Victoria's Secret & Co.
The analyst writes that the company has moved past its most challenging period. Despite a significant loss of market share in recent years, VSCO still holds around 20% of the U.S. intimate market.
The analyst says that they are more positive about the company due to the new management team's industry experience, the second-half of FY24 guidance surpassing consensus expectations, a return to core brand values with new product innovations, and an anticipated recovery in merchandise margins from improved sales-to-inventory in the fourth quarter of 2023.
However, Yih remained cautious about the company until they saw positive sales growth, increased market share, and new product launches.
The turnaround for Victoria's Secret and PINK is still in progress, and the analyst expects more significant impacts from new leadership in 2025.
The analyst estimates adjusted EPS of $2.04, $2.31, and $2.54 for FY24, FY25, and FY26, respectively.
Last month, Victoria's Secret reported second-quarter revenue that fell 1% Y/Y to $1.417 billion, beating the $1.41 billion estimate. Adjusted EPS of $0.40 beat the $0.36 consensus.
For the third quarter, Victoria's Secret expects net sales to increase in low-single digits Y/Y and adjusted loss per share of $0.60 - $0.80 vs. $0.65 loss estimate.
Investors can gain exposure to the stock via Tidal ETF Trust Aztlan Global Stock Selection DM SMID ETF
Price Action: VSCO shares are up 3.7% at $25.17 at the last check Wednesday.
