Business Context and Reporting Period
This Form 10-K is an annual report for The Limited, Inc. (the registrant), covering the fiscal year ended January 30, 1999. The Company operates as a diversified retailer with two primary segments: the Apparel segment (including Express, Lerner New York, Lane Bryant, The Limited, Structure, and Limited Too) and Intimate Brands, Inc. (IBI) (including Victoria's Secret and Bath & Body Works). The Company also operates sporting goods stores (Galyan's) and a single high-end fashion store (Henri Bendel). A significant corporate event during the prior period was the tax-free split-off of Abercrombie & Fitch (A&F) as an independent public company on May 19, 1998.
Key Financial Metrics
Note: Specific consolidated revenue, net income, cash flow, and margin figures for the fiscal year ended January 30, 1999, are not provided in the text of this filing. The document states that this data is incorporated by reference from the 1998 Annual Report to Shareholders.
- Net Sales by Business (Fiscal 1998):
- Victoria's Secret Stores: $1.8 billion
- Express: $1.4 billion
- Bath & Body Works: $1.3 billion
- Lerner New York: $940 million
- Lane Bryant: $933 million
- The Limited: $757 million
- Structure: $610 million
- Limited Too: $377 million
- Galyan's: $220 million
- Henri Bendel: $40 million
- Store Count (as of Jan 30, 1999): Total of 5,382 stores (down from 5,640 in 1998).
- Apparel Businesses: 3,477 stores
- Intimate Brands: 1,890 stores
- Other: 15 stores
- Inventory Levels: Peak inventory reached $1.6 billion in November 1998; lowest was $1.0 billion in May 1998.
- Employees: Approximately 126,800 associates (92,300 part-time) as of January 30, 1999.
- Market Capitalization: Aggregate market value of non-affiliate common stock was approximately $8.33 billion as of March 26, 1999.
Material Changes vs. Prior Period
- Store Count Reduction: Total store count decreased by 258 units from 1998 to 1999. This includes the removal of 156 Abercrombie & Fitch stores due to the 1998 spin-off, net of 251 new store openings.
- Segment Performance:
- Bath & Body Works: Expanded significantly from 921 to 1,061 stores.
- Victoria's Secret: Grew from 789 to 829 stores.
- Apparel Segment: Experienced net closures across most banners (e.g., The Limited closed 78 stores; Lerner New York closed 103 stores), though Express and Structure saw modest growth or stability.
- Corporate Structure: The Company now holds an 84.5% interest in Intimate Brands, Inc., following the restructuring that separated A&F.
Outlook, Risks, and Contingencies
Management Commentary and Outlook: The filing incorporates the Management's Discussion and Analysis (MD&A) from the 1998 Annual Report. The Company emphasizes rapid inventory turnover and markdowns to maintain freshness. Sales are seasonal, with peak activity in the Fall season.
Risks:
- Global Sourcing: The Company relies on approximately 4,700 suppliers worldwide. Risks include political instability, currency exchange fluctuations, and local business practices. No single manufacturer supplies more than 5% of goods.
- Competition: The retail apparel and personal care markets are highly competitive regarding design, price, service, and quality.
Legal Proceedings:
- ATMI Litigation: A False Claims Act case regarding country of origin records was dismissed with prejudice in 1997. The plaintiff appealed to the Sixth Circuit, where the matter remains pending. Management does not expect a material adverse effect.
- Saipan Labor Practices: Two complaints filed in January 1999 allege labor violations by manufacturers on Saipan who supply the Company. The Company intends to seek dismissal of these complaints and does not expect a material adverse effect.
Investor Verification Checklist
- Verify consolidated revenue, net income, and cash flow figures in the 1998 Annual Report to Shareholders (incorporated by reference), as they are not explicitly listed in this 10-K text.
- Review the Management's Discussion and Analysis in the 1998 Annual Report for detailed margin analysis and segment profitability.
- Monitor the status of the Saipan labor practice lawsuits and the ATMI appeal for potential future liabilities.
- Assess the impact of the Abercrombie & Fitch spin-off on the Company's long-term growth strategy and remaining apparel segment performance.
- Confirm the inventory turnover rates given the reported peak inventory level of $1.6 billion and the Company's reliance on rapid markdowns.