UPDATE 2-Limited Brands profit down, lowers 4th-qtr outlook
(Recasts, adds byline, detail from conference call)
LOS ANGELES, Nov 20 (Reuters) - Limited Brands Inc (LTD.N) abandoned its upbeat tone on the holiday season as it cut its current-quarter earnings outlook on Tuesday while reporting sharply lower quarterly profit on falling sales from declining traffic at its chains.
Citing a challenging retail environment, the parent of Victoria's Secret and Bath & Body Works also said November sales at stores open at least a year would decline in the mid-single digits. It had earlier said they would be flat.
Moreover, the company said that for the crucial holiday fourth quarter, it was scaling back circulation of its popular Victoria's Secret catalog in order to artificially stem demand. A new distribution center experiencing integration issues could not meet expected normal volume, it said.
Limited posted third-quarter net profit of $12.1 million, or 3 cents per share. That was just over half the $23.5 million, or 6 cents per share, recorded a year earlier.
Stripping away a pre-tax gain of 4 cents per share related to asset sales, Limited posted a net loss of 1 cent per share, which was a penny short of the average analyst target, according to Reuters Estimates.
Total sales fell 9 percent to $1.92 billion and same-store sales, a key gauge of retail performance measuring sales at stores open at least a year, fell 3 percent in the quarter.
This summer, Limited Brands shed underperforming apparel lines to focus on Victoria's Secret and Bath & Body Works.
FADING OPTIMISM
Wall Street has worried about how much consumers will spend in a holiday season marked by high fuel prices, a housing slump and fallout from the credit crisis.
Last month, Chief Executive Leslie Wexner told analysts he felt "very confident and I think very much at ease going into this holiday season."
But on Tuesday, Limited lowered its fourth-quarter outlook, saying it expects earnings per share of between 90 cents and $1.05. In August, the company said it was comfortable with a First Call earnings estimate of $1.18 for the fourth quarter.
Analysts, on average, have been expecting fourth-quarter earnings of $1.08, according to Reuters Estimates.
Limited said the lowered outlook was due to issues related to the opening of a new distribution center for the Victoria's Secret direct-to-consumer division as well as a challenging retail environment.
The company said the lowered demand could reduce Victoria's Secret direct sales by $150 million, and that fixing the distribution center problems was its top operational priority. The direct division is a $1.4 billion business for the company.
Shares fell 20 cents, or 1 percent, in after-hours trade after closing at $17.56 on the New York Stock Exchange. (Editing by Braden Reddall)
