Limited Brands' Comps Rise - Analyst Blog

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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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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: GPS , HBI , LTD

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