VSCO Stock Forecast & Price Target

Victoria's Secret & Co has exhibited robust financial performance, highlighted by eight consecutive quarters of growth in the beauty segment, driven by strong demand in key categories such as body care and fragrances. The company reported mid-single-digit growth in comparable sales, surpassing forecasts through broad-based strength across its brands, geographies, and channels, as well as successful customer acquisition initiatives like PINK Friday. Additionally, with e-commerce comprising approximately one-third of the business and a strategic focus on enhancing online growth, there is a significant potential for continued upward momentum in revenue generation.

Victoria's Secret's adjusted gross margin is projected to decline to approximately 34%, down from 34.8% the previous year, primarily due to tariff-related challenges. The company's operating margin has significantly declined from 12.8% in FY21 to an estimated 6.0% in FY24, with consensus expectations dropping further to 4.7% for FY25, indicating pressure from limited sales growth. Additionally, macroeconomic concerns, including inflation and a reduction in discretionary spending, pose further risks as the company confronts challenging year-over-year comparisons for the upcoming quarters.