Limited Brands Inc. raised its quarterly earnings outlook on Monday due to stronger-than-expected performances at its Bath & Body Works and Victoria's Secret stores following the high-profile launch of a new bra line earlier this month.
Limited, whose chains include Express and Limited stores, said it now sees fiscal first-quarter earnings in the range of 11 cents to 13 cents a share. Its previous outlook was flat with last year's adjusted result of 9 cents a share. Both projections exclude a gain of 9 cents a share from the sale of Alliance Data Systems stock.
Analysts on average had expected the company to earn 9 cents a share in the first quarter, according to Reuters Research, a unit of Reuters Group Plc.
The company, based in Columbus, Ohio, said it expects comparable-store sales in the five-week period ending April 3 to show a percentage increase in the low double digits, compared with its previous expectation of a mid-single-digit increase.
The increased outlook comes after the company launched a new bra line in its Victoria's Secret stores earlier this month, backed by an advertising campaign featuring supermodel Tyra Banks. The new underwire full-coverage bra is available in extended sizes up to 40DD in trendy spring colors like yellow and orange.
Limited also said New York & Co., the former Lerner stores that Limited sold in 2002, repaid its $75 million subordinated note held by Limited Brands plus accrued interest of about $10 million, before its scheduled maturity of Nov. 26, 2009. Additionally, New York & Co. paid $20 million to purchase Limited Brands' warrants to acquire about 13 percent of New York & Co.'s common equity.
The note and warrants were part of the consideration Limited Brands received for the sale of New York & Co. Limited Brands said it expects to record a $45 million pretax gain related to these transactions in the first quarter. The company did not include the gain in its earnings forecast.
Limited Brands said it would extend its modified Dutch auction tender offer to buy back $1 billion of its common stock to midnight EST on March 26 from midnight EST on March 25.
Shares of Limited Brands fell 13 cents or 0.67 percent to $19.29 on the New York Stock Exchange.
