VSCO Stock Forecast & Price Target

Victoria's Secret & Co has demonstrated strong performance in its beauty segment, achieving eight consecutive quarters of growth with a mid-single digit topline gain driven by robust demand in body care, seasonal fragrances, and mist collections. The company's comparable sales not only exceeded forecasts but also highlighted broad-based strength across various brands, geographies, and sales channels. Additionally, the successful PINK Friday event notably contributed to a surge in new customer acquisitions, while e-commerce continues to represent a significant portion of the business, suggesting further growth potential in the online marketplace.

Victoria's Secret's adjusted gross margin is projected to decline to approximately 34%, primarily attributed to tariff-related challenges, which is a significant indicator of increasing cost pressures. Alongside this margin contraction, the company has experienced a notable reduction in its operating margin, from 12.8% in FY21 to an anticipated 6.0% in FY24, with further consensus expectations suggesting a decline to 4.7% in FY25. Additionally, external economic factors such as macro uncertainty, inflation, and a decrease in discretionary spending pose further risks to the company's sales growth and profitability outlook.