Martyn R. Redgrave - Chief Administrative Officer and Executive Vice President Sharen Jester Turney - Chief Executive Officer of Victoria's Secret Megabrand & Intimate Apparel and President of Victoria's Secret Megabrand & Intimate Apparel Leslie H. Wexner - Founder, Executive Chairman, Chief Executive Officer, Chairman of Executive Committee and Group President of Lingerie Nicholas Coe - Chief Executive Officer Amie Preston - Vice President Investor Relations Stuart B. Burgdoerfer - Chief Financial Officer, Principal Accounting Officer and Executive Vice President

Dana Lauren Telsey - Telsey Advisory Group LLC Paul Lejuez - Nomura Securities Co. Ltd., Research Division Stacy W. Pak - Barclays Capital, Research Division Roxanne Meyer - UBS Investment Bank, Research Division Richard Ellis Jaffe - Stifel, Nicolaus & Co., Inc., Research Division John D. Morris - BMO Capital Markets U.S. Brian X Tunick - JP Morgan Chase & Co, Research Division Erika K. Maschmeyer - Robert W. Baird & Co. Incorporated, Research Division Michelle Tan - Goldman Sachs Group Inc., Research Division Howard Tubin - RBC Capital Markets, LLC, Research Division Marni Shapiro - The Retail Tracker Jennifer M. Davis - Lazard Capital Markets LLC, Research Division Lorraine Maikis Hutchinson - BofA Merrill Lynch, Research Division Kimberly C. Greenberger - Morgan Stanley, Research Division Christian Buss - Crédit Suisse AG, Research Division Janet Kloppenburg - JJK Research

Good morning, my name is Matthew, and I will be your conference operator today. At this time, I would like to welcome everyone to the Limited Brands Third Quarter 2011 Earnings Conference Call. [Operator Instructions] Thank you. Chief Investor Relations Officer, Amie Preston, you may begin your conference.

Thanks, Matt. Good morning, everyone, and thank you for joining us today. As a matter of formality, I need to remind you that any forward-looking statements we may make today are subject to our Safe Harbor statement found in our SEC filings. Our third quarter earnings release and related financial information, including any non-GAAP or adjusted financial reconciliation tables, are available on our website, limitedbrands.com. Also available on our website is an investor presentation, which we will be referring to during this call. This call is being taped and can be replayed by dialing 1 (866) NEWS-LTD. You can also listen to an audio replay from our website. Joining us today are Stuart Burgdoerfer, EVP and CFO; Sharen Turney, CEO Victoria's Secret; Nick Coe, CEO; and Andrew Meslow, CAO at Bath & Body Works; and Martyn Redgrave, EVP and CAO. After our prepared comments, we'll be available to take your questions for as long as time permits. [Operator Instructions] Thanks, and I'll now turn the call over to Stuart. Stuart B. Burgdoerfer: Thanks, Amie, and good morning, everyone. We are pleased with our third quarter performance. Our adjusted earnings per share increased 39% to $0.25 per share versus $0.18 last year. Our reported result was $0.31 per share versus $0.18 last year. This year's reported third quarter result included an income tax benefit primarily due to resolutions of certain tax matters of $16.7 million or $0.06 per share. All results discussed on this call exclude this significant item. To take you through the third quarter results as detailed on Page 3 of the presentation. Net sales were $2.173 billion versus $1.983 billion last year, and comps increased 9%. The gross margin rate increased 10 basis points to 36.1% as leveraged on [indiscernible] occupancy expense offset a decline in the merchandise margin rate. As expected, our third quarter merchandise margin rate was negatively impacted by increased costs. We continue to focus on managing total expense growth at a rate that is lower than sales. Total expenses, the combination of buying and occupancy and SG&A increased by 5% and leveraged as a percent of sales. SG&A dollars increased by $34 million or 6%, and the SG&A rate leverage by 90 basis points. A significant portion of our SG&A is variable and we will continue to manage that proactively throughout the quarter in response to our sales trends. Principally all of our SG&A expense growth in the third quarter relates to investments that we make in store selling to support and drive sales growth. These investments include higher selling payroll related to the growth in sales, increased investment in training and investment in other store initiatives, including technology. Turning to operating income on Page 5 of the presentation, total operating income increased $37 million or 25% and 100 basis points as a percent of sales to $186.1 million or 8.6% of sales. By segment, the Victoria's Secret segment increased by $25.6 million or 90 basis points as a percent of sales to $148.8 million or 11.3% of sales. Bath & Body Works increased by $8.9 million or 130 basis points as a percent of sales to $40.6 million or 8.1% of sales. And the other segment operating loss improved by $2.5 million to $3.3 million driven by improved profitability at Mast. Total nonoperating expenses increased by $16.6 million driven by increased interest expense associated with the $1 billion bond issuance. Turning to the balance sheet on Page 9. Retail inventories per square foot at cost ended the quarter up 2% versus last year. We repurchased 4.8 million shares of stock in the third quarter for $172 million. We completed our previous $500 million share repurchase program and the Board authorized a new $250 million program on November 3. Turning to Page 10 of the presentation for our forecast for 2011, adjusted earnings per share between $1.28 and $1.43 in the fourth quarter against last year's record $1.26 result. This forecast reflects a low-single digit comp increase. Also as we previously announced, at the beginning of November we sold a 51% interest in our third-party sourcing business. We retain 100% ownership of our intimate apparel and personal care and beauty sourcing business. We received $125 million in net pretax cash, and we expect to recognize a pretax gain of approximately $115 million in the fourth quarter. This gain is not included in our guidance. We have included a scheduled in your materials, on Page 11, which describes the anticipated impacts of this sale on our reported results. Essentially, we will no longer consolidate results related to the third-party sourcing business and will account for our 49% ownership under the equity method of accounting. Sales and profits related to the third-party sourcing business will come out of the other segment. The third-party -- as you know, the third-party sourcing business is a lower-margin business at approximate a mid-single digit operating margin rate, so our gross margin rate and the operating income rate will be positively impacted, while our SG&A rate will be negatively impacted. The transaction will have a dilutive impact of roughly $0.03 per share in the fourth quarter, which is reflected in our guidance. We expect the fourth quarter merchandise margin rate to be up significantly as the sale of the third-party sourcing business will benefit our merchandise margin rate by approximately 300 basis points. Absent this impact, we expect the merchandise margin rate to continue to be down, negatively impacted by cost increases. We expect the buying and occupancy rate to increase slightly, driven by the negative impact of the sale of the third-party sourcing business. Excluding this impact, buying and occupancy cost would leverage on a low-single digit comp in the high-volume fourth quarter. We expect the gross margin rate to be up significantly given the merchandise margin and buying and occupancy result I just discussed. This sale will favorably impact our gross margin rate by about 250 basis points and again absent this impact, our gross margin rate would be down slightly. We expect the fourth quarter SG&A rate to increase, driven by a negative impact related to the third-party sourcing business sale of about 150 basis points. Excluding this impact, the SG&A rate would leverage on low-single digit comps. The sale of the third-party sourcing business will favorably impact our fourth quarter operating income rate by about 100 basis points. Moving to inventories, we expect to end fourth quarter with the inventory per square foot roughly up low- to mid-single digits to last year. The end of quarter fourth cash includes a full quarter of inventory related to the timing of Chinese New Year this year, which has an impact of approximately 4 percentage points per foot. For the full year, we are projecting mid- to high-single digit positive comps. We expect our gross margin rate to be up, driven roughly equally by improvement in the merchandise margin rate and buying and occupancy leverage. The third-party sourcing business sale will benefit our full year gross margin rate by roughly 70 basis points. Excluding this impact, our gross margin rate would still be up for the year. We expect the full year SG&A expense rate to be roughly flat, negatively impacted by the sale by about 50 basis points. Nonoperating expenses are projected for the year at about $250 million, consisting principally of interest expense. Before any discreet items, our tax rate would be approximately 38%. We are forecasting weighted average shares of about $306 million in the fourth quarter and $315 million for the full year. So assuming all of these inputs, we expect adjusted earnings per share for the full year 2011 to be between $2.38 and $2.53 per share. Versus our previous guidance, this forecast reflects our third quarter fee plus the dilutive impact of the third-party sourcing business sale. We are projecting 2011 CapEx of about $425 million. As detailed on Page 12 of the presentation, we plan to open roughly 40 stores this year and close roughly 55 stores. We'll end the year with total square footage roughly flat to last year. Turning to liquidity. We expect free cash flow in 2011 of about $700 million, and we remain committed to returning excess cash to shareholders through a combination of share repurchases and dividends. Our free cash flow and cash position, along with additional availability under our revolving credit facility, result in very strong liquidity which is more than sufficient to fund our working capital, capital expenditures, dividends and any other foreseeable needs. Thanks, and now I'll turn the discussion over to Sharen.

Thank you, Stuart, and good morning, everyone. The Victoria's Secret segment achieved both record sales and profit in the third quarter, a result of which we are proud. This morning, I'll share with you the key drivers of our success, I'll then review third quarter financial results and end by briefly discussing how we're thinking about fourth quarter. Let's begin with what we've been doing to deliver our results. We continue to stay focused on our core categories, bras and panties, supported by a culture that emphasizes getting faster and more agile every day. We remain purposeful in our balanced approach between managing the business with optimism and conservatism. We brought this together in a well-told brand story across channel. We told that story through innovative product, steady newness, the right fashion and excellent in-store and online execution. And finally, critical to our success is our customer connection. We work every day to stay close to her and deliver an emotional and positive experience with every interaction. Now turning to our store financial performance. Our third quarter results are detailed on Page 13 of your presentation material. In the Victoria's Secret store channel, third quarter comps were up 13% and total sales were up 12%, increasing to $942 million with a 2-year comp of 27%. This result was driven by strength across the assortment. Customers continue to respond favorably to the fresh and fashion wide assortment that we are providing. Examples of our third quarter launches that continued to -- that contributed to this include the Showstopper Bra, the PINK Heartbreaker Bra, the Unforgettable Bra and our Gorgeous Bra. All launches were strong and met our expectations. We found success by complementing our bra launches with the Beauty fragrance launch. A great example is the Gorgeous fragrance, which landed concurrently with our launch of the Gorgeous Bra, driving sales up for both the bra and fragrance business to last year. As with prior quarters, in-store execution has been critical to our sales growth and we again achieved record conversion for the quarter. This is the ninth consecutive quarter we have achieved record conversion. The third quarter merchandise margin rate was down significantly to last year. Margin rate was impacted by cost pressures in PINK and positive response to our customer programs, including gift with purchase offers. We leveraged buying occupancy and SG&A expense and this combined with our top line growth, drove our operating profit up over 15% versus last year. Now let's review performance at Direct. Third quarter sales increased by 8% to $277 million with a 2-year sales growth of 11%. Top line growth was driven across the assortment with particular strength in PINK, sleepwear, panties and knit clothing. The merchandise margin rate declined with the product cost increases and increased use of shipping offers. Total expenses leveraged in the quarter, so operating income dollars increased by over 30% and the operating income rate improved. Now let's discuss the fourth quarter. We've been preparing for holiday and are ready. We are looking forward to Black Friday and the balance of fourth quarter. Our assortments continue to be fashion-right and are coupled with excellent in-store and online execution. We are cautiously optimistic. Following the all-important Black Friday weekend, we are very excited about the Victoria's Secret fashion show which will air on November 29 with Kanye West, Nicki Minaj, and Maroon 5 performing as our musical entertainment. We will not lose focus on our bra and panty business, nor we will lose focus in our -- on our robust business options such as beauty and sleepwear. These categories are our primary investments heading in to the all-important holiday time period. We will maintain maximum agility to chase what is working. We will stay balanced in our approach by managing our inventory and expenses to grow at a rate slower than sales and we will chase aggressively where appropriate. In closing, we are pleased with our performance but continue to see opportunities for improvement. We will stay close to our customers and work to drive sustained, profitable growth as our top priority. Thank you, and now I'll turn the discussion over to Nick.

Thank you, Sharon, and good morning, everyone. At Bath & Body Works, we're pleased with the results of the third quarter. We delivered sales on operating income growth versus last year's strong performance. We continued to -- continue to deliver improved results by maintaining focus on 3 key categories: our Signature Collection, the anti-bac soap and sanitizing business and our home fragrance assortment. The customer also responded well to the increased presence of seasonally relevant fragrances and forms. Performance improved versus last year in Signature Collection, driven by the successful launch of the new fragrance, Paris Amour. The anti-bac business delivered growth in our soap and PocketBac collections by increasing novelty and fashion newness in our seasonally relevant fragrances. Home fragrance performance continues to be driven by candles in new seasonal fragrances, as well as growth in forms and novelty in our diffuser and SCENTPORTABLE categories. Transactions were up versus last year, driven by traffic and continued improvement in our conversion rate. So with that backdrop, let me take you through the financial results for the quarter as detailed on Page 15 of your materials. Bath & Body Works third quarter comps were up 9%. Total sales for the quarter were $504 million, up 8% or $36 million -- up $36 million versus last year. For the quarter, the operating income was $41 million, up $9 million or 28% from last year. Operating income as a percentage of sales was 8% in the quarter and up to last year. Gross margin rate in the quarter was flat to last year. Merchandise margin rate declined somewhat, but was offset by leverage on buying and occupancy expense. The decline in merchandise margin rate was driven primarily by increasing costs, and we were able to leverage SG&A expenses versus last year. We also finished the quarter with inventory levels down to last year. We continue to drive inventories down year-over-year while maintaining a high stock -- high in-stock positions. The BBW Direct channels have delivered strong sales and operating income growth versus last year. Looking ahead to the fourth quarter, we will continue to introduce newness and innovation in both form and in fragrances. This month, we began our holiday theme with animation in the windows and front-of-shop focus on our holiday collections, home fragrance items, and gifts. Throughout the month, the shop will be focused on new fragrances, great seasonal gifts and the launch of our newest Signature Collection fragrance, the Enchanted. We're excited about the assortment and the visual appeal of our stores. Our overall focus continues to be about getting faster and better understanding in satisfying our customer needs, while providing them with a world-class in-store experience. In addition to focusing on products and fragrant launches -- fragrance launches, we will continue to test and weigh the results of new product offerings and promotional strategies while maintaining flexibility in our inventory to act quickly to our customers' needs. With that, I'll turn the discussion over to Martyn. Martyn R. Redgrave: Well thanks, Nick, and good morning, everyone. As most of you know, Martin Waters covered a complete update on our overall international strategy, including our accomplishments to date and our plans for 2011 and 2012 at our October Investor Update Meeting in New York. So today, I'll just hit the highlights. One of those highlights is that we, along with our partners, continue to be on track to open approximately 120 stores this year outside the United States. Now, taking a look at each of the businesses, let's start with our Victoria's Secret international business. In the third quarter, we opened 3 Victoria's Secret full assortment stores and 1 PINK store in Canada, bringing the total in Canada to 9 Victoria's Secret stores and 8 PINK stores. These stores continue to do very well for us and we plan to open another 2 locations in the fourth quarter of this year. Our partners opened 8 Victoria's Secret Beauty and Accessories stores in the third quarter, bringing the total to 32 stores. In addition, our partners plan to open another 27 stores by the end of the year for a total of 59 stores at year-end. Sale productivity in these stores continue to be very impressive. We also continue to be on track to open our new Bond Street store in London next summer, along with another 2 to 3 full assortment mall-based stores in the U.K. And as we announced at the update meeting, we also plan to open 3 mall-based full assortment stores in the Middle East in late 2012. So in summary, all of our Victoria's Secret stores outside the United States continue to perform very well and we are enthusiastic about the growth opportunities for this brand. Turning to BBW. We opened 3 stores in Canada in the third quarter, bringing our total to 65. These stores continue to achieve sales volumes well above our U.S. average. In fact, our most recent opening in Newfoundland broke the record for opening week sales across the chain. As a result, we plan to open another 4 stores over the remainder of the year. We opened another 6 stores, 6 new BBW stores under our partnership with Alshaya in the Middle East in the third quarter, bringing the total of 14. These stores also continue to do very well. Our partners will open another 6 stores in the Middle East and Turkey in the fourth quarter, and we are on track to open in Russia in early 2012. Now turning to La Senza, you will recall that this brand operates through company-owned stores in Canada and under our franchise partnership model in the rest of the world. Although the business is not significant to our overall results, our Canadian business has been slower to turn around than we would have liked and is also being impacted, in part, by a very challenging Canadian retail environment. La Senza's comparable store sales decreased 4% in the quarter. The La Senza International business has been strong with retail sales up significantly in the quarter. Our partners opened another 5 stores in the third quarter, bringing the total to 267 stores and our partners plan to open another 30 stores in the remainder of the year for almost -- a total of almost 300 stores. Total La Senza operating income was about flat to last year in the quarter and remains at about breakeven. So overall, we're very pleased with our progress towards developing the foundation for a sustainable international business model with outstanding long-term growth potential for all of our brands. In closing, I want to reiterate that we also continue to be very pleased with the company's overall performance, which has been driven by an intense focus on fundamentals, coupled with an orientation of getting faster and more agile and, of course, staying close to our customers. We remain focused on what we can control, and we will continue our disciplined and conservative approach to managing the business while also aggressively pursuing every opportunity to get even better. Thanks, and now I turn it back over to Amie.

Thanks, Martyn. That concludes our prepared comments. And at this time, we're happy to take any questions you have. [Operator Instructions] and I'll turn it back over to Matt.

[Operator Instructions] Your first question comes from the line of Erika Maschmeyer with Robert W. Baird. Erika K. Maschmeyer - Robert W. Baird & Co. Incorporated, Research Division: Could you talk a little bit more, Sharen, at Victoria's Secret about your good, better, best pricing architecture, kind of where you've added quality and raised price and have you been seeing customers gravitate towards your best price points? And then also just update us on what you're seeing from an AEC [ph] perspective in Q4 and into next year.

We do have a good, better, best strategy and the operating is very balanced in the good, better, best. And at each one of those levels, we are getting actually better sell-throughs this year versus last year. So whether it's the good price points, the better or the best price points. So it's very balanced. You will hear us talk about the best price point because the fashion and the details we're putting into the bras are actually anywhere from $42 to $98. It's not a distorted amount of newness that are going into that better price point, but we are seeing very good sell-through. So the key message is yes, we are pushing the best price point, but the offering is still very balanced. The sales are still very balanced and the sell-throughs are very balanced in the good, better, best price point. As we think about -- as you see, do not see much change going into the fourth quarter nor the first quarter in terms of the costing.

Your next question comes from the line of Brian Tunick with JPMorgan. Brian X Tunick - JP Morgan Chase & Co, Research Division: I guess the question is for Stuart. On the expenses growing slower than sales over the past year and so is there anything we should think about regarding next year, the Victoria's Secret international store rollout that would change your opportunity to continue to grow expenses slower? Stuart B. Burgdoerfer: Well Brian, we're still working on our 2012 models and plans, but our commitment to grow for the enterprise expenses slower than sales is just what I would called a foundational commitment. And so we're going to work very hard to do that, but do it in a way obviously that doesn't negatively impact experiences for our customers and so on. But that commitment, at an enterprise-level, is a strongly held one and we're going to continue to work hard to achieve that. But we continue to work on our '12 plans and ranges and scenarios and obviously, will provide more information about that in February when we provide 2012 guidance. But the commitment remains.

Your next question comes from the line of Lorraine Hutchinson with Bank of America. Lorraine Maikis Hutchinson - BofA Merrill Lynch, Research Division: Just wanted to follow up on the sale of the sourcing business. It doesn't look like you have too much equity income coming into your guidance in the fourth quarter or next year. So I was just curious how the profit sharing would work there and also if there's a possibility for a quicker deployment of that cash in terms of a share buyback to offset some of the dilution. Stuart B. Burgdoerfer: So in terms of the ongoing income, so we'll own 49% of the business. We'll account for it on the equity method. The view at this point about income contribution from that stake is that it won't be material and the reason for that is the new business, the newly formed business, will have some debt and related interest expense and there will also be recognition of intangible assets and other step-up in basis that will drive more depreciation and amortization. So all of those details are still getting sorted out a bit but at this point, we don't judge it to be material to any particular period. So that's why that is. With respect to deployment of that cash, I hope that you recognize what we do over time, which is we're very committed to returning excess cash to shareholders. We try to be very thoughtful and balanced about that, work with our Board, et cetera. As you know, we did just announce a new share repurchase program in early November. And again, our commitment to return cash to shareholders is as strong as ever.

Your next question comes from the line of Stacy Pak with Barclays Capital. Stacy W. Pak - Barclays Capital, Research Division: I was hoping you could talk a little bit more about Canada. My sense is mall traffic improved in Canada in October, and sort of what you're seeing there. And more fundamentally, why is La Senza strong in the rest of the world and not in Canada? What's the roadmap to getting that fixed? And what was the La Senza impact on EPS?

We'll go to Martyn for that. Martyn R. Redgrave: Yes, as I said in my prepared remarks, La Senza in Canada delivered a negative 4% comp in the quarter. This was driven by a bit more of a promotional activity what I won't categorized as very tough retail environment. From what we can see, in terms of reported results for Canada, the Canadian market in general remains very difficult. I mean we see mall traffic down 10% in the quarter and most of retailers in Canada are reporting negative comps. So it's a tough environment. That said, we continue to be very conservative about our plans for the business. We're applying learnings as we go to make sure that we're positioning the business for success in the future. Our inventories are very clean as we enter holiday and we're optimistic about the prospects for La Senza in the fourth quarter. Your question about the international side of La Senza is interesting, different retail markets distributed across the world. And as I said, our La Senza International franchise business continues to show very good growth for us, and even more indicated by the fact that partners are continuing to aggressively open new stores across the globe for a total of 55 stores this year alone. And a lot more to come next year, so we're very happy with the progress in international.

So the last part of your question, as Martyn said in his prepared comments that La Senza was about breakeven in the quarter.

Your next question comes from the line of Janet Kloppenburg with JDK Research. Janet Kloppenburg - JJK Research: Stuart, I just had a question on the SG&A. The leverage in the third quarter was much better than I expected. And yet in the second quarter on the same level of comp or close to it, your SG&A really showed SG was flat. So I was wondering what drove that difference, maybe there was some investment in the second quarter that benefited the third quarter. And what factors may have affected that change? Stuart B. Burgdoerfer: Janet, it obviously varies from quarter-to-quarter and you also have to also obviously look at the comparisons as well. Beginning last fall in the third quarter, we started to invest a bit more in customer-facing expenses, and so that affects the comparison of it.

Does that anyway your question, Janet? Janet Kloppenburg - JJK Research: Well, I was just wondering if what you're saying, Stuart, that you've anniversaried investment in payroll that you had started to do last year so perhaps we... Stuart B. Burgdoerfer: Yes, that's part of it, Janet. And then the other thing, and I just -- in the spirit of be helpful, in the fourth quarter -- just moving to the fourth quarter. As we called out last year on the fourth quarter call, we did have some one-time expenses last year in the fourth quarter related to stock comp and the write-off of a trade name, so that affects our view of the fourth quarter as well in terms of our guidance. Janet Kloppenburg - JJK Research: So were there some one-time items in last year's third quarter that perhaps I wasn't paying good enough attention to? Stuart B. Burgdoerfer: Yes. Not as significant as the fourth quarter, but there was a little bit of a one-time in last year's Q3 as well.

Your next question comes from the line of Paul Lejuez with Nomura Securities. Paul Lejuez - Nomura Securities Co. Ltd., Research Division: Can you maybe talk about what selling the main stake in Mast does for that organization that maybe could not be done under your umbrella? And just to be clear, I just want to understand what changes that brings to your sourcing organization by business and even within the Victoria's Secret business. Is there any change to the PINK sourcing organization versus the folks that are sourcing on the lingerie side? Stuart B. Burgdoerfer: Paul, in terms of schematically what we think is most important with respect to that sale of the third quarter party sourcing business. It's about focus. And so an ongoing focus for us related to the sourcing of intimate apparel and personal care and beauty is obviously very important and foundational to what we do. The new entity focusing on apparel sourcing and only apparel sourcing will be effective and helpful to that organization. So really, the underlying rationale for it is one of focus. And that is the most significant effects of the sale of the third-party sourcing business and that will benefit us, and that will benefit the ongoing new entity.

And we'll go to Sharen about the PINK and intimate sourcing structure.

All of the intimate and sourcing structure in what we call our loungewear, some people would call it apparel in PINK, in Victoria's Secret Lingerie, as Direct, will remain with the Mast global organization and not the third-party sourcing. The only thing, and it's only pieces of the categories that will go from the direct apparel business into the third-party sourcing such as coats and shoes, things that are outside of our core. Out of our core, including the lounge/apparel business in PINK, stays the Mast Global and Victoria's Secret.

Your next question comes from the line of Michelle Tan with Goldman Sachs. Michelle Tan - Goldman Sachs Group Inc., Research Division: Sharen, I was wondering -- and maybe this is a question for you as well, Nick. I think you guys have been calling out monthly some stronger response to promotional events. It feels like it's the first time we've heard that in a while from you. So I was just curious what you're seeing in terms of consumer behavior that might be changing and how you guys are thinking about playing into that or managing that?

Michelle, it's Sharen. Basically when we talk about promotion, it's really around our gift with purchase or maybe our PWPs. And we have a philosophy of how do we surprise and delight our customers with really branded kinds of product. So on example of that was our tote, that was the oversized tote in the fall season; a very high response to. An example of the spring season was the Victoria's Secret beach towel for the summer time frame. So as we think about really having an ownership of the brand, as well as surprising and delighting her, these are the things that we're really going after and that's what -- when we talked to the higher response that we're getting to the GWPs and PWPs are what we we're responding to.

Nick, do you want to add to that?

Sure. We're fundamentally running about flat in terms of promotions to last year. We continue to plan that down. And at the same time, we obviously monitor customer behavior to help us decide what we're running but for all intents and purposes, we're roughly flat to last year.

Your next question comes from the line of Jennifer Davis with Lazard Capital. Jennifer M. Davis - Lazard Capital Markets LLC, Research Division: I was hoping you could talk a little bit about your promotional plans for fourth quarter. Nick, you touched on this a little bit. Are they going to be similar to last year? Are you planning them down at all? Will there be any timing changes in terms of semiannual sales? And then also, if I can squeeze in another, I was hoping you could talk a bit more about, I guess your thoughts on pricing and the cost increases. I feel like you guys have a lot more pricing power than most other specialty retailers and just curious why you're not taking up prices a little bit more.

So let me reiterate, so we've been running pretty much flat promotionally, and that does that change as we look forward. We continue to actually play with prices in terms of testing different pricing scenarios, both up and down, what makes most sense for the brand. And where it works, we will continue to push that forward. And we don't see a change in terms of the timing of the sale as we come out of the end of holiday.

Sharen, do you want to add to...

Our promotional activity, if you're -- compelling promotional pricing activity is actually down to last year. We obviously are very prepared for Black Friday. We do have contingencies. But today, we are viewing that our promotional -- that means pricing activity will be down. We will continue our surprise-and-delight with our PWPs through the holiday season. Not that's it's a lot incremental to last year, but it is slightly up. When you think about -- as we really think about our costing, there's really 3 key priorities. It's about quality, speed, and innovation. And we know staying really focused and agile makes us better able to read, react and make big bigger. So the top line benefit we get from that mindset and really strong execution outweighs any downside from the increase in cost and raw materials.

Your next question comes from the line of Kimberly Greenberger with Morgan Stanley. Kimberly C. Greenberger - Morgan Stanley, Research Division: Sharen and Nick, I'm wondering if you can talk about how you're seeing traffic trends in your store. It seems to me that throughout the third quarter, you've been bucking the mall traffic trend. What do you attribute that to? And if you can talk about specific strategies you've employed and how you expect to drive those through the holiday season, that would be great.

We'll go to Sharen first.

The mall traffic, it's interesting. It has been erratic. We have been performing, probably 80% of the time slightly above the mall traffic. And I really attribute that from us being able to deliver compelling, emotional stories, really staying focused on our core. As we talked about also within the stores, the higher selling staff and training we're doing which actually really tends to drive more conversion. And in the surprise-and-delight strategy that is tied back into our powerful bra launches, and in the fact we actually have better alignment with our fragrance business and our bra business, putting power on power. We will not change that strategy as we go forward into the holiday time frame. Lastly, we've been trying to make our stores even more emotional and more fashion-right. And those that had the opportunity to see the holiday stores, I would hope that you agreed with me.

Nick?

We'll be consistent with what we've been doing all year, which is making really sure we're flowing newness on regular a basis for the customer, that she can emotionally connect with. I think it's really important that we're staying as close as we possibly can for the customer to understand the behavior so we can have the right inventory there, so that we can win with her. And making sure that our story, our windows, tell great stories of that product and of that newness. And that's really what's been helping us drive traffic.

Your next question comes from the line of Marni Shapiro with The Retail Tracker. Marni Shapiro - The Retail Tracker: I was curious, Sharen, you just said that mall traffic has been erratic. I was curious what you guys are seeing online. Is that traffic online more consistent or is it also a little erratic? Is it tied more to product launches and promotions or is it more a day-in, day-out business? And I'm curious across BBW and VS.

I'm glad you asked me about Direct because in my last remarks about what's going to happen, it is the power to our direct channel and our social media strategy with our store strategy. The traffic on the web is up and it is up in the double digits and it has been consistently up throughout third quarter.

Nick?

We continue to see good solid consistent performance in traffic online and, obviously we utilized our online business to help tell the overall brand story as much as we can.

Your next question comes from the line of Roxanne Meyer with UBS. Roxanne Meyer - UBS Investment Bank, Research Division: Just add a question on Victoria's Secret Direct. The performance there, obviously was really impressive, but we noticed that you didn't call out bras and beauty like in your stores, some of the standout categories. I'm just wondering is it just more of a relative performance or is there something that's keeping those a little bit softer on the Direct side? And then just thinking about that, how do you feel -- how you're positioned online for beauty for holiday?

In terms of the Direct channel and as you saw with the bra business, when we kind of call out the categories and it maybe a little bit misleading, is that those categories are just so extraordinarily strong. So our bra business was slightly below the store channel in terms of it comps but still comps itself. The panty business is up in the double-digits in terms of the Direct business for third quarter. I do believe that we have a lot of momentum within the core categories. And one of the strategies for the brand is how do we get even stronger among the categories that are shared categories between that Direct channel, as well as the store channel. And our goal is to have one seamless experience from the customer point of view. And we've done a lot this year and very excited about the progress we're making towards that goal.

Your next question comes from the line of Dana Telsey with Telsey Advisory Group. Dana Lauren Telsey - Telsey Advisory Group LLC: As you think about the new sourcing arrangement, is there a long-term benefit to gross margin, Victoria's Secret versus BBW? And also, is PINK at all different from Victoria's Secret that way?

We'll go to Sharen first.

I don't think that the new sourcing agreement will affect the margins. I mean obviously, every day we continue to strive to get better and better. But there's nothing really changing in the sourcing agreements with Victoria's Secret and that's why I look at it as all one and the same. I think the benefit that Victoria's Secret, Mast Global people will have is that they won't be distracted, they'll have more maniacal focus on Victoria's Secret.

And Nick?

It will be a consistent story for us, as Sharen just articulated. Stuart B. Burgdoerfer: And, Dana, financially the affects are all in the other segments. So...

Your next question comes from the line of Christian Buss with Credit Suisse. Christian Buss - Crédit Suisse AG, Research Division: Can I ask a longer-term question? Can you talk a little bit about the levers you have the drive, productivity ahead of prior peaks at both Victoria's Secret and Bath & Body Works? And then if you can articulate some of the longer-term targets there, that would be very helpful.

We'll go to Sharen first.

We think about the levers that really kind of drive productivity -- if I take it from a store channel perspective, one of the things that we really believe, there's probably 5 levers. One is about being the brand that relates a well-told story and having the right amount of compelling assortment. Number two would be the compelling assortments focus in our core categories, being able to test, read, react into the right fashion at the right time. One of the good pieces that we have is really our selling and service models that we are really trying to improve on, everyday, within the stores. So when we think about how to train our people, how do we really think about doing things differently than we have in the past, which we're also seeing great results in terms of driving that productivity. We also believe that as we continue to move to have a seamless interaction between store channels and Direct channel, such as buying online, returning in stores, which we have rolled that out the for this fall season, is also another opportunity for us to continue to improve the productivity. Nothing works on us well towards our seasoned agility, constant flow, constant newness, that I believe we're just at the beginning of the beginning on this journey as we go-forward. Nick?

So for us, it will be a continued focus on our big 3 businesses, we have fantastic franchises in each of those categories and, therefore, there's an opportunity for us to further profit from those, when we think about different adjacencies that we might be able to manage. Secondarily behind that, when we look at what is the optimum assortment from the stores, there's still opportunity to continue to refine and define what that would look like. As well as standing from the business and just thinking about whatever categories might we be able to play in, just given the overall strength of the brand.

Your next question comes from the line of Howard Tubin with RBC Capital Markets. Howard Tubin - RBC Capital Markets, LLC, Research Division: Okay. Maybe just a question for Sharen. When you talk about being agile and nimble in the fourth quarter, maybe you can give us some more detail on kind of what ability you have to chase strong performers at this point this season.

Sure. I'll just give you one quick real life example. So we have, let's say beauty which is a category that really build wildly as we go to the holiday season. We actually, in our beauty part, with componentry there that we actually can assemble and put together our gift set and actually get them out within 2 weeks. This is something we've never been able to do before, so we're able to read is what is actually working. And now we can actually push goods after the Black Friday, of which then we can get the stores who are selling them, that have gone through them very quickly, back into business as we go into holiday. So that's a quick example in terms of agility. The other piece that I'd like to add on the speed and agility work is really also about a mindset. It's about how we just think about it differently and how do we keep open to buy, to react, and to make quicker decisions. So it's also been a cultural change, as we've gone down the path, to really think about be more agile and to think about things differently.

Your next question comes from the line of Richard Jaffe with Stifel, Nicolaus. Richard Ellis Jaffe - Stifel, Nicolaus & Co., Inc., Research Division: I guess a question regarding the beauty business and the ability to shift that business through to the Direct channel. Obviously small average price points, small product. Wondering how effective that as compared to Victoria's Secret as a Direct business? Or is it really more of a relationship builder and we shouldn't look for that as a high-volume direct channel? Leslie H. Wexner: We'll go to Sharen.

The beauty business, in both Bath & Body Works Direct as well as Victoria's Secret Direct which I had a privilege of launching, is a very strong business and a highly profitable business. And when you think about really how do you not -- you're not selling only single items but then how do you really get your average order size, really opt which makes it more profitable. Yes, as you think about the prices, it does cost more but because of the efficiency of prepacking and the effectiveness of that, there really is a nice business model. And that we've enjoyed very strong growth, especially in the Bath & Body Works Direct and to beauty. I would say that Victoria's Secret still has a bigger opportunity that we've probably been more focus on bras and panties and sleep, and so the opportunity to continue to grow the Victoria's Secret beauty business is very, very big.

It's Nick. And I think, when we think about the different channels that you shop, the opportunity to engage with on multiple channels, it's a terrific way of building the brand, it's a great way of telling the brand story, it's a way great way for us to emotionally connect with her in more than just bricks and mortar. So it's a good, consistent opportunity for us.

Your last question comes from the line of John Morris with BMO Capital Markets. John D. Morris - BMO Capital Markets U.S.: Question, one for Sharen. Talk a little bit about -- just jump ahead, Valentine's Day is such an important holiday for you guys. Give us a sneak peek, what your thoughts are, strategy there, what might be a little different this year. To help that drive that business I know that you always think there's more and more opportunity there. So I'd love to kind of hear a little bit about your thoughts with that regard. And at Bath & Body Works, Nick or Andrew, some of the costs that have been creeping a little bit higher, we know about the freight and things like but what else is in there that is pushing the costs higher, perhaps petroleum, perhaps the packaged products. A little bit of understanding there. And how far out into next year would be continue to see those costs come into play?

We'll go to Sharen first about Valentine's Day.

Right now, I'm really maniacally focused on Direct party and delivering holiday. Absolutely Valentines, and that's a very important part of Victoria's Secret. We will have a lot of surprise-and-delight, we have one of the best bra launches, I think, ever. So I'm excited about that. But right now, I'd really want to continue to be focus on delivering this holiday timeframe.

And Nick, the question was about cost.

Primarily for us, outside of cost, our real focus is making sure that we're focused on full price selling because that's where, obviously, we're going to get the benefit. Our cost traditionally has been really around rising prices and fuel, and we really see a similar impact looking forward for the next quarter or so. But it's really about us continue to max the price on full price selling.

And that concludes our call this morning, and we want to thank you all again for your interest in Limited Brands.

And Happy Thanksgiving.

This concludes today's conference call. You may now disconnect.