Digging Into L Brands' Big Beat

In a report published Thursday, Wunderlich Securities analyst Danielle McCoy maintained a Buy rating on

, with a price target of $112. The company announced a March comp of +9 percent, as compared to negative comps of 1 percent last year. The performance beat the +6 percent estimate and management's guidance of mid-single-digit comps. About 3 to 4 points "were attributed to the earlier Easter season in 2015, shifting from April into March," McCoy said. In the report Wunderlich Securities noted, "The company continues to win with its powerful product stories, strong lifestyle appeal, captivating/multi-dimensional marketing approach, and lean inventory positions, all of which are driving greater full-price sell-through and merchandise margin gains YoY across the board." VS comp came in at +9 percent, versus negative comp of 1 percent last year and merchandise margin was up YoY. "Frequent flow of product newness at VS and PINK has been (and continues to be) the key to the strong performance, especially in a depressed retail/mall environment," the analyst wrote. VS Direct sales were down 2 percent, as compared to 1 percent growth last year. "The aggressive approach to clear non go-forward apparel categories continues to weigh on the top line, despite high-teens growth in core categories." There was a mix shift to higher margin products, which significantly boosted merchandise margins. Bath & Body Works comp was at 9 percent, as compared to negative comps of 2 percent last year. "Despite cold temperatures telling the consumer otherwise, apowerful mix of new and fresh Hawaiian scents and the Easter Holiday changed the sell-through mood at BBW," the report said. Inventories per square foot declined by 10 percent YoY. This was on account of "continued disciplined inventory management" rather than a result of the WC port slowdown. For April, L Brands guided to comps of flat to down low-single digits (versus +8 percent last year). This was expected, with the shift in the Easter Holiday accounting for about 5 points. "We are not surprised and believe given the strong momentum in all three brands that this could prove to be conservative," McCoy commented. The company "continues to fire on all cylinders" with significant cost controlled, tight management of inventories and a frequent flow of "new and exciting product stories," the report said, while adding, "We expect momentum to continue across all three aspirational brands and believe as square footage in NA grows and international penetration increases, it will continue to drive both top- and bottom-line results."