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Company: Limited Brands (LTD)
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  Limited Brands is being pummeled by the recession

The company's 4th quarter 2009 profit dropped 96% from the same period in 2008. Sales were $2.99 billion, below analyst expectations of $3.04 billion. The company has also laid off 400 workers, 10% of its workforce. In addition, Limited has entered talks to alter its credit agreement with banks, affording it more flexibility but charging higher fees as a result. Limited's performance has already been poor due in large part to decreased consumer spending, however now that America's economic condition is worsening the company is facing even lower sales with higher bank fees.

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  Industry competition is extremely high in retail

Industry competition is extremely high in retail. While Victoria's Secret and Bath & Body Works are dominant in their respective sectors, there are still other brands like Chico's and Sephora, respectively, that have the ability to take away a small but substantial chunk of respective market share.

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5 votes

  Market saturation limits growth

As Victoria's Secret and Bath & Body Works have saturated their current markets, sales will inevitably level off as the number of new store openings decreases. Future performance, to a great extent, is hedged on the bet that Pink will continue doing as well as it has, and that La Senza will take off in the international market.

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  Franchising may lead to Brand Damage

As LTD expands its products abroad, it has chosen to expand via franchising. One major concern with franchising is the loss of control over the image the brand is shown toward local consumers. This may lead to many problems later on if LTD does not monitor its franchisees closely.

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