Limited Sees a Drop in Profit
Limited Inc. and its Intimate Brands unit reported lower profit Thursday for their fiscal second quarter and warned that slowing sales will result in weaker-than-expected earnings for the third quarter and full year.
Shares of Limited fell $1.27 to $13.93 on the news, and Intimate Brands fell $1.22 to $13.39. Both trade on the New York Stock Exchange.
Limited, whose apparel chains include Limited and Express, said net income for the quarter ended Aug. 4 fell to $34.4 million, or 8 cents a share, from $77.6 million, or 17 cents, a year ago, matching analysts’ forecasts.
Sales declined 4.2% to $2.19 billion. Same-store sales fell 5%, and the chain had to cut prices to get rid of spring and summer clothing.
For the third quarter, Limited said it expects to break even, compared with a profit of 11 cents a share in the year-earlier period. The average estimate of analysts polled by Thomson Financial/First Call was 9 cents.
Sales at stores open at least a year are forecast to decline in the third quarter at a mid-single-digit percentage rate at Limited, and drop at a mid-to-high-single-digit rate at Intimate Brands, officials said in a conference call with investors and analysts.
Limited’s results were pulled down by Intimate Brands’ drop in profit, to $68.9 million, or 14 cents a share. Intimate Brands, which operates the Victoria’s Secret and Bath & Body Works chains, said sales fell 3.4% to $1.15 billion and same-store sales dropped 5%.
The companies said per-share profit this year will drop significantly, as both Limited’s and Intimate Brands’ same-store sales will fall at a low-single-digit rate.
Limited had a net income of 96 cents a share last year and was expected to earn 86 cents this year, according to First Call. Intimate Brands had net income of 87 cents, and the First Call forecast was 80 cents.
Intimate Brands said profit will break even this quarter. It had net income of 9 cents a share in the year-earlier third quarter and was expected to earn 6 cents, according to First Call.
Both retailers are based in Columbus, Ohio.
Other retail industry earnings, excluding one-time gains or charges unless noted:
* Barnes & Noble Inc. said its second-quarter net loss, including certain one-time items, narrowed to $1.69 million, or 3 cents a share, from $8.65 million, or 13 cents, a year ago. Excluding the items, the No. 1 book retailer said it broke even, beating the 12-cents-a-share loss that analysts were expecting. Sales jumped 14% to $1.05 billion, boosted by bookstore sales and a rapidly expanding video game business.
Barnes & Noble said it plans to file for a public offering of its GameStop video game and entertainment software business, citing the unit’s strong performance and conditions in the video game marketplace.
* Borders Group Inc. reported a fiscal second-quarter profit of $100,000, contrasted with a year-ago loss of $1.6 million, as it sold more books at its namesake stores and cut costs. Per-share results were break-even, compared with a loss of 2 cents a year ago. Analysts were expecting a loss of 1 cent, according to Thomson Financial/First Call. Sales rose 5.9% to $739.8 million.
* Men’s Wearhouse Inc., a discount retailer of men’s suits and casual wear, reported a drop in second-quarter profit and lowered its forecast for full-year earnings because of slower-than-expected sales. Earnings in the latest quarter fell 36% to $10.3 million, or 25 cents a share, matching analyst expectations. Sales edged up 0.9% to $297.2 million.
