Victoria’s Secret & Co (NYSE:), once the reigning monarch of the lingerie world, has hit turbulent times. Known for its dazzling fashion shows and bold marketing, the brand has struggled to keep pace with shifting consumer tastes and fierce competition. Financially, the company has seen stagnating revenue and shrinking profits, casting doubt on its future.
Yet, beneath the surface, there may be a glimmer of hope. With a low valuation, a globally recognized brand, and a revamped strategy, Victoria’s Secret could be a diamond in the rough for the bravest ones.
Company Background
Victoria’s Secret was founded in 1977 by Roy Raymond, who sought to create a welcoming space for men to buy lingerie for their partners. Acquired by L Brands (NYSE:) in 1982, the company grew into a global powerhouse, expanding into loungewear, beauty products, and accessories. Its annual Victoria’s Secret Fashion Show, featuring supermodels in extravagant outfits, became a cultural icon and a cornerstone of its provocative marketing.
Today, the brand operates over 1,000 stores worldwide and generates $6.23 billion in revenue, and is increasingly targeting Asia. However, competitors like Aerie (owned by American Eagle Outfitters (NYSE:)), Calvin Klein (PVH (NYSE:) Corporation), and Ralph Lauren (NYSE:) have chipped away at its dominance, capitalizing on inclusive messaging and online retail trends. Victoria’s Secret’s once-unassailable image has faltered, prompting a critical question: Can it reclaim its throne?
Financial Performance
Victoria’s Secret’s financial performance reveals a company grappling with some several strain in recent years. Revenue reached a high of $6.785 billion in 2022 but declined to $6.23 billion by 2024. Well, if we take a look ahead to 2025 further, forecasts predict a slight increase to $6.25 billion, a modest uptick that suggests stagnation rather than a robust recovery.
Alongside this, the company’s gross margin has steadily eroded, dropping from 40.7% in 2022 to a projected 36.7% in 2025, pressured by rising costs and the need for aggressive discounting to stay competitive.
Profitability has also suffered: operating income fell sharply from $650 million in 2022 to $310 million in 2024, with only a partial rebound to $350 million expected in 2025, while earnings per share (EPS) tumbled from $7.00 in 2022 to a forecasted $2.46 in 2025.
Compounding these challenges, free cash flow has halved, shrinking from $851 million in 2022 to a projected $425 million in 2025, even as capital expenditures have held steady at around $170 million annually. Together, these metrics paint a picture of a business struggling to adapt to a challenging retail environment.
The company grappling with declining profitability and cash generation, likely due to competitive pressures and a shifting retail field.
Valuation Analysis
Despite its recent challenges, Victoria’s Secret’s valuation metrics suggest the company may be trading at a discount. As of January 2025, its market capitalization stands at $1.813 billion, with an enterprise value of $3.9 billion. The price-to-earnings (P/E) ratio, at 8.93, sits below the apparel industry average, hinting at a potential bargain.
Even more compelling is the price-to-sales (P/S) ratio of just 0.3, which implies the market anticipates little to no growth-yet this could signal an opportunity if the company manages a successful turnaround. Meanwhile, the enterprise value to EBITDA (EV/EBITDA) multiple of 6.9 aligns with industry standards, supporting the idea that the stock isn’t overvalued.
The story becomes more complex when considering other metrics. The price-to-book (P/B) ratio of 2.8, alongside a strong 31.3% return on equity (ROE), appears promising at first glance. However, high debt levels may be artificially boosting ROE, while the low 3.6% return on assets (ROA) reveals inefficiencies in how the company utilizes its assets.
These contrasting figures highlight the market’s doubts about Victoria’s Secret’s growth potential. Still, the current low multiples could offer significant upside if the company can overcome its hurdles and stage a rebound.
Challenges Facing the Company
Victoria’s Secret is navigating a series of significant challenges that threaten its market position. The company’s revenue has stagnated, with flat sales highlighting its difficulty in attracting new customers and retaining existing ones in a highly competitive market. Profitability is also under pressure, as shrinking margins and earnings per share (EPS) reflect rising costs and a shift toward a less profitable product mix.
Compounding these issues, high debt levels and dwindling cash flow restrict the company’s financial flexibility, increasing its vulnerability during economic downturns. Additionally, the brand’s long-standing sexualized enough marketing has fallen out of favor with consumers who now prioritize inclusivity and authenticity-a trend competitors like Aerie have successfully embraced. Despite efforts to rebrand and enhance its e-commerce presence, the results have been inconsistent, leaving Victoria’s Secret at risk of losing even more market share.
Opportunities and Turnaround Potential
Victoria’s Secret, despite its struggles, still has a pathway to renewal. The brand’s enduring power, built on decades of glamour and a dedicated customer base, offers a strong starting point for a comeback. A bold rebranding effort is underway, embracing diversity and a modern outlook to reconnect with today’s consumers, while the Pink Annihili sub-brand-geared toward younger buyers-is already showing promising growth, surpassing the main line.
Looking beyond its current markets, the company sees opportunity in Asia, where its premium appeal remains intact, opening doors to new customers. At the same time, a focused push into e-commerce seeks to win over the rising tide of online shoppers. If these efforts succeed, Victoria’s Secret could halt its decline, turning its current low valuation into a springboard for substantial recovery and growth.
Investment Perspective
Victoria’s Secret stock (VSCO) has been a rollercoaster since its 2021 public debut. After climbing to nearly $50 in early 2024, it crashed to $15 by early 2025 before rebounding to $22.72. With a beta above 1.0, it’s volatile-typical for a consumer discretionary stock tied to discretionary spending.
Recent developments add intrigue. BBRC International PTE boosted its stake to nearly 13% in April 2025, buying over 500,000 shares at $18-$19. BlackRock (NYSE:), holding 15%, has steadily increased its position since 2022, signaling institutional confidence. Still, risks loom large: forecasts of declining cash flow and profitability temper optimism. 
For investors, the stock offers a high-risk, high-reward proposition. A target of $35-midway between its recent low and high-seems plausible if momentum builds, with $15 as a potential stop-loss level. However, without fundamental improvement, a return to $50 feels out of reach.
So, what can we say in the end?
Victoria’s Secret stands at crossroads at the moment. Its iconic brand and low valuation are countered by stagnating sales, shrinking profits, and a challenging retail environment. For risk-tolerant ones, the stock’s depressed price and turnaround efforts present an opportunity. Yet, success hinges on execution-revitalizing its image, growing sales, and shoring up finances.
Victoria’s Secret is at a crossroads. It could either reclaim its past glory or fade further into obscurity. Armed with diligence and a stomach for uncertainty, investors must carefully weigh the allure of a potential comeback against the reality of its struggles.
