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Net income plummets at apparel retailer Limited Brands in 2008
27 Feb '09
5 min read
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.
Term Loan and Revolver Amendment:
The company also announced that it has entered into an agreement to amend its existing bank credit agreements. The size of the company's multi-year revolving credit facility ($1 billion) and term loan ($750 million) and their maturity dates (Aug. 3, 2012) remain unchanged, continuing to provide substantial liquidity to the company. In connection with the amendment, the company determined that it no longer required and has therefore canceled its 364-day $300 million revolving credit facility.
"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. We have long enjoyed a very strong relationship with our bank group, led by J.P. Morgan, Bank of America and Citigroup, and we are pleased with their support on this transaction."
The amendment updates both the leverage and fixed-charge-coverage covenants of the bank credit agreements to provide additional flexibility to the company. In return for these covenant changes, fees and pricing were increased, and the company provided certain security from its U.S. subsidiaries.
The company noted that it has no current borrowings against the revolving credit agreement and did not borrow against it during 2008.
2009 Outlook:
Chairman and CEO Leslie Wexner stated, "In the current environment, we are managing all aspects of the business, including inventory, expenses, capital expenditures, cash and liquidity, very conservatively. We are also working to maximize sales by offering compelling merchandise, marketing and store experiences to our customers."
The company's earnings forecast is based on various assumptions which will be discussed more fully on the earnings conference call. The company expects 2009 full-year earnings per share to be between $0.60 and $0.85 per share, including a loss of between $0.07 per share and $0.12 per share in the first quarter. In 2009, the company expects capital expenditures to approximate $200 million, primarily related to new and remodeled stores.
Term Loan and Revolver Amendment:
The company also announced that it has entered into an agreement to amend its existing bank credit agreements. The size of the company's multi-year revolving credit facility ($1 billion) and term loan ($750 million) and their maturity dates (Aug. 3, 2012) remain unchanged, continuing to provide substantial liquidity to the company. In connection with the amendment, the company determined that it no longer required and has therefore canceled its 364-day $300 million revolving credit facility.
"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. We have long enjoyed a very strong relationship with our bank group, led by J.P. Morgan, Bank of America and Citigroup, and we are pleased with their support on this transaction."
The amendment updates both the leverage and fixed-charge-coverage covenants of the bank credit agreements to provide additional flexibility to the company. In return for these covenant changes, fees and pricing were increased, and the company provided certain security from its U.S. subsidiaries.
The company noted that it has no current borrowings against the revolving credit agreement and did not borrow against it during 2008.
2009 Outlook:
Chairman and CEO Leslie Wexner stated, "In the current environment, we are managing all aspects of the business, including inventory, expenses, capital expenditures, cash and liquidity, very conservatively. We are also working to maximize sales by offering compelling merchandise, marketing and store experiences to our customers."
The company's earnings forecast is based on various assumptions which will be discussed more fully on the earnings conference call. The company expects 2009 full-year earnings per share to be between $0.60 and $0.85 per share, including a loss of between $0.07 per share and $0.12 per share in the first quarter. In 2009, the company expects capital expenditures to approximate $200 million, primarily related to new and remodeled stores.
Limited Brands Inc
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