Victoria’s Secret delivered fourth quarter results that exceeded Wall Street’s expectations for revenue and profit. Management cited strong execution of its transformation strategy, with CEO Hillary Super highlighting renewed brand momentum and customer growth driven by product innovation, marketing campaigns, and a focus on core categories like bras, PINK, and beauty. The company’s Path to Potential plan, which includes reducing promotions and building emotional connections with customers, was credited for the broad-based sales gains. However, management acknowledged that operating margin declined year-over-year due to increased tariffs and investments in marketing and store labor.
Is now the time to buy VSCO? Find out in our full research report (it’s free for active Edge members).
Victoria's Secret (VSCO) Q4 CY2025 Highlights:
- Revenue: $2.27 billion vs analyst estimates of $2.23 billion (7.8% year-on-year growth, 2% beat)
- Adjusted EPS: $2.77 vs analyst estimates of $2.53 (9.7% beat)
- Adjusted EBITDA: $368.8 million vs analyst estimates of $350.6 million (16.2% margin, 5.2% beat)
- Revenue Guidance for Q1 CY2026 is $1.51 billion at the midpoint, above analyst estimates of $1.42 billion
- Operating Margin: 10.1%, down from 12.7% in the same quarter last year
- Locations: 1,420 at quarter end, up from 1,387 in the same quarter last year
- Same-Store Sales rose 8% year on year (5% in the same quarter last year)
- Market Capitalization: $3.63 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Victoria's Secret’s Q4 Earnings Call
- Matthew Boss (JPMorgan) asked about the sustainability of new customer acquisition and the stage of marketing and product improvements. CEO Hillary Super noted the highest growth was in new customers, especially younger cohorts, and said the leadership team was “just getting started” with marketing and product initiatives.
- Simeon Siegel (Guggenheim Partners) inquired about the growth potential of each brand and average unit retail (AUR) opportunities. Super stated all brands have significant runway, with particular AUR gains in bras and PINK apparel, and ongoing efforts to further reduce promotions.
- Mauricio Serna (UBS) sought clarity on the stage of the brand turnaround and North America market share. Super described Victoria’s Secret as in the “early to mid” innings of transformation, with share gains coming primarily from the value sector.
- Brooke Roach (Goldman Sachs) questioned future marketing spend and merchandising margin opportunities. CFO Scott Sekella expects marketing as a percent of sales to rise slightly and sees further opportunity to reduce promotions and selectively raise prices.
- Dana Telsey (Telsey Advisory Group) asked about the PINK pop-up strategy and learnings from the 2025 fashion show. Super described the SoHo pop-up as a “laboratory” for brand-building, with plans to use performance metrics and customer engagement to inform future store formats and activations.
Catalysts in Upcoming Quarters
In the coming quarters, our team will watch for (1) signs that new product launches and collaborations can sustain customer growth, (2) evidence that tariff mitigation efforts are protecting margins, and (3) continued progress in digital engagement and app-driven sales conversion. We will also pay close attention to the strategic evolution of the PINK brand and the impact of international expansion, particularly in China.
Victoria's Secret currently trades at $44.88, down from $60.01 just before the earnings. Is the company at an inflection point that warrants a buy or sell? The answer lies in our full research report (it’s free).
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