Limited Brands, Inc.
), a specialty retailer of women's intimate and other apparel,
beauty and personal care products, recently posted fourth-quarter
fiscal 2012 earnings of $1.76 per share that beat the Zacks
Consensus Estimate of $1.73 and rose 17.3% from the prior-year
quarter earnings of $1.50. The consumers, who cut back on their
discretionary spending during the recession, are now gradually
opening their wallets.
Including one-time items, earnings came in at $1.39, up from
$1.17 in the year-ago period.
Let's Dig Deep
Limited Brands posted net sales of $3,855.6 million, up 9.7%
from $3,515.4 million reported in the prior-year quarter, and
surpassed the Zacks Consensus Estimate of $3,785 million. The
prior-year period sales included $13.1 million from a third-party
apparel sourcing business that was sold in Nov 2011.
Limited Brands posted comparable-store sales growth of 5%
during the fourth quarter of fiscal 2012 compared with 7% in the
prior-year quarter and in line with the previous quarter. Comps
rose 5% in Nov 2012, 3% in Dec 2012, and 9% in Jan 2013.
Sales at Victoria's Secret Stores & Victoria's Secret
Beauty increased 9% to $1,713.4 million, whereas comps were up
3%. Victoria's Secret Direct sales rose 2.9% to $534 million.
Total Victoria Secret sales grew 7.5% to $2,247.4 million. Bath
& Body Works & The White Barn Candle Co.'s total sales
surged 10.8% to $1,249.6 million, with a 7% increase in comps.
However, comps at La Senza remained flat, whereas sales tumbled
14.2% to $102.4 million.
Adjusted gross profit for the quarter surged 12.9% to $1,743.2
million, whereas gross margin expanded 130 basis points to 45.2%.
Adjusted operating income advanced 15.4% to $907.8 million,
whereas operating margin augmented 110 basis points to 23.5%.
Other Financial Details
Limited Brands, which operates 2,876 stores as of Feb 2, 2013,
recently raised its quarterly dividend by 20% to 30 cents (or
$1.20 annually) from 25 cents a share (or $1.00 annually). The
increased dividend, which is the 153rd successive quarterly
payout, will be paid on Mar 8, 2013, to stockholders of record as
of Feb 22, 2013.
Strolling Through Guidance
Management now forecasts earnings in the range of 40 cents to
45 cents for the first quarter and between $2.92 and $3.12 per
share for fiscal 2013. However, the projected earnings remained
below the Zacks Consensus Estimate of 51 cents for the first
quarter and $3.24 for fiscal 2013.
For the month of February, Limited Brands reiterated its
comparable-store sales growth guidance of low single-digits.
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
revamping its La Senza brand alongside.
Limited Brands is keen on augmenting its retail footprint
internationally by expanding aggressively in Canada and other
international markets. However, stiff competition and erratic
consumer behavior still remain major causes of concern.
Currently, Limited Brands holds a Zacks Rank #3 (Hold). The
stock worth considering in the retail, apparel sector is
), which holds a Zacks Rank #1 (Strong Buy), and is expected to
continue with its positive earnings surprise history. Other
stocks that should be merited include
American Eagle Outfitters, Inc.
), both of which carry a Zacks Rank #2 (Buy) and are expected to
continue with their upbeat performance.
AMER EAGLE OUTF (AEO): Free Stock Analysis
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LIMITED BRANDS (LTD): Free Stock Analysis
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