Victoria’s Secret & Co. (NYSE:VSCO) is one of the most undervalued retail stocks to invest in. On October 1, Telsey Advisory raised the firm’s price target on Victoria’s Secret & Co. (NYSE:VSCO) to $29 from $24 while keeping a Market Perform rating on the shares. Victoria’s Secret & Co. (VSCO): Among Billionaire David E. Shaw’s Small-Cap Stock Picks with Huge Upside Potential The firm told investors that Victoria’s Secret & Co. (NYSE:VSCO) experienced strong momentum in H1 2025, exhibited by a solid Q2 e ...

Core Insights - The article emphasizes a shift in consumer philosophy from "external expression" to "internal support," highlighting the importance of comfort, functionality, and versatility in fashion choices [1][18] - TikTok Shop's latest trend report identifies four major fashion styles for Fall 2025, reflecting consumers' dual pursuit of comfort and individuality [9][18] Consumer Behavior Trends - Consumers are increasingly prioritizing functional, versatile, and comfortable clothing, with significant sales growth in categories such as outerwear, denim, and loungewear [7][18] - Specific data shows that outerwear for both men and women has seen year-on-year increases of over 360% and 190% respectively, while loungewear categories have surged by over 600% [7] Fashion Styles - **City Trek Style**: Represents a blend of urban and outdoor lifestyles, gaining over 50 billion exposures on TikTok, emphasizing lightweight and protective clothing [10] - **Cloud Comfort Style**: Focuses on tactile experiences with soft fabrics, achieving over 30 billion exposures, catering to the desire for warmth and elegance [12] - **365 Core Style**: Captures the minimalist and retro trends favored by Gen Z, with a fivefold increase in exposure, highlighting the value of basic items [14] - **Stealth Edge Style**: Reflects a shift towards understated luxury, with 140 billion exposures, showcasing high-quality materials and craftsmanship [16] Industry Implications - The insights from TikTok Shop provide essential guidance for retailers in inventory and marketing strategies, particularly in functional outerwear and loungewear categories [18][19] - The report serves as a strategic tool for the fashion industry, helping participants understand evolving consumer demands for functionality, versatility, and comfort [18][19] Conclusion - TikTok Shop's approach connects trends with consumer behavior, fostering a vibrant fashion ecosystem that benefits users, creators, and brands alike [21][22]

Financial Data and Key Metrics Changes - The company reported a 2% increase in sales year-over-year, reaching $760 million, with organic constant currency sales consistent with the prior year [25][10] - Gross margin increased by 165 basis points to 41.6%, while operating margin expanded by 390 basis points to 10.7% [26][10] - Earnings per share (EPS) surged by 240% compared to the previous year, reaching $0.07, primarily driven by higher margins and lower interest expenses due to significant debt reduction [26][10] Business Line Data and Key Metrics Changes - The intimate apparel category experienced a mid-teens decline, while other segments showed growth: low single-digit growth in Basics, mid single-digit growth in Active, and a 60% increase in new businesses, including scrubs and loungewear [12][10] - Operating profit increased by 61%, reflecting the benefits of cost restructuring and assortment management initiatives [10] Market Data and Key Metrics Changes - International sales grew by 4% on an organic constant currency basis, driven by growth in Australia and Asia, while U.S. sales decreased by 1% [11][10] - Approximately 75% of sales and cost of goods are from the U.S., with 25% from international markets, which are less impacted by U.S. tariffs [14][29] Company Strategy and Development Direction - The company is focused on a transformation strategy that includes cost reductions, pricing actions, and leveraging strong retailer relationships to capture new revenue opportunities [6][7] - The company aims to fully mitigate tariff impacts through various levers, including cost savings and strategic pricing actions, while maintaining a diversified supply chain [18][20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating the current tariff environment, citing a proactive approach and a strong balance sheet after reducing over $1 billion in debt [9][17] - The outlook for the second quarter includes continued margin expansion and operating profit growth, with expected sales of approximately $970 million and EPS of approximately $0.18 [28][30] Other Important Information - The company has no exposure to sourcing from China, which historically accounted for a low single-digit percentage of U.S. cost of goods [16][10] - The company is not pursuing private label opportunities but is focused on expanding its branded offerings [51][52] Q&A Session Summary Question: Can you elaborate on the effective tariff rate and revenue opportunities? - Management stated they can fully mitigate tariff headwinds, with tariffs not expected to impact until Q4, and emphasized their proactive approach to managing costs and pricing [34][36] Question: What contributed to the upside in EPS? - The upside was attributed to better-than-expected sales, cost savings, and improved gross profit margins [44][46] Question: What are the current market conditions and competitor pricing? - Retailers are managing inventory tightly, and while there haven't been significant price moves yet, the company is prepared to implement strategic pricing as necessary [50][56] Question: What is the outlook for the women's business and market share? - The intimate apparel category is facing challenges, but the overall women's business is performing well, with plans to improve the Made and Form segment [60][64] Question: What is the capacity for new revenue opportunities? - The company has sufficient capacity for growth and flexibility in its supply chain to meet new demand, particularly from its Western Hemisphere manufacturing capabilities [78][76]