Limited? Even More So.

Limited (NYSE: LTD  ) shareholders are undoubtedly pleased to be rid of the underperforming Limited and Express brands. Management points out that since selling off those brands, it can now concentrate its time and money on the company's two remaining chains -- Victoria's Secret and Bath & Body Works. The downside, of course, is that the company now has to rely on just these two concepts. Fortunately, they performed adequately, despite unattractive first appearances. But what about the long term?

Same-store sales for the company as a whole fell 3% in July. Comps for Victoria's Secret in particular fell 4%, but it would have been hard in any event to compare with last year, when it posted a 13% increase. But things won't get easier, because Victoria's Secret is facing more competition. Maidenform Brands (NYSE: MFB  ) offers a better selection of products for full-figured women, and its products are available at many different retail stores. J.C. Penney (NYSE: JCP  ) , meanwhile, is pushing into the lingerie business.

Victoria's Secret is test-marketing athletic wear as a counterattack. But this measure makes me wonder why Limited got rid of businesses that were already offering this type of merchandise. I assume the athletic wear would be sexier than what it used to offer under other brand names, but is sexy athletic wear what women really want?

Similarly, Bath & Body Works experienced a 2% decline in same-store sales. This brand, too, was up against a very difficult comparison from a year ago, when it grew 16%. Though it has been performing well recently, it also faces stiff competition -- from The Body Shop.

Retail is known for being cyclical, and trends could change on a dime. Time will tell whether the private equity companies that bought Limited and Express will turn things around for those brands. Limited is financing the share buybacks with debt, and of course, it now has two fewer brands to fall back on. So shareholders may be happy for the quick buck now, but they should be more concerned about the long-term future. Seller remorse could very well pop up later.

For related Foolishness:

• Midyear Checkup: Fashion Retail
• Stretched to the Limit at Limited

Limited Brands is a Motley Fool Income Investor pick. See what other dividend-paying stocks we're recommending by taking Income Investor for a free 30-day trial.

Fool contributor Larry Rothman is happy to receive feedback, and he promises to read it when he's not being wrestled by his three children. He doesn't have any positions in the companies mentioned.