NEW YORK — After posting better-than-expected fourth-quarter earnings results Wednesday, Limited Brands Inc. said on a Thursday morning conference call that it is forging ahead with plans to keep improving sales and profits, including revamping its weak Bath & Body Works division and maintaining progress already seen in its apparel division.
The company also hinted that it is considering opening stand-alone Pink stores, a concept it’s testing in 43 Victoria’s Secret locations.
Limited Brands said Wednesday after the close of the market that it earned $519.2 million in the three months ended Jan. 28, up 36 percent from a profit of $382.5 million last year. Quarterly sales were up 6 percent at $3.54 billion, while consolidated same-store sales rose 3 percent.
Victoria’s Secret, which saw same-store sales increase 3 percent in the quarter, had operating income below the company’s expectations; the company cited a decrease in beauty merchandise margins. But the division’s Pink concept continued to be well received by customers and racked up annual sales of $500 million, driven in part by sales of sleepwear.
The number of Victoria’s Secret stores testing Pink will increase to 90 to 95 stores in the spring. And Mark Weikel, chief operating officer of Victoria’s Secret stores, said on the call that the company is considering opening a freestanding Pink store with a potential target of fall of this year.
The retailer said Intimissimi, the Italian lingerie license offered in 26 Victoria’s Secret stores, will be rolled out into beauty products in 2007. By year-end 2006, the company expects to have the lingerie brand in 160 to 165 stores.
At Bath & Body Works, fourth-quarter operating profit was down 7 percent and it had a slight 1 percent increase in same-store sales. Neil Fiske, chief executive officer of the division, said the first holiday floor set was “too early with a look that was too overtly Christmas.”
In the spring, the company plans to invest in marketing programs to support its next brands, such as Pat Wexler and its C.O. Bigelow “modern urban apothecary” concept, both of which are performing well.
Wall Street, meanwhile, responded favorably to the information from the company’s conference call and pushed shares of Limited Brands up 2.9 percent to $24.09 Thursday.
Related Articles
You May Also Like
One area that analysts have had a laser focus on is the company’s apparel division, which had good news in the quarter: The Express division posted a 6 percent rise in quarterly comps.
“We focused on winning customers back with a casual, youthful, sexy sensibility and appropriate price points and a self-purchase, or wear-now, approach to the holiday,” said Ken Stevens, chief executive officer of Express.
Meanwhile, despite a 1 percent decline in comps for the retailer’s Limited apparel division, strong merchandise margins helped operating income more than double from year-ago levels.
Richard Jaffe of Stifel Nicolaus was so impressed with the retailer’s quarterly performance that he upgraded shares of Limited Brands to “buy” with a $28 target price in a research note Thursday. Jaffe said operating income from the company’s apparel business swelled to $45 million from $7 million in the quarter.
“While it is too early to declare victory, in our opinion, the improvement makes it clear that this business is better managed, and its focus on more moderately priced apparel and broadly appealing fashions is having a positive impact with customers,” Jaffe wrote.