Victoria's Secret Analysts Note 'Sluggish Start' To 2024, Stock Nosedives After Q4 Report

Shares of Victoria's Secret & Co (NYSE: VSCO) declined by more than 30% to $17.91 at the time of publication on Thursday after the lingerie company reported disappointing fourth-quarter revenues.

The results came amid an exciting earnings season. Here are some key analyst takeaways from the release.

• BMO Capital Markets analyst Simeon Siegel maintained an Outperform rating, while reducing the price target from $29 to $26.
• Telsey Advisory analyst Dana Telsey reiterated a Market Perform rating and price target of $29.
• Morgan Stanley analyst Jenna L Giannelli pointed out how comp sales and store comp sales declined by 6% year-on-year and 8% year-on-year, respectively.

Check out other analyst stock ratings.

BMO Capital Markets: Victoria's Secret reported fourth-quarter sales of around $2.083 billion, in-line with Street expectations of $2.084 billion, representing about 3% year-on-year growth, driven by North America trends, Siegel said in a note. The company’s volatile fourth-quarter revenue trends have continued into the first quarter, he added.

“Although we expect GM guidance to prove conservative, it seems difficult to call the top-line turn (management's aiming for 2H improvement) which will likely be necessary for most investors,” the analyst further wrote.

Telsey Advisory Group: The company reported adjusted earnings of $2.58 per share, higher than the $2.47 per share reported last year and above the consensus of $2.46 per share, Telsey said. The beat was driven by better-than-expected gross margin expansion, “while sales and operating expense deleverage were largely in-line with expectations,” she added.

Management’s 2024 guidance reflects “a sluggish start to the fiscal year, with Q1 sales expected to decline mid-single digits" from $1.41 billion in 2023, the analyst further wrote.

Morgan Stanley: Victoria's Secret’s first-quarter and full-year 2024 guidance were both softer than expected, Giannelli added.

“Commentary for the category and consumer were cautious for '24, specifically in 1Q, and while consistent with the broader theme this earnings season, VSCO's tone was relatively more cautious on the consumer and its category,” she added.

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