VSCO: Margins May Face Pressure From Ongoing Tariff Headwinds This Year

Analysts have raised their fair value price target for Victoria's Secret from $29.00 to $29.90, citing sustained brand momentum and early signs of stabilization under new strategic initiatives.

Analyst Commentary

Recent street research reflects a dynamic range of perspectives regarding Victoria's Secret's near-term prospects and execution under new management. Several analysts have updated their ratings and price targets in response to the company's progress on strategic initiatives and Q2 performance.

• Bullish analysts highlight improving brand momentum and relevance, citing strong consumer engagement across both the Victoria's Secret and PINK banners.
• Management's "Path to Potential" strategy is described as driving stabilization in market share losses and contributing to a more optimistic growth outlook.
• Solid financial performance, including multiple mentions of Q2 earnings beats, is seen as evidence of effective execution and progress under new leadership.
• Expansion of product assortment and positive initial responses to major brand events such as the 2025 Fashion Show suggest additional share gain opportunities.

• Bearish analysts point to ongoing macroeconomic and tariff headwinds, which could pressure margins and limit short-term earnings growth.
• Some express concerns that recent earnings outperformance has not flowed through to full-year guidance due to heightened cost expectations.
• The turnaround is considered early stage, with risk remaining around sustained top-line growth and the durability of improved full-price selling.
• Valuation adjustments by some firms reflect a more balanced risk/reward, with room for both upside and downside depending on execution consistency.

What's in the News

• Jefferies expresses optimism about Victoria's Secret's strategic direction and product assortment following the 2025 Fashion Show. The firm highlights strong consumer engagement and new product momentum (Jefferies).
• Victoria's Secret & Co. responded to a public letter from BBRC International, stating it has taken a collaborative approach with the investor and reaffirming confidence in its current management and strategy (Company Statement).
• BBRC International PTE Limited continues activist engagement, advocating for changes to the Board's composition and indicating plans to nominate directors at the 2026 annual meeting (BBRC International).
• Victoria's Secret raised its full-year 2025 earnings guidance, now expecting net sales of $6.33 billion to $6.41 billion, up from prior expectations (Company Guidance).
• The company provided Q3 2025 earnings guidance, anticipating net sales between $1.39 billion and $1.42 billion, marking growth over the previous year's third quarter (Company Guidance).

Valuation Changes

• The Fair Value Price Target has risen slightly from $29.00 to $29.90.
• The Discount Rate has decreased marginally, from 10.86% to 10.84%.
• The Revenue Growth Estimate has improved, moving from 3.03% to 3.17%.
• The Net Profit Margin projection has edged down from 2.12% to 2.11%.
• The Future P/E Ratio forecast has increased, changing from 22.89x to 23.59x.