Limited Posts 76% Profit Drop

"Obviously, we're very disappointed in our first quarter performance," Len Schlesinger, vice chairman and CEO, told investors in a conference call from the company's Columbus, OH headquarters Monday. Schlesinger said the firm was particularly embarrassed by the performance of its Express and Express Men's clothing stores, which experienced a 21% drop in sales at stores opened at least one year.

"We got fashion wrong. We drifted older, we drifted more expensive and in fact alienated a large percent of our total customers," said Paul Raffin, who took over as president of Express in February. Company officials said they expect the second quarter to be equally challenging for its Express brand as the company moves to shake off past merchandising mistakes into the Fall season.

The operator of Victoria's Secret, Bath & Body Works, Express, Express Men's, Limited Stores and other chains reported overall sales for the quarter ending April 30 was flat at $1.97 billion, slightly lower than the $1.98 billion in sales a year earlier. Same store sales were also down 5% for the quarter and operating income among its apparel brands fell $79.2 million during the same period.

The retailer's only brand to show improvement was Bath & Body Works which posted a 5% increase in same-store sales due largely to the introduction of new brands. It was the eighth consecutive quarter that Bath & Body Works posted positive comps, company officials said. Sales at Victoria's Secret, the retailers lingerie chain, were flat during the quarter however although direct customer sales through the internet and its catalogue operation increased 10%.

Despite the retailer's embarrassing first quarter performance, Limited Brand shares rose slightly by two cents to close at $20.45 on the New York Stock Exchange following the conference call Monday.