Limited Slashes 1Q, Year View (AP)

Apparel retailer Limited Brands Inc. on Tuesday slashed its earnings forecast for the fiscal first quarter and full year, citing lower-than-expected sales and merchandise margins at its brands, particularly at its Victoria's Secret stores. Limited now expects first-quarter earnings of 12 cents to 14 cents per share, compared with an earlier estimate of 25 cents to 28 cents per share. In the year-ago first quarter, earnings were 25 cents per share. Analysts polled by Thomson Financial, on average, were expecting profit of 22 cents per share for the latest quarter. For the second quarter, Limited projects earnings of 20 cents to 24 cents per share, down from 28 cents per share in the year-earlier quarter. Wall Street expected 29 cents per share. For 2007, Limited now forecasts earnings of $1.55 to $1.65 per share, down from earlier expectations of $1.75 to $1.90 per share. Analysts projected earnings of $1.78 per share for the year. The company expects trends will continue to be challenging in the second quarter, especially at Victoria's Secret. Limited Brands also said Tuesay it will sell a majority interest in its underperforming Express apparel brand and is mulling options for its Limited Stores chain. Limited shares rose 7 cents to $26.25 in the extended session, after losing $1.23, or 4.5 percent, to close at $26.18 in the regular session.