Limited Brands

About Limited Brands

Limited Brands is as much of a shopping-mall mainstay as food courts and teenagers. The company operates about 2,940 specialty stores throughout North America primarily under the  Victoria's Secret, Bath & Body Works (BBW), and La Senza (in Canada) banners, as well as corresponding websites and catalogs. Originally focused on apparel, Limited Brands – more... sold its ailing Limited Stores and Express chains -- leaving the company free to focus on two core businesses: Victoria's Secret and BBW. Limited Brands also owns apparel importer MAST Industries, accessories boutique operator Henri Bendel, apothecary C.O. Bigelow, and The White Barn Candle Co. Limited Brands was founded in 1963 by its chairman Leslie Wexner.

Operations

MAST Industries (dba Mast Global Fashions) is the company's production, sourcing and logistics arm. Mast is one of the world's largest contract manufacturers, importers, and distributors of apparel. Mast has manufacturing operations and joint ventures in more than a dozen countries including China, Israel, Mexico, and Sri Lanka.

Geographic Reach

Beyond North America, Limited Brands operates about 730 Victoria's Secret, BBW, and La Sensa stores. The company has formed a partnership with M.H. Alshaya (a popular franchise partner for many American retailers, including American Eagle Outfitters  and Pottery Barn) to operate stores in the Middle East. Going forward, Limited Brands plans to continue opening company-owned Victoria's Secret and BBW stores in Canada and outside North America through franchisees.

Financial Analysis

Limited Brands saw its total net sales increase 8% in fiscal 2012 (ends January) vs. the previous year, while net income rose more than 5%. It was the second year of sales growth for the company, which saw its sales jump 11% and net income surge nearly 80% in fiscal 2011. The gains followed three consecutive years of declining sales. Still, the nearly $10.4 billion in sales rung up in fiscal 2012 was below fiscal 2007 when sales topped $10.6 billion prior to the onset of the recession. Victoria's Secret Stores led the recovery, posting a 14% increase in net sales in fiscal 2012. By comparison, BBW turned in a 6% net sales gain. The La Senza business continued to struggle and Limited Brands incurred restructuring expenses and impairment charges related to the Canadian intimate apparel business. Total net sales at Victoria's Secret Stores and Victoria's Secret Direct were $6.1 billion in fiscal 2012, a 11% increase over the previous year. While the brand has a long way to go to reach $10 billion in sales, Victoria's Secret is again headed in the right direction.

Strategy

Wexner's goal is for Victoria's Secret to blossom into a $10-billion brand, but the global financial crisis, decline in consumer confidence, and poor performance of La Senza, have conspired to delay his growth strategy for the bra-and-panty business. The strategy at Victoria's Secret is to capture the teen and college-age female customer with its youth-oriented PINK brand (launched in 2004), with the hope that as she matures she will shop for sexier styles, such as Angels and Very Sexy, sold in Victoria's Secret stores. PINK is sold in freestanding stores as well as Victoria's Secret shops. While the retailer doesn't break out PINK sales, the brand is meeting stiff competition from American Eagle's Aerie brand and Gilly Hicks by Abercrombie & Fitch. Both target the youth market. Limited Brands has been closing La Senza stores and repositioning the brand. It has moved La Senza's headquarters from Canada to Ohio and stopped reporting the chain's financial results along with its Victoria's Secret business, which it did prior to fiscal 2012. In addition to La Senza's 320 shops throughout Canada, an additional 465 La Senza stores are operated in nearly 50 countries through franchisees.

Ownership

Wexner, who owns about 18% of the company's shares, is Limited Brands' largest shareholder. – less

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