Limited and Claire's Gain, Sharper Image Slips on Earnings

Two clothing retailers beat estimates while the electronics company meets the Street.
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Three specialty retailers reported higher third-quarter earnings Thursday, giving them a strong footing going into the upcoming holiday selling season, but stock market reaction was mixed.

Limited, Inc.

(LTD)

earned $129.7 million, or 25 cents a share, a huge jump from the previous-year's earnings of $15.8 million, or 3 cents a share. The results included a gain of 16 cents a share from the sale of the company's stake in

Alliance Data Systems

(ADS) - Get Report

as well as certain other gains. On an adjusted basis, the company earned $44.3 million, or 8 cents a share, compared with $10.4 million, or 2 cents a share.

Analysts were expecting a profit of 4 cents a share.

Operating earnings were $42.2 million, from $17.3 million a year ago. Total sales were $1.847 billion, up 4% from last year's $1.768 billion.

Shares of Limited were gaining 50 cents, or 2.9%, at $17.99 in recent trading.

In the fourth quarter, the company sees earnings of 74 cents a share, comparable with the Thomson First Call consensus estimate. The company earned 99 cents a share in the prior year.

Shares of Pembroke Pines, Fla.-based

Claire's Stores

(CLE)

were rising after the company said net income and income from continuing operations were $25.3 million, or 51 cents a share, up from $12.1 million, or 25 cents a share, in the year-earlier quarter. Analysts were calling for 47 cents a share.

Shares of Claire's were lately up $2.79, or 6.9%, at $43.26.

Total sales jumped 15% to $264.2 million, compared with $230 million a year ago. Same-store sales rose 8%, the company said. Jewelry sales outpaced accessories sales, which boosted bottom line performance because jewelry is a higher margin product, Claire's said.

"Our ability to gain leverage with respect to rent and rent related charges and careful control of expenses has enabled us to deliver a vastly improved bottom line as well," said newly donned co-chief executive, Marla Schaefer, who was awarded her leadership position on Thursday, as was co-chief executive Bonnie Schaefer. The sisters are also co-chairmen and had previously been acting co-chief executives. Their father, Rowland Schaefer, who is 87 years old and on leave since November 2002, decided to relinquish his positions as president, chairman and chief executive to assume the role of chairman emeritus, the company announced.

In the fourth quarter, Claire's sees earnings of $1.09 to $1.12 a share, before certain items, compared with 87 cents a share in the fourth quarter last year. Revenue is estimated at $350 million to $354 million and same-store sales are seen up 6%.

Analysts are calling for $1.03 a share with $340.23 million in sales in the fourth quarter.

In 2004, the company expects $2.37 to $2.40 a share in earnings, before items. Analysts expect a profit of $2.27 a share. The company earned $1.59 a share in the prior year.

Meanwhile,

Sharper Image

(SHRP)

shares were falling despite the company's quarterly results matching analysts' estimates and posting a 24% jump in revenue.

The company earned $985,000, or 6 cents a share, from last year's loss of $504,000, or 4 cents a share. Revenue was $131.1 million from $106.1 million. Comparable store sales increased 10%, while catalog sales rose 20% and Internet sales increased 36%.

"The new products from Sharper Image Design and other Sharper Image-brand merchandise drove top-line sales and were aggressively and profitably supported by higher levels of multimedia advertising," said Richard Thalheimer, chief executive.

The company also said its inventory is well-positioned for the holiday season. But Lehman Brothers analyst Jeff Black thinks the stock is being pressured because inventory rose 45.4%, nearly double the rate of sales. "The big increase might give investors pause," he wrote in a research note.

In addition, receivables rose to $20.4 million from $12.3 million a year ago, which Black called "another surprise." Lehman Brothers does investment banking for Sharper Image.

Shares of the San Francisco-based company were down 75 cents, or 2.4%, at $30.65 recently.