Limited Up on Self-Tender

The company also reports solid earnings, but lowers guidance.
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Limited Brands

(LTD)

was marginally higher in midafternoon trading Thursday despite giving slightly weaker-than-expected guidance, as investors focused on a 20% dividend increase and $1 billion self-tender.

The Columbus, Ohio-based company said it earned $386.7 million, or 74 cents a share, in the quarter ended Jan. 31, compared with $352.9 million, or 66 cents a share, a year ago. Total sales were up 9% to $3.23 billion, while same-store sales increased 8%.

Shares of the company were lately up 28 cents, or 1.4%, at $20.48, just above their 52-week high of $20.30 reached Wednesday.

Limited said its new annual dividend is 48 cents, up from 40 cents. A dividend of 12 cents a share will be paid March 16.

It also said it will buy back $1 billion of its stock via a self-tender that begins Feb. 27 and expires March 25. Shareholders will be able to sell shares to the company at a price of between $19.75 and $22.50 each.

Looking ahead, Limited expects spring-season earnings per share to increase 15% to 25% compared with last year, but said it anticipates earnings per share in the first quarter to be flat with the prior year's 9 cents a share. The Wall Street consensus calls for 13 cents a share.

In full-year 2004, Limited sees a 13% to 15% increase in earnings per share, compared with the $1.11 a share earned in 2003. The company said the repurchase will add 8 cents a share to earnings in the full year. Nonetheless, analysts have forecast $1.19 a share in the full year.

The company also said the president and chief executive of its Express unit, Michael Weiss, will retire. Weiss worked for the company for 20 years. After Weiss' departure, Ken Stevens, currently the president of the company's Bath & Body Works unit, will become chief executive of Express. Paul Raffin, who is a vice president of merchandising for Express, will become the president of the unit.