L Brands, Inc.
), formerly known as Limited Brands, posted third-quarter fiscal
2013 earnings of 31 cents a share that came ahead of the Zacks
Consensus Estimate of 28 cents and rose 19% from the prior-year
quarter earnings of 26 cents.
The consumers, who cut back on their discretionary spending
during the recession, are now gradually opening their wallets.
Retailers are spending more on promotions and coming up with
lucrative discounts to drive traffic.
Let's Dig Deep
This specialty retailer of women's intimate and other apparel,
beauty and personal care products posted net sales of $2,171.1
million, up 6% from $2,050.2 million reported in the prior-year
quarter, and surpassed the Zacks Consensus Estimate of $2,165
Limited Brands, which operated 2,927 stores as of Nov 2, 2013,
posted comparable-store sales growth of 3% during the quarter
compared with 5% in the prior-year quarter.
Sales at Victoria's Secret Stores & Victoria's Secret
Beauty increased 5% to $1,058.5 million, whereas comps were up
4%. Victoria's Secret Direct sales fell 1% to $268.9 million.
Total Victoria's Secret sales grew 4% to $1,327.4 million. Bath
& Body Works & The White Barn Candle Co.'s total sales
increased 5% to $566.6 million, with a 3% increase in comps.
Comps at La Senza rose 3%, but sales tumbled 9% to $75.1
Gross profit for the quarter grew 3% to $856.7 million,
whereas gross margin contracted 130 basis points to 39.5%.
Operating income advanced 7% to $211 million, whereas operating
margin expanded 10 basis points to 9.7%.
A Glance at the Guidance
Management now forecasts earnings in the range of $1.67 to
$1.82 for the fourth quarter and between $3.07 and $3.22 per
share for fiscal 2013.
The current Zacks Consensus Estimate for the fourth quarter
and fiscal 2013 are $1.83 and $3.18 per share, respectively.
Limited Brands now projects total comparable-store sales to
decline in the low single-digits for the month of November as
Thanksgiving Day falls one week later in 2013. For the fourth
quarter comps are expected to increase in the low
The company's Bath & Body Works segment is gaining
traction, driven by a rise in store transactions, enhancement in
the direct channel business and growth in 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
internationally by expanding aggressively in Canada and other
international markets. However, stiff competition and erratic
consumer behavior still remain major causes of concern.
Currently, Limited Brands holds a Zacks Rank #3 (Hold). Some
better ranked stocks in the retail sector are
Best Buy Co., Inc.
) both carrying a Zacks Rank #1 (Strong Buy), and
Five Below, Inc.
) sporting a Zacks Rank #2 (Buy).
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