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March Sales Rise at Ross and L Brands

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Both Ross (NASDAQ: ROST  ) and L Brands (NYSE: LB  ) -- formerly Limited Brands -- reported stronger-than-anticipated March sales today, pushing the stocks up 7% and 5%, respectively, at midday. Both companies had strong points in their releases, and both seem set for a strong quarter, based on the sales so far this year. Ross went as far as to raise its quarterly guidance on the news.

Strong sales in Canada
L Brands' biggest success came from the increase it saw at its La Senza brand stores. The company had been fighting weak sales through 2012, and in March it saw a 7% increase in comparable sales at La Senza. Over the last year the company has focused on getting rid of underperforming stores at the Canadian chain, and last year the company shuttered 68 locations. 

Helped by that 7% rise, L Brands posted an overall comparable sales increase of 3% in March. La Senza was actually the strongest brand in March. But a 9% drop in comparable sales online pulled the overall growth level down. Most of that decrease came from Victoria's Secret sales, which were pulled down by a fall in apparel sales.

Discussing the results, management said that they were expecting a similar increase in April, in part from a shift in the Easter holiday, which should have a positive impact on results. Overall, L Brands -- which really needs to hurry up and choose a new name -- looks well set up to post a solid quarter.

Ross raises forecast
Making the success at L Brands look tame, Ross went as far as to increase its earnings projection. The company said that it now expects earnings to be "slightly above" $1.04 per share. That increase is based on the 2% comparable sales increase in March. The company had been forecasting a 1% to 2% decline in sales.

Like L Brands, Ross is expecting a positive impact from the early Easter, with all the store closings coming in March, instead of April. That means that the company is expecting an even bigger increase in April, forecasting a 5% to 6% increase in comparable sales this month.

The bottom line
Both L Brands and Ross are looking set up for a good year. The early increases in comparable sales should help the brands gain traction with consumers before moving into the second half of the year. I'll be watching for 5% or more increases at both of these companies over the next few months.

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Related Tickers

8/26/2016 4:02 PM
LB $76.26 Down -0.67 -0.87%
L Brands CAPS Rating: ****
ROST $63.26 Down -0.15 -0.24%
Ross Stores CAPS Rating: ****