Victoria's Secret (VSXY.US) shares surged in pre-market trading after the company reported profits that exceeded expectations and raised its financial outlook, offering further evidence that CEO Hillary Super's turnaround strategy is gaining traction.
The financial results revealed revenue of $1.56 billion, a 15.6% increase year-over-year, surpassing expectations by $40 million. Adjusted earnings per share came in at $0.60, beating estimates by $0.28.
The lingerie retailer raised the upper end of its annual net sales guidance to $7.13 billion, up from a previous high-end forecast of $6.95 billion. Its second-quarter sales guidance also exceeded market expectations.
For the quarter ended May 2, Victoria's Secret's comparable store sales also outperformed expectations. The company's stock has soared approximately 160% over the past year as investors have shown confidence in Super's efforts to revitalize the brand.
The updated outlook suggests momentum is building for Super's transformation plan, which focuses the company on its core bra business and the Pink brand targeting younger consumers. As part of this repositioning, the company recently changed its stock ticker to VSXY.
Super has previously faced pressure from investors. Investment firm BBRC International Pte., backed by billionaire Brett Blundy, had urged shareholders to vote against board chair Donna James, criticizing management's past decisions for years of declining sales.
In an interview, Super stated that Victoria's Secret bras have been gaining market share, particularly among consumers aged 18 to 44. "Our consumer base is performing exceptionally well," she added, noting the strongest growth came from income brackets earning under $50,000 and over $200,000 annually.
Super mentioned she has only communicated with BBRC during quarterly investor meetings. Activist investor Barrington Capital, which had previously pushed for changes at the company, has since divested its stake.
A shareholder vote for Victoria's Secret is scheduled for the company's annual meeting on June 11.
Short Interest at Elevated Levels
In Tuesday's pre-market trading, the stock jumped as much as 47%. At the time of writing, it was up 38.05% pre-market to $74.96.
According to data from S3 Partners, short interest in the company represents approximately 19% of its float. This level is considered extremely high within the U.S. retail sector. Typically, a short interest ratio exceeding 20% of the float is seen as a signal of widespread negative sentiment, indicating significant institutional pessimism towards the company.
The short thesis for Victoria's Secret is primarily based on several factors. The company's revenue declined from $8.1 billion in fiscal 2019 to $6.18 billion in fiscal 2024, creating deep-seated market pessimism from years of negative growth. Although revenue recovered to $6.55 billion in fiscal 2025, shorts view this as a temporary rebound unlikely to be sustained.
Activist investor pressure and governance turmoil also contribute. BBRC International, holding about 13% of shares, has initiated a proxy fight to oust board chair Donna James, criticizing management missteps for the prolonged sales decline. The upcoming annual meeting vote on June 11 is a key event shorts are watching for potential governance risk escalation.
Uncertainty surrounds the brand's transformation. The shift from its "Angels" era to a more inclusive brand led to an identity crisis. While the recent pivot back to a "sexy" positioning and the ticker change to VSXY are steps forward, shorts question whether this strategic reversal can truly win back younger consumers.
Short sellers increased their positions when the stock was around $40. Between October and November 2025, the number of shares sold short rose from approximately 9.61 million to 10.69 million, with short interest briefly exceeding 22%.
The better-than-expected earnings triggered a short squeeze. On June 2, pre-market, the company released its Q1 fiscal 2026 results, with revenue and profit surpassing analyst expectations across all three brands. Comparable sales grew at a double-digit rate, marking the fourth consecutive quarter of positive comparable sales growth.
The company simultaneously raised its full-year revenue guidance to a range of $7.03 billion to $7.13 billion, well above the previous upper limit of $6.95 billion. This earnings reversal directly triggered concentrated short covering.
Combined with thin pre-market liquidity and a broader recovery in sentiment for U.S. consumer stocks, the stock price surged nearly 50% pre-market at one point. The high level of short interest acted as an "accelerator" for the price increase—every $1 rise forced more short sellers to buy back shares to cover their positions, creating a classic short squeeze scenario.
If BBRC fails to secure board seats at the June 11 annual meeting and second-quarter earnings continue to exceed expectations, short sellers could face further squeeze pressure. With the stock having already surged about 160% over the past year, short sellers are facing substantial paper losses.
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