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The Limited, Inc.

The Limited, Inc.

Three Limited Parkway
P.O. Box 16000
Columbus, Ohio 43216
U.S.A.
(614) 479 7000
Fax: (614) 479-7080

Public Company
Incorporated: 1963
Employees: 123,100
Sales: $8.64 billion (1996)
Stock Exchanges: New York
SICs: 5621 Womens Clothing Stores; 5632 Womens Accessory and Specialty Stores; 5611 Mens and Boys Clothing Stores; 5641 Childrens and Infants Wear Stores; 5961 Catalog and Mail-Order Houses

The Limited, Inc. is one of the largest corporate collections of specialty apparel retailers in the United States. The company owns and operates more than 5,300 stores throughout the United States and the United Kingdom, including big guns such as the Limited, Express, Structure, and Victorias Secret. The Limited, Inc.s holdings are separated into three main operating divisions: Womens Brands is composed of The Limited Stores, Express, Lerner New York, Lane Bryant, and Henri Bendel; the wholly owned subsidiary Intimate Brands, Inc. is made up of Victorias Secret, Cacique, and Bath & Body Works; and Emerging Brands includes stores aimed at men and children, such as Structure, Abercrombie & Fitch, Limited Too, and Galyans Trading Company.

The Early Years

The Limited, Inc.s beginnings can be traced to 1961, when Leslie Wexner dropped out of law school and went to work in a womens clothing store owned by his father in Columbus, Ohio. After a short time there, Wexner suggested to his father that business would improve if the store concentrated on sportswear, but his father, Harry Wexner, believed that a full product line was necessary to attract customers. Instead, he encouraged his son to try out the sportswear idea on his own, which Leslie Wexner soon did.

Two years later, in 1963, Wexner used a $5,000 loan from his aunt to open a 2,000-square-foot store in Columbuss Kings-dale shopping center. Wexner christened it The Limited, named after the limited line of merchandise it carried. Wexners goal was to gross $100,000 the first yeara goal which was surpassed with sales of $162,000. This success soon prompted the opening of a second store.

By 1965, The Limited was so successful that Wexners parents, Harry and Bella, closed their own store and joined him in running his new enterprise. Harry Wexner served as the companys chairman until his death in 1975. Bella remained on the board into the 1990s as corporate secretary, providing her son with advice on his business moves. One year after Wexners parents closed up shop and joined him, The Limited opened its first corporate headquarters above its Eastland mall store in Columbus. The companys employee count had reached 100, and by 1968 The Limiteds sales had surpassed the $1 million mark.

In 1969, with five stores in operation, Wexner issued The Limiteds first public stock, traded over the counter. After going public, the company began to expand rapidlytoo rapidly, in fact, causing earnings to collapse. Wexner responded by improving the efficiency of the companys manufacturing and distribution systems. In a brief period, what The Limited had done in order to survive became the companys distinctive strength.

Innovations and Growth Throughout the 1970s

After identifying The Limiteds trouble spots, Wexner implemented a system of financial controls supported by electronic point-of-purchase terminals. These terminals allowed the companys Columbus headquarters to monitor inventory levels to see what was selling and where it was selling. This information helped the company aggressively mark down slow-selling items, which cleared shelf space for hot new items to be brought in. Although marking down slow-sellers was not necessarily a fresh idea, the speed at which The Limiteds headquarters evaluated and authorized these markdowns was impressive. The computer lines that link The Limiteds shops to corporate headquarters brought the company the flexibility and speed of a small privately run boutique. This became The Limiteds competitive edge over department stores that were forced to stick to price adjustment budgets planned months in advance.

The Limiteds 1970 annual report, produced with a common copy machine, was bold enough to predict that The Limited would become the largest and most profitable retailer of womans specialty clothing in the nation, although, at the time, there were only six Limited stores in existence. Nonetheless, the companys confidence certainly paid off. By 1974, The Limited had more than 1,000 employees, and the company opened its 100th store two years later. In just over a decade, the company had carved out a niche for itself by selling to young, fashion-conscious women who could coordinate an entire wardrobe with one stop at a Limited store.

The Limiteds purchase of Mast Industries in 1978 added to the companys efficiency and flexibility. Mast Industries, a supplier that contracted with more than 150 production facilities around the world, became The Limiteds merchandise procurement arm. The acquisition of Mast, coupled with the electronic point-of-purchase terminals on line to headquarters, allowed The Limited to place orders, purchase, and restock shelves with its most popular merchandise within two to three weeks. In comparison, the companys department store competition required months to do the same. The Limited also added to its marketing strength when it opened its first distribution center, a 525,000-square-foot structure in Columbus.

Rapid Expansion in the 1980s

Meanwhile, on the retail end of things, The Limited did more than concentrate on a specific market segment; it segmented the segment. In 1980 it opened its first Limited Express store, which focused on the youngest of fashion-conscious womenteenagersputting more trendiness into its designs than would go into its other womens sportswear. In 1982, The Limited Express was comprised of eight successful stores, and became a separate business that was later renamed simply Express.

The Limiteds expansion and market segmentation did not stop there. In 1982 alone, The Limited acquired Lane Bryant, Victorias Secret, and Roamans, merging the latter with Sizes Unlimited. The Limited was also listed on the New York Stock Exchange that same year, and its employee count reached 10,000. Each of the 1982 acquisitions prompted the company to restructure portions of its existing business. The addition of Lane Bryant, which sold clothing for larger women, caused The Limited itself to drop its very largest sizes and restock shelves with lower-priced, more fashionable sportswear aimed at younger women. The company also signed a contract with Bonjour to produce jeans and other stylish sportswear in large sizes, giving the chain a new image. When The Limited purchased the Victorias Secret stores and catalog enterprise, it legitimized womens purchase of sexy lingerie on a national scale. Victorias Secret stores, full of floral and lace pillows, old English furniture, and classical music, projected a respectable image.

The Limiteds procurement arm, Mast Industries, soon began to supply all of the Limiteds subsidiaries. In 1984, when Limited buyers stocked stores with career clothes that no one would buy, the Limited was able to develop, place orders for, and receive the completely new and private Forenza line, all within a matter of months. This allowed the company to reverse a slump that could have been catastrophic.

Private-label goods such as the Forenza line, which The Limited manufactured specifically for its stores, were produced at low cost in other countries and sold domestically for whatever price the market would support. The private labels could support large markups because The Limited created a desirable image for each line. For example, the Forenza line sported a romantic Italian name, although most of it was produced in the Far East. Furthermore, garment tags bore the name of a fictitious designer, Maria Pia, a Limited production consultant whose name had appealed to Wexner.

By 1984 The Limiteds sales had surpassed the $1 billion mark. That same year, the company was also listed on the London Stock Exchange. The Limiteds growth showed little sign of slowing, and the company offered to buy the financially troubled Los Angeles-based retailer Carter Hawley Hale Stores for $1.1 billion, but the offer was rejected. The following year, The Limited acquired Lerner Stores, a chain of moderate-price shops that it made profitable within a year. Another purchase that year was that of Henri Bendel, a store chain which catered to upscale, fashion-conscious women. In 1985 the company also opened its second distribution center, a 1.07 million-square-foot facility.

Net sales rose past $3 billion in 1986. The first Lerner Woman store, carrying larger sizes, was opened in addition to existing Lane Bryant stores, in order to capitalize on The Limiteds name recognition. Limited Credit Services was also formed. In partnership with Edward J. DeBartolo Corporation, the company again attempted to buy Carter Hawley Hale, offering as much as $60 per share. Once again, Carter Hawley Hale rejected the bid, instead selling more than 3.5 billion shares to White Knight General Cinema Corporation.

In 1987, the company continued to expand into new markets when it opened two Limited International Fashion superstores, and also introduced Limited Too, targeting children. It merged Sizes Unlimited and Lerner Woman, while Express unveiled its mens collection. At this point, the corporation was made up of over 50,000 employees.

Company Perspectives:

We are determined to build a Company of powerful, differentiated retail brands that maintain and strengthen our position as the worlds dominant specialty retailer.

The following year, The Limited acquired Abercrombie & Fitch, which was a somewhat upscale store chain featuring casual wear for men and women. Some tagged it as The Limited enterprises answer to J. Crew and The Gap. The company also debuted its own private-label intimate apparel business, Lingerie Cacique, and a natural-toiletries store chain called Bath & Body Works. Another new entrance on the retail scene was that of Structure, a casual and trendy clothing store for men. The company also opened The Limited Building, a one million-square-foot distribution center and office. Then, to weather a slump in The Limiteds fashion world, the company enlarged its specialty stores, giving them more expansive window displays in an attempt to attract customers. Sales for 1988 topped off at $4 billion.

The Limited sold Lerner Woman in 1989 to United Retail Group, Inc., in an agreement that gave The Limited a one-third interest in United Retail and its holdings. The company also obtained a charter for Limited Credit Services to become the World Financial Network National Bank, making it the first U.S. retailer to transform its credit division in that way. The company was ranked first in growth and profitability among specialty apparel merchandisers by Forbes in January 1989.

The 1990s and Beyond

Entering the new decade, The Limited continued its string of acquisitions and retail expansion with the mid-1990 purchase of Penhaligons, a perfume and luxury gift marketer based in London that was formerly a division of Laura Ashley Holdings. Throughout the following two years, the company also completed the acquisition of Gryphon Development, L.P., a producer of bath and personal care products, for a total of approximately $79 million.

Some industry experts questioned how long The Limited could continue to grow at such a pace. Many wondered if The Limited might be losing its market advantage by leaving its original niche of small stores with limited lines of cost-conscious merchandise, and moving to larger groups of stores that were more department store-like in nature. Also, many U.S. manufacturers began refusing to produce The Limiteds private labels and thus operate at the companys breakneck pace.

In part of 1990 and 1991, The Limited experienced organizational and distribution difficulties which resulted in the late delivery of new lines of merchandise to many of its Limited stores. Same-store sales at Limited and the budget-priced Lerner began to decline, and the company made moves to once again boost profits. The Forenza clothing line, which had formerly been a Limited exclusive, was introduced at Lerner in an attempt to attract new customers and increase sales. Many of the companys other predominantly mall-based store chains were either restructured, downsized, or closed if proving to be unprofitable. The company also dealt with quality problems that had surfaced in relation to some Victorias Secret merchandise. Despite these problems, the companys efforts helped it increase 1992 sales almost 13 percent to $6.94 billion.

In late 1993, The Limited sold 60 percent of its stake in Brylane, an entity that had come to encompass and operate the Lane Bryant chain, as well as other catalog sales operations. The transaction brought in $285 million to The Limited, which maintained its control of the other 40 percent of Brylane. The Limited also reduced its stake in the United Retail Group, Inc. to 20 percent. The company continued to reevaluate each store units success, subsequently renovating or closing some stores based on their potential for growth.

In 1994, after having successfully introduced its own credit card, The Limited signed an agreement with Next plc to open Bath & Body Works stores in the United Kingdom, marking the companys first stray from the U.S. market. The decision to make Bath & Body Works the companys first entrance into the United Kingdom was an interesting one, given that the U.K. was the headquarters of The Body Shop, a huge rival in the natural-toiletries market.

The following year The Limited not only opened approximately 400 more stores, but also continued its string of acquisitions and expansion into new retail areas. In July 1995, the company purchased Galyans Trading Company, an Indiana-based sporting goods store chain, for approximately $18 million. This addition added to the already diverse line of products for which The Limited was responsible, prompting the company to restructure its holdings into three main operating divisions. Womens Brands became responsible for the operation of all womens apparel holdings; Intimate Brands came to encompass the lingerie and toiletries holdings; and Emerging Brands was composed of the mens, childrens, and sporting goods lines.

That same year, Intimate Brands was spun off and became a separate business entity, although listed as a wholly owned subsidiary of The Limited, Inc. Stock shares of the new company were offered to the public for purchase, and Intimate Brands was listed on the New York Stock Exchange. The company achieved first-year sales of $2.52 billion, which came from over 1,200 Victorias Secret, Bath & Body Works, Cacique, and Penhaligons store units, as well as from Victorias Secret catalog sales. Intimate Brands was also made up of Gryphon Development, which was responsible for the creation of the companys personal care products.

Approaching the end of the century, The Limited was continuing efforts to position itself for further growth and increased earnings. In 1996, the company sold nearly 60 percent of its credit services to a New York-based investment firm, and also announced plans to close some 200 stores early the next year. These moves were not necessarily indicative of financial trouble, but instead of The Limiteds experience in evaluating its weaker areas and then positioning itself for success. Even through its tougher years, The Limited had posted increased sales each year during the 1990s. In 1996 sales rose almost $800 million to $8.64 billion, from $7.88 billion in 1995. With an impressive portfolio of retail holdings, years of experience and proven success in the retail arena, and the international market still almost completely open, The Limited, Inc. approached the turn of the century with great potential for continued growth and expansion in the future.

Principal Subsidiaries

Abercrombie & Fitch, Inc.; Bath & Body Works, Inc.; Brylane, Inc. (40%); Cacique, Inc.; Express, Inc.; Galyans Trading Company, Inc.; Gryphon Development, Inc.; Henri Bendel, Inc.; Lane Bryant, Inc. (40%); Lerner New York, Inc.; Limited Distribution Services, Inc.; Limited London-Paris-New York, Inc.; Limited Too, Inc.; Limited Service Corporation; Mast Industries, Inc.; Mast Industries (Far East) Limited (Hong Kong); Penhaligons Limited (U.K.); Structure, Inc.; Victorias Secret Catalogue, Inc.; Victorias Secret Stores, Inc.; World Financial Network National Bank.

Further Reading

Baumgold, Julie, The Bachelor Billionaire: On Pins and Needles with Leslie Wexner, New York, August 5, 1985.

The Limited, Inc. Fact Book: 1989-1990, Columbus: The Limited, Inc., 1989.

Machan, Dyan, Knowing Your Limits, Forbes, June 5, 1995, p. 128.

Sparks, Debra, Limited Appeal, Financial World, August 12, 1996, p. 36.

Trachtenberg, Jeffrey A., Merchant in a Rush: Leslie Wexner Pushes Limiteds Fast Growth Despite Retailings Ills, Wall Street Journal, August 15, 1990.

The Unlimited Limited, Forbes, November 15, 1977.

Weiner, Steven B., The Unlimited? Forbes, April 6, 1987.

Zinn, Laura, Did Leslie Wexner Take His Eye Off the Ball? Business Week, May 24, 1993, p. 104.

Maya Sahafi

updated by Laura E. Whiteley

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The Limited, Inc.

The Limited, Inc.

Two Limited Parkway
Columbus, Ohio 43216
U.S.A.
(614) 479-7000
Fax: (614) 479-7080

Public Company
Incorporated: 1963
Employees: 72,500
Sales: $5.25 billion
Stock Exchanges: New York London Tokyo

The Limited, Inc. is one of the largest specialty apparel retailers in the United States. It has more than 3,800 stores, including the Limited and Express stores, selling young womens clothing; Henri Bendel, upscale womens fashion stores; Lane Bryant, focusing on larger sizes; and Victorias Secret, a group of lingerie shops. The company is largely the vision of its founder and chairman, Leslie Wexner.

In 1961 Leslie Wexner dropped out of law school and went to work in his fathers womens wear store in Columbus, Ohio. Wexner suggested business would improve if the store concentrated on sportswear, but his father, Harry Wexner, said a full product line was necessary to attract customers. He encouraged his son to try out this idea, which Leslie Wexner eventually did.

In 1963, with a $5,000 loan from his aunt, Wexner opened a 2,000-square-foot store in Columbuss Kingsdale shopping center. Wexner christened it The Limited for the limited merchandise it carried. Wexners goal was to gross $100,000 the first year. He surpassed this with sales of $162,000, and opened a second store.

By 1965 The Limited was so successful that Wexners parents, Harry and Bella, closed their own store and joined him at The Limited. Harry Wexner served as chairman until his death in 1975. As of 1991 Bella was still on the board as corporate secretary, providing her son with advice on his business moves.

One year after his parents closed up shop and joined him, The Limited opened its first corporate headquarters above its Eastland mall store in Columbus. That year its number of employees reached 100. By 1968 The Limiteds sales had surpassed the $1 million mark.

In 1969, with five stores operating, Wexner issued The Limiteds first public stock, traded over the counter. After going public, the company began to expand rapidlytoo rapidly, causing earnings to collapse. Wexner responded by improving the efficiency of the companys manufacturing and distribution systems. In a brief period, what The Limited had done in order to survive became the companys distinctive strength.

After identifying The Limiteds trouble spots, Wexner implemented a system of financial controls supported by electronic point-of-purchase terminals. These terminals allowed the companys Columbus headquarters to monitor inventory levels to see what is selling and where it is selling, which helps The Limited to aggressively mark down slow-selling items, clearing shelf space for hot new items to be brought in. Although marking down slow sellers is not a fresh idea, the speed at which headquarters can evaluate and authorize these markdowns is. The computer lines that link The Limiteds shops to corporate headquarters bring the company the flexibility and speed of a small privately run boutique, giving The Limited a competitive edge over department stores that are forced to stick to price adjustment budgets planned months in advance.

The Limiteds 1970 annual report, produced with a common copy machine, was so bold as to predict The Limited would become the largest and most profitable retailer of womans specialty clothing in the nation, although, at the time, there were only six Limited stores in existence. The companys confidence certainly paid off. By 1974 The Limited had more than 1,000 employees, and by 1976 The Limited had opened its 100th store. It had carved out a niche selling to young, fashion-conscious women who could coordinate an entire wardrobe with one stop at The Limited.

The Limiteds purchase of Mast Industries in 1978 added to the companys efficiency and flexibility. Mast Industries, a supplier that contracted with more than 150 production facilities around the world, became The Limiteds merchandise procurement arm. This acquisition, coupled with the electronic point-of-purchase terminals on line to headquarters, allowed The Limited to place orders and purchase and restock shelves with its most popular merchandise within two to three weeks, compared to the months required by competing department stores. The Limited had also opened its first distribution center, 525,000 square feet on Morse Road in Columbus.

The Limited did more than concentrate on a specific market segment; it segmented the segment. In 1980 it opened its first Limited Express store, which focuses on the youngest of fashion-conscious women, teenagers, putting more trendiness into its designs than would go into womens sportswear. In 1982 The Limited Express, with eight successful stores, became a separate business and was later renamed simply Express. The Limiteds expansion and market segmentation did not stop there.

In 1982 alone The Limited acquired Lane Bryant, Victorias Secret, and Roamans, merging the latter with Sizes Unlimited. That year The Limited was also listed on the New York Stock Exchange, and its number of employees reached 10,000.

Each acquisition focused on a specific segment of the market. During the restructuring of Lane Bryant, which sells clothing for larger women, The Limited dropped its very largest sizes and restocked shelves with lower-priced, more fashionable sportswear aimed at younger women. It signed a contract with Bonjour to produce jeans and other stylish sportswear in large sizes, giving the chain a new image. When The Limited purchased Victorias Secret, stores and catalog, it legitimized womens purchase of sexy lingerie on a national scale. Victorias Secret stores, full of floral and lace pillows, old English furniture, and classical music, projected a respectable image.

The Limiteds procurement arm, Mast Industries, helped supply all of the Limiteds subsidiaries. In 1984, when Limited buyers stocked stores with career clothes that no one would buy, the Limited was able to develop, place orders for, and receive the completely new, private Forenza line, all within a matter of months, managing to reverse a slump that could have been catastrophic.

These private-label goods, which The Limited manufactures specifically for its stores, are produced at low cost in Third World country and sold for whatever price the market will support. The private labels can support large markups because The Limited creates a desirable image for each line. The Forenza line sported a romantic Italian name, although most of it was produced in the Far East; garment tags bore the name of a fictitious designer, Maria Pia, a production consultant whose name had appealed to Wexner.

By 1984 The Limiteds sales had surpassed the $1 billion mark. That same year it was listed on the London Stock Exchange. The Limiteds growth showed little sign of slowing. In 1984 The Limited offered to buy the financially troubled Los Angeles-based retailer Carter Hawley Hale Stores for $1.1 billion. The offer was rejected. In 1985 The Limited acquired Lerner Stores, a chain of moderate-price shops that it made profitable within the year, as well as Henri Bendel, which caters to upscale, fashion-conscious women. That year it also opened its second distribution center, a 1.07 million-square-foot facility, and The Limiteds number of employees climbed past 25,000.

Net sales rose past $3 billion in 1986. The first Lerner Woman store, carrying large sizes, was opened, and Limited Credit Services was formed. In 1986 The Limited, in partnership with Edward J. DeBartolo Corporation, again attempted to buy Carter Hawley Hale, offering as much as $60 per share. Carter Hawley Hale rejected the bid, selling more than 3.5 billion shares to White Knight General Cinema Corporation.

In 1987 the company opened two Limited International Fashion superstores. It introduced Limited Too, targeting children. It merged Sizes Unlimited and Lerner Woman. Express unveiled its mens collection, and the number of employees reached 50,000.

The Limited in 1988 acquired Abercrombie & Fitch. The company debuted its own private-label intimate apparel business, Lingerie Cacique. It also opened The Limited Building, a one millions-square-foot distribution center and office. During the fashion slump that year it enlarged its specialty stores, giving them more expansive window displays, attempting to attract women with their look and size. In 1988 sales topped $4 billion.

The Limited sold Lerner Woman in 1989 to United Retail Group, Inc. It also obtained a charter for Limited Credit Services to become the World Financial Network National Bank, making it the first U.S. retailer to transform its credit division in that fashion. The company was ranked first in growth and profitability among specialty apparel by Forbes in January 1989.

Some industry experts question how long The Limited can grow at its current pace. They wonder if by leaving its original niche of small stores with limited merchandise for the fashionable yet cost-conscious woman, and by moving to larger stores or groups of stores that carry everything from underwear to clothes for children and men, The Limited might be losing its market advantage. Also, many U.S. manufacturers refuse to produce The Limiteds private labels or operate at the companys breakneck pace. Still, the company forecast continued growth, with the expectation of adding $1 billion in sales per year during the early 1990s, toward a goal of $10 billion by mid-decade.

Principal Subsidiaries

The Limited; The Limited Express; Victorias Secret; Victorias Secret Catalogue; Henri Bendel; Lerner; Abercrombie & Fitch; Brylane; Mast Industries, Inc.; Limited Credit Services.

Further Reading

The Unlimited Limited, Forbes, November 15, 1977; Baumgold, Julie, The Bachelor Billionaire: On Pins and Needles with Leslie Wexner, New York, August 5, 1985; Weiner, Steven B., The Unlimited? Forbes, April 6, 1987; The Limited, Inc.: Fact Book: 1989-1990, [1989]; Trachtenberg, Jeffrey A., Merchant in a Rush: Leslie Wexner Pushes Limiteds Fast Growth Despite Retailings Ills, The Wall Street Journal, August 15, 1990.

Maya Sahafi

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The Limited, Inc.

The Limited, Inc.

founded: 1963


Contact Information:

headquarters: 3 limited pky.
columbus, oh 48230 phone: (614)415-7000 fax: (614)479-7080 url: http://www.limited.com

OVERVIEW

With 1997 sales of $9.2 billion, The Limited, Inc. is one of the biggest specialty apparel retailers in the United States. With its corporate offices located in Columbus, Ohio, the company operates several chains nationwide, including The Limited, Limited Too, Express, Lane Bryant, Lerner New York, Henri Bendel, Galyan's Trading Company, Victoria's Secret, Structure, and Bath and Body Works. The Limited has acted progressively over the years to keep up with new trends and survive economic challenges and has competitors in many different markets. Due to its efficient operations and willingness to take chances, the company has often had the edge over its competition. The company is known to be aggressive in marketing and began expanding internationally into the United Kingdom.

At the same time, since 1995 it has downsized by closing unprofitable stores, including the 118-store Cacique chain of lingerie stores, and spinning off some of its most profitable chains as public companies. A 1995 public offering of stock in Intimate Brands (parent of Victoria's Secret and Bath and Body Works) left The Limited, Inc. with an 83-percent ownership in Intimate Brands. In 1998 it divested its interest in Brylane Inc., a catalog publisher that grossed $1.3 billion in 1997. Also in 1998, it completed its spin-off of Abercrombie and Fitch, a 156-store upscale casual clothier that had 1997 sales of $521.6 million. Overall, The Limited, Inc. reduced the number of stores it operated from 5,640 in 1997 to about 5,200 in 1998.


COMPANY FINANCES

For 1997 The Limited, Inc. reported net sales of $9.2 billion, up from $8.6 billion in 1996. The increase was due to sales from new stores, as comparable store sales were flat. Women's brands (Express, Lerner New York, Lane Bryant, The Limited, Henri Bendel) accounted for $3.9 billion in sales; Intimate Brands (Victoria's Secret Stores and Catalogue, Bath and Body Works, Cacique, and other) accounted for $3.6 billion in sales; emerging brands (Structure, Limited Too, Galyan's Trading Co., and other) accounted for $1.1 billion in sales; and Abercrombie and Fitch accounted for $522 million in sales.

For 1997, operating income fell to $480 million from $636 million in 1996, due in large part to a one-time charge of $187 million in 1997 for the closure of 5 of the 6 Henri Bendel stores and other charges. As a result, women's brands had an operating loss of $268 million, while the company's strongest performer, Intimate Brands, had an operating income of $505 million. Led by Limited Too, emerging brands reported an operating income of $159 million, and Abercrombie and Fitch was profitable with $84 million in operating income.

The company's stock price improved from trading in the $16-$20 range in early 1996 to a range of $23-$27 at the end of 1997. This change in price reflected Wall Street's approval of the company's restructuring efforts as well as the general strength of the retail sector during that period.


ANALYSTS' OPINIONS

Analysts have recommended The Limited sell some of its divisions and zero in on its target market, 20- to 40-year-olds. Some also believe the women's apparel division, including Limited, Limited Express, Lerner, Lane Bryant, and Henri Bendel should be sold. Others believe the company should drop only its budget apparel line, Lerner, and its plus sizes division, Lane Bryant. According to some critics, Structure stores for young men also have had declining sales and could be sold off.

Industry experts are also concerned because the company has expanded its product line extensively. Its "limited" product line led the company to success and gave it its market advantage in the past. Other critics claim the company has not been run as efficiently as it could have been, and that it has problems with product quality, concepts, and redundancy.

The Limited has also been criticized for lacking identity in a retail marketplace dominated by strong brands. One analyst asked, "Lerner, Limited, what do these stores stand for?"


HISTORY

Leslie Wexner started working at his father's clothing store in 1961. Disagreeing on how to run the business most effectively, Leslie tried to convince his father to focus on selling sportswear. Wexner's father urged him to open his own store and apply his marketing ideas. Taking his advice, he left his father's clothing business in 1963 and opened the first Limited store in Columbus, Ohio, using $5,000 of borrowed money. Named for its limited selection, The Limited offered mid-priced, fashionable clothing to young women. After the first year the store was such a success that a second store was opened in Columbus. In 1965, Wexner's parents closed their store and joined their son's rapidly growing company.

Sales topped $1 million by 1968 and, in 1969 The Limited's first public stock was issued. However, the company's earnings were collapsing due to its rapid growth, so Wexner improved its manufacturing and distribution systems' efficiency. By 1976 the company had 100 stores.

In the early 1980s, The Limited began segmenting the market, or branching off into other specific markets. Over the years the company has marketed many types of apparel and accessories to many types of people. Products sold through its different stores include women's casualwear and sportswear, men's sportswear, children's sportswear, lingerie, toiletries, and perfume.

In 1980 the company began segmenting its market by opening the first Limited Express store (later named Express). The new store was targeted toward teenagers, selling trendier fashions. By 1982 the Limited Express was so successful that it became a separate business.

In 1982 The Limited became a multidivisional company with the acquisition of Lane Bryant, a clothing store for larger women, and Victoria's Secret, a lingerie store and catalog operation. With the Lane Bryant acquisition, The Limited store discontinued selling its plus sizes and zeroed in on fashionable sportswear for younger women.

Acquisitions in 1985 included Lerner New York, mid-priced stores selling women's casualwear and sportswear, and targeted to a more budget-minded woman, and Henri Bendel, a New York-based company with six stores that specialized in haute couture. The Limited made Lerner lucrative within one year and opened the first Lerner Woman in 1986. Company sales for 1985 were $2.4 billion.

Limited Too, a children's fashion store, was opened in 1987 to capture the children's apparel market. Later, the Express store branched off by introducing the first men's line of fashions. The men's store name became Structure in 1987.

In 1988 The Limited acquired Abercrombie and Fitch, an upscale casual clothier, and introduced another lingerie store, Cacique, as sales reached the $4-billion level. Sales continued to grow in the early 1990s as the company introduced Bath and Body Works in 1990. By 1991 sales had reached $6.1 billion.

In 1995 The Limited purchased Galyan's Trading Company, a full-line sporting goods retailer with its own brands. That same year the company began restructuring to become more competitive, hiring away key executives from competitors such as J. Crew and Banana Republic, and downsizing by closing unprofitable stores. It made Intimate Brands (parent of Victoria's Secret and Bath and Body Works) a public company through an initial public offering of stock, but retained an 83-percent ownership. In 1996 Abercrombie and Fitch became a public company, and by 1998, The Limited planned to eliminate its ownership position in the 156-store chain through an exchange of stock.

In 1998 the company divested its interest in Brylane Inc., a catalog publisher, that grossed $1.3 billion in 1997, and closed the 118-store Cacique chain of lingerie stores. Overall, The Limited, Inc. reduced the number of stores it operated from 5,640 in 1997 to about 5,200 in 1998.

FAST FACTS: About The Limited, Inc.


Ownership: The Limited Inc. is a publicly owned company traded on the New York Stock Exchange and London Stock Exchange.

Ticker symbol: LTD

Officers: Leslie H. Wexner, Chmn., Pres. & CEO, 60, $2,861,560; Kenneth B. Gilman, VChmn. & Chief Administrative Officer, 51, $2,128,630; V. Ann Hailey, Exec. VP & CFO, 47, $463,152; Andrea Weiss, Exec. VP & Chief Stores Officer

Employees: 131,000 (1998)

Principal Subsidiary Companies: The Limited, Inc. owns and operates the following businesses: Galyan's Trading Co., Henri Bendel, Lane Bryant Inc., Lerner New York Inc., Limited Express, The Limited, Limited Too, Structure, and MAST Industries Inc. In addition, it owns 83 percent of Intimate Brands Inc., which includes Victoria's Secret Stores, Victoria's Secret Catalogue, and Bath and Body Works. It is in the process of divesting its ownership in Abercrombie and Fitch Co. through an exchange of stock.

Chief Competitors: The Limited, Inc. competes with other retailers of women's apparel, including: Banana Republic; Benetton; Body Shop; Charming Shopper; Clothestime; CML Group; Dayton Hudson; Dillard's; Dress Barn; Edison Brothers; Federated; The Gap; J. Crew; Lands' End; Levi Strauss; L.L. Bean; Marks and Spencer; May; Melville; Nieman Marcus; Nordstrom; Spiegel; TJX; and U.S. Shoe.


STRATEGY

The Limited has taken many steps over the years to reach its goal of becoming the largest and most profitable retailer of women's specialty clothing in the United States. One of the main reasons the company has been so strong in the marketplace is that it was the first store to offer affordable fashions catering to working women. It produced private-label lines, which were manufactured exclusively for its stores in Third World countries and sold at high profit margins. Higher margins could be maintained due to the desirable image The Limited's private-label lines projected.

Another reason The Limited has been able to keep its market share is its unique sourcing and distribution process. Starting in 1969, the company instituted a system to improve financial controls. Using point-of-purchase terminals, the company was able to monitor inventory from its headquarters. This system enabled The Limited to mark down slow-selling items and restock with a speed that provided an advantage over its competitors. Department stores could not be as flexible. Acquiring MAST Industries, an international apparel purchasing and importing company, was key to this distribution process as well. With The Limited's point-of-purchase terminals and MAST Industries' efficient buying and shipping operations, The Limited was able to restock its shelves with the latest and most popular fashions within a matter of weeks, while competing stores took months to reshelve.

The Limited was willing to be creative and take chances with its marketing ideas. In an effort to win back customer loyalty, The Limited introduced a radio advertising campaign in 1994 targeted at the younger generation, which was the first to be aired in 10 years. The company also started an Italian cafe, Papa Razzi Cucina, in Express stores to attract a larger crowd. Although customers could not shop while eating, the combination store was designed to be casual and convenient.

Since 1995 the company has been refocusing on its women's apparel chains, especially Limited and Express, and downsizing by closing underperforming stores. A new division, Limited Design Services, was formed to upgrade the company's product lines, and the former president of Banana Republic, Maria Holman-Rao, was hired to be in charge.

According to its 1997 annual report, The Limited is mainly interested in brands that are capable of producing $1 billion in annual sales. The company's recent strategy involves building its core brands and eliminating others. According to a "Most Recognized Brands" survey, in only two years the Victoria's Secret brand moved from twenty-sixth to ninth most recognized brand. In 1998 the company sold its Cacique chain of lingerie stores to focus its resources on building the Victoria's Secret brand even more. Overall, the company is seeking to have fewer, but stronger, brands.


INFLUENCES

When the company went public, business expanded astronomically, almost to the point of collapse. The Limited was able to survive by improving the efficiency of its manufacturing and distribution systems. Improving efficiency became the company's strategy and basis for strength in the market.

Economic challenges and the maturation of the company were obstacles for The Limited. In the early 1980s, the company grew at a phenomenal rate, but in 1984, a marketing mistake challenged The Limited. The company stocked its stores with career clothes, which did not sell very well. With the help of MAST Industries, The Limited quickly developed a new line of clothing and replaced career clothes with this more casual line within a few months, and avoided a possible catastrophe.

CHRONOLOGY: Key Dates for The Limited, Inc.


1963:

Leslie Wexner opens The Limited in Columbus, Ohio

1968:

Sales surpass $1 million for the first time

1969:

The Limited goes public

1978:

Purchases Mast Industries, a merchandise procurement firm

1980:

Launches The Limited Express targeting teenagers

1982:

Acquires Lane Bryant and Victoria's Secret

1985:

Acquires Lerner New York

1987:

Opens Limited Too, a children's clothing store

1988:

Acquires Abercrombie and Fitch

1995:

Makes Intimate Brands, parent Victoria's Secret, a public company with an initial public stock offering

1996:

Abercrombie and Fitch goes public

1998:

Announces plans to eliminate its ownership of Abercrombie and Fitch through an exchange of stock


All challenges The Limited faced were met with decisive action. In 1988, when stores experienced a slight decrease in business, the company combatted this by expanding its specialty stores with enlarged display windows to attract more customers. In the 1990s, though, impressive storefronts were not enough. Customers wanted fashion and more importantly, value. Comparable store sales declined.

In the move to create more value, The Limited decided to spin off Intimate Brands, which accounted for 17 percent of its best growth business, as a public company in 1995. The Limited kept an 83-percent majority interest in Intimate Brands, which included Victoria's Secret stores and catalog, Bath and Body Works (the personal care product stores), and Cacique (the lingerie stores). Revenue gained from the sale was used to buy back Limited stock and prevent other division stores from closing.

The success of its sourcing and distribution system caused problems for the company. With speedy delivery being the number one priority, quality became questionable and pricing problems developed. Items were being marked down the same day they were put on the shelf, which detracted from the brand's image. The Limited managed to fight these problems while continuing to expand.


CURRENT TRENDS

The Limited began reorganizing its many divisions in 1995 as part of its overall strategy to refocus on women's apparel and create more value for the company's shareholders. It eliminated entire businesses, sold off substantial assets, and strengthened its core brands. The company began closing underperforming stores in 1995 with 79 store closings, followed in 1996 by 135 closings, in 1997 with 186 closings, and in 1998 with a projected 280 closings. The closings affected Limited, Lerner, Express, and Lane Bryant Stores. In 1998 the company closed the 118-store Cacique chain of lingerie stores to focus on strengthening its Victoria's Secret brand.

Two of the company's most profitable divisions, Intimate Brands and Abercrombie and Fitch, were spun off as public companies. While The Limited retained an 83-percent interest in Intimate Brands, it announced in 1998 that it would eliminate its ownership position in Abercrombie and Fitch through an exchange of stock. With the company looking for brands capable of producing $1 billion in annual sales, it was possible other divisions could become publicly owned companies once their performance reached a certain level. Other streamlining measures included cutting back the exclusive Henri Bendel chain from six stores to a single store in New York City.

In order to focus on strengthening its brands, especially its women's apparel stores The Limited and Express, The Limited hired experienced executives away from its competitors and also promoted several executives from within. Rob Bernard, formerly president and chief operating officer at the J. Crew Group, was hired as president of The Limited Stores to reestablish it as a dominant brand. Marie Holman-Rao, former president of Banana Republic, was hired as president of Limited Design Services, a new position responsible for the overall design platform of each business. The position also oversees the quality of each individual business's design organization.


PRODUCTS

The company's products include its many different store chains and the branded merchandise it sells. Its most recent acquisition was Galyan's Trading Company, a retailer for sport and fitness enthusiasts. Other brands on which the company is focusing its resources include Victoria's Secret, which will be supported by a $50-million advertising budget in 1998. Limited Too, a specialty store for girls, is also considered a leader in its segment.


CORPORATE CITIZENSHIP

In 1993, The Limited offered to construct a new vocational center for the Columbus Public School District in Ohio in exchange for 28 acres owned by the Northeast Career Center. The land occupied by the current career center was next to land the company had acquired to build a shopping mall. The company also offered to pay for the building appraisal and travel expenses for school officials to collect ideas by visiting other career centers nationwide. CEO Leslie Wexner is also a major donor to Ohio State University.


GLOBAL PRESENCE

The Limited operates most of its stores within the United States. In 1994 and 1995, in partnership with British apparel retailer Next PLC, The Limited opened five Bath and Body Works stores in suburban London, England, and in Scotland. Next PLC withdrew from the venture in 1996, selling its stake back to The Limited. With those stores doing well, it would be possible for Bath and Body Works to expand into Europe.

Most of the merchandise sold by The Limited is purchased from some 4,000 manufacturers in foreign markets. In 1995, approximately 55 percent of the company's total goods purchased were from foreign outlets.


EMPLOYMENT

The Limited is dedicated to its employees and emphasizes teamwork. It describes its corporate culture as one emphasizing creativity, hard work, and high energy. It is looking for people who are smart, ambitious, outgoing, and interested in making a career with the company. The company promotes from within and has a creative incentive program for its workers.

Benefits vary depending on the level of employment. They include merchandise discounts, participation in a stock purchase plan, a savings and retirement plan, a full dental and medical package, life insurance, and disability income.


SOURCES OF INFORMATION

Bibliography

coleman-lochner, lauren. "limited to close 200 shops." record-bergen county, 15 january 1997.

gault, ylonda. "the limited discovers its limits." crains new york business, 19 december 1997.

gebolys, debbie. "bath & body works heads overseas." columbus dispatch, 25 january 1997.

——. "limited agrees to split with catalog operation." columbus dispatch, 3 march 1998.

——. "limited creates division, names president." columbus dispatch, 15 july 1997.

——. "limited to shed 2 chains, take charge." columbus dispatch, 18 february 1998.

——. "the limited's executive suite sees changes." columbus dispatch, 26 june 1997.

——. "new leader selected for limited stores." columbus dispatch, 12 august 1997.

limited fact book. columbus, oh: the limited, inc., 1997.

"the limited, inc." hoover's handbook of american business 1996. austin, tx: the reference press, 1995.

"the limited, inc. announces successful completion of exchange offer resulting in the split-off of abercrombie & fitch co." pr newswire, 14 may 1998.

the limited, inc. home page, 6 may 1998. available at http://www.limited.com.

o'malley, christine b. "limited pays for vocational school study." business first-columbus, 15 august 1994.

sahafi, maya. "the limited, inc." international directory of company histories. detroit, mi: st. james press, 1990.

sparks, debra. "limited appeal." financial world, 12 august 1996.

walters, rebecca. "limited stirs ingredients to revive winning recipe." business first-columbus, 31 january 1994.


For an annual report:

on the internet at: http://www.limited.comor write: the limited, inc., po box 16000, columbus, oh 43216


For additional industry research:

investigate companies by their standard industrial classification codes, also known as sics. the limited's primary sics are:

5621 women's clothing stores

5961 catalog and mail order houses

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