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 results for the five-week period ended
September 29, 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 September 2012 rose 5% following an elevation of 8% in
August 2012 and 11% in September 2011. For October, management
expects comparable-store sales to be in the low single-digit
range.
Comparable-store sales for September increased 6% at Victoria's
Secret Stores & Victoria's Secret Beauty and 5% at Bath &
Body Works & The White Barn Candle Co. but dropped 4% at La
Senza. Sales at Victoria's Secret Direct fell 5%.
Limited Brands' net sales for September fell 5.5% to $773.6
million from $818.6 million posted in the comparable prior-year
month. The prior-year period sales included $96.5 million from a
third-party apparel sourcing business that was sold in November
2011.
In terms of performance, Limited Brands, the operator of 2,624
specialty stores in the United States, marginally lagged its
competitor
Gap Inc.
(
GPS
), which posted a comparable-store sales growth of 6% compared with
a decline of 4% witnessed in the prior-year
period.
For the 35-week period ended September 29, Limited Brands
registered comparable-store sales growth of 7%. However, net sales
for the period fell 3.3% to $5,992 million from $6,196 million in
the prior-year period. The prior-year sales included $614.9 million
from a third-party apparel sourcing business that was sold in
November 2011.
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 on augmenting 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.
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