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Weak Quarter Posted at Limited’s Women’s Units

COLUMBUS, Ohio -- The Limited Inc. reported earnings rose 7 percent in the first quarter ended April 30 as continued weakness in its women's apparel chains was offset by strength in its other businesses.<BR><BR>Earnings advanced to $47.3 million, or...

COLUMBUS, Ohio — The Limited Inc. reported earnings rose 7 percent in the first quarter ended April 30 as continued weakness in its women’s apparel chains was offset by strength in its other businesses.

Earnings advanced to $47.3 million, or 13 cents a share, from $44.2 million, or 12 cents, a year earlier.

Sales increased 6 percent, to $1.48 billion from $1.4 billion.

Same-store sales were flat with an 18 percent gain in non-women’s apparel businesses offsetting a 6 percent decline at its women’s apparel chains.

At Express, the Limited’s largest chain, operating profits and margins declined, with same-store sales off in the low double digits.

Lerner New York’s same-store sales declined in low single digits, but margins and operating profits showed good improvement, offsetting the weakness at Express, said a spokesman.

At The Limited’s flagship chain, operating profits increased but same-store sales fell in the high teens. Lane Bryant’s same-store sales increased in the mid-single digits and Henri Bendel showed a high-single-digit gain. Both chains had flat earnings, however, hurt by depressed operating margins.

Combined, the women’s apparel chains operating profits were up slightly, the spokesman noted. Leslie H. Wexner, chairman and chief executive officer, said the company’s women’s apparel chains saw noticeable improvement in the quality of their merchandise offerings and were “considerably less price-promotional this quarter than in the past.

“Although this had a temporary dampening effect on sales, I firmly believe it is the right thing to do, because it strengthens the integrity of our brands and recognizes the good judgment of our customers,” he said.

“Looking forward,” Wexner added, “we remain focused on clarifying and differentiating our women’s apparel brands, and I think we are making some headway in that direction. Clearer positioning and better execution will enable these businesses to take advantage of the considerable sales and earnings opportunities we foresee in the third and fourth quarter.”

The weakness at the women’s chains was in sharp contrast to vibrant performances in its other businesses, most of which showed sharp increases in profits and margins.

Victoria’s Secret Stores notched significantly higher operating income and better margins on a same-store gain in the mid-teens. The Limited noted that its exclusive Miracle Bra topped one million units while its proprietary Second Skin Satin “continued to generate great customer acceptance.”

Victoria’s Secret Catalog posted its highest operating income ever, helped by the launch of the first swimwear catalog, which generated sales more than double management’s expectations. Sales for the overall catalog advanced in the mid-teens with increased operating profits. Cacique, a lingerie chain, had a same-store increase in the low single digits, but operating profits declined on lower margins.

Its men’s wear chains had a strong quarter, with Structure showing a substantial gain in operating profits and higher margins, driven by a same-store hike in the low 20s. Abercrombie & Fitch Co.’s same-store sales increased in the mid-teens, with operating profits and margins gaining.

Bath and Body Works’ same-store sales surged in the 40s and Limited Too, its young girls’ chain, advanced in the mid-30s. Both chains posted higher operating earnings and margins.