By  on April 20, 2007

NEW YORK — Could Limited Brands Inc. be closer to a deal to sell its Express and Limited Stores apparel divisions?

Executives at Limited Brands in recent investor meetings have said their future is Victoria's Secret and Bath & Body Works. They made no secret of their focus in the beauty and intimate apparel sectors. The rumblings about a sale or spin-off of the apparel divisions have circulated for the past year. The talk was that management kept the divisions hoping to effect a turnaround and possibly fetch a higher price should they later decide to sell.

Limited is about a $500 million business, while Express has about $1.6 billion in sales, according to sources.

A research note by Richard E. Jaffe at Stifel Nicolaus on Wednesday said that due to current depressed results, it might be the right time for management at Limited Brands to "reconsider" its plans. His point was that as apparel results have remained lackluster, perhaps selling the division, albeit at a lower price, would at least provide the company with cash at hand today that can be put to use for its growing businesses. Even if a turnaround eventually comes to fruition for the apparel divisions, there's not much growth beyond normalized earnings, Jaffe wrote.

The analyst wrote the divisions might be sold for between $400 million and $600 million, and noted that if management retained an equity stake, that sale price could be in the $500 million range.

Industry sources said that they expect a sale of Express first, following by Limited Stores. On the financial side, contacts said there's been some private equity interest in the chains.

Limited chairman and chief executive officer Leslie H. Wex­ner started the company with a single store called Limited, which opened in Columbus, Ohio, in 1963. Over the years, the company has gone through sell-offs and spin-offs. In 1995, it established Intimate Brands as a separate entity just for Victoria's Secret and Bath & Body Works. The new entity was recombined into Limited Brands in 2002. There also was the spin-off of Abercrombie & Fitch in 1998, as well as the sale of New York & Co. to Bear Stearns in 2002.

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