L Brands regains Zacks’ confidence

“We believe that Limited 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 provide long-term growth opportunities.”

Analysts at Zacks have wanted to close the year reiterating their trust on L Brands, Inc, on which they hold a ‘neutral’ recommendation. Shares at the apparel retailer have a target price of 64 dollars and a Zacks Rank #3 (‘Hold’).

With regards to further reasons for the analysis firm’s trust on L Brands in the mid-term, Zacks reiterated their position in a note to investors issues after Christmas: “Limited 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 and sets it apart from peers.”

The company’s strength was well evident from its third-quarter fiscal 2013 results, wherein earnings of 31 cents a share came ahead of the Zacks Consensus Estimate of 28 cents and rose 19 percent from the prior-year period.

Limited Brands now forecasts earnings in the range of 1.67 to 1.82 dollars for the fourth quarter and between 3.07 and 3.22 dollars per share for fiscal 2013.

“However, in the near-term, margins are likely to remain muted on account of probable pressure on merchandise margins. Going forward, management expects gross margins to shrivel year over year both for the fourth quarter and fiscal 2013. Moreover, stiff competition and erratic consumer behaviour still remain major causes of concern,” Zacks analysts conclude.