VSXY

Wrapping up Q2 earnings, we look at the numbers and key takeaways for the apparel retailer stocks, including Victoria's Secret (NYSE:VSXY) and its peers. Apparel sales are not driven so much by personal needs but by seasons, trends, and innovation, and over the last few decades, the category has shifted meaningfully online. Retailers that once only had brick-and-mortar stores are responding with omnichannel presences. The online shopping experience continues to improve and retail foot traffic in places like shopping malls continues to stall, so the evolution of clothing sellers marches on. The 8 apparel retailer stocks we track reported a satisfactory Q2. As a group, revenues were in line with analysts' consensus estimates while next quarter's revenue guidance was 0.7% below. In light of this news, share prices of the companies have held steady as they are up 2.5% on average since the latest earnings results. Spun off from L Brands in 2020, Victoria's Secret (NYSE:VSXY) is an intimate clothing and beauty retailer that sells its own brands of lingerie, undergarments, and personal fragrances. Victoria's Secret reported revenues of $1.61 billion, up 10.4% year on year. This print fell short of analysts' expectations by 0.6%. Overall, it was a mixed quarter for the company with a beat of analysts' EPS estimates but full-year EPS guidance missing analysts' expectations. Hillary Super, VS&Co Chief Executive Officer, said, "We delivered another strong quarter with broad-based growth across the business. Our Path to Potential strategy is working, our brands are stronger and more relevant, our customer file is growing, and we are gaining market share as product, brand identity, storytelling and execution are all working together." Victoria's Secret achieved the highest full-year guidance raise in the group. Unsurprisingly, the stock is up 8% since reporting and currently trades at $91.60. Is now the time to buy Victoria's Secret? Access our full analysis of the earnings results here, it's free. With an emphasis on skate and surf culture, Tilly's (NYSE:TLYS) is a specialty retailer that sells clothing, footwear, and accessories geared towards fashion-forward teens and young adults. Tilly's reported revenues of $163.5 million, up 8.1% year on year, outperforming analysts' expectations by 4.1%. The business had an incredible quarter with EPS guidance for next quarter exceeding analysts' expectations and a beat of analysts' EPS estimates. Tilly's scored the biggest analyst estimate beat and highest guidance raise of the whole group. The market seems happy with the results as the stock is up 20.7% since reporting. It currently trades at $4.60. Is now the time to buy Tilly's? Access our full analysis of the earnings results here, it's free. With store associates called "Zumiez Stash Members", Zumiez (NASDAQ:ZUMZ) is a specialty retailer of street and skate apparel, footwear, and accessories. Zumiez reported revenues of $209 million, down 2.5% year on year, falling short of analysts' expectations by 1.5%. It was a disappointing quarter as it posted revenue guidance for next quarter missing analysts' expectations significantly and EPS guidance for next quarter missing analysts' expectations significantly. As expected, the stock is down 20% since the results and currently trades at $13.37. Read our full analysis of Zumiez's results here. Founded as an outdoor and sporting brand, Abercrombie & Fitch (NYSE:ANF) evolved to become a specialty retailer that sells its own brand of fashionable clothing to young adults. Abercrombie and Fitch reported revenues of $1.27 billion, up 4.8% year on year. This print beat analysts' expectations by 1.8%. Overall, it was an exceptional quarter as it also recorded EPS guidance for next quarter exceeding analysts' expectations and a beat of analysts' EPS estimates. The stock is up 25.5% since reporting and currently trades at $136.69. Read our full, actionable report on Abercrombie and Fitch here, it's free. With a heavy focus on denim, American Eagle Outfitters (NYSE:AEO) is a specialty retailer offering an assortment of apparel and accessories to young adults. American Eagle reported revenues of $1.38 billion, up 7.5% year on year. This result topped analysts' expectations by 0.7%. It was a very strong quarter as it also put up a beat of analysts' EPS estimates. The stock is up 4.2% since reporting and currently trades at $17.61. Read our full, actionable report on American Eagle here, it's free. Over the past year, investors have been forced to repeatedly answer the same question: what is the market's biggest risk? The answer has changed several times, and each shift has reshaped market leadership. Late in 2025 and early 2026, artificial intelligence became the market's primary uncertainty. Investors questioned whether AI would erode software pricing power and weaken competitive moats as AI made it easier to replicate once-differentiated products. By the spring, technology took a back seat to geopolitics. The U.S. conflict with Iran briefly became the market's dominant narrative, raising concerns about oil prices, inflation, and global growth. But as energy markets remained orderly and fears of a prolonged supply disruption faded, investors quickly turned their focus back to fundamentals. Want to invest in winners with rock-solid fundamentals? Check out our Strong Momentum Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.

Image source: The Motley Fool. Thursday, Sept. 3, 2026 at 8:30 a.m. ET Global Controller - Kevin Wynk Chief Executive Officer - Hillary Super Chief Financial and Operating Officer - Scott Sekella Chief Marketing and Customer Officer - Elizabeth Preis Operator: Good morning. Name is Amanda, and I will be your conference operator today. At this time, I would like to welcome everyone to Victoria's Secret and Company's Second Quarter 26 Earnings Conference Call. Please be advised that today's conference is being recorded. All parties will remain in a listen-only mode until the question and answer session of today's call. I would now like to turn the call over to Kevin Wynk, global controller at Victoria's Secret and Company. Kevin, you may begin. Kevin Wynk: Thanks, Amanda. Good morning, and welcome to Victoria's Secret and Company's Second Quarter Earnings Conference Call for the period ended 08/01/2026. 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 release. 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 Investors section of our website. With that, I will turn the call over to Hillary. Hillary Super: 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 2 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 2 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 acquisitions 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, 2 areas stood out. Bras and PINK. Both are central to our Path to Potential 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 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. But 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. All together, 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 1 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 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 broad 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 continue to grow alongside more frequent newness. 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 20 Fifth 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 continue to see a strong response to innovation across key silhouettes. 1 example this quarter was the Flex Factor balcony. 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 Balconet 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, 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 clearer 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 keePINK 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 2 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 4 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 8 consecutive quarters of growth, remains an important part of the strategy and 1 of Pink's largest customer growth vehicles. Denim, linen, and fleece 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 1 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 the content and experiences. We are also expanding brand heat through collaborations and partnerships. Such as with JanSport and most recently Hydro Jug and the NFL. These remain important ways to create excitement, reach new customers, and give her new reasons to engage. As PINK increasingly stands on its own, those collaborations become the icing on a much stronger foundation built on recognizable brand codes, compelling core product, and a clear point of view. As we head into fall, we are listening to her, understanding the moments that matter, and responding in ways that feel uniquely pink. We are bringing that focus to moments like back to school while continuing to build opportunities in categories like accessories. We see significant runway to continue building from here. Turning to beauty. Beauty grew mid single digits in Q2 and delivered its 12th consecutive quarter of sales growth. Importantly, the quality of that growth remains strong. With regular price selling up high single digits. Growth was driven by strength in the core, especially fine fragrance and mist, while a consistent cadence of innovation gave her new reasons to engage. This year, we introduced 6 incremental scents, creating a steady flow of newness. And when customers tell us they have found something they love, we are extending many of those fragrances beyond their original launch windows. We are integrating beauty more fully into the broader Victoria's Secret world. We increasingly think about fragrance as the final outfitting layer connecting scent to the product, campaigns, and moments she is already engaging with across the brand. Mother's Day was a great example. Bombshell Bouquet was at the center of an integrated campaign that brought together fragrance, emotional storytelling, and gifting. We were also more surgical about where, when, and how we deployed our marketing investment, focusing on key days and channels leading into the holiday. Over Mother's Day weekend, beauty sales further accelerated, which reinforced an important learning. When we win in the moments that matter, we win in beauty. We are becoming more disciplined about identifying those moments, aligning product, marketing, and experience around them, and showing up in a more focused way. We are also getting better at identifying what is resonating with her and bringing those trends into beauty in ways that feel distinctly Victoria's Secret. Shimmer is a good example. We introduced Shimmer across both core and seasonal mist offerings and have seen continued growth. Looking ahead, we see an opportunity to build on that response by expanding into additional shimmer forms within Bombshell. We are also tapping into the nostalgia trend through archive drops. We brought back the original pink square bottle scents for Pink Friday, the collection sold out digitally in less than a day. More importantly, it reinforced the deep emotional connection our customers have with our fragrance heritage. We have decades of iconic scents and formats across Victoria's Secret and pink. And we are bringing them back in ways that feel relevant today. We are applying all of the learnings and our integrated marketing approach to 1 of our biggest beauty launches this year, Strawberry Bizzu, which continues to accelerate. Along with the customer response to Pink Friday, this gives us further confidence in our momentum going forward. Looking ahead, we continue to see meaningful runway in beauty through innovation franchise expansion, archive storytelling, strategic media investment, and stronger integration across the brands. Turning to our fourth pillar, evolving brand projection and go to market strategy. Brand relevance, awareness, and emotional connection are translating into customer growth. We continued to gain share in intimates, outpacing the market. That momentum is supported by emotionally resonant campaigns better customer engagement online and in store, and much fuller utilization of the marketing funnel. We delivered our fourth consecutive quarter of overall customer growth with gains across new, active, and reactivated customers as well as all income and age cohorts. That growth was broad based across all channels, brands, and key categories. New customer acquisition grew high single digits and continues to outpace total file growth with particularly strong, among 18 to 24 year olds, an encouraging sign of our growing relevance with younger customers. Customers are returning at a higher rate and spending more. Supported by a more integrated marketing ecosystem, including digital, social, app push, and CRM, all working together to reach new audiences and retain our loyal customer base. As part of our strategic rebalance of marketing investment, we are engaging her in new and exciting ways. Alongside our bigger campaigns, we have significantly increased our work with influencers, become more agile with social first content, and experimented with new formats like TikTok live. Our app and own channels are also helping us create a more connected customer journey. As we create more opportunities for her to engage, we are seeing a growing sense of community around our brands. Customers want to engage. They want to participate. They want to be part of the VS and PINK worlds. That is an important part of how we deepen our relationship with her and build fandom over time. We have significant opportunities to build on that engagement and sense of community in the back half. 1 of the biggest is the fashion show. Which we are continuing to evolve from a single event into an ongoing franchise. Last year gave us important insights into the show's potential. What stood out most was the excitement and fandom that emerged from our community. People threw watch parties, gathered with friends, and engaged across social. That engagement helped drive customer acquisition and product demand that exceeded our expectations and gives us confidence to increase our marketing behind the opportunity this year. We are also applying learnings from last year by creating dedicated watch parties around the country, making the show more accessible with distribution across YouTube and live streaming on social platforms and building more excitement in the lead up to the show. Angels Among Us, a nationwide search for the next angel, is an important part of that strategy. Building on the overwhelming response, we recently announced a special docuseries produced by Boardwalk Pictures. Premiering globally on YouTube on September 27, the series will follow the aspiring angels on their journey all the way up to the show where the newest angel will be revealed. Angels Among Us is a great example of how we are leveraging our strength as an entertainment brand by giving our community a more active role in the Victoria's Secret world and celebrating the fans who have always been the heart of the brand. Beyond the docuseries and the fashion show, we have an exciting and packed calendar ahead. We have more product innovation, partnerships, and emotionally connected campaigns coming through fall and holiday as we continue giving customers more reasons to engage with both brands. Finally, I want to touch on international. Our international business continued to grow in Q2, led again by China and our European digital business. The growth was broad based, with strength across channels and geographies. Importantly, we are delivering this growth on top of strong performance last year. We are continuing to expand the brand's global presence through new flagship openings in key markets, local content and marketing, and through the fashion show, which is resonating with customers all over the world. Our strategic priorities are translating globally, and we continue to see significant runway ahead. In closing, next week will mark 2 years since I joined Victoria's Secret. When I arrived, I knew there was meaningful work ahead, but I also knew what these brands could become. 2 years later, I have even greater conviction in the opportunity in front of us. Our customer file is larger and healthier. We are gaining market share, and customers are responding to stronger product more fashion, and more culturally relevant storytelling. We are winning from the core. We are amplifying those wins through fashion, innovation, and emotional connection. And we are seeing that translate into more customers stronger brands, and higher quality growth. Our path to potential strategy is delivering results. Despite a challenging macro environment, we are firmly in growth mode. For all the progress we have made, we still see tremendous runway ahead. We are getting better and faster at turning customer insight into action. helping us target more effectively and drive increased customer engagement. We enter the back half with a strong pipeline of product innovation and brand moments to build on this momentum. We will continue investing behind the growing brand heat in both VS and PINK to expand our reach and deepen engagement. 2 years in, I am incredibly proud of what our teams have accomplished. Their energy and commitment to putting our customers and brands first continue to impress me. I want to thank them for their passion and dedication, which have driven the progress we have made. Our teams are 1 of the biggest reasons I am even more excited about what is ahead. We have bold ambitions for this company. Significant opportunities still to capture, and we are not slowing down. With that, I will turn it over to Scott to walk through our results in more detail. Scott Sekella: Thanks, Hillary. Thank you, everyone, for joining today's call. We are very pleased to report second quarter results with operating income and earnings per share well above the high end of our guidance and net sales near the high end of our expectations fueled by strong North America and international performance. As Hillary mentioned, our Path to Potential strategy continues to deliver. Accelerating brand heat is translating into customer growth across the portfolio, and we are seeing healthy regular price selling in our core categories. Our continued execution and discipline drove exceptional first half performance keePINK us firmly in growth mode. We enter the back half well positioned with a high quality inventory position and elevated product innovation across Victoria's Secret, PINK, and beauty. We are also energized by our marketing activations, including the angels among us docuseries and an extended fashion show presence all of which give us confidence as we head into the second half of the year. 1 note before jumping into second quarter results. In the quarter, we received IEPA tariff refunds of $140 million, representing over 95% of the IEPA tariffs paid by the company. We have excluded the refunds from our non GAAP results and thus the results discussed on today's call exclude the impact of the refunds. Now turning to second quarter results in greater detail. Net sales were $1.611 billion an increase of $152 million, or 10% compared to last year. This was our fifth consecutive quarter of strong top line growth. Q2 comp sales increased 9% and 13% on a 2 year basis, consistent with our Q1 trend. Adjusted operating income increased a strong 105% to $124 million and adjusted net income per diluted share increased almost threefold to $0.95 from $0.33 in the second quarter of last year. As Hillary highlighted, the quarter's performance was broad based, with strength across Victoria's Secret, PINK, and beauty. And across channels. For the quarter, store and digital traffic both increased compared to last year. With digital traffic outpacing stores. We registered our fourth consecutive quarter of customer file growth, up mid single digits over last year. And as Hillary noted, new customer growth continued to outpace the total file growing high single digits. Regular price selling continued to strengthen in the second quarter. Supported by product innovation wins and expanding brand heat across Victoria's Secret, PINK, and beauty. Remain disciplined on inventory. Allowing us to further reduce promotional activity across levels, event count, and duration. As a result, second quarter AURs accelerated to up high single digits compared to last year. Ahead of the mid single digit growth we saw in the first quarter. We also grew total units low single digits in the quarter including regular price units, which were up high single digits. From a top line perspective, we saw outside strength in May and July, both up double digits year over year, while June was up mid single digits with strong performance during the initial weeks of our semiannual sale event. As Hillary noted, we have gained valuable insight into the opportunities to strengthen next year's semiannual sale that work is already underway. By brand, registered year over year retail sales growth across the portfolio. Victoria's Secret up mid teens pink up high single digits, or mid teens excluding a shift in the timing of the Pink Friday event from Q2 last year into Q3 this year. And beauty up mid single digits. We saw another quarter of strength in North America, with VS Intimates, accelerating from Q1 growing mid teens compared to last year. With pink intimates up high single digits which reflected a headwind from the timing shift of the Pink Friday event As Hillary reviewed, product innovation, marketing execution, and integrated gifting approach around Mother's Day, and strong initial semiannual sale performance, all contributed to another quarter of strong North American results. Our international business delivered another quarter of strong year over year growth. International reported net sales growth was 20% in the second quarter, inclusive of retail comp sales growth up low teens. The growth was led by another quarter of outstanding performance in China, in both the digital channel, which continues to be driven by social selling, as well as in stores where we are seeing very impressive comp sales results. Continued growth in the quarter was partially offset by fewer merchandise sourcing sales to our franchise partners in Q2 compared to last year as a result of order and shipment timing. For the full year, we continue to forecast international net sales up approximately 20% on top of strong results last year. As Hillary mentioned, our strategic priorities are translating globally and we continue to see significant runway ahead. As a reminder, we began fulfilling digital orders in Europe out of our new European distribution center in the third quarter last year, and thus began recording these sales as part of our international channel at that time. Adjusting for the reporting shift to these European digital sales, from direct sales to international sales, second quarter international sales grew 10%. Turning to margins. Second quarter adjusted gross margin dollars were $626 million an increase of $106 million or 20% over last year. The adjusted gross margin rate in the quarter was 38.8% compared to 35.6% in the second quarter last year. An expansion of 23 basis points and 30 basis points above the high end of our external guidance of 38.5%. Of the 23 basis points of year over year expansion, approximately 2-thirds was driven by higher merchandise margin reflecting increased mix of regular price selling and continued reduction in promotions with the remainder driven by buying and occupancy leverage on the 10% increase in net sales. The incremental gross tariff headwind in the quarter compared to last year was approximately $10 million, slightly better than our expectation and the net benefit factoring in mitigation was approximately $20 million, consistent with our guidance. The adjusted SG&A dollars were $502 million in the second quarter, and our adjusted SG&A rate was 31.1% compared to 31.8% last year. A 70 basis point improvement and 140 basis points better than our guidance of 32.5%. SG&A rate leverage on higher sales was achieved despite increased expense from North America Flex costs related to higher demand trends. Adjusted SG&A dollars continued to grow slower than net sales in the quarter. Reflecting ongoing leverage even as we made thoughtful investments in customer facing initiatives, including marketing, and the in store customer experience, the trend we expect to continue for the balance of the year. Adjusted operating income of $124 million was 125% above last year's adjusted operating income of $55 million, an increase of $69 million and exceeded the high end of our guidance range of $90 million to $100 million by $24 million Adjusted non operating expenses consisting principally of interest expense were $13 million in the quarter, consistent with our guidance and compared to $17 million last year. Our adjusted tax rate was 22.9%, in line with our guidance. Adjusted net income was $80 million compared to $27 million last year. And our adjusted net income per diluted share was $0.95 above the high end of our guidance range of $0.65 to $0.75 and compared to $0.33 in the second quarter of last year. In the second quarter, we did not repurchase any shares under our $50 million repurchase authorization approved in March 2024. Year to date, we have repurchased 2.2 million shares totaling $100 million at an average price of approximately $45 leaving $150 million remaining under our current authorization. had 84 million weighted average diluted shares outstanding in the quarter, in line with our guidance. Now turning to the balance sheet, Our inventories remain in a healthy position. Second quarter total inventories were up 8% year over year, in line with our guidance of up high single digits. From a liquidity standpoint, we ended the second quarter with a cash balance of $522 million, an increase of $334 million above last year with no outstanding borrowings on our ABL compared to $75 million last year. Cash balance and the remaining availability under our ABL leaves us in a strong financial position with ample flexibility for continued execution of our strategic priorities. Now let's turn to our outlook for the remainder of fiscal 26. 1 note regarding tariffs. Our third quarter forecast assumes current tariff rates of approximately 10-12.5% for the respective countries in which we source products. For the fourth quarter, our forecast assumes a return to an approximate 20% tariff rate. For fiscal year 26, we are raising our top and bottom line guidance. We now expect net sales to be in the range of $7.1 billion to $7.18 billion, up from our prior range of $7.03 billion to $7.13 billion and compared to net sales of $6.55 billion in fiscal year 25. The increased net sales outlook represents year over year growth of 8% to 10% compared to prior guidance of 7% to 9%. We now expect fiscal 26 adjusted operating income in the range of $560 million to $590 million compared to $403 million in fiscal 25. This represents an increase of $10 million at both ends of our prior guidance range of $550 million to $580 million. This outlook in part reflects our decision to reinvest a portion of the outperformance into marketing to accelerate short and long term growth. We are raising our fiscal year 26 adjusted net income per diluted share, to be in the range of $4.45 to $4.70, up from our prior range of $4.35 to $4.60, and compared to adjusted net income per diluted share of $3 in fiscal year 25. Our forecast assumes weighted average diluted shares outstanding of approximately 85 million. We continue to estimate capital expenditures in the range of $220 million to $240 million in fiscal 26 or approximately 3% of sales. In North America, we continue to expect store counts at the end of 2026 to be flat to slightly up compared to last year, with 45% of our global fleet in our store of the future design including 30% in North America and 55% internationally. Turning to our outlook for the third quarter of 2026. The strong first half momentum has continued in the third quarter. We are forecasting third quarter net sales in the range of $1.57 billion to $1.6 billion compared to net sales of $1.47 billion in the third quarter of 25. As mentioned earlier, Pink Friday shifted from Q2 last year into Q3. This outlook assumes top line growth of approximately 7% to 9% based on continued momentum quarter to date in our North American business as well as strength in our international business. On a 2 year basis, our sales forecast for the third quarter is up 16% to 18%, reflecting an acceleration from Q2. With this sales outlook, we expect third quarter 26 operating income to be in the range of $10 million to $20 million compared to adjusted operating income of approximately breakeven in the third quarter of 25. Expect our third quarter 2026 gross margin rate to be about 38% compared to 36.5% in the third quarter of 25 representing approximately 150 basis points of expansion. The expected rate expansion is based on the strength of our operating model which continues to deliver leverage on buying and occupancy expenses as net sales grow as well as our disciplined promotional strategy and more regular price selling. We also expect a gross tariff headwind similar to last year in the third quarter. And when factoring in mitigation efforts, year over year net benefit of approximately 60 basis points compared to the prior year. Partially offsetting these gross margin tailwinds is incremental pressure this year from rising transportation costs. SG&A rate in the third quarter of 2026 is expected to be approximately 37.5% compared to an adjusted SG&A rate of 36.5% in the third quarter of 25. An increase of approximately 100 basis points. This reflects customer facing investments including Angels Among Us and overall marketing spend, and higher assumed incentive compensation on improved forecasted results for the back half of the year. Non operating expense is expected to be approximately $13 million, favorable compared to $18 million in the third quarter of last year. Reflecting higher interest income on higher cash balances following the collection of tariff refunds together with reduced borrowings under our ABL facility. Given the near breakeven level of pretax income forecasted in the third quarter, we are forecasting income taxes to be insignificant in the period. Given these inputs, we estimate third quarter net income per diluted share to be in the range of a loss of $0.09 to income of $0.01 compared to adjusted net loss per diluted share of $0.27 in the third quarter of last year. Enter the back half of the year with healthy inventories and expect to end the third quarter with inventories up high single digits compared to last year to support business trends. In closing, our results this quarter reflect 2 years of significant transformation across Victoria's Secret, PINK, and Beauty. We are pleased with the continued acceleration in our top and bottom line performance, we believe there remains a long runway of opportunity ahead as we continue to grow our customer base, invest in our brands, our customer experiences, and our operating capabilities. I would now like to open it up for questions. Operator? Operator: Please press 1 and record your name clearly when prompted. To withdraw your question at any time, you may press star then 2. As a reminder, we ask that each participant limit themselves to 1 question and 1 follow-up to allow ample time to respond to each participant that may wish to participate in this portion of the call. For our first question, we will go to the line of Adrienne Yih with Barclays. Your line is open. Mike Vu: Good morning. This is Mike Vu on for Adrienne Yih. Thank you for taking our questions. So it is great to continue to see the strong regular price selling and strength at PINK across all the categories. So, I guess we wanted to ask specific to PINK. Would you be able to share any color on the use of promotions at the division and are you seeing any elevated promotions from the apparel category versus the other ones? Scott Sekella: Hey, Mike. it is Scott. I can take that. So at Ping, much like the other brands, we continue to pull back on promotions. Even on apparel. I mean, the regular price selling continues to be where all the growth is coming from. And within apparel, it is even particular to our sort of pink icon styles. Got it. Mike Vu: And then as a follow-up, I know, Hillary, you cited the total customer file grew mid single digit. New customer acquisition was up high single digits, and you saw improved retention during the quarter. So I guess we wanted to know what are you learning about the quality of these newer cohorts? Any color on initial AUR, repeat purchases, or cross-category purchasing? Thanks. Hillary Super: Thanks for the question. I am actually going to have Elizabeth, our Chief Marketing and Customer Officer, answer that. Elizabeth Preis: Right. Yes. We are very happy with our customer file this past quarter. It was the fourth straight quarter of customer growth and the fourth straight quarter of new customer acquisition that outpaced The key thing we are doing right now is we are really using our full network of owned channels and paid channels. Would include paid search, paid social, push, and email to make sure that we are keeping that customer engaged within the brand. As a result of these efforts, we are actually bringing those customers back to us more of them back to us. They are coming back faster, and they are actually spending more when they do come back. Great. Thank you very much. Thank you. Operator: Our next question comes from Dana Telsey with Telsey Advisory Group. Your line is open. Dana, your line is open. You may need to unmute yourself. Dana Telsey: Hi, Hillary. Morning, everyone. And nice to see the progress. As you think about the bra category, where you are gaining significant share, and the path going forward, how do you think about product introductions, pricing, and how do you think about it for PINK? VS Victoria's Secret? Secondly, what about retail stores? The PINK store in SoHo is doing well. Is there opportunity for others even if it is a selective number? And just lastly, marketing spend. And how you think of marketing spend for the balance of this year. And how you think about it for next year What is sustainable in marketing investment? what is new and different? Thank you. Hillary Super: Thanks, Dana. I will start off and then Scott and Elizabeth may chime in at the end. So bra sales in PINK and VS. So I will start with I will start by saying our innovation engine is fully in gear, shall we say. And in July, we were able to launch 2 innovations, 1 in pink, 1 in VS, that were very much, grounded in what we heard from the customer. On the VS side, it was taking a frame, the balcony, which she is absolutely loving, and marrying that with flex factor, a technology we know she loves. And creating a new product that really, really resonated with her. And then on the PINK side, it is the first time we have had a new frame in over 2 years, and it has been tremendous. It was 100% incremental. We still saw the other 2 franchises grow in the month, and we continue to see momentum in both brands in bras. Bras are really driving lion's you know, the lion's share of our growth in both brands. And we have a full pipeline of innovation on the way. We also we also think of we think of innovation in terms of technical innovation and also fashion innovation. And so then I would point to our very sexy launch in August where we launched a very fashion bra called the Very Sexy Envy it is already in our top 10, which is quite tremendous for a fashion bra. So long story short, more innovation, more fashion, more frequent, newness, and really focusing in our core to be much more productive to allow for that fun in the fashion space. So firing on all cylinders in the bra category, I am very excited for what is to come. On your question on retail stores and the PINK store in SoHo, we are really pleased with that store and we are pleased with it and its performance, but we are also pleased with it in terms of the experimentation, community building, cultural connectivity such as the TikTok Shop Live, that we did during Pink Friday. So it is absolutely a laboratory for us. And we are actively thinking about where there might be opportunity to bring more pink standalones. Over time, we want to meet the customer where she is. We will be selective in that, but we definitely think it is an opportunity. And then I will let Scott and Elizabeth talk about the marketing. Scott Sekella: Yeah. In terms of marketing spend, you know, we are in the low 7% of sales right now. We see opportunity over the next couple of years to drive that up to a high single digit. But, you know, the return that Elizabeth will talk to in the marketing is what gives us confidence to invest in marketing on the back half of this year. So there is an investment with angels among us, the docuseries that we are excited about, but that investment will continue in the fourth quarter, and we see this as really being sustainable as we go forward. Elizabeth Preis: Yeah. We have had solid growth. We started this journey about 4 quarters ago. Basically redeploying our marketing investment. I would say that we were sort of focused very much on our existing customers, and we were not really reaching more new customers. Since we have deployed a much more digital first social centric approach, that is allowed us to reach a broader audience, a broader relevant audience, and that is what has helped us bring in many more new customers. And I would say that when we started this journey, we did not have marketing that was not performing. What we have done in the past 4 quarters is actually optimize our marketing mix. So while not spending a lot more, we have actually just been shifting the dollars and that has performed very nicely for us. We see the results both in terms of traffic, traffic to stores, traffic to online, and we also see the results very clearly in our customer accounts and our customer new customer acquisition. So that gives us a lot of confidence for the go forward. We are going to continue this. We see this-- we see this additional opportunity. Of turning even more dollars into working dollars for us. And are excited about the back half. Over time, we believe that we could take the marketing investment from currently just over 7% annually up to high single digits. Thank you. Operator: Thank you. Our next question comes from Matthew Boss with JPMorgan. Your line is open. Matthew Boss: Great, thanks. So Hillary, on 9% comps in the second quarter, which accelerated on a 2 year stack, can you speak to the cadence or July exit rate trends excluding some of the shifts? And just elaborate on the August momentum or your confidence in raising back half revenue guidance despite tougher comparison? Hillary Super: Thanks, Matthew. Yeah, sure. So July was incredibly strong for us, and we accelerated in August. So July, very much grounded in bra innovation both brands. Very, very pleased with our performance in July. And as we entered August, I would say that in VS and PINK, the business was largely consistent, and we saw beauty, really accelerate. So I thought I would just take a minute to talk about some of the things that we have been working on in beauty because you will start to see them in the back half of the year. Really 4 key things we have been working on in beauty. 1 is our innovation pipeline. Very similar, taking a page out of the playbook in bras and applying it to beauty, and that is starting to come to market. 2 examples of that are Strawberry Bizzu from TEAS, which just launched this month. And has been very, very strong, as well as integrating shimmer into our product. And that is something you will see in the back half with the Bombshell franchise. The second is really tapping into our archive and then the nostalgia trend that is going on in social media and what we are calling bring back fragrances. And you know scent memory is really important and with all of the emotional attachment that our customer has to the brand, really, tying that with a bow with scent memory, we are finding is incredibly powerful. And so the pink square bottles, which sold out online in the first day, are a good example of that. And we have more of to come in the pipeline. that is something that we are really thinking about across the entire enterprise. The third is brand integration, making sure that scent is part of the big brand moments, Mother's Day being an example, Valentine's Day being example. And then finally, what is our channel experience for beauty? We have been working on new in store displays integrating into the main floor new creative, etcetera. So you will start to see an elevation in the beauty area in stores as well as, you know, some work in the service piece of the business. And then finally, our digital channel. When I say digital channels, I mean all of the touch points of digital, and that includes the use of influencers, which we also have had incredible success in the bra arena with. As well as TikTok shops and TikTok lives. So it is really a full court press in beauty, and that is just starting to come to life. And, you know, we are just feeling really strong about the business overall. Matthew Boss: Great color. And then as a follow-up, Scott, could you speak to North America and international top line performance relative to internal plan in the second quarter. Have you seen acceleration in both regions as you cited in August And just what you have embedded for the back half across the 2 regions, or are there any growth drivers that you see moderating relative to the front half of the year? Scott Sekella: Yes. I mean, Hillary touched on how North America has performed to start the back half, which gives us confidence there. From international, in Q2, we saw a little bit of a mix shift where we had less of the sell in to our franchise partners. Those are real low margin sales, which is why we had 1 of the reasons we had such good flow through in the second quarter. As we go forward in international, it was really the back half of Q2 when their growth accelerated even beyond what we had been seeing. So we are lapPINK that in the back half. So I do expect the growth to moderate a bit. And for the year, I think it will be approximately 20% growth. that is great color. Best of luck. Operator: Thank you. Excuse me. Our next question comes from Corey Tarlow with Jefferies. Corey Tarlowe: I guess, first, for Hillary and Scott, 1 of the things that is very impressive to me is that if we look back over the last several years, The company has not made money. In the third quarter. And based on the outlook that you provided today, there actually is scope for positive operating profit and earnings. And I think that speaks to potentially the positive underlying momentum of the business. So I was wondering if you could maybe highlight for us what it is that you see helping to drive that and support more profitable business going forward, despite the investments being made in the third quarter? Scott Sekella: Hey, Corey, it is Scott. Great question. And 1, we are proud of that we have been able to turn positive in Q3 because we know that is a heavy investment quarter. what is driving that is the continued really, strength of strong sell through of our regular price core products. We saw that in Q2, which helped contribute to the strong flow through. We are seeing that continue to come to fruition in Q3. So a few numbers on that. In Q2, our total units were up low single digits. But our regular price units were up high single digits. So I will take that mix anytime. And as we go forward into Q3, we really see units for Q3 accelerating and going to be up in the mid to high single digit. and so that strong flow-through is what is enabling us to turn profitable in Q3 despite investing even more into marketing to support fashion show, Angels Among Us, and just driving that new customer growth. So it speaks to the health of the P&L. Corey Tarlowe: Great. And then just to follow-up, Hillary, you shared that the customer file continues to grow. that is across all customer segments. And particularly a focus on new customers. Could you provide a little bit more color around how these new customers are performing post acquisition? Are they 1 and done? Or can you share any insights into their long term value? Hillary Super: Thanks, Corey. I will have Elizabeth speak to that. Elizabeth Preis: Sure. Yeah, we are very encouraged that these customers are not 1-and-done. Through our network, we are able to actually bring more of them back. And we are doing that with a very strategic approach. We are benefited with literally tens of millions of customers. And over 100 million followers and fans across all the social platforms. So that allows us a very, very rich dataset to tap into. And to market and to remarket against. So all of that basically allows us to very efficient with our funds, be very efficient with our targeting, and as bringing more customers back to us not only in the paid channels, but also in our organic channels. A fun fact is our app growth was up 30% last quarter, and that was on top of double growth from last year. Great. Thanks so much, and best of luck. Thank you. Operator: Our next question comes from Alex Straton with Morgan Stanley. Your line is open. Analyst: My first 1 is for Scott. Can you just speak to why back half margin expansion slows a bit from what you were seeing in the front half? Maybe just the puts and takes around gross margin and SG and A and what gets worse in the back half? Would be helpful. Then I have just 1 follow-up. Scott Sekella: Yes. So I will talk Q3 and a little bit on Q3, the growth of 7% to 9% on forecast is just a little bit obviously below what we have had in Q1 and Q2 as we have the tougher comps. So our leverage on B&O is just less than it was in that in that first half. The other thing to consider is in Q4, well, let me jump back. Q1 to Q3, we continue to drive promo favorability down close to a 100 bps each quarter. In Q4, given the heavy promotional nature of that quarter, we do not plan promos to be down. We plan we are planning them flat to slightly down. So that is a deterrent on that margin expansion in the back half. Analyst: Perfect. And then maybe for Hillary, I just wanted to dig into stores a bit more. I think you all said digital traffic outpaced the store. So what is your view on the role of stores for the brand generally? Do you think the current fleet size is the right 1? Any learnings on Store of the Future, if you plan to continue rolling those out? Any changes there? Would be helpful. Thanks so much. Hillary Super: Sure. Digital did outpace, but I would like to add that our stores outpaced the mall. So I think that they are in a very, very important competitive tool for us. They differentiate us. I think with bras being at the heart of our business, our service which I think is industry leading, is critical. I think what we do in terms of bra fitting in a personal space is unmatched. And so I believe very much in stores. We definitely see Gen z wanting a store experience even more than other groups of customers. And so we are investing in stores. Store of the future continues to be more productive. We are tweaking it as we learn about the business. I would say primarily in the beauty arena. Making sure that we have appropriately sized selling square footage by business, making sure that we have a pink side of the business that is what I will call pinkified. And so we are really looking at the SoHo store and determining what we will take to all stores or some stores based on the success of that pilot And in terms of the future of the fleet, you know, we have not really grown meaningfully in store count in some time. And we do think there is opportunity to selectively grow our footprint in actually globally, but also in North America. So very much believe in stores, very much believe that they are at the heartbeat of our business. And proud of what they have delivered. Thanks so much. Thank you. Operator: Our next question comes from Mauricio Serna with UBS. Your line is open. Mauricio Serna: Great. Good morning. Thanks for taking my questions. I guess I just want to follow-up on comment about the semiannual sale. You know, how should we think about the strategy for that event going forward? I mean, should we see that, you know, less of a revenue driver, but it is more stronger profitability just given how you, you know, continue to pivot towards more regular price selling. And then in terms of the marketing investment, that you talked about, you know, exactly, could you just elaborate on, like, the main buckets of marketing investment, and how should we think about that maybe manifesting in sales upside, you know, I do not know if it is, like, second half, or you expect to see that investment, you know, come into fruition or is it more like thinking about fiscal 27? Thank you. Scott Sekella: Mauricio, it is Scott. I will take the semiannual sale start there. But we do see semiannual sale still playing a key role in the period. It allows us to clear units, but to your point, it is less of an event as we go. And we do think there is a opportunity to add newness in the back part of that event. And not have the event be the hero. We are seeing higher AURs in the semiannual sale as we pull back on promotions and levels. And so it will it will continue to be less in the quarter for us. In terms of marketing investment, I will start, and turn it over to Hillary and Elizabeth. But, you know, we believe strongly in the marketing investment we are making. it is across the board, both in fashion show, but also in driving customer growth and the brand projection. So we see it impacting not only second half, but carrying forward into next year. And so we are looking at this as a key investment that will continue to make, and it is Not just Q3, but it is also in Q4. And then we will carry forward as Elizabeth talked about previously. Elizabeth Preis: I mean, yeah, we are confident that we are investing in the right ways to reach a new audience. We have a lot of runway ahead of us. We know that at our peak, we have many more customers than we do now. But here are the things that are giving us confidence that we will continue to invest, and that will prove fruitful for us. 1, our evolving marketing is already working for us. Customers are up, brand health metrics are up, and traffic is up both in stores and online. Secondly, we have a very disciplined execution plan in place. it is all about increasing our awareness to increase traffic, and then build a base with that traffic We will then convert that traffic much more efficiently. Based on our ecosystem and very wide network on both the digital platforms as well as our own active base. And then finally, as I said earlier, we are bringing these customers back to our brands once they do shop, at a higher rate And when they do, they are spending more. So we have a very good system in place. We have had 4 straight quarters of this being deployed, and we are seeing results. And we still have room to go. Mauricio Serna: Got it. If I could squeeze in a quick follow-up just on international, I think, like, you know, underlying growth, you know, if you if you exclude the shift and the shipments of the European distribution, center decelerated from 36% the previous quarter to 10% this quarter. You know, I know, like, anything in particular that you know, you could call out that caused that? I know you mentioned some shift in the shipments to your wholesale partners, but just more details will be very helpful. And then just on top of that, like, what are you seeing in China, you know, because we have heard, like, you know, actually some concerns about that market. Generally speaking. Just as a reminder, how big is that market for you at this point? Thank you. Scott Sekella: Yeah. On international, you said that the biggest change in that deceleration was the sales into our franchise partners. Which is a very low margin sale. And so that was due to order and shipment timing. So no real concerns there. In terms of China, China started seeing its accelerated growth with their 618 event last year, so we lapped that in the back part of the quarter. And China is still our number 1 growth area within international. And so really encouraged It continues to be led by digital, which is heavy in the social selling. But our retail comps have accelerated as well. So we are really pleased with the store performance in China as we are going into the back half, and they are lapping that accelerated growth. Still feel really strong about that market. Mauricio Serna: And how much was the shift in? in, like, the sale from the international wholesale partners? Scott Sekella: I mean, that we are that is not a number we quantify. But that was the biggest drag on that deceleration. Right. Thank you so much. Operator: Thank you. Our next question comes from Simeon Siegel with Guggenheim Securities. Your line is open. Simeon Siegel: Thanks. Sneaking in there. Hey, everyone. Good morning. Hope you had a great summer. Hillary, I do not know if this 1's for you or Elizabeth, but within the customer acquisition conversation, 1, I guess, do you have a view on where the customers are coming from? And then higher level, can you share with us how you are thinking about the customer acquisition for Victoria's Secret from PINK customers now? You have just done such a nice job at recreating specific and distinct brand identity for them, but curious how you think about the right level of bringing VS acquisition from PINK customers? Yeah. I will stop there. Thanks. Hillary Super: Thanks, Simeon. I will let Elizabeth start, and I will fill in with anything I think is relevant. Elizabeth Preis: First and foremost, you are absolutely right in terms of distinct brands. We look at VS and pink and also the beauty category within that very distinctly. And I will share that we have actually seen growth across all 3 brands, both total customer count as well as new customer count this past quarter. So we are very happy about that. In general, our total file is also growing, so we know that people are coming in not only to 1 brand. Yes. There is some cross shops. But we are also seeing people coming in specifically for a single brand growing our total file. Secondly, I would say, where are we bringing them from? I would say it is very much a function of how we are reaching them. We are bringing many more through the digital the digital channels. Paid social was our best performing channel this past quarter in terms of bringing in more customers. We see that continuing. And it is really about leveraging that network, leveraging our existing footprint in our network to its maximum ability. Hillary Super: And then I would just add that if you look at market share data, it is really a mass that is losing share in the category, and I think it is really that brand promise and that emotional connection that is convincing customers to shop with us, and engage with our brands because she believes so much in what we stand for. Simeon Siegel: Thanks. Then actually, if I can, Scott, just quick follow-up. Great to see the growth in both AUR and units this quarter. How are you thinking about price and units embedded within the third quarter and full year guide? Thanks, guys. Scott Sekella: Yeah. So for Q3, we are thinking AUR is probably going to be up low single digits. So a deceleration there, but the units will be up in mid to high single digit in Q3. So feeling good about the mix there. Simeon Siegel: Thanks, guys. Best of luck for the rest of the year. Thank you. Thanks. Operator: Our next question comes from Jonah Kim with TD Cowen. Your line is open. Jonah Kim: Thank you for taking my question. I would be curious to know just overall trends, what you are seeing on the intimate side, and sort of how you are thinking about the market share gains going forward. And then just 1 follow-up is your apparel share, how you are thinking about the mix at this point just given the strength on the intimate side. Do you plan to have that increase over time or sort of keep it balanced? Just given how well the intimate side has been. Thank you so much. Hillary Super: I think you asked me about trends in intimates. And then the balance of intimates and apparel. It was a little fuzzy. Okay. So our bra business is broad based success. Really nothing, not performing. So everything from push up to wireless, everything from balcony to demi, it really it really goes the whole distance. And we what I am really particularly encouraged about is that our core continues to grow even as we introduce more fashion. And also, we are seeing Pink and Victoria's Secret both grow at the same time, which has not always been the case. So broad based success across intimates, I think that comes partially from trend, partially from us resorting our authority in the category. Providing incredible fitting service, and connecting with her on an emotional level. To answer your question about apparel, you know, on the PINK side, the PINK side of the business, where it is most important, we really see the mix between bras and apparel, intimates and apparel being about 50-50 over time. So still seeing great growth in apparel. The icons in pink in particular are incredible. I am sure you just saw our PINK Campus Superflare yesterday, which we think is really exciting and lots more to come in both intimates and apparel. Thank you so much. Thank you. Operator: We have time for 1 more question. Our last question comes from Ike Boruchow with Wells Fargo. Your line is open. Ike Boruchow: Hey. Thanks so much. Scott, just-- sorry if you said this already. Just the gross margin drivers in Q3 and Q4, the tariff, the core merch margin, the occupancy? Any details specifically in Q3 And then could you comment on what that gross margin is supposed to look like for the full year as well? And last follow-up to that is, Hillary, I know you have spoken about the medium term gross margin opportunity. I think you have mentioned low 40s very much on the table. Can you kind of just comment on where you think the puck's kinda going for you guys on that on that line item? Thanks. Scott Sekella: Yes. So gross margin on Q3, we are calling it up about 150 basis points. Gross tariff in the quarter is going to be flat when you think about the tariff rates now at 10% to 12.5%, respectively. We factor in some of the mitigation efforts. there is gonna be about 60 bps sort of benefit Promos will be favorable, a little bit less than prior quarters because that PINK Friday shifted into Q3. So that just causes the promo favorability to be probably in the 70 bps range or so. And then we will leverage on B&O and then have a headwind on transportation costs probably around 30 bps or so. For the full year, you know, you factor in the strong performance Q1, Q2, that 150, the gross margin expansion in Q4, it will still expand. It will be less than the prior quarters as I mentioned earlier when you think about, promos being less of a tailwind just as a heavy promotional quarter? Does that conclude your question? Ike Boruchow: Yeah. Can you repeat the second part of your question? Scott Sekella: Yeah. Ike Boruchow: It was more-- I was kind of asking that to kinda go into the medium term gross margin opportunity where this business can be again in the next year or so? Like, we are but there is a lot of low hanging fruit you guys are picking. Just kinda curious how you kind of see? Yeah. Hillary Super: I think, you know, we see this gross margin, you know, all the uncertainty around tariffs aside in the starting with a 4. And so we are definitely on that trajectory. And feel really good, especially as we drive more regular price, higher margin, you know, core product sales. Thanks a lot. Operator: Thank you. I will now turn the call back to Hillary Super for closing remarks. Hillary Super: Thank you, everyone. For attending our Q2 call, and we look forward to seeing you after the fashion show to report Q3. Operator: Thank you all for participating in the Victoria's Secret and Company's Second Quarter 26 Earnings Conference Call. That concludes today's conference. Please disconnect at this time, and enjoy the rest of your day. 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Aerie, including the OFFLINE activewear business, generated $536 million in revenue, a 25% increase from the prior year. Comparable sales climbed 19%, with growth across channels and product categories. → Ride-Share Reckoning: Tesla Drives Into Uber's Lane MarketBeat Week in Review – 06/15 - 06/19 Jen Foyle, president and executive creative director for American Eagle and Aerie, said demand was broad-based across core apparel, intimates and activewear. She highlighted customer response to tees, tanks, fleece, bottoms, sleep-to-street products and seasonal assortments, as well as OFFLINE’s Cloud Fleece franchise and sports bras. Foyle said Aerie’s core intimates business remained strong, supported by its focus on comfort and fabrication. The brand introduced its Float bra collection in July, which she said complements Aerie’s structured bra assortment. The company also nearly doubled the size of its Advocate program during the quarter as it sought to expand customer engagement. → High Gas Prices Aren't Budging—Here Are 3 Stocks That Benefit Management said Aerie entered the third quarter maintaining momentum against more difficult comparisons. The company expects Aerie and OFFLINE comparable-sales growth in the high-teens to 20% range during the third quarter. Foyle said Aerie has room to expand awareness, noting that the brand’s awareness level was about 59%, compared with roughly 76% for American Eagle. She said the company is using store events, digital spending, Aerie Realmakers and its advocacy program to build the customer community. American Eagle revenue increased 1% during the second quarter, while comparable sales declined 1%. The result marked a sequential improvement from the first quarter, according to management. The men’s business posted its fourth consecutive quarter of positive comparable sales, driven by strength across bottoms categories. In women’s, the company cited favorable response to outfitting strategies, including tiny tops paired with oversized bottoms, as well as cargo styles and fashion bottoms. Foyle said new denim fits, including wide-leg, straight and low-rise styles, gained customer acceptance. She said the retailer had pivoted its denim offering toward working fits, particularly low-rise styles, but continues to rebalance inventory in older fits. Management said remaining American Eagle inventory cleanup is primarily concentrated in seasonal merchandise, particularly shorts, along with some fashion products. The company expects some markdown pressure at the banner to continue in the third quarter as it works through that inventory. For the third quarter, American Eagle expects comparable sales to be approximately flat. Mike Mathias, the company’s strategic advisor, said stores remain below the banner’s overall trend, while digital performance has been stronger. However, store performance has improved so far in the third quarter, particularly during the back-to-school period. The company has spent the past four quarters investing in brand awareness and now plans to shift more marketing dollars toward conversion-oriented tactics. Management said traffic, store conversion and product strategies will be key measures as it works to return American Eagle to sustained growth. Gross profit increased 34% to $672 million, and gross margin expanded 980 basis points to 48.7%. The company said tariff refunds produced a $179 million gross-profit benefit and accounted for 1,300 basis points of gross-margin expansion. Merchandise margins declined 330 basis points, as improvement at Aerie was offset by markdowns at American Eagle. Selling, general and administrative expense rose 19% to 29.6% of sales, including $18 million of incentive expense tied to tariff refunds. The remaining increase primarily reflected planned advertising investments. Second-quarter earnings per share were $0.79. Inventory cost increased 14%, while inventory units rose 9%. Capital expenditures totaled $66 million during the quarter. The company returned $21 million to shareholders through its quarterly dividend. American Eagle ended the quarter with approximately $148 million in cash and investments and total liquidity of $783 million, including its revolver. For the third quarter, the company expects consolidated comparable-sales growth in the mid- to high-single digits and operating income of $110 million to $115 million. Gross margin is expected to be similar to the prior year, while SG&A expense is projected to increase in the high-single digits. For the full year, American Eagle forecast operating income of $540 million to $550 million, based on consolidated comparable-sales growth in the mid-single digits. The company expects full-year gross margin to increase year over year. Mathias said the updated outlook reflects a flatter sales expectation for American Eagle in the second half than previously anticipated, along with markdown provisions for inventory rebalancing. Aerie is expected to remain a major growth contributor. The call also marked the transition of the chief financial officer role to Ravi Thanawala, who said he had spent his first weeks at the company listening and learning about the business. Thanawala said his priorities include connecting brand growth with disciplined execution, stronger profitability and thoughtful resource allocation. Mathias, who reviewed the quarter’s financial results and outlook, will continue as a strategic advisor. American Eagle Outfitters, Inc (NYSE: AEO) is a leading American specialty retailer offering apparel, accessories and personal care products for men and women. The company's flagship brand, American Eagle, focuses on casualwear including denim, tops, outerwear and accessories targeted primarily at teens and young adults. In addition to its core apparel lines, the company operates the Aerie brand of intimates, loungewear and swimwear, which has gained recognition for its body-positive marketing and inclusive sizing. American Eagle Outfitters conducts business through a combination of over 900 brick-and-mortar stores in North America and Greater China, complemented by a growing e-commerce platform that serves customers around the globe. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "American Eagle Outfitters Q2 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for September 2026.

Victoria’s Secret & Company’s VSXY PINK grew at a high-single-digit rate, marking its fifth consecutive quarter of growth, with increasing strength across its core categories, including bras, panties and apparel. The company sees significant opportunity to build on this momentum through the back half and beyond, with PINK representing the focus of its next strategic pillar. Efforts to sharpen PINK’s identity are gaining traction, as the brand builds a clearer personality, stronger brand codes and a deeper connection with customers. The company’s renewed confidence in PINK is supported by signs of stronger customer resonance. Management said that it has a clearer understanding of what customers want from PINK: products that are comfortable, expressive and connected to meaningful moments. The approach starts with PINK’s established icons, which are being refreshed through new silhouettes, fabrics, colors and fashion. This keeps the core familiar while continuing to introduce newness and maintain customer interest. PINK is using customer insights to create new growth opportunities, with Marshmallow serving as a strong example. The product addresses demand for all-day comfort while remaining fun and fashionable. Its four new frames, with features like easy sizing, wireless support and soft fabrication, were launched digitally through a broad network of creators. The combination drove outsized results following the launch, reinforcing management’s view that bras can become an increasingly important growth engine for PINK. Apparel has also delivered eight consecutive quarters of growth, with management expecting intimates and apparel to reach an approximately 50-50 mix over time. Overall, PINK’s stronger customer resonance, progress across key product categories and continued brand development give management confidence in the opportunity ahead. With multiple product categories contributing to growth and significant runway still available, the company sees room to build further on PINK’s recent momentum. Shares of this Zacks Rank #1 (Strong Buy) company have gained 57.1% in the past three months against the industry’s decline of 9.5%. Image Source: Zacks Investment Research From a valuation standpoint, VSXY trades at a forward price-to-earnings ratio of 14.01, higher than the industry’s average of 12.73. Image Source: Zacks Investment Research The Zacks Consensus Estimate for VSXY’s current and next fiscal year earnings implies a year-over-year rise of 57.3% and 23.8%, respectively. Image Source: Zacks Investment Research Some other top-ranked stocks have been discussed below: FIGS, Inc. FIGS operates as a direct-to-consumer healthcare apparel and lifestyle company in the United States and internationally. At present, FIGS carries a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here. The Zacks Consensus Estimate for FIGS’s current fiscal-year sales and earnings implies growth of 18.2% and 89.5%, respectively, from the year-ago figures. FIGS has delivered a trailing four-quarter earnings surprise of 201.8%, on average.Fossil Group, Inc. FOSL designs, develops, markets, and distributes consumer fashion accessories in the United States, Europe, Asia, and internationally. At present, FOSL carries a Zacks Rank of 2. The Zacks Consensus Estimate for FOSL’s current fiscal-year sales indicates a decline of 4%, while the same for earnings indicates growth of 96.7% from the year-ago figures. FOSL delivered a trailing four-quarter negative earnings surprise of 236.2%, on average. Boot Barn Holdings, Inc. BOOT operates specialty retail stores in the United States and internationally. At present, Boot Barn carries a Zacks Rank of 2.The consensus estimate for Boot Barn’s current fiscal-year sales and earnings implies growth of 15.7% and 22.6%, respectively, from the year-ago figures. BOOT delivered a trailing four-quarter earnings surprise of 11.4%, on average. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Victoria's Secret & Co. (VSXY) : Free Stock Analysis Report Boot Barn Holdings, Inc. (BOOT) : Free Stock Analysis Report Fossil Group, Inc. (FOSL) : Free Stock Analysis Report FIGS, Inc. (FIGS) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Intimatewear and beauty retailer Victoria’s Secret (NYSE:VSXY) fell short of the market’s revenue expectations in Q2 CY2026, but sales rose 10.4% year on year to $1.61 billion. On the other hand, next quarter’s outlook exceeded expectations with revenue guided to $1.59 billion at the midpoint, or 1% above analysts’ estimates. Its non-GAAP profit of $0.95 per share was 22.7% above analysts’ consensus estimates. Is now the time to buy VSXY? Find out in our full research report (it’s free). Revenue: $1.61 billion vs analyst estimates of $1.62 billion (10.4% year-on-year growth, 0.6% miss) Adjusted EPS: $0.95 vs analyst estimates of $0.77 (22.7% beat) Adjusted Operating Income: $124 million vs analyst estimates of $101.5 million (7.7% margin, 22.1% beat) The company slightly lifted its revenue guidance for the full year to $7.14 billion at the midpoint from $7.08 billion Adjusted EPS guidance for the full year is $4.58 at the midpoint, missing analyst estimates by 2% Operating Margin: 15.9%, up from 2.8% in the same quarter last year Locations: 1,430 at quarter end, up from 1,376 in the same quarter last year Same-Store Sales rose 9% year on year (4% in the same quarter last year) Market Capitalization: $5.85 billion Victoria’s Secret faced a strong second quarter, with management emphasizing outperformance and growth driven by core categories such as bras and the PINK brand. CEO Hillary Super highlighted that regular price selling and reduced promotional activity were key drivers, with new product innovation and an expanding customer base contributing to success. Increased engagement and retention were seen across both brands. Chief Marketing and Customer Officer Elizabeth Preis pointed out, “We are actually bringing those customers back to us more of them back to us. They are coming back faster, and they are actually spending more when they do come back.” Looking ahead, Victoria’s Secret’s updated guidance rests on continued product innovation, a ramp-up in marketing initiatives, and sustained momentum in both North America and international markets. Management is focused on leveraging digital channels and influencer partnerships to attract and retain a broader audience, with a particular emphasis on younger consumers. CFO Scott Sekella stated that investment in campaigns like the Angels Among Us docuseries and the extended fashion show are expected to support longer-term customer growth. Super added, “We have a full pipeline of innovation on the way... more innovation, more fashion, more frequent, newness, and really focusing in our core.” Management pointed to several factors that shaped the quarter’s financial performance, including the shift to regular price selling, new product launches, and a disciplined approach to inventory and marketing. Regular Price Selling Focus: The company continued to pull back on promotions, resulting in higher average unit retail (AUR) and more sales at regular prices. This shift was especially pronounced in PINK, driving growth across core styles and reducing reliance on discounting. Product Innovation Pipeline: Both Victoria’s Secret and PINK benefited from new bra launches and fashion updates, with the Very Sexy Envy and Marshmallow bras highlighted as successful recent introductions. Management cited a “full pipeline of innovation” supporting future growth. Customer File Expansion: Victoria’s Secret achieved its fourth straight quarter of customer file growth, led by strong new customer acquisition and improved retention. Preis noted that customers are returning at a higher rate and spending more, supported by a digital-first marketing approach. Store Strategy and Format Evolution: The SoHo PINK store served as a laboratory for community-building and experiential retail, including events like TikTok Shop Live. Management plans to selectively expand this format and apply learnings across the fleet, while the “store of the future” concept continues to drive productivity improvements. International and Digital Momentum: International sales, led by China and Europe, remained a bright spot. Digital traffic growth outpaced stores, and social selling and influencer campaigns were key to attracting younger demographics and driving engagement across regions. Management expects upcoming quarters to be driven by disciplined promotional strategy, continued innovation, and targeted marketing investments, though margin expansion is expected to moderate as comparisons toughen. Sustained Product Development: Ongoing investment in bra and beauty innovation is expected to underpin future revenue growth. New launches in both core and fashion-forward categories are planned to maintain consumer interest and drive higher-margin regular price sales. Marketing and Brand Engagement: Expanded marketing initiatives, including digital-first campaigns and influencer partnerships, are intended to bring in new customers and deepen engagement. Management plans to increase marketing spend to high single digits as a percentage of sales while optimizing for efficiency and measurable returns. Margin and Promotional Discipline: While gross margin expansion was strong in the first half, management signaled that future gains may slow as promotional activity levels off, especially in high-volume quarters. Tariff rate fluctuations and rising transportation costs are additional headwinds noted for the back half of the year. In the coming quarters, the StockStory team will watch (1) the impact of new product launches, especially in bras and beauty, on regular priced sales and customer acquisition, (2) the effectiveness of increased marketing investments and digital campaigns in driving engagement, and (3) the ability to sustain international and digital channel momentum amid shifting promotional strategies. Execution on store format evolution and response to tariff and cost pressures will also be important for Victoria’s Secret’s longer-term performance. Victoria's Secret currently trades at $73.50, down from $84.91 just before the earnings. Is there an opportunity in the stock? See for yourself in our full research report (it’s free for active Edge members). ONE MORE THING: Top 5 Growth Stocks. The biggest stock winners almost always had one thing in common before they ran. Revenue growing like crazy. Meta. CrowdStrike. Broadcom. Our AI flagged all three. They returned 315%, 314%, and 455%, respectively. Find out which 5 stocks it’s flagging this month — FREE. Get Our Top 5 Growth Stocks for Free HERE. Stocks that have made our list include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+1,154% between June 2020 and June 2025). Find your next big winner with StockStory today.

This article first appeared on GuruFocus. Release Date: September 03, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Victoria's Secret & Co (NYSE:VSXY) delivered its fifth consecutive quarter of positive comps, with net sales increasing 10% year over year and operating income and EPS exceeding the high end of guidance. The company's bra business grew in the mid-teens, driven by strength in core franchises and new innovations, contributing to both Victoria's Secret and Pink's performance. Pink delivered its fifth consecutive quarter of growth, with strength in bras, panties, and apparel, and the new 'Marshmallow' bra pillar drove outsized results. Beauty continued to grow, delivering its 12th consecutive quarter of sales growth, with regular price selling up high single-digits. The company is gaining market share in intimates, with a fourth consecutive quarter of customer file growth, including strong new customer acquisition among 18-to-24-year-olds. International business grew 20% in Q2, led by outstanding performance in China and the European digital business, with full-year growth forecast at approximately 20%. The company experienced a top-line pressure in June due to lower inventory levels during the semiannual sale, as initial demand exceeded expectations and depleted stock. Q3 guidance implies a deceleration in top-line growth to 7-9% from the 10% growth seen in Q2, due to tougher comparisons. The company faces incremental pressure from rising transportation costs in the third quarter, partially offsetting gross margin tailwinds. Q3 SG&A rate is expected to increase approximately 100 basis points year over year, reflecting higher marketing investments and incentive compensation. International growth decelerated to 10% in Q2 from 36% in the prior quarter, partly due to a shift in merchandise sourcing sales to franchise partners. The company's Q4 forecast assumes a return to an approximate 20% tariff rate, which could create headwinds in the back half of the year. Warning! GuruFocus has detected 3 Warning Sign with LE. Is VSXY fairly valued? Test your thesis with our free DCF calculator. Q: Can you provide color on the use of promotions at the Pink division, and were there elevated promotions in the apparel category versus other categories?A: (Hillary Super, CEO) At Pink, much like the other brands, we continue to pull back on promotions, particularly even on apparel. The regular price selling continues to be where all the growth is coming from, especially within our Pink icon styles. Q: What are you learning about the quality of newer customer cohorts, including initial AUR, repeat purchases, or cross-category purchasing?A: (Elizabeth Price, Chief Marketing and Customer Officer) We are very happy with our customer file, marking the 4th straight quarter of customer growth and new customer acquisition outpacing the total file. We are using our full network of owned and paid channels to keep customers engaged. As a result, we are bringing more customers back, they are returning faster, and they are spending more when they return. Q: As you think about the bra category where you are gaining significant share, how do you think about product introductions and pricing for Pink versus Victoria's Secret? Also, is there an opportunity for more Pink standalone stores, and what is the sustainable level of marketing investment?A: (Hillary Super, CEO) Our innovation engine is fully in gear. In July, we launched two innovationsone in Pink and one in VSgrounded in customer feedback. On the VS side, we married the balcony frame with Flex Factor technology, and on the Pink side, we launched our first new frame in over two years, which was 100% incremental. We have a full pipeline of technical and fashion innovation. Regarding stores, the SoHo Pink store is a laboratory for experimentation, and we are actively thinking about selective opportunities for more Pink standalones. On marketing, we are currently at 7% of sales and see an opportunity to drive that to high single-digits over the next couple of years. Q: On the 9% comps in Q2, which accelerated on a two-year stack, could you speak to the cadence or July exit rate trends and elaborate on August momentum or confidence in raising back-half guidance despite tougher comparisons?A: (Hillary Super, CEO) July was incredibly strong, grounded in bra innovation across both brands. As we entered August, the VS and Pink business was largely consistent, and we saw beauty really accelerate. We have been working on four key things in beauty: our innovation pipeline (e.g., Strawberry Bizou and Shimmer integration), tapping into our archive and the nostalgia trend with "bring back fragrances," brand integration making scent part of big brand moments, and enhancing our channel experience for beauty in stores and digitally. Q: Can you speak to North America and international top-line performance relative to internal plans in Q2, and have you seen acceleration in both regions as you cited in August?A: (Scott Skela, CFO) In Q2, we saw a mixed shift internationally with less sell-in to franchise partners, which are low-margin sales, contributing to strong flow-through. However, in the back half of Q2, international growth accelerated beyond what we had been seeing. We are lapping that in the back half, so I expect international growth to moderate a bit, but for the full year, we still forecast approximately 20% growth. Q: The company has historically not made money in Q3, but based on your outlook, there is scope for positive operating profit. What is helping to drive that and support a more profitable business going forward despite investments?A: (Scott Skela, CFO) What is driving that is the continued strength of regular price core product sell-through. In Q2, total units were up low single-digits, but regular price units were up high single-digits. Going into Q3, we see units on AUR accelerating to mid-to-high single-digit growth. That strong flow-through is enabling us to turn profitable in Q3 despite investing more into marketing to support the fashion show and Angels Among Us. Q: You shared that the customer file continues to grow across all segments. Could you provide more color on how new customers are performing post-acquisitionare they one-and-done or showing long-term value?A: (Elizabeth Price, Chief Marketing and Customer Officer) We are very encouraged that these customers are not one-and-done. Through our network, we are able to bring more of them back with a very strategic approach. We have tens of millions of customers and over 100 million followers across social platforms, which allows us a rich data set to market and re-market efficiently. Our app growth was up 30% last quarter on top of double-digit growth from last year. Q: Can you speak to why back-half margin expansion flows off from the front half, including the puts and takes around gross margin and SG&A?A: (Scott Skela, CFO) In Q3, the growth forecast of 7-9% is slightly below Q1 and Q2 due to tougher comps, so leverage on B&O is less. In Q4, given the heavy promotional nature of that quarter, we don't plan promos to be down as muchwe are planning them flat to slightly down, which is a deterrent on margin expansion in the back half. Q: Digital traffic outpaced storeswhat is your view on the role of stores, is the current fleet size right, and what are the learnings from the store of the future design?A: (Hillary Super, CEO) Digital did outpace, but our stores are outpacing the mall, making them an important competitive tool. With bras at the heart of our business, our industry-leading service and bra fitting in a personal space is unmatched. Gen Z wants a store experience even more than other groups. Store of the future continues to be more productive, and we are tweaking it based on learnings, particularly in beauty and "pinkifying" the Pink side of the business. We see opportunity to selectively grow our footprint globally and in North America. Q: How should we think about the semiannual sale strategy going forward, and how will the increased marketing investment manifest in sales?A: (Scott Skela, CFO & Hillary Super, CEO) The semiannual sale still plays a key role in clearing units, but it is less of an event as we go forward. We see an opportunity to add newness in the back part of the event rather than having the event be the hero. We are seeing higher AURs For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Interested in Victoria's Secret & Co.? Here are five stocks we like better. Victoria’s Secret exceeded Q2 guidance: Net sales rose 10% to $1.611 billion, comparable sales increased 9%, and adjusted operating income surged 125% to $124 million. Adjusted diluted EPS nearly tripled to $0.95. Growth and profitability were broad-based: Bras, PINK and Beauty led sales gains, while higher regular-price selling and fewer promotions expanded adjusted gross margin by 320 basis points to 38.8%. The company raised its fiscal 2026 outlook: Victoria’s Secret now expects $7.10 billion to $7.18 billion in sales, adjusted operating income of $560 million to $590 million, and adjusted diluted EPS of $4.45 to $4.70. From Runway to Riches: Victoria's Secret's New Look Victoria's Secret & Co. (NYSE:VSXY) reported second-quarter results that exceeded its guidance, as growth in bras, PINK and Beauty supported higher regular-price sales, reduced promotional activity and improved profitability. For the quarter ended Aug. 1, 2026, net sales rose 10% year over year to $1.611 billion, while comparable sales increased 9%. Adjusted operating income increased 125% to $124 million, exceeding the company’s guided range of $90 million to $100 million. Adjusted diluted earnings per share nearly tripled to $0.95 from $0.33 a year earlier. → Boarding Call: EHang Secures First-Mover Altitude Victoria's Secret Turnaround Went Stealthy, Financials Show Chief Executive Officer Hillary Super said the quarter marked the company’s fifth consecutive period of positive comparable sales growth. She attributed the performance to gains across Victoria’s Secret, PINK and Beauty, as well as North American and international channels. Bras remained the company’s largest growth driver, with sales up in the mid-teens during the quarter. Super said bras accounted for about half of the Victoria’s Secret brand’s mid-teens growth. The category benefited from core franchises as well as product innovation, including the FlexFactor Balconette and the launch of the Very Sexy Envy bra. → Medtronic’s Stars Are Aligning for a Price Recovery Victoria’s Secret Stock is Out of the Box “When we win in bras, we create a halo across the broader Victoria’s Secret business,” Super said, noting that the bra momentum contributed to high-teens growth in panties and mid-teens growth in sleep. PINK sales increased in the high single digits, representing the brand’s fifth consecutive quarter of growth. The company cited strength in bras, panties and apparel. PINK apparel has now posted eight consecutive quarters of sales growth, according to Super. → Dutch Bros Sell-Off Creates a Growth Opportunity The company highlighted its Marshmallow bra collection, PINK’s first new bra pillar in two years. Super said the launch was “100% incremental” and did not prevent the brand’s other bra franchises from growing. The collection includes wireless, easy-sizing styles designed around all-day comfort. Beauty sales increased in the mid-single digits, extending the category’s growth streak to 12 straight quarters. Regular-price Beauty selling rose in the high single digits, led by fine fragrance and mist products. Victoria’s Secret introduced six incremental scents during the year and said it is increasingly integrating fragrance launches with larger seasonal campaigns and gifting events. The company said its returning PINK Square bottle fragrances sold out digitally in less than a day during PINK Friday. Super also cited early strength in the Tease Strawberry Bisou launch and plans to extend shimmer offerings within the Bombshell fragrance franchise. Chief Financial and Operating Officer Scott Sekella said sales growth was accompanied by improved product sell-through and a reduced reliance on discounts. Regular-price selling increased in the low double digits during the second quarter, while average unit retail, or AUR, rose in the high single digits. Total units increased in the low single digits, while regular-price units increased in the high single digits. Adjusted gross margin expanded 320 basis points year over year to 38.8%. About two-thirds of the improvement came from higher merchandise margins, driven by a greater mix of regular-price selling and fewer promotions, Sekella said. The remaining improvement reflected buying and occupancy leverage from the sales increase. Adjusted selling, general and administrative expense totaled $502 million, and the SG&A rate improved 70 basis points to 31.1%. The company said it achieved expense leverage despite higher North American flex costs tied to stronger demand and investments in marketing and store experiences. Victoria’s Secret received more than $140 million in IEEPA tariff refunds during the quarter, representing more than 95% of the IEEPA tariffs it had paid. Sekella said those refunds were excluded from the company’s non-GAAP results discussed on the call. Inventory was up 8% from a year earlier, which management characterized as a healthy level to support demand. The company ended the quarter with $522 million in cash and no outstanding borrowings on its asset-based lending facility. The company’s customer file grew by the mid-single digits for the fourth consecutive quarter, while new-customer acquisition rose in the high single digits. Management said gains occurred across both brands, channels, income groups and age groups, with particularly strong acquisition among consumers ages 18 to 24. Chief Marketing and Customer Officer Elizabeth Preis said the company’s digital-first and social-focused marketing approach has helped customers return more frequently and spend more upon returning. Paid social was the company’s strongest customer-acquisition channel during the quarter, she said. Victoria’s Secret plans to increase marketing spending over time. Sekella said marketing currently represents the low 7% range as a percentage of sales, and the company sees an opportunity to move that level into the high single digits over the next several years. Planned second-half initiatives include the Angels Among Us docuseries, which is set to premiere globally on YouTube on Sept. 27, and a broader Fashion Show presence incorporating watch parties and distribution through YouTube and social live-streaming platforms. International reported net sales increased 20% in the second quarter, including low-teens retail comparable-sales growth. China and the company’s European digital business led the gains. Adjusting for a reporting shift involving European digital sales, international sales grew 10%. Sekella said international growth is expected to moderate somewhat in the second half as the company faces more difficult comparisons, though it continues to forecast approximately 20% international net sales growth for the full year. China remains the company’s largest international growth market, supported by social selling, digital demand and improving store comparable sales. For fiscal 2026, Victoria’s Secret raised its net sales outlook to $7.10 billion to $7.18 billion, implying growth of 8% to 10% from fiscal 2025. It now expects adjusted operating income of $560 million to $590 million and adjusted diluted EPS of $4.45 to $4.70. For the third quarter, the company projected net sales of $1.57 billion to $1.60 billion, up approximately 7% to 9% from the prior year. It expects operating income of $10 million to $20 million and adjusted diluted EPS ranging from a loss of $0.09 to income of $0.01. Management said the forecast includes continued sales momentum, though it also reflects higher marketing, transportation and incentive-compensation costs. Victoria’s Secret & Co is a leading designer, manufacturer and marketer of intimate apparel, beauty products and accessories for women. The company operates a portfolio of brands that includes Victoria’s Secret, renowned for its lingerie, bras and sleepwear; PINK, a line targeting younger consumers with activewear and lifestyle products; and Victoria’s Secret Beauty, offering fragrances, cosmetics and personal care items. Products are sold through retail stores as well as direct-to-consumer channels, including e-commerce platforms and mobile applications. The origins of Victoria’s Secret date back to 1977, when founders Roy and Gaye Raymond opened the first store in San Francisco. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "Victoria's Secret & Co. Q2 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for September 2026.

Intimatewear and beauty retailer Victoria’s Secret (NYSE:VSXY) will be announcing earnings results this Thursday before market hours. Here’s what you need to know. Victoria's Secret beat analysts’ revenue expectations last quarter, reporting revenues of $1.56 billion, up 15.3% year on year. It was an exceptional quarter for the company, with a beat of analysts’ EPS estimates and an impressive beat of analysts’ gross margin estimates. Is Victoria's Secret a buy or sell going into earnings? Read our full analysis here, it’s free for active Edge members. This quarter, the market is expecting Victoria's Secret’s revenue to grow 11% year on year, improving from the 3% increase it recorded in the same quarter last year. Analysts covering the company have generally reconfirmed their estimates over the last 30 days, suggesting they anticipate the business will stay the course heading into earnings. Victoria's Secret has a history of exceeding Wall Street’s expectations. Looking at Victoria's Secret’s peers in the apparel retailer segment, some have already reported their Q2 results, giving us a hint as to what we can expect. Abercrombie and Fitch delivered year-on-year revenue growth of 4.8%, beating analysts’ expectations by 1.8%, and Gap reported a revenue decline of 2%, falling short of estimates by 0.9%. Abercrombie and Fitch traded up 33.8% following the results while Gap was also up 12.9%. Read our full analysis of Abercrombie and Fitch’s results here and Gap’s results here. Over the past year, investors have repeatedly shifted their focus from one macro narrative to another (AI disruption and AI capex spending to geopolitics, interest rates, and the broader health of the economy). While some of the apparel retailer stocks have shown solid performance in this choppy environment, the group has generally underperformed, with share prices down 3.5% on average over the last month. Victoria's Secret is down 4.3% during the same time and is heading into earnings with an average analyst price target of $94.60 (compared to the current share price of $85.30). WHILE YOU’RE HERE: The Next Palantir? One satellite company captures images of every point on Earth. Every single day. The Pentagon wants it. Hedge funds are using it to beat earnings. You’ve probably never heard of it. This is what the early days of Palantir looked like before it became a giant. Same playbook. Different technology. If you missed Palantir, you need to see this. Claim The Stock Ticker for Free HERE.

Boot Barn Holdings, Inc. BOOT reported continued acceleration in its work business following efforts to reinvigorate the category last year. The company improved in-store merchandising, increased its marketing focus on the work business and invested in key third-party brands to strengthen its assortment for work customers. Management cited these initiatives as part of the progress seen in the category. The work boots business delivered high-single-digit comparable sales growth in the first quarter of fiscal 2027. This marked the fifth consecutive quarter of growth for the category and represented its strongest growth in the past few years. The performance also reflected the continued acceleration management has seen in the work business. Management said that the high-single-digit growth in work boots was supported by both Pull-On and Lace-Up styles. Lace-Up boots performed more strongly, but growth was not limited to a single product type. Management also noted that the category's performance was not being driven by oil-related demand. New third-party brands and a broader assortment of successful products from existing third-party brands also supported the category. The work apparel business continued to show improving momentum, with comparable sales strengthening over the last couple of quarters and reaching high-single-digit growth in July. Performance included both Flame Resistant (FR) and non-FR products, which management described as appearing broad-based across the work apparel assortment rather than being driven by a single product category. Overall, Boot Barn's work category continued to demonstrate positive momentum, supported by changes to merchandising, marketing and product assortment, as well as resilient demand from its needs-based customers. Management also said it expects the strength in its third-party work boots business to continue, although the transcript does not provide a specific forecast for the future growth rate of the overall work category. Boot Barn’s shares have lost 8.8% in the past three months compared with the industry’s decline of 6.2%. Image Source: Zacks Investment Research From a valuation standpoint, Boot Barn trades at a forward price-to-earnings ratio of 16.29, higher than the industry’s average of 13.20. BOOT presently carries a Zacks Rank #2 (Buy). Image Source: Zacks Investment Research The Zacks Consensus Estimate for BOOT’s current and next fiscal-year earnings implies year-over-year rallies of 22.6% and 10.5%, respectively. Image Source: Zacks Investment Research Some other top-ranked stocks have been discussed below: Victoria’s Secret & Co. VSXY operates as a specialty retailer of women's intimate apparel and other apparel and beauty products worldwide. At present, VSXY sports a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here. The Zacks Consensus Estimate for VSXY’s current fiscal-year sales and earnings implies growth of 9.2% and 57%, respectively, from the year-ago figures. VSXY has delivered a trailing four-quarter earnings surprise of 81.9%, on average. FIGS, Inc. FIGS operates as a direct-to-consumer healthcare apparel and lifestyle company in the United States and internationally. At present, FIGS carries a Zacks Rank of 2. The Zacks Consensus Estimate for FIGS’s current fiscal-year sales and earnings implies growth of 18.2% and 89.5%, respectively, from the year-ago figures. FIGS has delivered a trailing four-quarter earnings surprise of 201.8%, on average. Fossil Group, Inc. FOSL designs, develops, markets, and distributes consumer fashion accessories in the United States, Europe, Asia, and internationally. At present, FOSL carries a Zacks Rank of 2. The Zacks Consensus Estimate for FOSL’s current fiscal-year sales indicates a decline of 4%, while the same for earnings indicates growth of 96.7% from the year-ago figures. FOSL delivered a trailing four-quarter negative earnings surprise of 236.2%, on average. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Boot Barn Holdings, Inc. (BOOT) : Free Stock Analysis Report Fossil Group, Inc. (FOSL) : Free Stock Analysis Report FIGS, Inc. (FIGS) : Free Stock Analysis Report Victoria's Secret & Co. (VSXY) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research