Victorias Secret & Co. 2027 Q2 Earnings Call

Good morning and welcome to Victoria's Secret & Company Second Quarter Earnings Conference Call for the period ended August 1, 2026. Joining me on the call today is Chief Executive Officer, Hillary Super, Chief Financial and Operating Officer, Scott Sekella, and Chief Marketing and Customer Officer, Elizabeth Preis. We are available today for approximately 30 minutes to answer any questions. I would like to remind you that any forward-looking statements we may make today are subject to our safe harbor statement found in our SEC filings and in our press releases. Certain results we discuss on the call today are adjusted results and exclude the impact of certain items described in our press release and our SEC filings.

Reconciliations of these and other non-GAAP measures to the most comparable GAAP measures are included in our press release, our SEC filings, and the investor presentation posted on the investor section of our website. With that, I will turn the call over to Hillary.

Good morning, and thank you for joining us. Q2 was another strong quarter for Victoria's Secret. Net sales increased 10% year over year, near the high end of our guidance, and operating income and earnings per share exceeded the high end of our guidance. This marked our fifth consecutive quarter of positive comps, giving us further confidence in the progress we are making. The bigger story is what sits underneath those results. When I joined Victoria's Secret two years ago, I saw iconic brands with deep emotional connection, but significant untapped potential. Today, we are attracting more customers, winning market share, and strengthening the value proposition for both brands. Product, brand identity, storytelling, and execution are all working together. We have made meaningful progress, but we are not done.

As part of the Path to Potential strategy, we are working to build Victoria's Secret and PINK into two distinct world-class growth brands, supported by a powerhouse beauty business. This quarter, we continued to make tangible progress towards that goal. The strength in the quarter was broad-based, with continued growth across Victoria's Secret, PINK, and Beauty, and across channels. We also delivered continued momentum in our international business. Our customer file continues to grow, increasing mid-single digits versus last year and marking our fourth consecutive quarter of growth. Growth spanned both brands and channels as well as all age and income groups, led by strong new customer acquisition and improving retention. At the same time, we continued to improve the quality of our sales. Regular price selling increased in the low double digits, accompanied by strong unit and AUR growth.

Within that broad-based performance, two areas stood out, bras and PINK. Both are central to our Path to Potential strategy, and both are showing that our work is gaining traction. Our bra business grew in the mid-teens, driven by strength in core franchises and by new innovation, contributing to both VS and PINK's performance. PINK delivered another quarter of growth with strength in bras, panties, and apparel. Beauty also continued to grow, delivering its 12th consecutive quarter of sales growth. Importantly, we are not standing still and are continuing to learn and adjust quickly. Semiannual sale is a good example. We have made a deliberate decision to reduce our reliance on promotion and increase regular price selling. As a part of that shift, we entered the period with less sale inventory. Initial demand and sell-through exceeded our expectations, demonstrating that the event continues to resonate.

As the sale progressed, lower inventory pressured the June top line. That gives us a clear opportunity going forward. June has historically been a sale-heavy month, but we increasingly see it as buy now, wear now fashion window. We will continue to use semiannual sale to clear seasonal inventory while bringing more newness, innovation, and seasonal fashion into the month. We saw the potential of that approach in July, when growth returned to double digits as customers responded to new bra innovation across both VS and PINK. Altogether, Q2 reinforced that our Path to Potential strategy is working. We are entering Q3 with a larger customer file, strong brand relevance, and a full brand and marketing calendar ahead.

I will now walk through the progress we made against each of our Path to Potential pillars, supercharging our bra authority, recommitting to PINK, fueling growth in beauty, and evolving our brand projection and go-to-market strategy. I will start with bras, where we have firmly reestablished the category as our number one growth driver. Bras are the foundation of Victoria's Secret. They are where our authority begins, often the starting point of her relationship with us, and an important driver of the business. This quarter, our bra business grew in the mid-teens. That strength was a major contributor to the VS brand, which also grew in the mid-teens during the quarter, with bras driving approximately half of its growth. What is encouraging is how broad-based the growth is. We are growing both new and existing bra customers with particularly strong new customer growth among 18 to 24-year-olds.

That strength also spans the assortment, from wardrobe staples to more fashion-driven styles. That includes functional and seasonally relevant solutions like strapless, as well as lacy, where bright colors, fabrication, and styling give her another way to make intimates part of her overall look. Importantly, our core franchises continued to grow alongside more frequent newness. We have established a more consistent cadence of innovation and fashion updates that gives her more reasons to come back while growing the core. A good example was the 25th anniversary of Very Sexy. We celebrated the franchise with an iconic campaign set in Rome for the launch of our new Very Sexy Envy bra. While the campaign was anchored in Very Sexy, the impact extended across the bra assortment. That is exactly what we want our big brand moments to do, create heat, deepen emotional connection, and lift the total business.

We also continued to see a strong response to innovation across key silhouettes. One example this quarter was the FlexFactor Balconette. This new frame is a shape she loves and builds on the FlexFactor innovation that is already resonating. The launch drove incremental growth in both Body by Victoria and the broader Balconette business while driving demand across the collection. This quarter proved once again that when we win in bras, we create a halo across the broader Victoria's Secret business. The momentum in bras helped drive high teens growth in panties and mid-teens growth in sleep. We amplified that momentum through both marketing and sharper execution. We are reaching new audiences while fine-tuning assortments, size curves, and in-stock to put the right product in the right places and execute with greater precision.

As we move into Q3 and holiday, we will continue to build on what is working, maintaining a healthy core while bringing her more innovation, fashion, and powerful storytelling. We see significant opportunity to build on this momentum through the back half and beyond. We are seeing similar progress in PINK, the focus of our next pillar. The work to sharpen PINK's identity is taking hold. The brand is standing more confidently on its own with a clear personality, stronger brand codes, and a deep emotional connection. PINK grew high single digits and delivered its fifth consecutive quarter of growth with increasing strength from the heart of the brand, bras, panties, and apparel. That gives us further confidence in the renewed resonance we are seeing with the PINK customer.

We have a clear read on what she wants from PINK, product that is comfortable, expressive, and tied to the moments that matter. That starts with the icons she knows and loves. We are keeping those franchises fresh with new silhouettes, fabrics, color, and fashion so the core feels familiar but never static. At the same time, we are using customer insights to create new growth opportunities. Marshmallow is a great example. It is our first new bra pillar in two years, and it came from a very clear customer need. An all-day, every activity comfort bra that still feels fun, fashionable, and uniquely PINK. We paired that insight with our expertise in bras to deliver four new frames with easy sizing, wireless support, and soft fabrication. We brought it to life digitally through a broad network of creators, making Marshmallow feel like it was everywhere she was.

That combination drove outsized results following the launch, reinforcing our belief that bras can become an increasingly important growth engine for PINK. As the core fueled growth, we also continue to build PINK as a lifestyle brand. Apparel, which has now delivered eight consecutive quarters of growth, remains an important part of the strategy and one of PINK's largest customer growth vehicles. Denim, linen, and sleep all performed well this quarter, giving us new ways to outfit her and showing us where we have additional opportunity to scale. The Soho store continues to be an important physical expression of the PINK world. It brings together product, merchandising, and experience in a way that feels unmistakably PINK, and it gives us new ways to interact with our customers. We are taking what resonates in Soho and thinking about how to apply those learnings more broadly across the fleet.

PINK Friday is another example of how we are bringing the PINK world to life. This August, we evolved the event from one largely focused on promotion into an immersive experience, bringing together great product, playful moments, and the viral return of PINK's square fragrance bottle. By leading with emotion over promotion, we created a fun and engaging experience for our customers. We are also showing up in ways that feel most relevant to her. As part of PINK Friday, we launched our first TikTok Live from the store, taking the in-store experience she loves and bringing it to her phone through our social channels. This is another example of how we are leaning into our heritage as an entertainment brand and creating more ways to engage through content and experiences.