Victoria's Secret's Steel-Clad Playbook: Defending Value and Fueling Growth

The scent of opportunity is in the air for Victoria's Secret & Co. (VSCO), even as the lingerie giant battles a double threat: a cybersecurity breach and an activist investor's aggressive stake. But here's the twist—this is a company that's fighting back with strategic moxie, and its stock's low valuation might just be the best argument for buying now. Let's break it down.

The Poison Pill: A Defensive Masterstroke or Overreach?

Victoria's Secret didn't flinch when Australian billionaire Brett Blundy's BBRC Capital began amassing a 13% stake in the company. By triggering a limited-duration poison pill on May 20, 2025, the board sent a clear message: No backroom deals, no undervalued takeovers. The move was justified for three reasons:

1. BBRC's Intentions: The firm switched its reporting from passive investor (Schedule 13G) to activist (Schedule 13D) in 2024, signaling a play for control. Worse, it failed to comply with U.S. antitrust laws for three years, a red flag that raised doubts about its motives.
2. Competitive Threat: BBRC launched Léays, a direct rival to Victoria's Secret's lingerie and beauty lines, further fueling concerns about its agenda.
3. Market Volatility: With retail valuations depressed and recession fears looming, the board argued that BBRC's opportunistic stake buying could force a fire sale, harming all shareholders.

The poison pill, which activates if any investor crosses 15% ownership (20% for passive holders), gives the board a year to evaluate credible bids. Crucially, it doesn't block a fair offer—just ensures a premium is paid.

The IT Incident: A Speedbump, Not a Roadblock

A May cybersecurity breach briefly shuttered Victoria's Secret's e-commerce site and corporate systems. The company reported zero operational damage to Q1 2025 results, with net sales hitting $1.35 billion—a $20 million beat on its own guidance—and adjusted EPS of $0.09, exceeding expectations.

The incident's financial scars? Limited to potential Q2 costs, which the board is already addressing. The fact that sales surged despite the chaos underscores the brand's enduring appeal.

The Undervalued Catalyst: P/E at 11.7—A Bargain?

Victoria's Secret's P/E ratio of 11.7 (as of June 2025) is a stark contrast to its 21.5 P/E in late 2023. That drop reflects market skepticism about its turnaround—but here's why it's wrong.

The company's Path to Potential strategy is firing on all cylinders:
- Pink's Revival: Targeting Gen Z with social-first campaigns and collaborations (like "Pink by Frankie's") has boosted engagement.
- Beauty & Swim Dominance: Fragrance sales remain strong, while swimwear innovations are reactivating growth.
- Global Expansion: Double-digit international sales growth in Q4 2024, fueled by Chinese and UK franchises, signals untapped potential.
- Brand Clarity: A sharper divide between Victoria's Secret's “glamorous luxury” and Pink's “modern lifestyle” identity is reducing internal competition.

Risks? Yes. But the Upside Outweighs Them

Critics will cite North American market softness, leadership changes, and the lingering IT cleanup. But here's the kicker: Victoria's Secret is undervalued even on conservative estimates.

Take its North American market share of 20%—still dominant despite the challenges. Add in its 88 million Instagram followers and the $2.60 EPS in Q4 2024 (which beat forecasts), and you've got a company that's not just surviving—it's innovating.

The Bottom Line: Buy Now, but Keep an Eye on BBRC

At a stock price of $22.72 (June 2025), Victoria's Secret is priced for failure—but it's built for resilience. The poison pill has bought time, the Q1 results prove operational grit, and the P/E suggests the market's asleep at the wheel.

This is a buy for investors willing to stomach short-term volatility. Monitor BBRC's next moves: If they escalate, the poison pill could force a bidding war. If they back down, the stock could pop. Meanwhile, the Path to Potential is already paying dividends.

Final Call: Buy VSCO. Set a price target of $28–$30 within 12 months. Just don't blink—this undervalued beauty might be the breakout star of 2025.