Byline: David Moin

NEW YORK — Like many retailers, it’s been a rough ride for The Limited Inc. this year, marked by negative comps, decreased earnings per share, cautious inventory planning, some order cancellations and reduced capital spending. Yet, there’s no shortage of optimism at the specialty giant.
At the retailer’s annual presentation Wednesday to analysts and investors in Columbus, Ohio, top executives spoke of “claiming space” and big volume gains in underdeveloped categories, and building Express and Bath & Body Works into “360-degree, master brands.”
According to Leslie Wexner, Limited’s chairman and chief executive officer, the Victoria’s Secret model of expanding and integrating its stores, catalog and Internet operations, representing a combined $3.5 billion business, “is the model that you could put on the other large businesses. We see that kind of growth and acceleration. We are clearly moving to advance all the brands.”
His division lieutenants see a doubling of the Victoria’s Secret bra business, from $900 million currently to $1.8 billion; Bath & Body Works aromatherapy growing to a $400 million business from $100 million; and VS Beauty developing into a $1 billion brand over the next few years, taking a 10 percent share of the $6.2 billion fragrance market, up from 8 percent.
Among the projects in the works or upcoming:
BBW’s larger store format, up to 8,000 square feet with a broader range of products and some higher prices. A 7,000-square-foot unit just opened in Easton Town Center.
In the retail joint venture with Shiseido, four sites are set for spring and 10 to 15 more will follow next year.
The first full men’s assortment under the Express label will be ready in the spring. Formerly, men’s wear was called Structure.
A prestige men’s fragrance, Very Sexy for Him, will be launched next week, in two bottle sizes and ancillary products. It’s seeking $30 million to $40 million in sales on an annualized basis.
The Victoria’s Secret fashion show, a blockbuster marketing event, returns to Manhattan on Nov. 13 at Bryant Park and will be broadcast in prime time, for the first time, by ABC on Nov. 15.
In his opening remarks, Wexner, an industry visionary and firm believer in the cyclical nature of the fashion industry, said the nation is in recession and he saw it coming a year ago.
“It’s not fun, but in a way, it’s not scary,” he said. “My attitude having lived through these kind of [economic] events, is to check my instruments very carefully+.We did foresee an economic downturn and began to manage very conservatively.”
Just one day after reporting a comp-store decline of 10 percent in September, Wexner discussed how the company dealt with the events of Sept. 11, noting his five stores in the World Trade Center were destroyed but no personnel were killed. Overseas staff came home quickly, Limited provided counseling services, and all stores were closed for several hours the Friday after the attacks, for a period of prayer.
Optimistically, Wexner said that “things will get back to a norm. I don’t know what that norm will be. The world has never gone off its orbit.” He said his company is focused on the longer view, not making short-term shifts. “The future of brands and of our brands is very bright.” But to make them work, it’s been the corporation’s goal to recruit top talent and “form a team of eagles that fly in formation. Teams produce the best possible result and produce it fastest.”
He added that the bottom line in retail is detail, making customers happy one at a time and retaining their loyalties.
“There is a robust future that’s more exciting than the past. I sincerely believe that. It is about building a portfolio of world-class, master megabrands that are valued by customers and all stakeholders.”
According to Ann Hailey, chief financial officer, “the most important financial priority is management of inventory.” The company took a conservative approach to fall, delayed fourth-quarter purchases as long as possible to “maximize our ability to chase winners,” and is reducing targeted inventory investment every month, she said.
Michael Weiss, ceo of Express, said the division edits for a 28-year-old man, and a 22-year-old women, though the customer base is obviously much wider. He said Express does best in knit tops and sweaters; targets sales of more than $2 billion in 2003; maintains a “good, better and best” pricing strategy; and changed key merchandise categories in men’s to align them to women’s. Knits was the top category this season in women’s, followed by denim, which is a must-win, he said.
“The goal is to be an innovative sexy jeans destination for men, as we think we are for women. Denim is the lens through which the new brand will be viewed.”
Of the 1,200-unit Express chain, there are 16 experimental stores offering men’s and women’s merchandise, though Weiss added that there are 160 “side-by-sides.” Most of the growth will be driven by jeans and knitwear, he said.
Grace Nichols, ceo of VS Stores, cited the opportunity to double the bra business, noted strength in glamour bras and demi-bras, and opportunities in full coverage bras, both with and without wire frames. “It’s necessary for us to maintain our dominant position in sexy and glamorous bras,” and essential to “claim space in the everyday category.” Other opportunities are: more bras at opening price points, fixing sleepwear and creating a balance between glamour and relaxed classics.
Sharen Turney, head of VS Direct, said correcting clothing offerings was “the greatest challenge” and cited a “master-brand strategy around gifting” for holiday to extend fragrance, home fragrance, sleepwear and panties.
Robin Burns, head of VS Beauty, said regarding the Shiseido venture, a name will be revealed in early 2002, more than 300 products are being developed, and a store design is set. It’s potentially a $1 billion business, she said.

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