(Bloomberg) — Victoria’s Secret & Co. tumbled in morning trading on Thursday after the company boosted guidance but showed a slower pace of growth.
Comparable sales, which measure revenue at stores open at least a year, rose 9% in the second quarter, in line with analyst estimates compiled by Bloomberg. However, a 57% year-to-date increase in the company’s stock has raised the bar for investors.
Shares fell 9.2% at 9:33 a.m. in New York trading.
The company boosted its guidance for the current fiscal year, now seeing sales in a range of $7.1 billion to $7.18 billion, compared with a previous range that was as high as $7.13 billion.
Chief Executive Officer Hillary Super has worked toward revitalizing Victoria’s Secret by focusing on bras and its Pink brand. In the latest quarter, that strategy paid off.
“What stood out was bras and Pink,” Super said in an interview. The executive highlighted the Marshmallow bra at Pink, which it markets as a comfortable everyday option, and Envy push-up bras.
Victoria’s Secret is poised to report its highest annual sales in seven years. Super has improved the company’s bra designs and marketing while adding new products to the young adult-focused Pink brand, such as denim and NFL-themed apparel.
“The fact that growth is broad-based, with success across channels and regions, demonstrates that there is genuine traction behind the numbers,” GlobalData analyst Neil Saunders wrote in a note Thursday. “And, from our data, this is underpinned by the fact that Victoria’s Secret isn’t just expanding spend among existing shoppers, but it’s also now attracting new ones – which reverses a long period of continuous erosion of the customer file.”
Victoria’s Secret has been able to attract more customers, reporting four straight quarters of growth, Super said on a call with analysts. The growth was across all age and income groups. Shoppers are also spending more and going back to stores at a higher rate, Super said.
Super’s success has helped the company to reverse a prolonged slump and withstand pressure from investors, including billionaire Brett Blundy’s investment firm BBRC International Pte.
Victoria’s Secret expects sales in the third quarter to be as high as $1.6 billion, above analyst estimates. The company said it received more than $140 million of tariff refunds last quarter.
(Updates opening shares and commentary from analyst call.)
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