VSCO Stock Forecast & Price Target

Victoria's Secret & Co has demonstrated robust performance, highlighted by eight consecutive quarters of growth in its beauty segment, driven by strong demand across key categories such as body care and seasonal fragrances. The company's comparable sales grew in the mid-single digits, exceeding forecasts, which indicates a healthy customer engagement across various brands and geographies. Additionally, the launch of initiatives like PINK Friday has successfully boosted new customer acquisition, while e-commerce continues to represent a significant portion of the business, offering further growth potential.

Victoria's Secret's financial outlook is negatively affected by an expected decline in adjusted gross margin to approximately 34%, driven primarily by tariff-related challenges. The company has experienced limited sales growth since FY21, resulting in a significant decrease in operating margin from 12.8% to a projected 6.0% for FY24, with further decline anticipated to 4.7% for FY25. Additionally, macroeconomic factors, including inflation and reduced discretionary spending, pose concerns regarding the company's capacity to meet its competitive sales targets in the upcoming quarters.