Les Wexner Limited Brands

(FORTUNE Small Business) – When Leslie Wexner was in college, he really wanted to become an architect. His father, however, didn't think that was a good idea. As it turns out, sometimes fathers do know best. Following his dad's advice--and his footsteps--Wexner opened a women's clothing store called the Limited in Columbus, Ohio, in 1963. Unlike his father, whose shop went bankrupt, Wexner aggressively grew his own into an empire that today includes such brands as Victoria's Secret, Bath & Body Works, Express, Limited Stores, Henri Bendel, and more. Wexner--who as a kid hated the very idea of retail--now oversees some 4,000 locations and a staff of more than 100,000. Revenues last year were $8.5 billion, and Limited Brands was voted Most Admired Specialty Retailer in Fortune's 2002 rankings.

Wexner's stores pretty much ruled the suburban shopping malls until the 1990s, when the company was criticized for losing both direction and profits. In an effort to streamline the business, Wexner made major changes--selling off faltering brands like Lane Bryant and Lerner New York and buying back the previously spun-off Intimate Brands (made up of Victoria's Secret and Bath & Body Works). "As an entrepreneur," says Wexner, who's been self-employed since age 9, "you work out solutions." From Limited Brands' corporate headquarters, which he designed (he says he still wishes he'd become an architect), Wexner talks about the family of brands he created. --CARLYE ADLER

"Growing up, I knew you were supposed to have a profession--and something better than being a shopkeeper, which is what my parents were. I didn't want to go into the retail business. I hated it. My father had been a store manager at a small chain of specialty stores, and when I was 15, he took his life savings and invested it in his own women's clothing store. My parents named it Leslie's, after me. They worked 80-hour weeks to scratch out a living, but they never made $10,000 a year.

When you grow up in a family like that, if you want another pair of jeans or a bike or toys, you have to work for it. An allowance was out of the question, so I always had jobs. My first one was cutting grass and shoveling snow when I was 9 years old. When it snowed, I was happy because I could work--not because I could go sledding. If it rained in the summer, that was good because the grass would grow and I could cut more lawns. It meant money. As I look back it seems kind of Dickensian, but it didn't feel that way to me at the time.

After college I decided to go to law school. I still wasn't interested in retail, but I'd take study breaks from some boring case and, just for amusement, draw designs for stores and storefronts. Some people made erotic drawings or wrote their girlfriend's name--I did stores.

Before long, I dropped out of law school; I hated it because it wasn't creative enough. My dad asked me to hang around the store for a few months to learn how to take the money to the bank and close each night so that he and my mom could take a vacation. They hadn't taken one in ten years. I learned how to run the store and take the money to the bank, and they spent a week in Miami. While they were gone, I started some simple accounting to see what categories and goods made the most money. It was just curiosity, but I figured out pretty quickly that my dad made money selling skirts, sweaters, shirts, and blouses--typical sportswear separates--and he lost his ass selling dresses and coats. When my father came back, I asked him where he made money. He said dresses and coats.

Then we got into a typical father-son wrangle: "You're not going to tell me how to run the business," he said. "I worked my whole life. Get a job. You don't know anything about retailing." He was right, I didn't. But I did know a little about accounting, and I decided to prove that my theory was right and that he had it wrong.

When I first thought about the store I wanted to create, I called it Leslie's Limited. It was to be my limited store--meaning it would have a limited assortment, and I would sell only women's sportswear separates. Besides what I learned from my parents' store, the idea of specialization was very popular at the time. My friends were going to be doctors, but they were going to be specialists, not general practitioners. Lawyers were going to become tax lawyers. I began thinking about the business being a specialist--it was the only way I thought I could compete against the department stores that were dominant at the time.

I had a spinster aunt who loaned me $5,000 to get started, and on top of that a bank loaned me $5,000. I was on my way: I figured out a lease, designed the store, and built it myself. But in the seven months before it opened, I'd wake up in the middle of the night screaming. I had a recurring dream that I was opening a store, and I can remember going to the door, unlocking it, and seeing people standing with their noses pressed to the door--but no one walked in. It was a terrible nightmare. About two weeks before the store opened I called my family doctor and told him my stomach hurt after I ate. The doctor said, "You're too young for an ulcer." (I was 26 years old.) Then they took an X-ray of my stomach, and I had an ulcer.

The first store opened in Columbus on Aug. 10, 1963. First-day sales were negligible, $473, but that was still amazing to me. By January, after the fall and the holiday season, I was pretty sure I'd had a good idea. First-year sales totaled $160,000--I did more business and made more money than my dad ever made in a year. And in the second year it tripled.

I opened the second store in August 1964. (I'd leased the second store before the first one opened, so if it had failed, I would've been in a hell of a mess.) When my dad found out that I was going to open a second store, he quit talking to me for almost a year. He thought I was crazy. I respected my dad's judgment, but he was always cautious. He came to this country from Russia when he was a teenager. He was immensely proud and very conservative. When I had two stores, he said, "You're winning, take it to the bank." At four stores, he said, "You're winning, take it to the bank." When we had six stores, I decided I wanted to become a public company, and he thought I was totally insane. Everybody did. They said, "Your friends and acquaintances will buy stock, and then everybody will wallpaper their johns with it." In 1969 we went public with an intrastate offering, so the only people who could buy stock were residents of Ohio. We were too small for an interstate offering, too small for the SEC. It's unheard-of today.

Over the 20-year period that Jack Welch ran GE, the Limited was one of the few companies to increase its share price faster than GE. People retired from very simple jobs here--distribution-center workers, maintenance associates--who made millions of dollars.

We had stores in San Francisco, and that's where I found an interesting little lingerie store called Victoria's Secret. It was a small store, and it was Victorian--not English Victorian but brothel Victorian, with red-velvet sofas. There wasn't erotic lingerie, but there was very sexy lingerie, and I hadn't seen anything like it in all my travels.

Victoria's Secret was started by a fellow named Roy Raymond, who created the business as an MBA project while at Stanford. I was curious to learn more, but he was very guarded. When I met him, it was as if he met the devil. We were this big company with dozens and dozens of stores. He had three stores. Nothing happened from the meeting, but six months later he called me and said he was going to be put into bankruptcy that week. He'd rather sell the company to me than go bankrupt.

I got on a plane to San Francisco that day, and within 24 hours we negotiated the purchase. The idea was to buy the business and park it. I didn't know anything about the lingerie business, but then I began thinking--as a bachelor. (I got married later in life.) Most of the women I knew wore underwear, and most of them would rather wear lingerie. I thought maybe we could reconceptualize it into a business--instead of selling underwear, we could market and position it as lingerie. I thought if we could develop price points and products that had a broader customer base, it could be something big. It's our most profitable business today, but it didn't take off like a rocket. We just got better and better at it, and understood it more and more.

Pretty soon Abercrombie & Fitch and Lerner New York came along. We also acquired an Henri Bendel store in New York, and opened Limited Too, fashion for girls, and opened our first men's store, Structure (now called Express Men). Acquiring businesses pretty much carried us through the 1980s. By the early '90s we were a multidivision company. We had a lot of businesses. But I started to ask myself, How do you control these businesses? How do you run them? I came to the conclusion that we were more like a venture capital company than a multidivision company. We didn't have the systems, processes, organization, or leadership for any kind of central organization. Every day I came to work and felt as though it was a zoo. All the cages were open, and the animals were running around. It all culminated one day when I met Jack Welch of GE. He told me the way he thinks about managing the top talent in the business. I was sure that I knew and influenced the top people, but then I found out we didn't even know who the top people were. We didn't know how many officers there were in the different businesses. And we certainly didn't have the discipline to oversee it all; I learned that somebody had made their administrative assistant a vice president.

It was as if one day the emperor realized he had no clothes. We didn't have any real organization. We spent the next year reading and understanding what multidivision companies are like at their center. I decided that we needed to imagine ourselves as a very complex organism, or an animal with a central nervous system. We needed a center to help us grow it into the future and develop the appropriate processes and procedures that a large multidivision company should have. It was tough because everyone kind of liked it the way it was--the lack of discipline and the ability to make very decentralized decisions--because everyone saw himself or herself as an entrepreneur.

A woman at the Limited once asked me, "Why do you work?" She said, "You made a lot of money as a young man, so why are you still working?" I had never thought about it before. Forced to consider it, I told her, "You know why? Because I think that if you stop to smell the roses, you'll get hit by a truck." Sometimes I wish I lived more in the day, but I'm happier thinking about tomorrow or the day after. The way I see it, there's always a new or next thing."