Victoria's Secret shares dropped more than 16% in premarket trading Thursday after the company guided for a third-quarter operating income midpoint of $15 million, significantly below the Street consensus estimate of $24.4 million.
The soft operating income forecast stems from the retailer's decision to boost strategic marketing investments, a move CEO Hillary Super defended during the company's earnings call. "We see significant opportunity ahead and are doubling down on what is working," Super said. "We are increasing our strategic marketing investment to expand our reach, deepen customer connection, and build on the brand heat we are creating."
The guidance miss came on top of a solid second-quarter report. Victoria's Secret reported Q2 earnings per share of $0.95, beating the analyst consensus of $0.75. Revenue rose 10% year-over-year to $1.61 billion, roughly in line with the $1.62 billion estimate. Adjusted operating income came in at $124 million, up sharply from $55 million in the same quarter last year.
Looking ahead, the company guided for Q3 revenue of $1.57 billion to $1.6 billion, slightly above the $1.56 billion consensus estimate. The operating income midpoint, however, left a wide gap against Wall Street expectations.
On a full-year basis, Victoria's Secret updated its 2026 guidance upward. Revenue guidance was raised to $7.1 billion to $7.18 billion, up from the previous range of $7.03 billion to $7.13 billion, roughly in line with the $7.14 billion consensus. Adjusted operating income guidance was lifted to $560 million to $590 million, compared with the prior range of $550 million to $580 million.
