Victoria's Secret (VSXY) Q2 2026 Earnings Call: Margin Expansion and Raised Guidance
Source Tradingkey
Key Takeaways
- Q2 fiscal 2026 net sales increased 10% year over year to $1.611 billion, while comparable sales rose 9%. This was Victoria’s Secret & Co.’s fifth consecutive quarter of positive comparable sales.
- Adjusted operating income increased 125% to $124 million. Adjusted diluted EPS nearly tripled to $0.95 from $0.33, exceeding the company’s guidance range of $0.65 to $0.75.
- Adjusted gross margin expanded 320 basis points to 38.8%, driven primarily by higher merchandise margin, reduced promotions and leverage on buying and occupancy expenses.
- Growth was broad-based: Victoria’s Secret retail sales rose by the mid-teens, PINK grew by the high single digits, Beauty increased by the mid-single digits and reported international sales advanced 20%.
- Management raised fiscal 2026 guidance to net sales of $7.10 billion-$7.18 billion, adjusted operating income of $560 million-$590 million and adjusted diluted EPS of $4.45-$4.70.
- The customer file grew by the mid-single digits, with new-customer acquisition up by the high single digits. Management highlighted particularly strong acquisition among customers aged 18 to 24.
Key Financial Data
| Metric | Q2 fiscal 2026 | Year-over-year change / context |
|---|---|---|
| Net sales | $1.611 billion | Up 10% from $1.459 billion |
| Comparable sales | — | Up 9%; up 13% on a two-year basis |
| Adjusted gross profit | $626 million | Up 20% |
| Adjusted gross margin | 38.8% | Up 320 basis points from 35.6% |
| Adjusted SG&A | $502 million | Rate improved 70 basis points to 31.1% |
| Adjusted operating income | $124 million | Up 125% from $55 million |
| Adjusted net income | $80 million | Up from $27 million |
| Adjusted diluted EPS | $0.95 | Up from $0.33 |
| Ending cash | $522 million | Up $334 million year over year |
| Inventory | — | Up 8% year over year |
Disclaimer: For information purposes only. Past performance is not indicative of future results.
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