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Victoria’s Secret refers to Ukraine war, inflation as it issues dismal first-quarter outlook

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Shoppers are seen inside a shopping mall in Bethesda, Maryland on February 17, 2022.
Mandel Ngan | AFP | Getty Images

Victoria’s Secret seesawed in after-hour hours trading Wednesday after the lingerie retailer issued a downbeat outlook for the coming quarter, cautioning that it still sees challenges ahead – including inflation and “global unrest,” a reference to Russia’s war on Ukraine.

It reported fiscal fourth-quarter profits and sales that slightly outpaced analysts’ expectations, after it reaffirmed a forecast in December for its holiday performance.

The company said Wednesday that the first half of this year might prove to be more difficult to operate in, given ongoing supply chain issues, but it should return to growth in the back half. Victoria’s Secret called the third quarter an expected inflection point.

Here’s how Victoria’s Secret did in its fiscal fourth quarter compared with what Wall Street was expecting, based on a survey of analysts by Refinitiv:

Earnings per share: $2.70 vs. $2.63 expectedRevenue: $2.18 billion vs. $2.14 billion expected

Net income for the three-month period ended Jan. 29 fell to $246 million from $282 million a year earlier. Revenue grew about 4% to $2.18 billion from $2.1 billion a year earlier.

The company said its beauty merchandise helped to drive customers online and into its brick-and-mortar stores, while its international business reported outsized growth compared with North American operations. Victoria’s Secret also said it has been pleased with the recent launch of a new collection, called Love Cloud, that is centered around comfort and inclusivity.

To be sure, in the near term, Victoria’s Secret sees a challenging retail environment with rising inflation and “the potential for consumer uncertainty with the recent global unrest.”

The retailer sees first-quarter sales in a range of $1.43 billion to $1.5 billion, which would represent a decrease of 4% to 8% from the prior year. That’s also short of analysts’ estimates for $1.52 billion.

It sees first-quarter earnings per share in a range of 70 cents to 95 cents. Analysts had been looking for $1.32 a share, according to Refinitiv.

The retailer said in prepared remarks that it expects to face ongoing supply chain cost pressures, and it’s also lapping stimulus benefits of roughly $50 million in the first quarter of 2021.

It anticipates 2022 revenue to be flat to up low-single digits compared with 2021 levels. Analysts had been projecting a 2.9% increase year over year.

Victoria’s Secret shares are down about 2% this year, as of Wednesday’s market close. That brings the retailer’s market cap to $4.8 billion.

Read the full earnings release from Victoria’s Secret here. The company is set to hold a live conference call with analysts on Thursday morning.

This story is developing. Please check back for updates.

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