Limited’s Net Income Rises 20% Amid a General Retail Downturn

Limited Inc. reported a 20% jump in second-quarter earnings, in line with Wall Street estimates, but it said many of its store brands fell short of its expectations.

The apparel retailer’s net income rose to $77.6 million, or 17 cents a share, from $64.6 million, or 14 cents, a year earlier. Sales rose 4% to $2.26 billion.

Limited said its Express and Victoria’s Secret divisions performed up to par, but other brands, such as Structure, Lane Bryant and Limited, did not do as well. The company owns 84% of Intimate Brands Inc., the corporate parent of Victoria’s Secret.

The company said it may have skewed its fashions too much toward younger consumers, a mistake made this year by many prominent U.S. retailers, including Gap Inc., which earlier this month saw a drastic dip in its second-quarter results and warned that the third quarter might follow suit.

Still, analysts said Limited did well considering that the retail environment has been relatively dismal. Higher interest rates, booming gasoline prices and unusually cool weather in many parts of the country have dampened sales for U.S. retailers for much of the first half of the year.

The company, which for the past few years has been shifting all of its Lerner stores to carry New York & Co. brand clothing, said it plans to change store names, design, inventory and marketing in the three cities to all carry the New York & Co. brand name.

Chief Financial Officer Ann Hailey said Limited is projecting a “modest improvement” in third-quarter operating income and is comfortable with analysts’ consensus earnings estimates of 11 cents a share for the quarter, as compiled by First Call.

Limited’s earnings for the year-ago second quarter were adjusted to exclude a one-time charge of $13.1 million, or 2 cents a share, for the August 1999 spinoff of TOO Inc., which operated as the Limited Too girls’ clothing chain.

Shares of Limited closed up 6 cents at $19.25 on the New York Stock Exchange. Intimate Brands closed up 63 cents at $16.75, also on the NYSE.

At a Glance

Other retailer earnings, excluding one-time gains or charges unless noted, include:

* Barnes & Noble Inc. said it had a fiscal second-quarter loss of $8.46 million, or 13 cents a share, contrasted with profit of $23.5 million, or 33 cents, a year ago, as it invested more money in Internet operations and had a loss at its video game unit. Analysts expected a loss of 4 cents. Profit in the traditional book business jumped 46% on a 9.6% rise in sales. Sales at stores open at least a year rose 6.6%, helped by sales of J.K. Rowling’s book “Harry Potter and the Goblet of Fire.”

Barnesandnoble.com Inc., a separately traded company, said its loss widened to 31 cents a share from 17 cents as it spent more on book promotions and new services on its Web site. Barnes & Noble’s portion of that loss was 18 cents a share.

* Barneys New York Inc. said its net loss for the second quarter narrowed to $3.6 million, or 26 cents a share, from $7 million, or 56 cents, a year ago. The luxury retailer said net sales grew 9.8% to $84.3 million, while same-store sales jumped 11.1%.

* Sharper Image Corp. reported a better-than-expected profit of $1.18 million, or 9 cents a share, boosted by sales of the Razor scooter. The retailer had posted a loss of $102,000, or 1 cent, in the year-earlier period. Sales jumped 38% to $79.9 million as same-store sales soared 33%. Analysts were expecting earnings of 6 cents.

* Venator Group Inc. reported a profit from operations of $8.5 million, or 7 cents a share, for its fiscal second quarter as the owner of the Foot Locker and Champs specialty retail chains closed stores and sold more athletic shoes and clothing. In the year-earlier period, Venator had a loss from operations of $8 million, or 6 cents a share. Sales increased 10% to $1.01 billion. Sales at stores open at least a year rose 11%. Including a real estate gain of $3.5 million, or 2 cents a share, in the most recent quarter, Venator had profit of $12 million, or 9 cents a share. On that basis, Venator was forecast to earn 4 cents a share, according to the average estimate of analysts polled by First Call/Thomson Financial.