Profits soared but the stock is crashing: what happened to the famous brand?
The lingerie empire presented seemingly positive reports, but a dive into the papers revealed one-time tax refunds of millions that hid the true situation.
It seems that no matter what it does, the most famous lingerie empire in the world just cannot return to its glory days. Victoria's Secret stock took a hard hit and plunged by almost 18% in pre-market trading on Wall Street. Just when it seemed that things were starting to work out and the company was presenting nice profits for the second quarter, investors looked closely at the numbers and realized that the celebration was premature.
What really annoyed the investors on the stock exchange was the gloomy forecast for the next quarter, with an expectation of an exceptionally low operating profit. When diving into the papers, it turns out that the nice profits of the last quarter did not come from dizzying sales of bras, but mainly from one-time customs refunds of more than 140 million dollars. Once this bubble burst, everyone realized that the actual sales had actually missed the forecasts and the company is still dealing with real difficulties.
This drama comes exactly after senior analysts at major banks rushed to recommend the stock and raised expectations to the sky. CEO Hillary Super tried to calm the spirits, kept a smile, and defined the last period as a quarter of "broad-based growth." Super added with confidence that "we maintain full confidence in the brand's transformation strategy," but it seems that, at least for now, the market has stopped buying her promises.
