After several years in an outdated facility Limited Brands Inc. is making the move to a new direct market distribution center.
The new distribution center will be located on the Limited Brands corporate campus near Columbus, Ohio, and replaces an older facility the company, No. 16 in the Internet Retailer Top 500 Guide, used to operate in a nearby industrial park.
The new facility contains more than 1 million square feet of space compared with only about 600,000 square feet at the old location. “We’ve just opened a brand new distribution center to support the growth of both the existing Victoria’s Secret direct business and the new Bath & Body Works direct business,” Victoria’s Secret president and CEO Sharen Turney told analysts on the company’s recent second quarter earnings call. “The new facility has capacity to handle over 40% more volume than our old distribution center.”
The move to a new distribution center is part of an effort by Limited Brands to scale back some operations, but devote more resources to the fastest-growing parts of the business. In February, Limited Brands and investment firm General Catalyst Partners launched n2N Commerce, a provider of on-demand e-commerce technology whose first job is rebuilding the web and catalog operations of Limited’s marquee brand, Victoria’s Secret. “We are investing in new front end, Internet and call center systems for all of our direct channel businesses,” Turney told analysts. “Our new distribution center opened in August and the new distribution center will support the long-term expansion of the direct channel.”
While Limited Brands is applying more resources to its direct business, the company is cutting back in other areas. In July Limited Brands transferred a 75% ownership interest in its Limited Stores business to affiliates of Sun Capital Partners. In exchange, Sun Capital Partners contributed $50 million of equity capital into the business and arranged for a $75 million credit facility. In June Limited Brands also announced it was reducing its employee count by 10% at its corporate and brand home offices to generate annual savings of about $100 million.
In the second quarter Limited Brands reported net income of $264.3 million on revenue of $2.6 billion. Same-store sales rose by 2% while Victoria’s Secret Direct, which includes catalog and the web, had sales of $397 million, an increase of 8.5% from $366 million in the prior year.
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