Clifton, NJ, Feb. 4--Linens 'n Things Inc. on Wednesday said quarterly profit rose nearly 15%, as a strong holiday season helped the home decor retailer generate its best comparable sales in two years.
The Clifton, NJ based retailer's shares climbed more than 10% to an 18-month high in afternoon New York Stock Exchange trading.
Linens 'n Things said it earned $46.1 million, or $1.02 per share, in the fourth quarter ended Jan. 3, up from $40.2 million, or 90 cents per share, a year earlier.
Analysts, on average, expected the company to earn $1.01 per share, according to Reuters Research, a unit of Reuters Group Plc.
Quarterly sales rose 9% to $788.3 million, while sales at stores open at least a year--a key retail measure known as comparable sales--rose 4.7%.
The company said it was its best comparable sales performance in two years.
"The pieces may be coming in place for extended success through early 2004. However, Linens 'n Things doesn't exactly have a reputation for consistency," said Brian Postol, analyst with A.G. Edwards.
"Over the past several years, Linens 'n Things' business has been marred by a period of operational mediocrity--and that is being kind," he said, noting that the company's comparable-store sales had trailed those of its peers.
Home decor retailers have posted strong sales in recent years, thanks to a booming housing market and the mortgage refinancing wave that gave people more money to spend on their homes.
On a conference call with analysts, Chief Executive Officer Norman Axelrod said the company's selection of entertaining and gift items were well-received during the holiday season. December was the strongest month despite back-to-back weekend snowstorms across much of the U.S. Northeast.
Axelrod said both the number of shoppers and the average amount spent increased in the fourth quarter.
Jefferies & Co. analyst Donald Trott called the fourth-quarter results "admirable" but said he still favored rival Bed Bath & Beyond Inc. because of its more consistent and rapid growth.
For 2004, Linens 'n Things expects earnings per share in the range of $1.66 to $1.71, including a 25 cents-per-share noncash reduction related to an accounting change.
Analysts, on average, expected a 2004 profit of $1.77 per share, according to Reuters Research.
The accounting change, which the company said in October would likely reduce 2004 earnings by 25 cents per share, involves money that suppliers pay retailers for services such as advertising, or to secure prime shelf space.
The payments, called vendor allowances, have come under increased scrutiny following an accounting scandal at Dutch food retailer Ahold NV.
