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Victoria’s Secret Delivers EPS Beat, Get’s Analyst Price Target Cut on Revenue Miss (NYSE:VSCO)

Analyst Team trader
Updated 7 Mar 2024

Victoria's Secret & Co. (NYSE:VSCO), the renowned lingerie and beauty retailer, has released its fiscal fourth-quarter earnings, posting a profit of $181.1 million. Despite a challenging retail environment, the company's earnings per share (EPS) were $2.29, with adjusted figures climbing higher to $2.58 per share. This performance has beaten Wall Street analysts' expectations, which projected an adjusted EPS of $2.46.

However, the company experienced a slight setback in terms of revenue, with quarterly figures totalling $2.08 billion, which somewhat missed the forecasts anticipated by the Street. The shortfall suggests that while the iconic retailer has managed to keep its profitability robust, it's facing the broader industry headwinds of fluctuating consumer demand and a competitive retail landscape.

Over the course of the full fiscal year, Victoria's Secret reported a profit of $109.2 million, with annual revenue reaching a commendable $6.18 billion. The yearly performance reflects the resilience of the brand amid periods of economic volatility and shifting market trends.

Looking forward, Victoria’s Secret remains cautiously optimistic, projecting full-year revenues to be in the vicinity of $6 billion. Such forecasts indicate that while they expect business to stay relatively steady, they are likely factoring in the macroeconomic factors and consumer behaviour uncertainties that could impact discretionary spending in categories like clothing or apparel.

BMO Capital Analyst Cuts VSCO Forecast, Keeps ‘Outperform' Rating

In a recent market analysis, BMO Capital Markets has recalibrated its expectations for Victoria's Secret shares. The price target for the company's stock has been trimmed to $26, down from the preceding target of $29, while the firm sustains an Outperform rating on the stock.

Notwithstanding a robust performance encapsulated by the above strong earnings per share (EPS) and substantive gross margin figures, Victoria's Secret shares waned in post-market trading. The company's revenue guidance issued for both the forthcoming quarter and the entire financial year, together with the forecasts for earnings before interest and taxes (EBIT), did not align with market predictions, thereby injecting an air of caution surrounding the retailer's near-term financial horizon.

BMO Capital has posited that the current valuation in the wake of the post-market downturn may represent an attractive upside for investors, albeit the path forward carries its set of encumbrances.

The projection of a conservative gross margin guidance by Victoria's Secret has been earmarked as an area that the company might outperform expectations. However, the endeavour to identify a definitive catalyst that could fuel a resurgence in the stock's value appears to remain elusive for the moment.

In after hours the shares took a tumble and pre-market VSCO sits at $17.83, down more than 30%.

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The AskTraders Analyst Team features experts in technical and fundamental analysis, as well as traders specializing in stocks, forex, and cryptocurrency.