Limited Brands Comps Rise - Analyst Blog
11 April 2012 - 2:04AM
Zacks
Limited Brands Inc. (LTD), a specialty retailer
of women’s intimate and other apparel, beauty and personal care
products, posted better-than-expected comparable-store sales for
the five-week period ended March 31, 2012. The increase was boosted
by healthy sales at its Victoria's Secret Stores and Bath &
Body Works.
The owner of Victoria's Secret and La Senza chains has sustained
its growth momentum. Limited Brands’ comparable-store sales for
March 2012 rose 8% following a similar percentage increase in
February 2012 and 14% jump in March 2011.
Management had earlier predicted comparable-store sales to rise
in the low single digits for the month under review.
Comparable-store sales for March increased 10% at Victoria’s
Secret Stores & Victoria’s Secret Beauty, 6% at Bath & Body
Works & The White Barn Candle Co. and 1% at La Senza. Sales at
Victoria’s Secret Direct climbed 3%.
Limited Brands, which competes with Hanesbrands
Inc. (HBI), said that net sales for March dropped 2.6% to
$840.9 million from $863 million posted in the same month prior
year. The prior-year period sales included $84.3 million from a
third-party apparel sourcing business that was sold in November
2011.
Limited Brands performed at par with its peer Gap
Inc. (GPS), which also posted comparable-store sales
growth of 8% compared with a decline of 10% in the prior-year
period.
For the nine-week period ended March 31, 2012, Limited Brands
registered comparable-store sales growth of 8%. However, net sales
for the period fell 2.5% to $1,495 million from $1,534 million in
the prior year. The prior-year sales included $154.8 million from a
third-party apparel sourcing business that was sold in November
2011.
Sifting Through Guidance
For the month of April, management now expects comparable-store
sales to rise in the low single-digit range. At its last earnings
call, Limited Brands forecasted comparable-store sales to increase
in the low-to-mid single digits in the first quarter and between 2%
and 4% in fiscal 2012. The company also projected earnings in the
range of 35 cents to 40 cents for the first quarter and between
$2.60 and $2.80 per share for fiscal 2012.
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 increased number of 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 returns. However, stiff
competition and erratic consumer behavior still remain matters of
concern.
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, and correlates with our
long-term view.
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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