Women's Wear Daily is apparently the source of the sale report, although people have been speculating this might come to pass for quite some time. It's thought that Limited could sell the two apparel brands for somewhere around $1 billion.
It certainly isn't an outrageous concept. Limited has liberated many brands from its portfolio, including Abercrombie & Fitch
This kind of speculation is indeed interesting, but it doesn't excite me as an investor. After all, speculation of sales or spinoffs has bolstered shares of many retailers lately, with nothing coming to pass. Gap
Last but not least, Victoria's Secret and Bath & Body Works have been Limited's shining stars for quite some time with their impressive growth. Can there be yet more growth to come? Merchandise margins at Victoria's Secret have been weak lately, a slump that may suggest that customers are less enamored with the concept than they used to be.
On the other hand, Limited is known for its solid cash flow and its dividend policy -- which is part of why it's a recommendation in Motley Fool Income Investor, where advisor James Early has noted its position as a "branding behemoth." (Read more with a 30-day free trial). And I admit, I do my fair share of shopping at Bath & Body Works, which is always a fun place to spend discretionary dollars. (My last trip probably made the salespeople rejoice.)
However, picking up Limited shares on current speculation seems to be a symptom of premature euphoria, which often happens in investing when whispers of deals start circulating.
For related Foolishness, see the following articles:
- Check out Limited's most recent quarter.
- Read the Foolish forecast, too.
- Chico's is eyeing some rivals' customers.
Alyce Lomax does not own shares of any of the companies mentioned.