Limited Brands Sales Rise - Analyst Blog

Limited Brands Inc. (LTD), a specialty retailer of women's intimate and other apparel, beauty and personal care products recently posted sales results for the four-week period ended November 27, 2010.

The owner of Victoria's Secret and Bath & Body Works chains sustained its growth momentum. Limited Brands' comparable-store sales for November rose 10%, following a 9% increase registered in October 2010, and reflecting a sharp improvement from a growth of 3% in October 2009. Limited Brands now expects December comparable-store sales to rise in the low-single digits.

Comparable-store sales for November increased 13% at Victoria's Secret Stores & Victoria's Secret Beauty, 10% at Victoria's Secret Direct, and 8% at Bath & Body Works & The White Barn Candle Co. but dropped 10% at La Senza.

For the forty-three week period, comparable-store sales for Columbus, Ohio-based company, Limited Brands, grew by 9%.

Net sales for November rose 14.3% to $893 million from $781.1 million posted in the same month last year. In the forty-three week period, sales climbed 11% to $7,050 million from $6,350 million in the prior-year quarter.

Limited Brands' sustained focus on cost containment, inventory management and merchandise initiatives has kept it afloat in a sluggish retail environment as evident from its healthy third-quarter 2010 results.

The quarterly earnings of 18 cents a share came a penny ahead of the Zacks Consensus Estimate, but rose substantially from 2 cents earned in the prior-year quarter. Consequently, management raised its fiscal 2010 earnings outlook.

Limited Brands, which competes with Gap Inc. (GPS) and Hanesbrands Inc. (HBI), now expects fiscal 2010 earnings between $1.82 and $1.97 per share up from $1.68 and $1.83 previously anticipated. The company now expects fourth-quarter 2010 earnings between $1.02 and $1.17.

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 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 to drive growth and enhance return.

Currently, we have an Outperform rating on the stock. Moreover, Limited Brands holds a Zacks #1 Rank, which translates into a short-term ‘Strong Buy' rating, and correlates with our long-term recommendation.

 
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