The Wall Street Journal [subscription required] details some fascinating research on how activities in a CEO's private life affect his or her company's profitability or stock price. The most useful idea here is that investors can use Google Inc.'s (NASDAQ: GOOG) Google Earth to spot short selling opportunities.

One aspect of this research that did not surprise me was that if the CEO builds a huge home -- greater than 10,000 square feet -- the company's stock price declines. I have long noticed that when a company builds a huge new corporate headquarters building or names a sports stadium after itself, trouble often follows for investors in its stock. The reason for this link? The CEO is more focused on personal glorification than on expanding profits.

But what I found surprising and intrusive was that deaths in a CEO's family influence company profitability, according to a study by Danish researchers of 75,000 companies there. Here's the post-event change in return on assets of various deaths in a CEO's family:

Monday July 9

• The Chicago Board of Trade (NYSE: BOT) and Chicago Mercantile Exchange Holdings Inc (NYSE: CME) to hold a special shareholder meeting in Chicago about merging at 4pm.
• Take-Two Interactive Software (NASDAQ: TTWO) to hold a business update at 4:30pm.
• Alcoa Inc (NYSE: AA) to report Q2 earnings; conference call at 5pm.

Tuesday July 10

• Electronic Entertainment Expo, or E3, to be held from July 10-July 13 in Santa Monica, California.
• The Home Depot Inc (NYSE: HD) to release a 2007 Sales Update at 9am.
• Sealy Corporation (NYSE: ZZ) to report Q2 earnings; conference call at 5pm.

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.

Will players in the specialty retail field bring up solid March sales results this week? Who knows, but analysts expect this and, you know, analysts are always right (well, not exactly). At issue here is the expected strength of March sales in the specialty retail sector, reflecting a sales shift from April due to an earlier Easter. Who may suffer here? Specialty retailers of clothing, that's who.

OK, so what does that mean for April sales and beyond? A sour entry into late spring, perhaps? Who's in the cross-hairs of analysts in this sector? Try retailers like Talbot's (NYSE: TLB), Chico's FAS (NYSE: CHS), and Limited Brands (NYSE: LTD). Throw on that pile companies like Abercrombie & Fitch (NYSE: ANF), which may have seen lower sales due to bottoms (yeah, the "pants" kind) during this season shift that's happened in the last few weeks.

And the good news? While retailers like Pacific Sunwear (NASDAQ: PSUN), Hot Topic (NASDAQ: HOTT) and American Eagle Outfitters (NYSE: AEO) may have an above-average spring, sales are expected to slump over the summer season. Adjust positions accordingly I guess? Heh -- seasonality is the name of the game in clothing and much of specialty retail. The companies that can predict and adjust product lines as fast as possible are the winners.

Disclosure: I own HOTT shares as of 4-11-07.

On February 28, 2007, Limited Brands (NYSE:LTD) reported respectable results for the year ending February 3, 2007. The press release indicates that year to year growth was at least satisfactory. Earnings per share were reported at $1.68 as compared to $1.62 for the previous year. There have been changes in LTD's inventory valuation accounting which you'll also need to consider. Net income before the cumulative affect of accounting changes was $675.0 million as compared to $666.4 previous year. Also to be considered is the fact that 2006 totals are based on a 53 week year whereas 2005 numbers are based on one week less than that.

Limited Brands reports a same store sales increase of 7% year over year, using a 53 week benchmark for both years. When excluding that 53rd week and with an adjustment for gift card breakage (cards with little expectation of redemption), the stated increase in same store sales is 9%.

Limited Brands has adjusted guidance for first quarter 2007 downward from the upper single digits towards the mid to lower single digits for comparable store sales due in part to extreme weather conditions which they state had negatively affected the usual Valentine's Day sales spike in both Victoria's Secret stores and also at Bath and Body Works. LTD guidance suggests 4% to 13% EPS growth for 2007 for total EPS in the range of $1.75 to 1.90.

Limited Brands share value is holding up respectably in the face of the current market down turn. For my previous predictions regarding the expanding bear market please read here and here and here.

Limited Brands, Inc. (NYSE:LTD) successfully tendered and executed an offer to acquire all outstanding subordinate voting shares of La Senza Corporation, a leading apparel specialty retailer internationally and in Canada. According to a Limited Brands press release, La Senza Corporation owns and operates 326 La Senza Lingerie, La Senza Express, La Senza Spirit and La Senza Girl stores throughout Canada. Additionally, 341 La Senza and La Senza Girl stores are operated in 34 other countries in the world through corporate licensing and co-operation agreements.

La Senza subordinate voting shares outstanding were purchased for $48.25 per share for an approximate total of $609 million USD. It is reported that 14,202,648 subordinate voting shares, or 98.9% of total applicable voting shares were deposited to the share purchase offer. Limited Brands shall immediately proceed to acquire all remaining shares which were not deposited to the offer.

On February 2, 2007 Limited Brands announced their regular quarterly dividend of $.15 per share to become payable on March 16, 2007 to shareholders vested as of March 01, 2007. This marks the 129th consecutive quarter for which Limited Brands has paid a dividend.

Gary E. Sattler intends to take a position in Limited Brands shares this year.

Please pardon me while I get a bit whimsical here. I get a prose bug from time to time. You must forgive me if this is light duty reading for such a well read crowd but I'm just having fun!
Submitted for the approval of our readers:

If I had bet upon the game and chance did let me win, let's say my take was twenty grand and now let us begin. I'd take ten grand right off the top and invest in GE (General Electric Company (NYSE:GE)). A stalwart and diverse keystone is paramount to me.

I'd next place 4k in the hands of Limited Brands (NYSE: LTD) for care. It's hard to take a loss, my friend, in sexy underwear. And candles bright and fragrances and things the ladies like, assure me that our LTD is on an upward hike.

Two grand I'd sure send Wal-Mart Stores, Inc.'s (NYSE:WMT) way, though kicked around a lot. I just can't seem to shake the truth they'd be a safer spot.

Riddle: How is Jim Cramer like Daniel Boone?

Answer: They are both required to wrestle a bear now and then ...(pronounced, rassle a bar).

I'm going on record right now. It is my opinion that the bear is stalking Wall Street. A big, nasty, ugly, smelly, sluggish old bear is lurking around the corner, and he's going to park his fat, furry butt right on the DJIA. I don't like it any more than you do, but as I've said before, I can't help but see what I see. I see very few bright glossy gadgets slated for release in the electronics/technology sector. I see retail sales flagging. I see hopeless attempts to prop up crude oil prices. I see home sales and construction in a blue funk. I see satellite communications saturated along with their associated markets. I see banks raising their service fees to augment flat-lined profits. I see managerial bloat. I see speculators scurrying to and fro trying to grasp a slice of any 6% or better spike. I see a Democratic Congress damning the consumer by trying to place an increased capital drag on energy producers, (yeah, tax the oil companies ... that'll help the little guy, you idiots). I think it's time to button up and hunker down with some of your hard-earned profits. I think it's time to lock into some value positions that portion of capital that you don't consider to be a gambler's share of your wealth.

Is there a bear market coming? I do most assuredly think so. I select a quote from Jim Cramer: "If you're in the market, you have to know there's going to be declines. And they're going to cap, and every couple of years you're going to get a 10 percent correction ... They're gonna happen. When they're gonna start, no one knows. If you're not ready for that, you shouldn't be in the stock market."

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.

You may read my other articles here .

Yesterday, Brian White blogged about unused gift cards. Millions of people receive gift cards during the holidays, and many of these cards end up sitting in purses, pockets and desk drawers, unspent. This represents an enormous profit for retailers, who keep the payments for the cards without having to part with any merchandise. What an easy way to make money!

According to a recent AP report, Best Buy (NYSE:BBY) claimed $43 million in profit from gift cards sold but not used in two years or more. Limited Brands (NYSE:LTD), the owner of Victoria's Secret, claimed $30 million.

Gift cards are very popular. The National Retail Federation estimates that retailers will sell over $25 billion in cards this year. Somewhere between 5 and 25 percent of the cards will not be used. Interestingly, rates of use vary according to the kind of store the gift card is from. Cards for basics, such as food, get used quickly and in full. Less essential needs such as entertainment have higher rates of disuse.

I hate the idea of just giving money to retailers -- although I know there are a few gift cards in my desk drawer. So let's all make a vow to use those gift cards that come in this year. Make the stores earn their money!

It is without a doubt that Limited Brands (NYSE:LTD) is having an outstanding year. Year to date operating income has approximately doubled over last year and same store sales were showing a 7% increase just prior to November. I'm expecting that year end figures will be right on track with the previous three quarters.

What brought Limited Brands to my attention was their announcement of a new initiative to support the movement to protect endangered forests. It's only right that corporate America shows the government they can do the right thing without it being legislated against them. I live in a region of "working" forests. I have seen responsible forestry practices in action. I've watched as Michigan, Minnesota and Wisconsin implemented far-reaching and effective sustainable forestry practices. We love our trees, we work them and we protect them. Just last summer there was selected harvesting of mature trees right across the road from my home. I don't know how many thousands of dollars in revenue and income was generated by the project but I'll tell you what, if you stand at the end of my driveway, you can't even tell they were in there.

This announcement by Limited Brands should please environmentalists and the forest products industry alike. Limited Brands has pledged to maintain a high level of post-consumer material in their publications and has vowed to work with their suppliers to find workable options for acquiring the virgin material which quality paper production requires. Based on my experience in the field I think they and their suppliers shall find no shortage of viable options. I think this situation should serve to highlight the movement by corporate America towards environmental sustainability. The more we approve the right moves by our manufacturers, the more they will choose to make those right moves. My thanks to Limited Brands for exhibiting this high level of eco-responsibility.

Oh, and please keep the Victoria's Secret catalogs coming, my wife loves them.

The deals and general craziness of Black Friday have already been well-covered in this space, so I thought it might be interesting to turn your attention to the actual stock reactions. My intentions were simple enough (but aren't they always?): grab a list of retail stocks and calculate the returns from the close on Wednesday, November 22, through this morning. Sorting the list would give a quick (but early) overview of how the Street was reacting to the "day."

I have ample data manipulation tools at my disposal, so I figured this to be an easy task. What I didn't count on was not being able to find what I considered to be a satisfactory list of retail stocks. The lists I found were either too broad or too narrow. I wanted the usual suspects like Best Buy (NYSE:BBY), Wal-Mart Stores, Inc. (NYSE:WMT), and Gap (NYSE:GPS), while also picking up some of the smaller players like Bebe Stores (NASDAQ:BEBE) and Chico's FAS (NYSE:CHS). Additionally I wanted to capture some of the brands like Crocs (NASDAQ:CROX) and dELiA*s (NASDAQ:DLIA), while excluding consumer goods producers and fast food restaurants.

Unable to find a list that suited my (admittedly arbitrary) desires, I began to handpick names and compile a list of 72 stocks. The graph below shows the top and bottom performing stocks through noon today.



Blue Nile (NASDAQ:NILE), Pier One (NYSE:PIR), and Coldwater Creek (NASDAQ:CWTR) are the weakest stocks, while Lowe's (NYSE:LOW), American Eagle Outfitters (NASDAQ:AEOS), and Jo-Ann Stores (NYSE:JAS) are the strongest.

As you can infer from the graph, the bulk of the returns are flat to lower as two of the "best performing" stocks, Aeropostale (NYSE:ARO) and Limited Brands (NYSE:LTD), show a loss. In other words, buying just ahead of Black Friday doesn't seem like it would have been a good short-term trading strategy. Going forward though, I would expect to see some stocks distinguish themselves and separate from the pack. With my list now created (and saved!) it should be much easier to track. If there is interest in this, I can post periodic updates.

Nick Perry is an analyst with Schaeffer's Investment Research.

MOST NOTEWORTHY: Onyx Pharmaceuticals (ONXX) and CommVault (CVLT) top the list of today's initiations.

• Citigroup started Onyx Pharmaceuticals, Inc. (NASDAQ:ONXX) with a Hold rating and $22 target as the broker expects shares to be range bound until clarity is given into the company's cancer indications. A bunch firms initiated recent IPO CommVault Systems this morning, including IPO managers First Boston and Goldman Sachs.
• Goldman started shares of CommVault Systems, Inc. (NASDAQ:CVLT) with a Buy and $21 target, and added shares to its prestigious Conviction Buy List, as they expect the company to benefit from relationships with DELL and HDS. First Boston is more lukewarm on the name, starting shares with a Neutral rating and the same target of $21. Other firms' imitating the stock this morning was Merrill Lynch with a Buy, and Thomas Weisel and RBC Capital with Outperform ratings.

OTHER INITIATIONS:

• Caris initiated three retail names this morning: American Eagle Outfitters, Inc. (NASDAQ:AEOS), Limited Brands, Inc. (NYSE:LTD) and Men's Wearhouse, Inc. (NYSE:MW). The broker favors Limited and Men's Wearhouse with Above Average ratings, thinking inventory and cost management can bring margin expansion. Caris is less excited about American Eagle, starting shares with an Average rating, believing shares are fairly valued at current levels.

Analyst summaries provided by TheFlyOnTheWall.com (subscription required).