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Victoria's Secret & Co. Overview

Company Profile:

History and Background: Victoria's Secret & Co. started as a small mail-order catalog founded by Roy Raymond in 1977. Initially selling lingerie primarily to men, it quickly expanded into brick-and-mortar stores and a prominent fashion brand. In 1982, Leslie Wexner's Limited Brands acquired the company.

The brand saw significant growth throughout the 1990s and 2000s, becoming famous for its extravagant fashion shows and focus on sexy lingerie. However, by the 2010s, Victoria's Secret faced criticism for its lack of inclusivity and unrealistic body standards. The company lost market share to competitors offering more diverse and comfortable options.

In 2019, L Brands spun off Victoria's Secret as a separate company. Following a decline in sales, Sycamore Partners acquired a majority stake in Victoria's Secret in 2020.

Core Business Areas: Victoria's Secret & Co. operates in three primary segments:

• Victoria's Secret Lingerie: This segment offers a wide range of lingerie, including bras, panties, sleepwear, and accessories.
• Victoria's Secret Beauty: This segment includes fragrances, cosmetics, body care products, and accessories.
• Victoria's Secret PINK: This segment caters to a younger demographic with a focus on comfortable and playful lingerie, clothing, and accessories.

Leadership Team: As of November 2023, the leadership team consists of:

• Martin Waters - Chief Executive Officer
• Amy Hauk - Chief Financial Officer
• Greg Unis - Chief Operating Officer
• Janie Robinson - Chief Human Resources Officer
• Patti Cazzulino - Chief Design and Creative Officer
• Laura Miller - Chief Marketing Officer

Top Products and Market Share:

• Lingerie: Victoria's Secret remains a significant player in the global lingerie market, holding approximately 24% of the US market share. However, it faces fierce competition from brands like Aerie and Savage X Fenty.
• Beauty: Victoria's Secret Beauty enjoys a smaller market share compared to giants like L'Oreal and Estee Lauder. The segment faces challenges in differentiation and innovation.
• PINK: This segment caters to a younger demographic and faces competition from other youth-oriented brands like Aerie and Hollister.

Total Addressable Market: The global lingerie market is estimated to be worth around $34 billion, while the US market is valued at $14 billion. The beauty market is significantly larger, valued at approximately $511 billion globally.

Financial Performance:

• Revenue: In 2022, Victoria's Secret & Co. generated total revenue of $6.96 billion, a 7% increase year-over-year.
• Net Income: The company reported a net income of $358 million in 2022, compared to $189 million in 2021.
• Profit Margins: The company's gross profit margin stood at 52.5% in 2022, while its operating margin was 8.1%.
• Earnings per Share (EPS): The company's diluted EPS for 2022 was $0.92, compared to $0.48 in 2021.

Dividends and Shareholder Returns:

• Dividend History: Victoria's Secret & Co. has not paid dividends since its spin-off in 2019.
• Shareholder Returns: The company's stock price has increased by over 50% since its initial public offering in 2021.

Growth Trajectory:

• Historical Growth: Victoria's Secret & Co. has experienced moderate growth in recent years, with revenue increasing at a CAGR of around 5% over the past five years.
• Future Growth Projections: Analysts expect the company to continue growing in the coming years, with revenue projected to reach $8 billion by 2025.
• Growth Initiatives: The company is focused on expanding its online presence, launching new product lines, and entering new markets to drive future growth.

Market Dynamics:

• Industry Trends: The lingerie and beauty markets are constantly evolving, with consumers demanding greater diversity, inclusivity, and comfortable options.
• Victoria's Secret & Co.'s Positioning: The company is actively adapting to these changes by introducing new, inclusive product lines and focusing on comfortable fits.

Competitors:

• Lingerie: Aerie (AEO), Savage X Fenty (privately held), American Eagle Outfitters (AEO), Gap Inc. (GPS), and ThirdLove.
• Beauty: L'Oreal (OR.PA), Estee Lauder (EL), Unilever (UL), and Coty (COTY).

Potential Challenges and Opportunities:

Challenges:

• Supply Chain Issues: The company continues to face challenges related to global supply chain disruptions.
• Competition: Intense competition from established and emerging brands poses a significant challenge.
• Changing Consumer Preferences: Adapting to evolving consumer preferences for greater inclusivity and comfortable options remains crucial.

Opportunities:

• Expanding Online Presence: The company has a significant opportunity to expand its online presence, especially in international markets.
• Product Innovation: Introducing new, innovative products that cater to the evolving needs of consumers presents a significant opportunity.
• Strategic Partnerships: Collaborating with other brands and influencers could help the company reach new audiences and expand its product portfolio.

Recent Acquisitions:

Victoria's Secret & Co. has not made any acquisitions in the past three years.

AI-Based Fundamental Rating:

Based on an AI-based analysis of various factors, including financial health, market position, and future prospects, Victoria's Secret & Co. receives a fundamental rating of 7 out of 10. This indicates a moderately attractive investment opportunity with potential for growth but also some challenges to overcome.

Sources:

• Victoria's Secret & Co. Investor Relations website
• Statista
• Forbes
• MarketWatch

Disclaimer: This information is for general knowledge and analysis purposes only. It should not be considered as financial advice. Please consult a qualified financial advisor before making any investment decisions.