Victoria’s Secret Faces Financial Struggles Amid Tariffs and Shifting Consumer Preferences

Bank of America Securities analyst Lorraine Hutchinson has reiterated their bearish stance on VSCO stock, giving a Sell rating yesterday.

Lorraine Hutchinson’s rating is based on several factors impacting Victoria’s Secret’s financial performance. The company is facing challenges in maintaining consistent sales growth and margin expansion due to pressures such as tariffs and changing consumer preferences in the intimates category. The management’s guidance for the fiscal year reflects these difficulties, with a lowered earnings per share forecast and ongoing pressure from tariffs affecting margins.
Additionally, the shift in consumer behavior, particularly among younger customers, is impacting sales in the core bra category, with a preference for sports and unstructured bras, which are typically lower priced. The company’s marketing efforts are focused on acquiring new customers and differentiating its brands, but these initiatives may not be sufficient to offset the margin compression caused by tariffs and promotional activities. As a result, Lorraine Hutchinson has reiterated a Sell rating, reflecting the anticipated continued financial pressures on Victoria’s Secret.

In another report released yesterday, Goldman Sachs also maintained a Sell rating on the stock with a $15.00 price target.