L Brands (formerly Limited Brands) is as much of a shopping-mall mainstay as food courts and teenagers. The company operates nearly 3,000 specialty stores in North America and the UK primarily under the Victoria's Secret, Bath & Body Works (BBW), and La Senza (in Canada) banners, as well as corresponding websites and catalogs. Originally focused on apparel, L Brands sold its ailing Limited and Express chains -- leaving the company free to focus on two core businesses: Victoria's Secret and BBW. L Brands also owns apparel importer MAST Industries, accessories boutique operator Henri Bendel, apothecary C.O. Bigelow, and The White Barn Candle Co. Founded in 1963, the company changed its name to L Brands in 2013.
Change in Company Name
The company belatedly changed its name from Limited Brands to L Brands to distance itself from the Limited Stores, which it jettisoned in 2007.
In conjunction with the name change, the company also realigned its reportable segments into Victoria's Secret, Bath & Body Works (BBW), and Victoria's Secret and Bath and Body Works International. About 60% of sales come from domestic Victoria's Secret stores driven by its eponymous and PINK brands. Nearly a third of sales come from the BBW segment, which also includes White Barn Candle and C.O. Bigelow brands.
MAST Industries (dba Mast Global Fashions) is the company's production, sourcing and logistics arm - it accounts for the rest of sales. Mast is one of the world's largest contract manufacturers, importers, and distributors of apparel. Mast has manufacturing operations and joint ventures in more than a dozen countries including China, Israel, Mexico, and Sri Lanka.
In addition to its 3,000 US stores, L Brands has about 650 retail stores in Canada, the UK, and the Middle East. International sales totaled $1.34 billion in fiscal 2015 (ended January), about 10% of L Brands' total. L Brands has a partnership with M.H. Alshaya (a popular franchise partner for many American retailers, including American Eagle Outfitters and Pottery Barn) to operate stores in the Middle East.
L Brands' revenue has been trending upward for several years. It saw its total net sales increase 6% to $11.4 billion in fiscal 2015 (ended January) versus the prior year as Victoria's Secret and BBW products sold well across all categories. After a dip in 2013, net income has been on an upward trajectory. It grew 15% to $1 billion due to the higher revenue. Cash from operations rose 43%, from from $550 million to $1.7 billion, on the strength of higher revenue and net income.
The company's goal was for Victoria's Secret to blossom into a $10-billion brand, but the global financial crisis, decline in consumer confidence, and poor performance of the La Senza business in Canada conspired to delay the growth strategy for the bra-and-panty business. The strategy at Victoria's Secret is to capture the teen and college-age female customer with its youth-oriented PINK brand, with the hope that as she matures she will shop for sexier styles, such as Angels and Very Sexy, sold in Victoria's Secret stores. PINK is sold in freestanding stores as well as Victoria's Secret shops. While the retailer doesn't break out PINK sales, the brand is meeting stiff competition from American Eagle's Aerie brand and Gilly Hicks by Abercrombie & Fitch. Both target the youth market. L Brands has been closing La Senza stores and repositioning the brand.
Going forward, L Brands intends to continue international expansion but focus primarily on expanding stores and locations of Victoria's Secret and BBW in North America. It plans to increase the Victoria's Secret footprint by about 5% with 26 new stores and BBW by 3% with 24 new locations in fiscal 2015. Partners will open an additional 10 new Victoria's Secret stores (in the Middle East) and 50 new BBW stores in the Middle East, Latin America, Southeast Asia, and Eastern Europe in 2015.