Earnings Preview: Limited Brands

Limited Brands (LTD) is expected to report Q4 earnings with a conference call scheduled for Thursday at 9:00 a.m. ET.

Guidance

Analysts are looking for a profit of 91c on revenue of $3.27B. The consensus range is 88c to 95c for EPS, and revenue of $3.16B to $3.49B, according to First Call. Earlier this month, the company reported January same store sales down 8% vs. consensus of down 6.9% and reported Q4 SSS down 8% due to decreased mall and store traffic. The company reported net sales of $625.8M for the four weeks ended February 2. Limited said it sees Q4 EPS at the "low-to-mid point" of the 90c to $1.05 range.

For February, the operator of Bath & Body Works and Victoria's Secret said it sees a mid-to-high single-digit drop in same store sales. Apparel companies will be vulnerable to ratings downgrades in the coming months as a weak economy hurts sales, according to analysts at Standard & Poor's. Factors most likely to affect their ratings include brand relevance and acquisitions.

Analyst Views

CL King analysts reduced their target on Limited to $20 from $22. While there are significant headwinds facing consumers, the firm believes the company could benefit from recoveries in execution, reduced technology spending and associated risks, better marketing, reduced inventory levels, continued expansion of its concepts and greater clarity of the international opportunity.

Bear Stearns downgraded Limited shares to Peer Perform from Outperform, citing the unfavorable macro backdrop, execution issues and management turnover.