Limited surprises Street with Q1 profit

Columbus, Ohio Wall Street got an unexpected surprise late Wednesday when The Limited Brands beat estimates with a first-quarter profit. Analysts expected a loss from the company, but strategic cost-cutting measures offset lower sales and effected the surprising turnaround.

Profit for the quarter was $2.6 million, down sharply from a $97.8 million profit last year. Revenue dropped 10% to $1.73 billion. Analysts expected a loss on slightly higher revenue of $1.75 billion.

"Limited is an underloved recovery story," Lazard Capital Markets analyst Todd Slater wrote in a research note to investors. He said the company's improved margins and growing profit from international royalties should help boost its performance.

Same-store sales fell 7% during the quarter.

Limited has faced falling sales as consumers curb spending during the recession, but it has cut its costs in response.

The company said it now expects a profit to end its 2009 fiscal year.

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