While the fashion industry struggles to come to terms with the potential fallout of President Donald Trump’s trade wars, Victoria’s Secret & Co. at least took a guess Wednesday as it released fourth-quarter earnings and looked toward the year ahead.
The lingerie retailer said its 2025 forecast assumed it would face an additional 10 percent tariff on goods made in China for the full fiscal year, reducing operating income by $10 million to $20 million.
That impact — spread across a year — could ultimately wipe out all or most of the $10 million to $30 million in adjusted operating profits Victoria’s Secret forecast for the first quarter, when sales are pegged to fall to $1.3 billion to $1.33 billion, down from $1.36 billion a year earlier.
Despite what looks to be a slower start for 2025, Hillary Super, who joined the company as chief executive officer in September, said a lot is going right for the retailer, which has been struggling to find its footing for years.
“Sales increased across most major merchandise categories, in our stores and digital channels, and in both our North America and International businesses,” Super said in a statement. “We won in the big moments of the quarter and gained more than our fair share of the traffic in the mall and online.
“During the holiday season we clearly connected emotionally with our customer through our merchandise offering of the accessible luxuries she loves,” the CEO said. “After my first holiday season with the business, I continue to be optimistic about our future, our opportunity to further differentiate the brands with compelling storytelling and make even deeper emotional connections with our customers. As we look forward to 2025 and the future, we recognize there are near-term headwinds and ongoing uncertainty in the macro environment, which we will manage aggressively while also working to build upon our solid foundation, realize the full potential of our brands and drive long-term, sustainable growth.”
Net income for the fourth quarter increased 6.8 percent to $193.4 million, or $2.33 a diluted share, from $181.1 million, or $2.29, a year earlier.
Adjusted earnings tallied $2.60 a share — 30 cents above the $2.30 analysts forecast, according to Yahoo Finance.
Sales for the 13 weeks ended Feb. 1 rose 1.1 percent to $2.11 billion from $2.08 billion a year earlier, when the quarter included an extra week.
Comparable sales — which strip away the extra week — increased 5 percent.
That comp number showed some pep, but investors were looking for something more and traded shares of Victoria’s Secret down 5.9 percent to $20.90 in after-hours trading.
For all of 2025, the retailer is looking for sales to hit $6.2 billion to $6.3 billion, compared with $6.2 billion last year, excluding a $26 million benefit to adjust for how the company accounted for gift cards.
That would yield adjusted operating income of $300 million to $350 million for the year — if the trade war with China that’s just starting ends with a 10 percent tariff bump.
