Victoria's Secret (VSCO -5.67%) reported its fiscal first-quarter 2025 earnings on June 5, 2025, posting net sales of $1.353 billion (about flat year over year), adjusted operating income of $32 million, and adjusted EPS of $0.09. Its net sales and adjusted operating income exceeded guidance. Management maintained its full-year net sales target of $6.2 billion to $6.3 billion, but guided for adjusted EPS of $1.80 to $2.20, which would be down from $2.69 in 2024, citing persistent tariff headwinds, security incident impacts, and ongoing investment in strategic transformation. The call highlighted progress in key lifestyle growth categories, ongoing expense discipline, and significant brand modernization, alongside a multiyear leadership refresh and global fleet rationalization.
Strategic Leadership Realignment Accelerates Brand Differentiation
Between January and May, Victoria's Secret executed a major leadership overhaul, establishing a brand president model and hiring new executives with deep sector knowledge across intimates, beauty, and apparel. These hires coincide with the appointment of a new chief marketing officer and an executive creative director, who will be tasked with clarifying brand identity and accelerating customer acquisition in a market where differentiation and agility are paramount.
"We have invested in world-class leaders with proven track records of results. Anne Stevenson has been named president of Victoria's Secret, Ali Dillon, president of Pink, and Amy Kaczurek, president of Beauty. In addition, Elizabeth Price has joined us as chief marketing officer. Adam Selman has been appointed senior vice president and executive creative director reporting to Elizabeth."
— Hillary Super, CEO
This leadership restructuring signals a definitive commitment to multibrand operational excellence, positioning the company for substantive long-term shifts in brand expression, product innovation, and marketing ROI.
Pink and Beauty Categories Drive Outperformance and Margin Expansion
Pink apparel recorded its third consecutive quarter of positive comparable sales and notable improvements in both margin and average unit retail price (AUR), driven by faster fashion cycles and enhanced customer engagement focused on Gen Z. The beauty segment delivered its seventh consecutive quarter of growth -- significantly higher margin than intimates -- and sent strong signals for future international and cross-category expansion.
"Pink Apparel delivered its third consecutive quarter of positive comps and significant margin and AUR expansion, driven by improved product, high-emotion storytelling, and customer engagement. Our beauty business was a standout, achieving our seventh consecutive quarter of growth. Beauty is very significant, about 25% of our business. It's even stronger on the international side of our business. And we see lots of opportunity to innovate and expand here."
— Hillary Super, CEO
This momentum in non-core categories suggests the diversification strategy is both protecting profitability against pressures in the intimates market and creating strategic growth runways, particularly as beauty's international performance outpaces its results in North America.
Disciplined Cost Control and Strategic Investments Offset Macro and Tariff Pressures
In the fiscal quarter, which ended May 3, the company reduced its adjusted SG&A rate by 120 basis points year-over-year to 32.8% -- better than its guidance range of 34.5% to 35.5% -- thanks to cost cutting and a shift of some marketing spending into Q2. The company renewed its $750 million asset-based lending (ABL) facility at lower interest rates, strengthening liquidity. Management also dialed back its plans for 2025 capital expenditures to $220 million from the previously expected $240 million, reinforcing a focus on high-return store and technology projects, even as it expects tariff headwinds to have a net negative impact of $50 million on adjusted operating income.
"Our better-than-prior-year and expected SG&A dollar and rate performance in the quarter was due in part to our accelerated efforts to pull back on non-product and non-customer investment and expense areas of the business, as well as a strategic shift in marketing spend from Q1 into Q2. In May, we successfully renewed our asset-based lending facility with a $750 million borrowing base and secured a five-year term extension with favorable enhancements and lower interest rates that will generate annual savings."
— Scott Sekella, CFO
This approach provides sustained financial flexibility and cushions earnings volatility as management actively mitigates external shocks, underpinning confidence in the company’s ability to absorb tariff-related drag and cybersecurity event impacts while executing its transformation agenda.
Looking Ahead
Management maintained net sales guidance for fiscal 2025 of $6.2 billion to $6.3 billion, expects operating income of $270 million to $320 million, and projects adjusted EPS of $1.80 to $2.20. Those figures include the expectation of a net $50 million headwind to net income from tariffs, even after $70 million in mitigation efforts. The company plans to open 16 new North American stores (mostly off-mall), will close 30 to 40 locations (largely via consolidating Pink and Victoria's Secret brand stores), and will renovate 40 locations to its "Store of the Future" model. "Store of the Future" locations are on track to comprise approximately 25% of the North American store base and nearly 40% of the international footprint by year's end. Capital expenditures and depreciation are each forecast at $220 million, and the guidance range for adjusted free cash flow is $150 million to $200 million. Management highlighted that ongoing investments will prioritize store modernization, digital capability, and marketing efficiency, while cautioning that macroeconomic conditions and tariffs will shape its near-term results.