Blog: Limited outlook
Leonie Barrie | 16 May 2007
So, Limited Brands is stepping away from the apparel business to focus instead on more profitable businesses like fragrances and lingerie. Its decision to sell a majority stake in its Express brand to affiliates of Golden Gate Capital for US$548m hasn’t really come as a surprise. Not only have rumours of such a move been circulating for over a month now, but it follows trends over the past six years which have seen Limited offload several other apparel interests including Lane Bryant and Lerner New York, as well as spin off teen retailer Abercrombie & Fitch and girls' retailer Tween Brands Inc.
Shedding underperforming apparel companies and refocusing Limited Brands seems like a good idea, particularly if it can distance itself from the highly competitive and overcrowded specialty clothing sector and focus instead on products that are less prone to seasonal fluctuations in demand.
But it seems all is not rosy at Victoria’s Secret, on which Limited Brands is now pinning its hopes. At the same time as Limited Brands announced it was offloading its Express stake, the company also lowered its first quarter earnings guidance, citing “lower-than-anticipated sales and merchandise margins at each of its brands in the first quarter, particularly Victoria's Secret.”
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