Business Context and Reporting Period
This Form 10-K is an annual report for The Limited, Inc. for the fiscal year ended February 2, 2002. Although the user request metadata mentions "Bath & Body Works," the filing text identifies the registrant as The Limited, Inc., a Delaware corporation that operates Bath & Body Works as a subsidiary within its Intimate Brands segment. The Company operates in two primary segments: Apparel (Express, Lerner New York, Limited Stores, Structure) and Intimate Brands (Victoria's Secret, Bath & Body Works). As of the reporting date, the Company operated 4,614 retail stores globally.
Key Financial Metrics
The filing text incorporates financial statements by reference and does not provide a consolidated table of revenue, profit, cash flow, or margins within the provided text. However, specific net sales figures for individual operating businesses for fiscal year 2001 are disclosed:
- Victoria's Secret Stores: $2.403 billion
- Bath & Body Works: $1.747 billion
- Express: $1.542 billion
- Lerner New York: $940 million
- Victoria's Secret Direct: $869 million
- Limited Stores: $618 million
- Structure: $502 million
- Lane Bryant (pre-sale): $495 million
- Henri Bendel: $36 million
Inventory Levels: Peak inventory was $1.4 billion (November 2001); lowest was $957 million (December 2001).
Debt and Liquidity: The text references a 7 1/2% Debenture due 2023, 7.80% Notes due May 15, 2002, and revolving credit agreements with The Chase Manhattan Bank. Specific debt balances and liquidity ratios are not provided in the text.
Material Changes Versus Prior Period
- Store Count Reduction: Total retail stores decreased from 5,129 in 2001 to 4,614 in 2002. This decline was primarily driven by the sale of the Lane Bryant business (653 stores) to Charming Shoppes, Inc. on August 16, 2001.
- Segment Growth: Despite the Lane Bryant divestiture, the Intimate Brands segment expanded, with Victoria's Secret Stores growing from 958 to 1,002 locations and Bath & Body Works growing from 1,432 to 1,615 locations.
- Acquisition of Minority Interest: On March 21, 2002 (post-fiscal year end), the Company completed a tax-free tender offer to acquire the remaining 16% minority interest in Intimate Brands, Inc. (IBI) for approximately $1.6 billion.
Guidance, Outlook, Risks, and Contingencies
Forward-Looking Statements: Management cautions that future results may differ due to consumer spending patterns, economic conditions, security concerns, competition, weather, and supply chain risks.
Legal Proceedings:
- Saipan Labor Lawsuits: Two lawsuits regarding labor practices by manufacturers on Saipan remain pending. One motion to dismiss was granted in part; the other remains pending.
- Shareholder Derivative Actions: Actions regarding the rescission of a Contingent Stock Redemption Agreement and a 1999 tender offer were partially dismissed and partially denied by the Delaware Court of Chancery in March 2002.
- IBI Exchange Offer Litigation: Thirteen lawsuits were filed regarding the exchange offer for IBI shares. As of March 2002, parties reached an agreement in principle to settle these actions, subject to court approval.
Management Commentary: The Company emphasizes rapid inventory turnover and markdowns to maintain freshness. It notes that the retail apparel market is highly competitive and seasonal, with peak sales in the fall.
Investor Verification Checklist
- Verify the consolidated revenue and net income figures in the 2001 Annual Report, as they are incorporated by reference and not explicitly stated in this text.
- Confirm the final settlement terms and financial impact of the IBI shareholder litigation.
- Review the impact of the $1.6 billion acquisition of the remaining IBI minority interest on the Company's capital structure and future earnings per share.
- Assess the performance of the remaining apparel brands (Express, Lerner, Limited, Structure) following the divestiture of Lane Bryant.
- Monitor the status of the Saipan labor lawsuits for potential future liability.