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The Limited Lacks Sex Appeal

Ryan Fuhrmann, CFA
May 22, 2008

Unlike the glamorous models posing in its Victoria Secret's catalogs, Limited Brands (NYSE: LTD  ) doesn't look so hot right now. With gas prices at all-time highs, few consumers have enough cash left over to splurge on expensive lingerie or premium-priced creams from Bath and Body Works.

At first glance, the first-quarter earnings Limited reported after the market closed yesterday more than doubled to $0.28. However, it took a one-time gain to get to that figure. Excluding the net gain from the sale of a joint venture, Limited's bottom line fell to $0.10 per share. That still came in ahead of what analysts were projecting -- the key reason why the stock is trading up today.

However, sales trends remain worrisome. Total sales fell nearly 17%, as new store openings failed to offset an 8% drop in same-store sales. Expanding Victoria Secret's store base did help the segment's total sales figure increase 4%,