Limited Brands Inc. (LTD) recently announced plans to open a Victoria’s Secret flagship store in London by 2012. However, the specialty retailer did not provide any details about the upcoming 16,500-square-foot store.
The company’s other international expansion plans include the opening of Bath & Body Works stores, Pink stores and Victoria’s Secret stores in Canada.
With a network of 36 stores at the end of the first-quarter 2010, Limited Brands plans to open about 25 more Bath & Body Works stores in Canada this year. The company also plans to increase the number of Pink stores to 8 from its present count of 4 stores in Canada. Moreover, four Canadian Victoria’s Secret stores are also scheduled to open this year.
We believe that Limited Brands is keen to enhance its retail footprint across the globe by expanding aggressively in Canada, and other international markets. The company had also previously announced that it entered into a franchise partnership with M.H. Alshaya, Co. with plans to open Bath and Body Works stores in the Middle East later this year.
Furthermore, Limited Brands has plans to open Victoria’s Secret stores (of about 1,000 square feet each) under a wholesale model, and primarily located in airports and tourist destinations. These stores provide significant growth opportunities and are an innovative way of advertising wares. The company has these stores in Brazil, Argentina, Dubai, Barbados and Mexico, among others.
Limited Brands’ sustained focus on cost containment, inventory management and merchandise initiatives has kept it afloat in a sluggish consumer environment. Gross margin is also expected to improve during the year, driven by an improvement in the merchandise margin rate.
The operator of 2,671 specialty stores, Limited Brands, holds a Zacks #3 Rank, which translates into a short-term ‘Hold’ recommendation. Our long-term recommendation for the stock remains ‘Neutral’.
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