Back to top

Analyst Blog

Not much reaction was seen in L Brands, Inc.’s (LB - Analyst Report) shares, after it posted sales data for December (five weeks ended Jan 4, 2014). The stock rose marginally by 0.2% in the last trading session. It might be that investors factored in better comps results for the December month than November but were at the same time cautious as December sales data were below analysts’ expectations.

L Brands reported 2% year over year rise in comps.

This specialty retailer of women’s intimate and other apparel, beauty and personal care products depicted a 7.8% rise in net sales of $2.098 billion from $1.947 billion in the prior-year period. For the 48 week period ended Jan 4, 2014, net sales increased 6% year over year to $10.042 billion while comps grew 2% for the said period.

Increased promotional activity had a profound impact on merchandise margins and compelled L Brands to lower its fourth-quarter fiscal 2013 guidance. The company now expects earnings per share to be around $1.60 as against the earlier projection of $1.67 to $1.82.

The Zacks Consensus Estimate for the fourth quarter stands at $1.60 per share.

L Brands comparable-store sales for December rose 3% at Victoria’s Secret Stores & Victoria’s Secret Beauty and 1% at Bath & Body Works & The White Barn Candle Co. but fell 7% at La Senza. Sales rose 1% at Victoria’s Secret Direct.

The holiday season has been quite tough and the intense competition in prices made it more difficult for retail companies. Apart from L Brands, heavy promotional expenditure weighed on the performance of other companies as well. At present, most companies are grappling with reduced margins, which are compelling a lowered guidance for the quarter.

Retailers battered by the holiday sales results include Family Dollar Stores Inc. (FDO - Analyst Report) and American Eagle Outfitters Inc. (AEO - Analyst Report). While Family Dollar posted a 3% fall in comps for December, American Eagle witnessed 7% comps decline.

Another retailer, Sears Holdings Corporation’s (SHLD - Analyst Report), announced one of its most disappointing holiday season sales results. Total domestic comparable-store sales for the nine-week period ended on Jan 6, 2014, declined 7.4%.

L Brands, which operates 2,934 stores, has a Zacks Rank #3 (Hold).

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
RPC INC RES 24.91 +8.35%
LITHIA MOTO… LAD 94.59 +4.60%
DELTA AIR L… DAL 39.15 +3.90%
FLAMEL TECH… FLML 14.51 +3.50%
SOUTHWEST A… LUV 28.87 +2.92%