Since its split from Bath & Body Works to become a tax-free spin-off earlier this year, Victoria’s Secret has seen a rebound in its sales in what has been a critical period for the brand’s recovery.
Net income for Q2 increased to US$151m and operating income stood at $202.7m for the three months ended 31 July compared with the same period in 2020, while net sales reached $1.6bn, just 10% lower than its 2019 earnings.
Prior to its latest results, the L Brands-owned lingerie and beauty brand had garnered a reputation as a burden on the business’ balance sheets, with tumbling profits and losses that amounted to a US$199.5m net loss for Q2 in 2020.
But its upward trajectory is a promising outlook for Victoria’s Secret as it tries to move on from the business’ troubling period.
L Brands made the announcement last year that it was going to sever ties between the beleaguered Victoria’s Secret and lucrative Bath & Body Works.
The beauty owner, founded by Wes Lexner in 1963, who stepped away from the business earlier this year at the age of 83, said that the split would allow the company to better manage and maximise the lingerie brand.
Just a month after the split had been unanimously given the green light by shareholders, Victoria’s Secret revealed a drastic shift in its brand purpose.
Swapping runway angels for advocats, the former high street favourite refocused its ethics in a more humble direction by signing accomplished women as part of its VS Collective, or ambassadors, to drive positive change.
Founding members of the collective include: Adut Akech, Amanda de Cadenet, Eileen Gum, Megan Rapinoe, Paloma Elsesser, Priyanka Chopra-Jonas and Valentina Samaio.
“Following the finalisation of the spin-off from L Brands, our momentum continues, fuelled by strong fundamentals, inspiring merchandise she loves, our new brand positioning and disciplined business operations,” said Victoria’s Secret’s CEO Martin Waters.
“With tighter inventory management and more emotionally appealing product, we are less promotional, resulting in significant margin increases.
“As a result, operating income in the second quarter exceeded expectations, helping us deliver our most profitable spring season in five years.
“Our vital signs are strong and, with our exceptional leadership and associate teams, I continue to be confident in our long-term growth in all channels.”
Looking to the rest of 2021, the brand is not unaware of the challenges Covid-19 presents in the months ahead.
Ahead of the autumn, the business expected disruptions to deliveries and freight to cost up to $100m, which would significantly impact its Q4 results; as a result, it has not provided financial guidance for the three month period.
However, the company has predicted third quarter sales to increase in the mid to high single digits, compared with last year’s Q3 sales of $1.35bn.
Although this will be a loss on 2019’s sales of $1.58bn.