Analyst Alan Rifkin says he thinks holiday sales met the low end of the home-goods retailer's plan of low- to mid-single digits. However, he also thinks margins have been impacted by greater-than-expected promotional activity, as well as mix, with a more equal balance of sales betweeen housewares and textiles. Rifkin says housewares are higher margin, with typically a greater percentage of sales in the fourth quarter.
As a result, he cut the $1.01 fourth-quarter earnings per share estimate to 99 cents, cut the $1.67 2003 estimate to $1.65, trimmed the $1.68 2004 estimate to $1.65, and reduced the $2.20 2005 estimate to $2.15. He's keeping the fourth-quarter comparison-sales estimate of 2%. Rifkins says he remains optimistic on Linens 'n Things' longer-term opportunities. He rates the shares as equal-weight.