NEW YORK — Although analysts said Limited Brands Inc. took a cautious tone during its annual investor meeting Monday and Tuesday, the company said it’s focused on improving its apparel businesses and remains excited about future opportunities in its beauty and lingerie businesses.
Margaret Mager of Goldman, Sachs & Co. said chairman and chief executive officer Leslie Wexner’s opening remarks were “strikingly more cautious” than last year. In a research note, she cited Wexner’s concerns over the economy, interest rates, gas prices and past and future terrorist attacks, and how those factors are affecting consumer spending.
“All these kinds of things provide distraction for all of us on a day-to-day basis,” Wexner told investors and analysts. “So I think there’s a cloudiness or kind of murkiness that’s likely to hang over us for another six- to 12-month period until some of these things that can be resolved are resolved, or we just learn to live with them and get past them.”
Wexner predicted that the holidays will be highly promotional and that consumers could hold off on buying for themselves before Christmas, believing that better deals can be had post-holiday.
Earlier in his remarks, Wexner admitted that Limited Brands has performed “embarrassingly badly” from a financial perspective in the first two quarters of the year, for which he took full credit. But Wexner said the company is committed to fixing the problems, especially those in its Express and Limited apparel divisions.
“We really only have one option, and that option is to fix the [apparel] businesses as soon as possible to generate profitability and for those businesses to be more than stabilized and for them to be aggressive. That is all we’re focused on right now,” Wexner said, adding that the divisions are “beginning to see traction,” thanks to the work of Jay Margolis, group president, apparel, for Limited Brands. At least one analyst agreed.
“We walked the new holiday floor set for Express and believe the occasion-based merchandising reflected in store was a marked improvement versus the wear-to-work themes so prevalent last year,” Mager wrote in Monday’s research report.
Wexner is also optimistic, thanks to the company’s product development in its beauty business and the solid preparation for Christmas by its lingerie business. Victoria’s Secret, for example, launched its “very sexy unlined push-up bra without padding” today, and the division’s televised fashion show is set for Dec. 6, chief financial officer Ann Hailey said during her presentation Tuesday afternoon.
Given the company’s views on the Christmas holiday shopping season and its financial performance of late, Limited Brands will keep a tight focus on inventory and expenses during the fourth quarter. Hailey said the company also has lowered its capital spending projections to $500 million from between $550 million and $575 million.
Hailey was unable to provide financial forecasts for the holidays and beyond because the company is in its quiet period before announcing third-quarter results on Nov. 17. Analysts are calling for a loss of 3 cents a share on sales of $1.92 billion.