What Happened?
Shares of intimatewear and beauty retailer Victoria’s Secret (NYSE:VSCO) jumped 9.3% in the morning session after the company reported a "beat and raise" quarter. Third-quarter results significantly blew past analysts' revenue and earnings expectations. Revenue reflected mid-single digit growth in North America and more than 20% growth from International markets. Given the strong result, the management raised full-year sales outlook, implying the momentum is expected to be sustained. Its EPS guidance for next quarter also outperformed Wall Street's estimates. Zooming out, we think this was a good quarter with some key areas of upside.
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What The Market Is Telling Us
Victoria's Secret’s shares are extremely volatile and have had 36 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 4 days ago when the stock gained 9.4% on the news that data from Adobe Analytics, which tracks retail transactions, revealed that shoppers spent a record $10.8 billion online on Black Friday (2024), representing more than a 10% growth compared to the previous year, and more than double what consumers spent in 2017. This is a bullish 'read-through' for retailers and aligns with some of the positive sentiments and holiday spending trends observed by some of the companies that have reported this earnings season.
Victoria's Secret is up 73% since the beginning of the year, and at $46.93 per share, has set a new 52-week high. Investors who bought $1,000 worth of Victoria's Secret’s shares at the IPO in July 2021 would now be looking at an investment worth $1,104.
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