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Banc of America Hikes Ratings on Three Apparel Retailers


Banc of America raised its investment rating on each of Ann Taylor (ANN), Intimate Brands (IBI), and Limited Inc. (LTD) to buy from market perform.

Analyst Dana Cohen says Ann Taylor's December same-store sales seem to be running better than expected. While promotional activity is certainly helping, Cohen says, the company is seeing improving customer response to new products, particularly a new transitional assortment. Cohen thinks December same-store sales can beat the company's minus 7%-8% plan. She adds that operating margins are extremely depressed, but there is high leveragability to Ann Taylor's model. She raised her $0.25 fourth-quarter EPS estimate to $0.27.

Cohen upgraded Intimate Brands' rating based on improving momentum at its Bath & Body Works unit, and continuing strength at Victoria's Secret. With Intimate accounting for 97% of Limited's valuation, and the apparel business likely tracking near to plan, she also raised Limited's rating.


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