Limited Brands Inc. (LTD), a specialty retailer of women’s intimate and other apparel, beauty and personal care products recently posted better-than-expected sales results for the five-week period ended October 2, 2010.
 
The owner of the Victoria’s Secret and Bath & Body Works chains sustained its growth momentum. Limited Brands’ comparable-store sales for September 2010 rose 12%, following an increase of 10% registered in August 2010 and reflecting a sharp improvement from a marginal growth of 1% in September 2009.
 
Comparable-store sales for September jumped 13% at Victoria’s Secret Stores, climbed 11% at Bath & Body Works, grew 3% at La Senza, and rose 1% at Victoria’s Secret Direct.
 
Columbus, Ohio-based company, Limited Brands, pointed that year-to-date comparable-store sales grew by 9%. Limited Brands now expects October comparable-store sales to rise in the mid-single digits. Management expects comps to increase between 3% and 5% in the third quarter, and at a mid-single digit for fiscal 2010.
 
Limited Brands indicated that net sales for September rose 12.4% to $735.8 million from $654.8 million posted in the same month last year. Year-to-date, sales climbed 10.6% to $5,540 million from $5,008 million in the prior-year period.
 
Limited Brands’ sustained focus on cost containment, inventory management and merchandise initiatives has kept it afloat in a sluggish consumer environment. Management also expects gross margin to improve in the year driven by an improvement in the merchandise margin rate.
 
The company’s Bath & Body Works segment is gaining traction, driven by rise in store transactions, enhancement in the direct channel business and growth from new stores. Victoria’s Secret Stores have been performing well. The company is constantly revamping its La Senza brand. Limited Brands is keen to enhance its retail footprint across the globe by expanding aggressively in Canada and other international markets.
 
However, stiff competition and unfavorable macro-economic factors influencing consumer spending pattern remain concerns.
 
We have a Neutral rating on Limited Brands. Moreover, the Zacks #3 Rank, which translates into a short-term ‘Hold’ rating, correlates with our long-term recommendation.

 
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