Victoria's Secret shares sink 10% on CFO transition, narrowed Q4 guidance

Investing.com -- Victoria's Secret&Co (NYSE:VSCO) updated its fourth-quarter forecast on Wednesday and appointed Scott Sekella as the new Chief Financial Officer (CFO) following Timothy Johnson's decision to retire in June 2025. 

Sekella previously held the CFO position at Joann, a fabric and crafts retailer. This appointment follows the earlier naming of Hillary Super as the new CEO in October.

The company's shares plunged nearly 10% after the market opening bell. 

The move comes amid a turnaround phase for Victoria’s Secret. Alongside the leadership change, the company has updated its fourth-quarter guidance, raising the lower end of its net sales, adjusted operating income, and adjusted earnings per share (EPS) expectations.

Despite the current macroeconomic headwinds that may affect short-term top-line trends, Jefferies analysts maintain a positive outlook on VSCO's long-term potential.

“While we do not expect a linear recovery, we believe that VSCO's long-term opportunity remains unchanged and that the company is capable of restoring lost sales while recapturing margin,” analysts led by Corey Tarlowe said in a note.

As such, the firm’s analysts have left their estimates largely unchanged, positioning them at the high end of the company's updated guidance.

Since Super's arrival, VSCO has seen positive signs such as increased foot traffic in October and November, a significant boost in social media engagement, and a slight uptick in web traffic in December.

“Looking ahead, we believe that the company is well-positioned to continue witnessing healthy data trends,” Jefferies analysts concluded.

Following the guidance update, Victoria’s Secret now expects its fourth-quarter adjusted operating income to be between $260 million and $270 million, compared to its previous range of $240 million to $270 million. Analysts surveyed by Bloomberg had estimated $266.5 million.

The company projects net sales growth of 3% to 4% and revised its adjusted EPS forecast to $2.20 to $2.30, up from the prior range of $2.00 to $2.30. The consensus estimate stood at $2.27.