Doubled investment won’t save The Limited’s stores from closure

The Limited Stores LLC owner, Sun Capital Partners Inc, disclosed earlier in January on Friday it has almost doubled its investment in the struggling U.S. womenswear chain. However, the retailer will go ahead with its recently announced plans to shut all of its 250 The Limited stores.

As reported by Reuters, Sun Capital Partners told investors in a letter that it has made 1.8 times its 50 million dollars investment in Limited Stores, thanks to prior distributions and dividends. In fact, the letter continues, Sun Capital is writing down the remaining equity value of Limited Stores to zero.

"We have worked very hard and made significant investments over nine years to improve operations and create a sustainable business at The Limited," Sun Capital told Reuters in an emailed statement.

In the letter to investors, Sun Capital said Limited Stores is evaluating strategic alternatives for the company's remaining e-commerce business and intellectual property.

The Limited, first fashion retailer shutting down in 2017

Despite the private fund’s funding, Limited Stores said on Friday that it would close all its brick-and-mortar retail locations effective Sunday.

This series of closures will put 4,000 employments at stake, according to people familiar with the company's plans quoted by Reuters.

"In an increasingly challenging environment for mall-based retail and women's apparel, we are very disappointed that the company has had to make the difficult decision to close its retail locations," Sun Capital said regarding the retailer’s network closing.

It’s worth recalling how Sun Capital acquired a majority stake in Limited Stores in 2007 and bought the rest of the company in 2010. The return on investment for Sun Capital has been "an unusually happy ending for the private equity firm," explained Erik Gordon, a professor at the University of Michigan Ross School of Business. Gordon further added that the nine-year period during which Sun Capital was an investor in Limited Stores was a "little on the long end."

The Limited was the first foray into the fashion world of Leslie H. “Les” Wexner, who founded the fashion chain in 1963. The first store was a 2,000-square-foot box named for its limited assortment of women’s apparel. The ‘Washington Post’ calls out how the business thrived quickly, encouraging Wexner to open fancier womenswear brand Express, and Structure, a men’s shop.

Wexner’s company is today’s L Brands, parent group to Bath & Body Works and Victoria’s Secret.

Image:The Limited Web