Victoria’s Secret warns that the cost of managing supply chain challenges could reach $150 million for Q3 and Q4, and even with the extra spend, sales could suffer. Like others, the company is spending big to manage unprecedented supply chain challenges.
Victoria’s Secret & Co. warns that the cost of managing supply chain challenges could reach $150 million for the combined third and fourth quarters, and even with the extra spend, sales could suffer.
“We estimate the COVID-19 related disruption to our base of supply will increase our freight and product costs by as much as an incremental $100 million in Q4 ,” the company said in commentary released alongside the earnings numbers. Victoria’s Secret is guiding for fourth-quarter sales in a range of flat to up 3% compared with $2.10 billion last year. The FactSet consensus is for sales of $2.02 billion.
“[The] recovery story remains undervalued, [and there’s] a lot to like in a tough retail environment,” analysts said. “Victoria’s Secret has shown us the brand momentum remains on track, but cost pressures are building – and the Street needs to appreciate that margins will likely come down next fiscal year.
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