Valentine's Day sales could lend Intimate Brands' stock a little support.
While most clothing retailers are bidding a misty-eyed farewell to 1999's banner Christmas shopping season, for some lucky companies the fun's not over yet.
In particular, Intimate Brands' (NYSE:IBI - news) Victoria's Secret lingerie chain is poised to benefit from a different big winter holiday -- one that's more about stripping down than dressing up.
Valentine's Day is right around the corner, and the inevitable sales rush may give Intimate Brands' stock a boost, creating momentum that can be sustained past this season by the company's plans for a new retail line and further Internet expansion.
The company's share price has fallen nearly 10 points since a December 31 peak of 43 1/8. That's because investors bought in anticipation of strong Christmas sales, says Hilliard Lyons analyst Tony Howard.
``Now it's January and they're selling,' he says. Like its parent company, The Limited (NYSE:LTD - news), Intimate Brands is in a profit-taking dip. That's driven the stock down to what Howard says is an appealing level.
``We still believe they can make $1.14 (per share) on fourth-quarter earnings,' he said. Hilliard, Lyons has a ``buy' rating and a 12-month price target of $48 on the stock. ``We're very bullish on Intimate Brands.'
As for the second quarter, Howard says the company is up against tough competition after a very successful year-ago quarter. But he thinks Victoria's Secret can pull it off again, and for good reason.
Call it the February Effect
``Of course I've bought lingerie for Valentine's Day. And I'm excited about going out and finding some 'interesting' lingerie this year,' laughs Elizabeth Meehan, a 27-year-old analyst with a New York mutual fund company. ``It makes the holiday that much more fun and special.'
She's not alone. Women's magazines like Cosmopolitan and Glamour fill their February issues with directives to readers to dress up - and down - for their men. They know Valentine's Day is a time when people traditionally think about looking sexy for their mate, as one magazine editor put it.
The lingerie industry is given even more enthusiastic help from those magazines' male counterparts: Whole issues of Maxim and Gear seem devoted to instructing twenty-something guys on the fine art of getting women into something a little less comfortable.
It's working, the company says. Last year February sales at Victoria's Secret stores were up 11%. The company won't say what it expects for this February, but it's projecting a 7% to 9% jump for in-store sales in January from the year-ago quarter. The company is ``right on plan for the year,' says an investor relations executive.
``The second-busiest holiday of the year after Christmas is Valentine's Day,' says Victoria's Secret public relations manager Marnie McLaughlin. She says the January semi-annual sale - which just ended -- clears lots of inventory out of the store and makes way for new product launches and a selection of lingerie in would-you-be-mine reds and pinks. This year the store will launch a new ``Desire' demi-bra and continue pushing the successful Christmas-time launch of the Dream Angels Heavenly fragrance.
Sales are helped by men looking to give the gift that keeps on giving. ``Our stores are packed at this time of year. And men tend to be last-minute shoppers,' McLaughlin says, adding that sales peak the day before and Valentine's Day.
Beyond Valentine's Day
But the company has more plans for after the big day that may make the stock a good long-term buy. Intimate Brands' continues to enjoy growth fueled by the company's savvy use of the Internet. Remember last year when Victoria's Secret's live online Valentine's fashion show drew so many viewers the company's site melted?
Well the site's just fine now, thank you very much. Thriving in fact, thanks to a happy marriage of product and medium. VictoriasSecret.com saw a sales increase of around 800% in December, as shoppers chose to buy holiday lingerie in the privacy of their homes rather than in mall stores.
For Intimate Brands, e-commerce is an even more discreet version of the strategy that's made the Victoria's Secret catalogue the most fought-over piece of mail in most American households.
Intimate Brands has leveraged its online popularity by keeping service standards high, according to an early January report from Robertson Stephens analyst Janet Joseph Kloppenburg in which she maintained the investment bank's ``buy' rating on Intimate Brands' stock. ``The company's Internet site\205has maintained its strong customer service and order fulfillment capabilities, a distinction among Internet retailers,' she wrote.
Offline expansion continues as well. Intimate Brands' newest chain is the White Barn Candle Company. Several of the candle stores are already operating and as many as 50 may come in the next year. Between Victoria's Secret, Bath & Body Works, and the new line, Intimate Brands hopes to soon be accessorizing every aspect of your love life - from scent to clothes to the appropriate lighting.
All of which makes Intimate Brands stock some pretty sexy stuff |
