Limited Brands Inc. is moving closer to a deal to shed its $2.1 billion apparel business.
According to financial sources familiar with the talks, two leading potential buyers for Express and Limited Stores are said to be Schottenstein Stores Corp. and Gordon Brothers Group. Jay Margolis, president of Limited's apparel group, is also believed to be interested in making a bid, perhaps in a deal structured like a management buyout.
Any sale of the Limited and Express businesses would complete an evolution of the 44-year-old group, which is led by chairman, chief executive officer and founder Leslie H. Wexner, that has seen it shift from an apparel-only retailer to one that now gets the majority of its profits and revenues from its innerwear and beauty products.
Once accounting for more than 70 percent, the apparel brands now represent less than 20 percent of Limited Brand revenues of $10.7 billion a year. Limited had sales last year of $493 million, while Express had revenues of $1.7 billion, according to the company. Victoria's Secret and Bath & Body Works now account for the bulk of sales.
There are 658 Express stores and 260 Limited stores in operation, selling men's and women's apparel. The sources said the price tag for the apparel group is in the $1 billion range. Some estimates have been as low as $900 million and others as high as $1.1 billion. Real estate sources said any deal would also include the real estate holdings connected with the Limited and Express operations. Merrill Lynch is said to be the banker advising Limited. Merrill Lynch could not be reached for comment.
Schottenstein Stores is the retail holdings vehicle for the Schottenstein family. Holdings include stakes in Retail Ventures and American Eagle Outfitters, as well as Value City Furniture and liquidator SB Capital Group. Jay Schottenstein is the firm's chairman. Retail Ventures operates Value City Department Stores, Filene's Basement Stores and DSW footwear warehouse stores. A spokesman for Schottenstein Stores declined comment.
Margolis is said to be putting together an investor group that would try to buy the division. Sources said he has had discussions with Schottenstein to that effect. Calls to Margolis were directed to a Limited spokeswoman, who said, "The company does not respond to Wall Street rumors and speculations." The spokesman for Schottenstein declined comment about a possible venture with Margolis.
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