Victoria's Secret Analyst Flags Profit Pressure, Keeps Rating Amid Tariff And Cyber Headwinds

Telsey Advisory Group analyst Dana Telsey reiterated the Market Perform rating on Victoria’s Secret & Co. VSCO with a price forecast of $24.

On Wednesday, the company reported first-quarter adjusted earnings per share of 9 cents, which is in line with the analyst consensus estimate. Quarterly sales of $1.35 billion (flat year over year) also came in line with the Street view.

Victoria’s Secret has lowered its fiscal year 2025 adjusted operating income guidance to a range of $270 million to $320 million, down from its prior forecast of $300 million to $350 million.

Also Read: Victoria’s Secret Navigating Unsettled Macro Environment, Analyst Lowers Expectations

The company also forecasts second-quarter sales between $1.38 billion and $1.41 billion, slightly below the $1.42 billion estimate.

Telsey noted that while second-quarter sales guidance was roughly in line with expectations, profit forecasts lagged prior consensus, which had already factored in a $10 million cybersecurity-related hit and another $10 million from tariffs.

Given ongoing macro pressures and uncertainty around the full-year tariff impact, the analyst remains cautious on the company, acknowledging progress in product and messaging but highlighting the continued need for brand repositioning in a competitive, slow-growth market.

Telsey pointed out that while Victoria’s Secret has taken steps to soften the blow from tariffs, higher rates, assumed at 30% for China and 10% elsewhere, will still have an effect in the second quarter and beyond, compared to assumptions made in the March fiscal year 2025 outlook.

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The company expects a $120 million gross tariff impact for the year, with $70 million already mitigated, leaving a $50 million net hit that could shave over 100 basis points off gross margin, including a $10 million drag in the second quarter due to timing limitations.

The remainder is expected to be spread fairly evenly between the third quarter and fourth quarter.

The analyst noted that Victoria’s Secret has worked with suppliers to cut costs, diversify sourcing, reduce reliance on China (now in the low-single digits), improve shipping efficiency, and shift from blanket discounts to more targeted promotions like gift-with-purchase events.

Telsey lowered estimates, now projecting fiscal year 2025 EPS of $2.10, down from its prior $2.22 forecast.

For fiscal year 2026, the analyst expects EPS of $2.25, revised from $2.38 earlier and slightly below the prior consensus of $2.31.

Price Action: VSCO shares are trading lower by 5.48% to $19.85 at last check Thursday.

Read Next:

• Victoria’s Secret Expects $50 Million Tariff Hit In 2025 — CFO Scott Sekella Says Q4 To Bear Largest Dollar Hit

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