Intimate Apparel Mobile Sales Spike Around Valentine’s Day

Limited Brands’ (NYSE:LTD) February sales are likely to benefit from the sharp rise in intimate apparel mobile sales during the week leading to Valentine’s Day. In a recent report published by IBM (NYSE:IBM), the company reported that intimate apparel m-commerce sales grew by 17.7% during the week. ^[1] Additionally, intimate apparel was the highest growth category in percent of site traffic from mobile devices, with the figure growing to 24% compared to last year’s 8.3%. Limited Brands is a specialty apparel retailer focused on lingerie, beauty and personal care products competing with the likes of Abercrombie & Fitch (NYSE:ANF), American Eagle Outfitters(NYSE:AEO), Ann (NYSE:ANN) and Gap (NYSE:GPS).

See our full analysis of Limited Brands

Implication of high m-commerce sales for Limited:

One of the biggest trends evident during 2011 holiday season was the arrival of m-commerce as a credible platform for shoppers. In its holiday 2011 report IBM reported that m-commerce sales doubled compared to last year, with 14.6 % of all online sessions on a retailer’s site getting initiated from a mobile device as compared to 5.6 % in 2010. ^[2] Limited’s digital media campaigns such as Victoria’s Secret Facebook Campaign were a big hit among mobile shoppers and contributed handsomely to company’s success in holidays 2011.

See our article: Limited Gets a Lift from Victoria’s Secret Facebook Campaign This Holiday Season

Taking a cue from Limited’s December and January sales results, we expect Victoria’s Secret to continue its strong run in February as well. We believe m-commerce sales should be a major contributor to Victoria’s Secret direct revenues this month. According to Trefis estimates Victoria’s Secret Direct & International segment contributes 22% to Limited’s stock price.

Additionally, an increase in m-commerce sales should also reflect as an improvement in Limited’s overall margins. As direct sales carry higher EBITDA margins compared to store sales, an increase in contribution of direct sales to the net sales will imply an improvement in Limited’s margins.

Understand How a Company’s Products Impact its Stock Price at Trefis

1. IBM publishes report on m-commerce sales in the week leading to Valentine’s Day, Source: IBM Blog [↩]
2. IBM reports holiday 2011 online retail sales, Source: IBM [↩]