Shares of L Brands, Inc. (LB) rose 3.2% during after-market trading hours, after this specialty retailer of women’s intimate and other apparel, beauty and personal care products, raised its third-quarter fiscal 2014 earnings guidance.
The owner of Victoria’s Secret and Bath & Body Works now envisions earnings in the band of 38–40 cents a share, up from its previous forecast of 26–31 cents, reflecting year-over-year growth of 23%–29%.
L Brands is slated to release its third-quarter results on Nov 19 and analysts polled by Zacks, project earnings to come in at 32 cents. We expect the Zacks Consensus Estimate to move northwards in the coming days due to management’s upbeat guidance.
L Brands expects October comparable-store sales (comps) to increase in the low single-digit range. This comprises flat comps at Victoria's Secret Stores and 5% expected growth at Bath & Body Works. Total Victoria's Secret Direct sales are expected to decline approximately 7%.
We believe that L Brands’ sustained focus on cost containment, inventory management, merchandise and speed-to-market initiatives have kept it afloat in a sluggish consumer environment. The company’s foray into international markets is likely to bring long-term growth opportunities as these stores continue to perform better, generating increased sales volumes.
L Brands commands a market-leading position in the lingerie, personal care and beauty segments. We believe that the company’s innovation in merchandise and exclusive assortments remain popular among consumers, setting it apart from its peers. The company, with its operational efficiencies as well as new and innovative assortments, is well positioned to capitalize on the same.
Currently, L Brands carries a Zacks Rank #2 (Buy).
Other Stocks to Consider
Other favorably-ranked stocks in the retail sector include Hanesbrands Inc. (HBI), Columbia Sportswear Co. (COLM) and Gildan Activewear Inc. (GIL), all carrying a similar rank as L Brands.
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