Limited Brands Inc.'s net income rose sharply in the second quarter as more Americans shopped at its mall stores.
Limited Brands, the owner of the Victoria's Secret and Bath & Body Works chains delivered quarterly earnings (including one-time items) that more than doubled to 54 cents a share from 23 cents earned in the year-ago quarter. Net sales soared 8.5% from the prior-year quarter to $2,242.5 million. The consumers, who cut back their discretionary spending during the recession, are now gradually opening up their wallets.
The second quarter results have made the Columbus, Ohio, based company, Limited Brands more optimistic. Consequently, management forecasted fiscal year 2010 earnings between $1.68 and $1.83 per share up from $1.60 and $1.80 previously anticipated. The company now expects third-quarter 2010 earnings in the range of 3 cents to 8 cents a share.
Comparable-store sales for the quarter under review climbed 7% compared with a fall of 9% registered in the year-earlier quarter. Comps rose 5% in May, 6% in June and 12% in July. Limited Brands now expects August comparable-store sales to rise in the mid-to-high single-digit range compared with low single-digit increase forecasted earlier.
Despite a 4.7% increase in cost of goods sold, buying and occupancy, gross profit for the quarter surged 16.4% to $777.5 million, aided by increase in the top line, whereas gross margin expanded 240 basis points to 34.7%. Adjusted operating income surged 59.1% to $236.5 million, whereas operating margin expanded 330 basis points to 10.5%.
Limited Brands sells its merchandise through specialty retail stores in the United States and Canada, which are primarily mall-based, and its websites, catalogue and other channels. The company currently operates 2,669 specialty stores.
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