LB LandBridge Company LLC

Limited Brands Inc. (LTD), a specialty retailer of women’s intimate and other apparel, beauty and personal care products, posted strong comparable-store sales results for the four-week period ended July 28, 2012. The increase resulted from strong sales at its Victoria's Secret Stores and Bath & Body Works.

Limited Brands, owner of Victoria's Secret Direct and La Senza chains, has sustained its growth momentum. The company’s comparable-store sales for July 2012 rose 12% following an increase of 7% in June and compared with a 6% growth in July 2011. Management now expects comps to rise in the low single digits for the month of August.

Comparable-store sales for July increased 12% at Victoria’s Secret Stores & Victoria’s Secret Beauty and 17% at Bath & Body Works & The White Barn Candle Co. but declined 5% at La Senza. Sales at Victoria’s Secret Direct inched up 1%.

Limited Brands, which competes with Hanesbrands Inc. (HBI), announced that net sales for July fell marginally by 1.6% to $649.8 million from $660.4 million posted in the comparable prior-year month. The prior-year period sales included $67.7 million from a third-party apparel sourcing business that was sold in November 2011.

In terms of performance, Limited Brands fared better than its competitor Gap Inc. (GPS), which also posted a solid comparable-store sales increase of 10%.

For the 26-week period ended July 28, 2012, Limited Brands registered comparable-store sales growth of 8%. However, net sales for the period fell 2.6% to $4,553 million from $4,675 million in the prior-year period. The prior-year sales included $430.6 million from a third-party apparel sourcing business that was sold in November 2011.

Comparable-store sales for the second quarter of 2012 rose 8%. Sales for the quarter dropped 2.4% to $2,399 million from $2,458 million in the year-ago quarter. Prior- year quarter sales consist of $216.6 million from a third-party apparel sourcing business that was sold in November 2011.

The better-than-expected July comparable-store sales performance prompted management to raise second-quarter 2012 earnings guidance to a range of 46 cents to 48 cents, from 40 cents to 45 cents forecasted earlier.

Limited Brands also announced the payment of a special dividend of $1 per share, apart from regular quarterly dividend of 25 cents a share. Both the dividends are scheduled to be paid on September 7 to stockholders of record as on August 23.

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 intends 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 as well as 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. Limited Brands holds a Zacks #3 Rank that translates into a short-term Hold rating.

 
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