Amy Preston - Vice-President of Investor Relations Martyn Redgrave - Executive Vice President and Chief Administrative officer Stuart Burgdoerfer - Executive Vice President and Chief Financial Officer Sharen Turney - Chief Executive Officer, Victoria’s Secret Dian Neil - Chief Executive Officer, Bath & Body Works Tom Katzenmeyer - Senior Vice President Investor Relations

Paul Lejuez - Credit Suisse Dana Cohen - Banc of America Securities Tom Filandro - SIG Barbara Wyckoff - Buckingham Research Todd Slater - Lazard Capital John Morris - Wachovia Steve Kernkraut - Berman Capital Kimberly Greenberger - Citigroup Brian Tunick - J.P. Morgan Jeff Stein - Soleil Securities Lorraine Maikis - Merrill Lynch Marni Shapiro - Retail Tracker Dana Telsey - Telsey Advisory Group Mark Montagna - C.L. King

Welcome everyone to the Limited Brands second quarter 2008 earnings conference call. (Operator Instructions) I would now like to turn the conference over to Amy Preston, Vice-President of Investor Relations.

Welcome to the Limited Brand second quarter earnings conference call for the period ending Saturday August 2, 2008. 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 filing. Our second quarter earnings release and related financial information are available on our website limitedbrands.com. This call is being taped and can be replayed by dialing 1866-NEWS-LPD. You can also listen to an audio reply from our website. Martyn Redgrave, the EVP and CAO; Stuart Burgdoerfer for EVP and CFO; Sharen Turney CEO of Victoria Secretes; Dian Neil, CEO of Bath & Body Works and Tom Katzenmeyer are all joining us today. After our prepared remarks we will be available to take your questions for as long as time permits. So that we can speak with as many callers as possible it is important that you limit yourself to one question. Thanks and now I’ll turn the call over to Martyn Redgrave.

Before I start my prepared remarks today I would like to take a moment to recognize a major transition that’s about to occur here at Limited Brands. As many of you know Tom Katzenmeyer has recently accepted a new position as the Senior Vice President of University Communications at the Ohio State University. After 18 years with Limited Brands and with the Limited Brands family, Tom is moving to what in many ways is just another part of our family and he will be working directly for the President Gordon Gee. Now from our point of view this is an incredible opportunity for Tom, the University and frankly the whole state of Ohio. We couldn’t be more pleased for him and thrilled that he has taken this new role and while we will miss him, having him here with us; in fact Tom was telling me this morning, his 72nd earnings call in his career, so I’m not sure he’s going to miss the earnings calls, but we thought in honor of Tom’s new role that we are going to have Tom answer all of your questions today. No, Tom is saying no. Anyhow congratulations Tom, we wish you our best. Now back to our results. As we anticipated, the retail environment continued to be very challenging in the second quarter. As I’ve said for the past year we are facing very strong headwinds that we are continuing to manage through. At this stage we are not expecting any material change in the macro or micro economic indicators for the balance of this year and we are planning our business accordingly. Nevertheless, we are very pleased with our second quarter performance. As Stuart will explain in more detail in a minute, we increased earnings per share by 35% over the prior year and exceeded our initial expectations. We continue to manage the business considerably with respect to inventory and expenses which has led to improved second quarter profitability despite our negative comps. At the same time we are aggressively focused on bringing compelling merchandize assortments, marketing and store experiences to our customers to maximize our upside and we are continuing to be opportunistic wherever we see openings to move forward in this difficult environment. Now as we did on the first quarter call, today we will take more time with Sharen and Diane to discuss Victoria's Secret and Bath & Body Works, but it’s worth noting that we continue to be very much on track with our technology implementations and our vast industry sourcing functions and with our real estate initiatives. We are also on track with our progress in the new Victoria's Secret direct distribution center. In the second quarter we successfully implemented improvements in our material handling and systems capabilities. We are confident that we are on the path to be able to meet all of our holiday shipping levels and requirements; however, as I mentioned on the first quarter call we are still not at our targeted accuracy or productivity levels in this new centre and we will be continuing to work on improving as we move through the fall season. We also continue to put a lot of effort into pursuing the international opportunities; evaluating markets, partners and our approach and of course laying the ground work in the supply chain, logistics and other areas of our business to prepare to deliver our brands to the rest of the world. Our first area of focus is Canada and we are very much on track to open six new BBW stores in Canada this fall with another four opening in early spring 2009. Now before I turn it over to Stuart, I’d like to make some comments on La Senza’s second quarter performance. Our second quarter results of La Senza were consistent with our expectations. Second quarter sales were $134.5 million and comps were up 4%. As incremental growth from our Victoria Secrete beauty product in La Senza Canada stores offset declines in core lingerie and La Senza Girl. Operating income dollars and rate were both up significantly to last year. The rate increase was primarily driven by a significant increase in the gross margin rate as a result of fewer promotions and aggressive management of inventory. So with that I will turn it over to Stuart, thank you.

Turning to our second quarter performance we reported earnings at $0.30 per share versus $0.67 per share last year. This year’s results include a pretax gain of $13.3 million or $0.2 per share related to a $71 million cash distribution on Express. Last year’s results included a number of significant items which were described in detail in our press release totaling $0.47 per share. Our earnings per share excluding these items in both years were $0.27 this year versus $0.20 last year, an increase of 35%. All results discussed in this call excluded these insignificant items from both periods. Our earnings results exceeded our initial expectations driven by higher than anticipated merchandise margins and aggressive expense management. Second quarter net sales were $2.284 billion versus $2.624 billion last year and comps were down 7% against the positive 1% cost increase excluding apparel last year. The gross margin rate increased 230 basis points to 33.3%. Excluding the impact of the apparel divestiture and related mass sales recognition, the gross margin rate was up roughly 340 basis points. By segment, the gross margin rate was up at Victoria’s Secret and up significantly at Bath & Body works. The improvement in merchandized margin was partially offset by buying and occupancy de-leverage at both segments. The SG&A rate improved by 40 basis points. Including the impact of the apparel divestiture and the related mass sales recognition, the SG&A rate de-leveraged by 100 basis points on a negative 7% comp. SG&A dollars excluding apparel from last year was roughly flat year-over-year. Total operating income increased $42.8 million to $185.2 million. Excluding the total operating income of $6.6 million last year operating income increased by $49.4 million. By segment the Victoria’s Secret segment increased by $20 million to $182.4 million; Bath & Body works increased by $26.6 million to $40.6 million, the other segment expense decreased by $2.8 million to a loss of $37.8 million. Retail inventories ended the quarter down at 18% per square foot at cost. We completed our $500 million repurchase program in the quarter with the repurchase of $1.5 million of shares for $27.4 million. Now turning to our earnings outlook for the third quarter; we expect third quarter earnings per share to be between $0.0 and $0.4 versus last year’s loss of a penny per share which excludes the gain from the sales of corporate aircrafts of $0.04 per share in 2007. As you know, the third quarter is typically challenging for us. It is our lowest quarter in sales volume and it lacks a significant holiday resembling annual sales. In addition we are investing in the third quarter in preparation for the holiday time period and in the fiscal to leverage these investments on the lowest sales volumes. We estimate that 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. We estimate that the third quarter gross margin rate will be up. There are a couple of important things to call out that will impact our gross margin rates in the third quarter. First it is important to note that throughout 2007 we were aggressively focusing on managing and reducing inventories. We began 2007 with retail inventories up 47% per square foot. That level declined progressively throughout the year and we ended the year down 25% per square foot. As a result we don’t expect to see the same level of merchandize margin rate improvement this fall that we achieved in this spring as we are now anniversaring the benefits of the tighter inventory management that we began in 2007. Second, we are forecasting a decline in mass sales in the third quarter of over 100 million associated with the decline in business where expressed and other third party customers. The decline in the lower margin mass business will have had a positive impact on our overall gross margin rate. In addition, buying and occupancy costs which are increasing as a result of our real estate strategy will de-lever on the negative low single digit comps. We estimate that SG&A dollars and rates will be roughly flat in the third quarter. We expect that our operating dollars will be up in the third quarter driven by an increase in operating income at Victoria’s Secrete Direct and lower corporate overhead expense partially offset by operating income declines at Victoria’s Secrete stores, Bath & Body Works and mass. Interest expense is expected to be roughly flat to last year and interests income approximately $5 million driven by lower cash balance. Inventory level in the third quarter will continue to be down to last year although the later decline will continue to moderate over the last year’s decrease. We expect to end the year with retail inventories per square foot roughly flat to last year’s levels. For the full year 2008 we are projecting earnings per share at $1.45 to $1.60 excluding the $0.20 of significant items in the first half or earnings growth of 20% to 32% versus last year’s $1.21 result. We expect total comps to be down in the low single digit range consistent with our guidance on our last earnings call. This implies an evolved two year conference of negative high single digits versus our spring results of down five excluding apparel for 2007. For the full year we expect an improved gross margin rate driven by improved merchandised margins at both brand segments and an improvement in the SG&A rate. Although there is no impact from the apparel divestiture to our fall results that drives the negative impact to the full year gross margin rate and a favorable impact on the SG&A rate. We are now projecting 2008 capital expenditures to be between $500 million and $525 million versus our previous guidance of $515 to $540 million. In 2008, total capital expenditures will be down more than $225 million from the 2007 actual. Our product plans have not changed significantly since last quarter’s calls and we are still projecting 7% square footage growth at Victoria’s Secret, 4% at BBW and 14% in Canada including La Senza and BBW for a total company growth of over 6%. Sales and the remodels and expanded Victoria’s Secrete stores continue to run about 20 points above the balance of the company average. The majority of our CapEx budget, roughly 75% is driven by real estate activity. About 15% of our CapEx budge relates to investment and technology initiatives. The remainder of our CapEx budget relates to home office and distribution center investments. Our pre cash flow and cash position along with the additional amounts available under revolving credit facilities result in very strong liquidity which is more than sufficient to fund our working capital, capital expenditures, dividends, share repurchases, and any other foreseeable needs. Thanks and now I'll turn the discussion over to Sharen.

I’m pleased with the progress that we’ve made at Victoria’s Secret in the second quarter. We are reconnecting to our heritage and timing even more sophisticated sexy story across all of our channels. We started an evolution that will lead to products that are new and better differentiated. Launches have been successful and we are taking lessons from each one to make the next even better. There are positive signs in the quarter for the total segment. Operating income was up $20 million on a $41 million sales increase. Inventory is down and merchandised margin is up. We achieved overall total sales growth of 3% in the second quarter to $1.4 billion as a result of sales growth for new and expanded stores and 7% growth in the direct channel partially offset by negative 7% comps. Total segments operating income increased $20 million or 100 basis points to $182 million. Let’s talk about our channel starting with the store. In Q2 store comps were down 8% against the positive 4% cost last year slightly below our expectation. Sales were roughly flat to last year at $913.4 million. The gross margin rate was up to last year as a significant increase in the merchandise margin rate was offset, while buying and occupancy expense de-leveraged; SG&A expenses also de-leveraged on the 8% negative comp. The merchandised margin increased as a result of fewer promotion and better sale through on fashion. We also had improved margins in Pink. Operating income was roughly flat to last year in dollars and as a percent of sales. There are a couple of specific points of interests I’d like to call out from the quarter at the store. The re-launch of BioFit in May beat expectations. Based on the response of the initial launch we were able to react and chase that opportunity. We were pleased with the results of the 350 stores of Swim test and are evaluating how to make this a bigger opportunity for next year. Beauty missed our expectations for the quarter due to a lack of newness and anniversary may clearance of Garden last year. The Semi-Annual Sale was a success as margin dollars were up significantly driven by fewer redline units and increased sales of full-priced product. Coming out of the Semi-Annual Sales, we featured our July 8, floor set which included some elements we’ve been testing to show a softer, more feminine side of the brand. There will be more to come over the next month including fabric mannequin forms, better in-store navigation and other softened elements. Finally we launched Pink’s back-to school assortment, which included the co-brand and collegiate lines we have been talking about. We are pleased with the results of the collegiate lines and excited about the opportunity for further growth. Now let’s move to the direct channel. Sales were $423 million up 7% to last year. Sales growth was driven by strengthened spring merchandize, such as swimwear and dresses as well as bras and shoes. Operating income dollars were up and the operating income rate increased significantly. In fact following the challenges of last fall the BSD achieved its highest operating income results ever this spring. The operating income rate increase was driven by significant leverage in SG&A and marketing, probably offset by a decrease in the gross margin rate. Direct continues to aggressively manage the fundamentals. In addition to it, Think Pink lower inventories levels ended the quarter down to last year. The decline in the gross margin rate resulted from a lower merchandised margin rate as well as the increased buying and occupancy expenses, particularly in distribution centre and internet technology cost, the decline in the merchandise margin to be attributed to commercial activity. Direct is in a strong position heading into fall. The client file is healthy and has continued to grow and inventory is at an appropriate level. I believe our strategic administrative are succeeding in Direct. The Swim success in stores was in part attributable to what we learned from offering it in Direct, and the regional store distribution of the Pink collegiate collection is being complemented by having the entire line available online. Our store associates can send our customer to the web and for nearby store features are local schools, but not her favorite national university. That’s Q2 and before I wrap up, I wanted to share a couple of things that we are excited about for the upcoming quarter. We will feature supermodel obsession starting in a week, this is inline that highlight some of our most beautiful and most giftable laungery guest. You will also see it featured national advertising campaign that represents our new elevated marketing approach. We will continue to invest in in-store experience. We’re re-grounding in the fundamentals in our training. I also thank you will see how our innovation pipeline is getting stronger. We will have the story that’s more about a fashion authority and beautiful coloration. The products in fall will be fresh and there will be lots of newness. Plenty of reasons for her to come back to shop with us, and we’ll support that newness and continue our string of successful launches with further investment in marketing and our launch strategy. Lastly we are very excited about our new sleepwear assortment, its beautiful, luxuries and elegant and early fall selling has been good. So in closing I’d say we have some things to go cautiously optimistic about. Despite comps being down we maintained healthy profitability. I think that it’s an indication of the strong core in tough environment. As Stuart mentioned that third quarter is typically challenging, but I feel good about the progress we had made and about our plans for the fall and holiday season. Thank you and now I will turn it over to Diane.

Bath & Body Works second quarter comps were down 8% versus a 4% decrease last year primarily driven by continued softness in store traffic. Total sales in the quarter were down 2% or $9 million versus last year. The 6% spread between comps and total sales represent sales from our new store. Despite the Q2 sales decrease to last year, gross margin increased significantly versus last year driven by the 2007 impact on inventory-related charges associated with the write-off of excess component inventory and shrink. As a results both merchandize margins, gross margin dollars and rate increased significantly the last year. Consistent with prior quarters, we continue to experience de-leveraging of fixed, buying and occupancy expenses associated with the negative comp. Also consistent with Q1, SG&A expenses were flat to last year due to aggressive expense management, but de-leveraged due to the negative comp sale trends. For the quarter operating income versus last year increased $27 million to $41 million driven by the 2007 impact of inventory related charges discussed earlier. During the quarter performance of our e-commerce business met expectations. We continue to view the direct channel as both a revenue generator and marketing vehicle for our brand in collection of sub-brands. Looking ahead, we have a conserved outlook on the third quarter. We will continue take proactive measures to manage discretionary spending in inventory to litigate any top-line softness. Throughout last fall and the holiday season, we believe that we lacked newness in the overall assortment and than we also missed in our gifting assortment. These factors dampen the excitement throughout holiday, which required additional markdowns earlier to clear seasonal merchandize and impacted the overall performance of our semiannual sales. Leveraging in learning’s; we’ve introduced exciting new products every three weeks as we refresh our stores starting September 3 with our Black Amethyst fragranced body care launch. Although this is a new fragrance, we will surround the launch with new ancillary products, new accessories and more sophisticated gift sets afforded into our key price points and packages. Similarly, each fall, floor set will launch with new products, product extensions and coordinated gift sets and accessories. We mentioned in the last call that we would care our plans to reintegrate our signature collection, which has been the primary reason we saw year-over-year declines in the spring season. This fall we will rollout a new and more sophisticated package design and formula improvements for our signature collection. The rollout will expand to approximately 400 stores in the Eastern half of United States in mid November and the remainder of the fleets at the end of the fall season. We will also have new creative and exciting marketing vehicles that bring this rollout to life to better in-store navigation, which will increase product knowledge and clarity. Operationally, we continue to test and analyze results to segment or fleet, by customer, market and specific product opportunities. As you know last fall, we ran a skew reduction test and have implemented those learning’s into our fall 2008 assortment architecture. We have been testing the spring and we will continue through falls different segment of assortments by market to expand or contract specific products in our brands to maximize our overall square foot productivity. We are encouraged by early results and will continue prove upon these efforts throughout the balance of the year and into spring of 2009, and in addition the new technology infrastructure that we implemented last year will greatly aid in our efforts to achieve the segmentation initiative. We are currently in our annual hand soap event, which focuses on our antibacterial and aromatherapy hands soap. New but as same as our gel hand sanitizers, the extension of two signature collection fragrances into our antibacterial collection, Irresistible Apple and Velvet Tuberose and a preview of our Perfect Autumn seasonal home fragrance collection. In early September we move to our fall fragrance brand where we launch our Black Amethyst fragrance. In late September we move to our home fragrance brand focused on the Perfect Autumn home fragrance collection. In mid October we began our countdown towards holiday. Looking forward to holiday and the balance of fall seasons, we believe that continued focus on our key priority, building and learning from our last falls and the rollout of the new signature collection will allow us to build momentum throughout the balance of the year and to position us to deliver a successful holiday and overall fall season. With that I will turn the discussion back over to Amie.

That concludes our prepared comments this morning. At this time we will be happy to take any questions you might have.

(Operator Instructions) Your first question comes from Paul Lejuez - Credit Suisse. Paul Lejuez - Credit Suisse: Stuart now that the third quarter is more apples-to-apples, just looking at the expense line I think you said it was flat on an apples-to-apples basis in the second quarter quarter; what should we expect for the whole second half and I’m even thinking a little bit further out; what is a normal expense run rate in this business as we look out to 2009, can you run the business on flat expenses?

Well 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. With that said, 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 pretty consistently on a go forward basis we do want expenses to grow slower than sales and we are very focused on that. The wild card at this point is what assumptions we make about the comp rate, so that’s kind of where we are.

Our next question will come from the line of Dana Cohen with Bank of America Securities. Dana Cohen - Banc of America Securities: I just wanted to clarify; you’re saying that the improved profitability at Victoria’s Secrete Complex this quarter was entirely from direct, so as you look at the back half I want to confirm that, but in the back half of the year given the $80 million or so that was the expense related to direct can you help us understand if we just take Victoria Secrete in the back half of the year should we get all of that back offset by other things? Just help us to understand because there are so many moving pieces.

Dana there are three or four things that I would just call out in terms of the dynamics. It relates to Victoria’s Secret Direct, we’ve talked about $70 million to $80 million negative impact a year ago and that skew is more towards the fourth quarter than the third quarter, so I’d start with that and in addition there are ongoing higher cost levels running this new distribution center than there were in the old distribution center, so point one would be more of a skew in Q4 versus Q3 of the SG&A. The second thing as we called out in our prepared comments is in the low volume third quarter, we really have de-leverage both in buying occupancy and in some SG&A marketing related investments that we’re making to really setup for a really strong fourth quarter and then the last thing big variable is what we called out with respect to the decline in mass third party sales related to the step down in the express business that’s by contract in connection with that transition services agreement, so those are the details.

Our next question will come from the line of Tom Filandro with SIG. Tom Filandro - SIG: Dian sort of touched on this, but I would like to ask it both of Dian and Sharen; as you plan the holiday season this year we’ve got a shorter selling season and no doubt shoppers will be focused on price more than they have in prior years, can both Dian and Sharon please sort of give us a view on how you combat those two issues from both a marketing and merchandizing advantage points please?

Well as I mentioned during the remarks and actually on the last call we have a much more newness this falls and holiday than we had last year. 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 which I can’t share with you, but we have a very exciting black Friday offering and then we have a couple of different options for the month of December by how we’re looking at the business and we can drive either promotional or non-promotional based on what happens in the early part of the season. So we actually feel we are in a really good position to react to macro or micro economic trends.

Tom basically for Victoria’s Secret, one of the things that you can look at are inventory levels today. Being on the conservative side we have a very strategic testing strategy in place both either 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’ve 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’ve been approached between thanksgiving and the holiday timeframe. So I think that we feel pretty excited about these thing that we are doing. We have a very cohesive holiday statement this year and I think that the gift able assortment as well as the reinvention of our sleepwear assortments will board well for us for holiday.

Our next question will come from the line of Barbara Wyckoff with Buckingham Research. Barbara Wyckoff - Buckingham Research: I would like to ditto what Tom said to Tom Katzenmeyer and to the company and congratulations. Next question is for Martyn and Stuart; I mean how were you looking at potential acquisitions of either the lingerie or personal care business which will complement what you do in Victoria’s Secret and Bath & Body Works or are you exclusively focusing on rebuilding the margins in Victoria’s Secrete and Bath & Body Works sort of with that overlay of international potential.

The way I would answer that question is to repeat our number one priority; 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 but that’s not what I call a major priority inside the US. 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 wouldn’t preclude acquisitions in the rest of the world space.

Our next question will come from the Todd Slater with Lazard Capital. Todd Slater – Lazard Capital: Question about the mid point of your guidance for the year assumed sort of about $1.13 in earnings in the fourth quarter which is about a total company EBIT rate of 17% which is below last years 17.8% yet your cycling big VS markdowns due to broadened inventory, the distribution nightmare or you got a lower mass mix which is positive for margins, so I’m wondering if you think that Bath & Body could actually have on an apple to apples basis down margins on a segment level in the fourth quarter and then Martyn I saw you registered the Victoria’s Secret trademarks in Russia and there are rumors that you signed the deal, a joint venture partner there; I’m just wondering if we should expect something in Russia or the Middle East as your first efforts outside of Canada internationally and how far along you are in UK, Continental Europe, Asia and South America? Thanks.

For the four quarters really what’s in the middle of our guidance range, I’d see slight improvements at the consolidated levels for operating margins and excluding VSDs I would say yes and we begin to be roughly flat for the fourth quarter.

And Todd let me just comment a little bit more broadly on the international because I know it’s on a lot of people’s minds. As I said in the prepared remarks, our test ground for international expansion of our brands is Canada, so we’re putting a lot of time and effort in learning about how to deliver our brands outside the United States in the form of the BBW store launch that will take place in September and October of this year. We are also building the management team as we have talked about before and just in the last couple of weeks a new leader, Ralph Johnson who has joined us from Triumph International at Hong Kong has started with us so he has the intimate apparel background and combined with Mark Border who’s the head of our international business, US and personal care and beauty background for Goods International, so a few other key team members in place to prepare us to do this work outside the United States as well as with the leverage of our international experience from our La Senza International team. Building and testing capabilities in terms of how we do all of the work that it takes to deliver a brand well outside the United States and yes we are narrowing our list of potential franchise and joint venture partners. I can’t comment specifically on Russia; we’re registering our marks all over the world to make sure that we are prepared to have our brands and be present in different markets of the world and I’m not really in a position to make any other announcements at this stage.

Our next question will come from the line of John Morris with Wachovia. John Morris - Wachovia: Thanks and my congratulations to and best wishes to Tom. Diane question for you about somebody works I believe is the launch line up this year versus last year and your effort to introduce more newness, how will this launch comparisons look in terms of numbers in the back half on a year-over-year basis and I guess how does that square with your efforts towards the skew reduction program. In other words you are going to get more launches, but fewer skews and the signature collection role out slated for mid November, did that get pushed back in terms of timing. I had in my notes, so I thought maybe it was going to be October, so is the timing the same and then if you can comment on that pricing for the rollout for signature; thanks.

Okay, we’ll start with the number of launches. Actually the amount of newness that we have in our seasonal products as I mentioned in our last call is about double of last year. Our core assortment skews have reduced over year and I believe our seasonal skew has actually increased and that was probably slightly up in the Q4 as far as new products. Our signature collection; just probably what you have in your notes, we’re testing earlier in the Columbus market at the end of September and our pricing overall on signature, while we’re making the changes to different products and formula upgrades we actually are increasing the pricing. John Morris - Wachovia: Increasing it by how much?

Anywhere from 5% to 15%, depending on the item.

Our next question will come from the line of Steve Kernkraut with Berman Capital. Steve Kernkraut – Berman Capital: When you guys just spoke to the apparel businesses, the thesis was that with Victoria’s Secret and Bath & Body Works you’ll be less economically sensitive, less fashion sensitive and therefore have consistent results and so far that hasn’t been the case, so I just wanted to kind of revisit that thesis and to see what your thoughts are here and whether or not you still think with these two brands that you’ll be able to at the long term deliver consistent results in spite of economic or fashion cycles.

I think the core to the strategy that we’ve been driving against over the last two years has been to focus on BBW and Victoria Secrete as two brands that we think can be world winning brands and are in fact US winning brands today. Both the characteristic of the products, the assortments, the basics that are part of the lines that give us I think more resiliency as well as the kind of a fashion that is part of the core brands, the emotional kind of functional and technical continent of these brands we think are the right way to focus, obviously diminishing our focus on apparel is part of that strategically and driving now these brands into the rest of the world is we think a huge upside growth opportunity. Obviously the headwinds that we faced that I’ve discussed over the last year are persisting and we, I think are demonstrating the kind of disciplined management that you would expect of us in the phase of those headwinds and positioning ourselves I think for the recovery that will come, all of these things do turn at some point and we think we’re going to be in a very, very strong position both from a liquidity, balance sheet, brand and positioning of the assortment point of view to get back to the kind of winning performance that we’ve had consistently over the past years both in terms of sales growth and operating income margins. Steve Kernkraut – Berman Capital: Okay, I mean you guys have been excellent defensive players as you’ve proven with this reduce inventory, but you think this strategy will work when you go on offense when the economy improves and you could win with those two brands?

Yes absolutely. I think there’s a lot of growth left in these brands and as evidence by our real estate initiatives in both brands in the way that the new stores at BBW as well as the expanded stores at VS are performing.

Our next question will come from the line of Kimberly Greenberger with City Group. Kimberly Greenberger - Citigroup: Thank you and I will be bid my found farewell to Tom as well. I have a question on the comp guidance here for the third quarter; I am assuming that the August guidance for a decline of mid to high single digits stands and I guess that implies that September and October would be more like flat to only down slightly and is that simply a function of easier comparisons or is there something they are specifically doing in the merchandizing effort at BS and BBW that these equals drive that improvement comp?

So Kimberly we are humble with what we put out for August to answer the first part of your question and as you point out the other comparisons are easier in September and October which really does square up whether you kind of you (Inaudible) so we are comfortable with the math worked and we feel comfortable with the August guidance we put out previously.

At Victoria’s Secret we have a little bit of shift in our launch, which actually we have a very strong launch in September compared to last years ore of a weaker launch, so I think some of that you will see affected as well as, as we started in terms of the repositioning of the brand you will see more of that happening later in August and really starting to roll in September and October and for us again it’s about the amount of newness. We have our Black Amethyst that launches on September 3 and our early preview tells us that should be a good fragrance, as well as home fragrance launches at the end of September and home fragrance is actually doing extremely well right now and in our initial reach and our early autumn fragrances are doing quite well and that we have in the month of October building on another one of our co-brands the new launch with accessory around it that has been doing quite well, so we feel very good about Q3 overall.

Our next question will come from the line of Brian Tunick with J.P. Morgan. Brian Tunick - J.P. Morgan: I guess for Sharen, maybe talk a little bit about the VS Beauty business; may be sort of what kind of drag that was to the comps and sort of who’s working on it now to improve it and then may be Martyn and Stuart could talk about the plans for the cash flow now that the current by back is completed and is there a debt to cap ratio you guys are focused on.

In the beauty business we just didn’t have many things in the pipe line as we came into this spring season and we were down in the high double digit decreases in beauty as well as last year we went up against the restage of our Secrete Garden program. Sashi Batra who has joined us earlier this year, we have much more robust beauty, our pipeline as we go into the fall season. We have some new fragrance launches, color, fast products, we actually are doing some home fragrance as well, so we feel very optimistic about it and the whole objective is to really raise the level of sophistication within our beauty to be more aligned with the total brand.

Brian on that we do generate good free cash flow in business and we have sound expectations for 2008 for free cash flow; as you know we have a record of returning excess cash to shareholders over time and it’s been a very significant activity in that area over the years and then the board periodically looks at capital structure alternatives and that process is ongoing. We do not target a specific debt-to-cap ratio. We obviously understand the ratios and look at them, but we are not overly focused on a particular number as the guiding principle and that’s kind of where we are. We also obviously are aware of the environment that we’re operating in as most are and we combine all those factors and have periodic discussion amongst management and with the Board.

Our next question will come from the line of Jeff Stein with Soleil Securities. Jeff Stein – Soleil Securities: The rang of 145 to 160 that you’re providing, that is kind of a big range with most of it, it looks like coming in the fourth quarter, so I’m just kind of curious is it skewed more heavily to one of your two operating units or is this just kind of a very broad range due to a very uncertain macro environment? In other words what are you counting on to get to the high end of the range versus the lower end?

It’s a terrific point; why we did narrow the range a bit as we updated the year guidance that will be the first point I’d make. The second point I’d make is as you know we make the majority of our money in the fourth quarter and so that drives a fair amount of the range. In terms of what the key drivers are, that we will be at the low end of the range to the high end of that range and the most important driver is sales and that will be the function of the environment of promotional activity by our competitors and others, our reactions to that how and compelling our assortments are with the consumers. Those are the key drivers which will affect sales and can also affect merchandise margin rates, obviously based on the level of promotions that we ultimately execute in the business. Then, the leverage of the expenses falls in there and the management of expenses within the seasons in the time period will obviously be actively managed as well but the key driver of the range is sales.

Our next question will come from the line of Lorraine Maikis with Merrill Lynch. Lorraine Maikis - Merrill Lynch: When you look at the Bath & Body sales decline in recent quarters, do you think the customer is trading down here and how did you take that into consideration when making the decision to raise prices and then if Sharen could just comment on the bra launch schedule for the rest of the year and how you will expect that to drive comp? Thank you.

We’ve been doing a lot of testing and pricing this spring season. Our overall signature brand has been if you buy three you get one free, so we’ve been trying a lot of different things to lower the overall buy and to generate more business and actually we have been seeing some success in some of the areas as well as they don’t have to spend $3 to get our signature collections that in itself has been working. :

Basically we have four bra launches this year compared to really the four bra launches last year and we kind of classified bra launches; A launches and B launches and obviously this year as we look at the bra launches that we have four ‘A’ launches versus last year’s two ‘A’ and two ‘B’. So, as you know we just came in at the July August BioFit re-launch which met our expectation. We added sizes and we added colors and new fashion colors looked very well very and so we are pleased with that. In September we come out with our new Ipacks; new and improved against last year’s the reversible slip bra which was not successful. We come back in October with a like offering and then we have in November a brand new uplift bra which we're calling the New Miracle.

Our next question will come from the line of Marni Shapiro with The Retail Tracker. Marni Shapiro - Retail Tracker: Tom congratulation even if you are going to Ohio State. I wish you the best of luck and I will miss you very much. If you guys can talk a little bit about Victoria’s Secrete and Bath & Body Works in the Beauty business, I am curious what you are thinking about Victoria’s Secrete Beauty and the point of view there as you upgrade and take a more pretty point of view on the lingerie and in-store experience; what happens to the body product which is tended to be a little bit more as aggressive and sexy the way the brand has been? And if you could also talk about the BBW, I noticed the Pink product in BBW, but again as you take the BBW brand more sophisticated with these new launches, what does that say for the inconsistency then of having a brand like Pink in the store?

As you know, one of our foundations in our Beauty business has been our fragrance business which is really what we would consider a prestige fragrance business and this year as we continue to look at the fragrance business and how we are positioning that we think that there is a lot of opportunity for growth, not only in this fall season, but also if you look at into the future. There is so many new things that are happening in skin care that we today are not really in and that we have a lot of things that we are working on both on the skin care and body care positioning. We are not looking at actually getting out of the Garden Collection; it’s just that we are looking at really holding that growth flat and basically layering on the new things that are happening in the Beauty industry today. We are not even in the home fragrance business that we believe has such a big opportunity. If you think about Victoria’s Secret, the bar and the loungewear that we are doing with the new sleepwear, it’s a natural adjacency for us to be looking at. There’s also new things and new technologies that can tie back to what’s happening, whether its lace and silk and I don’t want to tip my hand too much, but a lot of things that are coming forth for us for the spring season. So, we’re very optimistic about the Beauty business and really we will be putting our toe in the water for this fall season and I think for the spring season the lineup looks pretty strong. Marni Shapiro - The Retail Tracker: So, does that suggest you’ll move into also the skin care, anti-wrinkle treatment as well, is that what you’re saying or not that route?

I think that that is a future opportunity for us, but there are some other body products that we will be introducing in this spring season and I think you will see from us a very small focus line of performance skin care.

In Bath & Body Works, we have struggled gaining additional share with a younger consumer, so part of the reason for putting painting Pink into Bath & Body Works is; one, it’s a powerful brand and secondly, to really test our opportunity to drive in the younger consumer to in fact overall shop, which has been very successful. So, I really think it is offset to the sophistication level that we are doing with the rest of the store.

Our next question will come from the line of Dana Telsey with Telsey Advisory Group. Dana Telsey - Telsey Advisory Group: On Victoria’s Secret there have been discussions of a bit of an image shift maybe to more English of feminine type of stature. Where are you on that; how do you see that progressing? And also given the success of Pink has your expectations for the potential of Pink changed along with any of the margin structure given that it is a lower margin?

I think we’re making progress on the femininity side; I wouldn’t put English within that. Hopefully all of you will get an opportunity to look at our national advertising campaign that actually hit vogue in Elle review as we speak in terms of the new fashion but I think really it is a great indication of where we are going. With the softer elements that are coming in and looking at the manikins that we used to have and actually the safety notes that the softer feminine bust form, we’re really taking the manikins out of the windows. So hopefully, that if you have an opportunity within the next four weeks you’ll start seeing that as we roll those elements out to the store. The other piece that say when we put together the color pallets instead of having them so differentiated now we have the opportunity with the color pallets to play off each other that you can go anywhere in the store and buy a bra and find a matching panty. So, I think that the whole femininity and sophistication level of what we are doing, I am very optimistic about it.

And on the cost side with respect to cost associated with real estate we haven’t observed a major change there in terms of where we have been 6 or 12 months ago through the cost per foot or underlying cost. As it relates to product cost, we are seeing some increase related to transportation and fuel. We’ve accounted for that properly in our views that we shared with you and as it relates to product cost itself in various efforts that the business has made to reduce cost through smart sourcing and good strategic relationships with vendors, those activities have largely offsets cost pressures as it relate to merchandise.

You had also asked the question about the success of Pink. One of the things that we’d implemented was a strategic sourcing initiative around the Pink product and that we all think that it’s tremendous. We continue to work on it. As you know that when we launched Pink we were pretty much basically manufacturing that in our traditional manufacturing base which is really more about functional bra expertise versus some of the fashion and so we had been working through sourcing and quality and I think that you’ll see some improvement and we saw some improvement in that as we came out of the Spring season

Our final question will come from the line of Mark Montagna with C.L. King. Mark Montagna - C.L. King: Just a question regarding Victoria’s Secret; you have I guess five clearance stores and outlet centers and then eight regular stores and outlet centers, I’m wondering that how those eight stores differ from your regular mall stores and is this a strategy to grow Victoria’s Secret in outlet centers throughout the country and if so does that perhaps somehow change the in-store strategy of the regular Victoria’s Secret Stores?

Basically what we did was that we had opened up six clearance center stores to really what I would say just flush out excess inventory. Our regular stores that are in clearance centers are regular price and do very well. We are continuing to watch that and I don’t see us right now within the next year opening up anymore clearance centers to flush inventory. So, that’s all it is and so we’re being very strategic about that, but we happened to do very well with regular price in some of these clearance malls that we have regular price stores and we’ll continue to have regular price within those stores. Mark Montagna - C.L. King: So do you see that base of regular price stores growing in the outlet centers?

Not so much in the strategic real estate I believe that we have today; that is not what we are focusing.

That concludes our call this morning. I would like to thank everyone for your continuing interest in Limited Brands.