VSCO Stock Forecast & Price Target

Victoria's Secret & Co demonstrated a positive growth trajectory in Q3, achieving a low-single-digit increase in US market share amid a contracting overall market, thereby gaining over 1% share within the intimates sector. Revenue grew by mid-single digits, with PINK’s revenue rising by low double digits, driven by a successful marketing strategy, including the Fashion Show that revitalized interest in its products. Additionally, the company showcased strong performance in gross margins due to reduced promotions and improved regular price selling, alongside increased store and digital traffic, indicating a solid operational footing.

The negative outlook for Victoria's Secret & Co is driven by a declining operating margin, projected to fall to 4.8% for FY25, down from 6.0% in FY24, and significantly below the 12.8% margin achieved in FY21. Furthermore, the company faces challenges in achieving consistent sales growth, as indicated by a series of negative comparable sales results, including a decline of 1% in 1Q25 and a negative 5% in the prior year, alongside increased pressure from macroeconomic factors such as inflation and reduced discretionary spending. Lastly, ongoing risks related to commodity volatility, consumer confidence, and rising interest rates add to the uncertainty surrounding Victoria's Secret's financial performance, further contributing to the negative sentiment regarding its stock.