Aug. 20 (Bloomberg) -- Limited Brands Inc., the owner of the Victoria's Secret lingerie chain, rose in late New York trading after reporting profit that fell less than analysts estimated and saying full-year profit will exceed its earlier projections.

Second-quarter net income dropped 61 percent to $102 million, or 30 cents a share, from $264 million, or 67 cents, a year earlier, when profit doubled on the sale of the Express apparel division, the Columbus, Ohio-based retailer said today in a statement. Excluding a gain, the results beat analysts' estimates by 7 cents.

Sales at stores open at least a year decreased at both Victoria's Secret and Bath & Body Works, which sells shampoo and lotion, as consumers facing higher gasoline and food prices skipped the mall. Chief Executive Officer Leslie Wexner's plan to slash inventory and reduce capital expenditures may allow the retailer to preserve profit during a holiday season in which consumers have less money to spend.

``When the consumer recovers, it's off to the races,'' Todd Slater, an analyst at Lazard Capital Markets LLC in New York, said today in a phone interview.

``Limited Brands can show dramatic earnings results driven by margin expansion even in a challenging economic environment,'' he said. Slater recommends buying the shares and doesn't own any.

Limited Brands forecast full-year profit of $1.45 to $1.60 a share, excluding some items. In May, it predicted $1.38 to $1.58. Analysts, on average, estimate $1.50 a share, according to a Bloomberg survey.

Shares Surge

Limited Brands rose $1.29, or 7.2 percent, to $19.26 as of 5:34 p.m. New York time in trading after the close of U.S. markets. The shares fell 16 cents to $17.97 today in New York Stock Exchange composite trading. The stock has dropped 5.1 percent this year.

Revenue in the three months ended Aug. 2 declined 13 percent to $2.28 billion. Total same-store sales dropped 7 percent. The retailer had 2,992 stores at the end of the quarter.

Limited Brands predicted third-quarter earnings from breakeven to profit of as much as 4 cents a share. The average analyst estimate is 4 cents.

``Although we expect that the environment will continue to remain challenging, we will continue to conservatively manage the financial aspects of the business while at the same time provide compelling assortments,'' Chief Executive Officer Leslie Wexner said in the statement.

General, administrative and store operating expenses decreased to 25.2 percent of sales from 27.5 percent.

Revenue increased 2.9 percent to $1.47 billion at Victoria's Secret, with sales through the Web and catalog and purchases at Canadian lingerie retailer La Senza countering a decline at Victoria's Secret stores. Bath & Body Works sales decreased 1.6 percent to $399 million.

To contact the reporter on this story: Heather Burke in New York at hburke2@bloomberg.net.

Last Updated: August 20, 2008 19:27 EDT