S&P Global Ratings on Monday moved Victoria's Secret & Co.'s outlook to positive from stable and affirmed the company's 'BB-' issuer credit rating. The ratings action reflects what S&P described as better-than-expected operating results and double-digit growth in market share during the first quarter of fiscal 2026.
Victoria's Secret reported a 15% increase in consolidated revenue for the quarter ended May 2, 2026, driven by 13% comparable sales growth. Digital engagement was pronounced, with app downloads climbing 50%. Stores also saw traffic improvements, registering mid-single-digit gains. The company recorded double-digit increases in new customers, concentrated among shoppers aged 18 to 24, and noted stronger customer acquisition among households earning under $50,000 and over $200,000 annually, even as promotional activity declined.
S&P's analysis incorporated expectations that the company's adjusted operating margin will expand to the mid- to high-17% range in fiscal 2026, compared with 16.6% in fiscal 2025. The ratings agency forecasts roughly 8% total consolidated revenue growth for fiscal 2026, citing support from a mix of new store openings, brand campaigns across Victoria's Secret, PINK and Beauty, and influencer partnerships. S&P highlighted the company's "promo detox" initiative and disciplined inventory management as contributors to margin stability.
On balance-sheet and cash-flow metrics, S&P expects adjusted leverage to improve to roughly 2.4x in 2026 from about 2.6x in 2025. Reported free operating cash flow is projected to rise to roughly $356 million in fiscal 2026 from approximately $312 million in fiscal 2025. At the end of the first quarter of 2026 the company held roughly $207 million in cash and had about $685 million available under a $750 million asset-based lending facility.
S&P framed the positive outlook around sustained improvements in operating performance and profitability if management continues to execute the company's strategy under CEO Hillary Super. The ratings agency did, however, call out governance-related uncertainty stemming from activist investor BBRC International. That investor holds an 11.6% stake and has advocated for board changes. Shareholders subsequently voted to re-elect the incumbent board at the annual meeting held in June 2026.
The ratings action indicates S&P's view that the company is on a path to stronger margins, modest leverage reduction and higher free cash generation, supported by digital traction, customer acquisition among younger cohorts and continued brand investments. S&P's projections rely on the company's plans for controlled promotions and inventory management to preserve profitability while pursuing top-line growth through store openings and marketing initiatives.
Contextual notes
- All financial and operational figures are taken from S&P Global Ratings' assessment and the company's reported first-quarter results for the period ended May 2, 2026.
- S&P's projections for margins, leverage and free operating cash flow reflect its adjusted measures and forward-looking estimates for fiscal 2026.