Victoria's Secret beats earnings estimates, announces partnership with Naomi Osaka

Yahoo Finance's Julie Hyman and Brian Sozzi break down the latest earnings results from Victoria's Secret as the retail company beat earnings estimates, missed on revenue, and announced a partnership with tennis star Naomi Osaka.

Video transcript

JULIE HYMAN: And as we talk about, maybe not activism, but certainly a changing brand, let's talk about Victoria's Secret. It still cracks me up that VSCO is the ticker on this, VSCO for just my own amusement reasons. But the company coming out. And here too we are seeing an outperformance on the part of Victoria's Secret. Look at those shares, up 11.5% of the company's earnings per share, better than estimated. Comp sales up 4% as well. And I think it's felt like expectations, Brian, going into this, were fairly low.

BRIAN SOZZI: A fair way to put it. And I'm just reading a note right now from our friend, Simeon Siegel, over at BMO Capital Markets. Really noting a strong same store sales increase for Victoria Secret up 6.5%. The guidance was for an increase of mid-single digit percentage to high single digit percentage, so pretty good there. Gross profit margins up 250 basis points year over year and inflationary environment, that's pretty good.

And, of course, Julie, they're also continuing to try to improve their image. And to that end, inking a new deal with tennis star, Naomi Osaka. So a lot is to consider here. Again, another one of these retail names. I think you'll see analysts come out here, as they're doing today, but continue to do so moving forward raise their estimates on the holiday season and for next year.

JULIE HYMAN: Yeah, and just on that Osaka element for just a moment. This is a brand, sort of a side brand that Victoria's Secret has developed where they have podcasts attached to it with various diverse female figures in the public eye. Osaka being the latest to sign on to that. And, obviously, this is a very deliberate and conscious attempt to change Victoria's Secret traditional image of being a brand for tall, voluptuous, white women, right? And so, this is their attempt, continued to attempt to try to change that.

I guess it's showing some success if you look at the sales numbers, but the other point I would make is a point that I've been making over the past few days and I'm going to continue to make. People are still spending money. They may not feel great, they are seeing higher prices, they are complaining about the higher prices, but they are paying them.

And that's something else that Simeon in his note about Victoria's Secret explicitly said that the company is selling less and charging more. So maybe lower volume, OK, maybe some people are not buying it. But enough people are buying it that the numbers overall are going up for Victoria's Secret and for a lot of these other retailers.

BRIAN SOZZI: Did you did you get my holiday gift yet? What did you get me?

JULIE HYMAN: Not yet. Oh, did I buy yours or did I receive the one from you?

BRIAN SOZZI: Yeah. I'm waiting for it. That's what we got to do, like anchors, we get each other gifts. I mean, what did you get me?

JULIE HYMAN: Should I get you something from Victoria's Secret, is that we're saying? Is that reminded you of it?

BRIAN SOZZI: We're live right now, we're taking that off air. But no, no, no.

JULIE HYMAN: OK, finally.