Limited Brands Inc. (Columbus, Ohio) will sell a 67 percent interest in its Express chain of stores to affiliates of the private equity firm Golden Gate Capital (San Francisco), for $548 million.
The company said it will also explore options for Limited Stores, its other specialty apparel unit.
“Our strategic agenda focuses on growth in the intimate apparel, and personal care and beauty segments of our business,” said chairman and ceo Leslie Wexner. “The new ownership structure for Express will provide it with the resources, leadership focus and capital to maximize its potential.”
Once the disposition of the apparel business is completed, it will take the 44-year-old retailer out of the apparel fashion business, where it began with the first Limited store in 1963. The company said it will now focus on its two largest brands, the Victoria’s Secret and Bath & Body Works chains, which account for nearly $8 billion in annual sales. The apparel brands, by contrast, bring in $2.24 billion and have been dogged by intense competition and eroding store traffic. Same-store sales rose 11 percent for Victoria’s Secret and 10 percent for Bath & Body Works in the 2006 fiscal year while same-store apparel sales fell 2 percent. The company has been closing underproductive apparel stores and converting its Express stores to offer apparel for both men and women.
Jay Margolis, who had been interim president of Express and Limited Brands’ group president, apparel, will lead Express as its ceo. Express will continue to operate its 631 stores under the same brand and will remain headquartered in Columbus.
“We have been very encouraged by the progress and improved performance that Express has demonstrated over the last year and a half,” Wexner said. “We continue to believe in Express and its potential. In fact, we structured this transaction specifically in order to continue to participate in the growth of Express through our 33 percent ownership interest.”
Golden Gate Capital manages more than $2.6 billion invested in software and technology, electronics, retail, financial services and media. Early this year, it had been a part of a takeover attempt of the financially troubled clothing retailer Eddie Bauer (Redmond, Wash.), but Eddie Bauer shareholders rejected that $286 million buyout offer in February.