VSCO Stock Forecast & Price Target

Victoria's Secret & Co has demonstrated strong performance, achieving its eighth consecutive quarter of growth in the beauty category, driven by robust sales in key segments such as body care and seasonal fragrances. Comparable sales have also surpassed forecasts, reflecting broad-based strength across various brands, locations, and sales channels. Furthermore, the increased focus on e-commerce, which currently constitutes about one-third of the business, presents significant opportunities for further growth and customer acquisition, particularly evidenced by successful events like PINK Friday driving double-digit increases in new customer accounts.

The financial outlook for Victoria's Secret & Co is challenged by an anticipated decline in adjusted gross margin to approximately 34%, primarily due to tariff-related headwinds, which is indicative of ongoing cost pressures. Additionally, the company's operating margin has significantly decreased from 12.8% in FY21 to a projected 6.0% in FY24, with consensus estimates suggesting a further drop to 4.7% for FY25, highlighting the struggle with limited sales growth. Lastly, external factors such as macroeconomic uncertainty, rising inflation, and reduced discretionary spending contribute to concerns about the company's ability to sustain performance against tough comparable sales in the upcoming quarters.