On September 3, 2026, Victorias Secret & Co. reported second-quarter results for the period ended August 1, 2026. Net sales rose 10% to $1.611 billion, adjusted diluted earnings per share nearly tripled to $0.95 from $0.33, and management raised full-year net sales, adjusted operating income, and adjusted earnings per share guidance. The bra business drove roughly half of the Victoria’s Secret brand’s growth, and international sales jumped 20% to $273.4 million.
Five Straight Quarters of Comp Growth Make the Pullback a Buying Opportunity
Morgan Stanley’s Alex Straton raised her target on Victorias Secret & Co. to $101 from $99, keeping Overweight, saying Q2 reinforced the durability of the turnaround and calling the recent stock pullback, shares are down over 8% in the past month despite a 40%-plus year-to-date gain, a buying opportunity.
Barclays kept an Overweight rating, trimming its target only slightly to $106 from $108, saying the company is “investing from a position of strength.”
JPMorgan reiterated Overweight and a $110 price target, noting management flagged two specific, temporary headwinds rather than a deeper problem: reduced Semi-Annual Sale discount rates and lower inventory following a stronger-than-planned first half, plus World Cup and Prime Day timing that hurt mall traffic.
The product detail supports the bull case: the Very Sexy Envy bra tied to the franchise’s 25th anniversary and the Flex Factor balcony frame pushed regular-price selling up in the low double digits, PINK grew high single digits behind its first new bra pillar in two years, and Beauty extended its growth streak to 12 consecutive quarters. The customer file grew for a fourth straight quarter, with new customer acquisition up high single digits and particularly strong among shoppers aged 18 to 24.
BMO and UBS Say the Recovery is Real, But the Stock Already Reflects it
BMO Capital initiated coverage at Market Perform with an $80 target, saying that while the Victorias Secret & Co.’s and PINK turnaround is “real and still has room to run,” much of that recovery is already reflected in the shares following their re-rating over the past year.
UBS lowered its price target to $87 from $95 while maintaining a Neutral rating. The firm said management’s initiatives have put the brands on a stronger footing for sustained comparable-sales growth and forecast an 11% four-year compound annual growth rate in EPS beyond fiscal 2026. However, UBS argued that these expectations are already reflected in the stock’s valuation.
The June semiannual sale stumbled after the company deliberately entered the period with less discounted inventory, pressuring the month’s top line before growth returned to double digits in July. Third-quarter guidance calls for earnings per share of a loss of $0.09 to a gain of $0.01, a sharp step down from the quarter just reported, as marketing investment behind the Angels Among Us docuseries and higher incentive compensation push the expected SG&A rate up to roughly 37.5% from 36.5% a year ago, while rising transportation costs pressure gross margin. CFO Scott Sekella said fourth-quarter guidance assumes tariff rates jump back to approximately 20% from the 10% to 12.5% assumed for the third quarter.
What The Smart Money Sees
Arrowstreet Capital raised its stake in Victorias Secret & Co. 47% to 1.96 million shares worth $163.9 million as of the second quarter of 2026, while Divisadero Street Capital trimmed 13% to 1.03 million shares worth $85.6 million and D. E. Shaw cut its position 31% to 979,402 shares worth $81.8 million.
Overall hedge fund ownership slipped to 43 funds from 44. Short interest sits at 16.29% of float, while shares trade at 13.59 times forward earnings as of September 18, 2026, a multiple that looks modest for a company posting triple-digit operating income growth.
Morgan Stanley, Barclays, and JPMorgan are underwriting the turnaround as still early, betting the bra and PINK product cycle can keep converting into full-price sales through the heavier promotional months ahead. BMO and UBS agree the turnaround is real but think the stock has already caught up to it.
With third-quarter guidance ranging from a small loss to roughly breakeven and tariff rates set to climb back toward 20% in the fourth quarter, the next print will show whether regular-price selling can keep offsetting the margin pressure both camps agree is coming.
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