How Limited Brands Is Saving Their Money

March 7, 2009

Limited Brands Inc., the Columbus retail giant, said Tuesday that it will save $775,000 a year by using new long-life energy-saving lighting in its Central Ohio distribution centers.

The more efficient configuration includes use of 2- and 3-foot fluorescent tubes and other products that the GE Consumer & Industrial lighting institute at the East Cleveland Nela Park facility recommended.

The lamps Limited Brands is using operate on lower wattage than lights it used in the past but still offer strong illumination at lower operating cost, said Mary Beth Gotti, manager of the lighting institute.

The plan also employs motion-sensor technology that turns on lights in work areas only when employees move into those sections of warehouses to find and retrieve merchandise. The company also included skylights in the high-ceilinged facilities to improve lighting and cut power costs during daylight hours.

A GE spokesman said the retro-fit of new lamps and fittings in Limited Brands’ 3.5 million square feet of floor space will lower energy bills by $650,000 a year. The retail company operates five Columbus-area distribution facilities.

The remaining savings are projected to result from the reduced maintenance costs, principally from having to replace the lamps less frequently. The tubes offer a 24,000-hour rated life if started every 12 hours, Gotti said.

In contrast, so-called “long life” incandescent bulbs rated at 60 watts last about 2,000 hours. The equivalent illumination can come from lower-energy-consuming 13-watt compact fluorescent lights. But they usually require replacement about every 6,000 hours of illumination, while using less energy than incandescent bulbs.

The new versions of fluorescent tubes give users two economic advantages: a 50 percent cut in lighting bills and fewer trips that maintenance workers must make up ladders to change burned-out units.

The warehouses receive merchandise from manufacturers around the world, store it and then ship boxes and pallets to stores. Limited Brands spokeswoman Robin Hoffman said the warehouses “are brighter and more pleasant than they were before.”

The company also has replaced older, less-efficient lamps in some 700 stores with more efficient lighting. Limited’s retail efforts alone have reduced stores’ electricity consumption by 50 million kilowatt hours annually.

“It does save us money, but a big part of this comes from our sustainability initiative,” which commits the company to reducing waste, Hoffman said.

Many companies that employ large-scale indoor work and storage spaces have found that fitting facilities with new lighting can pay off quickly. Studies from the U.S. Department of Energy have shown homes and businesses can generate enough savings to cover capital costs within two years. Gotti said the Columbus facilities may be able to pay off its expense with a year’s worth of savings.

For further information, visit: http://www.cleveland.com/business/index.ssf/2009/06/limited_brands_saves_energy_by.html

Dress Barn and Tween Unite To Battle Out The Recession

March 7, 2009

Dress Barn Inc. is acquiring New Albany apparel retailer Tween Brands Inc. in a stock-swap transaction, the companies announced Thursday.

Suffern, N.Y.-based Dress Barn said the deal, expected to close in October, will give Tween shareholders about 16 percent of Dress Barn stock. Based on terms of the transaction, the company is paying about $157 million for Tween shares and paying off the retailer’s outstanding bank debt. Tween in regulatory filings reported an outstanding balance of more than $166 million on its credit facility, but company officials valued the deal at roughly $220 million. A representative wasn’t immediately available to explain the discrepancy.

Tween, which runs more than 900 stores under the Justice and Limited Too nameplates, will become a subsidiary of the more than 1,500-store Dress Barn chain.

Tween CEO Michael Rayden, in a conference call Thursday, said the company is in a stronger financial position under Dress Barn than as a standalone business, particularly in regards to access to capital. And with much of the financial duties shifting to Dress Barn, he said, the Tween team can focus on merchandising and marketing.

Rayden will continue to manage Tween but report to Dress Barn CEO David Jaffe.

Jaffe called the transaction “strategically compelling” for his company and said providing trendy merchandise at a value price is a formula his company is well-acquainted with.

For Dress Barn, the Tween acquisition is a move to diversify its business, which operates under the Dressbarn and Maurices nameplates. The company has about a dozen stores in Central Ohio, with Dressbarn targeting women in their 40s and Maurices aiming at women in their 20s.

“Those are my girls’ moms,” Rayden said, referencing Tween’s core customer base of girls age 7-14.

He said the chains will have cross-promotional opportunities once customer databases are shared.

Jaffe said Tween will continue to be headquartered in New Albany, but that some cost reductions will come from eliminating duplicate public company expenses. Both he and Rayden declined to share specifics, but it could mean more job cuts for Tween, which already has cut 235 jobs in the past year as it transitioned from its onetime flagship Limited Too stores to its smaller – but lower-priced – Justice brand.

Rayden said between 30 and 40 stores still have the Limited Too branding and will not be converted until lease negotiations finish.

Jaffe said Dress Barn is confident in Rayden and his long-term strategy and admitted that it was the transition to the lower-priced Justice brand that initially piqued the company’s interested in acquiring Tween.

“The business is well-positioned,” he said. “This is a unique niche. They have no direct competition.”

Rayden said the company was not pursuing a sale, but when approached by Dress Barn agreed that a deal made sense. Tween has struggled amid a pullback in consumer spending that helped push sales at company-owned stores open at least a year down 12 percent in its last fiscal year.

Tween lost $17 million on $995 million in revenue in its fiscal year ended Jan. 31 and last month reported a $1.4 million fiscal first-quarter loss.

The combined company would have annual sales of about $2.4 billion and operate 2,465 stores.

The boards of both Dress Barn and Tween have approved the deal, which requires Tween shareholders’ approval.

For further information, visit: http://www.bizjournals.com/columbus/stories/2009/06/22/daily30.html?s=industry