VSCO Stock Forecast & Price Target

Victoria's Secret & Co has demonstrated strong performance with eight consecutive quarters of growth in its beauty business, significantly driven by increased customer spending across key categories such as body care and seasonal fragrances. Comparable sales have also shown mid-single-digit growth, surpassing forecasts due to broad-based strength across various brands, geographies, and sales channels. Furthermore, the company's digital initiatives have capitalized on the e-commerce segment, which comprises roughly one-third of its business, indicating a promising outlook for continued growth through online channels.

The analysis indicates a negative outlook for Victoria's Secret & Co, primarily due to a decline in the adjusted gross margin, projected to decrease to approximately 34% from 34.8% the previous year, attributed to tariff-related challenges. Furthermore, the company's operating margin has significantly decreased from 12.8% in FY21 to a projected 6.0% in FY24, with future projections suggesting a further decline to a consensus of 4.7% for FY25. The ongoing macroeconomic uncertainties, persistent inflation, and a pullback in discretionary spending raise concerns about the company's ability to maintain sales, particularly as it faces tough comparable sales targets of 3% in Q3 and 5% in Q4.