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Victoria's Secret (VSCO)
NYSE:VSCO
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Victoria's Secret
(NYSE:VSCO)
62Neutral
Positive Factors
Earnings Performance
VSCO delivered its fifth consecutive EPS beat, exceeding expectations and previous guidance.
Product Innovation
Management feels confident in the improved product assortment at PINK and will allocate more marketing to the brand to attract a younger customer.
Negative Factors
Consumer Confidence
Management called out shifting consumer confidence, a volatile economy, and weather events as headwinds continuing into Spring 2025.
Market Competition
There is ongoing consumer and macroeconomic uncertainty, along with a highly competitive retail environment.
Sales Growth Challenges
VSCO needs 1-2% sales growth to leverage B&O and SG&A expense, which will be challenging in the current environment.
Victoria's Secret (VSCO) vs. S&P 500 (SPY)
Market Cap
$1.45B
Dividend YieldN/A
Average Volume (3M)4.64M
Price to Earnings (P/E)9.3
Beta (1Y)1.75
Revenue Growth0.76%
EPS Growth49.95%
CountryUS
Employees13,000
SectorConsumer Cyclical
Sector Strength49
IndustryApparel - Retail
Share Statistics
EPS (TTM)1.97
Shares Outstanding78,888,590
10 Day Avg. Volume4,519,479
30 Day Avg. Volume4,641,568
Financial Highlights & Ratios
PEG Ratio0.19
Price to Book (P/B)N/A
Price to Sales (P/S)0.27
Price to Cash Flow (P/CF)-1.70
P/FCF Ratio0.00
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$28.50Price Target Upside55.57% Upside
Rating ConsensusHold
Number of Analyst Covering11
Victoria's Secret Business Overview & Revenue Model
Company DescriptionVictoria's Secret (VSCO) is a leading American retailer specializing in lingerie, beauty products, and women's apparel. Founded in 1977, the company has established itself as a prominent name in the intimate apparel industry, known for its high-quality products and iconic fashion shows. Operating primarily through its Victoria's Secret and PINK brands, the company offers a wide range of bras, panties, sleepwear, and beauty products through its extensive network of retail stores, online platforms, and catalog sales.
How the Company Makes MoneyVictoria's Secret generates revenue through multiple streams. The primary source of income is retail sales from its extensive network of physical stores, which are strategically located in shopping malls and high-traffic areas worldwide. Additionally, the company has a strong e-commerce presence, allowing customers to shop online for their favorite products, contributing significantly to its revenue. The brand also engages in direct-to-consumer sales through catalog orders. Revenue is further bolstered by the sale of beauty products and accessories, such as perfumes and body care items. Key partnerships and collaborations with designers and influencers help to boost brand visibility and sales. The company also benefits from licensing agreements, allowing third parties to produce and sell products under the Victoria's Secret brand, further expanding its revenue streams.
Victoria's Secret Financial Statement Overview
Summary
Victoria's Secret shows strengths in profitability and cash flow management with improving margins and strong cash conversion ratios. However, challenges in revenue growth and high leverage pose risks, impacting overall financial stability.Income Statement
Victoria's Secret shows a mixed performance in recent periods. The TTM gross profit margin is 36.9%, indicating decent efficiency in cost management. The net profit margin has improved to 2.5% from 1.8% annually, showing a positive trend. However, the revenue growth rate is slightly negative at -0.3% TTM, indicating challenges in increasing sales. The EBIT margin is 5.4%, while the EBITDA margin stands at 8.5%, reflecting moderate operating profitability.65
Positive
Balance Sheet
The balance sheet indicates a high debt-to-equity ratio of 7.22, suggesting significant leverage, which might pose financial risks. The return on equity (ROE) is 35.7%, showing strong profitability relative to shareholder equity. The equity ratio of 8.7% highlights a relatively low portion of the company funded by equity, indicating a potentially risky capital structure.60
Neutral
Cash Flow
Cash flow metrics reveal a positive trajectory, with free cash flow growth of 18.8% TTM, indicating improved cash generation. The operating cash flow to net income ratio is 2.22, suggesting strong cash conversion. The free cash flow to net income ratio stands at 1.03, demonstrating efficient cash utilization relative to profits.70
Positive
| Breakdown | |||||
| TTM | Mar 2024 | Mar 2023 | Mar 2022 | Mar 2021 | Mar 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 6.21B | 6.18B | 6.34B | 6.78B | 5.41B | 7.51B | Gross Profit |
| 2.29B | 2.25B | 2.26B | 2.76B | 1.57B | 2.06B | EBIT |
| 333.12M | 246.00M | 203.21M | 567.54M | -100.00M | -171.00M | EBITDA |
| 530.12M | 530.00M | 846.90M | 1.17B | 226.00M | -480.00M | Net Income Common Stockholders |
| 153.00M | 109.00M | 348.00M | 646.00M | -72.00M | -897.00M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 331.00M | 270.00M | 427.00M | 490.00M | 335.00M | 245.00M | Total Assets |
| 4.37B | 4.60B | 4.71B | 4.34B | 4.23B | 5.27B | Total Debt |
| 2.69B | 2.70B | 2.79B | 2.64B | 2.07B | 2.65B | Net Debt |
| 2.36B | 2.43B | 2.36B | 2.15B | 1.74B | 2.41B | Total Liabilities |
| 4.12B | 4.16B | 4.31B | 4.09B | 3.34B | 3.96B | Stockholders Equity |
| 252.00M | 417.00M | 383.00M | 257.00M | 891.00M | 1.31B |
| Cash Flow | Free Cash Flow | ||||
| 158.00M | 133.00M | 273.00M | 682.00M | 547.00M | 90.00M | Operating Cash Flow |
| 340.00M | 389.00M | 437.00M | 851.00M | 674.00M | 315.00M | Investing Cash Flow |
| -164.00M | -254.00M | -555.00M | -169.00M | -123.00M | -243.00M | Financing Cash Flow |
| -141.00M | -291.00M | 58.00M | -527.00M | -465.00M | -192.00M |
Victoria's Secret Technical Analysis
Negative
18.32
Price Trends
28.02
Negative
33.86
Negative
27.99
Negative
Market Momentum
-2.31
Negative
30.32
Neutral
18.27
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For VSCO, the sentiment is Negative. The current price of 18.32 is below the 20-day moving average (MA) of 19.98, below the 50-day MA of 28.02, and below the 200-day MA of 27.99, indicating a bearish trend. The MACD of -2.31 indicates Negative momentum. The RSI at 30.32 is Neutral, neither overbought nor oversold. The STOCH value of 18.27 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for VSCO.
Victoria's Secret Risk Analysis
Victoria's Secret disclosed 42 risk factors in its most recent earnings report. Victoria's Secret reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Victoria's Secret Peers Comparison
Overall Rating
UnderperformOutperform
Sector (59)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
80 Outperform | $4.78B | 12.14 | 17.56% | ― | 7.71% | 40.01% | |
78 Outperform | $132.89B | 27.75 | 61.98% | 1.24% | 3.95% | ― | |
74 Outperform | $3.86B | 7.15 | 47.77% | ― | 15.60% | 71.45% | |
67 Neutral | $2.05B | 7.14 | 18.80% | 4.20% | 1.27% | 96.32% | |
62 Neutral | $1.45B | 9.32 | 31.30% | ― | 0.76% | 49.95% | |
60 Neutral | $5.33B | 242.82 | 7.53% | 0.13% | ― | ― | |
59 Neutral | $12.27B | 11.11 | -0.54% | 3.71% | 1.45% | -20.42% |
* Consumer Cyclical Sector Average
Performance Comparison
VSCO
Victoria's Secret
18.32
-0.21
-1.13%
ANF
Abercrombie Fitch
76.57
-55.27
-41.92%
AEO
American Eagle
11.42
-14.13
-55.30%
TJX
TJX Companies
118.21
19.83
20.16%
URBN
Urban Outfitters
51.48
6.60
14.71%
LB
LandBridge Company LLC Class A
69.69
46.80
204.46%
Victoria's Secret Earnings Call Summary
Earnings Call Date: Mar 5, 2025 | % Change Since: -17.51% | Next Earnings Date: May 28, 2025
Earnings Call Sentiment Positive
The earnings call highlighted strong Q4 results with growth in sales and international markets. PINK and Beauty segments performed well, and the company outperformed the North American intimates market. However, challenges from economic conditions, weather, marketing strategies, and inventory management were noted. The company is optimistic about future growth strategies.Highlights
Strong Q4 Results
Sales increased year-over-year across Victoria's Secret, PINK, and the Beauty business, with operating income and EPS exceeding expectations.
Growth in International Markets
International retail sales were up double-digits, driven by strong growth in franchise, travel retail partners, and joint ventures in China and the UK.
PINK and Beauty Performance
PINK apparel showed a significant trend change at the beginning of the fall season, continuing strong performance in Q4. The Beauty business also stood out with higher AUR items driving traffic and basket size increases.
Outperforming North American Intimates Market
Victoria's Secret outperformed the slightly declining North American intimates market for the second consecutive quarter.
Positive Customer Sentiment
Studies indicated that Gen Z feels positively about the brands, and there was a high rate of customer retention and reactivation.
Lowlights
Weather and Economic Challenges
The company faced challenges from shifting consumer confidence, a volatile economy, and unseasonal weather impacting mall traffic.
Marketing and Promotional Strategy
The company acknowledged a need to rebalance marketing spend, as they had reduced marketing too much after the fashion show, impacting traffic in January to February.
Inventory and Product Launch Challenges
The company did not buy Valentine's Day merchandise big enough, leading to sellouts, and noted the need for better strategies to ensure new bra launches lift overall sales.
Company Guidance
During Victoria's Secret & Company's fourth quarter 2024 earnings call, CEO Hillary Super provided guidance for 2025, highlighting a strong performance in Q4 with sales increases across their brands, including VS, PINK, and their Beauty business. The company's focus on execution led to operating income and EPS that exceeded expectations. Sales growth was observed in North America and internationally, with VS and PINK achieving positive year-over-year sales growth in both stores and digital channels. The company plans to continue reducing promotional activities while enhancing product offerings, particularly in lifestyle categories such as sport, swim, and PINK apparel, which have shown significant growth. With a market share of approximately 20% in North America and a focus on customer engagement, Victoria's Secret aims to reinforce its brand authority and drive sustainable growth through its "path to potential" strategy, which includes supercharging their growth brands and expanding internationally. Additionally, the company is evolving its marketing efforts to differentiate between Victoria's Secret and PINK, with an emphasis on creating a best-in-class omnichannel experience.Victoria's Secret Corporate Events
Business Operations and StrategyFinancial Disclosures
Victoria’s Secret Reports Strong Q4 2024 Financial Results
Positive
Mar 5, 2025
On March 5, 2025, Victoria’s Secret & Co. reported its financial results for the fourth quarter and full year 2024, showing a 5% increase in comparable sales for the fourth quarter. The company exceeded expectations in operating income and earnings per share, and provided guidance for the first quarter and full year 2025. Despite facing a competitive holiday season, the company achieved strong sales across its brands and channels, and managed costs effectively. Looking forward, Victoria’s Secret anticipates challenges due to macroeconomic uncertainties but remains optimistic about its growth potential.
Executive/Board ChangesFinancial Disclosures
Victoria’s Secret Announces CFO Transition and Strong Guidance
Positive
Jan 29, 2025
On January 29, 2025, Victoria’s Secret announced the planned retirement of CFO Timothy Johnson, with Scott Sekella stepping in as his successor. The company also provided an optimistic update on its fourth-quarter 2024 financial guidance, with expected sales and earnings near the high end of forecasts, bolstered by strong holiday sales and increased customer engagement in North America and internationally. This transition and financial outlook position Victoria’s Secret for continued growth and stability.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.