- Provides First Quarter and 2008 Earnings Guidance -
- Updates February Comp Guidance -
COLUMBUS, Ohio, Feb. 27 /PRNewswire-FirstCall/ -- Limited Brands, Inc.
(NYSE: LTD) today reported 2007 fourth quarter and full year results.
(Logo: http://www.newscom.com/cgi-bin/prnh/20020520/CLM001LOGO )
Fourth Quarter Results
Earnings per share for the 13-week fourth quarter ended Feb. 2, 2008,
were $1.10 compared to $1.08 for the 14 weeks ended Feb. 3, 2007. Fourth
quarter operating income was $621.4 million compared to $726.8 million last
year, and net income was $388.6 million compared to $439.8 million last
year.
The 2007 results contain certain significant items totaling $0.16 per
share. These items include:
-- A pre-tax gain of $47.8 million, or $0.08 per share, related to the
recognition of initial gift card breakage at Victoria's Secret; and
-- A tax benefit of $28 million, or $0.08 per share, related to a decline
in the Canadian federal tax rate, the finalization of income taxes
related to the Express and Limited Stores divestitures, audit
settlements and other items.
Excluding these items, fourth quarter earnings per share were $0.94
compared to $1.08 last year; operating income was $573.6 million compared
to $726.8 million last year; and net income was $331.7 million compared to
$439.8 million last year.
Comparable store sales for the 13 weeks ended Feb. 2, 2008, decreased
8% compared to the 13 weeks ended Feb. 3, 2007. Net sales were $3.276
billion (including $47.8 million related to the previously mentioned gift
card breakage adjustment) for the 13 weeks ended Feb. 2, 2008, compared to
$4.025 billion for the 14 weeks ended Feb. 3, 2007.
Full Year Results
Earnings per share for the 52-week year ended Feb. 2, 2008, were $1.89
compared to $1.68 for the 53 weeks ended Feb. 3, 2007. Operating income was
$1.110 billion compared to $1.176 billion last year, and net income was
$718.0 million compared to $675.0 million last year.
The 2007 results contain certain significant items, including:
-- A second quarter pre-tax gain of $302 million related to the
divestiture of a 75% interest in Express to affiliates of Golden Gate
Capital;
-- A second quarter pre-tax loss of $73 million related to the divestiture
of a 75% interest in Limited Stores to affiliates of Sun Capital
Partners;
-- A second quarter tax benefit of $39 million related to an adjustment to
state net operating loss valuation allowances in connection with the
divestiture of the apparel brands;
-- A second quarter pre-tax gain of $100 million related to the
refinancing of Easton Town Center, in which the company has an
investment interest, included in other income;
-- A second quarter pre-tax restructuring charge of $47 million for costs
of disposing of non-core assets and severance related to the
termination of approximately 10% of the company's home office
headcount;
-- A second quarter pre-tax gain of $17 million related to an interest
rate hedge entered into in the first quarter in anticipation of the
intended financing of the LaSenza acquisition, included in other
income;
-- A third quarter pre-tax gain of $24.5 million related to asset sales;
-- A fourth quarter pre-tax gain of $47.8 million related to the
recognition of initial gift card breakage at Victoria's Secret; and
-- A fourth quarter tax benefit of $28 million related to a decline in the
Canadian federal tax rate, the finalization of income taxes related to
the Express and Limited Stores divestitures, audit settlements and
other items.
The full-year earnings per share impact of the above items is $0.68.
Excluding these items, earnings per share for the 52-week year ended Feb.
2, 2008, were $1.21 compared to $1.68 for the 53 weeks ended Feb. 3, 2007.
Operating income was $861.0 million compared to $1.176 billion last year,
and net income was $461.8 million compared to $675.0 million last year.
The company reported a comparable stores sales decrease of 2% for the
52 weeks ended Feb. 2, 2008, compared to the 52 weeks ended Feb. 3, 2007.
Net sales were $10.134 billion (including $47.8 million related to the
previously mentioned gift card breakage adjustment) for the 52 weeks ended
Feb. 2, 2008, compared to $10.671 billion for the 53 weeks ended Feb. 3,
2007.
2007 net sales include Express sales through July 6, 2007, the closing
date of the sale of a majority interest to affiliates of Golden Gate
Capital, and Limited Stores sales through Aug. 3, 2007, the closing date of
the transfer of a majority interest to affiliates of Sun Capital Partners.
2008 Outlook
The company stated that it now expects February comps in the negative
low double digit range versus its previous guidance for negative mid to
high single digit comps.
The company stated that it expects 2008 first quarter earnings per
share to be $0.05 to $0.10 compared to $0.13 per share last year.
For 2008, the company expects earnings per share of $1.35 to $1.55.
Gift Cards
The company issues gift cards which contain no expiration date or
inactivity fees. During the fourth quarter of 2007, the company recognized
$47.8 million of revenue and operating income ($0.08 per share) related to
gift card breakage at Victoria's Secret. The amount of gift card breakage
recognized was based upon analysis of historical redemption patterns and
represents the remaining balance of gift cards for which the company
believes the likelihood of redemption is remote. The fourth quarter of 2007
is the first period during which the company has recognized gift card
breakage for Victoria's Secret. Therefore, the amount recognized includes
the breakage income related to gift cards sold since inception of the gift
card program at Victoria's Secret. The company began recognizing gift card
breakage at Bath & Body Works in the fourth quarter of 2005.
Earnings Call Information
Limited Brands will conduct its fourth quarter earnings call at 9:00
a.m. Eastern time on Thursday, Feb. 28. To listen, call 1-877-601-1433
(International Dial-In Number: 1-630-395-0024). For an audio replay, call
1-800-337-6551, followed by the passcode LTD (583), (International Replay
Number: 1-402-220-9656, passcode: LTD (or 583)) or log onto
http://www.Limitedbrands.com. Additional fourth quarter financial
information is also available at http://www.Limitedbrands.com.
ABOUT LIMITED BRANDS:
Limited Brands, through Victoria's Secret, Pink, Bath & Body Works,
C.O. Bigelow, La Senza, White Barn Candle Co. and Henri Bendel, presently
operates 2,926 specialty stores. The company's products are also available
online at http://www.VictoriasSecret.com, http://www.BathandBodyWorks.com
and http://www.LaSenza.com.
Safe Harbor Statement Under the Private Securities Litigation Reform
Act of 1995
The Company cautions that any forward-looking statements (as such term
is defined in the Private Securities Litigation Reform Act of 1995)
contained in this press release or the Fourth quarter earnings call or made
by the Company or management of the Company involve risks and uncertainties
and are subject to change based on various important factors, many of which
are beyond our control. Accordingly, the Company's future performance and
financial results may differ materially from those expressed or implied in
any such forward- looking statements. Words such as "estimate," "project,"
"plan," "believe," "expect," "anticipate," "intend," "planned," "potential"
and similar expressions may identify forward-looking statements. The
following factors, among others, in some cases have affected and in the
future could affect the Company's financial performance and actual results
and could cause actual results to differ materially from those expressed or
implied in any forward- looking statements included in this press release
or the Fourth quarter earnings call or otherwise made by the Company or
management: risks associated with general economic conditions, consumer
confidence and consumer spending patterns; the potential impact of national
and international security concerns on the retail environment, including
any possible military action, terrorist attacks or other hostilities; risks
associated with the seasonality of the Company's business; risks associated
with the highly competitive nature of the retail industry generally and the
segments in which we operate particularly; risks related to consumer
acceptance of the Company's products and the Company's ability to keep up
with fashion trends, develop new merchandise, launch new product lines
successfully, offer products at the appropriate price points and enhance
the Company's brand image; risks associated with the Company's ability to
retain, hire and train key personnel and management; risks associated with
the possible inability of the Company's manufacturers to deliver products
in a timely manner or meet quality standards; risks associated with the
Company's reliance on foreign sources of production, including risks
related to the disruption of imports by labor disputes, risks related to
political instability, risks associated with legal and regulatory matters,
risks related to duties, taxes, other charges and quotas on imports, risks
related to local business practices, potential delays or disruptions in
shipping and related pricing impacts and political issues and risks related
to currency and exchange rates; risks associated with the dependence on a
high volume of mall traffic and the possible lack of availability of
suitable store locations on appropriate terms; risks associated with labor
shortages or increased labor costs; risks associated with increases in the
costs of mailing, paper and printing; risks associated with our ability to
service any debt we incur from time to time as well as the requirements the
agreements related to such debt impose upon us; risks associated with the
Company's reliance on information technology, including risks related to
the implementation of new information technology and distribution systems,
including risks associated with our new Victoria's Secret Direct
distribution center; risks related to utilizing third parties to provide
information technology services; risks associated with severe weather
conditions, natural disasters or health hazards; risks associated with
rising energy costs; and risks associated with independent licensees. The
Company is not under any obligation and does not intend to make publicly
available any update or other revisions to any of the forward-looking
statements contained in this press release or the Fourth quarter earnings
call to reflect circumstances existing after the date of this report or to
reflect the occurrence of future events even if experience or future events
make it clear that any expected results expressed or implied by those
forward-looking statements will not be realized.
LIMITED BRANDS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
THIRTEEN WEEKS ENDED FEBRUARY 2, 2008 AND
FOURTEEN WEEKS ENDED FEBRUARY 3, 2007
(Unaudited)
(In thousands except per share amounts)
2007 2006
Net Sales $3,276,181 $4,024,702
Gross Profit 1,303,821 1,612,245
General, Administrative and Store
Operating Expenses (682,377) (885,425)
Operating Income 621,444 726,820
Interest Expense (46,292) (27,821)
Interest Income 5,510 4,419
Minority Interest (112) 1,356
Other Income 10,006 1,004
Income Before Income Taxes 590,556 705,778
Provision for Income Taxes 202,000 266,000
Net Income $388,556 $439,778
Net Income Per Diluted Share $1.10 $1.08
Weighted Average Shares Outstanding 353,786 405,340
LIMITED BRANDS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FIFTY-TWO WEEKS ENDED FEBRUARY 2, 2008 AND
FIFTY-THREE WEEKS ENDED FEBRUARY 3, 2007
(Unaudited)
(In thousands except per share amounts)
2007 2006
Net Sales $10,134,205 $10,670,599
Gross Profit 3,542,169 4,013,512
General, Administrative and Store
Operating Expenses (2,661,748) (2,837,427)
Gain on divestiture of Express 301,843 -
Loss on divestiture of Limited Stores (72,308) -
Operating Income 1,109,956 1,176,085
Interest Expense (149,496) (101,835)
Interest Income 17,976 25,010
Minority Interest 22,463 1,116
Other Income (Expense) 128,073 (3,327)
Income Before Income Taxes 1,128,972 1,097,049
Provision for Income Taxes 411,000 422,000
Income Before Cumulative Effect of
Change in Accounting Principle 717,972 675,049
Cumulative Effect of Change in
Accounting Principle (Net of tax
of $445 in 2006) - 696
Net Income $717,972 $675,745
Net Income Per Diluted Share:
Income Before Cumulative Effect of
Change in Accounting Principle $1.89 $1.68
Cumulative Effect of Change in
Accounting Principle - -
Net Income Per Diluted Share $1.89 $1.68
Weighted Average Shares Outstanding 380,230 402,499
SOURCE Limited Brands, Inc.
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Related links:
http://www.Limitedbrands.com
Photo Notes:
NewsCom: http://www.newscom.com/cgi-bin/prnh/20020520/CLM001LOGO
AP Archive: http://photoarchive.ap.org
PRN Photo Desk, photodesk@prnewswire.com
CONTACT:
Investors, Amie Preston, +1-614-415-6704,
apreston@limitedbrands.com, or Media, Tammy Roberts Myers,
+1-614-415-7072, extcomm@limitedbrands.com, both of Limited
Brands, Inc.
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