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Limited Slips on Downgrade

Soleil Securities expresses concern about the retailer's Victoria's Secret chain.
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Limited Brands


shares slipped Friday after Soleil Securities Group downgraded the retailer based on concern over the performance of its Victoria's Secret chain.

Analyst Harry Ikenson lowered his rating of the Columbus, Ohio-based company to hold from buy, noting disappointing sales at Victoria's Secret. Over the past few years, the lingerie chain has been one of the company's strongest performers.

While Victoria's Secret's same-store sales, or sales at stores open at least a year, rose 8% in March, Ikenson said it was the fourth consecutive month the division missed an aggressive sales plan.

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"Importantly, merchandise margin was below plan and down significantly due to increased markdowns in store price offers, direct mail and a shift in the mix of business," he wrote. "Further, we believe the recent bra product relaunches lacked enough newness."

Limited Brands, whose other stores include Express and Bath & Body Works, reported an overall 8% rise in March comps on Thursday.

Ikenson lowered his first-quarter earnings estimate to 22 cents a share, down from a prior view of 26 cents. He also cut his second-quarter EPS estimate to 28 cents from 30 cents.

Ikenson expects second-quarter same-store sales growth of 4.5%, down from a previous forecast of 5.4%.

Shares of Limited Brands recently were trading down 57 cents, or 2.2%, to $25.75.