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Analyst Blog

Limited Brands Inc. , a specialty retailer of women’s intimate and other apparel, beauty and personal care products, posted comparable-store sales growth of 3% for the four-week period ended Mar 2, 2013, that betters analysts’ expectations.

However, we observe that the rate of growth in comps for this Zacks Rank #4 (Sell) stock decelerated from an increase of 9% in Jan 2013 and 8% in Feb 2012. Management now projects comparable-store sales to rise in the low single-digit in Mar 2013 before adjusting for the impact of the calendar shift in Easter.

Comparable-store sales for February increased 5% at Victoria’s Secret Stores & Victoria’s Secret Beauty, 5% at La Senza but remained flat at Bath & Body Works & The White Barn Candle Co. However, sales dropped by 4% at Victoria’s Secret Direct.

Limited Brands, which competes with Hanesbrands Inc., said that net sales for February surged 9% to $712.7 million from $653.9 million posted in the comparable prior-year month.

As a whole, Feb 2013 was tough for most retailers as macroeconomic factors including increase in fuel and energy costs, higher payroll taxes and delay in tax refunds coupled with unfavorable weather conditions hindered consumer spending and in turn adversely affected the growth and profitability of companies.

Comparable-store sales for companies like Zumiez, Inc. (ZUMZ - Analyst Report), Buckle Inc. (BKE - Snapshot Report) and Ross Stores Inc. (ROST - Analyst Report) witnessed a decline of 8.9%, 1.1% and 1%, 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.

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