THE LIMITED JUGGLES 3 DIVISION HEADS

Byline: Sharon Edelson

NEW YORK--The Limited Inc. Tuesday shuffled the heads of three of its divisions in a major management reorganization.
The moves, observers noted, were prompted by continuing difficulties at the Limited's Lerner New York operation and a need for the retail giant to differentiate its vast women's businesses.
Pamela McConathy, president of Express, was named president of Lerner's. McConathy will be succeeded at Express by Henri Bendel president Susan Falk. Ted Marlow, executive vice president and general merchandise manager of Structure, will replace Falk at Bendel's. Marlow's successor at Structure has not been named yet.
All report to Michael Weiss, The Limited's vice chairman.
Barry Aved, former president of Lerner New York, resigned to pursue other interests, the company said. In a phone interview Tuesday, Leslie H. Wexner, chairman and chief executive officer of The Limited, downplayed Lerner's problems as the catalyst for the executive changes, focusing on the strength of the new management team.
"I believe our women's fashion apparel businesses are now led by the finest apparel merchants in retailing," Wexner said. "I was determined that the leaders of our major businesses had to be promoted from within. They had to share our values, our leadership style and point of view about specialty retailing."
Wexner said that the women's apparel divisions, many with over 700 units, "might be considered fully mature, so now it becomes a question of productivity.
"All our businesses are large in terms of the number of stores," he added. "Some have growth opportunity in terms of expanding store fleet and some have opportunity for increasing volume per store."
Asked whether the industry is overstored, Wexner said, "Retailing always goes through cycles. Whenever it's in a lull it's overstored, then when it picks up, everyone presses for more stores. I don't worry about that much. I worry about our stores."
While the promotions reflect the Limited's strategy of giving its strongest managers opportunities to maximize the growth of key divisions, retail analysts agreed the moves were largely motivated by Lerner's sagging fortunes.
"This is based on the need to stem the deterioration of profitability at Lerner's," said Thomas Filandro, senior vice president of research for retail analysis at Gerard, Klauer, Mattison. "If Lerner did not exist, there might not have been a place for Ted Marlow to become president of a division and Susan Falk might have stayed at Bendel's."
According to analysts, Lerner's sales have declined from $1.2 billion in 1992 to $1.03 billion in 1994. Operating profits have dipped from $81 million in 1992 to $50 million in 1994. The 860-store chain is projected to do $927 million in 1995.
The 715-unit Express, considered one of the company's healthier divisions, could reach $1.6 billion in sales this year, up from $1.4 billion in 1994.
For Falk, the move to Express is something of a homecoming. In the late Eighties, as the chain's general merchandise manager, she worked with Weiss, then president of the division, to grow the business.
Harry A. Ikenson, senior director and retail analyst at Mabon Securities, doubts Falk will make any major changes at Express. Rather, she will fine-tune and bring more focus to the brand.
"You're bringing someone back who has gotten a lot of other experience that's even more fashion forward and more upscale, which won't hurt Express," he said.
Filandro said the moves are significant to the entire company, which needs to differentiate its operating divisions and customer bases.
"The pie isn't getting any larger," he said. "If you overlap your customer base to the degree the Limited has in the past, cannibalization is bound to occur. This tells me they are fully aware of cannibalization if they do not differentiate their divisions."
"You should see accelerated growth in each one of the businesses, with the fashion talent and leadership skills of these managers," Wexner said. "The growth of each business is only limited to the imagination and vision of its president."
According to Wexner, Weiss's recruitment of Ellin Saltzman as fashion director is an indication that "we take the fashion piece very seriously."
"With Cheryl [Turpin] at Limited, Pam McConathy at Lerner and Susan Falk at Express, you have very strong merchants with fashion insights into their own brands," Wexner said.
"Express is the largest business in terms of volume," Wexner said. "Lerner is largest in terms of number of stores. Lerner will probably grow by increasing productivity instead of stores, but some stores will probably increase in size so they are more dominant."
As for Bendel's, Wexner said, "We'll probably make a decision in the next six to 12 months about accelerating store growth. The overall business of Limited Inc. is enormously financially stable. We have no operating debt, so everybody could grow rapidly."
Analysts noted that Marlow's experience prior to joining the Limited dovetails nicely with his promotion. He was senior vice president and general merchandise manager for women's apparel at Marshall Field's and a vice president and divisional merchandise manager at Neiman Marcus.
"They clearly have the market potential of opening 50 or so stores down the road when they fine-tune that business," Filandro said. "Ted has a department store background. He's ready for the challenge."
Regarding the company's troubled Limited Stores division, Wexner said the operation "is making good progress in terms of quality and fashion." Analysts said, however, it will take time for the Limited Stores to win back the customers it lost.
"This is just another indication that the company is recognizing that the transition we've all been waiting for at Limited and Lerner hasn't happened," said Janet Joseph Kloppenberg, a retail analyst at Robertson, Stephens & Co. "The Limited is now trying to turn itself around. Lerner under Barry Aved was trying to turn itself around, but it didn't happen."

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