NEW YORK -- Howard Gross resigned Tuesday as president of Limited Stores, the weakest division of The Limited Inc., and corporate vice chairman Michael A. Weiss was named acting president.
It is now up to Weiss, the company's star merchant, to turn around the division, a $1.1 billion business that has been troubled by merchandising woes for the last three years.
Gross will join Today's Man, a men's wear chain, on Monday as president and chief operating officer.
A successor to Gross is being sought, and it's likely to be an insider, based on the company's record of promoting from within.
In the meantime, Weiss shifts from his supervisory role over Limited Stores to a hands-on position. He will be on the next trip to the Orient in April, working with the merchandising team to shape fall assortments, the company said. That, said Weiss in a statement Tuesday announcing the changes, is the "immediate focus."
As vice chairman, Weiss has been supervising Limited Stores, Lerner New York, Express, Structure, Limited Too and Henri Bendel.
Last December, Weiss said in an interview in WWD that he expects "real improvement" at Limited Stores this spring. Apparently, that timetable has shifted. Weiss could not be reached for elaboration on his statement.
"I had a tougher time than I expected," Gross said Tuesday, reflecting on his stint at Limited Stores. "It's much easier to take a business and grow it than to rebuild a mature business."
After three difficult years as president of Limited Stores, Gross's resignation came as no surprise, but his appointment to the 22-unit Today's Man may have, considering that his experience is in women's merchandising.
"I intend to be a thorough student [of men's wear] starting Monday," said Gross. "I'm excited about it. When I started at Victoria's Secret, I didn't know anything about lingerie."
Robert Kerson, the executive search consultant who placed Gross at Today's Man, said, "You can not discount the 20 years of success Gross had at The Limited through intense growth periods. That's worth a lot for Today's Man, which is moving through a growth period. Under his leadership, Victoria's Secret moved from a handful of stores to become a dominant chain."Gross began his career in 1965 at Kaufmann's in Pittsburgh as a trainee and rose to buyer. He joined The Limited in 1973, and even though he had been in retailing for eight years, company tradition meant he had to start there as a trainee.
Subsequently, he became a buyer, then a vice president of merchandising at Limited Stores. He was promoted to general merchandise manager at Victoria's Secret Stores in 1983 and two years later was named president. He expanded Victoria's Secret into a $1 billion chain. Based on that success, he was named Limited Stores president in 1991 and charged with reviving the division.
"The Limited gave Gross more time than a lot of other people might have been given," said Harry Ikenson, senior vice president of Mabon Securities. "It doesn't make a difference whether he left or was forced out. The bottom line is he wasn't able to turn things around, and The Limited needs someone else to do it."
"I think management should be complimented for recognizing that the Limited division and the team couldn't contribute an improved operating performance," said Kenneth Londoner, vice president of J&W Seligman & Co., investment advisers.
"This wasn't an easy decision," Londoner added. "Howard made significant contributions to the corporation over a long period of time."
The $1.1 billion volume of Limited Stores last year represents 15 percent of corporate revenues. It is the third-largest chain in the company, but its biggest headache.
It is plagued by poor fashion, a lack of direction, questionable pricing and deteriorating sales. Operating profits at 4 or 5 percent of sales last year were roughly 50 percent under desired levels. The division has been trying to target women 30 and older, and emphasize career apparel and sportswear.
On the positive side, the division has superior real estate and cost-efficient distribution systems. It remains a destination for many shoppers, but needs a leader to provide the fashion and marketing direction.
Most chains in the U.S., including several operated by The Limited, are expected to generate high comparable-store sales for March. However, Limited Stores is expected to report a high single-digit drop, Ikenson said."Limited Stores do not look right for spring," he said. "Twenty-five percent of the assortments are in black and white and there was no clear fashion message. Price points are generally too high."
Nevertheless, last Thursday Ikenson upgraded his recommendation on Limited stock from "neutral" to "buy," citing improved sales and margin trends overall, despite the performance of Limited Stores. He also raised his estimate for the first quarter from flat at 12 cents, to 14 cents. He said the Lerner division will be a big contributor to improved results. The merchandise, he said, finally looks distinctive from the Limited Stores and Express divisions, spring colors stand out, prices are "sharp" and many attractive items are offered, including silk dresses at $59 and $69, and leggings at $12.99.
He also cited continued strong sales at newer businesses, particularly Structure, Bath & Body Works, and Limited Too divisions.
The Limited's largest division is Express, with $1.4 billion in sales. Lerner does about $1.15 billion and Victoria's Secret Stores about $1 billion.
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