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Dustin Nadeau, Donatas Sumyla, David Deprey and Jaime Rodriguez Bus 411, April 2006. LIMITED BRANDS - Inc. 2003. Case-Study Overview. Existing Condition Limited Brands overview Industry overview History, Key Facts, Goals and Objectives and Stock Information

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Dustin nadeau donatas sumyla david deprey and jaime rodriguez bus 411 april 2006

Dustin Nadeau, Donatas Sumyla, David Deprey and Jaime Rodriguez

Bus 411, April 2006

LIMITED BRANDS - Inc.2003


Case study overview

Case-Study Overview

Existing Condition

Limited Brands overview

Industry overview

History, Key Facts, Goals and Objectives and Stock Information

Limited Brands Proposed Vision and Mission

External opportunities and threats

CPM

EFE

Financial Ratios

Internal strengths and weaknesses

IFE

Analysis

SWOT Matrix

SPACE

BCG

IE matrix

Grand Strategy Matrix

QSPM

Possible strategies: Matrix Analysis

Decisions

Strategic implementation

Long-term and short-term Actions

Evaluation Procedure

Current Update


Limited brands overview

Limited Brands Overview

Founded in 1963 by Leslie H. Wexner, Limited Brands, Inc. is a specialty retail business in the U.S.

Headquartered in Columbus, Ohio

Sells women’s intimate apparel, personal care and beauty products, and women’s and men’s apparel

3 segments:

Victoria’s Secret (women’s intimate and other apparel, beauty products, and accessories through retail stores, catalogue, and e-commerce)

Bath & Body Works (personal, care, beauty, and home fragrance products)

Apparel

Express stores, which offer women’s and men’s apparel, sportswear, and accessories

Limited stores, a mall-based specialty store retailer of sportswear for women


Limited brands overview1

Limited Brands Overview


Limited brands overview2

Limited Brands is committed to building a family of the world’s best brands to create sustained growth of shareholder value by focusing its time, talent, and capital on the highest return opportunities.

At first - a multi-divisional, largely apparel-based, popular-priced retailer

Over the past ten years Limited brands has reinvented itself completely, becoming a predominantly a personal care, beauty and lingerie company (Victoria’s Secret and Bath & Body Works)

Limited Brands in the past has:

Re-visioned the business

Sorted the portfolio of businesses, and

Re-thought its talent

Now they are:

Turning to offense, and

Applying its specialty retailing skills to deliver high-value, branded, consumer packaged goods through channels of distribution it controls – stores and direct.

Limited Brands Overview


Key facts 2003

Key facts (2003)

Sector: Services

Industry: Apparel Stores

Full Time Employees: 18,000 (2002)

3,911 Stores (2003)

Net sales 2003 $8.934M

Operating income $963M


History

History

1963 The Limited opens its first store in Kingsdale Mall in Columbus, Ohio

1969 The Limited's first public stock offering is issued over-the-counter. 47,600 shares are offered at $7.25 per share

1982 Victoria's Secret store and catalogue are purchased for $1 million.

1985 One Henri Bendel store is acquired for $10M

1988 25 Abercrombie & Fitch stores and one catalogue are acquired for $46 million

1990 Bath & Body Works opens first store in Boston.

1995 Initial Public Offering of Intimate Brands, Inc. establishes it as a fully independent company.

1998 50 Bath & Body Works Home stores are converted to The White Barn Candle Co. stores to begin a home fragrance brand test.

1998 The Limited, Inc. completes split-off of Abercrombie & Fitch.

Victoria's Secret launches e-commerce site www.victoriassecret.com which has been profitable since day one.

1999 The White Barn Candle Co. is launched by raising an old-fashioned barn in New York City's Bryant Park.


History1

History

2000 Intimate Beauty Corporation and Shiseido Co., Ltd. form joint venture to develop, market and sell new lines of prestige beauty products for sale in free-standing stores.

2001 Sale of Lane Bryant

Integration of Structure into the Express brand as Express Men’s

2002 Recombination of Intimate Brands and The Limited, Inc.

The Limited, Inc. changes name to Limited Brands to further emphasize the Company’s commitment to building a family of the world’s best fashion brands Sale of Lerner New York/New York & Company

2003 Sales of remaining interest in Alliance Data SystemsNamed the world's most admired specialty retailer by FORTUNE magazine


Our brands

Our Brands


Analysis swot matrix space bcg ie matrix grand strategy matrix qspm possible strategies matrix analysis decisions st

Victoria's Secret Stores

Victoria's Secret Direct

(Catalogue/E-commerce)

Victoria's Secret Beauty


Analysis swot matrix space bcg ie matrix grand strategy matrix qspm possible strategies matrix analysis decisions st

First six stores opened in 1990

Remodeled in 2002 (wood shelving, red-checked fabric, country atmosphere)

Website launched in 2002 (www.BathandBodyWorks.com)

Two new brands in 2003 - "Aromatherapy" and "True Blue Spa"

1,639 stores


Apparel division

Apparel Division

Limited Stores

Flagship division of the organization

No online presence (351 stores)

Focuses on fashion-conscious women who want a “sexy, sophisticated style”

Express Stores

- Offers cutting-edge style

- Still making the transition to a dual-gender brand through remodeling

- 1,031 stores are located primarily in shopping malls


Other retail businesses

Other Retail Businesses

Henri Bendel

Offers the best in clothing and accessories from international designers

Products for “higher income 30-something women”

The only upscale LB store

aura science

LB owns 51% with Japanese cosmetics company Shiseido

The product line consists

of different beauty products


Support businesses

Support Businesses

Limited Logistics Services

Limited Real Estate

Limited Design Services

Limited Brand and Creative Services

Limited Technology Services

Mast Industries


Limited brands inc stock ltd information

Limited Brands, Inc. Stock (LTD) Information

Index Membership:

S&P 100

S&P 500

S&P 1500 Super Comp

Company Type -Public (NYSE: LTD)

Fiscal Year-End – January

First IPO: 47,600 stocks @ $7.25 (1969)

Shares Outstanding: 523M (2003)

Stock Price:

Dec. 2003: 18$

April 20th 2006: 25$


Stock price performance

Stock Price Performance


Industry overview outlet centers

Industry Overview: Outlet Centers

The world's largest owner and operator of outlet centers is Baltimore-based Prime Retail Inc. With 50 centers in 26 states, the company operates outlet shopping space of nearly 14 million square feet.

Among the most significant finding is the identification of this market as the fastest-growing segment of the retail industry.

Nation's outlet centers generates close to $ 500 million in sales tax revenues every year.

65 percent of outlet shoppers are married and 74 percent are female.

Baby boomers, ranging in age from 25 to 54, make up a large percentage of outlet center shoppers.

Outlet shoppers:

60 percent, report household income between $ 25,000 and $ 75,000

23 percent report incomes of less than $ 25,000

16 percent boasted incomes of more than $ 75,000.


Stock info compared to industry

Stock Info compared to Industry


Compare to industry nov 2002

Compare to Industry (Nov 2002)


Annual report statements

Annual Report Statements

“Our brands are about innovation - about next.”

Les Wexner (2002 Annual Report)

“With every major initiative, I ask myself the same question: ‘Is the light worth the candle?’ That is, are the potential rewards commensurate with the effort? Across a number of significant efforts this year, the light was very bright indeed.”

Les Wexner (2003 Annual Report)


Leslie wexner ceo and chairman

Leslie Wexner, CEO and Chairman


Goals objectives

Goals & Objectives

Aggressively sort our portfolio and financially restructure our business through spins, splits, sell-offs, and store closings

With obtained cash from above actions, continue building our brand recognition

Our principle goal – increase shareholders value through a family of the world’s best fashion brands


Vision statement

Vision Statement

Build a “family of the world’s best fashion brands” (Book, 2004)

To build a Company of powerful and differentiated retail brands that maintain and strengthen our position

as the world’s dominant

specialty retailer

(Website, 2006)


Company values

Company Values

What are the four company values?

Doing What is Rightfor associates, customers and investors

Being Inclusivein our thoughts and behaviors

Working for the Greater Goodof the enterprise and the communities in which we operate

Pursuing Excellencein all we do


Mission statement

Mission Statement

Create sustained growth of shareholder value by focusing its time, talent, and capital on the highest return opportunities (Book, 2004)

Limited Brands is committed to building a family of the world's best fashion brands

offering captivating customer

experiences that drive long-term

loyalty and deliver sustained

growth for our shareholders

(Website, 2006)


External opportunities and threats

External Opportunities and Threats

  • OPPORTUNITIES:

  • Current 31M of people ages 12-19 is expected to increase to a record 34M by 2010

  • Teens ages 12-19 spent approx. $200B in 2002 with 1/3 of this spending in fashion

  • Female baby boomers needs are not fully satisfied by retailers and manufacturers of women’s apparel

  • General e-commerce sales were up 25% in 2002 with spending at $35.9B, which indicates that shoppers are willing to make purchases online

  • Increase in time-conscious type of online consumers because of busy lifestyles

  • Increasing acceptance of the casual workplace trend

  • Federal tax cuts might encourage more consumer spending

  • Increase Internet advertising and sales

  • THREATS:

  • Large numbers of female baby boomer consumers began staying away from the stores entirely or purchasing fewer clothing items because of lack of products offered

  • Female baby boomers place retirement savings, college tuition, and mortgages at a higher priority than spending on apparel

  • Slow U.S. economy growth in 2003

  • Household debt increase to $9B by fall 2003

  • The gap between rich and poor continues to grow

  • Industry is risky because in order to gain competitive advantage you may have to take gambles (prediction of future trends)

  • Competitive sector nationally, regionally, and locally represented by the department and specialty stores and mail-order catalogue businesses

  • Disruption of foreign suppliers

  • Increasing transportation cost caused by escalating fuel prices


Efe matrix

EFE Matrix


2006 annual ranking of america s largest corporations specialty retailers

2006 Annual ranking of America's largest corporations:Specialty Retailers


Direct competitors comparison 2006

Direct Competitors Comparison (2006)

LTD = Limited Brands Inc

GPS = Gap Inc.

TJX = TJX Companies Inc.

Industry = Apparel Stores (Source: http://finance.yahoo.com)


Competitive profile matrix cpm

Competitive Profile Matrix (CPM)


Internal strengths and weaknesses

Internal strengths and weaknesses

STRENGTHS:

Defined company philosophy which implies continuous innovations

Strong brand recognition

Victoria’s Secret performance

Healthy financial position

Flexible changing strategies

Fast adaptation to emergent trends, markets, and environments

Brand building as a model

Location of distribution center

Effective computerized system

WEAKNESSES:

Increased debt results in lower profits and decline in cash flow

Reduce in selling square footage of Apparel business group

Large amount of suppliers (2,500) which means difficulties to ensure consistent quality and time of delivery

Uncertainty of consumer acceptance of the Company’s products

Reliance on foreign sources of production

Locating stores in close proximity in malls


Ife matrix

IFE Matrix


Key ratios evolution 1999 2003

Key Ratios Evolution (1999-2003)


Overall key ratios 2006

Overall Key Ratios (2006)


Swot analysis

SWOT Analysis


Space matrix

SPACE Matrix

* Y axis: - Financial Strength: +6

- Environmental Stability: -2 => Y coordinate: STRATEGY: AGRESSIVE

* X axis: - Competitive Advantage: - 4 => X coordinate:

- Industry Strength: + 5

* Y axis: - Financial Strength: +6

- Environmental Stability: -2 => Y coordinate: STRATEGY: AGRESSIVE

* X axis: - Competitive Advantage: - 4 => X coordinate:

- Industry Strength: + 5


Bcg matrix

BCG Matrix

Stars

Question marks

Cash-Cow

Dogs


Ie matrix

IE Matrix


The grand strategy matrix

The Grand Strategy Matrix

Potential Strategies:

Market development

Market penetration

Product development

Horizontal integration

Divestiture


Matrix analysis

Matrix Analysis


Analysis swot matrix space bcg ie matrix grand strategy matrix qspm possible strategies matrix analysis decisions st

QSPM


Decisions

Decisions

Primary: Long-term Divestiture of the Apparel business group

Alternative:

Horizontal Integration by acquiring small and emerging competitors in the lingerie and body care areas

Product development by introducing new product lines based on best categories’ performance


Why divestiture

Why Divestiture?

Competition is fierce

Industry is risky

Our top two business groups show significantly better annual results and are gaining larger market share

Apparel segment does not fit with the company’s philosophy


Implementation

Implementation

Actions:

Short term: First year

Shut down unprofitable Apparel stores

Establish closing-down sales in order to get rid of inventory

Use earned cash for product development and horizontal integration

Open up to 15 new Victoria’s Secrets and Bath & Body Works stores in most profitable areas

Establish a management team which will focus especially on tracing the divestiture process

Provide precise information to the media, stockholders, and customers with the reasons of our decision and future procedures

Long-term: Next 5 years

Look for potential buyers

Contact specialized companies which would professionally manage the divestiture process

Use the generated cash to decrease debt and to carry out further investments


Evaluations

Evaluations

Apparel’s quarterly financial reports

Sales and profits reports based on individual Apparel stores

Frequent divestiture management team’s meetings

Evaluation reports

Annual survey to assure our brand image is not damaged


Update 2004 2006

Update: 2004-2006

2004

Predominantly became a personal care, beauty, and lingerie company, over 70% of sales from these areas (Victoria’s Secret and Bath and Body Works)

C.O. Bigelow rapidly becoming known as, “The best specialty beauty store in the world.”

Victoria’s total U.S. sales is almost as large as the entire lingerie market 10 years ago.

Victoria has 5 of the top 20 prestige women’s fragrances sold in the U.S.

New division of Victoria is introduced, “PINK.” Will become the second largest lingerie brand in the U.S., behind Victoria’s

2005:

Reorganization into three business groups: lingerie, beauty and personal care, and apparel.

Victoria’s introduces IPEX wireless bra which is claimed to be the most supportive ever, provides the most coverage, and minimal padding.

2006

Bath and Body Works is now open 24/7 to suit all of their customers’ needs.

Introduced the Infinity Edge push up bra which has become the most comfortable push up bra offered.


References

References

http://finance.yahoo.com

Limited Brands Inc. Annual Reports

Annual ranking of America's largest corporations, Magazine: Fortune 500 (2006): cnn.money.com

www.hoovers.com

www.bigcharts.com

www.limitedbrands (Investor Relations)

www.businessweek.com

Strategic Management Concepts and Cases; Fred R. David, 10th Ed.


Thank you

Thank you!

Questions?

Comments?


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