Limited Brands (
), a specialty apparel retailer focused on lingerie, beauty and
personal care products, competes with retailers like
Abercrombie & Fitch
), AnnTaylor (
), and J.Crew Group (JCG). Some of its popular brands include
Victoria's Secret in the lingerie business and Bath & Body
Works in the personal care segment.
We estimate that the Victoria's Secret brand is the largest
value driver for Limited Brands, contributing about 53% to
our $30.63 price estimate for the company's stock. Bath
& Body Works generates an incremental 34%.
Strong Holiday Season Sales
Retailers, notably those who offer affordable luxury, performed
well in November and December as pent-up consumer demand was
released during the holiday season. Limited Brands in particular
had an outstanding holiday season and reported a 5% increase in
year-over-year (YOY) same-store sales during December (See Limited
Looking Good in 2011 on Growth in Lingerie Business).
While many expected these stores to maintain some strength into
January, analysts did expect a dip in spending coming off the
holiday season. Also, many anticipated that record snowfall in the
U.S. had kept shoppers away from stores and pressured same-store
sales. Markets seemed to be expecting modest retail activity in
See our full analysis and $30.63 price estimate for Limited
Limited Outperforms Expectations
While analysts were expecting almost 7% YOY growth in January
spending at Limited Brands' stores (Victoria's Secret and Bath
& Body Works), results surprised on the upside. Limited Brands'
comparable store sales increased 24% in January over the same
period last year.
We currently forecast a mere 3% increase in revenue per square
foot for Victoria's Secret stores in the U.S. during 2011. However
if the Limited Brands continues its current momentum through 2011,
achieving double-digit growth in revenue per square foot for its
Victoria's Secret U.S. stores (excluding Bath & Body Works),
there could be an upside of 4% to our
price estimate for Limited Brands. A similar increase in revenue
per square foot at Bath & Body Works stores could present