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LTD Comps Up 2%

Zacks Equity Research

L Brands, Inc. (LTD) formerly known as Limited Brands, posted comparable-store sales growth of 2% for the four-week period ended May 4, 2013. This specialty retailer of women’s intimate and other apparel, beauty and personal care products showcased a disappointing performance.

We observe that the rate of comps growth in April for this Zacks Rank #3 (Hold) stock fell by 100 basis points with that of March and February but decelerated sharply from an increase of 9% in Jan 2013. Management now projects comparable-store sales to rise in the low single-digit for the month of May.

Comparable-store sales for April increased 2% at Victoria’s Secret Stores & Victoria’s Secret Beauty, 2% at La Senza and 4% at Bath & Body Works & The White Barn Candle Co. However, sales dropped 4% at Victoria’s Secret Direct.

Limited Brands said that net sales for April rose marginally to $660.5 million from $659 million posted in the comparable prior-year month.

For the thirteen-week period ended May 4, 2013, comparable-store sales jumped 3%, whereas net sales rose 5% to $2,268 million from $2,154 million in the year-ago period.

As a whole, most retailers were able to put up a decent comparable-store sales performance for the month of April, despite challenges arising from higher Social Security Payroll taxes, an unexpected cold weather, and political gridlock and brinkmanship.   

Retailers like The TJX Companies, Inc. (TJX), Ross Stores Inc. (ROST) and Buckle Inc. (BKE) witnessed comps increase of 8%, 7% and 6.2%, respectively.

Let’s Conclude

Limited Brands’ 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 revamping its La Senza brand alongside.

Limited Brands is keen on augmenting 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 and higher returns. However, stiff competition and erratic consumer behavior still remain matters of concern.

Limited Brands, which is slated to release its first-quarter fiscal 2013 results after the market closes on May 22, now projects earnings of 46 cents a share in line with the Zacks Consensus Estimate. Earlier, the company had forecasted earnings between 40 cents and 45 cents a share for the quarter.

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