Limited to Sell Most of Express Brand

The Associated Press
Tuesday, May 15, 2007; 6:27 PM

COLUMBUS, Ohio -- Limited Brands Inc. will sell a majority interest in its underperforming Express apparel brand and is considering options for its Limited Stores chain, the retailer said on Tuesday as it warned of first-quarter earnings likely to disappoint Wall Street.

Limited Brands, the operator of Victoria's Secret and Bath & Body Works, said it is selling 67 percent of its interest in Express to affiliates of private equity firm Golden Gate Capital for $548 million. The sale is expected to be completed by July.

There is no time frame for what Limited Brands will do with Limited Stores, which company founder Les Wexner used as the starting point for the specialty retailer when he opened his first store in 1963.

Wexner expanded the business to other retail brands in building a chain with 3,700 stores, but over the past six years, Limited has been selling its apparel divisions to focus on more profitable operations: lingerie and personal care products.

The company sold Lane Bryant in 2001 and Lerner New York in 2002, spun off teen retailer Abercrombie & Fitch and girls' retailer Tween Brands Inc. and consolidated its struggling Structure menswear stores under the Express label. In January, the company bought La Senza Corp., an intimate apparel retailer based in Canada, for $628 million.

"Our strategic agenda focuses on growth in the intimate apparel, and personal care and beauty segments of our business," Wexner said in a statement. "The new ownership structure for Express will provide it with the resources, leadership focus and capital to maximize its potential."

Limited stock, which jumped last month on a Women's Wear Daily report that the retailer is considering options for its apparel brands, fell $1.25, or 5 percent, to $26.16 in trading Tuesday afternoon.

Limited Brands said it expects to make 12 to 14 cents share in the first quarter compared with its previous guidance of 25 to 28 cents and 25 cents a share last year. The company blamed the decrease on lower-than-anticipated sales and merchandise margins at each of its brands in the first quarter, particularly Victoria's Secret.

Analysts surveyed by Thomson Financial expected earnings of 22 cents per share for the quarter.

Standard & Poor's Ratings Services said the company should benefit from "addressing the issues of two underperforming entities" and a lighter lease obligation.

Express and Limited Stores had just $2.2 billion of Limited Brand's $10.7 billion in sales last year.

Sales at stores open at least a year _ considered a key indicator of a retailer's strength _ rose 11 percent for Victoria's Secret and 10 percent for Bath & Body Works in its 2006 fiscal year while sales at its apparel brands fell 2 percent last year and 6 percent the year before.

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