Victoria’s Secret, riding healthy comp-store growth, is making its global move.
Limited Brands Inc. will advance its international strategy by testing two to three Victoria’s Secret mall stores in the London area next summer, the Columbus, Ohio-based company said on Thursday during its second-quarter earnings Webcast. The first Victoria’s Secret flagship in the U.K., a 16,000-square-foot unit, will open on New Bond Street next summer.
Martyn R. Redgrave, executive vice president, chief administrative officer, said the company will conduct a “careful test,” of mall stores prior to a country-by-country rollout. “The mall-based stores will be large box, A-mall-type units with full assortments, but they’re in the U.K., not the U.S., and we have to learn. That’s what we’re looking to do as we expand, in the U.K. in particular, and those will be company-owned and operated.”
Mall stores have been a growth vehicle for Limited, while downtown or High Street flagships are used for major impact, but are fewer in number.
Limited Brands in 2011 will open 130 stores outside the U.S. In Canada and the Middle East, the company with partners will unveil units for Victoria’s Secret, Pink, La Senza and Bath & Body Works.
The burgeoning Victoria’s Secret Beauty and Accessories retail concept will get a boost from 39 new stores bowing this year in Asia, Europe, the Middle East, Turkey, South America, “even the U.S. with airport stores such as JFK,” Redgrave said, describing it as “the concept that can travel well and leads the Victoria’s Secret brand into other parts of the world.”
La Senza can be a major business in the U.S., but the brand is not ready for prime time yet. The first priority is the turnaround of La Senza in Canada,” said Stuart Burgdoerfer, executive vice president and chief financial officer, “and making that brand the kind of brand we want it to be in Canada. Then we’ll bring it to the U.S.” Nine units opened in the second quarter, bringing the total to 250, with 40 stores slated to bow by yearend.
A domestic growth initiative for Victoria’s Secret is VSX activewear. “We’ve always been very excited about the VSX business,” said Sharen Jester Turney, chief executive officer and president of Victoria’s Secret megabrand and intimate apparel. “In 2008, we wanted to focus on our core bras and panties. We’re now testing one freestanding VSX concept store and will have two more in the fall, as well as some side by side stores we’re testing. We believe there’s a big upside for VSX.”
Limited Brands’ profits and revenues rose in the second quarter ended July 30 due to inventory and expense management and more full-price selling. Second-quarter adjusted operating income was $307 million compared to operating income of $236.5 million last year, and adjusted net income was $150.7 million compared to $120.6 million last year.
Limited Brands expects third-quarter earnings per share of 17 cents to 22 cents, compared to 2010 record EPS of 18 cents per share. The company now expects August comparable-store sales to increase in the high-single-digit range versus its previous guidance for a low-single-digit increase. For 2011, the company increased its adjusted EPS forecast to $2.35 to $2.50, from $2.25 to $2.45 previously.
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