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 four-week period ended February 26, 2011 on the heels of healthy sales at its Victoria’s Secret Stores and Bath and Body Works.
The owner of Victoria’s Secret and La Senza chains sustained its growth momentum. Limited Brands’ comparable-store sales for February 2011 rose 12%, following a 24% increase in January 2011, and compared with 10% posted in February 2010.
Limited Brands now expects March comparable-store sales to be flat due to a shift in Easter holiday to April 24 this year from April 4 in the prior year. At its last earnings release, the company projected comparable-store sales growth of 2% to 4% for the first quarter and in the low single digit for fiscal 2011.
Comparable-store sales for February increased 15% at Victoria’s Secret Stores & Victoria’s Secret Beauty, 2% at Victoria’s Secret Direct, and 10% at Bath & Body Works & The White Barn Candle Co. but decreased 3% at La Senza.
Limited Brands, which competes with Gap Inc. (GPS) and Hanesbrands Inc. (HBI), said that net sales for February rose 11.8% to $670.9 million from $600.1 million posted in the same month last year.
Recently, Limited Brands posted healthy fourth-quarter 2010 results on the back of cost containment, inventory management, and merchandise initiatives. Management projected first quarter earnings in the range of 26 cents to 31 cents and fiscal 2011 earnings between $2.15 and $2.35 per share.
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 has been performing well, and the company is also 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. Moreover, the company’s strong liquidity, positions it for higher growth and returns.
Currently, we have a long-term Neutral recommendation on the stock. Moreover, Limited Brands holds a Zacks #3 Rank, which translates into a short-term Hold rating and correlates with our long-term view.
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