened the first store in San Francisco.

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