Walgreen (WAG), Dollar General (DG) and Express (EXPR) all reported higher quarterly profits Tuesday morning, with Dollar General and Express both beating Wall Street consensus earnings estimates. With news like this, it may be beneficial for an investor to take a closer look at the retail sector.

Granted, Walgreen did not impress Wall Street, and shares fell more than 7%. Express and Dollar General, however, are reaping the benefits with Express trading up over 5% and Dollar General enjoying a 3% upswing. Both companies opened trading up in the markets Tuesday.

Even thought its more than 30 years old, Express continues to be a relevant specialty fashion retailer. In fact, it is ranked the number six player in the U.S., with 573 stores.

So this week, Express filed to go public. The company expects to raise $200 million.

Express focuses on a tough demographic; that is, women and men between the ages of 20 and 30. Yes, this is part of the so-called Gen Y crowd, which can be fickle. But it is also a large market and will continue to grow.

In an effort to create a more streamlined business model, Limited Brands Inc. (NYSE: LTD) announced today that it will cut roughly 10% of its corporate staff. This move comes as the company is reducing its exposure in apparel sales to focus on two areas where it sees the brightest future: lingerie and beauty products.

In addition to operating Express and Limited Stores, Limited Brands also operates Victoria's Secret and Bath & Body Works, and that is where they see the company moving in the future. According to Les Wexner, the company's chairman and chief executive, the company is looking to "streamline the company, enhance productivity and efficiency, and focus resources on the most promising growth opportunities".

Mega-trendy retailer Limited Brands (NYSE: LTD) announced the sale today of its Express Stores unit to private equity firm Golden Gate Capital, and in the same breath said it was evaluating the options for its Limited Stores segment -- the brand the company derives its name from. Despite the surface inscrutability of this decision (why sell the company's titular brands, the ones that are growing in gross profit while the company's other units are slipping bigtime?), it's one that analysts have been predicting for a while given that CEO Leslie Wexner has been hyping his Victoria's Secret unit as a "megabrand" upon which Limited's future prospects would hinge. Both Victoria's Secret and soap-and-lotion retailer Bath & Body Works, he insists, depend on products whose sales are more predictable than those of clothing.

While that's certainly true, it's also true that the profit margins for the cheap, trendy clothing sold by the company's Express and Limited stores are growing while the rest of the company's brands are falling. Today the company announced that it is revising its outlook for Q1 2007 downward significantly due to poorer-than-expected sales and merchandise margins at Victoria's Secret. After slashing the outlook from 25-28 cents a share to 12-14 cents a share, the stock was down significantly, $1.23 or 4.5% to $26.18, although after-market trading shows some nice recovery.

Perhaps the prediction isn't so easy, but the fact remains that the profit margins and same-store sales growth is a lot better on lemongrass- and magnolia-scented lotion than tank tops and skinny jeans. While Victoria's Secret and Bath & Body Works regularly record operating profit in the 20-30% range, a good quarter for Express and Limited stores hovers between 5% and 6%. Lingerie is sexy, and soap is way, way sexier -- and Limited Brands has picked this clean, sweet-smelling horse to ride for now.

As of February 3, 2007, Limited had 658 Express stores and 260 Limited stores; 1,326 stores in the Victoria's Secret unit (which includes the La Senza brand); and 1,546 Bath & Body Works stores.

One of my favorites, Limited Brands Inc. (NYSE: LTD,) has announced a direct stock purchase plan to provide an affordable means for investors to purchase their common stock. Its plan called BuyDIRECT is being facilitated by The Bank of New York and is available to anyone. An initial minimum investment of just $200 is required but after that, purchases as small as $50 may be transacted. A one time enrollment fee of $10 is applicable at time of first purchase.

The plan offers enough flexibility to be both interesting and useful. Shares may be held in book entry form or you may have stock certificates issued directly to you. Be advised that having hard copy stock certificates issued generally involves extra cost so you'll need to weigh that into your decision when choosing what to do. Additionally, Limited Brands offers you the option of reinvesting all or some of your dividends earned, which can have significant tax advantages. Alternatively, you may have your dividends paid directly to you. Holders of shares already in certificate are allowed to have any portion of those shares transferred to their plan account and are welcome to withdraw or transfer at any time.

Limited brands has a plan brochure available and it invites you to have a look. The plan will be available 24 / 7 through Bank of New York. This plan looks like an excellent way for a newbie investor like me to grab a chunk of some exciting stock. I see limited Brands as a good, solid company group and I think I'll start my portfolio with it. When that happens I'll be sure to let you know!

You may get current information on Limited Brand's stock performance here.

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