Victoria’s Secret reported a quarterly profit that topped Wall Street expectations on Tuesday, but warned that it could continue to face supply chain and sales challenges for the remainder of the year.

The Ohio-based lingerie retailer noted that it faced “supply chain headwinds” in the three-month period ended April 30 while also lapping the sales bump it got in the year-ago period from people spending their federal stimulus money.

“If the first quarter sales trends adjusted for stimulus were to continue for the balance of the year, it could challenge our ability to deliver full year operating income in line with last year,” the company said in a news release.

Sales in the quarter were down 4.5% from a year ago, but in line with Wall Street estimates. The company noted that federal stimulus benefits lifted sales by about $75 million in the same period in 2021.

For the most recent quarter, the company reported strength in its bras and beauty businesses as its international segment recovered from heavy Covid restrictions.

The company’s shares rose around 7% in extended trading.

Here’s how Victoria’s Secret did in its fiscal first quarter compared with what Wall Street was expecting, based on Refinitiv estimates:

• Earnings per share: $1.11 adjusted vs 84 cents expected
• Revenue: $1.48 billion vs. $1.48 billion expected

For the three-month period ended April 30, net income was $76.14 million, or 93 cents per share, compared with net income of $174 million, or $1.97 per share, a year earlier.

Excluding one-time items, Victoria’s Secret earned $1.11 per share, ahead of the 84 cents that analysts expected.

Sales fell 4.5% to $1.48 billion from $1.55 billion a year earlier, but were in line with Wall Street forecasts.

Same-store sales were down 8% in the quarter from 2021. Adjusting for last year’s stimulus benefit, the company said same-store sales were down 3%.

Victoria’s Secret ended the quarter with inventory levels up 37% from the prior year, which it said was primarily due to longer transportation times and higher cost of goods stemming from inflation.

For its fiscal second quarter, Victoria’s Secret expects to earn between 95 cents per share to $1.25 a share, on an adjusted basis. Analysts were looking for $1.19 per share.

The company forecast sales to be down low-single digits to up low-single digits on a year-over-year basis. Analysts were looking for a 0.8% decline.

For the year, Victoria’s Secret said Tuesday it still expects total sales to be flat to up low-single digits from 2021. Analysts were projecting a year-over-year increase of 1.7%, according to Refinitiv data.

“We have proactively anticipated and are managing supply chain and inflationary pressures,” the company said in prepared remarks. “However, we understand there could be volatility in our results.”

Victoria’s Secret shares have fallen about 26% year to date, as of Tuesday’s market close.