Limited Brands' Earnings Rise - Analyst Blog
May 23 2013 - 10:10AM
Zacks
L Brands, Inc.
(LTD) formerly known as Limited Brands, posted first-quarter fiscal
2013 earnings of 48 cents a share that beat the Zacks Consensus
Estimate by a couple of cents and rose 17% from the prior-year
quarter earnings of 41 cents. The consumers, who cut back on their
discretionary spending during the recession, are now gradually
opening their wallets. The company also raised it fiscal 2013
earnings guidance.
Let’s Dig
Deep
This specialty retailer of women’s
intimate and other apparel, beauty and personal care products
posted net sales of $2,268 million, up 5% from $2,153.8 million
reported in the prior-year quarter, and surpassed the Zacks
Consensus Estimate of $2,250 million.
Limited Brands, which operated
2,873 stores as of May 4, 2013, posted comparable-store sales
growth of 3% during the quarter compared with 7% in the prior-year
quarter.
Sales at Victoria’s Secret Stores
& Victoria’s Secret Beauty increased 5% to $1,145.6 million,
whereas comps were up 3%. Victoria's Secret Direct sales fell 6% to
$359.1 million. Total Victoria Secret sales grew 2% to $1,504.7
million. Bath & Body Works & The White Barn Candle Co.’s
total sales grew 5% to $530.1 million, with a 3% increase in comps.
Comps at La Senza jumped 5%, but sales tumbled 3% to $72.8
million.
Gross profit for the quarter grew
4% to $941.4 million, whereas gross margin contracted 40 basis
points to 41.5%. Operating income advanced 6% to $311.2 million,
whereas operating margin increased 10 basis points to 13.7%.
A Glance at the
Guidance
Management now forecasts earnings
in the range of 50 cents to 55 cents for the second quarter and
between $2.95 and $3.15 per share for fiscal 2013. The company had
earlier projected fiscal 2013 earnings guidance of $2.92 to $3.12
per share.
The current Zacks Consensus
Estimate for the second quarter and fiscal 2013 are 54 cents and
$3.12 per share.
Limited Brands now projects
comparable-store sales to rise in the low single-digit for the
month of May.
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 growth
in 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 internationally by expanding
aggressively in Canada and other international markets. However,
stiff competition and erratic consumer behavior still remain major
causes of concern.
Currently, Limited Brands holds a
Zacks Rank #3 (Hold). The other stock worth considering in the
retail, apparel sector is Stein Mart Inc. (SMRT),
which holds a Zacks Rank #1 (Strong Buy), and is expected to
continue with its positive earnings surprise history. Other stocks
that should be merited include Gap Inc. (GPS) and
The Buckle, Inc. (BKE), both of which carry a
Zacks Rank #2 (Buy) and are expected to continue with their upbeat
performance.
BUCKLE INC (BKE): Free Stock Analysis Report
GAP INC (GPS): Free Stock Analysis Report
L BRANDS INC (LTD): Free Stock Analysis Report
STEIN MART INC (SMRT): Free Stock Analysis Report
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