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Net income plummets at apparel retailer Limited Brands in 2008
27
Feb '09
Limited Brands Inc reported 2008 fourth quarter and full-year results.

Fourth Quarter Results:
Adjusted earnings per share for the fourth quarter ended Jan. 31, 2009, which exclude certain significant items as detailed below, were $0.68 compared to $0.94 for the quarter ended Feb. 2, 2008. Fourth quarter adjusted operating income was $390.7 million compared to $573.6 million last year, and adjusted net income was $218.9 million compared to $331.7 million last year.

Including these significant items, reported fourth quarter earnings per share were $0.05 compared to $1.10 last year; operating income was $153.1 million compared to $621.4 million last year; and net income was $16.1 million compared to $388.6 million last year.

Significant items are as follows:

In 2008 (totaling $0.63 per share):
• A pre-tax non-cash impairment charge of $215.0 million, or $0.63 per share, to reduce the carrying value of La Senza goodwill and other intangible assets. This charge is expected to have no impact on the company's business, bank credit agreements or bond indentures;
• A pre-tax charge of $22.6 million, or $0.04 per share, for severance related to the reduction of roughly 10% of home office headcount, or approximately 400 associates; and
• A tax benefit of $15.0 million, or $0.05 per share, primarily related to certain discrete foreign and state income tax items

In 2007 (totaling $0.16 per share):
• A pre-tax gain of $47.8 million, or $0.08 per share, related to the recognition of initial gift card breakage at Victoria's Secret; and
• A tax benefit of $28 million, or $0.08 per share, related to a decline in the Canadian federal tax rate, the finalization of income taxes related to the Express and Limited Stores divestitures, audit settlements and other items

The company reported a comparable store sales decrease of 10 percent for the fourth quarter ended Jan. 31, 2009. Net sales were $2.991 billion compared to net sales of $3.228 billion last year, excluding the previously mentioned $47.8 million in initial gift card breakage.

Full-Year Results:
Adjusted earnings per share for the year ended Jan. 31, 2009, which exclude certain significant items, were $1.05 compared to $1.21 for the year ended Feb. 2, 2008. Adjusted 2008 operating income was $717.5 million compared to $861.0 million last year, and adjusted net income was $353.4 million compared to $461.8 million last year.

Including these significant items, reported 2008 full-year earnings per share were $0.65 compared to $1.89 last year; operating income was $588.9 million compared to $1.110 billion last year; and net income was $220.1 million compared to $718.0 million last year.

The company reported a comparable store sales decrease of 9 percent for the year ended Jan. 31, 2009. 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.


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