Limited Brands Earnings Cheat Sheet: Net Income Drops by Double-Digits

S&P 500 (NYSE:SPY) component Limited Brands Inc. (NYSE:LTD) reported its results for the first quarter. Limited Brands is a specialty retailer of women’s apparel, beauty, and personal care products and accessories operating under various trade names.

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Limited Brands Earnings Cheat Sheet for the First Quarter

Results: Net income for Limited Brands Inc. fell to $124.6 million (41 cents per share) vs. $165 million (50 cents per share) a year earlier. This is a decline of 24.5% from the year-earlier quarter.

Revenue: Fell 2.9% to $2.15 billion from the year-earlier quarter.

Actual vs. Wall St. Expectations: Limited Brands Inc. beat the mean analyst estimate of 40 cents per share. Analysts were expecting revenue of $2.14 billion.

Key Stats:

Last quarter, the company’s gross margin expanded 3.9 percentage points from the year-earlier quarter to 41.9%. It was the fifth consecutive quarter of gross-margin growth. Over that span, margins have grown, on average, 1.9 percentage points per quarter on a year-over-year basis.

A year-over-year revenue decrease last quarter breaks a four-quarter streak of revenue increases. The best quarter in that span was the first quarter of the last fiscal year, which saw revenue rise 14.8%.

The company has now surpassed analyst estimates for four quarters in a row. It beat the mark by 4 cents in the fourth quarter of the last fiscal year, by one cent in the third quarter of the last fiscal year, and by 2 cents in the second quarter of the last fiscal year.

The company’s net income has fallen in each of the last two quarters. In the fourth quarter of the last fiscal year, net income fell 20.8% from the year-earlier quarter.

Looking Forward: Over the past ninety days, the average estimate for the second quarter has fallen from 54 cents per share to 50 cents, indicating that analysts are growing pessimistic about the company’s performance next quarter. For the fiscal year, the average estimate has moved down from $2.92 a share to $2.83 over the last ninety days.

(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

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