Limited's Tough 1st Qtr.: Earnings Fall 76 Percent As Express Unit Falters

First-quarter earnings at Limited Brands dropped 76 percent, as merchandise shortcomings at Express dragged down results.

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  • Breathe, a collection of "mood enhancing" fragrance and skin care line, will be launched by BBW in July. Neil Fiske, BBW ceo, called the line an "accessible trade up opportunity and a modern alternative to everyday body care."

  • C. O. Bigelow, Limited's take on a 21st Century apothecary, plans to open six stores in September and October in Chicago's Water Tower Place and the Hawthorne and Woodfield malls; Boston's Copley Place and suburban Northshore mall, and in Garden State Plaza in Paramus, N.J. The prototype debuted in the Easton Town Center near Columbus. As Bigelow rolls out, the key is to maintain differentiation from BBW stores and customers.
  • Last week, Limited bought Slatkin & Co., a force in the home fragrance market. "The integration will happen very quickly beginning this week,'' Fiske said. "We've already mapped out ways this company will be integrated into ours. We already have been working with Harry Slatkin [founder and president] on a consulting basis. We will hit the ground running with his ability to contribute a wealth of ideas to the home fragrance business."

    At Express, comps fell 21 percent and had a higher markdown rate, Kenneth Venner, chief information officer, said on the call. "Growth continued in pants but was more than offset by declines in casual bottoms and knit tops," Venner said. "Selling on crop pants in the first quarter was well below our expectations, driven by color and fit issues. We expect that the second quarter will continue to be challenging for Express, although we are doing everything we can to optimize margins. Our priorities are clearing through underperforming merchandise and fixing our fashion issues by the fall season."

    Emme Kozloff, an analyst with Sanford Bernstein & Co., noted in a report that the quarterly loss at Express "is twice the amount that Express earned in all of 2004, which was half that earned in the prior year." However, "while investors might be clamoring for disposal of the apparel business now more than ever, the value equation is unlikely to work in shareholders' favor given the deterioration in performance. Even if the business was up for sale, it's unclear whether any buyers would be interested for a reasonable price."
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