Victoria's Secret: Lacing Up Profits With A Turnaround That's Shaping Up Nicely

Summary

• Victoria's Secret shows signs of recovery with revenue growth, improved profitability, and a leaner cost structure, making shares attractive after a 60% drop YTD.
• Strong holiday sales, international expansion, and disciplined operations highlight the company's ability to navigate a challenging retail landscape and set a solid foundation for 2025.
• Risks include the need to resonate with Gen Z through the PINK brand and potential macroeconomic headwinds, but strategic focus on brand relevance and cost synergies is promising.
• Valuation is attractive at 7.3x earnings with a robust share buyback program, making Victoria's Secret a 'strong buy' with significant upside potential.

Robert Way

Introduction

As 2024 came to a close for Victoria’s Secret (NYSE:VSCO), the company has shown over the last two quarters that it’s reached an inflection point where revenue growth is returning and profitability is looking like it can meaningfully

Analyst’s Disclosure:I/we have a beneficial long position in the shares of VSCO either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.