L Brands, Inc. (LB) has been on a roll as the company’s shares hit yet another 52-week high of $68.61 on the last trading day, before eventually closing at $68.27 and amassing a year-to-date return of 14.9%.
Shares of this specialty retailer of women’s intimate and other apparel, beauty and personal care products, have been gaining traction ever since the company posted second-quarter fiscal 2014 earnings of 63 cents a share that came a penny ahead of the Zacks Consensus Estimate, and rose 3.3% from the prior-year quarter earnings of 61 cents on the back of higher sales.
This prompted management to raise its full-year earnings projection as it now forecasts earnings between $3.03 and $3.18 per share for fiscal 2014, up from $3.00 to $3.15 projected earlier. The current Zacks Consensus Estimate for fiscal 2014 is $3.19.
Further, from April to August, L Brands has consistently registered comparable store sales (comps) growth. Within this period, comps growth touched a low of 2% and hit a high of 8%, thereby recording average growth of approximately 4.8%. Comps increased 8% in April, 3% in May, 2% in June, 6% in July and 5% in August.
L Brands’ driving force is its sustained focus on cost containment, inventory management, merchandise and speed-to-market initiatives, which have helped it to stay afloat in a sluggish consumer environment. The Zacks Rank #3 (Hold) company’s foray into international markets is likely to bring long-term growth opportunities as overseas stores continue to perform better and generate increased sales volumes.
Moreover, L Brands commands a leading market position in the lingerie, personal care and beauty segments. The company’s innovative merchandise and exclusive assortments have not only made it a popular name among consumers but also set it apart from its peers. Moreover, its operational efficiencies position it well to capitalize on the same, as evident from the sales performance so far in the year.
The company continues to revamp its business by improving store experience, localizing assortments and enhancing its direct business. We believe these measures will facilitate it to generate incremental sales, while increasing store transactions through a higher conversion rate.
These aforementioned factors clearly underscore the company’s solid fundamentals and highlight its strong growth prospects, instilling confidence among investors.
Apart from L Brands, Spectrum Brands Holdings, Inc. (SPB) also hit a 52-week high of $90.94 on Sep 26, 2014.
Other Stocks to Consider
Stocks worth considering in the same industry include Citi Trends, Inc. (CTRN) sporting a Zacks Rank #1 (Strong Buy), along with Foot Locker, Inc. (FL) carrying a Zacks Rank #2 (Buy).
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