Victoria's Secret & Co（VSCO.US）Market Likely to see 2Q EPS Upside and CEO Appointment as Positive

Investment Rating - The report assigns a 12-month rating of "Sell" for Victoria's Secret & Co (VSCO) with a price target of US$13.00 [2][12][14] Core Viewpoints - Victoria's Secret & Co pre-announced Q2 2024 EPS guidance of $0.34-$0.39, exceeding previous expectations of $0.05-$0.20, while net sales are expected to decline by 1-2% year-over-year [2][4] - The appointment of Hillary Super as CEO is viewed positively, as she has a track record of turning around brands, which may enhance market sentiment [2][4] - Despite the positive short-term outlook, the report maintains a "Sell" rating due to ongoing structural issues and market share loss in North America [2][4] Summary by Sections Financial Performance - For FY22, Victoria's Secret generated approximately $6.5 billion in revenue [4] - The forecast for revenues shows a decline from $6,182 million in FY24 to $5,978 million in FY25 [2] - EBIT is projected to decrease from $327 million in FY24 to $255 million in FY25 [2] Valuation Metrics - The report indicates a forecast stock return of -31.8% with a market return assumption of 8.9% [3] - The P/E ratio is expected to rise from 10.8x in FY24 to 12.3x in FY25 [2] - The net debt to EBITDA ratio is projected to improve from 1.2x in FY25 to 0.9x in FY29 [2] Market Dynamics - The industry structure is rated as stable (3 on a scale of 1-5) over the next six months, indicating no significant changes expected [7] - The report highlights increased competition in the intimates market and a shift in consumer preferences towards off-price and mass merchants [2][4]