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Victoria's Secret (VSCO)
NYSE:VSCO

Victoria's Secret (VSCO) AI Stock Analysis

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Victoria's Secret

(NYSE:VSCO)

Rating:63Neutral
Price Target:
$23.50
▲(5.86%Upside)
Victoria's Secret's overall stock score is driven by strong earnings performance and positive sentiment from the latest earnings call. The company's challenges in financial stability and recent IT security incident weigh down the score. Moderate valuation and mixed technical indicators further contribute to a cautiously optimistic outlook.
Positive Factors
Earnings
The company expects to report 1Q adjusted EPS of $0.09, which is above prior estimates and consensus.
Financial Outlook
Management increased their outlook for adjusted EBIT to $32mn, surpassing prior expectations and consensus estimates.
Financial Performance
Management raised their expectation for 1Q net sales to $1.35bn, indicating a smaller decline than previously anticipated.
Negative Factors
Earnings Delay
The company will be postponing its full 1Q earnings results to a later date due to ongoing work to restore access to its systems.
E-commerce Disruption
VSCO websites, apps, and customer service centers went down, leaving both customers and workers unable to place online orders during the important Memorial Day weekend.
IT Security Incident
The company temporarily shut down its e-commerce website and corporate systems due to a security incident, impacting particular functions in stores.

Victoria's Secret (VSCO) vs. SPDR S&P 500 ETF (SPY)

Victoria's Secret Business Overview & Revenue Model

Company DescriptionVictoria's Secret & Co. operates as a specialty retailer of women's intimate, personal care, and beauty products worldwide. The company offers bras, panties, lingerie, sleepwear, loungewear, and athletic attire and swimwear, as well as fragrances and body care products, and accessories under the Victoria's Secret and PINK brands. As of March 2, 2022, it operated approximately 1,400 retail stores. The company was incorporated in 2021 and is headquartered in Reynoldsburg, Ohio.
How the Company Makes MoneyVictoria's Secret makes money through the sale of its products in both physical retail locations and online platforms. The company's primary revenue streams include sales from its extensive network of stores as well as its e-commerce operations. Additionally, Victoria's Secret benefits from its strong brand recognition and customer loyalty, which drive substantial traffic and sales. The company also engages in strategic partnerships and collaborations to expand its product offerings and market reach, further contributing to its revenue. Seasonal promotions, loyalty programs, and exclusive product lines are employed to enhance customer engagement and sales performance.

Victoria's Secret Earnings Call Summary

Earnings Call Date:Jun 03, 2025
(Q1-2025)
|
% Change Since: 6.58%|
Next Earnings Date:Aug 27, 2025
Earnings Call Sentiment Neutral
The earnings call highlighted several positive developments such as exceeding expectations in Q1 2025, strong international growth, and strategic hires. However, the call also acknowledged challenges, including flat net sales, security incidents, and ongoing tariff pressures, leading to a balanced view of the company's position.
Q1-2025 Updates
Positive Updates
Exceeded Expectations in Q1 2025
Victoria's Secret & Co. delivered first-quarter net sales of $1.353 billion and adjusted operating income of $32 million, both exceeding guidance ranges. Adjusted net income per diluted share was $0.09.
International Growth
International sales grew 9% to nearly $200 million with strong high single-digit growth. The China business showed strong double-digit growth, primarily driven by digital channels.
Strong Performance in Beauty Segment
Beauty segment achieved its seventh consecutive quarter of growth, with Bombshell's fifteenth anniversary contributing significantly.
Positive Momentum in Pink and VSX
Pink Apparel had its third consecutive quarter of positive comps, and VSX sports bras saw double-digit growth, with a 20% increase in the quarter.
Strategic Leadership Hires
Announced new brand presidents and a Chief Marketing Officer, aiming to drive sustained growth and strategic vision.
Store of the Future Expansion
Planned expansion of the Store of the Future concept, expected to represent 25% of the North American fleet by year-end.
Negative Updates
Flat Net Sales and 1% Comparable Sales Decline
Net sales for Q1 were flat, and total comparable sales were down 1% compared to the previous year.
Security Incident Impact
A security incident required taking some internal systems and e-commerce sites offline, impacting Q2 sales forecast by approximately $20 million.
Gross Margin Pressure
Adjusted gross margin rate declined by 170 basis points to 35.2%, below the guidance of 36.5%, due to elevated airfreight rates, tariff-related order adjustments, and higher GWP activity.
Tariff Headwinds
Tariff impacts expected to result in approximately $50 million net impact for fiscal year 2025, with ongoing mitigation strategies.
Challenges in Intimates and Panties
The intimates market continues to be pressured, with a decline in share in Q1. Panties business was softer throughout the quarter.
Company Guidance
During Victoria's Secret & Co.'s first-quarter earnings call for fiscal year 2025, the company reported net sales of $1.353 billion and an adjusted operating income of $32 million, both exceeding their initial guidance. The adjusted net income per diluted share was $0.09, slightly below the upper end of the guidance range. The company maintained its forecast for fiscal year 2025 net sales between $6.2 billion and $6.3 billion, and expects adjusted operating income to range from $270 million to $320 million. The call highlighted key strategic priorities, including innovation in product lines, particularly in the Pink and Beauty segments, which showed robust growth. The company noted a 9% growth in international sales, with significant contributions from China. For the second quarter, net sales are projected between $1.38 billion and $1.41 billion, accounting for a $20 million impact from a recent security incident. Adjusted operating income is anticipated to be between $15 million and $35 million. The fiscal year guidance includes a gross tariff impact of approximately $120 million, with mitigation efforts projected to reduce this to a net impact of $50 million. The company plans capital expenditures of around $220 million for fiscal year 2025, while aiming for an adjusted free cash flow of $150 million to $200 million.

Victoria's Secret Financial Statement Overview

Summary
Victoria's Secret shows a gradual recovery with improved profitability and operational margins post-2020. However, challenges in revenue growth, high leverage, and fluctuating cash flows continue to pose risks, despite some improvement in equity.
Income Statement
65
Positive
Victoria's Secret has shown a moderate rebound in profitability since 2020, with gross profit margins stabilizing around 36-37% in recent years. However, net profit margins remain low, showing only a slight improvement from negative figures. Revenue has been fairly stable, with a slight decline over the past few years, indicative of challenges in achieving growth. The EBIT and EBITDA margins have improved post-2020, suggesting some operational efficiency gains.
Balance Sheet
55
Neutral
The balance sheet shows some improvement in equity from 2022 to 2025, with stockholders' equity rising. However, the debt-to-equity ratio was high until 2025, reflecting significant leverage. With liabilities exceeding assets in 2025, the equity ratio appears concerning. While return on equity improved in recent years, it remains modest, highlighting a need for stronger financial stability.
Cash Flow
50
Neutral
The cash flow statement indicates volatility, with free cash flow fluctuating significantly. Operating cash flow has been inconsistent, leading to a challenging environment for maintaining robust cash flow generation. The operating cash flow to net income ratio is not calculable for 2025 due to missing data, but prior years show a moderate ability to convert net income into cash.
Breakdown
Mar 2025Mar 2024Mar 2023Mar 2022Mar 2021
Income StatementTotal Revenue
6.23B6.18B6.34B6.78B5.41B
Gross Profit
2.28B2.25B2.26B2.76B1.57B
EBIT
310.00M246.00M478.00M567.54M-100.00M
EBITDA
565.00M530.00M751.00M1.17B226.00M
Net Income Common Stockholders
165.00M109.00M348.00M646.00M-72.00M
Balance SheetCash, Cash Equivalents and Short-Term Investments
227.00M270.00M427.00M490.00M335.00M
Total Assets
4.53B4.60B4.71B4.34B4.23B
Total Debt
2.70B2.70B2.79B2.64B2.07B
Net Debt
2.47B2.43B2.36B2.15B1.74B
Total Liabilities
3.87B4.16B4.31B4.09B3.34B
Stockholders Equity
640.00M417.00M383.00M257.00M891.00M
Cash FlowFree Cash Flow
247.00M133.00M273.00M682.00M547.00M
Operating Cash Flow
425.00M389.00M437.00M851.00M674.00M
Investing Cash Flow
-153.00M-254.00M-555.00M-169.00M-123.00M
Financing Cash Flow
-315.00M-291.00M58.00M-527.00M-465.00M

Victoria's Secret Technical Analysis

Technical Analysis Sentiment
Positive
Last Price22.20
Price Trends
50DMA
19.68
Positive
100DMA
23.85
Negative
200DMA
28.23
Negative
Market Momentum
MACD
0.39
Positive
RSI
55.92
Neutral
STOCH
77.29
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For VSCO, the sentiment is Positive. The current price of 22.2 is above the 20-day moving average (MA) of 22.05, above the 50-day MA of 19.68, and below the 200-day MA of 28.23, indicating a neutral trend. The MACD of 0.39 indicates Positive momentum. The RSI at 55.92 is Neutral, neither overbought nor oversold. The STOCH value of 77.29 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for VSCO.

Victoria's Secret Risk Analysis

Victoria's Secret disclosed 42 risk factors in its most recent earnings report. Victoria's Secret reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks

Victoria's Secret Peers Comparison

Overall Rating
UnderperformOutperform
Sector (63)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
BKBKE
75
Outperform
$2.22B11.1444.55%3.19%-1.08%-8.20%
66
Neutral
$282.60M-29.52%1.85%-337.77%
GEGES
64
Neutral
$625.70M14.292.65%9.97%9.02%-93.09%
AEAEO
64
Neutral
$1.76B10.4012.19%4.83%-0.95%-10.51%
63
Neutral
$1.77B11.2931.30%0.76%49.95%
63
Neutral
$6.96B11.512.80%3.85%2.70%-24.43%
FLFL
56
Neutral
$2.30B194.63-13.07%-2.62%
* Consumer Cyclical Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
VSCO
Victoria's Secret
22.20
4.29
23.95%
AEO
American Eagle
10.39
-9.88
-48.74%
BKE
Buckle
43.69
10.19
30.42%
CTRN
Citi Trends
34.14
12.09
54.83%
FL
Foot Locker
24.12
-1.39
-5.45%
GES
Guess?
12.46
-8.52
-40.61%

Victoria's Secret Corporate Events

Business Operations and StrategyFinancial Disclosures
Victoria’s Secret Exceeds Q1 2025 Expectations
Positive
Jun 11, 2025

Victoria’s Secret & Co. reported its first quarter 2025 results, with sales and operating income exceeding expectations. The company maintained its full-year sales guidance despite a slight decrease in comparable sales. The first quarter saw net sales of $1.353 billion and an operating income of $20 million, with a net loss of $2 million. The company remains optimistic about its future, focusing on brand differentiation and customer engagement. For the second quarter, the company forecasts net sales between $1.380 billion and $1.410 billion, with adjusted operating income expected to range from $15 million to $35 million.

The most recent analyst rating on (VSCO) stock is a Hold with a $18.00 price target. To see the full list of analyst forecasts on Victoria’s Secret stock, see the VSCO Stock Forecast page.

Business Operations and StrategyFinancial Disclosures
Victoria’s Secret Faces IT Security Incident Impact
Negative
Jun 3, 2025

On May 24, 2025, Victoria’s Secret & Co. detected a security incident involving its IT systems, prompting the temporary shutdown of corporate systems and the e-commerce website. While the incident did not affect the company’s financial results for the first quarter of fiscal 2025, it delayed the earnings release and call webcast. The company expects its financial metrics for the first quarter to meet or exceed the high-end of guidance ranges, but ongoing restoration efforts and potential expenses from the incident could impact future financial results.

The most recent analyst rating on (VSCO) stock is a Hold with a $18.00 price target. To see the full list of analyst forecasts on Victoria’s Secret stock, see the VSCO Stock Forecast page.

Private Placements and FinancingBusiness Operations and Strategy
Victoria’s Secret Amends Credit Agreement for Flexibility
Positive
May 22, 2025

On May 21, 2025, Victoria’s Secret & Co. amended its Revolving Credit Agreement with JPMorgan Chase Bank and other lenders, extending the maturity date and adjusting terms to improve financial flexibility. The amendment includes a seasonal increase in inventory advance rates, reduced interest rates on borrowings, and changes to borrowing conditions, which could enhance the company’s operational efficiency and financial positioning.

The most recent analyst rating on (VSCO) stock is a Hold with a $18.00 price target. To see the full list of analyst forecasts on Victoria’s Secret stock, see the VSCO Stock Forecast page.

Business Operations and Strategy
Victoria’s Secret Adopts Shareholder Rights Plan Amidst Market Dislocation
Neutral
May 20, 2025

On May 19, 2025, Victoria’s Secret & Co. announced the adoption of a limited-duration shareholder rights plan in response to BBRC International Pte Limited’s substantial accumulation of the company’s stock. The plan, effective immediately and expiring in one year, aims to protect the long-term interests of all shareholders by preventing any person or group from gaining control without paying an appropriate premium. The plan was adopted amidst market dislocation in the retail sector and is not intended to deter fair offers but to ensure shareholders receive equal treatment in any takeover scenario.

The most recent analyst rating on (VSCO) stock is a Hold with a $18.00 price target. To see the full list of analyst forecasts on Victoria’s Secret stock, see the VSCO Stock Forecast page.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.