Why Victoria's Secret Shares Are Underperforming in a Recovery-Driven Market

The global retail apparel market has shown resilience in 2025, with the fashion retailing sector valued at $99.31 billion and projected to grow at a 7.4% CAGR through 2029. Yet, Victoria's Secret & Co. (VSCO) remains an outlier, with its shares lagging despite broader industry recovery. This underperformance stems from a confluence of strategic missteps, brand erosion, and misalignment with evolving consumer priorities, even as the company has made recent strides in addressing these challenges.

Strategic Missteps and Brand Erosion

Victoria's Secret's most significant misstep occurred in 2021, when it abruptly retired its iconic "Angels" and shifted toward a rebranded identity centered on inclusivity and empowerment. This pivot alienated a core demographic of loyal customers who associated the brand with its aspirational, fantasy-driven messaging. Sales declined sharply, and the brand struggled to regain relevance until 2024, when it began reversing course by reintroducing the Angels and the fantasy runway show.

. While the 2025 fashion show attracted 15 million views and stabilized sales, the damage to brand equity was profound.

The rebranding fiasco highlights a broader issue: inconsistent messaging and reactive leadership. From 2020 to 2025, the company faced multiple leadership changes, including a board purge and a CFO transition, which compounded uncertainty. These disruptions hindered long-term strategic coherence, leaving the brand vulnerable to competitors who had already embraced personalization, sustainability, and digital engagement.

Misalignment With Industry Trends

The apparel and lingerie sectors have pivoted toward three key trends: personalization, sustainability, and digital-first engagement. Victoria's Secret's response has been uneven.

1. Personalization: Competitors like Bath & Body Works and American Eagle Outfitters have leveraged AI for demand forecasting and tailored customer experiences. Victoria's Secret partnered with Google Cloud in 2024 to enhance data-driven personalization, but this effort came late to a market where 25% of shoppers prioritize in-store styling services.
2. Sustainability: Circular fashion initiatives are now table stakes, driven by European regulations and consumer demand. While Victoria's Secret has received praise for sustainability efforts, its progress lags behind peers who integrated eco-friendly practices earlier.
3. Digital Engagement: Gen Z shoppers in the UK now discover apparel via social media, yet Victoria's Secret's digital strategy remained fragmented until 2025. The 2025 fashion show's live-streaming on platforms like TikTok and Instagram marked a belated but critical step toward aligning with social-first consumer behavior.

Financial Performance: Mixed Signals

Despite recent improvements, Victoria's Secret's financials reveal a fragile recovery. In Q3 2025, the company reported a 9% sales increase to $1.472 billion, driven by its core brands and international expansion. However, this growth masks persistent challenges:
- High Debt: The company carries $1.347 billion in long-term debt, constraining reinvestment in innovation.
- Tariff Exposure: Rising U.S. tariffs have pressured margins, forcing price hikes or inventory losses.
- Profitability Gaps: While Q3 2025 narrowed its net loss to $37 million (vs. $56 million in 2024), the company's 0.22% net margin still trails competitors like Bath & Body Works, which reported 25.54% market share and higher profitability.

Investment Outlook

Victoria's Secret's 2025 performance suggests a tentative path to recovery, with improved sales and a stabilized brand identity. However, the stock remains a high-risk proposition. The company's debt load, exposure to global trade tensions, and history of strategic indecision raise concerns about long-term resilience. For investors, the key question is whether the recent recommitment to its aspirational roots-coupled with digital and sustainability investments-can sustainably outperform a sector increasingly dominated by agile, tech-savvy rivals.

In a market where personalization and sustainability are no longer optional, Victoria's Secret's delayed adaptation may continue to weigh on its valuation. While the 2025 fashion show and international growth are encouraging, the brand's ability to retain its re-earned relevance will determine whether this recovery is fleeting or foundational.