Victoria’s Secret & Co.
Victoria's Secret & Co. (NYSE: VSCO) is a specialty retailer of women's intimate and other apparel and beauty products marketed under the Victoria's Secret, PINK, and Adore Me brand names. It offers a range of products across intimate apparel, sleepwear, loungewear, swimwear, and beauty. Victoria's Secret brand offers bras, panties, lingerie, sleepwear, loungewear, sport and swim products across its global retail locations and its online e-commerce channel.
Financial Highlights
- Quarterly Financial Performance: A Shift from Profitability to Loss: In the third quarter of 2023, the Company faces a notable downturn, reporting a net loss of USD 71 million, a stark contrast to the net income of USD 24 million in the same period of the previous year.
- Operational Dynamics: Operating Income Plunge and Adjusted Figures: The operational landscape witnessed a substantial shift, with the operating loss reaching USD 67 million in Q3 2023, a significant deviation from the USD 43 million operating income reported in the third quarter of 2022. Excluding specified items, the adjusted net loss was USD 66 million, aligning with the guidance range.
- Sales Performance: A 4% Dip Amidst Guided Expectations: Net sales for the third quarter of 2023 totaled USD 1.265 billion, reflecting a 4% decrease compared to the previous year. This aligns with the midpoint of the earlier communicated guidance, projecting a net sales decline of 3% to 5%.
- Outlook for Q4 and Full Year 2023: Forecasting Recovery Amidst Challenges: The Company projects a 2% to 4% increase in net sales for the fourth quarter of 2023, anticipating adjusted operating income in the range of USD 245 million to USD 285 million and adjusted net income between USD 2.20 and USD 2.60 per diluted share. For the full year 2023, a net sales decrease of 2% to 3% is expected, with adjusted operating income projected between USD 290 million and USD 330 million and adjusted net income in the range of USD 1.85 to USD 2.25 per diluted share.
Technical Observation (on the daily chart)
The stock is currently forming a double top pattern, if the USD 28-USD29 resistance in not broken, with expectations of a healthy correction before a further continuation of the upward trend. The Relative Strength Index (RSI) over a 14-day period stands at 66.42, currently upward trending, with expectations of a formation of bearish divergence. Additionally, the stock's current positioning is above both the 21-day Simple Moving Average (SMA) and the 50-day SMA, which may serve as dynamic short-term support levels.
As per the above-mentioned price action, recent key business and financial updates, momentum in the stock over the last month, and technical indicators analysis, a ‘WATCH’ rating has been given Victoria's Secret & Co. (NYSE: VSCO) at its current price of USD 28.74 as on December 26, 2023, at 07:15 am PST.
Individuals can evaluate the stock based on the support and resistance levels provided in the report in case of keen interest taking into consideration the risk-reward scenario.
Markets are trading in a highly volatile zone currently due to certain macro-economic issues and prevailing geopolitical tensions. Therefore, it is prudent to follow a cautious approach while investing.
Related Risk: This report may be looked at from a high-risk perspective and a recommendation is provided for a short duration. This report is solely based on technical parameters, and the fundamental performance of the stocks has not been considered in the decision-making process. Other factors which could impact the stock prices include market risks, regulatory risks, interest rates risks, currency risks, social and political instability risks etc.
How to Read the Charts?
The yellow colour line reflects the 21-period simple moving average (SMA) while the blue line indicates the 50- period simple moving average (SMA). SMA helps to identify existing price trends. If the prices are trading above the 21-period and 50-period moving average, then it shows prices are currently trading in a bullish trend.
The orange colour line in the chart’s lower segment reflects the Relative Strength Index (14-Period) which indicates price momentum and signals momentum in trend. A reading of 70 or above suggests overbought status while a reading of 30 or below suggests an oversold status.
The red and green colour bars in the chart’s lower segment show the volume of the stock. The volume is the number of shares that changed hands during a given day. Stocks with high volumes are more liquid than stocks with lesser volume as liquidity in stocks helps with easier and faster execution of the order.
The Orange colour lines are the trend lines drawn by connecting two or more price points and used for trend identification purposes. The trend line also acts as a line of support and resistance.
Technical Indicators Defined: -
Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock.
Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the stock.
Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.
Abbreviations
CMP: Current Market Price
SMA: Simple Moving Average
RSI: Relative Strength Index
USD: United States dollar
Note: Trading decisions require a thorough analysis by individual. Technical reports in general chart out metrics that may be assessed by individuals before any stock evaluation. The above are illustrative analytical factors used for evaluating the stocks; other parameters can be looked at along with additional risks per se. Past performance is neither an indicator nor a guarantee of future performance.
Note 1: Past performance is not a reliable indicator of future performance.
Note 2: The reference date for all price data, currency, technical indicators, support, and resistance level is December 26, 2023. The reference data in this report has been partly sourced from REFINITIV.
Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.
Note 4: Target Price refers to a price level that the stock is expected to reach as per the relative valuation method and or technical analysis taking into consideration both short-term and long-term scenarios.
Note 5: ‘Kalkine reports are prepared based on the stock prices captured either from the New York Stock Exchange (NYSE), NASDAQ Capital Markets (NASDAQ), and or REFINITIV. Typically, all sources (NYSE, NASDAQ, or REFINITIV) may reflect stock prices with a delay which could be a lag of 15-20 minutes. There can be no assurance that future results or events will be consistent with the information provided in the report. The information is subject to change without any prior notice.’