Limited Brands, Inc. (LTD) second-quarter 2011 earnings of $0.48 per share beat the Zacks Consensus Estimate of $0.46, and rose 33% from the prior-year quarter on the back of cost containment, inventory management and merchandise initiatives. The better-than-expected results, prompted management to raise its fiscal 2011 earnings outlook to a range of $2.35 to $2.50 per share. We believe it would maintain its growth momentum as evident from its monthly sales results.
Limited Brands' comparable-store sales for September rose 11%. 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 has been performing well, and the company is also revamping its La Senza brand.
Limited Brands is also keen to enhance its retail footprint across the globe by expanding aggressively in Canada and other international markets. We have a long-term Outperform recommendation on the stock. Our target price of $46.00, 18.3X 2011 EPS, reflects this view.
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