(Reuters) – Victoria’s Secret & Co’s shares plunged about 29% premarket on Thursday after the lingerie brand forecast weaker annual sales following a sluggish start to the year as shoppers in its key North America market switch to cheaper options.
The company, popular for its PINK brand of intimates, forecast fiscal 2024 net sales of $6 billion, indicating a third annual sales dip in a row, below LSEG estimates of $6.14 billion.
“Broader intimates market in North America will remain pressured throughout the first and second quarter, with sales trends improving throughout the back half of 2024,” the company said as it forecast a glum first quarter.
It expects first-quarter net sales to decline in the mid-single-digit range, compared with analysts’ expectation of a 2.5% fall.
The company, however, announced repurchase of up to $250 million worth of shares.
“While the newly announced share repurchase program can help support the stock near-term, ultimate visibility to operational improvements remains challenging,” said Dana Telsey of Telsey Advisory Group.
Shares of the company, which has been grappling with declining demand, lost nearly 26% of their value last year, and were down 3.5% so far this year.
While the company’s fourth-quarter margins jumped 240 basis points helped by lower freight costs, merchandising strategies and easing inflation, they reflected challenging demand.
The quarter “reflected a shift towards value and Amazon… in addition to sportswear players such as Lululemon taking share in the sports bra category,” J.P.Morgan analyst Matthew Boss said in a note.
Victoria’s sports bras were priced between $45 and $88, while Lululemon’s were between $29 and $78, their websites showed.
In 2024, Victoria’s Secret plans to open about 15 new stores in North America, mostly in off-mall locations, despite slow demand, and close 35 stores mainly due to consolidation of co-located Victoria’s Secret and PINK stores.
(Reporting by Savyata Mishra in Bengaluru; Editing by Shinjini Ganguli)
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