Limited Brands' Comps Rise - Analyst Blog
07 May 2012 - 11:45PM
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 four-week
period ended April 28, 2012. The increase was boosted by 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 April 2012 rose 6%
following increases of 8% in March 2012 and 20% in April 2011.
Management had earlier predicted
comparable-store sales to rise in the low single digits for the
month under review.
Comparable-store sales for April
increased 8% at Victoria’s Secret Stores & Victoria’s Secret
Beauty and 4% at Bath & Body Works & The White Barn Candle
Co. but fell 5% at La Senza. Sales at Victoria’s Secret Direct
climbed 2%.
Limited Brands, which competes with
Hanesbrands Inc. (HBI), said that net sales for
April dropped 3.5% to $659 million from $683.2 million posted in
the comparable prior-year month. The prior-year period sales
included $59.2 million from a third-party apparel sourcing business
that was sold in November 2011.
In terms of performance, Limited
Brands fared far better than Gap Inc. (GPS), which
posted a comparable-store sales decline of 2% compared with a
growth of 8% registered in the prior-year period.
For the thirteen-week period ended
April 28, 2012, Limited Brands registered comparable-store sales
growth of 7%. However, net sales for the period fell 2.8% to $2,154
million from $2,217 million in the prior year. The prior-year sales
included $214 million from a third-party apparel sourcing business
that was sold in November 2011.
Strolling Through
Guidance
For the month of May, management
now expects comparable-store sales to rise in the low single-digit
range. The company now expects to post first-quarter 2012 earnings
between 38 cents and 40 cents a share. The current Zacks Consensus
Estimate for the quarter is 40 cents a share. The company will come
out with its first-quarter 2012 earnings results after the market
closes on May 16.
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 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. However, Limited Brands
holds a Zacks #2 Rank that translates into a short-term ‘Buy’
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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