Figuring out why a stock is up or down in the brutal calculus of Wall Street requires two basic pieces of information — how a company is performing and how that compares with what investors were expecting.

When investors have been disappointed repeatedly and then the business perks back up and looks set to continue headed higher, the result can be a big run up in the stock price. 

So it was for Victoria’s Secret & Co., which was one of the best-performing stocks in the first half with a gain of 54.1 percent. 

That puts the retailer way ahead of the market overall, which has been supercharged by AI everything and is up 9.6 percent so far this year, according to the S&P 500.

Victoria’s Secret has been rapidly evolving under chief executive officer Hillary Super, who’s unapologetically brought the sexy back — the stock ticker symbol was changed to “VSXY.” She has also worked to give Pink more of its own identity and to tighten up operations. 

“We were so transactional and value driven and now we are so emotional, tapping into how [the customer] feels about herself, being a place where she can be confident or feel great,” Super told WWD after the company reported a 15 percent increase in first-quarter sales. “It’s just a very different tone and a very different positioning and we’re driving this fun and brand heat through all of the activations.” 

The vibe shift is being felt by analysts. 

Jonna Kim, at TD Cowen, said the company’s “underlying momentum remains compelling.”

“We believe Victoria’s Secret and Pink are gaining share from value and off-price players,” Kim said. “Higher cultural relevancy combined with newness is driving share gains. Beauty remains a bright spot, which management expects to grow [by a percentage in the double digits] for the year, driven by fragrance and mists.

“We are impressed Victoria’s Secret has not seen any slowdown despite a softer macro backdrop and execution remains encouraging,” she said. 

Growth at the company has been supported by “a strategic shift away from promotions toward brand-led storytelling — ‘promo detox’ — which drove higher average unit retail prices and stronger full-price selling, indicating healthier brand equity,” Kim said.

Brand equity will, sooner or later, translate into stock market equity. 

But brand by itself is not enough to keep a stock rising. 

If investors are looking for a great business to go on and become amazing, anything less can be a disappointment.

Witness Hermès International, where sales growth in constant currencies slowed to 6 percent in the first quarter, slightly below expectations and down from a 9.8 percent expansion in the fourth quarter. In the market, that translated into a 23.9 percent stock decline for Hermès in the first half.

Investors have been closely watching the big luxury brands, wondering if the affluent will be willing to keep paying more and, if so, how much. The sales rise at Hermès was driven by price increases at the brand, which like the rest of the industry also suffered through disruptions in the Middle East and in oil prices since the U.S. and Israel launched a war against Iran.

Nobody doubts the power of Hermès; the doubts seem to be on the expectations side of the equation. 

“Hermès’ brand equity is second to none,” Luca Solca, an analyst at Bernstein, wrote in a recent analysis. “Hermès may be facing a momentary soft patch in brand momentum, but it remains one of the largest luxury brands by revenue, despite a significantly smaller presence on social media, while its iconic bags consistently command a premium on the resale market.”

Solca described Hermès, which has revenues of 16 billion euros, as a “megabrand” that has room to grow. 

“A focus on costume jewelry, silk and more accessible handbags has opened the brand to a larger consumer audience, reaching down well into the aspirational middle class,” the analyst said. 

“Direct competitors like Chanel now seem better equipped to take care of top-end consumers,” he said. “When compared to Hermès, Chanel is more expensive in apparel, in shoes, in jewelry and — since post-COVID-19 — as expensive in leather handbags. Hermès is stretching its assortment upward to better serve rich consumers. It has invested in high jewelry and high-end watches, with price points stretching into the hundreds of thousands. The upcoming launches of couture will offer another case in point.”

The trick for the C-suite at Hermès and Victoria’s Secret is to focus on their brands and their companies and to let the stock take care of itself. 

The trick for investors is to remember that their expectations aren’t the end all, be all.