Limited Brands Inc.
), 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
), 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
), 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
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
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
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.
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