After decades of taking it slow overseas, Limited Brands Inc. is charged up and aims to double international revenues to $2 billion in three years.
“We’re taking it very seriously,” Limited’s chairman, chief executive and founder Leslie H. Wexner said during an analysts’ meeting in Columbus, Ohio, on Tuesday. “A paradigm shift happened in the last 12 months.”
Wexner said the $1 billion in revenue currently generated abroad is “very profitable” and that Limited’s La Senza intimate apparel chain in Canada, acquired in 2007, is “an area of accelerating growth.…We will start plowing forward very aggressively.”
“Over the next three years we should double the size of our international business,” added Martin Waters, executive vice president of the international division. “We learned that our brands have appeal all over the world and we have learned how to make money.”
The executives cited “a menu of opportunity” including:
• Rebuilding La Senza in Canada, which has struggled in the last two years.
• Opening 30 to 40 Bath & Body Works stores in Canada annually over the next few years; by the end of November, there will be 31.
• Opening Pink stores in Canada, with the first opened last week and four more bowing over the next few weeks.
• Seeking a “really big scale” franchise partner, probably for BBW, to cover expansion across an entire continent, like Europe or Asia.
• Testing BBW in travel-related locations including airports.
• Adding Victoria’s Secret flagships in strategic markets, including Japan in 2012 at the earliest.
• Building Victoria’s Secret Direct overseas from the current $100 million in volume.
Wexner long stuck to the belief that transporting U.S. fashion brands overseas was a losing proposition. However, he now has a different outlook since the company shed its sportswear businesses — Abercrombie & Fitch, Express and Limited Stores — leaving it with the more profitable Victoria’s Secret and BBW brands, and with no significant square footage growth currently seen in the U.S.
Still, Wexner sounded a word of caution. “We are firewalling off international from the U.S. domestic business,” he said. “The golden goose is North America. We don’t want to go down that dark hole of being successful there and getting screwed up here.”
The economy, he predicted, will be “fluffing along maybe a year, maybe two. I don’t believe we are seeing the end of the world. The world is stabilized. Customers are largely stabilized….I am pretty optimistic about the Christmas season. We have made progress across the enterprise.…The whole mind-set of the business is younger, more emotional, even the vocabulary. Women are saying, ‘I want to be a bombshell.’ Years ago, it was ‘I want to be an angel.’ I am optimistic on a relative basis.”
He cited a sustained improvement in the performance of BBW and “better execution of ideas” at VS. Overall, “there has been an improvement through the fall.”
On Monday, the $8.6 billion Limited updated its guidance, projecting third-quarter earnings per share between zero and a loss of 4 cents versus its previous estimate of a loss of seven to 12 cents, but the outlook for October comp-store sales worsened to negative low- to midsingle digits, versus the earlier estimate of roughly flat. Limited’s shares fell on Tuesday since analysts had originally expected a better comp-sales performance.(For more on stocks, see page 14.)
Free cash flow for 2009 (cash flow from operations less capital expenditures) is expected to be between $500 million and $600 million, compared to a previous estimate of $350 million to $450 million. Wexner said Limited wants to return to 15 percent growth in the top line and 15 percent gain in operating income by 2012, but to reach that target, not met since 2004, margins and sales trends must improve. Wexner emphasized that better merchandise with “emotional content” and the international opportunities are the drivers. “We want to build back to that model. We think it’s quite doable,” Wexner said. “We are not trying to fast dance to slow music.” In 2008, Limited had a 7.9 percent operating margin.
As far as the U.S., Wexner said “the next big thing” is the Henri Bendel accessories stores. “We think that’s [potentially] a big, big business.” He said the new Bendel’s format is in a debugging stage. He also said Victoria’s Secret Sport is another potential big thing.
“My personal philosophy to beauty is paying attention to oneself. I love to be outdoors, lots of fresh air, trying to take care of yourself as best you can. I always notice that comes through,” says Felicity Jones, the global face of @shiseido-owned @cledepeaubeauteus, which launches today. Head to WWD.com to read more about the actress’ love for beauty and how she prepared for her new role in “The Basis of Sex,” playing the young Ruth Bader Ginsburg. #wwdbeauty (📷: @dandoperalski)
For men’s fall 2018, @giuseppezanotti drew on elements from streetwear, sport, biker, combat and rock ‘n’ roll. Pictured here are a pair of shoes from the collection, featuring zippers, rhinestones, and silver hardware. Head to WWD.com to see a roundup of the accessories from Milan’s men’s fall 2018 shows. #wwdfashion (📷: Andrea Delb)
To celebrate the 25th anniversary of @ralphlauren’s snowboarding collection, the brand is mining its archives. The iconic brand is reintroducing vintage styles and dropping new designs for a color capsule that will be available in Ralph Lauren stores and @openingceremony on January 25. The capsule will consist of 10 pieces, including the Snow Beach Pullover, pictured here, which is a collector’s item that rapper Raekwon wore in Wu-Tang Clan’s “Can It Be All So Simple” video. #wwdfashion (📷: Tom Gould)
For @rochasofficial’s pre-fall 2018 collection, creative director Alessandro Dell’Acqua channeled the sophisticated and intriguing Catherine Denevue in the film “Belle de Jour.” Polished collarless coats, midi skirts, suits and ’60s graphic motifs were all featured in the collection, adding a sense of discreet luxury. See the rest of the photos on WWD.com #wwdfashion
“We tried to produce clothing of that couture quality, but the most daunting part was that we only had a matter of days [to do it],” said costume designer Lou Eyrich, who recreated Gianni Versace’s iconic looks for @americancrimestoryfx. Eyrich searched online retailers and vintage shops for original pieces from the design house and for @penelopecruzoficial, who plays Donatella Versace. Head to WWD.com to read how she created the Versace world. #wwdfashion
Only three months after her stellar debut catwalk season, @kaiagerber has inked her first big design collaboration –– with @karllagerfeld. The collection blends Lagerfeld’s Parisian chic aesthetic and the model’s signature West Coast casual style via RTW, accessories, footwear and more. The #KarlLagerfeldxKaia collection will launch in September with a series of events. Get all the details on WWD.com. #wwdnews #wwdfashion
Harrods plans to remove the famous statue of Princess Diana and Dodi Al Fayed from the bottom of the Egyptian escalators and hand it back to Mohamed Al-Fayed. “We are very proud to have played our role in celebrating the lives of Diana, Princess of Wales and Dodi Al Fayed at Harrods and to have welcomed people from around the world to visit the memorial for the past 20 years,” said Michael Ward, Harrods managing director. “With the announcement of the new official memorial statue to Diana, Princess of Wales at Kensington Palace, we feel that the time is right to return this memorial to Mr. Al Fayed and for the public to be invited to pay their respects at the palace.” More on the news, with reporting by @loreleimarfil, at WWD.com. #wwdnews