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Will L Brands’ Comparable Store Sales Growth Be a Major Driver?

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Nov. 17 2015, Published 2:29 p.m. ET

Net sales growth

L Brands (LB) has seen impressive top-line growth. A major reason for the growth has been its comparable store sales growth. It’s not wrong to say that for any retailer (XRT) (XLY), top-line growth fueled by organic growth is a highly positive sign for its future performance.

L Brands (LB) had a 4.0% comparable store sales growth in fiscal 2Q15. In the last five years, it has averaged a 6.0% comparable store sales growth annually, as you can see in the graph below.

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What’s been providing organic growth?

L Brands’ strong brand recognition has been a driver for its growing comparable sales. Victoria’s Secret and Bath and Body Works have a lot of loyal customers. Their innovation and newness in the assortment of goods have been increasing their dollar sales period-over-period.

The company recently estimated comparable sales for October for both its leading brands to be around 5% on a year-over-year basis. It has estimated September comparable sales to grow by 9.0%. It was a solid 6.0% in August.

Comparable store sales growth for peers

L Brands (LB) has been able to accomplish higher organic growth than its peers TJX Companies (TJX), Gap (GPS), Ross Stores (ROST), and Urban Outfitters (URBN), which have grown 2.0%, 0.0%, 3.0%, and 1.6%, respectively, in their last fiscal years.

 

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