Victoria's Secret soars on strong Q4 beat, FY26 outlook
Lingerie retailer raises annual sales forecast 6% as brand turnaround gains momentum
Victoria's Secret & Co. shares surged in pre-market trading Thursday after the lingerie retailer reported fourth-quarter results that topped management's own guidance and raised its annual outlook for 2026, signaling the success of its brand repositioning strategy.
The company posted adjusted earnings per share of $2.77 for the quarter ended Jan. 31, well above the $2.20 to $2.45 range it had previously guided and ahead of analyst projections. Revenue climbed 8% year-over-year to $2.27 billion, surpassing the company's guidance of $2.17 billion to $2.20 billion, driven by an 8% increase in comparable sales.
The strong quarterly performance capped a fiscal year in which adjusted operating income reached $403 million, with adjusted diluted EPS of $3.00—representing 22% year-over-year growth. Full-year revenue totaled $6.39 billion, according to market data.
Victoria's Secret raised its sales forecast for fiscal 2026 to a range of $6.85 billion to $6.95 billion, an increase of 4.5% to 6% compared to the prior year. The retailer also lifted its operating income outlook to $430 million to $460 million, up from $403 million in the prior year. For the first quarter of 2026, the company projected sales between $1.49 billion and $1.525 billion.
Analysts at Barclays responded by raising their price target to $80 from a prior $65 while maintaining an Overweight rating. The brokerage cited mounting evidence that Victoria's Secret's brand repositioning is gaining traction, with particular strength in international retail sales, especially in China. Another firm's update reflected a target to $65 from $55, also maintaining Overweight, underscoring the broadly positive analyst sentiment. The consensus price target among analysts stands at $65.44.
The results underscore the progress of Victoria's Secret's "Path to Potential" initiative, launched to strengthen its core brands and modernize its image. The company has pivoted toward greater inclusivity and body positivity in its marketing—a significant shift from the approach that defined its previous era—while rebooting the Victoria's Secret Fashion Show as a promotional platform. Management has emphasized product innovation and improved customer experience as key drivers of the turnaround.
As part of ongoing portfolio optimization, the company is conducting a strategic review of DailyLook, a personal styling service. The review signals management's focus on allocating capital toward higher-growth opportunities and streamlining operations. Victoria's Secret sells products through multiple digital channels, with DailyLook listed among its current retail platforms.
Victoria's Secret's strong international growth provides a counterbalance to a competitive U.S. retail landscape, where consumer spending remains under pressure. The company's ability to deliver 8% comparable sales growth during the crucial holiday quarter suggests its merchandise assortment and marketing resonated with shoppers.
The stock has seen substantial appreciation over the past year, with a low around $13.76 and a high of $66.89, according to market data. As of the latest close, shares were at approximately $60.01, giving the company a market capitalization of roughly $4.99 billion. The company's forward price-to-earnings ratio of about 23.1 times reflects investor optimism about continued growth.
Looking ahead, analysts will be focused on the sustainability of the company's sales momentum, particularly as the company laps against last year's strong performance. Key catalysts include progress on its international expansion, particularly in China, and the outcome of the DailyLook strategic review. Additionally, investors will be monitoring gross margin trends and the effectiveness of the company's brand investments in driving customer acquisition and retention.