Diane Neal - Executive Vice President, Chief Executive Officer of Bath & Body Works and President of Bath & Body Works Stuart Burgdoerfer - Chief Financial Officer and Executive Vice President Martyn Redgrave - Chief Administrative Officer and Executive Vice President Amie Preston - Vice President Investor Relations Sharen Turney - Executive Vice President, Chief Executive Officer of Victoria's Secret Megabrand & Intimate Apparel and President of Victoria's Secret Megabrand & Intimate Apparel

Stacy Pak - Prudential Thomas Filandro - Susquehanna Financial Group, LLLP Michelle Tan - Goldman Sachs Group Inc. Paul Lejuez - Credit Suisse John Morris - BMO Capital Markets U.S. Jeff Black - Lehman Brothers Emily Shanks - Lehman Brothers Todd Slater - Lazard Capital Markets LLC Kimberly Greenberger - Morgan Stanley Neely Tamminga - Piper Jaffray Companies Janet Kloppenburg - JJK Research Lorraine Hutchinson - BofA Merrill Lynch

Good morning. My name is Tiffany, and I will be your conference operator today. At this time, I would like to welcome everyone to the Limited Brands Fourth Quarter Year-End 2010 Earnings Conference Call. [Operator Instructions] I would now like to turn the conference over to Amie Preston. Ms. Preston, you may begin.

Thanks, Tiffany, and good morning, everyone, and welcome to Limited Brands’ Fourth Quarter Earnings Conference Call for the period ending Saturday, January 29, 2011. 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 fourth quarter earnings release is 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. Stuart Burgdoerfer, EVP and CFO; Sharen Turney, CEO, Victoria's Secret; Diane Neal, CEO, Bath & Body Works; and Martyn Redgrave, EVP and CAO are all joining us today. After our prepared comments, we'll be available to take your questions for as long as time permits. So that we can speak to as many callers as possible, please limit yourself to one question. Thanks, and now I'll turn the call over to Stuart.

Thanks, Amie, and good morning, everyone. We're very pleased with our fourth quarter performance. Our adjusted earnings per share increased 25% to $1.26 per share versus $1.01 per share last year. Our reported 2010 result was $1.36 per share versus $1.08 last year. Both this and last year's reported results include significant items as detailed in our press release. This year's reported fourth quarter results include pretax gains from the sale of Express shares and the payment of an Express dividend totaling $52 million or $0.10 per share. 2009's reported results include a tax benefit of $23 million or $0.07 per share, primarily related to the reorganization of certain foreign subsidiaries. All results discussed on this call exclude these significant items in both years. Our fourth quarter earnings per share of $1.26 significantly exceeded our beginning of the quarter expectations of $1.02 to $1.17 per share. This upside was driven by the 10% comp increase versus our initial forecast of up low-single digits. To take you through the fourth quarter results as detailed on Page 1 of the presentation, net sales were $3.456 billion versus $3.063 billion last year, and comps increased 10%. The gross margin rate increased 100 basis points to 41.8%, primarily driven by leverage on buying and occupancy expense. The merchandise margin rate increased slightly despite a negative impact of about 60 basis points related to the increase in Mast sales to Express and Limited Stores, which are recognized at 100% this year versus 75% last year. The change in revenue recognition is a result of the change in accounting for our Express investment to the cost method versus the equity method last year and the sale of our remaining investment in Limited Stores. This accounting change, which occurred in the third quarter of 2010 will continue to have a negative impact on our consolidated merchandise margin rate in the first two quarters of 2011. SG&A dollars increased by $67.8 million or 10%, and the SG&A rate improved by 50 basis points. The major drivers of expense growth are as follows: over half the dollar increase in SG&A was driven by increased store selling costs, including costs related to new stores in Canada; total selling cost leverage as a percent of sales; about 25% of the increase was related to certain unusual expenses in the quarter, including a significant increase in stock compensation expense due to a lower forfeiture rate as a result of lower associate turnover; and separately, the write-offs of an intangible trade name asset. And most of the remainder of the increase was driven by an increase in marketing costs, which held flat as a percent of sales. Turning to operating income on Page 2. Total operating income increased $128 million or 22% and 150 basis points as a percent of sales to $713.5 million or 20.6% of sales. By segment, the Victoria's Secret segment increased by $83.8 million or 230 basis points as a percent of sales to $394.8 million or 19.6% of sales. Bath & Body Works increased by $35.4 million or 130 basis points as a percent of sales to $330 million or 30.5% of sales. And the other segment operating loss declined by $8.7 million to $11.3 million. Total non-operating expenses were roughly flat at $47.5 million, as the loss of income from Express and Limited Stores was offset by a decline in interest expense. Turning to our full year results on Page 3. Excluding the significant items described in our press release, earnings per share increased 67% to $2.06 versus $1.23 last year. Our operating income and earnings per share results were records for the company. Net sales increased 11% to $9.613 billion versus $8.632 billion last year, and comps increased 9%. The gross margin rate increased 270 basis points to 37.8%. About 2/3 of the gross margin rate increase was driven by an increase in the merchandise margin rate, and the remainder was driven by buying and occupancy expense leverage. SG&A dollars increased by $176.9 million or 8%, and the SG&A rate improved by 70 basis points. Page 4 details our full year operating income results. We made significant progress toward our goal of a 15% operating income rate. Total operating income increased by 50% to $1.284 billion, and our operating income rate improved by 340 basis points to 13.4%, driven by significant improvement in all three segments. I know there is ongoing interest in the drivers of results in the other segment, so I'd like to take some time to provide some additional clarity. The other segment consists of our sourcing function, Mast Global, Henri Bendel, corporate overhead and all of our international operations except La Senza, which is included in the Victoria's Secret segment. For the full year, other segment revenue consisted of the following. Mast sales to the third parties were $886 million and increase by roughly $100 million from last year. About $70 million of the increase was driven by the accounting change to recognize 100% of sales to Express and Limited Stores in the last two quarters of the year versus 75% last year. And the remainder was driven by sales growth to third-party customers. Sales from our Bath & Body Works and Victoria's Secret stores in Canada totaled roughly $165 million and increased by about $100 million versus last year, driven by new store openings. Revenue from our international, wholesale and franchise business, including our Victoria's Secret Travel and Tourism location stores and our Bath & Body Works franchise stores was about $75 million and increased by approximately 50% over last year. And finally, our Henri Bendel business recorded sales of about $50 million, about 20% above last year. The other segment operating loss is driven by corporate overhead expense and a loss from our Henri Bendel business, which is partially offset by operating income from Mast and our International business. The improvement in the 2010 other segment operating loss of $22 million was driven by the allocation of technology cost to Victoria's Secret and an increase in profits from our International business, partially offset by a decline in profitability at Mast. Moving down the income statement below operating income. Total nonoperating expenses for the year decreased by $36.6 million to $181 million, primarily driven by a decline in interest expense. Moving to the balance sheet on Page 5. Retail inventories per square foot at cost ended the year down 2% versus last year and down 11% on a two-year basis. Excluding an increase in the first quarter of 2009 related to the pull-forward of inventories associated with the Victoria's Secret systems implementation, inventory per square foot has decreased for 15 consecutive quarters. We ended the year with $2.5 billion in total debt and $1.1 billion in cash. Free cash flow in 2010 was just over $1 billion, a record year. 2010 capital expenditures were $274 million. We repurchased 1.9 million shares of stock in the fourth quarter for $60.5 million. We have $139 million remaining under our $200 million share repurchase program. In 2010, we returned over $1.5 billion to shareholders through share repurchases, special dividends and our ongoing regular dividend. We also just announced a 33% increase in our regular annual dividend to $0.80 per share. Turning to Page 6 of the presentation for our forecast for 2011. We expect earnings per share between $0.26 and $0.31 in the first quarter. This forecast reflects a comp increase of between 2% and 4%, including the updated guidance for February comps of up high-single digits. We expect a spread of about two to three percentage points between total sales growth and comps, driven by sales growth from new stores in Canada and Mast. We are projecting first quarter gross margin and SG&A rates that are roughly flat to last year. We expect to end the first quarter with inventory per square foot roughly flat to last year. For the full year, we are projecting low single-digit positive comps and a spread between comps in total sales of roughly three percentage points, driven by growth in Mast and International. With respect to increases in sourcing costs, we want to communicate five points. First, we make our money on the sell side. We create value for our customers through the emotional content of our brands and merchandise, which enables us to price independent of cost and to earn premium margins. We think this aspect of our business differentiates us from many others in the retail industry. Second, the combination of inventory discipline and our efforts to get faster in the execution of our business has enabled us to improve merchandise margin over the last several years, and we do believe that there is additional opportunity. Third, we have a very significant sourcing capability in the Mast Global organization with a lot of experience literally on the ground in key regions. We have longstanding relationships with our sourcing partners, as well as a geographically-diverse vendor base, and we think that these capabilities and relationships also differentiate us. Fourth, about 40% of our retail sales come from personal care and beauty, shower gels, body lotions, fragrance. These products do not contain cotton, and substantially all of this product is made in the United States. With all that said, we do expect to see some pressure from increased cost weighted principally to the back half of the year. It is not practical to predict how much of that can be offset through more full-priced selling. Therefore, our outlook does call for some decline in our merchandise margin rate in 2011. We believe that this decline will be principally offset by buying and occupancy leverage, so our forecast is for our 2011 gross margin rate to be about flat to last year. We expect the full year SG&A expense rate to leverage on total sales growth. Nonoperating expenses are projected roughly flat to last year at about $47 million per quarter, consisting principally of interest expense. Before any discrete items, our tax rate will be approximately 38%, and weighted average shares will approximate 333 million. Assuming all of these inputs, we expect earnings per share for the full year 2011 to be between $2.15 and $2.35 per share. We are projecting 2011 capital spending of about $400 million. As detailed on Page 7 of the presentation, we plan to open roughly 30 to 35 stores this year, mostly in Canada, and close roughly 45 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 $600 million to $650 million. 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 the additional availability under our revolving credit facility, results 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. Victoria's Secret earned record Q4 and full year profit in fiscal 2010. We are very pleased with this result and are confident that the keys to our success are the priorities we've been discussing all year, so let's talk about those. The first is our focus on our core categories, bras and panties, coupled with a much higher emphasis on getting faster and more agile. Second, is our continued purposeful balance between managing business with optimism and conservative management of inventories and expenses. And third is bringing all our work together in a well-told brand story across channel and telling that story through innovative products, steady newness with the right fashion and outstanding in-store execution. I'll begin my remarks this morning with review of fourth quarter performance at both Victoria's Secret channel, followed by a brief recap of the full year and will then turn to a discussion of how we are thinking about the business as we head into the first quarter of 2011. Our fourth quarter results are detailed on Page 8 of the presentation. In the Victoria's Secret stores channel, fourth quarter comps were up 15% with total sales increasing 16% to $1.39 billion. This result was driven by strength across the assortment as customers continue to respond favorably to our new, fresh and fashion-right [ph] offerings. We remained agile on inventory, chasing into winners and placing strategic bets in a controlled manner. Our Lingerie business demonstrated balanced growth in Q4 with bras, panties and sleepwear all performing well. The quarter began with a relaunch of the Miraculous bra. We didn't focus on gifting for the holiday-selling season. All three of our businesses were much less promotional than both last year and the mall in general. Pink has outstanding performance. We continue to see growth in bras and loungewear. In Beauty, customers continue to love the Bombshell fragrance introduced last quarter, as well as new fourth quarter offerings, including seasonal fragrance programs and expanded gift sets. A key contributor to our top line performance has been our in-store execution. And we, again, achieved record customer conversion for the quarter, something we've done every quarter this year. Q4 merchandise margin rates were up versus last year. As I mentioned, we continue to accomplish these results while being less promotional than last year and with lower inventory levels related to sales. Our fourth quarter gross margin rate increased significantly versus last year, and our operating profit was up nearly 25%. Now let's review performance at Direct. Fourth quarter sales increased 9% to $504 million, driven by strength in bras, Pink, swim and dresses. The gross margin rate increased significantly, driven by an increase in the merchandise margin rate as the strength of the assortment and our conservative inventory position enabled us to drive more business at regular price. Additionally, both SG&A and buying and occupancy expenses leveraged, so operating income dollars increased more than 30%, and the operating income rate was up significantly to last year. Turning to our full year results on Page 9. Victoria's Secret comps increased 14% with total sales increasing 15% to $4 billion. Merchandise gross and operating margins all increased significantly versus last year, and operating income was up nearly 16%. At Victoria's Secret Direct, sales increased 8% to $1.5 billion. Merchandise gross and operating margins also increased significantly versus last year, and operating income was up over 40%. We believe the frequent innovation we delivered throughout 2010 drove results. We remain focused on the core and the fundamental. We state balance in our approach, and we told our brand story through fresh products. Looking ahead to the first quarter, we will continue to do more of what works. We will offer customers newness and innovation and plan the business conservatively. We feel very good about our inventory position and are managing our expenses prudently, investing when we believe we can improve our customer connections and our profitability. With respect to our view of product cost, our priorities in sourcing are getting faster and increasing quality and innovation. As Stuart mentioned, we do expect some pressure from increased costs in 2011 weighted toward the back half of the year. We have a strong emotional connection with our customers, and we will continue to focus on maximizing full price selling. In closing, we are pleased with our performance and our position, but we see opportunities to do better. We will continue to focus on executing with discipline, simplicity and speed. And of course, staying close to our customer and driving profitable growth will continue to be our top priority. Thanks, and now I'll turn the discussion over to Diane.

Thank you, Sharen, and good morning. At Bath & Body Works, we are very pleased with the results of our fourth quarter. We were able to deliver growth in sales and operating income versus last year. We continue to deliver improved results versus our strong performance last year by maintaining focus on our top three categories, which is our Signature Collection product line, the Anti-Bacterial Soap and Sanitizer business and our Home Fragrance assortment. Performance improved on top of strong results last year in our Signature Collection, driven by the performance of our holiday collection and launches of our new fragrance, Secret Wonderland, the new Island Escape collection and the continued success of fragrances launched throughout the past year. The Anti-Bacterial business continued its strong growth trajectory, driven by growth in our Hand Soap and Sanitizer business, as well as performance in holiday fragrances and new seasonal forms. Our home fragrance sales also grew versus strong performance last year and continued to be driven by candles and seasonal fragrances, as well as the introduction of new forms and novelties in our diffuser [ph] category. Transactions were up versus last year, driven by an improvement in our conversion rate. Customers also spent more per transaction versus last year. So with that backdrop, let me take you to the financial results in the quarter as detailed on Page 10 of the presentation. Bath & Body Works fourth quarter comps were up 6%. Total sales for the quarter were $1.1 billion, which was up 7% or $73 million versus last year. For the quarter, our operating income was $330 million, which is up $35 million or 12% from last year and represented a record performance. Operating income as a percentage of sales is 31% in the quarter and up to last year, driven by strong top line sales, improvements in merchandise margin rate and leveraging our expenses in the fourth quarter. Improvements in our merchandise margin rate continue to be driven by cost reduction. Our in-store promotional activity was comparable to last year in the fourth quarter. We also finished the quarter with inventory levels down to last year. This is our 15th consecutive quarter with inventories down year-over-year, while our in-stock positions continue to improve. For fiscal 2010, as presented on Page 11, our operating income was $464 million, which is up $106 million or 29% versus last year and also represented record performance. Operating income as a percentage of sales is 18.4%, which is up 340 basis points to last year. The operating income performance was driven by comps of about 5%, improvements in merchandise margin rate and leveraging our expenses. The Bath & Body Works direct channel delivered strong sales and operating income growth, and we continue to view the direct channel as both a revenue generator and a marketing vehicle for our brand. So with that in mind, in the first quarter, we will continue to introduce newness and innovation in both forms and fragrance. This month, we launched our newest Signature Collection fragrance, Carried Away, and will transition to the relaunch of our already successful fragrance, Japanese Cherry Blossom. We are very pleased that our focus in disciplined approach delivered record performance for the year. We're cautiously optimistic about the first quarter and continue to manage expenses and inventories conservatively. Our focus will be to get faster and better in understanding and satisfying our customers' needs, while providing them with a world-class, in-store experience. In addition to our focus on products and fragrance launches, we will continue to test and read the results of new product offerings and promotional strategies, maintaining flexibility in our inventories to react quickly to our customers' needs. And with that, I'll turn the discussion over to Martyn.

Thanks, Diane, and good morning, everyone. I'd like to spend some time this morning updating you on our strategy to grow our international businesses. Of course, it goes without saying that we recognize that we have tremendous international growth opportunities for all of our brands, and we are expanding now outside of the United States aggressively. We're determined to pursue this growth with discipline, while making sure that we do not overrun our headlights or denigrate the reputation of our brands. We want to ensure that we have both the managerial bandwidth and the sourcing logistics and systems infrastructure in place to support our growth and deliver a superb brand experience to our customers. We made significant progress in 2010. We opened 77 new stores internationally. We moved the La Senza business to Columbus, and we launched our first organic franchise partnership. We also just recently hired Mary Mitchell to join Martin Waters’ core leadership team as Chief Administrative Officer. Most recently, Mary led inventory management and strategy for Banana Republic's North American business. Previously, she served as General Manager for Gap's international operations in Europe and Japan, where she delivered business teams in each of these markets and opened the Banana Republic flagship store in London. Now, many of you are familiar with our six-point agenda for international business development, which is detailed on Page 12 of the presentation. Now just before I go on, let me just level set for a minute. Please remember that the La Senza and La Senza international businesses, as well as the Victoria's Secret Direct International business roll up under the Victoria's Secret segment for reporting purposes, while the BBW, VS and Pink Canada business, the Travel and Tourism business and our new franchise BBW business are all reported as part of the other segment. Our first priority, as you see on the slide, continues to be improve the performance of our La Senza business. La Senza's comps declined 5% in the fourth quarter, as significant growth in our core bra and panty business did not fully offset the decline in the sleepwear business, as we are de-emphasizing this category. Total sales were $121.2 million, and the total sales decline year-over-year was also attributable to our closure of the La Senza Girl business in 2009. The gross margin rate increased significantly, driven by an increased merchandise margin rate and a decrease in buying and occupancy costs. The improvement in merchandise margin rate was driven by the sales shift to panties and bras and better inventory management. The operating result was approximately breakeven. For the full year, La Senza comps were down 1%, and sales were $398.2 million. Gross margin rate increased versus last year, driven by a significant improvement in the merchandise margin rate. Excluding the one-time cost related to the relocation of the business to Columbus, La Senza's 2010 operating result was about breakeven. Now we encouraged by the growth in the bra and panty business and the performance of our remodeled store locations. Conversion is up significantly, however, the business has been and continues to be challenged by significant traffic declines. We are actively working to turn this business around. Now in addition to the approximately 250 stores in Canada, there are over 450 La Senza stores in the rest of the world that are operated by our franchise partners. We saw a significant improvement in the performance of these locations in 2010 and believe we will likely add around 50 additional locations in 2011 with existing partners. Now turning to our second priority, which is our new businesses in Canada. We ended the year with 59 Bath & Body Works stores, four Victoria's Secret stores and eight Pink stores. We continue to be very pleased with the performance of these stores. As Stuart mentioned, we delivered $165 million in retail sales from these new businesses in 2010. Our Bath & Body Works stores continue to perform well above our U.S. average store volumes, and the response to the Victoria's Secret stores has been phenomenal. In 2011, we plan to open about 10 additional BBW stores, about eight additional Victoria's Secret stores and one or two additional Pink stores. We expect that these new stores, along with full year sales related to the 2010 store openings will contribute over $100 million in incremental retail sales in 2011 with four-wall profitability that is consistent with our U.S. stores. Now looking at our third priority, we ended the year with 18 stores operating under the Victoria's Secret Travel and Tourism model, which are principally in international airport locations. These are small Victoria's Secret stores focused on beauty and Victoria's Secret branded accessories. The stores are approximately 1,000 square feet in size and are operated by partners under either a wholesale or a franchise model. These stores continue to deliver strong early results with retail sales averaging around $1.5 million per store. In 2011, we plan to open another 40 to 50 stores in the T&T format. And against our fourth priority, we opened our first six BBW stores in the Middle East under our franchise agreement with Alshaya. We continue to be very pleased with the performance of these stores and could open around 20 more stores this year. In addition, as you know, we plan to open the previously announced Victoria's Secret flagship location on New Bond Street in London in mid-2012. And finally, our Direct business continues to gain strength internationally with over $150 million in sales to over 200 countries in 2010. So in summary, we're building on our existing base of profitable sales outside of the United States. With our expansion plans in Canada and the early success we're seeing in our other initiatives, we believe we are just beginning to exploit the full potential of our brands internationally. And before we take your questions, I want to reiterate that we're very pleased with our progress that we've made in 2010 and our record-setting financial performance. This performance was driven by an intense focus on the fundamentals, coupled with an orientation to getting faster and more agile in everything that we do, and of course, staying close to our customers. We will maintain this disciplined and focused approach in 2011, and we clearly see opportunities to continue to get even better. Thanks, and now I'll turn it back over to Amie.

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

[Operator Instructions] You're first question is from the line of Neely Tamminga of Piper Jaffray. Neely Tamminga - Piper Jaffray Companies: Martyn, just a question here for you on the international side. We're reading about press reports of Australian retailers that want you, and I think we're just running at this with the assumption that global demand for your brand is there. How are you guys choosing which region to go with? And are the licensing agreements pretty comparable across the regions? We're just trying to understand that a little bit more.

Neely, I think the first thing that I need to cover is that today, we have the La Senza international franchise business, which has been an established business for a number of years and is growing, as I’ve commented on. It operates today under more of a wholesale, franchise-type model. We're actually converting that more to a traditional royalty-based franchise model, and those agreements are more consistent across the world. The only other franchise arrangement we have today is the BBW franchise arrangements with Alshaya in the Middle East, and that is a royalty-based franchise model. You're right to say that demand for our brands across the globe is significant, and it's across the globe. The choices that we're making as to where to go, when to go and who to go with remain guided by some of the things I mentioned in my prepared remarks, which is we're being very careful, very planful, very purposeful about making sure that we take steps carefully into this new world of international franchising, for instance. And right now, we're very focused on the deals, the arrangements that we have with our La Senza partners and with Alshaya. And we really are not prepared to discuss going beyond that today.

Your next question is from the line of Paul Lejuez of Nomura Securities. Paul Lejuez - Credit Suisse: After opening 20-plus BBW stores in Canada the last few years, why the slowdown to 10? And then just one separate question, what kind of cost pressure are you guys expecting in the second half?

Thanks, Paul, so we'll go to Martyn first.

So Paul, again, I think the pace that we've been on with our BBW expansion in Canada has been great and it’s been very successful. If you look at the aggregate of what I just announced in terms of 2011, the overall agenda for Martin Waters and his international business team, it is significant. There's a lot of things we're putting on the plan for 2011. And frankly, one of the trades that we've made in looking at resources, time, priorities is to continue the expansion of BBW in Canada but not exactly at the same pace. That has nothing to do with our performance or our concerns about our ability to expand in Canada over time, just simply a resources and priority decision. The other thing to note is we've increased our emphasis on expansion of the Victoria's Secret stores, and relatively speaking, in terms of square footage for instance because the Victoria's Secret stores are much bigger, the actual overall expansion of square footage in Canada in '11 will be very similar to '10, but it'll be the combination of VS and BBW.

And Stuart, the cost question?

Paul, I would want to reiterate the point that I made in the prepared comments, but beyond that, the cost pressure will be back-half weighted. We have initial internal estimates of that. And, again, it'll be more back half weighted. But we're not going to quantify that externally. And, again, we're working hard to offset it through all the things we talked about.

Your next question is from the line of John Morris of BMO Capital. John Morris - BMO Capital Markets U.S.: Stuart, on SG&A, a little bit about your thoughts there in terms of the quarter and also go-forward where you would still see opportunity, in particular, I think I would have expected to see a little bit more leverage than you actually got. So I don't know if that requires a little bit more explanation on some of those components that you were good enough to break out to us, such as the dollar increase I think that you were getting from the Canadian stores perhaps, and then also the increase in marketing cost that you had mentioned, so a little bit more clarity there.

The biggest thing to understand, with respect to Q4, is the two things I referred to. So we did recognize a meaningful amount of additional expense related to stock compensation because, frankly, we just had a lot less turnover in our business, which we view by the way as a good thing. So we've had a lot of stability in leadership and management, and the effect of that is that our forfeiture rates on stock comp were down a lot. And between Q3 and Q4, for different groups and based on additional analysis, we trued that up, and the effect during the quarter was significant. In addition, I mentioned the write-off of a trade name, which was also significant, which is why we called it out. And when you isolate or pull those two things out, the flow-through, the profit flow through from sales in Q4 was about 40%, which is kind of an ongoing benchmark in my mind. Obviously, over the last several years, our profit flow-through from sales has been higher than that. But when you account for those two things I described, the flow-through about 40%, and again, I think that's really the delta on expenses and some views that folks may have had on operating income. With respect to going forward, our mindset is we've been consistent about this, and hopefully you see it in our numbers. We intend very clearly to grow expenses slower than sales. And we did that in 2010. We expect to do that in 2011. There is a little bit of increase and de-leverage Q1 in SG&A, driven by some additional investment in marketing, but that “de-leverage” in marketing and SG&A is not that significant at the end of the day. So the key message is that we will continue to be disciplined on it and grow expenses slower than sales. John Morris - BMO Capital Markets U.S.: What was the dollar increase in store selling costs in Canada that you were referring to, just clarify that? I think I accounted for half of the increase.

I'm not going to break it out specifically, John. John Morris - BMO Capital Markets U.S.: But it's coming from what, just opening stores there?

Absolutely, yes. You open stores -- I mean, in explaining the dollar increase in SG&A growth, obviously, if you open stores, you're going to have increase in dollar expenses. And, again, store selling in aggregate leveraged as a percent of sales.

Your next question is from the line of Lorraine Hutchinson of Bank of America. Lorraine Hutchinson - BofA Merrill Lynch: I know you've been highlighting innovation quite a bit at Victoria's Secret and had some very big success with the bras at Pink and the Miraculous. I was just wondering if you could elaborate a little bit on perhaps the number of launches versus last year and the price points that you're expecting for 2011.

Lorraine, we'll go to Sharen.

Lorraine, this is Sharen. Basically, we will have -- comping the launches that we had last year, so we'll have the exact same amount of launches that we did this year versus last year. But the different approach that we're taking is that we're actually putting more power in the launches by taking them across all the beauty products within the store as well. So I think we have a very exciting lineup. The prices are pretty much the same as what we were in the spring season of last year.

Your next question is from the line of Brian Tunick of JPMorgan.

It’s actually Ike [ph] calling in for Brian. Martyn, I wanted to speak with the international opportunities, regarding the opportunity you guys have in Canada for Bath & Body. And how many stores do you feel that you can get a hold [ph] above those concepts [ph]? And also, are you seeing a similar lift in volume at the Vicki’s [Victoria’s Secret] and the Pink stores over there that you have seen in the Bath & Body Works stores?

I think, given that we're at 60 stores at the end of the year, 70-plus at the end of 2011 for BBW, we continue to see a lot of opportunity for that concept to expand in over the next x number of years. And I think probably, I think we've said in the past, Martin Waters has said in the past, 150 to 250 stores are potential in Canada. The VS stores -- and they continue to perform extremely well versus our U.S. averages, and we've said, 1.5 to 2x, that kind of average. The Victoria's Secret stores have come out of the box very strong. Remember that's still early days. They've only open, on average, probably four months. And the results, so far, have been extraordinary. And, again, the same kind of ratios of performance to the U.S. averages. That concept though, because it will be in addition to our La Senza business in Canada, probably would not expand as aggressively within Canada, as we've said. I think we've probably always said over the past couple of years, maybe 30 to 40 stores in total.

Your next question is from the line of Michelle Tan of Goldman Sachs. Michelle Tan - Goldman Sachs Group Inc.: Diane, I think you mentioned conversion in dollars per transaction were up nicely at Bath & Body. I was wondering if you could give us any more color on drivers there in terms of marketing or different promotions that you're doing. And then, Stuart, not sure if you could make it easier for us on these couple of items on SG&A, whether you can quantify the basis point impact of the stock comp and the intangible write-off this quarter?

Michelle, it's Diane. I think the increase in conversion and transaction process is really due to the amount of newness that we’ve offered. We changed the shop and we’re actually -- among the seasonal fragrances that we offer, as well as forms, is doubling last year. We seeing that business change dramatically across all three of our big core categories. It's more seasonally relevant versus year-round. So that was really the biggest driver. We had tons of marketing, but it was only in the Chicago market, external marketing. And our promotional strategy was basically flat to last year.

And we'll go to Stuart for the next question.

Michelle, as we mentioned, it's about 25% of the SG&A dollar increase. And just doing the math on that, on the fly here, it looks like that would be about 60 basis points on the total.

Your next question is from the line of Kimberly Greenberger of Morgan Stanley. Kimberly Greenberger - Morgan Stanley: My question's on the international agenda. I'm wondering if you can touch on two things. What guidepost should we be looking for out of the La Senza business? And what sort of goals do you have for that business here in 2011? And then secondarily, on the Victoria's Secret Direct opportunity, is it an IT upgrade? Or what are the steps that would be necessary in order to take the Victoria's Secret Direct division into other countries outside the United States and Canada?

Kimberly, we'll go to Martyn for both of those.

I'm not sure if I'll be able to comment on the VSD international, but let me start with La Senza. As I said in my remarks, the business is in the process of being transformed. And we’ve talked about that in the last three or four calls, still very much a work in progress, lots of progress being made. But as we’ve described today, the business was basically flat year-over-year in comps, and it's a breakeven business for us still today. In terms of prospects for the future, our goal and clear plan is to produce this kind of OI profitability, margin rate, if you will, from the La Senza Canada business, company-owned retail business that we would produce for our U.S. brands. It's, obviously, not there today, and that is the plan. How much progress we'll make in 2011 I really am not prepared to describe because it is, as I said, a work in progress. The other businesses, we've also described in more detail today in terms of how they're making contribution to the overall international results. And the last thing I would want to mention is, I think, in terms of the overall international business model, in addition to the company-owned retail business that we have in Canada with La Senza, Pink, VS, BBW, these other businesses that we're building, which is the franchise businesses and the Travel and Tourism businesses are a different business model. That's why I keep calling them businesses. It's not one business outside the United States. And for the T&T, what we call T&T, Travel and Tourism, and for the franchise businesses, it's important to remember that for those businesses, we'll be recognizing revenues that are based on a mix of wholesale, sales, royalty income and sourcing sales to those partnered businesses and that on those recognized revenues, we expect the profit contribution from those businesses that are growing at a very fast pace to be highly accretive to our overall operating income margin. Hopefully, it's helpful to you in terms of understanding how to think about that business. The last thing I'd say about international is, obviously as I’ve described, we're investing in people and new store opening costs and systems to support our growth, which is also constraining short-term profitability, obviously. In terms of the international Victoria's Secret Direct business, it is, and I want to repeat, it is the sixth priority of our six agenda items. And therefore, we're not putting as much time and effort against that opportunity as we are the first five. That said, we remain convinced that there’s a substantial opportunity there, and we're building additional systems and capabilities around that to improve the customer experience when the customer is ordering from us for international, from an international location, improve the shipping and handling experience and also improve the language experience. For instance, we have a Spanish-language site up, and we would look at doing additional languages when and if our retail operations are expanded into different geographies where that would be very helpful to our customers, so optimistic but not our top priority.

Your next question is from the line of Stacy Pak of Barclays Capital. Stacy Pak - Prudential: I was hoping both businesses could talk a little bit about what they've been doing with tickets now. For instance, five for $25.50 panties, that sort of thing. And kind of what you're seeing in terms of response? And also, both businesses, talk about how much faster you can get. And also Diane, can you talk about new product pipelines for spring overall relative to last year? And also address what it is that's been driving your costs down so much, and sort of what inning you're in there for BBW?

Stacy, that's like four questions, I think I counted, but we will try to do our best to address everything here. I think the first question was what are you doing with ticket prices now, and what the response has been. Diane, you want to start with that one?

We are always in a testing mode with price elasticity at BBW because we sell everything in multiples. So we're always looking for ways to drive price up or to drive more units and more basket. So where we have broadened units and we marked prices up, we've actually seen absolutely no resistance to that. So we'll continue to test those different strategies throughout the spring season to help us better inform fall and holiday of next year. And as far as -- I’ll just hit the other two questions you had for me, as far new product pipeline for spring, we're about double last year. And it's really due to the fact that, like I mentioned in the earlier answer, is that our business is being driven much more seasonally than it ever was in the past. So we have an opportunity for more seasonally relevant fragrance launches across all three of our businesses this spring that we didn't have last spring or as much last spring. And as far as costs being driven down, it really is a multiple of things, when you realize you have an opportunity and it goes from 10,000 units to 1 million units, there’s a cost advantage for that. And that has really helped drive a lot of our cost decreases over the last couple of years. Kimberly Greenberger - Morgan Stanley: And just what inning are you in on the cost?

What inning am I in on the cost? Where am I? Kimberly Greenberger - Morgan Stanley: Yes.

I would say that we're basically probably there, and we will probably start to see modest cost increases this year, but again, offset hopefully by newness and more fashion relevance.

And then Sharen?

We are looking at pricing opportunities, but we're being extremely mindful in that area. We also test a lot of pricing before we make a move. And the pricing action that we have taken, we've actually seen no resistance whatsoever. We have a good-better-best strategy. We're not walking away from the good-better-best strategy. And as we said before, we are really focused more on getting the right product at the right time to the customer.

Your next question is from the line of Tom Filandro of SIG. Thomas Filandro - Susquehanna Financial Group, LLLP: Can you guys provide some color on the February sales update in terms of maybe brand performance and the drivers to the increase? Is this average dollar sale, AUR? And I'm kind of curious, given the quarter comp guidance at 2% to 4%, is that just a conservative view, or are you anticipating some slowdown due to either market conditions, comparisons and other factors? And if I could just quickly ask on Henri Bendel, the management change in long-term view there, I appreciate it.

So we got February comps, we'll go to Stuart for that one.

So Tom, February comps are stronger than we thought they would be at the beginning of the month. And again, as we commented on, we think a high single result -- both big businesses are doing well, a little bit stronger at VS than Bath & Body, but again, both businesses doing very well. With respect to the balance of the quarter, the whole quarter, our view is very clear. And hopefully, it's clear to those that are following us and that invest in us, and that is that we're managing this business with a very conservative mindset. And then when we have demand, we're chasing very aggressively to satisfy our customers and realize the potential of that demand. So that's how we're thinking about our business. That's how we've been running our business for the last several years, and it seems to be working pretty well. Obviously, it hard to predict sales, Tom. But obviously, a conservative view for the quarter, and particularly given the strength we’ve seen so far in February.

We'll go to Martyn for the Henri Bendel question.

On Henri Bendel, just a couple of quick updates on there. I think overall, Henri Bendel had a very strong fourth quarter and full year performance in 2010. Sales margin, growth-driven, and we're very encouraged by that performance. As you remember, we have 10 new concept stores opened and of course the Fifth Avenue flagship store. We did, as you called out, we just recently announced that Chris Fiore has joined us to lead the Henri Bendel operations, and he'll partner with Bucciarelli, who leads the concept in accessories design and product development for Henri Bendel. Chris, as you probably know, Tom has deep experience in retail operations and developing brands. And he's worked at American Eagle most recently in their international businesses. He's also was the head of Coach retail, worked with Coach for a number of years. The bottom line is we remain very optimistic about the business, and we are planning, as you've seen in our analyst package information, to open an additional seven stores this year and really to further explore the potential of the new concept. It’s still in what I characterize a test-and-learn mode.

Tom, did we miss a question somewhere? Thomas Filandro - Susquehanna Financial Group, LLLP: Well, the only other question I had was related to the comp, if you could give us any kind of metrics, was it AUR or ADS or transactions that are driving the business?

I'm not sure we have that information readily available, but I can follow up with you.

Your next question is from the line of Todd Slater of Lazard Capital Markets. Todd Slater - Lazard Capital Markets LLC: The comment that virtually every year since I've followed your company, your February comp and your first quarter comp were almost identical, uncanny, and I hope your model remains true to trend this year. My question is, you mentioned flat inventory coming out of the first quarter. And Stu, I know your mantra on improving inventory turns. So I'm just wondering on how you're planning inventory management over the balance of the year and what you're expecting especially given some potential inflation towards the back end of the year.

Todd, with respect to inventory management, and again, it's probably getting a little boring to hear about it, but we're going to be very disciplined on it. We manage it very closely. And the “we” is a big we, most importantly at the brands. We would expect to grow inventory slower than sales, and we're very focused on continuing to improve turn, and a lot work going on there. With that said, we're not stupid. We know we sell high-margin goods, and we're very clear-minded about the cost of disappointing a customer. So we work hard and strike that down, and we measure inventory levels in units and dollars, and we measure in-stocks and out-of-stocks very regularly, so we're working hard to maintain that balance. We're very focused on it. We'll continue to be disciplined on it. In terms of guidance for the back half or unit views versus dollar views, I'm not going to get into those details. Again, I think the most important messages are the ones that I've just kind of reiterated and pretty consistent with what we've been doing for the last couple of years.

Your next question is from the line of Janet Kloppenburg of JJK Research. Janet Kloppenburg - JJK Research: For Martin and Stuart, I know you don't want to detail the dollar outlook for La Senza, but it was breakeven, and you said you're looking to make progress this year. So should we assume that it could be a contributor to the operating income line this year? And for Diane and to Sharen, I was wondering if you could talk a little bit about your product launches, what you've learned in fiscal '10 and how you might use your -- I think you both have increased marketing dollars -- wiser in fiscal '11?

Janet, so we'll go to Martyn for the La Senza question.

Janet, I think the simple answer to your question is yes, we expect that business to be a contributor to our profit in 2011. We believe we've made a lot of fundamental transformational changes, not the least of which is relocating the headquarters of the business in 2010. And we're on a path to the kind of profitability we’d expect us to deliver.

Sharen, do you want to start with product launches?

Yes, I think in 2010, we were very pleased with our performance in our product launches, not only in the bra category but as well as in the Beauty category and in Pink. And as we think about what our learns [ph] were, is that how do we get better about tying the power of the bra launch into the power of our beauty. So as you saw in the fourth quarter, we actually came out with our Bombshell fragrance, which actually tied to the launch of the Miraculous, which we called Bombshell. So in 2011, you'll be seeing more of that strategy from us as well. And Pink will continue to bring in new product and newness and they are in an innovation around their bra category as well as the important category of loungewear. I think from a marketing perspective, we are a very highly, emotional brand, and we will continue to market our launches with every launch that we do have from a TV, social media perspective, so you'll see more of that from us as well in 2011. Janet Kloppenburg - JJK Research: The TV will be a higher percentage of the budget, Sharen?

No, the TV is about flat, except the problem is that, that you are going to have your TRPs are a little more expensive this year. So your TRPs are pretty much flat, a little higher because of inflation.

Janet, it's Diane. As far as product launches, I think what we've learned is what I said earlier as far as the seasonality of our businesses, also the more frequent launches we can have across the categories, as well as the more fashion-forward type point of view and also more youthful. All of that has been resonating extremely well with our customers. The only thing I can say about marketing is we don't do a lot of television marketing. In fact, we're still in a test mode, and the tests in the Chicago market have been somewhat inconclusive. So we'll continue to test television through the spring season, just in Chicago. But we do probably have a little bit of additional marketing expense in our in-store experience because as we really blow up that experience in the fourth quarter, that we are testing throughout the spring to see if we can add more foot traffic by more engagement in store. Janet Kloppenburg - JJK Research: So will you have more launches this year versus last?

Yes, significantly more.

Your next question is from the line of Emily Shanks of Barclays Capital. Emily Shanks - Lehman Brothers: I had a question for Stuart around uses of cash and wanted to inquire if, one, a one-time special dividend is still on the table for fiscal year '11 and/or, two, how you view acquisitions as a growth strategy, particularly on your franchises.

I'll take the second part of the question first. We're very happy with the portfolio of the business we have now, meaning that we always read what people send us or we’re curious about what's out there. But with that said, a big part of our success over the last years has been having a more focused portfolio of businesses to run and those that are leaders in their categories. So we don't have a big M&A agenda per se. With respect to views about special dividends, we evaluate the return of cash periodically. We do it with our board. You can look at our track record over time, but it would be premature and not appropriate to comment about what we may do in 2011. We'll see how the year unfolds. And we try to make the right decisions based on facts and circumstances as they evolve. What is absolutely clear is that we return excess cash to shareholders through a combination of repurchases and dividends.

Your final question comes from the line of Jeff Black of Citigroup. Jeff Black - Lehman Brothers: So Martyn, we've written off a lot of La Senza, anyway. I mean, how committed are we really to this brand? What sense do we have that it can be anything near Victoria's Secret margin? And if the answer is no, is there a plan to transition those, is there a path to transition those just to VS and Bath & Body stores?

Well, it's a nice challenge to close the morning here. Jeff, I understand the question, and it's a reasonable question for you to ask. I think the key thing from my point of view is kind of what we've declared from the stage in our last two years of investor update meetings, and I'll repeat it today, which is we believe La Senza is another core brand to us. It represents a value position in the intimate apparel category that works well around the world today, not as well in Canada as we needed to work because we're transforming it. And we believe that it has a position in our portfolio of businesses, alongside of, not up against, but alongside of Victoria's Secret and Pink. And that it has a global expansion potential beyond its current distribution around the world. We're committed to making it work. Les is personally committed to making it work. He's spending a lot of time on it, and I have a tremendous confidence in Les, Martin Waters, Joanne Nemeroff and our management team that they are going to figure it out and get it right, whether it will produce exactly the same kind of profitability that our Victoria's Secret produces, probably not over time, but close to it is the ambition that we have. And I'm talking about operating margin rate. It's obviously a lower per store sales volume type of business because of its smaller box size and value position.

Thank you all for joining us this morning and for your interest in Limited Brands.

This concludes Limited Brands' Fourth Quarter Year-End 2010 Earnings Conference Call. You may now disconnect.