L Brands, Inc.
), formerly known as Limited Brands, posted second-quarter fiscal
2013 earnings of 61 cents a share that came a penny ahead of the
Zacks Consensus Estimate and rose 22% from the prior-year quarter
earnings of 50 cents. The consumers, who cut back on their
discretionary spending during the recession, are now gradually
opening their wallets. The company also raised its fiscal 2013
Let's Dig Deep
This specialty retailer of women's intimate and other apparel,
beauty and personal care products posted net sales of $2,516
million, up 5% from $2,399.1 million reported in the prior-year
quarter, and surpassed the Zacks Consensus Estimate of $2,513
Limited Brands, which operated 2,892 stores as of Aug 3, 2013,
posted comparable-store sales growth of 2% during the quarter
compared with 8% in the prior-year quarter.
Sales at Victoria's Secret Stores & Victoria's Secret
Beauty increased 6% to $1,236.8 million, whereas comps were up
1%. Victoria's Secret Direct sales fell 6% to $383.7 million.
Total Victoria Secret sales grew 3% to $1,620.5 million. Bath
& Body Works & The White Barn Candle Co.'s total sales
grew 3% to $630.3 million, with a 3% increase in comps. Comps at
La Senza jumped 4%, but sales tumbled 9% to $86.1 million.
Gross profit for the quarter grew 5% to $988.6 million,
whereas gross margin contracted 10 basis points to 39.3%.
Operating income advanced 16% to $357.8 million, whereas
operating margin expanded 130 basis points to 14.2%.
A Glance at the Guidance
Management now forecasts earnings in the range of 23 cents to
28 cents for the third quarter and between $3.06 and $3.21 per
share for fiscal 2013. The company had earlier projected fiscal
2013 earnings guidance of $2.95 to $3.15 per share.
The current Zacks Consensus Estimate for the third quarter and
fiscal 2013 are 28 cents and $3.19 per share, respectively.
Limited Brands now projects comparable-store sales to rise in
the low single-digit for August.
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).
However, the other stocks worth considering in the retail sector
Fortune Brands Home & Security, Inc.
Lumber Liquidators Holdings, Inc.
PetMed Express, Inc.
), all sporting a Zacks Rank #1 (Strong Buy).
FORTUNE BRD H&S (FBHS): Free Stock Analysis
LUMBER LIQUIDAT (LL): Free Stock Analysis
L BRANDS INC (LTD): Free Stock Analysis
PETMED EXPRESS (PETS): Free Stock Analysis
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