LESLIE WEXNER KNOWS WHAT WOMEN WANT The chairman of the Limited started with one store and now, at age 46, has some 2,500, selling all kinds of clothes to all kinds -- and sizes -- of women. He has four houses and stock worth nearly $1 billion. And what does he want? More of everything.
By Brian O'Reilly RESEARCH ASSOCIATE Kim Bendheim

(FORTUNE Magazine) – YOU'D THINK Leslie Wexner would slow down now that his company, a $2.5- billion-a-year collection of women's clothing stores called the Limited, is 100 times bigger than it was ten years ago and he's got nearly $1 billion of its stock. Not likely. Odds are he's worked 18 hours today, is on the road somewhere tonight, and hasn't taken a day off in a month. ''He's one of the most driven men I know,'' says his friend and investment banker Felix Rohatyn, ''with that terrible impatience that seems to grow with every accomplishment.'' The hard work wouldn't get him very far without ability. At 46, the slim, elegant, and soft-spoken bachelor apparently possesses that rarest of gifts: he seems to know what women want. Milton Petrie, crusty 83-year-old president of Petrie Stores, a chain of women's shops that is the Limited's major competitor, calls Wexner ''the greatest merchandising talent in America.'' Wexner has changed the look of U.S. clothing stores and accelerated shifts in women's fashions. His talent extends to stimulating employees to work almost as hard as he does. Wexner once summoned a sales clerk to an apparently routine meeting at company headquarters in Columbus, Ohio. He met her at the airport with a 17- piece brass band and escorted her to the Limited offices, where hundreds of employees cheered and waved flags to celebrate her sales record. Wexner wants nothing less than to dominate the $50-billion-a-year women's clothing business. He's already got 5% of it, but his aspirations expand quickly, and doubtless he would try selling something else if he felt he'd sold every blouse, skirt, and G-string that customers wanted. ''My vision of the business is always to have a large one,'' he says. ''When I had two stores, ten stores seemed like a lot.'' Now he's got about 2,500 stores and talks almost mystically about unending growth. ''I'd like to believe that trees can grow to the sky,'' he says. ''None have yet, but that doesn't mean it's impossible.'' Lately the Limited seems downright limitless. Sales and stockholders' equity have both climbed an average 46% a year, compounded, for the past five years, earnings shot up 63% annually over the same period, and the stock sells at 32 times anticipated earnings, one of the lushest multiples on Wall Street. Despite his boundless ambition, Wexner has so far mostly stuck to his knitting: rapidly expanding the chains of small specialty clothing stores for women that he already owns, or buying and fixing ailing chains. He almost doubled the Limited's sales by getting the 222-store Lane Bryant chain three years ago, and boosted sales another $700 million a year in April by buying 800 Lerner stores from Rapid-American Corp. Lane Bryant, which sells to large women, fitted in easily, though Wexner came up with some large ideas about how to expand sales. Lerner, with tired stores and an unexciting merchandising approach, is getting a new look that has shaken up the garment trade. Great things were not predicted for Wexner -- at least not by his father -- when he first entered the clothing business full time. He quit law school at Ohio State University in 1961 and went to work at his family's store in Columbus, named Leslie's after him. The father, a Russian immigrant who'd managed clothing stores for the Miller-Wohl chain, and the young college graduate did not agree on how to run the business. The junior Wexner noticed that women's sportswear sold faster than office clothes or fancy dresses. He urged his parents to get rid of the slow-moving merchandise and concentrate on sportswear, but they insisted that a clothing store needed a wide variety of merchandise to attract customers. Said his father one day: ''You'll never be a merchant.'' Wexner opened his own store in Columbus in 1963. It offered a limited selection of clothes -- just sportswear -- so he called it the Limited. Its sales zoomed past those of his parents' store and hit $165,000 the first year. Soon his parents closed Leslie's and joined Junior. When the Limited went public in 1969 -- with father as chairman and mother as secretary -- Wexner had opened six stores. By 1976 he owned 100 stores. There are 577 Limited stores now, and a new one is to open every week for the rest of the year. While he still had just a few stores, he hired his accountant, an ex-football player at Penn State named Robert Morosky, to handle administration of the stores. With Morosky zestfully doing the fist-pounding, Wexner is free to do what he does best: find the right merchandise before his competition does and figure out how to sell it. ''Great merchants are great researchers,'' says a Limited executive. Wexner travels constantly -- formerly in coach class, now on one of several private company jets -- to New York, Paris, Tokyo, or anyplace that will help him spot trends or stimulate his imagination. ''I doubt he spends 40% of his time in Columbus,'' says his friend John B. McCoy, a local banker. Verna Gibson, president of the Limited Stores division, recalls her days as a buyer: ''We'd go to Europe five times a year and to the Far East just as often. Les would have a list of stores he'd want to see, and we'd just walk and talk constantly. Sometimes two cities a day.'' His merchandising antennae are active all the time. He was in Paris in 1977 and noticed that a streetside vendor had tacked flowers to the side of his booth, rather than laying the blooms on a table like other vendors. Wexner found himself pulling out his wallet. He resolved to figure out what had prompted the urge to buy. ''I went out and took pictures of whatever made me want to buy. It was whenever there was lots of merchandise on display -- flowers on the booth, cheeses and salami hanging in delicatessens.'' Back in Columbus, he ordered new designs for his Limited stores: blouses, dresses, sweaters cascading down walls, with lots of shiny chrome and mirrors on high to make the displays look even more voluptuous. The dramatic effect has since been widely imitated. Though it may seem that way, Wexner doesn't work all the time. Every once in a while he drops out for several days at a time -- ''long weekends,'' he calls these respites. When he drops, he lands very softly, cushioned last year by a $600,000 annual salary and $4.4 million in dividends from the third of Limited stock that he controls. HIS OFF-HOURS PURSUITS are varied and include buying and selling cars, attending Ohio State football games with chums from high school, and entertaining a few friends at home. ''He's quite content with meatloaf and < good conversation,'' says John Kessler, a Limited board member. His taste for cars is greater than for food. ''I've probably owned a hundred,'' he admits. He likes them expensive: his favorite is a $50,000 Mercedes 500 SEC, but he's owned Rolls-Royces and Porsches and Aston Martins, with the sports cars usually red and the sedans black. ''He probably spends 20 minutes a day trading cars,'' says John McCoy. Wexner says he buys cheap, drives the cars for a while, and sells at good prices. ''I'll bet I've lost less to car depreciation than the average family,'' he brags. When he's not remodeling stores, he's likely to be redoing residences. He owns houses or apartments in New York City, Palm Beach, Florida, and Vail, Colorado, as well as Bexley, a prosperous suburb of Columbus. Recently he gutted his midtown Manhattan apartment ''right down to the concrete'' and had it done over with curving, stark-white walls. He's already tired of the apartment, though, despite a dramatic view of Central Park. ''It must be part of growing up in the Midwest,'' he suggests. ''Living on one floor makes me feel like I'm in a hotel.'' He's getting back to his Midwestern roots by selling the apartment and buying a $5.8-million four-story townhouse on the Upper East Side. He likes to jog but felt hemmed in by the lack of land at his Palm Beach house. He is selling it to buy a landmark Palm Beach mansion with seven acres on the water. And when a 70-acre site became available on a mountaintop in Aspen, which is easier to fly to than Vail, he snapped it up and designed a house that's now being built. The Vail house is up for sale (price: $1.5 million). So much house shuffling is just coincidence, he says, ''but frankly, I like to buy and sell things.'' He has traveled around the world building up an extensive art collection, replete with works by Matisse and Picasso, which crowds the walls in all of his houses. He's got ancient Egyptian water jugs that he is apt to pat affectionately, big statues he will pose alongside -- ''that reminds me of me,'' he said of a man-sized Miro -- and a Japanese altar figure that he'll get down on hands and knees to see from a worshiper's perspective. All this gadding about is made easier, of course, by the absence of a family, and he has often said he is just too busy to settle down with anybody. His father died in 1975, and he has a sister in New York, but the person he is closest to is his mother, Bella. She is still on the Limited's board of directors (age ''over 65,'' the proxy statement notes), lives near his house in Bexley, and has an office at company headquarters. But he likes beautiful women -- challenging women, he says. One division manager remembers being dumped unceremoniously at the end of a ride on the corporate plane as Wexner raced into Manhattan, late for a date. LIKE OTHER BACHELORS, but with a stronger motive than most, Wexner spends a great deal of time ruminating about the feminine psyche. He says he is a believer in ideas he attributes to Charles Revson, founder of Revlon, who Wexner believes understood women unusually well. ''He'd go off and watch hookers to see how they dressed,'' Wexner says. If Wexner's success in selling clothes is any indication, his understanding isn't bad either. ''What do women want?'' he asks. And answers: ''Anything they don't have. Every woman already has enough clothes to last 100 years. You have to sell excitement.'' Yes, but what do women want? He purses his lips, pondering the delicacy of what he's about to say. ''Revson said women all hope they get laid, and I agree. They're sensuous. They're different from men. They dress to please men. You're not selling utility. That's why uptight women stockbrokers will put on a G- string when they get home. Like Revson said, we're selling hope in a bottle.'' Wexner says he might get married some day, admitting to a pang of envy sometimes when he's around happily married couples like Felix and Elizabeth Rohatyn. But he won't be marrying soon. ''Sometimes I need a recess from women,'' he says. ''In this line of work, I'm already so involved with women.'' On a trip to Vail four years ago he had an experience that permanently changed him and may do the same to Columbus. He was mountain climbing in light clothes when a freak summer snowstorm stranded him, and it occurred to him that he could die of exposure. ''I asked myself whether I'd accomplished anything more than a fancy car collection,'' he recalls. Down from the mountain, he plunged into civic affairs in Columbus, aroused by a sudden insight that the residents of Ohio's capital had for too long been far too stingy in donating to charity. Wexner tossed a $5,000-per-ticket party -- complete with a laser show -- to raise money for United Way. He threw himself into sprucing up his hometown, labeling Columbus ''uninteresting . . . one of the worst downtowns in America.'' He hired an architect to elaborate on his own plans for Columbus . -- still unrealized, they include a domed stadium -- and pledged $5 million toward a 3,000-seat performing arts center. Some of his projects have been fruitful. The laser party raised more than $1 million, and gift giving to United Way has risen faster in Columbus than anywhere else in the country. He gets credit for the start of a big mall downtown. But his Moses-like return to Columbus and lack of tact have ruffled some local feathers. ''A lot of Columbus old-timers resent this 'newcomer' getting up and saying they weren't carrying their share,'' says Gordon Zacks, a Columbus slipper manufacturer who has worked with Wexner on Jewish philanthropies. Columbus Mayor Dana G. Rinehart says it's ''embarrassing'' to pick up the morning paper and see another of Wexner's rehabilitation plans, unveiled without prior discussion with other community leaders and therefore probably doomed. ''I'm just too impatient,'' says Wexner. In the clothing business impatience can be a virtue. Some of Wexner's best moves have involved identifying quick shifts and submarkets of the women's apparel business. In 1976 he realized that as the customers of his Limited stores -- women between 15 and 25 -- grew older, their tastes changed, and he was losing them. New customers kept coming along, of course, but he executed an abrupt fashion change to accommodate women 20 to 35. ''In June we were selling bareback tops and jeans for backyard barbecues,'' recalls division president Verna Gibson. In August the Limited was one of the first with the preppy look. ''I can't explain how he spotted it,'' Gibson says. TWO YEARS AGO Wexner decided preppy was about to peak and dropped it with astonishing abruptness, switching to an Italian designer look. He gave the line an invented name that sounds Italian: Forenza. He plastered store walls with Italian flags and phrases, as well as pictures of a distinguished gent who was not, but might just as well have been, an Italian designer named Forenza. Wexner declared his stuff, which was mostly produced in the Far East, ''official . . . accept no substitutes.'' Official? The line isn't sold in Italy. No matter. The Forenza look is one of the hottest in the U.S. Competitors can only grit their teeth when customers ask for Forenza.

After he aimed the Limited stores at maturing women, Wexner created a new line of stores for teenagers and women in their early 20s. Limited Express stores -- 161 of them now -- usually cover only 2,000 square feet, about half the size of their big sisters. They play more raucous music and sell items like Minnie Mouse sweaters. More recently Wexner bought and expanded a small chain of sexy lingerie stores called Victoria's Secret. Men make up about half the customers, and the stores have a bordello look. ''Vickie's,'' as Limited executives call it, now has 65 stores, up from four in 1981.

His handling of the Lane Bryant acquisition in 1982 shows Wexner at his savviest. ''He eliminated the tall sizes,'' explains Robert Corea, a retail analyst at Ohio Co., a Columbus brokerage firm. ''The business is just too small.'' Then Wexner eliminated the largest sizes (''Size 52 women don't get out much,'' notes Corea) and offered sizes 14 through 20 for the first time. Size 14 -- about a 30-inch waist -- is where a lot of stores leave off, but Wexner embraced a huge market by observing that about 40% of women are 14 or larger. Most important, though, Wexner changed the look of Lane Bryant's clothes. ''Big women are just like every other woman,'' he says. ''They read the same books, watch the same TV, and fall in love with Burt Reynolds just as fast. They want to look like their smaller friends.'' He put in higher-fashion clothes. Sales per store have grown an estimated 20% in the past year. The number of stores has expanded from 222 in 1982 to 377. Wexner expanded his dominion again in April, buying the Lerner chain. ''It's the McDonald's of the clothing business,'' says Wexner. ''There are more women's clothing stores named Lerner than any other. Unfortunately, they make lousy hamburgers.'' Limited paid $297 million for Lerner, which booked an operating profit of $19 million last year, but the business, Wexner says, was ''essentially bankrupt when we got it.'' After the acquisition he was aghast at the shoddy, outdated, and overpriced merchandise he found. Even more appalling for a dedicated merchandiser was Lerner's lack of inventory control. ''They were still getting Shetland sweaters! We'd dropped them two years ago!'' Wexner says, unable to keep exclamation points at bay. He soon learned that Lerner was using outdated Univac computers. Buyers never knew if they needed to order more of a hot item or had 500 surplus belt buckles in the Altoona store. Morosky's staff -- no doubt with visions of brass bands at the airport -- got Lerner's data punched into Limited's computers in six weeks, about a tenth the time predicted. Wexner hadn't owned Lerner long when he stunned Seventh Avenue by canceling incoming shipments of clothing for the chain -- about $200 million worth. Lerner eventually accepted most of the canceled merchandise or placed orders with the suppliers for newer, better goods. Most suppliers hurt by the cancellation swallowed their fury in silence. ''He's a giant buyer,'' said one. ''Nobody wants to get on the wrong side of him.'' Has Wexner turned around Lerner? Who knows. He didn't buy the chain in time to order new merchandise for the spring season, and inventory gaps caused sales to drop. Cheap long-term leases are valuable, but some locations would be more profitable if the Lerner store were made into a Limited or a Lane Bryant. Some Lerner stores might be split into several stores, but Wexner says 400 more Lerner locations are possible. A new look is also in order, says Lerner division president Robert Grayson, formerly head of the Limited stores. The stores have offered a not-too-stylish hodgepodge for lower-middle-income women. Lerner won't aim at Limited's yuppier customers, says Grayson, but Lerner will be more fashionable. ''If red is hot, then at any time you should be able to walk by a storefront and say to yourself, 'Aha! They're doing red right.' '' The Limited's executives are constantly prodded to think of ways to fill in more of Wexner's unfinished mosaic. ''It'll be 11:30 at night, and we're figuring out how to market $1.99 pantyhose,'' says Grayson, ''and suddenly Les is thinking five and ten years out, and encouraging everyone else to do the same.'' The pace of shopping mall construction has slowed, but Limited managers think about opening more stores and new lines in old malls. The company dropped tall sizes from Lane Bryant and children's clothes from Lerner. Why not start a tall-size chain? A children's? A girls' line? A chubby girls'? How about older women, who used to start dressing in funereal stuff after a certain age, but have begun dressing younger?

Wexner's eyes are on department stores, which sell about 40% of women's clothes. He regards most department stores with contempt, calling them ''dinosaurs,'' surviving thanks to real estate acquired long ago. Says Wexner, ''They're being hit by low-priced appliance dealers on one side, and they're so proud they've got the biggest yarn selection in town, which is a complete waste of space.'' Last year he tried to acquire the Carter Hawley Hale chain, noting that despite big names like Neiman's and Bergdorf Goodman's, earnings are low. Wexner offered $1.1 billion for Carter's shares, about 25% over the going price. Carter borrowed $170 million to help buy back its own stock. Wexner backed away, for now. He is still fairly twitching to get his hands on a department store. ''We understand the business,'' he says, ''and we understand women, who make up 80% of department store customers.'' One of his off-the-cuff notions: Why not gut a whole floor to install the fanciest athletic club in town? That would draw people to the store. WEXNER'S THEME is always growth, as though whatever he's done isn't enough. The grand opening celebration for one project is always unsatisfying, he admits, because by then he's far down the road on the next project. Why? Proving his talent to his parents seems to be part of it. ''I regret my father didn't live to see it,'' he says of the business. His mother, he says, is still an inspiration, and he discusses things with her once or twice a week. ''She's instinctively aggressive,'' he says. ''If I told her I was going after General Motors, she'd say, 'Go for it.' '' Wexner's intimates say her influence is considerable. ''She gives him great courage,'' says Grayson. ''No matter what he does, she trumps him. She says, 'You should have done better.' '' Another executive recalls: ''He finished a speech once and came right down into the audience and kissed his mother and asked, 'How did I do?' He's like a little kid: 'Look, Ma -- no cavities.' '' Close as he is to his mother, Wexner says she has no day-to-day role in the Limited's operations and notes that she spends winters in Florida. Anyway, he doesn't always obey his mother. ''Sometimes she tells me to slow down,'' he says. ''I tell her there's work to be done.'' BOX: INVESTOR'S SNAPSHOT THE LIMITED SALES (LATEST FOUR QUARTERS) $1.5 BILLION CHANGE FROM YEAR EARLIER UP 37% NET PROFIT $100.2 MILLION CHANGE UP 34% RETURN ON COMMON STOCKHOLDERS' EQUITY 34% FIVE-YEAR AVERAGE 28% RECENT SHARE PRICE $26.50 PRICE/EARNINGS MULTIPLE 32 TOTAL RETURN TO INVESTORS (12 MONTHS TO 7/19) 165% PRINCIPAL MARKET NYSE Explanatory notes: page 210