Limited Brands Inc. ( LTD ), a specialty retailer of women's intimate and other apparel, beauty and personal care products, is slated to report its fourth-quarter 2011 financial results on February 22, 2012. The current Zacks Consensus Estimate for the quarter stands at $1.46 per share, representing an estimated year-over-year increase of about 16%. Revenue, as per the Zacks Consensus Estimate, is $3,490 million.

Third-Quarter 2011, a Synopsis

Limited Brands' third quarter earnings of 25 cents per share surpassed the Zacks Consensus Estimate by a penny and rose 39% from 18 cents per share in the prior-year quarter.  On a reported basis, quarterly earnings came in at 31 cents, up 72% from the year-ago quarter.

Limited Brands, which competes with Gap Inc . ( GPS ) and Hanesbrands Inc . ( HBI ), posted net sales of $2,173.4 million that climbed 10% year-over-year and comfortably beat the Zacks Consensus Estimate of $2,163 million.

Earnings Estimate Revisions- Overview

Estimates crept up for Limited Brands following its fourth-quarter 2011 sales data. The company registered an increase in its comparable-store sales, but lagged its prior-year quarter's performance.  Let's get to the details of the earnings estimate.

Agreement of Estimate Revisions

The analysts are positive about the company's upcoming earnings, as among the 20 analysts covering the stock, 4 revised the estimates upward in the last 30 days, while none moved in the opposite direction. For fiscal 2011, 8 analysts revised their estimates upward while none lowered the same. 

Magnitude of Estimate Revisions

The Zacks Consensus estimate inched up a penny in the last 30 days as the analysts are upbeat about the company's future outlook. Management now expects fourth-quarter 2011 earnings to be at the high end of the earlier guidance range of $1.42 to $1.46 per share.

Positive Earnings Surprise History

With respect to earnings surprises, Limited Brands has topped the Zacks Consensus Estimate over the last four quarters in the range of 0.8% to 4.4%. The average remained at 3.0%. This suggests that Limited Brands has outperformed the Zacks Consensus Estimate by the same magnitude over the trailing four quarters.

Our View

The company's net sales during the fourth quarter rose 1.7% year over year to $3,515 million, and surpassed the Zacks Consensus Estimate of $3,490 million. Limited Brands comparable-store sales increased 7% during the fourth quarter of 2011, compared with 9% in the previous quarter and 10% in the prior-year quarter.

Comparable-store sales for quarter rose 12% at Victoria's Secret Stores & Victoria's Secret Beauty and 3% at Bath & Body Works & The White Barn Candle Co., but fell 3% at La Senza. Sales at Victoria's Secret Direct grew 3%.

Limited Brands' sustained focus on cost containment, inventory management and merchandise initiatives has kept it afloat amid a sluggish retail environment. The company's Bath & Body Works segment is gaining traction on the back of higher store transactions, enhancement in the direct channel business and growth in new stores. Victoria's Secret Stores has been performing well, and the company is constantly revamping its La Senza brand.

Limited Brands is keen to enhance its retail footprint across the globe by expanding aggressively in Canada and other international markets. However, stiff competition and erratic consumer behavior remain concerns.

Currently, we have a long-term 'Neutral' recommendation on the stock. However, Limited Brands holds a Zacks #2 Rank, which translates into a short-term 'Buy' rating.