Victoria’s Secret (VSCO) delivered a better-than-expected quarter, signaling real progress in its turnaround.
Victoria’s Secret surprised Wall Street with stronger third-quarter results, giving investors fresh reasons to re-evaluate the retailer. The company’s turnaround strategy is lifting sales, narrowing losses, and strengthening margins.
Key Points
- Q3 sales rose 9% to $1.5 billion, beating expectations.
- Adjusted loss per share narrowed to 27 cents, far better than forecasts.
- Management raised full-year sales and earnings guidance.
Sales Momentum Returns for Victoria’s Secret
Victoria’s Secret posted a 9% year-over-year sales increase in Q3, reaching about $1.5 billion and topping the $1.4 billion analysts expected. Growth came from all major brands — Victoria’s Secret, PINK, and Beauty — with comparable store sales up 8% and overall comparable sales up 5%. Direct-to-consumer sales improved 4.3%.
International markets delivered standout results, jumping more than 33%. North America sales rose 5.4% to $778 million. Management credited reduced discounting, stronger full-price selling, and healthier margins for the improvement.
Why Is the Turnaround Working?
After years of falling sales and heavy promotions, the company is seeing early results from its Path to Potential strategy. CEO Hillary Super highlighted stronger brand storytelling, better product assortments, and fewer markdowns as key drivers. CFO Scott Sekella noted a 170-basis-point improvement in adjusted gross margin thanks to higher regular-priced sales and tighter cost controls.
Even though the company still posted a net loss of $0.46 per share, it was a significant improvement from last year’s $0.71 loss. On an adjusted basis, the loss was only $0.27 versus analyst expectations of $0.59. Investors welcomed the progress, pushing VSCO shares up roughly 14%–17% during Friday’s trading session.
Is VSCO Becoming One of the Companies That Are Good to Invest In?
Victoria’s Secret raised its full-year forecast for both revenue and adjusted earnings. It now expects:
- Net sales of $6.450–$6.480 billion
- Adjusted EPS of $2.40–$2.65
Tariffs remain a headwind, with management estimating a $90 million impact this year. Stripping out tariffs, earnings would be stronger — about $1.28 per share on a net basis. But even with improving fundamentals, VSCO trades at a high valuation relative to its recent growth rate. This raises the question many investors ask when they analyze stocks: How much optimism is already priced in?
What It Means for Investors
Victoria’s Secret is clearly making progress. The company is selling more products at full price, reducing promotions, and improving margins — all crucial signs in retail turnarounds. The upgraded outlook suggests management believes the momentum can continue into the holiday season.
However, the stock's valuation remains elevated when compared to its growth rate. Even adjusting for tariff costs, the shares trade at a relatively high price-to-earnings ratio. That means investors expecting VSCO to become one of the best stocks to buy may need to weigh improving fundamentals against a premium valuation.
Still, for investors looking for retail recovery stories, Victoria’s Secret is showing tangible improvements and boosting confidence with stronger guidance. Continued execution on the Path to Potential strategy could shift sentiment further in the company’s favor.
Conclusion
Victoria’s Secret delivered an impressive Q3 performance that exceeded expectations across sales, earnings, and margins. While the company still faces challenges — including tariffs and a premium valuation — the turnaround strategy is gaining traction. Investors watching for the best company investments in the retail sector may find VSCO worth monitoring as the brand rebuilds momentum.
FAQs
What drove Victoria’s Secret’s Q3 sales growth?
Stronger full-price selling, fewer promotions, and improvements across Victoria’s Secret, PINK, and Beauty helped push sales 9% higher.
Did the company remain unprofitable in the quarter?
Yes. Victoria’s Secret reported a net loss of $0.46 per share, though that was much better than last year and far better than analysts expected.
Why did the stock jump after earnings?
Investors reacted positively to stronger-than-expected sales, narrower losses, margin improvements, and upgraded full-year guidance.
How significant are tariffs for Victoria’s Secret?
Tariffs are expected to impact full-year results by about $90 million. Without them, earnings would be meaningfully higher.
Is VSCO considered one of the best stocks to buy right now?
The turnaround is showing progress, but the stock’s valuation remains high relative to its growth rate. Investors should weigh improving fundamentals against its elevated price.
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