VSCO: Margin Pressure Will Persist As Tariff Headwinds Remain A Risk

Analysts have increased their price target for Victoria's Secret from $29.90 to $31.20, citing stronger brand momentum and the positive impact of the company's ongoing strategic initiatives.

Analyst Commentary

Recent research notes from leading analysts reflect a growing sense of optimism around Victoria's Secret, balanced with ongoing cautions about the company’s execution and market positioning. Analysts are closely watching the impact of management’s strategic initiatives and changes in consumer trends.

Bullish Takeaways

• Bullish analysts highlight stronger brand relevance and consumer engagement, attributing gains to new management and recent strategic efforts.
• Improved product assortment and early momentum from the latest fashion show are seen as catalysts for increased consumer interest and potential market share gains.
• Sustained improvements in brand momentum and early signs of revenue growth are raising confidence that execution is on track for a longer-term turnaround.
• Upward revisions in price targets by several firms reflect heightened expectations for earnings growth and ongoing progress under the company’s transformation strategy.

Bearish Takeaways

• Bearish analysts note that execution challenges remain, particularly given the company is still early in its turnaround process and market share losses have not yet fully stabilized.
• There are ongoing concerns about tariff headwinds and the risk that early successes may not be sustained in the current competitive retail landscape.
• Some maintain more neutral ratings, citing that while recent metrics are promising, Victoria's Secret must demonstrate consistent top-line growth and margin expansion to justify higher valuations.

What's in the News

• Jefferies analyst Corey Tarlowe expressed encouragement about Victoria's Secret's strategic direction and product assortment after attending the 2025 Fashion Show, noting share gain potential and approximately 10 million YouTube streams for the event (Jefferies).
• Victoria’s Secret issued a public response to a letter from BBRC International, defending its collaborative approach with the investor and emphasizing recent strong performance under the Path to Potential strategy and new leadership (company statement).
• BBRC International sent a letter to Victoria’s Secret’s board advocating for changes in board composition and governance, arguing for the removal of current Board Chair Donna James and stating it may nominate new directors if the Board does not engage more constructively (BBRC International).
• The company reported no share repurchases from May to August 2025, confirming that no shares were bought back under the previously announced buyback plan (company report).

Valuation Changes

• Consensus Analyst Price Target has risen from $29.90 to $31.20. This reflects a modest increase in expected valuations.
• Discount Rate has fallen slightly from 10.84% to 10.61%, suggesting marginally lower perceived risk.
• Revenue Growth is projected to improve fractionally from 3.17% to 3.18%.
• Net Profit Margin remains essentially unchanged, moving minimally from 2.11% to 2.11%.
• Future P/E (Price-to-Earnings ratio) has grown moderately, rising from 23.59x to 24.46x. This indicates a higher valuation multiple on anticipated earnings.