- Looking ahead, the firm will continue take proactive measures to manage discretionary spending in inventory to litigate any top-line softness.
- The company introduced exciting new products every three weeks as it refreshes the stores starting September 3 with the Black Amethyst fragranced body care launch.
– It will also rollout a new and more sophisticated package design and formula improvements for signature collection, which will expand to approximately 400 stores in the Eastern half of United States in mid November.

Fiscal 2008 Outlook:

- The company expects third quarter earnings per share to be between nil and 40 cents versus last year’s loss of a penny per share which excludes the gain from the sales of corporate aircrafts of 4 cents per share in 2007.
- Third quarter comps will be down in the low single digit range on top of last year’s negative 3% comp.
- Sales dollars should be relatively flat as an increase in sales at the Victoria’s Secret segment primarily driven by direct will be offset by a decline in sales at mass.
- Interest expense is expected to be roughly flat to last year and interests income approximately $5 million driven by lower cash balance.

For the full year 2008 the firm is projecting earnings per share at $1.45 to $1.60 excluding the 20 cents of significant items in the first half or earnings growth of 20% to 32% versus last year’s $1.21 result.

- Total comps expected to be down in the low single digit range.
- The firm expects improved gross margin rate driven by improved merchandised margins at both brand segments and an improvement in the SG&A rate.
- Capital expenditures are expected to be between $500 million and $525 million versus the previous guidance of $515 to $540 million.

Key questions and answers from the second quarter earnings call conducted by Limited Brands Inc. (LTD) on August 21, 2008.

Paul Lejuez (Credit Suisse): What is a normal expense run rate in this business as we look out to 2009?

Stuart Burgdoerfer : For the third quarter we are expecting a roughly flat SG&A rate. As we look further out to your point we continue to be very focused on expense management as we talked about in the last several quarters with particular focus on overhead expense that are from office.

What really is important is whether we leverage or de-leverage depending upon the comp as we add stores which we are doing. Obviously expense dollars should increase related to that store activity, but we are working hard to manage our over head very tightly and as we talked about consistently on a go forward basis we do want expenses to grow slower than sales and we are very focused on that.

Tom Filandro (SIG): Given the shorter selling season and shoppers focussing on price more than they have in prior years, how do you combat those two issues from both a marketing and merchandizing advantage points?

Diane Neal: We have focused our assortments, specifically our gifts assortment into key sellers, key price points which are much more value oriented than they were a year ago; as well as the fact that we have a pretty exciting black Friday.

We have a couple of different options for the month of December by how we are looking at the business and we can drive either promotional or non-promotional based on what happens in the early part of the season. We actually feel we are in a really good position to react to macro or micro economic trends.

Sharen Turney: Being on the conservative side we have a very strategic testing strategy in place both in the stores and direct to go after those holiday items, so that we have the ability to read and react and could chase into the things that we feel strong about working.

We also have a lot more newness in our fleet in terms of our gift able as well as in the beauty category and how we are actually looking at transitioning that two weeks prior to Christmas.

We have made some strategic marketing investments and changing in our circulation strategy both in the direction channel and the store channel to beep up our Black Friday as well as in how we have been approached between thanksgiving and the holiday timeframe.

Barbara Wyckoff (Buckingham Research): Comment on potential acquisitions of either the lingerie or personal care business?

Martyn Redgrave: The main thing is less calls which is our core brands in the United States and so with the distortion of time, effort, resources, capital that we are putting to our core businesses will continue and will be our priority.

We are always looking for opportunities and we are always “shopping” for things that might fit into our core brand portfolio in the United States product oriented things in particular.

Outside the US as we look at the international opportunity, we are looking at different ideas around either requiring into, joint venturing with or partnering with in a franchising sense, companies they are either directly in the product space that we are focusing on or have very significant retailing capabilities or real estate development capabilities in the key markets of the world. so I would not preclude acquisitions in the rest of the world space.

John Morris (Wachovia): Can you comment on the pricing for the rollout for signature?

Diane Neal: Our core assortment skews have reduced over year and our seasonal skew has actually increased and that was probably slightly up in the fourth quarter as far as new products.

On the signature collection, we are testing earlier in the Columbus market at the end of September and our pricing overall on signature, while we are making the changes to different products and formula upgrades we actually are increasing the pricing.