Victoria's Secret & Co. (NYSE:VSCO) shares are trading lower on Thursday after the company reported fourth-quarter results and initiated a strategic review of its non-core asset, DailyLook.

Earnings Snapshot

Net sales rose 8% year over year (Y/Y) to $2.270 billion, slightly above the consensus of $2.23 billion.

The company reported an operating income of $229 million versus $268 million in the prior-year quarter. Adjusted EPS of $2.77 beat a $2.52 estimate.

Segment Results

By channel, net sales were $1.22 billion from Stores – North America, up 5.2% Y/Y; $773.2 million from Direct, up 2.8% Y/Y; and $276.4 million from International, up 43.1% Y/Y. Total comparable sales increased 8% in the quarter.

The company stated that last year's results include an approximately $26 million benefit to sales, gross margin and operating income.

Excluding the impact of last year's accounting estimate change related to outstanding gift cards, net sales rose about 9% year over year from roughly $2.08 billion.

Adjusted operating income increased about 16% Y/Y, while adjusted diluted EPS grew about 18% Y/Y.

The company began a strategic review of DailyLook, a non-core asset acquired in the December 2022 Adore Me deal.

The review aligns with the company's focus on its core brands, Victoria's Secret and PINK, under the Path to Potential strategy, while also exploring ways to optimize the Adore Me business within its portfolio.

Conference Call

Hillary Super, VS&Co Chief Executive Officer, stated, "In the quarter, our customer responded enthusiastically to our product and marketing, as demonstrated by growing new customer acquisition and increased AURs. Our 2025 results reflect the progress we have made against our Path to Potential strategy as we build brand heat and powerful connections with our customers around the world."

In the conference call, management noted that the Middle East conflict has caused some shipping delays. But these are not expected to affect the overall business materially. A small number of franchise stores in the region have temporarily closed.

The executive highlighted on the company conference call that PINK operates independently in terms of products, and it is roughly 30% focused on collaborations and 30% on core products.

Outlook

Victoria's Secret expects FY26 adjusted EPS of $3.20–$3.45, versus the $3.23 consensus. The company sees sales of $6.85 billion–$6.95 billion compared to the $6.80 billion estimate.

For the first quarter, the company forecasts adjusted EPS of $0.20–$0.30 (vs. street view of $0.09) and sales of $1.49 billion–$1.525 billion (vs. consensus of $1.421 billion).

The company says that any potential impact from tariff changes is not included in the current outlook, though the company continues to monitor developments closely.

VSCO Price Action: Victoria's Secret shares were down 12.91% at $52.26 at the time of publication on Thursday, according to Benzinga Pro data.

Photo by Sorbis via Shutterstock