By  on February 22, 2002

NEW YORK -- Can Limited Stores be revived?

That's the challenge facing Jeffrey Sherman, chairman and chief executive of Federated Direct and former Bloomingdale's president, who on March 4 will join Limited Inc. as ceo of the struggling Limited Stores division. Some observers speculated, though, that the appointment could presage even bigger things for Sherman at Limited Inc.

It's a sign that Limited Inc. is not ready to give up on its namesake division, and that the chain remains close to the heart of Leslie Wexner, founder, chairman and ceo of Limited Inc. Sherman will report to Wexner, and serve as chief operations executive of Limited Stores.

But the unit has been bleeding a flood of red ink since the mid-Nineties, and had an estimated loss of around $60 million last year. Some analysts have raised the possibility Wexner might eventually shutter the division to concentrate on Limited Inc.'s more successful Intimate Brands and Express operations. Intimate Brands accounts for about 90 percent of Limited Inc.'s profits.

Limited Stores peaked at close to 800 units in the early Nineties and $1.2 billion in sales, but is down to about 390 stores and $673 million in sales, as of the end of last year. The business continues to seek a sharper identity and has recently shown some improvements in inventory management and fashion.

Overall, Limited Inc. women's apparel businesses, which also include Express and Lerner New York, are said to be just moderately profitable, with profits coming out of Express, the biggest, hippest and most successful of the divisions with about 670 stores and $1.6 billion in sales, and Lerner New York, which is marginally profitable. Lerner is aimed at the budget customer with more basic fashions, and in the process of converting many locations to the New York & Co. nameplate, for a more modern appeal. Lerner did about $1.03 billion in sales last year and runs about 560 locations. Of the three women's units, Limited Stores has the most questionable future.

"The corporation is really focusing on making these businesses brands, and they really know they need to have established identities," said Jennifer Black, equity analyst at Wells Fargo Securities LLC. "They have been testing certain things, keeping inventories really lean, and really feeling the waters for what is going to work, without being very vocal about it."

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