Will L Brands (LB) Strategic Initiatives Bring Rewards?
We believe that L Brands, Inc.’s (LB) 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 well and are 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 remains popular among consumers and sets it apart from its peers. The company, with its operational efficiencies as well as new and innovative assortments, remains well positioned to capitalize on the same. This is evident from its positive earnings surprise history. In the trailing 7 quarters it has surpassed the Zacks Consensus Estimate by an average of 5%, including 10% for the last concluded quarter.
The company posted third-quarter fiscal 2014 earnings of 44 cents a share that surpassed the Zacks Consensus Estimate of 40 cents and surged 42% from the prior-year earnings of 31 cents on the back of higher sales. This prompted management to raise its full-year earnings projection.
Management now forecasts earnings in the range of $1.61 to $1.71 per share for the fourth quarter and between $3.21 and $3.31 per share for fiscal 2014, up from $3.03 to $3.18 forecast earlier. The current Zacks Consensus Estimate for the fourth quarter and fiscal 2014 are $1.72 and $3.32, respectively.
L Brands continues to revamp its business by improving store experience, localizing assortments and enhancing its direct business. We believe that these measures will facilitate it to generate incremental sales and increase store transactions through a higher conversion rate.
Currently, the stock carries a Zacks Rank #2 (Buy).
Other Favorably Ranked Stocks
Other favorably ranked stocks worth considering in the retail sector include Citi Trends, Inc. (CTRN), American Eagle Outfitters, Inc. (AEO) and Foot Locker, Inc. (FL), all carrying a Zacks Rank #2.
Read the Full Research Report on AEO
Read the Full Research Report on FL
Read the Full Research Report on CTRN
Read the Full Research Report on LB
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