Limited Brands Sales Rise - Analyst Blog
06 December 2011 - 3:12AM
Zacks
Limited Brands Inc. (LTD), a specialty retailer
of women’s intimate and other apparel, beauty and personal care
products, recently posted better-than-expected sales results for
the four-week period ended November 26, 2011 on the heels of
healthy sales at its Victoria's Secret Stores and Bath & Body
Works.
The owner of Victoria's Secret Direct and La Senza chains has
sustained its growth momentum. Limited Brands’ comparable-store
sales for November 2011 rose 7% following an increase of 6% in
October 2011 and compared with a 10% jump in November 2010.
Comparable-store sales for November increased 11% at Victoria’s
Secret Stores & Victoria’s Secret Beauty and 6% at Bath &
Body Works & The White Barn Candle Co. but declined 7% at La
Senza. Sales at Victoria’s Secret Direct dropped 3%.
Limited Brands, which competes with Gap Inc.
(GPS) and Hanesbrands Inc. (HBI), said that net
sales for November fell 2.3% to $872.6 million from $893 million
posted in the same month last year.
For the forty-three week period ended November 26, 2011,
comparable-store sales surged 10%, whereas net sales jumped 9.5% to
$7,721 million from $7,050 million reported in the prior-year
period.
Limited Brands is also actively managing its cash flows, and
returning much of its free cash via dividends and share
repurchases. The company announced a special dividend of $2 per
share payable on December 23, 2011, to shareholders of record as of
December 12, 2011. Considering this dividend, the company would
have returned $12 billion to stockholders since 2000.
Management expects to generate free cash flows of about $700
million during fiscal 2011, and exit the year with a cash balance
of about $800 million, taking into account the special dividend
that has been declared.
Let’s
Conclude
The company’s Bath & Body Works segment is gaining traction,
driven by a rise in store transactions, enhancement in the direct
channel business and growth in new stores. Victoria’s Secret Stores
have been performing well, and the company is also revamping its La
Senza brand.
Limited Brands is keen to augment its retail footprint across
the globe by expanding aggressively in Canada and other
international markets. Moreover, the company’s strong liquidity
positions it for growth and higher return. However, stiff
competition and erratic consumer behavior still remain
concerns.
After the Black Friday sales blast, there is cynicism in the
market whether the success of weekend sales could be replicated in
the upcoming holiday season, or consumers who have now become more
rationale about spending will tighten their purses. However, the
efforts of retailers to convert store traffic into business cannot
be decried who are trying to lure customers, and it definitely
remains a wait-and-watch story as to who emerges successful in
wooing consumers in this distressed economy.
Currently, we have a long-term Neutral recommendation on the
stock. Moreover, Limited Brands holds a Zacks #3 Rank that
translates into a short-term Hold rating.
GAP INC (GPS): Free Stock Analysis Report
HANESBRANDS INC (HBI): Free Stock Analysis Report
LIMITED BRANDS (LTD): Free Stock Analysis Report
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