Limited Brands Q4 Profit Falls 96%

Columbus, Ohio Limited Brands Inc. said Thursday that weak sales during the holiday season caused its fourth-quarter profit to fall to $16.1 million from $388.6 million a year ago.

As announced last month, sales fell to $2.99 billion from $3.28 billion. Analysts had predicted revenue of $3.04 billion. Same-store sales fell 10%.

During the quarter, the company's results included a $215 million write-down in the value of inventory and $22.6 million in severance to 400 employees, or 10% of the staff, who were laid off at headquarters. One-time items also included a tax benefit of $15 million.

Adjusted earnings per share for the year ended Jan. 31, which exclude certain significant items, were $1.05 compared to $1.21 for the year ended Feb. 2, 2008.

The company reported a same-store sales decrease of 9% for the year ended Jan. 31. Net sales were $9.043 billion compared to net sales of $10.086 billion last year, excluding the previously mentioned $47.8 million in initial gift-card breakage. (For 2007, net sales include Express sales through July 6, 2007, the closing date of the sale of a majority interest to affiliates of Golden Gate Capital, and Limited Stores sales through Aug. 3, 2007, the closing date of the transfer of a majority interest to affiliates of Sun Capital Partners.)

Limited also said it has amended its bank term loan and revolver financial terms to give it additional flexibility.

"We continue to manage our capital structure and credit facilities in a proactive and conservative manner," said Stuart Burgdoerfer, CFO. "We ended 2008 with $1.2 billion in cash and significant cushion in both of our financial covenants. As we looked at 2009, we thought it was important to amend the terms of our borrowing facilities to ensure flexibility in the event of continued deterioration in the economic environment. This action, coupled with our substantial cash flow, strong existing liquidity and lack of near-term debt maturities, gives us great advantage as we navigate this uncertain economy."