LB LandBridge Company LLC

Limited Brands Inc. (LTD), a specialty retailer of women’s intimate and other apparel, beauty and personal care products recently posted healthy sales results for the five-week period ended April 2, 2011 on the heels of healthy sales at its Victoria's Secret Stores and Bath and Body Works.

The owner of Victoria's Secret and La Senza chains sustained its growth momentum. Limited Brands’ comparable-store sales for March 2011 rose 14%, following a 12% increase in February 2011, and compared with 15% posted in March 2010.

Limited Brands hinted that a shift in the Easter holiday to April 24 this year from April 4 in the prior year hurt the March comparable-store sales by 3 to 5 percentage points. Management now expects April comps to rise in the mid-to high single-digit range.

Comparable-store sales for March increased 19% at Victoria’s Secret Stores & Victoria’s Secret Beauty, 8% at Victoria’s Secret Direct and 8% at Bath & Body Works & The White Barn Candle Co. but decreased 7% at La Senza.

Limited Brands, which competes with Gap Inc. (GPS) and Hanesbrands Inc. (HBI), said that net sales for March rose 15.5% to $863 million from $746.9 million posted in the same month last year.

For the nine-week period ended April 2, 2011, comparable-store sales surged 13%, whereas net sales jumped 13.9% to $1,534 million from $1,347 million reported in the prior-year period.

Recently, Limited Brands posted healthy fourth-quarter 2010 results on the back of cost containment, inventory management, and merchandise initiatives. Management projected first quarter earnings in the range of 26 cents to 31 cents and fiscal 2011 earnings between $2.15 and $2.35 per share.

The company’s Bath & Body Works segment is gaining traction, driven by a rise in store transactions, enhancement in the direct channel business and growth in new stores.

Victoria’s Secret Stores have been performing well, and the company is also revamping its La Senza brand.

Limited Brands is keen to enhance its retail footprint across the globe by expanding aggressively in Canada and other international markets. Moreover, the company’s strong liquidity positions it to drive growth and enhance return. However, stiff competition and erratic consumer behavior still remain concerns.

Currently, we have a long-term Neutral recommendation on the stock. Moreover, Limited Brands holds a Zacks #3 Rank, which translates into a short-term Hold rating and correlates with our long-term view.

 
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