Limited Brands Q3 Profit, Sales Edge Down, Still Ahead of Forecast

Model preview from Victoria’s Secret annual fashion show, scheduled for 10 p.m., Dec. 4, on CBS.

Columbus, OH—Limited Brands Inc. reported Wednesday that its third quarter profit and sales slipped compared to last year, but the figures still beat analysts’ average estimate.

For the quarter ended Oct. 27, the parent to Victoria’s Secret, La Senza and Bath & Body Works posted net income of $73.4 million, or 25 cents a share, compared with $94.3 million, or 31 cents a share, in third quarter 2011.

Net revenue fell 5.7% to $2.05 billion. The company made $2.17 billion in its third quarter last year which included $258.7 million gain from the sale of its third party apparel sourcing business.

Analysts’ average estimate expected Limited to earn 24 cents a share on sales of $2.05 billion.

Total comparable store sales grew 5% compared with 8% in the second quarter and 9% in the prior year quarter.

By division, sales at Victoria’s Secret Stores & Victoria’s Secret Beauty increased 7% to $1.0 billion, with comp sales up 6%. At Victoria’s Secret Direct sales fell 2% to $270.6 million. Total Victoria Secret sales grew 5% to $1.2 billion. Bath & Body Works & The White Barn Candle Co.’s total sales rose 7% to $538.4 million, with a 5% increase in comps. However, comps at La Senza edged down 2%, whereas sales tumbled 11% to $82.9 million.

Adjusted gross profit rose 6% to $835.6 million, aided by a 12% decline in cost of goods sold, buying and occupancy. Gross margin widened 470 basis points to 40.8%.

Looking ahead, Limited Brands raised it full year earnings forecast to $2.78 to $2.93 a share, up from its previous estimate for $2.73 to $2.88. For fourth quarter, the company expects $1.62 to $1.77 a share. Analysts’ consensus expects $2.90 for fiscal 2012 and $1.76 for fourth quarter.

In other news, Limited’s board of director authorized the repurchase of up to $250 million in stock, which includes $49.6 million remaining under the previous $500 million program.


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