Victoria's Secret stock drops on soft Q3 profit forecast

Victoria's Secret & Co. (NYSE:VSCO) shares fell more than 12% after the retailer's third-quarter profit outlook came in below Wall Street estimates, overshadowing a second-quarter earnings beat and a raised full-year guidance.

The company reported second-quarter revenue of $1.61 billion, up 10% from a year earlier but slightly short of the $1.62 billion analysts had expected.

Adjusted earnings per share came in at $0.95, well above the $0.77 estimate and up 188% year-over-year.

Adjusted operating income rose 125% to $124 million, topping forecasts of $101 million.

Comparable sales grew 9%.

By segment, North America store revenue reached $897.9 million, up 9%, while direct revenue climbed 8.1% to $439.4 million.

International revenue jumped 20% to $273.4 million.

Adjusted net income more than doubled to $80 million, ahead of the $65.7 million estimate, aided in part by $140.3 million in pre-tax recoveries from IEEPA tariff refunds.

For the third quarter, Victoria's Secret guided revenue of $1.57 billion to $1.60 billion, roughly in line with estimates, but projected operating income of just $10 million to $20 million, falling short of consensus.

The company raised its full-year revenue guidance to a range of $7.10 billion to $7.18 billion, up from a prior forecast of $7.03 billion to $7.13 billion, though still below the $7.2 billion analysts had projected.

Full-year adjusted operating income guidance was lifted to $560 million to $590 million from $550 million to $580 million, while adjusted earnings per share guidance was set at $4.45 to $4.70.

Analysts at Jefferies said the results were solid but noted shares had entered the quarter trading around 15 times earning