Limited, Gap earnings sluggish

Apparel retailers Limited Brands Inc. and Gap Inc. may be in for a tough holiday season. Both reported sluggish results for the third quarter on Thursday due to fashion missteps, and while they’re fixing their assortments, heated competition from rivals could make winning over shoppers this Christmas season more difficult.

Gap announced a 20 percent drop in third-quarter profits as the clothing retailer stumbled through its worst sales slump in more than three years. It also dimmed its outlook for the crucial holiday season. Limited reported a third-quarter loss as sales languished at Victoria’s Secret and its apparel lines. But it left its earnings outlook unchanged for the fourth quarter.

Meanwhile, upscale retailer Nordstrom Inc. posted a 38 percent profit increase in the third quarter, buoyed by strong sales momentum and ongoing operating improvements. It also boosted its forecast for the year.

Both Limited and Gap, which have struggled for several quarters with sluggish sales, face competition from Abercrombie & Fitch Co. and discounters like Target Corp. and Wal-Mart Stores Inc., both of which are focusing on cheap chic.

“The holiday outlook will be challenging for Gap and the apparel divisions at Limited Brands,” said Richard Hastings, senior retail analyst at Bernard Sands in New York.

Seattle-based Nordstrom earned $107.5 million, or 39 cents per share, for the three months ended Oct. 29, up from year-ago profit of $77.8 million, or 27 cents per share. Sales rose 8 percent to $1.67 billion from $1.54 billion a year ago and same-store sales increased 5.9 percent.

•Hewlett-Packard Co.’s fiscal fourth-quarter profit fell 62 percent after the computer and printer company took a $1.1 billion charge for a massive restructuring it announced in July. Still, the results announced Thursday exceeded Wall Street expectations.

Aside from the one-time expense, all the company’s business units — from personal computers and printers to enterprise servers and software — reported revenue growth. HP also said its profit in the first quarter would surpass current Wall Street estimates.

For the period ending Oct. 31, HP earned $416 million, or 14 cents per share, compared with a profit of $1.091 billion, or 37 cents per share, in the same period last year. Sales increased 7 percent, to $22.9 billion from $21.4 billion.

Excluding special items, primarily related to the previously announced restructuring, the company earned $1.5 billion, or 51 cents per share, compared with $1.2 billion, or 41 cents per share, in the same period last year.