VSCO Stock Forecast & Price Target

Victoria's Secret & Co demonstrated a positive performance in Q3 with a low-single-digit growth in US market share, capturing over 1% of the overall intimates market even as it contracted. The company's revenue increased by a mid-single-digit percentage, driven by both its core Victoria's Secret line and a low double-digit growth in the PINK brand, bolstered by successful marketing initiatives such as the Fashion Show. Additionally, the gross margin exceeded expectations due to a reduction in promotions and higher regular price selling, while store and digital traffic showed resilience compared to broader retail trends.

Victoria's Secret & Co is anticipated to struggle with a declining operating margin, projecting a drop to 4.8% in FY25 from a prior 6.0% in FY24, raising concerns about future profitability. The company has also faced challenges in achieving consistent sales growth, as evidenced by a negative 1% comparable store sales (comp) in the first quarter of FY25 and a tough outlook for the next quarters amidst macroeconomic uncertainties. Additional threats such as inflation, reduced discretionary spending, and rising commodity costs contribute to a dim performance forecast, indicating a challenging environment for Victoria's Secret moving forward.