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 comparable-store sales results for the four-week period ended November 24, 2012 that betters analysts' expectation.

The owner of Victoria's Secret Direct and La Senza chains sustained its growth momentum with comparable-store sales increasing sequentially. Limited Brands' comparable-store sales for November 2012 rose 5% following an increase of 3% in October. In November 2011 the company had registered comparable-store sales growth of 7%. Comparable-store sales are now expected to rise in the low single-digits in December.

Management hinted that Hurricane Sandy adversely impacted the comps by 1% to 2%. Other retailers who experienced soft sales were Macy's Inc. ( M ), Nordstrom Inc. ( JWN ) and Kohl's Corporation ( KSS ) registering a decline of 0.7%, 1.1% and 5.6%, respectively.

Comparable-store sales for November increased 4% at Victoria's Secret Stores & Victoria's Secret Beauty, 6% at Bath & Body Works & The White Barn Candle Co. and 5% at La Senza. Sales at Victoria's Secret Direct rose 2%.

Limited Brands, which competes with Hanesbrands Inc. ( HBI ), said that net sales for November jumped 5.7% to $922 million from $872.6 million posted in the comparable prior-year month. The prior-year period sales included $13.1 million from a third-party apparel sourcing business that was sold in November 2011.

In terms of performance, Limited Brands, the operator of 2,632 specialty stores in the United States, fared better than its competitor, Gap Inc. (GPS), which posted comparable-store sales growth of 3%.

Comparable-store sales climbed 7% for the 43 week-period ended on November 24, 2012. Net sales dropped 2.5% to $7.525 billion for the period compared with net sales of $7.721 billion last year. The year-ago period sales included $702.4 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 revamping its La Senza brand alongside.

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. Moreover, Limited Brands holds a Zacks #3 Rank that translates into a short-term "Hold" rating.



HANESBRANDS INC (HBI): Free Stock Analysis Report

NORDSTROM INC (JWN): Free Stock Analysis Report

KOHLS CORP (KSS): Free Stock Analysis Report

LIMITED BRANDS (LTD): Free Stock Analysis Report

MACYS INC (M): 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 , JWN , KSS , LTD

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