VSCO Stock Forecast & Price Target

Victoria’s Secret & Co. reported a positive outlook driven by a low single-digit market share growth in the U.S. during Q3, enabling the brand to capture over 1% of the intimates market amid an overall market contraction. The company's revenue rose by mid-single digits, with the PINK brand exhibiting low double-digit growth, largely supported by strong consumer demand across multiple channels and successful product launches, such as the Wear Everywhere Bra. Additionally, improved gross margins were achieved through reduced promotions and enhanced regular price sales, indicating strong operational efficiency and customer retention, despite a challenging macroeconomic environment.

Victoria's Secret & Co. has experienced a significant decline in its operating margins, dropping from 12.8% in FY21 to 6.0% in FY24, with further consensus forecasts predicting a decrease to 4.7% for FY25. The company faces challenges from limited sales growth and increased operating expenses, leading to an operating income forecast indicating a margin of (2.8%), highlighting ongoing financial pressures. Additionally, macroeconomic concerns, inflation, and a decline in the percentage of the PINK brand's business attributed to apparel contribute to a negative outlook for Victoria's Secret's stock.