Earnings Preview: Limited Brands

Limited Brands (LTD) is expected to report Q3 earnings before market open Thursday, November 20, with a conference call scheduled for 9:00 am ET.

Guidance

Analysts are looking for a profit of 0c on revenue of $1.88B. The consensus range is (1c) to 3c for EPS, and revenue of $1.84B to $1.98B, according to First Call. On November 6, the company reported October same-store sales declined 9% on net sales of $580.4M for the four weeks. The company also reported Q3 SSS declined 7% on net sales of $1.84B. Additionally, data from the International Council of Shopping Centers-Goldman Sachs Index, mid-way through the month, November sales remain weak despite lower gas prices. Between the faltering economy, soaring food prices, limited credit, slumping home prices and worries about jobs, shoppers remain unnerved and have cut back spending on discretionary items. Instead of spending at retailers, bargain-hunters are flocking to wholesale clubs and discount apparel chains.

Analyst Views

In a November 17 note to clients, Piper Jaffray analyst Jeffrey Klinefelter said that holiday shopping season traffic is likely to be "inconsistent and unpredictable" and that "value will be the key theme" of the season. As consumers cut back on spending, he believes retailers will rely on promotions to draw them in. Going into the holiday season, Klinefelter said Limited Brands is a "top trading idea," as it is well-positioned in terms on inventory and new products.