Limited Brands' Robust July Sales - Analyst Blog
August 06 2012 - 10:45AM
Zacks
Limited Brands
Inc. (LTD), a specialty retailer of women’s intimate and
other apparel, beauty and personal care products, posted strong
comparable-store sales results for the four-week period ended July
28, 2012. The increase resulted from strong sales at its Victoria's
Secret Stores and Bath & Body Works.
Limited Brands, owner of Victoria's
Secret Direct and La Senza chains, has sustained its growth
momentum. The company’s comparable-store sales for July 2012 rose
12% following an increase of 7% in June and compared with a 6%
growth in July 2011. Management now expects comps to rise in the
low single digits for the month of August.
Comparable-store sales for July
increased 12% at Victoria’s Secret Stores & Victoria’s Secret
Beauty and 17% at Bath & Body Works & The White Barn Candle
Co. but declined 5% at La Senza. Sales at Victoria’s Secret Direct
inched up 1%.
Limited Brands, which competes with
Hanesbrands Inc. (HBI), announced that net sales
for July fell marginally by 1.6% to $649.8 million from $660.4
million posted in the comparable prior-year month. The prior-year
period sales included $67.7 million from a third-party apparel
sourcing business that was sold in November 2011.
In terms of performance, Limited
Brands fared better than its competitor Gap Inc.
(GPS), which also posted a solid comparable-store sales increase of
10%.
For the 26-week period ended July
28, 2012, Limited Brands registered comparable-store sales growth
of 8%. However, net sales for the period fell 2.6% to $4,553
million from $4,675 million in the prior-year period. The
prior-year sales included $430.6 million from a third-party apparel
sourcing business that was sold in November 2011.
Comparable-store sales for the
second quarter of 2012 rose 8%. Sales for the quarter dropped 2.4%
to $2,399 million from $2,458 million in the year-ago quarter.
Prior- year quarter sales consist of $216.6 million from a
third-party apparel sourcing business that was sold in November
2011.
The better-than-expected July
comparable-store sales performance prompted management to raise
second-quarter 2012 earnings guidance to a range of 46 cents to 48
cents, from 40 cents to 45 cents forecasted earlier.
Limited Brands also announced the
payment of a special dividend of $1 per share, apart from regular
quarterly dividend of 25 cents a share. Both the dividends are
scheduled to be paid on September 7 to stockholders of record as on
August 23.
Let’s
Conclude
The company’s Bath & Body Works
segment is gaining traction, driven by a rise in store
transactions, enhancement in the direct channel business and new
stores. Victoria’s Secret Stores have been performing well, and the
company is also revamping its La Senza brand.
Limited Brands intends to augment
its retail footprint across the globe by expanding aggressively in
Canada and other international markets. Moreover, the company’s
strong liquidity positions it for growth as well as higher returns.
However, stiff competition and erratic consumer behavior still
remain matters of concern.
Currently, we have a long-term
Neutral recommendation on the stock. Limited Brands holds a Zacks
#3 Rank that translates into a short-term Hold rating.
GAP INC (GPS): Free Stock Analysis Report
HANESBRANDS INC (HBI): Free Stock Analysis Report
LIMITED BRANDS (LTD): Free Stock Analysis Report
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