(Filed Under Financial and General Interest News). Earlier this year, Victoria’s Secret parent Limited Brands promised gains in 2013 and beyond, while reporting a modest decline in net profits for 2012 of about $753 million on increased sales of $10.46 billion, compared to net income of $850 million on sales of $10.36 billion for 2011. A reading of the company’s full annual report shows the firm is planning an aggressive expansion of much of its lingerie business with implications for all of its domestic and international competition.
First, the company says that in North America “In 2013, we plan to increase our square footage at Victoria’s Secret by about 3.5% through expansions of existing stores and the opening of approximately 50 new stores.” This is particularly significant because (while the numbers did fluctuate in the interim) at the end of 2012 the company had almost exactly the same number of Victoria’s Secret stores here (1,019 now compared to 1,020 then) as it did at the end of 2007. If it closes none of its existing stores, there could be 1069 Victoria’s Secrets in the U.S. by the end of the year.
And, in the introduction to this year’s report, chairman and CEO Leslie Wexner said of Limited (which also includes La Senza stores in Canada as well as the large Bath & Body Works chain of stores), “I believe we can double our volume through store productivity in North America alone.” He also noted, “There will be incremental growth as we add square footage and sustainable, profitable growth in North America as well as internationally as we expand our global potential … but that’s not the most important focus. Doubling the business means doubling volume and profitability in every store.”
“We have excellent real estate and generate great store productivity, and yet there is opportunity. We’ve become faster, increasing speed and decreasing cycle times. We’re even more focused and thinking and acting frugally. It’s that simple, and that simple formula leads to core growth.”
Speaking of the lingerie portion of its business, the annual report emphasized, “Our overriding focus is on the substantial growth opportunity in North America. The core of Victoria’s Secret is bras and panties. We see clear opportunities for substantial growth in these categories by focusing on product newness and innovation and expanding into under-penetrated market and price segments.”
Interestingly, Limited seems to have far less confidence in the La Senza brand it purchased several years ago. Not only did the company reduce the number of those stores in Canada from 230 in January of 2012 to 158 by February of 2013, but also “In the fourth quarter of 2012, we recognized charges totaling $93 million related to the impairment of goodwill, trade name and other intangible assets at La Senza” following similar charges totaling $232 million in the fourth quarter of 2011. Not that long ago, at the end of 2008, there were 322 La Senza stores in Canada.
Meanwhile Limited Brands, in 2012, added a net total of seven new Victoria’s Secret stores in Canada, raising the number there 26. And it said it plans to open 8 more in 2013.
In other international expansion plans, Limited said it will open in 2013 two more Victoria’s Secret stores in London (where it already operates two stores) as well as one additional store elsewhere in the U.K.
Expansion in 2013 is also expected by Limited’s licensees and franchisees. Limited said that “our partners plan to expand by an additional 10 to 20 stores in 2013” the 339 licensed La Senza stores currently operated in 32 countries outside North America. It also stated that a partner recently “opened three Victoria’s Secret full assortment stores in the Middle East and plans to open two to four more in 2013.”
Finally, Limited said there were, at the end of 2012, “108 independently owned Victoria’s Secret Beauty and Accessories stores and various small-format locations in over 50 countries” to which its partners plan to add an “70 to 100” in 2013.
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