Limited to Spin Off Kids’ Store, Buy Back Up to 15 Million Shares

Continuing its pattern of divide and conquer, Limited Inc. said late Monday that at a time of higher-than-expected earnings it would spin off kids’ store Limited Too and buy back as many as 15 million shares of Limited, at between $50 and $55 per share.

Company executives also announced a plan to sell a majority interest in Galyan’s Trading Co., a sporting goods chain, to Los Angeles-based investment firm Freeman Spogli & Co., which is putting $50 million into the venture, partner Ron Spogli said Monday.

In a statement, Limited Chairman and Chief Executive Leslie H. Wexner said the buyback was conceived as a tax-efficient way to distribute to shareholders the windfall from the company’s recent strong performance. Wexner owns 26% of Limited.

April sales for the Columbus, Ohio-based retailer were up 5% in stores open at least a year. The retailer also reported that first-quarter earnings per share of 14 cents were up 56% from a year ago--beating estimates of 10 cents per share.

Those numbers come from strong first-quarter performances at Express, Lerner New York, Lane Bryant, Intimate Brands and Limited Too, the company said.

Analysts said the spinoffs are vintage Wexner, who has in the past made separate companies of his highest-flying divisions, each time promoting a stock rise that quells his critics.

That includes a 100% spinoff of Wall Street darling Abercrombie & Fitch, a highly successful up-market college retailer, and a partial spinoff of Intimate Brands, the parent of both Victoria’s Secret and Bath & Body Works.

The newest Limited offspring, Limited Too, which targets girls 7 to 14 years old, will follow the model of A & F as a tax-free, 100% spinoff. The Limited plans to make the move in late July or August.

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* CLOTHES CALL: Stock Exchange looks at the potential of the Limited. C7