Victoria’s Secret & Co. Reports Strong Q1 2026 Results, Raises Full-Year Guidance
Victoria’s Secret & Co. (NYSE: VSXY) delivered a robust start to fiscal 2026, reporting first quarter results that not only exceeded internal guidance but also prompted management to raise its full-year outlook. These developments are expected to be highly relevant to shareholders and could have a significant impact on the company’s share price.
Key Financial Highlights
- Net Sales: Q1 net sales rose 15% year-over-year to \$1.560 billion, surpassing the company’s prior guidance range of \$1.490 billion to \$1.525 billion.
- Comparable Sales: Total comparable sales increased 13% in the quarter, marking the fourth consecutive quarter of positive comps.
- Operating Income: Operating income surged to \$76 million, up dramatically from \$20 million in Q1 2025.
- Adjusted Operating Income: Excluding one-time items, adjusted operating income was \$80 million, versus guidance of \$32 million to \$42 million and up from \$32 million a year ago.
- Net Income: Net income reached \$48 million (\$0.56 per diluted share), compared to a net loss of \$2 million (\$0.02 per diluted share) in Q1 2025.
- Adjusted Net Income: Adjusted net income was \$51 million (\$0.60 per diluted share), far exceeding guidance of \$0.20 to \$0.30 per share and up from \$7 million (\$0.09 per diluted share) a year ago.
Segment Performance
- Victoria’s Secret, PINK, and Beauty: All three brands delivered double-digit sales growth, helping drive broad-based strength across categories, channels, and geographies.
- Customer Acquisition: The company saw double-digit growth in new customer acquisition and increased regular-price selling, while reducing reliance on promotions.
- International Expansion: International sales grew nearly 45% year-over-year, reflecting ongoing global expansion efforts and a change in reporting for European Union direct sales.
Capital Allocation
- Share Repurchases: Victoria’s Secret repurchased 2.2 million shares for \$100 million at an average price of \$45.27 during Q1 2026. As of May 2, 2026, \$150 million remains authorized under the current \$250 million buyback program.
Raised Guidance for Fiscal Year 2026
- Net Sales: The company raised its FY26 net sales guidance to \$7.030-\$7.130 billion, up from its previous range of \$6.850-\$6.950 billion. This compares to \$6.553 billion in FY25.
- Adjusted Operating Income: Guidance for adjusted operating income was increased to \$550-\$580 million, from \$430-\$460 million previously, versus \$403 million in FY25.
- Q2 2026 Outlook: Net sales for Q2 are forecasted at \$1.590-\$1.615 billion (Q2 2025: \$1.459 billion), with operating income of \$90-\$100 million (Q2 2025 adjusted: \$55 million).
- Adjusted EPS Guidance: Full-year adjusted net income per diluted share is now guided to \$4.35-\$4.60.
Operational and Strategic Highlights
- Path to Potential Strategy: Management credited the company’s “Path to Potential” strategy, citing stronger brand heat, emotionally resonant marketing, and improved customer connection.
- Margin Expansion: Gross margin improvement was driven by higher regular-price selling and lower promotional activity, despite tariff headwinds.
- Cost Control: SG&A leverage improved year-over-year, contributing to EPS growth that outpaced operating income growth.
- Store and Direct Channel Growth: Company-operated stores in North America increased, and the direct channel posted 8.4% growth. The company operated 1,423 stores globally as of May 2, 2026.
Risk Factors and Forward-Looking Statements
Management reiterated caution regarding potential risks, including general economic conditions, inflation, tariffs, global trade environment, leadership changes, competition, ability to operate and expand internationally, supply chain disruptions, and the successful integration of acquisitions and new technologies. These and other factors could materially affect future results.
Investor Considerations
- Positive Earnings Momentum: Both quarterly performance and raised guidance are likely to be viewed positively by shareholders and could support a higher valuation for VSCO shares.
- Active Share Repurchase Program: The ongoing buyback program demonstrates management’s confidence in long-term value creation and could provide downside support for the share price.
- International Growth: Rapid international sales expansion and the integration of digital channels (including Adore Me) point to an increasing global footprint and diversified revenue streams.
- Margin Expansion and Cost Discipline: Improved gross margins and cost control highlight operational efficiency—a key focus for investors.
Conclusion
Victoria’s Secret & Co. delivered a standout Q1 2026, beating expectations and raising full-year guidance across sales, operating income, and EPS. Strong execution, a clear growth strategy, and shareholder-friendly capital allocation measures are likely to be well received by the market and could drive share price appreciation.
Disclaimer: This article is for informational purposes only and does not constitute investment advice or a recommendation to buy or sell any securities. All forward-looking statements are subject to risks and uncertainties as described in the company’s filings with the SEC. Investors should conduct their own research and consult a professional adviser before making investment decisions.
