the limited inc 1999 annual report
06 letter from the chairman
22 lane bryant
28 lerner new york
33 the limited
38 henri bendel
40 what others are saying…
42 intimate brands
bath & body works
white barn candle company
60 operating results and year-end position
63 financial table of contents
82 company information
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Dear Partner –
As you know, for the
past several years
we’ve been involved
in a sweeping strategic reconﬁguration. Moving from specialty fundamentals” of the businesses. At the same time, we made
businesses to brands. Creating a Center organization led by major strategic decisions like the closing of Cacique, the
talented specialists who are able to add value across multiple creation of Intimate Brands, Inc. (IBI), the spin-offs of
disciplines and businesses. Adding real design skill in every Abercrombie & Fitch, Limited Too, Galyan’s, and Alliance
brand, not only to create original, differentiated design, but as Data Systems. Strategic and tactical decisions, designed to
important, to establish consistent, vivid, sharply deﬁned narrow our focus and create shareholder value.
customer experience across brands.
Our strategies are working. This annual report is evidence of
We moved deliberately, impacting all areas of the business, the progress of our move to brands and brand management.
often simultaneously. We built teams, within and across the For the ﬁrst time, I’ve included a variety of comments from
brands, to address business issues and opportunities. We The New York Times, Merrill Lynch, Bear Stearns, and other
consciously distorted our allocations of time and money in the ﬁnancial reporters and analysts whose job it is to review these
service of our most promising people, ideas, and businesses. sorts of things. They see the change.
And we built our capacity to embrace a world of increasing
change, while deepening our disciplined capacity to “nail the We hope you can, too.
0 6 LT D A R 9 9 99 9AA RLT DD09
9 R LT 7
“To sustain our brands,
Even a cursory glance through this report tells you we’re getting traction. The to “move the needle”? Are they distorting in our history. Period. It’s only appropriate. moving in the right direction, with every
difference in the photography alone is dramatic. There is more separation in our their time against those critical few things Best brands demand best talent. brand now positioned for growth. we need to be able
brand positions today than at any time in our history. Photographs don’t deﬁne a that produce the biggest wins?
to count on a reliable
brand position. They reﬂect it. The best ones, often, don’t even need a logo. By the way, if you’re reading this as a Plus, our 84% stake in Intimate Brands
supply chain for our
When the merchandise is well designed, and the marketing position well deﬁned, One critical brand-supporting initiative is prospective new associate, let me be gives us the added participation of two of
the ﬁnished photo becomes an extension of the whole. Branding. inventory management. And here, we may equally clear: We will continue to seek out, the most powerful brands, of any kind,
products. With good
have made our most dramatic progress in promote, and hire, the best and brightest, anywhere. They are, of course, Bath & Body
We’re getting there. the past year, with, I’m convinced, even while continuously raising the bar for all Works and Victoria’s Secret. And their business processes,
more improvement to come. Under CFO associates. If that sounds appealing, join continued superb performance – proﬁts,
we can make sure that
In fact, our current brand positions are the strongest and most precise in our Ann Hailey’s leadership, inventories are us. There is much to do. in 1999, once again grew at a greater pace
product is on time
history. Vivid. Well edited. Tightly deﬁned. No cannibalization. leaner, better planned, in earlier, out ear- than revenues – gives us a healthy base the
and delivered at the
lier, with better turns, higher proﬁts, and Speaking of talent, I’m very happy to have apparel brands can only add to.
Yes, you can see it in the photographs. Most important, you can see it in the lower markdowns. Ann’s contributions Len Schlesinger managing Human
results. In fact, 1999 was our best year, reach far beyond a “controller” mentality. Resources. I’ve known Len for six years, as Would you call all this a turnaround?
“When I think about overall, since moving to the brand strategy. She’s a ﬁnancial partner to the brands, a conﬁdant, a friend, and a board mem- Certainly others have. I think of it as a
1999, it brings to mind Approaching $10 billion in sales and with penetrating insights into how they ber. He is, without question, one of the healthy beginning to a retail/brand success
a quote by coach Joe nearing one billion in operating proﬁts. can grow. foremost authorities on organizational story that will sustain itself for years to come.
A 43% earnings increase. Good progress. issues in America.
Paterno, ‘The will to
Another major area of concentration is This year’s improved result wasn’t an acci-
win is important, but I want to talk about that earnings increase our “Must Win” stores program. Led by In October, he elected to join the business dent. It was budgeted and planned. It is an
the will to prepare is a minute. Andrea Weiss, it involves every brand in as Executive Vice President, Organization, indication that the deliberate steps we’ve
vital.’ In the Stores the enterprise. The idea is to focus on the Leadership, and Human Resources. Clearly, taken are working. I’m conﬁdent these
Operations group, I’ve said that, since 1995, we have been in- best stores in each brand and, simply, do his decision is a strong endorsement of the steps are the right ones, and our improved
volved in a sweeping strategic reorganization. whatever it takes to dramatically increase direction we’ve taken, and the potential that results are just beginning. Additionally,
we’ve begun to prepare
performance. When it works, and it is lies ahead. now that we’re starting to get traction, I
to win through our Jane O’Dell
In 1999, I added a few tactical objectives. already beginning to in several brands, it feel comfortable shifting more to offense,
Vice President, International Trade
‘Must Win’ stores ini- can set the standard for all stores, while Since he’s gotten here, he’s leapt our talent pressing the advantages we have, and con- and Customs Compliance
tiative. The year 2000 LIMITED DISTRIBUTION SERVICES
The ﬁrst, because results do matter, was to unlocking huge additional proﬁtability. So agenda ahead by years. Moving, seemingly, centrating on growing the brands. That’s
is when the rubber make more money. much so, I’m demanding it become a pri- in ten directions at once. His impact has the exciting part, growing brands. Using the entire arsenal of tools at our dispos-
oritized performance objective for every been immediate, dramatic, effective, and al, from stores, to e-commerce, to catalogue, to get to the future. It’s exciting.
meets the road.”
I wanted to keep the double-digit momen- CEO, CFO, head designer, store executive, much appreciated by all. And it’s fun.
tum going in IBI, and have every fashion and marketing manager. Everyone.
brand proﬁtable in fall ’99. My personal goal Len is helping to make what has always As you well know, we’ve made a lot of promises over the past ﬁve years. Promises
Last, and maybe most important, is talent. been a very good place to work, a great
was a minimum of a 40% increase in earnings. about shifting to brands, building the talent, developing capability, narrowing
place to be. And he’s just one of many, our focus, improving performance, and creating shareholder value. Promises
And we exceeded it. Without talent, nothing gets done. And many executives and associates whose that all of us here, collectively, made. To which I will only humbly add, promises
our stated mission, to build a family of the impact is being felt at every level. made, promises kept. I want to thank my associate partners for all of the extra
My personal goal for 2000? Do it again. world’s best fashion brands, requires effort it took to fulﬁll those promises.
superb talent at every level. This is a changed business.
We set and aligned the priorities of the
enterprise, concentrating on doing a few So, if you’re a shareholder, let me be clear: Dramatically changed. Changed for the
things well. And only a few. What is each Over the past three years, The Limited, better. Changed in virtually every way.
Leslie H. Wexner
brand best at? How can they win? Does Inc. has promoted and hired more top tal- One where every brand position gets
Vice President of Human Resources
everyone know? Who are our best people? ent, in more disciplines, making more stronger, more focused, and, hopefully,
Chief Executive Ofﬁcer
THE LIMITED, INC. Are we giving them the tools and measures signiﬁcant contributions, than at any time more proﬁtable every quarter. We’re
0 8 LT D A R 9 9 9 9 A R LT D 0 9
STRUCTURE, the leading men’s-
only specialty retailer in the
country, designs and sells
classically inspired sportswear
with a rugged fashion appeal
for men in their 20’s and 30’s.
1 0 LT D A R 9 9 9 9 A R LT D 1 1
“This past year has
been spectacular. It
is amazing to have
so many people so
quickly get behind new
ideas and new ways
of working, at every
level. We have an
attentive and vibrant
retail audience, and
our customers are all
over our new ideas
as fast as we can get
them in the stores.
This is what makes
every day exciting.
We have a lot of fun.”
We’ve been involved in a number of BRAND BUILDING INITIATIVES STRUCTURE cut its operating loss by was down signiﬁcantly throughout the
75% in 1999, the largest dollar improve- fall season, and the focus was on getting
AND STRATEGIES that have impacted all areas of the business and ment among the apparel brands. This in and out of seasons earlier.
improvement was primarily driven by The result was dramatically lower
the progress of our brands. A summary of 1999 follows. higher gross margin, a result of disci- carryover inventory and higher gross
plined inventory management. margins.
Best at Pants “Must Win” Stores Program
Structure continued to focus its efforts Structure has identiﬁed 110 “Must Win”
on providing the most complete offering branded stores for peak performance.
of casual fashion and basic pants for Stores have been reorganized to focus
men. In 1999, Structure launched the on the “Must Win” strategy, a priority
Vice President, Design
“X” pant, a proprietary line of draw- for 2000.
string pants. Over one million pairs of
“X” pants were sold in 1999, and addi- Talent
tional styles will be introduced in 2000. Structure hired David Lawn as EVP, General Merchandise Manager, and also
reorganized merchandising and hired a new Merchandise Manager for the
Disciplined Inventory Management “Best at Pants” category. Under the direction of Andrew Maag, VP, Design,
Structure signiﬁcantly altered its the design department reorganized, hiring senior designers in knits,
inventory management strategy in sweaters, and accessories, and added additional talent in pants.
1999. Inventory per square foot at cost
1 4 LT D A R 9 9 9 9 A R LT D 1 5
From every angle, EXPRESS is a fashion leader.
International, innovative, sexy, strong. A modern
women’s brand that delivers runway style, virtu-
ally as it heads down the runway. Great design.
Well priced. That’s Express.
1 6 LT D A R 9 9 9 9 A R LT D 1 7
“Our #1 objective was
to ‘win at’ denim in
the fall season.
Through distortion of
time and talent, we
succeeded in helping
achieve the strongest
volume and margin
results in the history
EXPRESS, our most proﬁtable apparel nationwide. Express will continue to
brand, improved operating income in invest in denim and underwear in 2000.
1999 and delivered a 5% comparable
store sales increase on top of a 16% Brand Top Stores in Top Markets
gain in 1998. As of year-end 1999, Express had recol-
ored and remodeled over 300 critical
Fashion stores to brand-right design. These 300
Express has developed a unique fashion stores included the top ten markets and
pyramid to ensure an appropriate mix all the “Must Win” locations. Conversion Heidi Popadych
Director, Store Planning and
of fashion basics, current fashion, and drove incremental volume and above-
fast fashion merchandise. The mix hurdle returns.
builds a foundation for sustained sales
growth and increased margin opportu- Fit and Quality Standards
nity. The biggest merchandising suc- 1999 saw major improvements in ﬁt and quality standards. Express reviewed
cesses in 1999 were denim, woven its vendor base and made consolidations and improvements as needed. A
pants, and activewear. In addition, an manufacturing manual instituting brand standards across the board was
underwear campaign was launched established.
2 0 LT D A R 9 9 9 9 A R LT D 2 1
Hot fashion, star power, sizzling
brands. LANE BRYANT’s sportswear
line, Venezia Jeans Clothing Co., and
sexy new intimates line, Cacique,
set the standard in hip fashion for
women size 14+.
2 2 LT D A R 9 9 9 9 A R LT D 2 3
“We have worked very
hard to relentlessly
focus on our ‘best at’
businesses of sweaters
and knit tops. Both
businesses have com-
pletely transitioned to
teams of specialists,
through MPR. Today,
we have the best talents
in these businesses.
production, and plan-
ning are working hand-
in-hand to achieve
common goals. We are
delivering better fashion,
in a timely manner, at
great value to our
customers, and we are
very proud of it.”
(MPR). A Vice President of Product
LANE BRYANT is the dominant specialty
Development, Karen Tweedie, was hired.
retailer in the plus-size market. In 1999,
Leveraging talent resources in design
Lane Bryant achieved a comparable
and production allows Lane Bryant to
store sales increase of 5% and deliv-
be ﬁrst to market in delivering fashion
ered more proﬁt to the bottom line
to its customer.
through improved gross margin.
A combination of opening new stores,
In February 2000, Lane Bryant held the
remodels, and store closings resulted in
ﬁrst lingerie fashion show for plus-size
productivity increases and a better-
women, featuring a number of celebrity
branded fleet in 1999. In 2000, Lane
models. The show generated great
Bryant will open approximately 25 new
excitement and publicity for the inti-
strip center locations, a real estate
mate apparel line, which was launched
format that has proven to be very
nationwide. Lane Bryant achieved
Executive Vice President
successful for the brand.
double-digit comparable store sales in General Merchandise Manager for
Sportswear, Ready-to-Wear and
intimate apparel for the past two years,
Communicating with the Customer
and will continue to invest in the
One million new names were added to
Cacique intimate apparel line in 2000.
the customer database as a result of
celebrity model campaigns, New York fashion shows, print advertising,
direct mail prospecting, the Web site, and the recently introduced quar-
In 1999, Lane Bryant continued the roll-
out of Merchandise Process Redesign
2 6 LT D A R 9 9 9 9 A R LT D 2 7
Under the New York &
Company brand, LERNER
NEW YORK has redeﬁned
fashion. Modern, city hip,
energetic, NY&CO is
fashion with an attitude.
2 8 LT D A R 9 9 9 9 A R LT D 2 9
“This past year was one
“This year, after seven
of the most rewarding
years with Lerner New
for me since joining the
York, I was excited to
company in 1991. We
be promoted to manage
were challenged by our
the Staten Island store,
leaders to be the best
the #1 volume store in
again, to align our-
our chain. I was also
selves as a team and
proud of the fact that
to focus on our #1
my entire management
team at Steinway Street
Through the empower-
was promoted behind
ment and education of
me, knowing that I had
our people, we were
hired and trained each
able to signiﬁcantly
associate in that store.”
impact our business
and share many wins
together. In addition to
being a shareholder of
The Limited, Inc., I am
thankful for the per-
LERNER NEW YORK turned in a 12% under the NY&CO brand. Lerner New York
sonal satisfaction I
increase in comparable store sales in will continue to clearly communicate the
have enjoyed and the
Virtual Stretch Program
THE LIMITED cut its operating loss in
1999, the highest of the apparel brands. brand’s fashion key items in windows,
The Virtual Stretch System is a collection
half in 1999, a result of a 5% increase in
Gross margin and operating proﬁt also outﬁts, and advertising. The “WOW!”
professional growth I
of related separates for the Modern
comparable store sales, signiﬁcantly
improved dramatically. promotional strategy, which is the peri-
have experienced as a
American Woman, including jackets,
improved gross margin, and expense
odic promotion of fashion-right key
skirts, pants, and tops with a decidedly
savings resulting from the closure of
Build the NY&CO Brand items, reinforced the brand promise of
“Must Win” Store Manager
chic feel. Virtual Stretch represented
over 100 unproductive stores.
The NY&CO store design, which debuted fashion-quality-value and drove total
over 20% of sales volume in 1999 and is
at the Lloyd Center in Portland, Oregon store trafﬁc.
LERNER NEW YORK
projected to increase signiﬁcantly in
Continued Focus on “Must Win” Stores
and the Mall of Georgia, near Atlanta,
2000. Remarkable for a category that did
created a new environment that conveys Successfully Execute the “Must Win” Stores Program
not exist in 1998.
Our “Must Win” program includes 140
the energy and excitement of the brand. Lerner New York’s focus will be on increasing productivity through invento-
locations and will represent 50–55% of
New, bolder brand imaging, including ry priority and enhanced marketing to ensure this group of stores leads the
Continued Focus on Fit and Quality Upgrades
sales. The Limited held weekly sales
powerful photography and dynamic win- brand. Lerner New York will also focus on customer service; having stores
The Limited’s goal is to double the pants
meetings with all regional and district
dow and point-of-sale displays, focused that provide brand-appropriate customer service that highlights ease of
business in 2000. Quality upgrades are
managers and “Must Win” sales man-
on fashion. Direct mail programs included self-service and friendly, speedy transactions for busy customers.
speciﬁcally directed toward consistent ﬁt
agers which focused on reviewing
aggressive, focused prospecting to
and quality in pants. To accomplish this
results, developing strategies, and
increase the customer base. Develop Flexible Manufacturing Capability
goal, a manual of manufacturing stan-
driving sales. The main objective is to
A long-term global sourcing strategy supports the brand requirements of
dards has been implemented to which all
create a sales culture that validates the
Fashion fashion, quality, value, and flexibility and provides a framework for supply
sourcing partners must adhere.
brand and generates customer loyalty.
Lerner New York’s merchandising team chain management. The development of “chase” scenarios for key items and
For 1999, the “Must Win” program
of President Richard Crystal, VP of categories ensures a quick reaction to shifting trends and business needs.
“Must Win” Store Manager
resulted in a double-digit comparable
Design Charlotte Neuville, and GMM Increased partnership with key suppliers will ensure a better understand- Las Vegas
store sales spread between the “Must
Jackie Corso produced an exciting, ing of business needs on both sides. THE LIMITED
Win” stores and the balance of the chain.
focused merchandise assortment
3 2 LT D A R 9 9 9 9 A R LT D 3 3
THE LIMITED brand designs sophisticated sports-
wear for the Modern American Woman, who wants
accessible feminine fashion at a great value.
3 4 LT D A R 9 9 9 9 A R LT D 3 5
HENRI BENDEL’s Fifth Avenue store, a premier destination Windows
One of Manhattan’s most beautiful and
and New York City landmark, produced a comparable Henri Bendel’s windows featured unique, enticing displays,
store sales increase of 7% in 1999. including interactive and live-action windows, and guest
fashionable shopping environments,
Henri Bendel continued to redirect and strengthen its Events
HENRI BENDEL’s Fifth Avenue store is a
merchandising strategy to reflect its target customer. Henri Bendel also increased the visibility of the store
through high-proﬁle on-site events, including: InStyle
Henri Bendel also focused on young and emerging designer
Beauty Issue parties; Little Black Dress party with Vogue;
talent to separate itself from the competition.
mecca for modern, sophisticated, higher-
Cruel Intentions movie premiere; Catherine boutique
launch party with Manhattan File; Trudie Styler book sign-
ing party with Harper’s Bazaar ; Girls’ Nite event series;
Henri Bendel increased the visibility of the store through
income, thirty-something women from all
regional buys in targeted high-proﬁle advertising vehicles, and the Möet & Chandon Designer Debut party in conjunc-
including InStyle, Harper's Bazaar, and Vogue, and also tion with Seventh On Sixth. In addition to enticing targeted
over the world.
increased its presence in New York magazine. potential customers to the store, these events generated
press coverage and created positive energy and “buzz.”
3 8 LT D A R 9 9 9 9 A R LT D 3 9
“Lane Bryant has had
“LTD has narrowed its
What others are saying...
business scope substan-
one of the most striking
tially in the past ﬁve years
“4Q/99 Results Blow
“The Limited’s credibility with investors
turnarounds in retailing
from 12 retail businesses
has increased dramatically over the
to ﬁve. Simultaneously
past two years, as the company has
.…Congratulations on a
Thomas Filandro, J.P. Morgan, 2/23/00
the company has made
made good on its promise to increase
shareholder value by having spun off the transition to central-
Abercrombie & Fitch and Limited Too; Report, 2/17/00
ized functions of fully
sold off noncore assets; and utilized
integrated design, pro-
cash to repurchase shares.”
duction, and merchant “This new design team has given the Lerner [New York] store chain a strong point
Richard Baum, Credit Suisse First Boston, 9/22/99
teams. These initiatives
of view, as well as a consistency of product offerings.”Barbara Wyckoff, Buckingham Research, 11/8/99
have created a ‘best
“In what is turning out to be the practices’ platform for
“It’s 6 p.m. on a weeknight and the Express store on Madison Avenue is
turnaround story of the year, each business and have
crowded with twenty-something shoppers fawning over the embroidered
Limited, Inc., whose subsid- enabled division leaders
jeans and ankle-length skirts. ‘I was walking by and the stuff in the window
to focus more clearly on
iaries include Express, Lane caught my eye,’ said Missy Patel. ‘I’m shocked at how cool everything is.
Bryant and Lerner [New York] I haven’t shopped here in years.’ Yes, this is the same Express that only
Thomas Filandro, J.P. Morgan, 11/24/99
three years ago fashion watchers and Wall Street analysts were calling
and which owns [over] 80% of
an almost-dead retail chain.” Associated Press/Chicago Tribune, 8/15/99
Intimate Brands, parent of Victoria’s Secret, posted an
impressive companywide gain of 12%.”The New York Times, 9/3/99
“Clearly, throughout the past two years, Limited has built a powerhouse team
of proven retail executives from Banana Republic, Estée Lauder, J. Crew,
“The Limited remains committed to increasing shareholder value, including an
Liz Claiborne, Macy’s, Talbot’s, Pillsbury, etc. And now it appears that the
ongoing commitment to improving the apparel business.”Mark Friedman, Merrill Lynch, 2/22/00
fruits of the labor of putting together these top executives has paid off.”
Steve Kernkruat, Bear Stearns, 2/23/00
“…a dramatic rethinking of strategy at the company….The ﬁrst
“Inventory Religion Pays Off.”
is a new focus on shareholder value…”Dana Eisman Cohen, Donaldson, Lufkin & Jenrette, 8/19/99 Harry Ikenson, Chase H&Q, 2/22/00
4 0 LT D A R 9 9 9 9 A R LT D 4 1
The Limited, Inc. owns approximately 84% of INTIMATE BRANDS, Inc.
(NYSE:IBI). IBI is the leading specialty retailer of lingerie and personal
care products, sold through the Victoria’s Secret, Bath & Body Works,
and White Barn Candle Company brands. Because of the relationship
between The Limited, Inc. and Intimate Brands, Inc., one that gives
Limited, Inc. shareholders a stake in this dynamic business, I thought
you might want to read my letter from the IBI annual report.
Dear Partner –
With all the talk about technology, the Web, clicks vs. bricks, Finally, a major reason for a lot of people to log on to the Web.
etc., it’s interesting to note what Adweek named the Internet A big audience. Real content. It was, perhaps, the most tangible
marketing event of 1999: February’s Victoria’s Secret Fashion demonstration, yet, of what the Internet could be. And the
Show. And why not? reason it was such a success? The power of the brand. The glob-
al impact of Victoria’s Secret made the event come alive in a way
1.5 million people watched the show live on the Web. 500 mil- nothing else could. And Victoria’s Secret is just part of the com-
lion hits during the week. The number one most visited site for pelling brand story that is your company, Intimate Brands.
the month. The biggest live Web event. Ever.
The Webcast was a prelude to another very good year. In a
Technology meets fashion. And the results are astonishing. string of continuing good years. With 21% earnings per
4 2 LT D A R 9 9 9 9 A R LT D 4 3
VICTORIA’S SECRET is the world’s most recognized
brand of elegant intimate apparel and personal care
products for women. Victoria’s Secret is available
through stores, catalogue, and online at
4 4 LT D A R 9 9 9 9 A R LT D 4 5
share growth, on $4.5 billion in volume. progress. Powerful performance. So, the obvious question, Then, so is White Barn Candle Company. Good. That was the goal.
“Embracing the new role
when confronted with numbers like these, is “just how White Barn began as a sub-brand in Bath &
of merchant has meant
At IBI, we place a premium on growth. And we’ve delivered much soap and shampoo can you sell?” My answer is Body Works. Candles and home fragrance We’ve worked diligently to integrate every
moving from a product
sustainable, predictable growth, by every metric. billions. Billions and billions. Because, it isn’t just about under the White Barn label. A way to test the aspect of the brand, ensuring the sum of
development role, to
soap and shampoo. It’s about body care. And cosmetics. And market potential for a separate business. the whole is greater than the parts.
a new analytical role,
Victoria’s Secret and Bath & Body Works show the kind of aromatherapy. It’s about home fragrance, candles, and
that allowed me to
strong, sustained performance that virtually deﬁnes the anti-bacterial products. Bath & Body Works for women. And And it worked. Today, across every channel, stores, cata-
rigorously test and
model for growth brands. With proﬁt, once again, increasing children. And men. It touches, or can touch, virtually every logue, and e-commerce, there are tight
as a percentage of sales. segment of personal care products that a family can buy. It’s So we began to test the concept of White brand standards with no shortcuts, no validate my market-
not about soap. It’s about lifestyle. And about a powerful Barn Candle Company stores. And that’s compromise. Products are launched at
place instincts. My
Still, the potential of Intimate Brands is, I believe, far emotional connection to the brand. worked too. the same time, in the same way, with the
new role includes three
greater than even what we’ve achieved to date. same quality, at the same price. Same,
Bath & Body Works has earned credibility as a brand, crucial By year-end, we’ll have 125 White Barn same, same. Today, we think of ourselves
Because, this is a business about “next.” The next soap. The to the success of personal care products. More important, Candle Company stores and, within the as a 360-degree brand. One position. One
intimacy, and fashion
next bra. The next fragrance. The next big thing. it’s earned the loyalty of its customers, who chose BBW next three years, 275. We believe there voice. Anytime. Anyplace. Worldwide.
radar. Using these tools,
Christmas gift baskets eight million times last holiday sea- can be a White Barn virtually everywhere Period. The end.
I was able to identify a
So, what’s next? son, while stufﬁng tens of millions more BBW products into there is a BBW. With similar productivity,
gift boxes or Christmas stockings. margin characteristics, and potential Forty-seven weeks of national television in
Let’s start with Bath & Body Works. Let me remind you, this sales growth. Clearly, a wonderful busi- 2000. Over 100 pages of national magazine in cotton foundations.
business began about ten years ago. We initially believed When you think enough of a brand to choose it for family ness. Clearly, just the beginning. advertising. 36 billion catalogue pages.
Teaming with design,
stores could average about $500,000 each, or $500 million and friends, that’s customer loyalty. A powerful, pervasive The Victoria’s Secret brand is in front of
directing our team,
in annual sales on a thousand-store base. brand. And, by the way, customer loyalty can be measured in Now, to Victoria’s Secret. millions of customers every day, making a
and partnering with
ﬁnancial terms. Both in margin. And in footfall. To be clear, multitude of positive impressions.
We were a little off. I believe that wherever there is footfall, from malls to strip Five years ago, Victoria’s Secret Stores
Catalogue, we delivered
centers, to smaller cities to airports, even to hospitals, Bath and Catalogue ran two very independent We believe that Victoria’s Secret, already the
In the past fall season alone, Bath & Body Works’ sales & Body Works can perform proﬁtably. I now believe the businesses. Little coordination of styles dominant lingerie brand in America, has
approached $1 billion. Just six months. And, in the aggre- domestic potential for BBW exceeds 2,000 stores. And or marketing. Little effort to interact or the potential, with its abundant credibility
gate, we have sold over $5 billion in personal care products. that’s not all. connect on their shared brand. and momentum, to be the global lingerie
Amazing growth. Amazing success. A wonderful brand. brand. There appears to be no upper limit.
We know there are also multiple distribution channels for Each a good business, but, beyond
Why? I believe the key is that, from its inception, the BBW BBW. We’ve tested a catalogue, or magalogue, that we believe sharing a name, no brand connection, or Victoria’s Secret Stores led the way with
team has approached the business as a completely inte- is a brand-right business extension. And it works. Doing brand standards. another excellent year. The VSS team has
grated brand. Everyone, and everything, connects to their business, while driving customers to stores, and advertising fully integrated top-tier design, produc-
integrated brand approach. The brand evokes a strong emo- the brand. An excellent vehicle. All that’s changed. Victoria’s Secret has tion, merchant, and marketing talent, and
tional response. It is delivered with quality and consistency. made enormous strides. In sales. Proﬁt their results have been impressive.
It gets trial and repeat purchase. The entire team “lives the So, we’ll continue to reﬁne and expand our magalogue this margin. Customer awareness. And brand Sustained product launches like Body by
brand,” brainstorming new products, talking to customers, year, and then establish a brand-right e-commerce Web site integration. Victoria, the Miracle Bra, Angels, Body
testing, reﬁning. in the next 12 to 18 months. And we’ll certainly leverage the Flex, Desire, Cotton Lingerie, and Body Director, Merchandise Manager
e-commerce knowledge and experience gained at IBI to Researchers who chart this sort of thing say Bare continue to ring up sales and drive
VICTORIA’S SECRET STORES
IBI became a public company in 1995. BBW’s sales, for the accelerate the BBW site and grow the brand. they’ve never seen the kind of growth in customers to the brand. At the same time,
previous year, were $260 million in just over 300 stores. In positive brand penetration and customer the business continues to take the neces-
1999, sales exceeded $1.5 billion, in 1,214 stores. Great All good news. perception we’ve experienced. sary steps to position itself for the long
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BATH & BODY WORKS offers healthy, natural,
good-for-you personal care products from
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Launched in November 1999,
WHITE BARN CANDLE COMPANY
has the potential to become as
vivid and powerful a brand as
Bath & Body Works.
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When she was a young girl, Marian Wright
“We were able to open term. Relentlessly attacking every area to Heavenly is one of them.
Edelman, founder of the Children’s Defense
get it to “next.” Preparing the organization
7 stores in 10 days,
Fund, was told by her father that helping others
for growth. And populating it with talent. We believe the potential for the Victoria’s
which is incredible. is simply the “rent we pay for living.” We agree.
Secret Beauty business is well in excess of
The 3-week new hire Giving back has always been an important part of
In addition, the Catalogue’s strategy to $1 billion. With excellent margins. And
the way we do business. Knowing that our
management training produce fewer, better books has proved it’s just the beginning of the potential, the associates, our businesses, and The Limited,
program empowered correct. Larger books, stronger images, “what’s next,” in the beauty category’s Inc./Intimate Brands, Inc. Foundation are
our managers to do more powerful, differentiated photogra- future. The very reason we established the sources of good in our communities ﬁlls us with
their job well, right respect for each other and pride in our
phy, all help to position the brand. Plus, Intimate Beauty Corporation last year.
out of the gate. It we’ve upgraded the merchandising talent
to ensure the fashion is consistent with There is, in truth, awesome potential, or
gives our associates
Our businesses and our Foundation form bonds
the aspiration. The right thing to do. “next,” in every part of the Intimate
who go through the with local organizations to address the most
Brands businesses. That’s what makes
program a great deal
Our e-commerce site, already one of the them so exciting.
of conﬁdence in them-
most popular and, more important, proﬁt-
selves, and in the able, in all e-tailing, has processed orders I’d like to close this letter by going full
brand. It’s something from over 160 countries. And, we feel we circle, back to the Victoria’s Secret Fashion
I’m incredibly proud of are just beginning to market the site, and Show. Several months ago, we got a call
on both a personal and the brand, internationally. from Miramax Films, inviting us to take
professional level.” the show to Cannes, to beneﬁt amfAR’s
Which leads me to Victoria’s Secret Beauty. Cinema Against AIDS. We were happy to
accept. We expect that, with our partici-
In the past year, the VSB team examined pation, the event will raise a dramatic We want to make every home a loving and healthy variety of companies. This free public service
important issues impacting our communities
the entire business, paring back some amount of money for research. A power- home for all children. Following the success of the helps women restore their appearance and conﬁ-
every day. Our associates across the country –
categories, while eliminating others ful brand, doing powerful good. The right Columbus Coalition Against Family Violence in dence, arming them for the ﬁght against cancer.
from New York to New Mexico – also act as
1998, we were instrumental in forming the
sources of good, with their own generous contri-
entirely. At the same time, they began to thing to do.
Central New Mexico Task Force Against Family To be a family of the world’s best fashion brands, we
butions of time and money.
develop and introduce more brand-right
Violence in 1999. This coalition of employers and know The Limited, Inc. and Intimate Brands, Inc.
products. The ﬁrst signiﬁcant introduc- We are at the beginning of a major global
community and political leaders has hosted must attract, retain, and effectively lead a diverse
To be effective requires focus. While we support
tion was the Dream Angels Heavenly presence, for brands with major global
employer training sessions and well-attended workforce. One example of our commitment to
dozens of programs around the country, our phi-
prestige fragrance collection. potential. Populated by talented associ-
forums to address the impact of violence on chil- diversity is our long-standing and growing part-
lanthropy efforts concentrate on four issues,
ates who pursue growth, and the future,
dren, the workplace, and society and offer the nership with the United Negro College Fund – in
including some that are of particular interest to
Introduced in the fall of 1999, Heavenly with passion. I want to thank them for
community a multifaceted approach for the pre- underwriting UNCF events and contributing in
women, our primary customers and associates:
District Sales Manager
quickly sold out, and should annualize at their hard work. Their passion translates vention and resolution of domestic violence. support of service and scholarships. This national
fostering better education, working to support
BATH & BODY WORKS
over $100 million. It could well end up to results. organization has provided support to more than
children and families, investing in health care,
Our support of the “Look Good…Feel Better” 300,000 students educated by the 39 small, his-
and promoting diversity.
being the biggest fragrance launch in histo-
program in New York City, created in partnership torically black member colleges and universities.
ry. Good initial work, a strong result. And, a
with the American Cancer Society, gives women
So much hinges on education: progress, change,
powerful example of what can happen when Sincerely,
undergoing chemotherapy and radiation the tools We hope our involvement with these, and many
understanding, and potential. It is an investment
talented people touch an astonishingly
they need to cope with changes in their appear- other tremendously worthwhile issues, encour-
with unlimited payback. This year, 600 of our
ance – sometimes as difﬁcult to handle as the ages you to pledge your time and dollars as well.
associates have committed their time as reading
Leslie H. Wexner disease itself. Our ﬁnancial support helps women You just might consider it your share of the “rent.”
tutors and mentors to more than 300 kinder-
By the way, we’ve enclosed some coupons in Chairman and receive training sessions with volunteer cosme-
garten students in the Columbus Public Schools
this report for you to sample our products. Chief Executive Ofﬁcer tologists and personal care products from a
through our ColumbusReads program.
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