Foolish Forecast: Can Limited Brands Keep the Beat?

An increasingly Limited Brands (NYSE: LTD  ) reports its latest batch of earnings news Tuesday afternoon. But will the Q3 numbers be as stylin' as last quarter's "earnings beat"?

What analysts say:

  • Buy, sell, or waffle? 23 analysts track Limited, giving it nine buy ratings, 13 holds, and a sell. Our CAPS community gives the stock two out of five stars.
  • Revenues. On average, analysts expect to see sales fall 8% to $1.95 billion.
  • Earnings. Profits are predicted to shed a nickel to come in at just a penny a share.

What management says:
Limited Brands gave investors (well, analysts at least) the chance to hear how things are going, straight from company executives this quarter. Senior VP for investor, media, and community relations, Tom Katzenmeyer, and CEO for Victoria's Secret Beauty, Christine Beauchamp, appeared in September at the Goldman Sachs 14th Annual Global Retailing Conference to talk a bit about how the recently downsized retailer plans to resume its growth. Read all about it here.

Honestly, there wasn't much of interest in Limited's presentation. Probably the most useful information was management's list of who's who among Limited's competitors: Target (NYSE: TGT  ) , Wal-Mart (NYSE: WMT  ) , and J.C. Penney (NYSE: JCP  ) were named, and "emerging specialty competitors" American Eagle (NYSE: AEO  ) and Abercrombie & Fitch (NYSE: ANF  ) got honorable mention. Notably absent from Limited's competitive radar was Maidenform (NYSE: MFB  ) .

What management does:
A Fool can forgive that oversight, however. Clearly, Limited has other things to attend to, chief among them the need to move gross and operating margins in the right direction again.

Margins

4/06

7/06

10/06

2/07

5/07

8/07

Gross

36.6%

37.1%

37.7%

37.6%

36.9%

36.1%

Operating

10.7%

10.9%

11.1%

11.0%

10.1%

9.4%

Net

7.1%

7.3%

7.4%

6.3%

5.8%

7.0%

Data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ending in the named months.

Two Fools say:
I may not have been impressed with Limited's September presentation, but Foolish minds can certainly differ. Over at Motley Fool Inside Value, where we've recommended the stock, Michael Olsen expressed "cautious optimism" after a comment from Katzenmeyer, who said that Limited is planning to expand Bath & Body Works and Victoria's Secret overseas. Michael especially likes Limited's plan to use a franchising model when crossing U.S. borders, calling this "an excellent source of high-margin revenues that requires little capital investment."

What we thought last quarter:


Read/Post Comments (0) | Recommend This Article (3)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 540442, ~/Articles/ArticleHandler.aspx, 9/1/2014 3:47:41 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Apple's next smart device (warning, it may shock you

Apple recently recruited a secret-development "dream team" to guarantee its newest smart device was kept hidden from the public for as long as possible. But the secret is out. In fact, ABI Research predicts 485 million of this type of device will be sold per year. But one small company makes Apple's gadget possible. And its stock price has nearly unlimited room to run for early-in-the-know investors. To be one of them, and see Apple's newest smart gizmo, just click here!


Advertisement