October 17, 2013
Holiday sales should be good for Limited Brands this year, probably better than last year, even though consumers are nervous.
That was the prediction offered by Leslie H. Wexner, chairman and CEO of the Columbus-based retailer known temporarily as L Brands, at the company’s annual investor update yesterday in New York.
“I think business is remarkably good, considering all the static,” Wexner said, referring to the partial federal shutdown and debt-limit debate. “I think our year will be good, perhaps very good, unless Washington completely mucks everything up.”
However, Wexner added, “I think the consumer is just nervous for obvious reasons. I think we all are. ... There’s financial instability that exists in the world. ... We as a country were kind of a bastion of stability; now we’re the epicenter of stupidity.”
While Wexner was optimistic about the holidays, he was less so about some retailers’ forays into the popular-again outlet business.
“Typically, it’s the beginning of the end,” he said. “Coach became a discount outlet brand, and as they were growing their outlet channel, they cut their own throat.
“I think the outlet business is a terrific business, but don’t delude yourself. Whether it’s Gap or Nordstrom, you’re cutting off your own water. It’s really hard to have a dual identity.”
Other L Brands executives spoke to revenue growth at the company, where the eagerly awaited international rollout of brands such as Victoria’s Secret and Bath & Body Works is progressing rapidly.
Sales in both the United Kingdom and the Middle East are positioned to more than double in 2014, said Martin Waters, president of the company’s international division.
One foreign market that Limited Brands is avoiding is South America.
“South America will be an amazing market for Victoria’s,” Waters said. “Many of the supermodels are from (that) part of the world. … But at the same time, it’s a very difficult place to do business … because it’s such a closed market and the restrictions on trade are so punitive. There are just easier ways to make a living in the near term.”
The retailer is hardly neglecting its U.S. market, where it intends to double its business, too.
Part of the focus will include testing its Canadian lingerie brand, La Senza, in the U.S. market. That’s not only an endorsement of the health of the U.S. market but an indication that the company plans to begin treating Canada and the United States as a combined market.
“So in spring 2014, we’ll open five or six stores at about 2,500 square feet in space each,” Waters said. The planned locations weren’t mentioned but they were described as “meat and potato malls, the regular malls of the Midwest.”
“We’re going to open five or six stores in markets that we believe are typical of what a scale rollout might look like, and we’ll see.”
Limited Brands also likes the sports category, in which it has tested Victoria’s Secret Sport products such as yoga pants, seeing it as “a billion-dollar business. It’s a very substantial opportunity,” said Chief Financial Officer Stuart Burgdoerfer.
“I think we have a neat sports business,” Wexner said. “There’s 10 guys in the world who do, too. I think it will be like the jeans business — everyone will have one.”