LIMITED BRANDS
Optimistic in the face of a challenging market, limited brands shares the company’s strategy for addressing the current financial climate, the continued expansion of the group's portfolio and the importance of embracing diversity
Limited Brands operates nearly 3,000 specialty stores in North America across the Victoria’s Secret, Pink, Bath & Body Works, CO Bigelow, La Senza, White Barn Candle Co and Henri Bendel brands. Outside the US, Victoria’s Secret Direct sells to customers in approximately 160 countries through its website and catalogue, whilst, in addition to its Canadian stores, La Senza products are licensed in 37 other countries. Canada will be the first international entry for six new Bath & Body Works stores this fall, and Limited Brands also offers Victoria’s Secret Beauty through 250 La Senza stores in Canada.

“There is great opportunity in expanding internationally and it is an obvious extension for our brands and another way to further enhance stockholder value,” it said in a statement.

During the fourth quarter earnings call in February, EVP and CAO Martyn Redgrave said: “As for international expansion, we have taken a ‘go slow to go fast’ approach, as we want to ensure that we position ourselves for maximum growth and profitability.”

Last October, the group announced plans for an overall 8-10 per cent square footage growth per year over the next several years for Victoria’s Secret that will expand its stores by an average of 50 per cent, so that the average store size increases to nearly 7,000sq ft selling space. In addition, at the end of 2007, Bath & Body Works had shared plans of 170-240 total projects each year for the next three years, including 70-100 new stores primarily in non-mall locations and would invest in more than nine per cent of the fleet annually. However, in its recent earnings call in May, the company announced that due to the current retail environment, they would be scaling back on their overall expansion projects.
Of course, many retailers in the US have reported lower-than-expected Q1 results, has Limited Brands experienced any such difficulties due to the current financial climate?
“The external business environment remained challenging, contributing to disappointing sales across retail,” says the company.

In June, Limited Brands reported a decline of six per cent in May comparable sales, which was in line with its expectations.

Since the company’s announcement to reduce the number of projects planned for 2008 by 35 per cent, it has resulted in a reduction in planned capital expenditures of about $60M. Square footage growth in both brands will be lower than previously planned, roughly seven per cent for Victoria’s Secret and four per cent for Bath & Body
Works in 2008.

“The retail environment is challenging due to a number of socioeconomic factors but we are optimistic that keeping our customers emotionally connected with our brands and products will bring a brighter future ahead,” the company says.It is worth noting
that the Pink brand has recently reached approximately $1bn in volume, including
stores and web sales.

In Fall 2006, Limited Brands set up group pages on both MySpace and Facebook. Today, it has 250,000 and 350,000 friends respectively — the second largest group behind Apple (which gave away free downloads in order to build its group).
Victoria’s Secret Beauty is a $1bn business and some 50 per cent of lingerie shoppers purchase Victoria’s Secret’s beauty products, which gives the company a significant opportunity to capitalise on their existing customer base and convert them to beauty.

For the full article please see the RLI July/August 08 issue

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