Victoria's Secret Navigating Unsettled Macro Environment, Analyst Lowers Expectations

Telsey Advisory Group analyst Dana Telsey reiterated a Market Perform rating on the shares of Victorias Secret & Co. VSCO, lowering the price target to $31 from $41.
Victorias Secret will report 1Q23 earnings on Wednesday, May 31, after the market close.
The analyst notes that recent quarters have been challenging for the company as it navigates a complex macro environment with pressured consumers.
With uncertainties around consumer health and limited near-term visibility, the analyst slashed the price target by 24.4%, just ahead of earnings.
In the quarter to be reported, on the top line, the analyst sees total sales to decline 5.0% Y/Y to $1.409 billion, slightly below the consensus estimate of $1.420 billion.
The analyst expects the gross margin to expand 110 bps Y/Y to 37.7%, broadly in line with the market's expectation of 37.8%.
Dana forecasts 350 bps of SG&A deleverage to 32.3%, in line with the consensus of 32.3%.
The company's VS and PINK businesses will come in relatively flat Y/Y for the full year, while AdoreMe is expected to be up mid-teens for the full year.
The company plans to ignite growth outside of its core business, with a particular focus on international and market expansion.
Price Action: VSCO shares are trading lower by 2.4% to $23.00 on the last check Wednesday.

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