Victoria's Secret Cybersecurity Breach A Significant Concern: Analyst

Telsey Advisory analyst Dana Telsey maintained a Market Perform rating on Victoria’s Secret & Co. (NYSE:VSCO) with a price forecast of $24.

On Tuesday, the company reported a cybersecurity breach that caused it to take its website offline for three days in late May, the fashion industry hardly batted an eyelash.

Also, the company reported preliminary first-quarter results and saw revenue of $1.35 billion (vs. consensus of $1.33 billion) and adjusted EPS of 9 cents (vs. street view of four cents).

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This is compared to the company’s prior guidance of net sales of $1.30 billion-$1.33 billion and adjusted EPS range of a loss of 10 cents to a profit of 10 cents.

The analyst is encouraged by the company’s better-than-expected preliminary results, showing continued momentum despite a slow start in January/February.

However, the cybersecurity incident is a significant concern; Telsey noted that VSCO’s inability to access systems for its full earnings report has caused a postponement.

Given digital sales were ~33% last year, the analyst believes that the prolonged website shutdown during Memorial Day sales could have a meaningful impact.

While the first quarter showed positive momentum, the analyst asserted that the unknown fallout from the cyberattack could weigh on the second quarter and the second half as details emerge.

With this new incident, ongoing macroeconomic challenges, and fluid tariff impacts, the analyst remains cautious on the company.

Despite strides in product and messaging, Telsey believes the brand still needs to be more successfully repositioned within its highly competitive, low-growth category.

Consequently, the analyst lowered the estimates and now projects FY25 EPS at $2.22, down from $2.35 previously, which compares to last year’s $2.69 and the prior consensus of $2.22.

Also, the FY26 EPS estimate is lowered to $2.38 from $2.58, against a prior consensus of $2.35.

Price Action: VSCO shares are trading lower by 0.84% to $20.10 at last check Wednesday.

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