L Brands, Inc.’s (LB) sustained focus on cost containment, inventory management, merchandise and speed-to-market initiatives has helped it to stay afloat in a soft consumer environment. Moreover, the 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.
L Brands commands a market-leading position in the lingerie, personal care and beauty segments. We believe that the company’s innovations in merchandise and exclusive assortments have made it a popular name among consumers and set it apart from its peers. The company, with its operational efficiencies as well as innovative assortments, remains well positioned to capitalize on the same. This is evident from L Brands’ sales performance last year.
From Apr–Dec 2014, 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 5%. Comps increased 8% in April, 3% in May, 2% in June, 6% in July, 5% in August, 6% in September, 3% in October, 8% in November and 4% in December.
Given the current macroeconomic environment, monthly sales data for L Brands is also encouraging, reflecting steady growth. The company, within the span of Apr–Dec 2014, registered sales growth in the range of 3% to 9%, reflecting average growth of approximately 7%. L Brands registered sales growth of 9% in April, 4% in May, 7% in June, 8% in July, 9% in August, 9% in September, 3% in October, 9% in November and 5% in December.
L Brands continues to revamp its business by improving store experience, localizing assortments and enhancing its direct business. We believe these measures will help it to generate incremental sales and increase store transactions through a higher conversion rate. However, the competitive retail landscape and aggressive promotional strategy to gain market share may weigh upon margins.
L Brands currently carries a Zacks Rank #2 (Buy).
Other Stocks that Warrant a Look
Other favorably ranked stocks worth considering in the retail sector include G-III Apparel Group, Ltd. (GIII), sporting a Zacks Rank #1 (Strong Buy), Michael Kors Holdings Limited (KORS) and Lululemon Athletica Inc. (LULU), both carrying a Zacks Rank #2.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
To read this article on Zacks.com click here.
Get all Zacks Research Reports and be alerted to fast-breaking buy and sell opportunities every trading day.
Be the first to comment