Shares of Victoria’s Secret surged nearly 13% on Friday following the company’s announcement of better-than-expected financial results for the third quarter, which included a notable reduction in promotional costs and an increase in product prices. The lingerie retailer reported a loss of $0.46 per share, which was $0.13 better than analysts’ forecasts according to Visible Alpha. Revenue for the period rose by 9.2% to reach $1.47 billion, surpassing expectations, with comparable store sales climbing 5% and direct-to-consumer sales up 8%.
Specifically, North American sales grew by 5.4% to $778 million, while direct-to-consumer sales increased by 4.3% to $428.5 million. International sales saw an impressive jump of 33.5%, amounting to $264.8 million. CFO Scott Sekella attributed the adjusted gross margin growth of 170 basis points to Victoria’s Secret’s strategic approach of reducing promotions and increasing regular prices.
In terms of future outlook, the company raised its full-year guidance for adjusted earnings per share to a range between $2.40 and $2.65, alongside an elevated revenue forecast of $6.45 billion to $6.48 billion. This is a significant upgrade from previous expectations of adjusted EPS between $1.80 and $2.20 and revenue estimations of $6.33 billion to $6.41 billion.
Meanwhile, in a separate development, the bidding war for Warner Bros. Discovery concluded with Netflix entering into a deal valued at nearly $83 billion. This acquisition will encompass Warner Bros. Discovery’s movie studio and streaming services, with shareholders set to receive $27.75 per share. The deal is anticipated to finalize after Warner Bros. Discovery separates its cable division in the third quarter of next year.
Following the announcement, Netflix shares dipped before stabilizing, reflecting market apprehension surrounding the financial implications of such a significant acquisition. On the other hand, shares of Warner Bros. Discovery saw a rise of about 3%, even as they remained slightly below the acquisition price, indicating some investor skepticism regarding the deal’s likelihood of completion amid potential regulatory challenges.
Concerns about increasing consolidation in the streaming sector were echoed, particularly from competitors like Paramount Skydance, which previously accused Warner Bros. Discovery of unfair bidding practices. Shares of Paramount Skydance dropped by 5% shortly after news of the acquisition emerged, while Comcast, another player in the bidding, saw its shares increase by nearly 3%.
These developments are part of a broader landscape that’s seeing a significant reshaping of the media and entertainment industry, with Netflix’s landmark acquisition highlighting shifting dynamics and intensified competition among streaming platforms.
