Victoria’s Secret & Co. (NYSE: VSCO) encountered significant turbulence in yesterday’s trading session, witnessing a drastic 31% plummet in premarket hours trading post its Q4 earnings unveiling.
While the company managed to surpass analysts’ earnings projections, posting adjusted earnings of $2.58 per share against the expected $2.46 per share, its revenue of $2.08 billion missed the consensus estimate.
Performance Review and Guidance
The disappointment stemmed from the subdued performance in the North American intimate apparel market, prompting a downward revision in the company’s fiscal year 2024 net sales forecast to approximately $6 billion, falling short of Wall Street’s anticipated $6.19 billion. Although there was a positive surprise in the earnings side, it was the topline miss that caused investor to sell off.
CEO Martin Waters addressed the challenging market conditions, acknowledging the four consecutive quarters of decline in the broader intimates market in North America.
This acknowledgment underpinned the company’s conservative approach in planning for the near term, manifesting in the cautious first-quarter sales projection, expecting a mid-single-digit decrease compared to the previous year’s $1.407 billion.
Investor Response and Strategic Moves
The market’s response to Victoria’s Secret’s performance was swift and severe, with a 31% plunge in the stock’s value during extended-hours trading. In a bid to restore investor confidence, the company announced a new stock buyback program, greenlighting the repurchase of up to $250 million of its common stock.
Technical Analysis and Market Sentiment
Despite the earlier formation of a bullish golden cross pattern on the Victoria’s Secret chart, the stock’s subsequent sideways trajectory has led analysts to highlight a critical support zone between $20 and $21.50.
A breach below this level could trigger a revisit to the stock’s record low of $13.62 recorded in October last year. Currently, the stock is experiencing trading volumes ten times higher than average, leading some observers to speculate on its oversold status.
