The Limited’s founder and CEO Leslie Wexner, opened the women’s clothing
store in 1963 with a $5,000 loan from his aunt. For years it was the clothes
that made the business. Yet, in recent years, the clothes have been going out
Limited Brands’ past may be in traditional apparel, but its present and future are increasingly tied to its Secret. Victoria’s Secret that is. Today the lingerie chain and its beauty and personal-care products operation, Bath & Body Works account for nearly three-fourths of the company’s sales.
"(Limited Brands) is Victoria’s Secret. The lingerie business is the
dominant part of the business. This is where our future is," said Wexner
Ten years ago Victoria’s Secret and Bath & Body Works accounted for
32% of the Columbus-based company’s sales. Victoria’s Secret alone overtook the
company’s apparel segment in 2002, thanks to its own growth and Limited Brands’
decision to sell or spin off some of its apparel chains.
Why the shift? "The
margins are higher in the other businesses," said Limited Brands spokesman
Tom Katzenmeyer. "Apparel has more risk. It is more competitive. Some of
the risk is taken out of (Victoria’s Secret and Bath & Body Works) because
there is a core product there – underwear and beauty products."
Therefore, the company is increasing the profitability of that business by
shrinking its remaining apparel chains, Limited and Express.
Limited Brands last year opened two Express stores but closed 80 Express
outlets and 32 Limited stores. Same-store sales at outlets open at least a year
at the chains were down 2% in 2006, while rebounding 12% in January.
Until recently most malls had one or two competitors in the
lingerie market, but the market for undergarments is about to get more
American Eagle Outfitters Inc., has started Aerie, a line of
underwear and sleepwear aimed at taking away market share from
its Pink affiliate. Additionally, apparel competitors, such as
Limited isn’t sitting around and waiting though. Pink, which caters to
college women and posted $700 million in sales in 2006 is moving out of
into it’s own stores. Three Pink stores are now being tested.
Lorraine Maikus, a stock analyst at Merrill Lynch, singled out Pink as an
example of what Limited Brands does best – identifying an underserved customer
and delivering a product.
Intimissimi, an Italian lingerie line for which Limited Brands secured
its own. The line grew from being a feature in 25
Limited Brands is testing a stand-alone Intimissimi store.
The company also is wading into the accessories market with
six Diva London stores and product testing at