Victoria's Secret&Co.

Overview Key strengths Key risks Leading market position and strong brand name recognition as the largest retailer of intimate apparel. Participation in the intensely competitive and fashion-sensitive women's intimate apparel segment. Scale and geographic diversity, with an increasing international presence through franchise operations. Historical merchandising missteps and weak track record of store development. Good digital penetration of nearly 30% of sales in fiscal 2022. Intense execution risk related to strategic initiatives, amplified by macroeconomic headwinds such as weakening demand and rising operating costs. First-quarter sales (ended April 29, 2023) declined 5%, reflecting a comparable sales decline of 11%. We now expect sales to decline in the low-single-digit percent area in fiscal 2023, following a 6.5% decline in fiscal 2022. We

...Victoria's Secret & Co. (VS) faces a sharp decline in demand for its core product offering amid industry headwinds and challenging macroeconomic conditions. First-quarter sales (ended April 29, 2023) declined 5%, reflecting a comparable sales decline of 11%. We now expect sales to decline in the low-single-digit percent area in fiscal 2023, following a 6.5% decline in fiscal 2022. We attribute this to a more cautious consumer who is spending less on discretionary categories like apparel. The company is also likely losing some customers to more affordable options from retailers like Walmart, Target, and Amazon. Moreover, merchandising missteps at PINK have challenged the company's performance, a trend which we expect to reverse in the second half of the year as the company resets its merchandise offering to resonate with consumers. Nonetheless, these challenges are offset by good growth in its international business, including double-digit systemwide sales growth in 2022 and the first quarter...

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