Victoria's Secret & Co (VSCO)
Profitability ratios
Return on sales
| Feb 3, 2024 | Jan 28, 2023 | Jan 29, 2022 | |
|---|---|---|---|
| Gross profit margin | 36.86% | 35.93% | 40.84% |
| Operating profit margin | 4.04% | 7.61% | 12.87% |
| Pretax margin | 2.30% | 6.80% | 12.47% |
| Net profit margin | 1.79% | 5.54% | 9.56% |
The profitability ratios of Victoria's Secret & Co over the past three years show a declining trend. The gross profit margin has decreased from 40.84% in January 2022 to 36.86% in February 2024, indicating a decrease in the percentage of revenue retained after accounting for the cost of goods sold.
Similarly, the operating profit margin has declined from 12.87% in January 2022 to 4.04% in February 2024, signifying a reduction in the company's ability to generate profits from its core operations. The pretax margin has also seen a decrease from 12.47% in January 2022 to 2.30% in February 2024, indicating a decline in the company's profitability before accounting for taxes.
Overall, the net profit margin has decreased from 9.56% in January 2022 to 1.79% in February 2024, reflecting a diminishing bottom line profitability for the company. This downward trend in profitability ratios suggests potential challenges in cost management, revenue generation, or operational efficiency that may need to be addressed by Victoria's Secret & Co in order to improve its overall financial performance.
Return on investment
| Feb 3, 2024 | Jan 28, 2023 | Jan 29, 2022 | |
|---|---|---|---|
| Operating return on assets (Operating ROA) | 5.35% | 10.15% | 20.03% |
| Return on assets (ROA) | 2.37% | 7.39% | 14.87% |
| Return on total capital | 15.55% | 29.44% | 70.45% |
| Return on equity (ROE) | 26.14% | 90.86% | 251.36% |
Victoria's Secret & Co's profitability ratios have shown a general downward trend over the past three years. The Operating return on assets (Operating ROA) decreased from 20.03% in 2022 to 5.35% in 2024, indicating a decline in the company's ability to generate operating profits from its total assets.
Similarly, the Return on assets (ROA) decreased from 14.87% in 2022 to 2.37% in 2024, reflecting a decrease in the company's overall profitability in relation to its total assets.
The Return on total capital also decreased significantly from 70.45% in 2022 to 15.55% in 2024, suggesting a decline in the company's ability to generate returns from its total capital employed.
The Return on equity (ROE) also showed a substantial decrease from 251.36% in 2022 to 26.14% in 2024, indicating a significant decrease in the company's ability to generate profits for its shareholders based on their equity investments.
Overall, the declining trend in Victoria's Secret & Co's profitability ratios raises concerns about the company's efficiency in generating profits relative to its assets, capital, and equity over the past three years. Further analysis of the company's financial performance and strategic initiatives may be required to address these declining profitability ratios.