What happened

Shares of Victoria's Secret (VSCO 2.81%) were down 9.6% for the week through Thursday's close, according to data provided by S&P Global Market Intelligence. Earlier this week, UBS analyst Jay Sole issued a negative view on the company's turnaround potential, and this has fueled the sell-off. 

So what

Since spinning off in 2021 from L Brands, which also owned Bath & Body Works, the iconic women's beauty brand has been trying to reshape its image to appeal to a wider demographic. It's been successful in shifting its merchandise and marketing to accomplish that goal, but it may not be doing enough, according to the analyst.

Sales fell 9% year over year in the most recent quarter, but Sole noted a few opportunities for improvement. First, Victoria's Secret still has the potential to expand globally, given its name recognition. It could also leverage its customer data with loyalty programs.

The main problem is marketing, according to the analyst. Sole doesn't see Victoria's Secret doing enough to define exactly what its brand stands for.

One problem is Victoria's Secret's history: It came up in the heyday of shopping malls. It doesn't seem to have the wherewithal to compete in today's retail landscape.

E-commerce opened the door for many direct-to-consumer brands to connect with consumers through social media. Greater competition means Victoria's Secret needs a marketing strategy that will allow its brand to stand out, and it hasn't found one yet.

Now what

In this challenging retail environment, there are not enough catalysts to justify buying the stock. Management guided for sales to decline again in the high-single-digit range for the holiday quarter. At its investor day in October, management told investors that the company has completed only two years of a five-year turnaround plan. 

It's clearly going to take time for Victoria's Secret to recover, so even at these low share prices, it's still early to consider buying the stock. With so many stocks trading at lower valuations right now, investors can find stronger retail companies at value prices.