Intimatewear and beauty retailer Victoria’s Secret (NYSE: VSCO) reported Q4 CY2025 results exceeding the market’s revenue expectations, with sales up 7.8% year on year to $2.27 billion. On top of that, next quarter’s revenue guidance ($1.51 billion at the midpoint) was surprisingly good and 6.4% above what analysts were expecting. Its non-GAAP profit of $2.77 per share was 9.7% above analysts’ consensus estimates.
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Victoria's Secret (VSCO) Q4 CY2025 Highlights:
- Revenue: $2.27 billion vs analyst estimates of $2.23 billion (7.8% year-on-year growth, 2% beat)
- Adjusted EPS: $2.77 vs analyst estimates of $2.53 (9.7% beat)
- Adjusted Operating Income: $315.8 million vs analyst estimates of $298 million (13.9% margin, 6% beat)
- Revenue Guidance for Q1 CY2026 is $1.51 billion at the midpoint, above analyst estimates of $1.42 billion
- Operating Margin: 10.1%, down from 12.7% in the same quarter last year
- Locations: 1,420 at quarter end, up from 1,387 in the same quarter last year
- Same-Store Sales rose 8% year on year (5% in the same quarter last year)
- Market Capitalization: $4.82 billion
Hillary Super, VS&Co Chief Executive Officer, said, “We delivered an exceptional fourth quarter and a standout year, exceeding top- and bottom-line guidance with broad based outperformance across brands, channels and geographies. We drove meaningful acceleration in the second half of the year, with fourth quarter net sales of $2.270 billion and comparable sales growth of 8%. In the quarter, our customer responded enthusiastically to our product and marketing, as demonstrated by growing new customer acquisition and increased AURs. Our 2025 results reflect the progress we have made against our Path to Potential strategy as we build brand heat and powerful connections with our customers around the world.”
Company Overview
Spun off from L Brands in 2020, Victoria’s Secret (NYSE: VSCO) is an intimate clothing and beauty retailer that sells its own brands of lingerie, undergarments, and personal fragrances.
Revenue Growth
A company’s long-term sales performance is one signal of its overall quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul.
With $6.55 billion in revenue over the past 12 months, Victoria's Secret is a mid-sized retailer, which sometimes brings disadvantages compared to larger competitors benefiting from better economies of scale.
As you can see below, Victoria's Secret’s 1.1% annualized revenue growth over the last three years was sluggish, but to its credit, it opened new stores and increased sales at existing, established locations.
This quarter, Victoria's Secret reported year-on-year revenue growth of 7.8%, and its $2.27 billion of revenue exceeded Wall Street’s estimates by 2%. Company management is currently guiding for a 11.4% year-on-year increase in sales next quarter.
Looking further ahead, sell-side analysts expect revenue to grow 3.1% over the next 12 months, an acceleration versus the last three years. This projection is above the sector average and suggests its newer products will fuel better top-line performance.
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Store Performance
Number of Stores
A retailer’s store count influences how much it can sell and how quickly revenue can grow.
Victoria's Secret operated 1,420 locations in the latest quarter. It has generally opened new stores over the last two years and averaged 1.4% annual growth, faster than the broader consumer retail sector.
When a retailer opens new stores, it usually means it’s investing for growth because demand is greater than supply, especially in areas where consumers may not have a store within reasonable driving distance.
Same-Store Sales
The change in a company's store base only tells one side of the story. The other is the performance of its existing locations and e-commerce sales, which informs management teams whether they should expand or downsize their physical footprints. Same-store sales is an industry measure of whether revenue is growing at those existing stores and is driven by customer visits (often called traffic) and the average spending per customer (ticket).
Victoria's Secret’s demand rose over the last two years and slightly outpaced the industry. On average, the company’s same-store sales have grown by 2.4% per year. This performance suggests its measured rollout of new stores could be beneficial for shareholders. When a retailer has demand, more locations should help it reach more customers and boost revenue growth.
In the latest quarter, Victoria's Secret’s same-store sales rose 8% year on year. This growth was an acceleration from its historical levels, which is always an encouraging sign.
Key Takeaways from Victoria's Secret’s Q4 Results
We were impressed by Victoria's Secret’s optimistic revenue guidance for next quarter, which blew past analysts’ expectations. We were also happy its revenue and EPS both outperformed Wall Street’s estimates. On the other hand, its gross margin slightly missed. Zooming out, we think this was a good print with some key areas of upside. The stock remained flat at $59.48 immediately following the results.
Is Victoria's Secret an attractive investment opportunity right now? When making that decision, it’s important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here (it’s free).
