US intimates giant Victoria’s Secret has reported a hit to its top- and bottom-line performance in the first quarter of the year amid “a volatile macro environment”.
The specialty retailer posted a 5 percent drop in net sales to 1.407 billion dollars in the three months to April 29 against a “challenging” economic backdrop and an increase in promotional activity. Total comparable sales were down 11 percent.
The company’s bottom line was also impacted, with net income plunging to 1 million dollars from 81 million dollars a year earlier, and operating income falling to 28 million dollars from 94 million dollars.
CEO Martin Waters told investors: “The first quarter continued to be a volatile macro environment for our customer and as the quarter progressed business became more challenging.”
Promotional activity hits profitability
He said Q1 sales were in-line with its original expectations, but higher than expected promotional activity meant the company ended the quarter at the lower-end of its adjusted operating income guidance.
“Sales performance was particularly challenging in our core categories where there was significant decline in the overall stores and digital intimates market in North America,” he said.
However, on a more positive note, he added: “Our international business continued its stellar growth around the globe with China as a particular bright spot, and our recent acquisition, Adore Me, met our expectations during its first quarter as a part of Victoria’s Secret & Co.”
The company lowered its full-year revenue outlook based on its first-quarter results. It now expects revenue to be in the range of flat to down low-single digits compared to its previous guidance of a mid-single digit increase.