Limited Brands shifts focus to lingerie, beauty - Atlanta Business Chronicle:

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Founder and CEO Leslie Wexner openefd theLimited women's clothing store in 1963 with a $5,00 0 loan from his aunt, and for year it was the clothes that made the business. But in recent the clothes have been goingt outof style. Limited Brands' past may be in traditionakl apparel, but its present and futurd are increasingly tied to its lingerie chainh and its beautyand personal-care product s operation, , which together account for nearlhy three-fourths of the company's sales. "Victoria'sd Secret dominates our dominatesour profits," Wexner said at an investor conferencs in November. "(Limited Brands) is Victoria'w Secret.
The lingerie business is the dominant part of the This is where ourfuture is." That wasn' the case just 10 years ago, when Victoria'se Secret and Bath Body Works accounted for 32 percent of the Columbus-based company's sales. Victoria's Secre t alone overtook the company's apparel segmenrt in 2002, thanks to its own growth and Limitedd Brands' decision to sell or spin off some of itsapparelk chains. The company in the past decadwe sold the and New York chains and spun off LimitesdToo (now ) and Lingerie, includingv the recently acquired Canadian chaij , accounted for just less than half of Limited total sales last year.
Bath & Body Works contributed 25 percenty ofthe company's total. Wexner expects Victoria'x Secret to hit $10 billion in salees by 2010, nearly doubling the $5.1 billion it broughg in last year. Limited Brands has a call cente rfor Victoria's Secret Direct in Ketteringb that employs about 1,000 people. The reasons for the shiftt are simple. "The margins are higher in the otheer businesses," said Limited Brands spokesmanTom Katzenmeyer. "Appareol has more risk. It is more competitive. Some of the risk is takemn outof (Victoria's Secret and Bath Body Works) because therwe is a core product therde -- underwear and beauty products.
" Martyn Redgrave, Limited Brands' executiv e vice president and chief financial said at the investor gathering that appare has been a challenge for several years, but the compang is increasing the profitability of that business by shrinkinh its remaining apparel chains, Limited and Katzenmeyer said the shifft in focus goes back to Wexner's ability to find "whitse space," or markets that are beinhg underserved. A stroll througj the mall shows Express and Limited are up againstt plentyof competitors, while Victoria's Secrert and Bath & Body Works face fewer directr rivals. But the market for undergarments is abour to getmore intimate. Warrendale, Pa.
-based , controllefd by retailer of Columbus, has started a line of underwear and sleepweaf aimed at taking away market sharefrom Victoria's Secret and its Pink And apparel competitors, such as out of Fort Fla., and San Francisco-basede , also are diving into Limited Brands isn't sitting idly by while competitionj heats up. While the company once used Expresse and Limited as its incubators for new spinning out the Limited Too appareo chain for girls andBath & Body Works from its flagshi stores, those days are Pink, which caters to college-age women and postexd $700 million in 2006 sales, is moving from operatingb as a section at Victoria'z Secret into its own The company is testing three Pink stores.
Lorrainwe Maikus, a stock analyst at , singled out Pink as an examplr of what Limited Brands doesbest -- identifyinb an underserved customer and delivering a Intimissimi, an Italian lingerie line for which Limite d Brands secured U.S. distribution rights, also could make the move from storew shelves to stores ofits own. The line grew from being a feature in25 Victoria's Secret stores to 160 in 2006, and Limited Brandsx is testing a stand-alone Intimissimi storw at Easton Town Center in Columbus.
Bath & Body meanwhile, spun off the , which is up to 84 and is doing the samefor , whicj has nine stores, including one at Easton Town