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Limited Brands (LTD) |
HenryTo
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 Posted: Sun Aug 23, 2009 3:08 am Post subject: Limited Brands (LTD) |
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Morningstar analysts' latest notes on LTD's 2Q2009 earnings:
| Quote: | | We think Limited Brands' LTD second-quarter results confirm our thesis that sales at Victoria's Secret and Bath & Body Works continue to be hurt by slow U.S. mall traffic. We don't expect a quick recovery, considering that consumers still face a number of head winds, including a tight job market and fallout from the soft housing market. For these reasons, we anticipate that Limited Brands' sales will remain under pressure over the next few quarters. We plan to re-evaluate our model assumptions after taking a closer look at the numbers and listening to management's comments on the conference call. In the second quarter, total sales decreased 9.5% year over year to just under $2.1 billion, driven by same-store sales declines of 12% and 5% at Victoria's Secret and Bath & Body Works, respectively. While the company was able to trim its operating expenses by about 10%, the operating margin declined to 7.2% (excluding a one-time gain) from 8.1% in the year-ago period because of moderate gross margin contraction. Given the challenging retail environment, we're encouraged that Limited Brands finished the quarter with more than $1.5 billion in cash and inventories down 11% year over year. We think lower inventories will help to limit margin-destroying markdowns, should consumer spending trends deteriorate further. |
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Limited Brands (LTD) Replies |
HenryTo
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Location: Los Angeles, California
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| Posted: Thu Feb 23, 2012 12:26 pm Post subject: |
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Morningstar on LTD's 4Q earnings.
| Quote: | | Limited Brands LTD reported fourth-quarter results that were largely in line with the updated guidance it provided earlier this month in tandem with January same-store sales data. Net sales were already expected to increase to $3.515 billion in the quarter, and management guided earnings per share to the high end of the previously offered $1.42-$1.46 range. Adjusted earnings per share were $1.50, excluding a host of one-time items, an increase of 19% year over year. We are putting the shares under review to better evaluate the company's prospects over the long term and transfer coverage to a new analyst. The company delivered impressive quarterly comparable-store sales yet again, increasing 7% for the quarter and 10% for the year (on top of a 10% full-year comp in 2010). We admit these numbers are impressive, but note that the positive data in the pre ss release were weighed down by one-time items and a surprisingly tempered outlook for the year ahead. The just-reported quarter had a $0.32 gain on the sale of the third-party apparel sourcing business, a $0.74 noncash charge related to impairments and restructuring charges at La Senza, and a $0.09 tax benefit due to one-time tax matters. Including these items, earnings per share for the fourth quarter would have been $1.17 versus an adjusted $1.36 last year ($0.10 of one-time items added back), down 14% year over year. The company's outlook for 2012 indicated that comp-store sales growth for February is likely to be in the high-single-digit range, better than the originally forecast low-single-digit range. However, management expects earnings per share for the first quarter to be between $0.35 and $0.40 (lower than the current $0.44 consensus), implying that either comp-store sales become materially weaker in the back half of the quarter or cost pressures remain through th e entire quarter; we believe the latter. For the 2012, the company expects earnings per share of $2.60-$2.80, compared with adjusted earnings per share of $2.60 in 2011. |
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HenryTo
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| Posted: Fri May 20, 2011 2:03 am Post subject: |
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Morningstar on LTD's "robust" 1Q results:
| Quote: | | Limited Brands LTD delivered robust first-quarter results, validating our thesis that the retailer's ability to attract consumers with a constant flow of fresh and unique merchandise will boost near-term sales and profitability. The firm offered a more optimistic outlook for fiscal 2011, and now our previously published estimates are at the lower end of management's $2.25-$2.45 earnings per share forecast (previously $2.15-$2.35). Accordingly, we are increasing our 2011 top-line and margin assumptions, which will in turn increase our fair value estimate. We now expect 2011 revenue growth to be 6.5%, thanks to robust comps at Victoria's Secret, and operating margin expansion of 130 basis points to 14.7%. Total quarterly revenue was up 15%, driven by a 15% increase in consolidated comparable-store sales. By concept, comparable sales at Victoria's Secret and Bath & Body Works grew 17% and 11%, respectively. The operating margin expanded 240 basis points to 12.0% thanks to more full-price selling, fewer merchandise markdowns, and to a lesser extent, operating leverage. |
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HenryTo
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Location: Los Angeles, California
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| Posted: Fri Feb 25, 2011 3:55 am Post subject: |
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Morningstar on LTD's 4Q earnings:
| Quote: | | Limited Brands LTD delivered solid fourth-quarter results, validating our thesis that the retailer's ability to attract consumers with a constant flow of fresh and unique merchandise will boost near-term sales and profitability. The firm guided to a more optimistic outlook in fiscal 2011, and now our previously published estimates are at the lower end of management's $2.15-$2.35 earnings per share forecast. We plan to increase our 2011 projections, but the change will not be material enough to alter our fair value estimate. Total quarterly revenue was up 13%, largely driven by a 10% increase in consolidated comparable-store sales. By concept, comparable sales at Victoria's Secret and Bath & Body Works grew 15% and 6%, respectively, thanks to new product launches and a successful holiday selling season. More full-price selling, fewer merchandise markdowns, and operating leverage gains drove an operating margin expansion of 150 basis points (to 20.6%) during the quarter. As the firm headed into the new fiscal year with a strong Valentine's Day launch, management projects a solid high-single-digit increase in comparable sales for February, on top of the 10% posted in the year-ago period. This validates our thesis that Limited Brands can break through current peaks and add sustainable growth in the near term, given its ability to attract postrecession consumers with new and differentiated merchandise in stores, made possible through industry-leading product-allocation and supply-chain systems. Therefore, while higher sourcing costs on the horizon will probably weigh on the firm's 2011 margins, we project that Limited Brands will hold up better than its peers, given strong demand for its merchandise, lending support to superior pricing power. |
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HenryTo
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| Posted: Thu Aug 19, 2010 11:22 am Post subject: |
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Morningstar on LTD's 2Q earnings:
| Quote: | | Solid sales momentum at Limited Brands LTD continued into the second quarter, validating our view that the retailer's ability to attract consumers with a constant flow of new and unique merchandise will boost near-term sales and profitability. Results were in line with our expectations, and we are maintaining our fair value estimate. Total quarterly revenue was up 8.5%, largely driven by a 7.0% increase in consolidated same-store sales. By concept, Victoria's Secret posted impressive 13.0% growth in comparable sales, thanks to new product launches and successful promotional events during the quarter. Comparable sales at Bath & Body Works, however, were flat relative to the year-ago quarter, mainly because of a shorter semiannual sales period in June. Nonetheless, sales at Bath & Body Works picked up significantly by the end of the quarter (comparable sales were up 15% in July). Additionally, both of these chains had a strong start heading into the back-to-school season, and the firm now expects August same-store sales growth to be in the mid- to high-single-digit range, relative to the low-single-digit increase projected earlier. This is in line with our view that comparable sales will come in above management's mid-single-digit growth forecast for fiscal 2010. The quarterly operating margin expanded to 10.5% from 7.2%, as a result of more full-price selling, fewer merchandise markdowns, and savings from cost-reduction initiatives. While we project that the firm will continue to benefit from more targeted promotions and operating leverage gains over the next few quarters, it will probably be partially offset by higher sourcing costs and increased marketing expenses. Therefore, we estimate that the magnitude of margin expansions will be smaller in the back half of the year. For the full year, we anticipate that the operating margin will only expand to 11.5% from 10% in 2009, despite the 420-basis-point increase year to date. |
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HenryTo
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Location: Los Angeles, California
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| Posted: Thu May 20, 2010 10:11 am Post subject: |
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Morningstar on LTD's 1Q earnings:
| Quote: | | Limited Brands' LTD solid first-quarter results validate our view that the introduction of new and innovative products at Victoria's Secret and Bath & Body Works will boost near-term growth and profitability. Results were in line with our expectations, and we are maintaining our fair value estimate. The firm posted a robust 10% increase in same-store sales during the quarter, largely driven by improving consumer spending trends. Additionally, we believe Limited Brands has done a great job repositioning its products to cater to postrecession consumers, who remain selective with their purchases. By offering something new and differentiated, the retailer provides customers with a reason to loosen their purse strings. For example, consumers were willing to pay up for the newly launched Victoria's Secret Miraculous bra line, which is priced 50% higher than its predecessors. In our view, positive trends will continue for the rest of the year, but top-line growth will probably decelerate as demand for new products moderate. Therefore, we project a mid-single-digit increase in same-store sales for the full year. The quarterly operating margin expanded to 9.6% from 3.8%, largely because of a greater proportion of new products in the mix, which carry higher merchandise margins. More full-price selling, fewer merchandise markdowns, and savings from cost-reduction initiatives also boosted margins for the quarter. In fiscal 2010, we estimate that the operating margin will improve to the low double digits from the 9.9% posted in 2010, driven by more targeted promotions, leaner inventories, and operating leverage gains from spreading fixed costs over a larger revenue base. |
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HenryTo
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Posts: 11740
Location: Los Angeles, California
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| Posted: Thu Feb 25, 2010 2:32 pm Post subject: |
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Morningstar's latest analyst notes on LTD:
| Quote: | | Limited Brands' LTD fourth-quarter results validate our view that the introduction of new innovative products at Victoria's Secret and Bath & Body Works will boost near-term growth. However, sales of new products surpassed our projections, which drove the better-than-expected results during the quarter. The change had minimal impact on our valuation, and we are maintaining our fair value estimate. Consolidated comparable-store sales increased 1% during the quarter, a marked departure from consecutive declines over the past two years, thanks to better merchandise offerings and increased demand for small-ticket discretionary items during the holiday season. Furthermore, Limited is off to a good start heading into fiscal 2011, expecting to report a same-store sales i ncrease in the high-single-digit to low-double-digit range in February. In our view, this trend should continue for the rest of the year, but probably at a slower pace as demand for new products moderate. Therefore, we project a mid-single-digit increase in same-store sales for the full year. The quarterly operating margin expanded significantly to 19.1% from 5.1%, largely because of a greater portion of new products in the mix, which carry higher merchandise margins. Additionally, more full-price selling, fewer merchandise markdowns, and savings from cost-reduction initiatives also boosted margins for the quarter. In fiscal 2011, we estimate that the operating margin will improve to the low double digits, up from the 9.9% posted in 2010, driven by more targeted promotions, leaner inventories, and operating leverage gains from spreading fixed costs over a larger revenue base. |
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