Victoria's Secret Reports Q1 2025 Financial Results with Slight Sales Decrease

Victoria's Secret & Co. reported its financial results for the first quarter of fiscal year 2025, revealing net sales of $1.353 billion, a slight decrease from $1.359 billion in the same period last year. The company's operating income fell to $20 million, down from $26 million in the first quarter of 2024, reflecting a decrease in merchandise margin dollars primarily due to increased transportation costs. The net loss attributable to Victoria's Secret was $2 million, or $(0.02) per diluted share, compared to a net loss of $4 million, or $(0.05) per diluted share, in the prior year.

In terms of operational metrics, North American store sales decreased by 1% to $721 million, while direct channel sales dropped by 3% to $433 million. However, international sales saw a 9% increase, reaching $199 million, driven by growth in China and royalties from franchise operations. The company reported a total of 870 stores across the U.S., Canada, and China, with an additional 510 stores operating under various international arrangements. The total inventory as of May 3, 2025, was $1.043 billion, up from $987 million a year earlier, indicating a strategic buildup to support anticipated sales growth.

Strategically, Victoria's Secret has made significant leadership changes, including the appointment of three Brand Presidents and an Executive Creative Director, aimed at enhancing brand performance and market presence. The company has also focused on restructuring its marketing spend, shifting resources from the first quarter to the second quarter to better align with sales patterns. Additionally, the company continues to integrate its acquisition of Adore Me, which was completed in December 2022, and has made substantial payments related to this acquisition.

Financially, the company reported total assets of $4.580 billion and total liabilities of $3.907 billion as of May 3, 2025. The long-term debt stood at $1.078 billion, with a significant portion attributed to a $600 million fixed-rate note due in 2029. The company has not repurchased any shares under its $250 million share repurchase program authorized in March 2024, maintaining its liquidity position with cash and cash equivalents of $138 million at the end of the quarter.

Looking ahead, Victoria's Secret aims to focus on its strategic priorities, including recommitting to its PINK brand, enhancing its bra offerings, and expanding lifestyle categories. The company acknowledges ongoing macroeconomic challenges, including inflation and changing consumer behaviors, but remains committed to executing its strategic plan to drive long-term value for shareholders. The company is also monitoring the impact of recent U.S. tariffs on imports, which could affect future financial performance.