L Brands (formerly Limited Brands) is as much of a shopping-mall mainstay as food courts and teenagers. The company operates 3,005 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.
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.
The Victoria's Secret segment sells women's intimate and other apparel, personal care and beauty products under the Victoria's Secret and PINK brand names.
The Bath & Body Works segment sells personal care, soaps, sanitizers and home fragrance products under the Bath & Body Works, White Barn Candle Company, C.O. Bigelow and other brand names.
Victoria's Secret and Bath & Body Works International segments include the Victoria's Secret and Bath & Body Works company-owned and partner-operated stores.
In addition to its 3,005 US stores, L Brands has retail stores in Canada, the UK, and the Middle East. International sales totaled $1.31 billion in fiscal 2016 (ended January), about 11% 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.
Sales and Marketing
L Brands spent $414 million on advertising expenses in fiscal 2016, down from $436 million and $452 million in 2015 and 2014, respectively.
The company sells its La Senza products at more than 120 La Senza stores in Canada and online at www.LaSenza.com.
The company's net revenues have been increasing over the last five years. In fiscal 2016 L Brands' net revenues increased by 6% due to increase in all of its segments, particularly Victoria's Secret.
Victoria's Secret segment revenues increased due to higher Victoria's Secret Stores and Victoria's Secret Direct sales, resulting from the performance of PINK brands, core lingerie and sport driven by a compelling merchandise assortment that incorporated newness, innovation and fashion, as well as in-store execution.
In fiscal 2016, the company's net income increased by 20% due to higher net revenues and other income driven by a pre-tax gain due to the divestiture of remaining ownership interest in third-party apparel sourcing business to Sycamore Partners.
L Brands' operating cash inflow increased by 5% to $1.87 billion compared to $1.79 billion in fiscal 2015.
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 increased the Victoria's Secret footprint by about 5% with 26 new stores and BBW by 3% with 24 new locations in fiscal 2015. Partners also opened 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.
While the company's first focus is on major growth in North America, it plans to further expand into international markets, including mainland China and other countries, through partner arrangements or company-owned stores.