Roy Raymond felt embarrassed trying to purchase lingerie for his wife in a public department store environment. He was an alumnus of Tuft’s University and a graduate from Stanford Business School. To open Victoria’s Secret he took a $40,000 bank loan and borrowed $40,000 from relatives. Its name is derived from the 19th century Queen of England, Queen Victoria. She is said to be a notorious prude despite having 9 children with Prince Albert. By the way, the Victoria’s Secrets’ Angels are chosen by their appeal to women and not men! In the company’s first year of operation, it earned about $500,000. Shortly after, he started a mail order catalogue and opened three more stores. In 1982, after five years of operation, Victoria’s Secret had grown to have six stores and a 42-page catalogue. Now Victoria’s Secret was grossing roughly $6 million per year. However, also in 1982, he sold the company to Leslie Wexner, who is the founder of Limited brands (NYSE: LTD). He bought Victoria’s Secret for only $4 million. By the early 1990’s the company had become the largest American retailer of lingerie, doing over $1 billion in revenue. In the fiscal year of 2009, Victoria’s Secret was worth over $5 billion. Mr. Wexner bought Victoria’s Secret for $4 million USD in 1982 and by the early 1990s it was doing over $1 billion in revenue. Talk about a sound investment. Sadly, on August 26, 1993, Roy Raymond committed suicide by jumping off the Golden Gate Bridge.
In 1912, Bella Cabakoff emigrated with her parents from Russia to Columbus, Ohio. At the early age of 21, she became the youngest buyer for the Lazarus Department store chain. After spending over 20 years with Lazarus, she and her husband Harry Wexner opened a women’s clothing store names Leslie’s (after their son) on State Street in Columbus. In 1963, he borrowed $5,000 from his aunt and $5,000 from the bank and opened a store at the Kingsdale Shopping Center in Upper Arlington. This store was named “The Limited” because the store only had clothes for younger women, different from his parents’ general merchandise store. In 1969, Wexner took The Limited Brands public. The 1980s started the acquisitions spree. In 1982, he bought the Victoria’s Secret brand, store, catalogue and bought 207 Lane Bryant stores. In 1985, a single Henri Bendel store was purchased for $10 million and 798 Lerner stores for $297 million. It also bought 25 Abercrombie and Fitch stores in 1988, which then phased the stores out in 1996 as it spun off into a public company (NYSE: ANF). In the 1990s such stores as Bath and Body works, Structure (converted to Express Men and sold to Sears), and Limited Too were also developed. Later in 1998, Victoria’s Secret beauty became known as The White Barn Candle Company and began to become a home fragrance brand. In August 2007, Limited brands transferred 75% of the ownership of its flagship Limited chain to buyout firm Sun Capital Partners Inc. The remaining shares were sold to Sun Capital Partners Inc. in 2010. Les Wexner is worth $3.2 Billion as of 2011.
Limited Brands, Inc is worth $12.2 billion at current marker value. The company has a dividend of $.80 and has a yield of 2%. They have not missed a quarterly earnings report since November 20, 2007. Since inception the stock has split 3 times. A 3 for 2 split in June of 1986, a 2 for 1 split in June 1990 and another 2 for 1 split at the end of May in 2000. Besides VF Corp (NYSE:VFC) and Gap (NYSE: GPS), Limited Brands is the largest clothing conglomerate listed on the NYSE (although Nike is bigger then all three of these companies put together- their in a class of their own, respectively).
Retail is a tough business; the failure rate of a new startup is enormous. They do not sell a commodity you must have like oil or electricity. They have to go through different avenues to make their product known and coveted. Retail is almost solely based on marketing towards a certain audience. Everyone needs utilities like electricity and running water! In the cutthroat world of retail it surprises me how well some of these companies do year over year, quarter after quarter, bad economy or worse economy. Do you think retail is an industry that will always grow? And if so, is the sky the limit, no pun intended!
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