Limited Brands Enhances Return to Shareholders

Mar.16.10 | About: L Brands, (LB)

Limited Brands Inc. (LTD), a specialty retailer of women’s intimate and other apparel, beauty and personal care products, is actively managing its capital and returning much of its free cash to shareholders via share repurchases and dividends.

The company’s Board recently authorized a share repurchase program of $200 million, which includes $31 million remaining under the previous $250 million buyback program. The company also declared a special dividend of $1 per share, which will be paid on April 19, 2010 to shareholders of record as on April 5, 2010.

The news of special dividend and share repurchase has sent the shares of mall-based retailer, Limited Brands, soaring 3.8% or 89 cents to $24.60 in after hours trading on Monday.

Columbus, Ohio, based company, Limited Brands is committed to enhancing shareholders’ return. The record free cash flow generation of $972 million in the last fiscal year, and the expectation of free cash flow between $500 million and $600 million in fiscal 2010 have encouraged the company.

Limited Brands’ sustained focus on cost containment, inventory management, and merchandise initiatives has kept it afloat in a difficult consumer environment, and has helped post better-than-expected fourth-quarter 2009 results. The quarterly earnings of $1.01 per share have outstripped the Zacks Consensus Estimate of 98 cents, and rose 49% from 68 cents delivered in the prior-year quarter.

Signs of improvement have been noticed in consumer spending. Consumers had cut back their discretionary purchases during the recession and are now starting to loosen their purse strings. Limited Brands’ February 2010 comparable-store sales rose 10%, following a 6% jump in January 2010 and a decline of 2% in December 2009.

The owner of the Victoria's Secret and Bath & BodyWorks chains currently operates 2,970 specialty stores.