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Executives

Amie Preston – Vice President Investor Relations

Limited Brands (LTD) December Sales Results Call January 10, 2008 7:30 AM ET

Amie Preston

This is Limited Brands December sales report for the five week period ending January 5, 2008. As a matter of formality, I need to remind you that any forward-looking statements I may make today are subject to the Safe Harbor Statement found in our SEC filing.

Total Limited Brand sales for the five weeks ended January 5, 2008 were $1.744 billion compared to sales of $2.027 billion for the five weeks ended December 30, 2006. Limited Brands comps on a calendar basis were down 8% below expectations. Both Victoria’s Secret and Bath & Body Works were challenged by negative traffic levels. December merchandise margin rates were down significantly to last year.

Retail inventories consisting of Victoria’s Secret and Bath & Body Works ended the month down 33% versus last year on a per square foot basis at cost. Although there is still months left in the fourth quarter as a result of the 8% decline in comparable store sales quarter to date, versus our previous expectation for a low single digit decline, we now expect to report fourth quarter earnings per share at the low to mid point of our previously announced range of $0.90 to $1.05.

Now for the individual brand results beginning with Victoria’s Secret Stores. Victoria’s Secret Stores comp store sales for December were down 8% to last year and below expectations, against a 10% comp increase last year. The external business environment remained challenging contributing to disappointing sales. Our sales decline was driven by bras, panties, sleepwear and beauty partially offset by moderate growth in Pink. The merchandise margin rate was down significantly to last year. The decline was primarily driven by the impact of the calendar shift this year as it relates to our semi annual sales. The sales started on January 3rd both this year and last year, however January 3rd was included in fiscal December this year and fiscal January last year. Leading up to the holiday we featured our first ever Super Model Pajama Party, beauty gift sets and additional gift giving merchandise. To capitalize on post holiday mall traffic we featured an in-store bra event offering bras at buy one, get one at 50% off pricing, and in line with last year, we began our semi annual sale shortly after the holiday. In January we will continue with our semi annual sale followed by our Valentine’s Day floor set at month-end.

Turning to Victoria’s Secrets Direct, sales on a fiscal basis were down 11% to last year due primarily to one less pre-holiday week versus last year. On a calendar basis sales were down 9% against 10% growth last year. Quarter to date sales at Direct are down 5% on a fiscal basis. We made significant progress with DC output in December and were able to achieve daily outputs that surpassed our initial expectations. As a result we were able to take some actions to regenerate demand including reactivating a free shipping offer for the semi annual sale and increasing our email contact.

We have a thorough understanding of the issues at the DC and we are working to implement the solutions. The December merchandise margin rate was down to last year driven by deeper price reductions in seasonal merchandise.

At La Senza, December comps were down 4%. At Bath & Body Works December performed below expectations with comps down 8% compared to a 5% increase in comps in December last year. The merchandise margin rate for the month was down significantly to last year due to soft traffic driving the need to be more promotional in our gifting business and to a lesser extent, the calendar shift of having an additional week of the semi annual sale included in December this year on a fiscal basis.

After Christmas we moved to our semi annual sales theme which will continue through most of January. Near the end of January we will move to our expect advice theme which will feature items from Patricia Wexler, [inaudible] hair and our aroma therapy line and a new collection of new items from our True Blue Spa line inspired by the Far East. Later in the theme focus will shift to our Valentine’s Day selection.

In closing, we expect negative mid to high single digit total company comps in January. Thank you for your continuing interest in Limited Brands.

Question-and-Answer Session

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Source: Limited Brands December 2007 Sales Results Call Transcript
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