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Victoria's Secret (VSCO)
NYSE:VSCO
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Victoria's Secret (VSCO) AI Stock Analysis

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VSCO

Victoria's Secret

(NYSE:VSCO)

Rating:72Outperform
Price Target:
$25.00
▼(-4.76% Downside)
Victoria's Secret's overall stock score reflects a balanced view of its strengths and challenges. Strong technical indicators and positive earnings call sentiment are offset by financial stability concerns and valuation limitations. The company's ability to navigate tariff impacts and leverage international growth opportunities will be crucial for future performance.
Positive Factors
Earnings
VSCO delivered an across-the-board EPS beat to both consensus expectations and management guidance.
Product Innovation
Technology-driven innovation and fashion remain central to the intimates strategy, with management highlighting the July launch of the Body by Victoria FlexFactor Bra as a key driver of customer engagement and growth.
Sales Performance
VSCO delivered a strong 2Q25 beat and 3Q25 sales outlook was better than Street while EPS bracketed Street.
Negative Factors
Financial Guidance
VSCO set initial 3Q25 EPS guidance below the Street, reflecting skepticism on the company's ability to accelerate quarter-over-quarter revenue growth amid rising inflation and other headwinds.
Margin Pressures
Consistent margin expansion will be difficult to achieve from here.
Tariff Headwinds
Tariff headwind will pick up materially in 4Q onward.

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

Victoria's Secret Business Overview & Revenue Model

Company DescriptionVictoria's Secret (VSCO) is a leading American lingerie, women's wear, and beauty products retailer, renowned for its high-quality products and iconic branding. Founded in 1977, the company has evolved to become a prominent player in the fashion industry, offering a wide range of products including bras, panties, sleepwear, loungewear, sportswear, and beauty items. Victoria's Secret operates through various channels, including physical retail stores, an online presence, and catalog sales, catering to a diverse customer base seeking luxury and comfort in intimate apparel.
How the Company Makes MoneyVictoria's Secret generates revenue primarily through the sale of lingerie, sleepwear, and beauty products both in-store and online. Key revenue streams include direct retail sales from its extensive network of physical locations and e-commerce platform, as well as catalog sales. The company benefits from brand loyalty and recognition, which drive repeat purchases. Strategic partnerships, such as collaborations with celebrities and influencers, enhance its marketing efforts and expand its customer reach. Seasonal promotions and exclusive product lines also contribute to sales spikes. Additionally, the company's ability to leverage data analytics for targeted marketing and inventory management plays a significant role in optimizing its revenue generation.

Victoria's Secret Earnings Call Summary

Earnings Call Date:Aug 28, 2025
(Q2-2025)
|
% Change Since: |
Next Earnings Date:Nov 26, 2025
Earnings Call Sentiment Positive
The earnings call demonstrated a successful quarter with strong sales growth, improved gross margins, and positive international performance. However, challenges such as the digital outage and increased tariff impacts were noted. Overall, the positive aspects slightly outweigh the negatives, suggesting a generally optimistic outlook.
Q2-2025 Updates
Positive Updates
Net Sales Growth
Net sales grew by 3% year-over-year to $1.459 billion, with comparable sales increasing by 4% across both Victoria's Secret and PINK brands.
International Expansion
International net sales grew 22% year-over-year, with high single-digit retail comparable sales gains and continued new store openings.
Improved Gross Margins
Gross margins improved to 35.6%, 20 basis points above last year and 60 basis points above guidance, driven by reduced promotions and higher regular-priced sales.
Bra Market Share Gain
Victoria's Secret grew market share by approximately 0.5 points in total bras, including almost 1 full point in traditional bras.
Successful Product Launches
The launch of the Body by Victoria collection's new FlexFactor bra and the PINK x LoveShackFancy collaboration drove significant customer engagement and sales.
Negative Updates
Impact of Digital Outage
A digital outage in May negatively impacted net sales by approximately $20 million.
Increased Tariff Impact
Incremental tariff exposure led to an estimated $50 million increase in net tariff impact for fiscal year 2025.
Adjusted Operating Loss Forecast
Third quarter 2025 adjusted operating loss is projected to be between $35 million and $55 million, compared to a $28 million loss in the same quarter of 2024.
Company Guidance
During the Victoria's Secret & Co. second quarter 2025 earnings call, the company announced that they exceeded their top and bottom line guidance, with net sales growing by 3% and comparable sales increasing by 4%. The international segment was a standout, with net sales increasing by 22% year-over-year. Gross margins improved to 35.6%, 20 basis points higher than the previous year and 60 basis points above guidance. Adjusted operating income reached $55 million, surpassing the high end of their guidance by $20 million. The company also gained market share in the intimate apparel category, particularly in the 18 to 44 age group. Looking forward, Victoria's Secret is maintaining its full-year operating income guidance despite an anticipated $100 million net tariff impact, and it plans to mitigate the impact through strategic pricing, sourcing, and promotional strategies, alongside a focus on driving top-line growth with elevated product assortments and major brand initiatives.

Victoria's Secret Financial Statement Overview

Summary
Victoria's Secret exhibits mixed financial performance with declining revenue and high leverage. However, it maintains decent profitability margins and strong cash flow management, indicating moderate financial health.
Income Statement
67
Positive
Victoria's Secret shows a mixed performance in its income statement. The company experienced a decline in total revenue over the past year, dropping from $6.78 billion in 2022 to $6.22 billion in TTM (Trailing-Twelve-Months). Gross profit margin stands at 36.3% for TTM, indicating decent profitability, while the net profit margin is relatively low at 2.7%. The EBIT margin is at 4.9% and EBITDA margin at 7.9%, reflecting moderate operational efficiency. The revenue growth rate has seen a negative trajectory over recent periods, indicating challenges in maintaining sales momentum.
Balance Sheet
58
Neutral
The balance sheet analysis reveals some financial stability concerns. Victoria's Secret has a high debt-to-equity ratio of 4.38 in TTM, suggesting significant leverage and potential risk in financial stability. However, the equity ratio has improved to 14.1%, showing an increase in shareholder equity relative to total assets. The return on equity (ROE) is 26%, indicating effective use of equity to generate profits, although this is offset by high leverage.
Cash Flow
72
Positive
The cash flow statement reflects robust operating cash flow of $391 million in TTM, indicating strong cash generation capabilities. The free cash flow to net income ratio is 1.25, showcasing efficient conversion of income into free cash flow. However, free cash flow growth has been inconsistent, with a decline from recent years, suggesting fluctuations in cash flow generation. Despite this, the company maintains a healthy operating cash flow to net income ratio of 2.33, showing sound cash flow management.
BreakdownMar 2025Mar 2024Mar 2023Mar 2022Mar 2021
Income Statement
Total Revenue6.23B6.18B6.34B6.78B5.41B
Gross Profit2.28B2.25B2.26B2.76B1.57B
EBITDA565.00M530.00M751.00M1.17B226.00M
Net Income165.00M109.00M348.00M646.00M-72.00M
Balance Sheet
Total Assets4.53B4.60B4.71B4.34B4.23B
Cash, Cash Equivalents and Short-Term Investments227.00M270.00M427.00M490.00M335.00M
Total Debt2.70B2.70B2.79B2.64B2.07B
Total Liabilities3.87B4.16B4.31B4.09B3.34B
Stockholders Equity640.00M417.00M383.00M257.00M891.00M
Cash Flow
Free Cash Flow247.00M133.00M273.00M682.00M547.00M
Operating Cash Flow425.00M389.00M437.00M851.00M674.00M
Investing Cash Flow-153.00M-254.00M-500.00M-169.00M-123.00M
Financing Cash Flow-315.00M-291.00M3.00M-527.00M-465.00M

Victoria's Secret Technical Analysis

Technical Analysis Sentiment
Positive
Last Price26.25
Price Trends
50DMA
20.93
Positive
100DMA
20.44
Positive
200DMA
26.32
Negative
Market Momentum
MACD
1.02
Negative
RSI
72.38
Negative
STOCH
77.07
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 26.25 is above the 20-day moving average (MA) of 22.61, above the 50-day MA of 20.93, and below the 200-day MA of 26.32, indicating a neutral trend. The MACD of 1.02 indicates Negative momentum. The RSI at 72.38 is Negative, neither overbought nor oversold. The STOCH value of 77.07 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 (61)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
78
Outperform
$3.08B14.4843.13%6.58%1.62%-2.57%
75
Outperform
$3.26B13.1412.17%2.66%-2.73%-16.71%
72
Outperform
$2.05B14.3531.35%2.31%
66
Neutral
$877.00M161.656.27%7.12%7.84%-81.08%
62
Neutral
$321.31M-13.32%3.32%25.71%
61
Neutral
$17.97B12.87-5.30%2.97%1.26%-14.45%
49
Neutral
$2.30B194.63-13.84%-3.58%-4.20%
* Consumer Cyclical Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
VSCO
Victoria's Secret
26.25
3.16
13.69%
AEO
American Eagle
18.81
0.52
2.84%
BKE
Buckle
59.27
20.98
54.79%
CTRN
Citi Trends
37.71
23.71
169.36%
FL
Foot Locker
24.01
-1.13
-4.49%
GES
Guess?
16.86
-0.42
-2.43%

Victoria's Secret Corporate Events

Business Operations and StrategyFinancial Disclosures
Victoria’s Secret Exceeds Q2 Expectations, Raises Sales Guidance
Positive
Aug 28, 2025

On August 28, 2025, Victoria’s Secret & Co. reported its second quarter 2025 financial results, revealing sales and operating income that exceeded expectations. The company saw a 4% increase in comparable sales, driven by product innovation and a refreshed leadership team, despite tariff challenges. The company raised its full-year sales guidance, forecasting net sales between $6.330 billion to $6.410 billion, and adjusted operating income between $270 million to $320 million, reflecting optimism about future growth and brand differentiation.

Executive/Board ChangesShareholder Meetings
Victoria’s Secret Holds Annual Stockholders Meeting
Neutral
Jun 23, 2025

On June 18, 2025, Victoria’s Secret held its annual meeting of stockholders remotely. During the meeting, stockholders elected ten directors to serve until the 2026 annual meeting, approved the compensation of the company’s named executive officers on an advisory basis, and ratified the appointment of Ernst & Young LLP as the independent registered public accounting firm for fiscal year 2025.

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.

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.Date of analysis: Aug 28, 2025