As befits a company whose most prominent brand, Victoria’s Secret, sells wispy patches of silky fabric, Limited Brands’ IR program is a hallmark for transparency. In fact, the IR department’s reputation for ‘see-through’ disclosure earned Tom Katzenmeyer, vice president of communications and IR for Limited Brands, and Amie Preston, the company’s vice president of IR, the award for best IRO in the mid-cap category at this year’s IR Magazine US Awards.
Katzenmeyer has been working in IR at Limited Brands for 14 years but he got his start in the far less transparent realm of politics, working as the Governor of Ohio’s lobbyist with the state legislature. When he first switched to the corporate world, ‘it was definitely an on-job learning experience, learning about retail and working inside a major corporation,’ Katzenmeyer notes.
Preston, a relative newcomer with only nine years at Limited, came from an accounting background and was introduced to IR while working on financial reporting. When she decided to officially join Limited’s IR legion, Preston took some National Investor Relations Institute (Niri) courses but largely relied on Katzenmeyer to show her the ropes. ‘My background in financial reporting, which gave me good knowledge of the business, operational and financial results, was a very good background to start with,’ she says.
‘We’ve both taken many Niri classes over the years and we actually served as officers at our local chapter,’ acknowledges Katzenmeyer. ‘I was on the board for a couple of years and Amie is currently membership chair.’
Retail savvy
Preston says that one of the differences in the retail industry is that companies report more frequently than in other sectors. ‘Retail sales results are reported monthly, so that means far more contact with sell-side analysts and investors,’ she says.
Monthly reporting has its advantages, notes Katzenmeyer. ‘Analysts and investors who follow retail understand that holidays, weather and promotions can shift results,’ he explains. ‘So it’s good that we announce results every 30 days because people can measure us against those factors while they give us a chance to reiterate some of the investment thesis.’
Much of their IR success can be attributed to their great staff, say Katzenmeyer and Preston. They include Carol Dreska, who is in charge of retail investor communications and managing relations with the retailer’s transfer agent as well as looking after the web site and webcasting. Annamarie Schaeffer is also an integral part of the IR team. Among her responsibilities, Schaeffer coordinates presentations, retail conferences, one-on-one meetings and management visits. Finally, the IR team say they couldn’t do it without the administrative support of their assistant, Julie Ferree.
Access is key
Limited’s dynamic IR duo identify their investor base as ‘a healthy mix’, ranging from long-term, deep-value shareholders to hedge funds and growth investors, the bulk of which are US-based. The company is about three-quarters institutionally held and the rest is held by top management (with about 15 percent) and CEO and founder Les Wexner (with around 12 percent). Katzenmeyer and Preston estimate around 5-10 percent of shares are held overseas.
Their targeting efforts ‘aren’t necessarily focused on changing the current mix of the investors, but we try to target the more long-term strategic investors,’ reports Preston. The tracking of stockholders is carried out as regularly as retail sales figures. ‘We track very closely every month and also have a very active targeting program. We go to different cities and invite investors to events we are hosting as well as sell-side events,’ she adds. ‘We watch if they are buying the stock and follow up with them. It’s the core part of what we do.’
The IR team relies on feedback from the company’s top shareholders when contemplating certain moves like increasing the dividend by 33 percent, which Limited did in January. At the same time, the company announced a modest share buyback of $150 mn. ‘We took into account feedback we were hearing from our investor base about their perceptions on dividends and share repurchases and what they would value,’ says Preston. ‘And of course the recent changes in the tax law have helped.’
The retailer’s IR program comes into its own with the annual investor update meeting at the firm’s headquarters in Columbus, Ohio. Each year around 150 buy-side and sell-side analysts arrive for senior management briefings. ‘Our IR program is successful because senior management is very engaged,’ asserts Katzenmeyer. ‘The mantra around here is about driving shareholder value so investors have a lot of access to these folks.’
‘All of our senior executives are available to investors and analysts – they have lunch together and attend a reception so there is readily available access,’ notes Preston. The October timing for the meeting is no coincidence, she adds, as it allows attendees to get a taste of what the all-important holiday season will bring.
Brand value
When so much of a company’s value is tied into brands, it’s essential for investors to become acquainted with Limited’s top names. According to Preston, investors and analysts value the time they spend in the company’s stores.
‘That’s the difference between ours and other industries: our investors and analysts actually shop in our stores all the time,’ says Preston. ‘So we get a lot of interaction when investors and analysts call us asking about different things that they saw in our stores, which is another way of staying in close contact with them.’
For a company with such brand recognition, you would almost expect a stock purchase with every bra. But Limited’s IR team has not really focused on targeting retail investors even though, as a member of the National Association of Investors Corporation (NAIC), the company occasionally attends investment fairs and does presentations. ‘They’re not a priority for us but retail investors do have live access to all our calls and presentations,’ Katzenmeyer says.
The brands are as important to institutional investors as they are to individuals. ‘We host events that are centered around our brands and invite the investment audience to those,’ Katzenmeyer describes. ‘We also attend sell-side hosted conferences and have many public relations events throughout the year to which we invite shareholders and prospective institutional shareholders, like the Victoria’s Secret fashion show.’
Is the webcast fashion show, which famously jams servers across the continent, not a missed opportunity to attract new retail shareholders? ‘While it does receive vast entertainment and business news coverage, which results in a crossover to the individual, our focus is firmly on institutional investors,’ insists Katzenmeyer. ‘They view it as a branding effort; it really enhances our brand credibility.’
This IR team points out that the company’s mission statement emphasizes building a family of the world’s best fashion brands to drive sustained growth of shareholder value. Preston adds, ‘We definitely believe in the power of brands to add to our financial results and our growth prospects.’
In fact Limited has been juggling brands to get the right mix and is already radically different from the entity it was five years ago. That process has included splitting off Abercrombie & Fitch, disposing of Limited Too in a spin-off, and selling Lerner New York and Lane Bryant. More recently, it combined the Limited with Intimate Brands, hitherto traded separately although the Limited held a majority stake.
‘We’ve been pretty active in explaining some of these quite complex types of transactions to our investors,’ notes Preston. ‘We’ve had roadshows and very targeted communications strategies.’
Katzenmeyer maintains that ‘each of our transactions over the last six or seven years will show that we have returned value to our shareholders,’ while Preston adds that these moves have left the company ‘strategically positioned and well-balanced between the areas of intimate apparel, fashion apparel and beauty and personal care.’
When Limited Brands goes on the road to explain these deals, the IR team draws on the participation of a number of people. ‘Typically we have members of the executive committee, our vice chairman and COO or CFO, and then we are also fortunate to have six different brand CEOs who we take with us,’ lists Preston.
Interestingly, many analysts are less enthused about that broad management access than you might think. The reason is that many express such confidence in Katzenmeyer and Preston. Katzenmeyer modestly admits, ‘Amie and I have a great depth of knowledge about the company and our brands, so usually we can immediately answer any question that would come up , or find the answer to it quickly. It helps that we have tenure, and that we are on the road quite a bit, so we have obviously connected quite a bit with these folks over the years.’
And Preston adds, ‘We return everyone’s phone calls the same day they call; we really strive to be very responsive,’ to which Katzenmeyer faithfully counterpoints: ‘Without exception.’
What the analysts say
Josh Cummings, Putnam Investments
‘We’ve been investors in this company for quite some time, and these guys are widely regarded as the best in retail in terms of IR. First, they give a lot of detail and granularity in their press releases, breaking everything out by division, giving you every number you’d want. I contrast that with some of my other companies in the retail space that don’t give you anything.
In a Reg FD environment, you really have to go through the IR department to get information, but a lot of other companies have not adapted to this information sharing or the IR person is not qualified enough to give all the information.
Look at the degree of professionalism these investor relations officers bring to the position. I can have a very detailed conversation about the business with Tom, and he knows every single number, he knows exactly what I’m asking.
It seems to me that Les Wexner, the chairman, has given Tom an awful lot of responsibility for the business. Tom is really the go-to guy because if I talk to him, I don’t really feel the need to pick up the phone and talk to the CEO or CFO because Tom knows all the numbers.
They always do a great job when they are out on the road. You know there are some companies where it is just the IR person coming to see us, and I’d rather not bother. Bring me the CFO, or CEO, or nobody. But with Tom or Amie, I’d always see them because I know I can have the same level of conversation and discussion with them. They have really taken this position to a new level.’
Dana Telsey, Bear Sterns
‘Tom Katzenmeyer and Amie Preston are superb.They know the company inside and out, they know the industry segment in which they compete, and they are accessible. They help me understand what’s happening with the business and the sector.’
Kimberly Bernard, SG Cowen
‘What sets the Limited investor relations team apart from those at other companies we cover is that they are extremely willing to provide us with access to the information and people who can help us understand the company better.
I know there are a lot of people who cover them and who are after them as well, but I always find them to be extremely accommodating. It’s a complex business that requires a lot of access to a lot of different pieces but they are very generous with their time and very willing to provide us with the information we need. That’s pretty much all you need for a good investor relations team, isn’t it?’
