Victoria's Secret Q4 Earnings Beat Estimates, Comparable Sales Rise 8%

Victoria’s Secret & Co. VSCO reported better-than-expected fourth-quarter 2025 results, wherein both the top and bottom lines increased year over year. The company delivered strong comparable sales growth and improved profitability, supported by strategic initiatives under its multi-year “Path to Potential” transformation strategy.

VSCO’s Quarterly Performance: Key Insights

Victoria’s Secret reported adjusted quarterly earnings of $2.77 per share, which exceeded the previously communicated guidance range of $2.20 to $2.45 per share. The figure beat the Zacks Consensus Estimate of $2.48 per share. This compares to earnings of $2.60 per share reported a year ago.

Victoria's Secret & Co. Price, Consensus and EPS Surprise

Victoria's Secret & Co. price-consensus-eps-surprise-chart | Victoria's Secret & Co. Quote

Net sales reached $2,269.8 million, up 7.8% year over year and exceeded the previously communicated guidance range of $2,170 million to 2,200 million. The reported number came ahead of the Zacks Consensus Estimate of $2,256 million. 
Comparable sales rose 8% year over year, reflecting broad-based strength in product categories and customer engagement. Comparable sales from stores and direct channels rose 8%, while store-only comparable sales advanced 7% in the quarter.

VSCO’s Geographical Performance

Victoria’s Secret saw growth across each of its key operating segments in the fourth quarter. Net sales in North America stores rose 5.2% year over year to $1,220.2 million, while the direct channel posted net sales of $773.2 million, up 2.8% from the prior-year quarter. The strongest performance came from the international segment, where sales surged 43.1% year over year to $276.4 million, aided by continued global expansion and the reporting shift that now includes European Union direct sales in the international business.

VSCO’s Margin & Cost Performance

Gross profit rose 5.1% year over year to $854.9 million in the quarter, though gross margin contracted 90 basis points to 37.7%. General, administrative and store operating expenses increased 14.7% year over year to $626 million and deleveraged 170 basis points to 27.6% of net sales. Adjusted operating income climbed 5.5% year over year to $315.8 million, which topped management’s guided range of $265 million to $290 million.

Victoria’s Secret Store Update

Victoria’s Secret ended fiscal 2025 with 1,420 stores globally, up from 1,387 stores in fiscal 2024, reflecting 111 openings and 78 closures during the year.

Company-operated stores declined slightly to 790 locations as of Jan. 31, 2026, from 806 stores a year earlier, following 16 openings and 32 closures. In the United States, the company operated 766 stores after opening 15 and closing 31 during the year. Canada maintained 24 stores, with one opening offset by one closure.

Within the China joint venture, Beauty & Accessories stores decreased from 30 to 20 following 10 closures, while Full Assortment stores increased from 40 to 45 with six openings and one closure. As a result, the China joint venture ended the year with 65 stores.

The partner-operated network expanded during the year. Beauty & Accessories partner stores increased from 324 to 350, while Full Assortment stores grew from 181 to 212, bringing the subtotal to 562 partner-operated locations globally.
Meanwhile, Adore Me’s physical presence declined to three stores, down from six in the prior year, following three closures.

VSCO’s Financial Health Snapshot

Victoria’s Secret ended fiscal 2025 with cash and cash equivalents of $517.6 million, compared with $226.6 million at the end of fiscal 2024, reflecting stronger cash generation during the year. Long-term debt totaled $971.3 million.

The company generated $499 million in operating cash flow in fiscal 2025. Capital expenditures were $187 million, resulting in free cash flow of $312 million for the year. On an adjusted basis—excluding the impact of a credit card interchange fee settlement and certain acquisition-related payments—adjusted free cash flow was $244 million.

A Look Into VSCO FY26 Guidance

The company expects fiscal year 2026 net sales between $6.85 billion and $6.95 billion, compared with $6.6 billion in 2025. Adjusted operating income is projected to be between $430 million and $460 million compared with $403 million in 2025. 
Fiscal 2026 guidance includes an estimated incremental gross tariff cost of approximately $160 million, with mitigation efforts expected to result in a net tariff impact of about $40 million through vendor cost optimization, sourcing diversification, freight mix efficiency and strategic pricing actions. Tariffs are expected to have the greatest impact in the first half of the year, particularly in the first quarter, before easing in the second half as mitigation efforts increase.

For fiscal 2026, earnings per share is projected to be in the range of $3.20 and $3.45 as compared with $3.00 per share reported in fiscal 2025. Capital expenditures are estimated to be in the range of $220 million to $240 million, or about 3% of sales, with free cash flow expected to range from $220 million to $250 million.

The company forecasted net sales for the first quarter of 2026 to be in the range of $1.49 billion to $1.525 billion compared with $1.4 billion in the first quarter of 2025. At this forecasted level of net sales, operating income for the first quarter of 2026 is expected to be between $32 million and $42 million compared with $32 million reported in the first quarter of 2025.

The company expects first-quarter 2026 gross margin to be approximately 35.5%, up 30 basis points from 35.2% in the first quarter of 2025, despite about 175 basis points of tariff pressure. VSCO expects first-quarter earnings per share in the band of 20 cents to 30 cents compared with 9 cents per share in the prior-year period.

VSCO currently carries a Zacks Rank #3 (Hold). The stock has gained 4.1% in the past three months compared with the industry’s growth of 3.8%.

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