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Limited Brands Inc. , a specialty retailer of women’s intimate and other apparel, beauty and personal care products, posted better-than-expected comparable-store sales results for the five-week period ended September 29, 2012. The increase was boosted by healthy sales at its Victoria's Secret Stores and Bath & Body Works.

The owner of Victoria's Secret Direct and La Senza chains has sustained its growth momentum. Limited Brands’ comparable-store sales for September 2012 rose 5% following an elevation of 8% in August 2012 and 11% in September 2011. For October, management expects comparable-store sales to be in the low single-digit range.

Comparable-store sales for September increased 6% at Victoria’s Secret Stores & Victoria’s Secret Beauty and 5% at Bath & Body Works & The White Barn Candle Co. but dropped 4% at La Senza. Sales at Victoria’s Secret Direct fell 5%.           

Limited Brands' net sales for September fell 5.5% to $773.6 million from $818.6 million posted in the comparable prior-year month. The prior-year period sales included $96.5 million from a third-party apparel sourcing business that was sold in November 2011.         

In terms of performance, Limited Brands, the operator of 2,624 specialty stores in the United States, marginally lagged its competitor Gap Inc. (GPS - Analyst Report), which posted a comparable-store sales growth of 6% compared with a decline of 4% witnessed in the prior-year period.      

For the 35-week period ended September 29, Limited Brands registered comparable-store sales growth of 7%. However, net sales for the period fell 3.3% to $5,992 million from $6,196 million in the prior-year period. The prior-year sales included $614.9 million from a third-party apparel sourcing business that was sold in November 2011.

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 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.

Currently, we have a long-term “Neutral” recommendation on the stock. However, Limited Brands holds a Zacks #2 Rank that translates into a short-term “Buy” rating.

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