This summary is based on the first quarter fiscal 2008 earnings call conducted by Limited Brands, Inc. (LTD: chart) on May 22, 2008.

Management:

Vice President Investor Relations: Amie Preston
Executive Vice President, Chief Administrative Officer: Martyn Redgrave
Executive Vice President, Chief Financial Officer: Stuart Burgdoerfer
Chief Executive Officer Victoria’s Secret: Sharen Turney
Chief Executive Officer Bath & Body Works: Diane Neal
Senior Vice President Investor Relations: Tom Katzenmeyer

Key Investors Issues

- EPS were 28 cents a share compared to 13 cents a share last year.
- Net income rose to $97.8 million from $52.9 million in the year-earlier period.
- Revenue fell to $1.93 billion from $2.31 billion a year ago.

First Quarter Highlights

Earnings were 28 cents per share versus 13 cents per share last year.

- This year''s result includes a pre-tax gain related to the sale of a non-core joint venture of $128 million, or 24 cents per share, and a pre-tax charge related to the impairment of another noncore joint venture of $19 million, or 5 cents per share. Earnings per share excluding these items were 11 cents.
- Although comparable store sales result is at the low end of expectations, the sales miss was more than offset by a higher than anticipated merchandise margin rate and aggressive expense management.

Net sales were $1.925 billion versus $2.311 billion last year, and comparable store sales were down 8% against a 3% comparable store sales increase, excluding apparel, last year.

- Gross margin decreased 110 basis points to 33.3%. The net of the positive effect of the elimination of the lower-margin apparel business offset by the negative effect of the recognition of mass sales to Express and Limited stores was a negative impact of about 160 basis points. Gross margin excluding this impact was up 50 basis points.
- By segment, the gross margin rate at Victoria''s Secret was down to last year as an improvement in merchandise margin was offset by buying and occupancy deleverage.
- At Bath & Body Works, the gross margin rate was up, reflecting improvement in the merchandise margin rate. It was partially offset by deleverage in the buying and occupancy rate.

The SG&A rate improved by 160 basis points.

- The net impact of the apparel divestiture, including the recognition of mass sales to Express and Limited stores, drove 170 basis points of improvement. Excluding this impact, the SG&A rate deleveraged by 10 basis points on the negative 8 comp.
- Total operating income excluding the $109 million net gain from the two previously mentioned special items declined $8.1 million to $100.4 million. Excluding apparel operating income of $13 million last year, operating income increased by $4.9 million.

- By segment, the Victoria''s Secret segment increased by $16.9 million to $149.2 million.
- Bath & Body Works declined by $4.7 million to a loss of $5.6 million.
- The Other Segment expense increased by $7.2 million to a loss of $43.1 million. This increase was the result of a decline in mass profitability that was partially offset by a decrease in corporate overhead costs.

- Retail inventories ended the quarter down 28% per square foot at cost.
- The company repurchased 7.1 million shares of stock for $122.4 million. At the end of the first quarter it had 27.4 million remaining in current 500 million program.
- In addition to the $124 million in after-tax proceeds the company received from the sale of the joint venture in the first quarter, it received a $41 million cash distribution from Express. The company is projecting a year end cash balance in excess of $1.2 billion.

Victoria''s Secret segment sales, including La Senza, increased $46.5 million or 4% to $1.3 billion, driven by new and expanded stores and growth in the Direct channel.

- Comparable store sales decreased 6% against a 2% last year.
- Total segment operating income increased $17 million or 13% to $149 million and increased 90 basis points as a percent of sales.
- Victoria''s Secret stores comparable store sales were down 7%, below expectations. Real estate activity drove incremental sales growth and total sales were down only 1% to $750.7 million.

- BioFit was a major success. It surpassed expectations.
- At Pink, the company saw strength in all top categories, Dresses and Accessories.
- In mid-February the company began offering swimwear in 350 stores.

- VSX is performing to expectation. The company is testing a full line in 30 stores, and is using the results to continue to evolve the concept.
- The company has seen some positive signs in Fragrances, launches like Ooh La La and Heavenly Kiss and in seasonal launches like Very Sexy Now. The company continues to be disappointed in the overall Beauty performance.

- Store channel operating income increased in both dollars and rates.
- Occupancy expense increased versus last year, driven by increased risk in occupancy charges associated with real estate strategy. The increased expense drove rates to deleverage. As a result, the gross margin rate was y flat to last year.
- For the Store channel selling, general and administrative expense dollars were down to last year and leveraged as a percent of sales, driven by a reduction in marketing expense.

Sales at Victoria''s Secret Direct were $381 million, up 11% to last year.