Victoria's Secret: Assessing the Scalability of a Rebranded Legacy Brand

CEO Hillary Super's turnaround hinges on a fundamental repositioning. She is moving the brand away from a narrow, prescriptive beauty standard and into the business of emotional resonance. As she stated, "More than anything, we're in the business of feelings". The goal is to make customers feel like the best version of themselves-confident, comfortable, and inspired-rather than pressured to conform to a specific look. This shift is a direct response to the backlash the brand faced, where its legacy imagery was seen as "Inadequate. Objectified. Fat-shamed" by many.

The strategy aims to capture a larger, more inclusive market by acknowledging that "sexy is not one single thing" and that beauty standards vary globally. By promising to reflect diverse cultural standards and invite women into its world, Super is trying to broaden the brand's appeal beyond its historically thin, white model base. This inclusive angle is central to the new runway show, which Super describes as a chance to "put a stake in the ground about what this next chapter will look and feel like." The show's return last year was a key signal of this new direction, aiming to be a platform for aspiration and entertainment rather than a rigid definition of attractiveness.

Yet this pivot operates on a complex foundation. The brand carries substantial legacy equity, with a peak of $8.1 billion in sales in 2018 and a powerful cultural footprint. However, that heritage is intertwined with significant trust barriers. The fallout from the #MeToo era, allegations of bullying and harassment, and the damaging association with Jeffrey Epstein have left deep scars. As one observer noted, the brand's comeback sparked both "glitz and glam" and deep "skepticism" about its ability to truly change. Super's challenge is to leverage the brand's iconic heritage while actively shedding the body-shaming and outdated narratives that have alienated a generation. The new strategy is a direct attempt to reconcile these opposing forces.

Financial Performance: Evidence of a Turnaround in Progress

The financial results from the third quarter are the clearest signal yet that the strategic pivot is gaining traction. The company delivered net sales of $1.472 billion, a solid 9% year-over-year increase that not only met but significantly exceeded expectations. More importantly, the company raised its full-year net sales guidance to a range of $6.450 billion to $6.480 billion, a meaningful upward revision that reflects growing confidence in the path forward. This isn't just a one-quarter beat; it's a tangible acceleration in the growth trajectory.

The operational improvements behind the top line are equally telling. The company achieved a break-even adjusted operating income for the quarter, a dramatic turnaround from the $28 million loss in the same period last year. This was driven by a disciplined pullback on promotions and a focus on higher regular-priced selling, which expanded the adjusted gross margin by 170 basis points. For a growth investor, this shows the business model is not just scaling revenue but also improving its underlying profitability as it executes the new strategy.

The most compelling growth story, however, is international. International sales grew by 34% in the quarter, a staggering figure that points to a vast, untapped market. The strong digital performance in China, in particular, emerges as a key scalable channel. This international ramp-up is critical for long-term dominance, as it diversifies the revenue base beyond the mature U.S. market and taps into higher-growth regions. The market's reaction-a 17.88% surge in pre-market trading on the earnings news-confirms investors see this as a credible turnaround story with real scalability.

The bottom line is that Victoria's Secret is showing the hallmarks of a brand successfully repositioning and capturing new demand. The revenue growth is accelerating, the cost structure is improving, and the international expansion is taking off. While the full-year net loss remains a reality, the trajectory is decisively positive. For a growth investor, these results suggest the company is not just surviving its legacy but is building a more resilient and expansive foundation for future market share gains.

Market Context and Competitive Threats

The opportunity for Victoria's Secret is defined by a paradox. The broader lingerie retail industry is in decline, with revenue projected to drop 2.7% in 2025 after a five-year contraction of nearly 5%. This shrinking pie presents a headwind, as the category faces a drop in consumer confidence and intense competition. Yet within this downturn, the brand's strategic pivot aims to capture a larger share of a more inclusive definition of "sexy." The key question for scalability is whether Super's emotional branding can outpace the industry's structural decline.

The competitive threat is multifaceted. Private-label expansion by retail giants like Target and Costco offers affordable, mass-available alternatives that directly challenge the distinctiveness of specialty boutiques. These retailers are reshaping the market with scale and competitive pricing, eroding the traditional value proposition of niche players. For Victoria's Secret, this means its core product category is under pressure from both price and convenience. The company's own financials show this tension, with tariffs on key manufacturing countries like China and Vietnam putting upward pressure on costs and risking margin compression.

Despite these headwinds, the stock's performance signals a market betting on a successful turnaround. The shares have shown strong momentum, rising 30.78% in 2025. This rally reflects investor confidence in the new strategy and the acceleration in sales. Yet the stock remains far below its peak, trading at $65.04 compared to an all-time high of $74.77 in 2021. This gap indicates lingering skepticism about the brand's ability to permanently escape its legacy issues and capture sustainable growth in a shrinking market.

The bottom line is that Victoria's Secret is fighting an uphill battle on two fronts. It must grow its share within a declining industry while defending its premium positioning against powerful private-label competition. The brand's scalability depends entirely on the success of its emotional repositioning. If it can truly become the go-to platform for diverse, aspirational feelings, it may carve out a profitable niche. But if the industry continues its downward trend or if the new brand identity fails to resonate, the path to dominance will be blocked by formidable structural and competitive forces.

Catalysts, Risks, and What to Watch

The growth thesis now hinges on a series of near-term events that will prove whether the rebrand can scale beyond a single quarter of strong results. The upcoming Victoria's Secret Fashion Show is the most immediate litmus test. As CEO Hillary Super stated, the event is "an opportunity for us to really introduce this next era of Victoria's Secret and Pink to everyone". It is a critical marketing moment to gauge consumer reception of the new, inclusive brand narrative. A successful show that resonates with a diverse audience could provide a powerful sales catalyst, while a lukewarm reception would challenge the entire strategic pivot.

Sustained international growth, particularly in China, will be the longer-term validation of scalability. The company's 34% surge in international sales last quarter was a standout performance, driven by strong digital demand. For the growth story to hold, this momentum must continue. China represents a vast, high-growth market where the brand's new emotional appeal could find fertile ground. Any deceleration in this segment would signal that the repositioning struggles to cross cultural or geographic lines, limiting the total addressable market.

The primary risk, however, is that the rebrand fails to resonate. The company is attempting to capture market share in an industry that is structurally contracting, with revenue projected to drop 2.7% in 2025. If Victoria's Secret cannot become the dominant emotional platform it aims to be, it will be left competing in a shrinking, commoditized market against private-label giants and discount retailers. The financials show the company is improving its cost structure, but without a clear growth engine, those gains could be eroded by tariffs and rising input costs.

The bottom line is that the runway show and international sales are the next milestones. Investors will watch these with keen interest, as they will determine if the brand's new narrative can translate into durable, scalable growth-or if it remains a promising but unproven concept in a declining category.