The Limited Inc. Chairman Leslie H. Wexner told stockholders today he "has never been more positive, more serious or more aggressive about the future," despite unexpected problems from the company's latest acquisition, the 800-store Lerner's chain.
By the year's end, the 22-year-old, 2,267-store chain -- comprising The Limited, Limited Express, Lane Bryant, Victoria's Secret and the mail-order company Brylane as well as Lerner's -- should see revenue of $2.5 billion -- nearly two times last year's level, Wexner told shareholders attending the company's annual meeting. Earnings should climb 40 to 50 percent above last year's total of $92.5 million, he added.
"We could be a 5,000-store business in five years," selling more than $5 billion worth of clothes a year, Wexner said.
The growth has not been limited to sales and earnings. With its stock nearly double its price of six months ago, when it hovered in the mid-$20s range, The Limited announced a 2-for-1 stock split today, payable June 25 to shareholders of record on June 7. The stock split, which was met by hearty applause from the 2,000 shareholders in attendance, helped drive The Limited's stock price on Wall Street up 3 1/4 at 50 1/4 today with 280,200 shares traded.
The company's bottom line should not be adversely affected by the $297 million Lerner's acquisition, completed last April, Wexner said.
The Limited bought Lerner's to enhance its role as a specialty retailer for women, hoping to gain a large foothold in the budget-apparel market. However, the acquisition has brought a host of problems, many unexpected, Wexner said, citing "lack of control" over inventories and poor buying practices.
Wexner decided last month to cancel all outstanding orders and payments due to Lerner's manufacturers. That move brought a howl of protest from Lerner's vendors, who charged that The Limited was unfairly trying to pressure them into lowering their prices.
Wexner, however, made no apologies. "We stand by those decisions," he said.
He said that, despite the protests, only two lawsuits have been filed against The Limited for that action. One of those has been settled and the other is in the process of being settled. "I don't believe there was a vendor that was bruised," he said.
Limited officials said it will take at least another six months to resolve some of the problems they inherited from Lerner's -- which Wexner said was "sick and retrogressing" at the time it was acquired. In the meantime, The Limited has launched an aggressive campaign to revamp the stores themselves.
Among the first actions taken has been an aggressive mail-order catalogue campaign. Wexner indicated that he expects to expand Lerner's operation significantly through the mail-order division.
In addition, The Limited will redo the Lerner's stores to emphasize sportswear and deemphasize lingerie. The children's department in each store will be eliminated.
Although Wexner is phasing out Lerner's children's-wear division, he said he remains interested in that market. A special Lerner's children's catalogue or even a retail chain could be forthcoming. So, too, could specialty Lerner's stores such as "Lerner Jrs." or "Lerner Career," geared for more specific markets than the current Lerner chain.
Wexner, who last year made an unsuccessful $1.1 billion bid for Carter Hawley Hale Stores Inc. of Los Angeles, said he remains interested in the nation's sixth-largest retailer, which includes Neiman Marcus, Bergdorf Goodman, The Broadway and several other department stores. However, he added, "We believe the tradition of that business has deteriorated seriously."