NEW YORK (TheStreet) -- Shares of L Brands Inc. (LB) are up 1.63% to $64.73 in mid-afternoon trading on Thursday, after the company reported a 9% increase in net sales to $765.3 million for the month of August.
Net sales for August 2013 were $704.7 million.
Comparable store sales for August grew 5% compared to last August.
Analysts polled by Thomson Reuters expected a 2.7% rise in store sales.
Wharton School marketing professor David Bell tells TheStreet's Brittany Umar retailers should rely less on discounts and sales for growth:
The apparel retailer, which operates the Victoria's Secret and Bath & Body Works brands, reported a 6% rise in net sales for the 30 weeks ended August 30, 2014 to $5.83 billion, from $5.48 billion for the 30 weeks ended August 30, 2013.
Comparable store sales increased 3% for the 30 weeks ended August 30, 2014.
TheStreet Ratings team rates L BRANDS INC as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:
"We rate L BRANDS INC (LB) a HOLD. The primary factors that have impacted our rating are mixed some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, growth in earnings per share and increase in net income. However, as a counter to these strengths, we find that the company's profit margins have been poor overall."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- LB's revenue growth has slightly outpaced the industry average of 0.5%. Since the same quarter one year prior, revenues slightly increased by 6.3%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- L BRANDS INC's earnings per share improvement from the most recent quarter was slightly positive. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, L BRANDS INC increased its bottom line by earning $3.05 versus $2.54 in the prior year. This year, the market expects an improvement in earnings ($3.19 versus $3.05).
- The net income growth from the same quarter one year ago has exceeded that of the S&P 500, but is less than that of the Specialty Retail industry average. The net income increased by 5.6% when compared to the same quarter one year prior, going from $178.00 million to $188.00 million.
- The stock price has risen over the past year, but, despite its earnings growth and some other positive factors, it has underperformed the S&P 500 so far. Looking ahead, our view is that this company's fundamentals will not have much impact in either direction, allowing the stock to generally move up or down based on the push and pull of the broad market.
- 39.05% is the gross profit margin for L BRANDS INC which we consider to be strong. Regardless of LB's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 7.02% trails the industry average.
- You can view the full analysis from the report here: LB Ratings Report
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