At this time, I'd like to welcome everyone to the Limited Brands third quarter earnings call. (Operator Instructions) I'd now like to turn the call over to Amy Preston, Vice President, Investor Relations.

Good morning everyone, and welcome to the Limited Brands third quarter earnings conference call for the period ending Saturday, October 31, 2009. As a matter of formality, I need to remind you that any forward-looking statements we may make today are subject to our safe harbor statement found in our SEC filings. Our third quarter earnings release and related financial information are available on our website, www.limitedbrands.com. 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. Martyn Redgrave, EVP and Chief Administrative Officer; Stuart Burgdoefer, EVP and Chief Financial Officer; Sharon Turney, CEO, Victoria's Secret; and Diane Neil, CEO, Bath & Body Works, are all joining us today. Stuart is in a different location then the rest of us. After our prepared comments we will be available to take your questions for as long as time permits. So that we can speak with as many of you as possible, please limit yourself to one question. Thanks and now I'll turn the call over to Martyn Redgrave.

Thanks Amy and good morning everyone. Although the third quarter as you all know is not a significant quarter to us from a profitability perspective, we are pleased with the progress that we made in each of our businesses versus spring, which overall enabled us to exceed our initial earnings guidance and increase operating income by $17.7 million or 43% over last year. Now coming into the fourth quarter and the all important holiday season, the environment remains challenging and uncertain. So we’re focused on what we can control. With this in mind we continue to plan conservatively and we are well positioned to deliver the best holiday possible as a result of our disciplined management of inventory of expenses. Additionally our technology systems and the Victoria’s Secret direct distribution center are all performing well. In light of this perspective we have raised our full year earnings guidance to reflect our third quarter beat and a slightly improved view of fourth quarter opportunities. Stuart will of course provide more details on that in just a minute. As we discussed in detail at our recent investor update meeting in Columbus, we continue to be focused on maximizing sales and profitability with an overriding emphasis on speed and execution. Our product assortments are compelling and include a significant number of new items for holiday. Now before I turn it over to Stuart I’d like to provide you with an update on our international activities. At our investor update meeting Martin Waters outlined our six point management agenda for pursuing growth outside the United States, the first three of which we are actively engaged in, and I’m going to focus my remarks on those first three this morning. First is the effort to rebuild the profitability of the La Senza business both in…

Thanks Martyn, and good morning everyone. Turning to our third quarter performance, our adjusted earnings per share were $0.02 per share versus $0.01 last year. Our reported 2009 result was $0.05 per share including an income tax benefit of $0.03 primarily due to the resolution of certain tax matters. All results discussed on this call exclude this income tax benefit. As Martyn mentioned our third quarter result exceeded our August guidance for a loss between $0.07 and $0.12 per share. The upside was primarily driven by a better comp and merchandise margin result versus expectations particularly at Bath & Body Works. To take you through the third quarter results in more detail, net sales were $1.777 billion versus $1.842 billion last year and comps were down 2%. The gross margin rate increased 20 basis points to 31.7% driven by a merchandise margin rate improvement that was partially offset by buying and occupancy expense deleverage. Adjusting for the effect of Mast, our merchandise margin rate would have been roughly flat. SG&A dollars declined by $35.2 million or 7% and the SG&A rate improved by 90 basis points primarily driven by our expense reduction efforts and a reduction in marketing. Total operating income increased $17.7 million or 43% to $58.9 million. By segment, the Victoria’s Secret segment decreased by $20.9 million to $53.9 million. Bath & Body Works increased by $44.5 million to $15.5 million and the other segment operating loss increased by $5.9 million to $10.6 million. Total non-operating expenses increased by $9.5 million or $0.02 a share driven by incremental interest expense that was partially offset by the recognition of our 25% interest in Express’ third quarter net income. Retail inventories per foot at cost ended the quarter down 10% versus last year and down 20% on a two-year basis,…

Thank you Stuart and good morning everyone. I’d like to talk about three things today. First I will review our key insights from third quarter, second, I’ll review third quarter results and third, I’ll spend a few moments talking about the fourth quarter and holiday. Let’s begin with the third quarter; in the third quarter we continued to manage inventory and expenses conservatively. Third quarter comps met our expectations and we saw trends improve from spring. I believe some of that improvement is a result of applying what we learned last season. You may remember that I shared during our last call that the Victoria’s Secret management team was committed to improving three areas in the third quarter; bra launch support, improved assortment with bright colors, and better balance across good, better, best price points. Looking back I am pleased by improvements in all three areas. First we are supporting bra launches with a more robust inventory position. As a result the launch of the new Body by Victoria collection in August was one of our best ever in terms of both newness and dollars over the launch period. Second, in late September we began landing better fashion in much bolder, brighter colors including across many of our best price points. Finally we have worked to create more balance in our good, better, best pricing by introducing new products at opening price points. We launched the Pink, Where Everywhere bra at two for $32, and a new T-shirt bra collection at $29.50 through September; both have been strong performers. I am encouraged by our progress but I also remain focused on improving both top line and margin dollars in the fourth quarter. Let me now walk through the third quarters for the segment and by channel, sales in the third…

Thank you Sharon and good morning, at Bath & Body Works we are encouraged by the results of the third quarter but recognize that we continue to operate in a difficult retail environment. We have continued to focus on our three key categories, our Signature Collection products, the internet business, and our home fragrance assortment, which all continue to deliver improved results versus last year. Signature Collection had two fragrance launches in the third quarter. PS I Love You which met our expectations, and we are very encouraged by the performance of Twilight Woods, which launched at the end of the third quarter. The internet business posted gains over last year driven by growth in both our soap and PocketBac hand sanitizer categories. Hand sanitizer sales improved with the growing concerns over H1N1 outbreaks and our product is differentiated by a broad assortment of fragrances. Our home fragrance sales were up to last year driven by strong candle and diffuser performance along with the successful launch of the new Scentbug which is a passive oil diffuser. Our conversion was up significantly to last year helping to partially offset traffic declines. Additionally the retail environment continues to be heavily promotional and our customers are increasingly responsive to our promotional vehicles. So with that backdrop let me take you through the financial results for the quarter. Bath & Body Works third quarter comps were up 2%. Total sales for the quarter were $439 million, up 3% or $15 million versus last year. For the quarter our operating income was $16 million, which was up $45 million to the third quarter of last year. This was our first profitable third quarter since 2002. Operating income was driven by the positive sales comp, improvements in merchandise margin rate and expense decreases in buying and…

Thanks Diane, that concludes our prepared comments and at this time we’d be happy to take any questions you might have.

(Operator Instructions) Your first question comes from the line of Brian Tunick - JPMorgan

As we think about the restage you just talked about on the anti bac and we compare that to the restage of Signature which obviously has very negative margin implications, can you maybe talk about what the company is going to do for this new restage that’s not going to have such an impact on the gross margins this time.

Well first of all the Signature restage didn’t impact margins all that negatively—

We meant on the clearance side, when you were clearing out the old product.

The margins are still pretty high on that product that when we cleared the Signature and the anti bac category we have based on the success that we have on this category through holiday, we’re going to be entering the semi annual sales with a lot less inventory in anti bac then we did in the Signature Collection. And I feel very confident that we’re going to move through this is a very profitable way.

Your next question comes from the line of Tom Filandro - Susquehanna International Group

I’m going to ask this question, I don’t know if I’ll get a definitive answer, but we are hearing from many out there that its been challenging last half of October, early November, I was wondering if you could give us a sense of what you’re seeing and then also maybe you can give us a better understanding on how we should think about modeling that billion dollars of incremental volume coming out of the international extensions. And by the way, great quarter and a great call this morning.

We’re not commenting on any November trends on the call today due to the significance really of the Thanksgiving Day weekend to November results, but I’m glad you had that other question there for Martyn.

And the only thing I’d add is to reiterate what we did say and in my remarks which is the environment remains challenging and uncertain and I’d characterize it as fluctuating but I agree with Amy that with what we call Pink Friday coming up next week, we want to make sure that we stick to the guns on not providing more information at this stage. In terms of the international business when I was commenting on the billion dollars was mainly talking about Canada, therefore I was mainly talking about company owned operations of our La Senza, BBW, now Pink, and with VS flagships coming next year. So I would model that if I was to answer your question in terms of the billion dollars, as a company owned store based operation kind of P&L. Beyond that this travel retail concept that we’re testing and seeing very great early results on is a wholesaling model which has a different revenue to operating income kind of profitability characteristic. We’re recording the wholesale revenues on sale to the partners and then recording profit on that. So that’s the way I would think about it but the billion dollars was specifically for Canada, company own ops.

Your next question comes from the line of Michelle Clark - Morgan Stanley

We were just wondering for the mid point of the comp store sales guidance for fourth quarter implies about a 250 basis point deceleration to your comp trends, why is it a little more negative, your outlook.

We looked at it a number of ways, as you would expect us to and the thing that I would add to kind of the obvious is we have also looked at sequential builds and what I mean by that is the relationship between Q4 sales, Q3 sales and other kind of prior periods on a sequential basis. And when we look at it in that way what we’ve seen is a pattern over a number of years that the fourth quarter is becoming less significant in relation to the third quarter so we’ve not only looked at it on a multiyear comp basis, but also on a build basis and particularly when we look at it sequentially, that’s really, has influenced where we ended up on our comp view.

Your next question comes from the line of Todd Slater - Lazard Capital Markets

Question on apparel, you have gotten, you sold Limited and Express and you’re closing La Senza Girl, how should we think of apparel at Victoria’s Secret direct, what are your plans for that and then a clarification, how much was traffic down in the third quarter comp store up two, but I think you said traffic was down and how should we assume a similar trend for 4Q.

Even with our recent disappointing trend in clothing, we are still one of the leading online clothing retailers in the world. And our clothing customer spends significantly more then the non-clothing customer and our customer [inaudible] for the clothing categories is very large. So many of the categories that we stand for in clothing also relate back to somewhat to the master brand in terms of our bra tops and [knit] top business, active business that we do have.

Traffic is basically down to the mall traffic, slightly worse then the mall traffic and we see our traffic get more in line with the mall on holiday type promotional weekends. So how it goes into the fourth quarter, I’m not sure but we’re still anticipating it to be slightly worse then mall.

Your next question comes from the line of Paul LeJuez - Credit Suisse

Even if you back up forgetting [Mast] the first few weeks of November, how were you anticipating the quarter to play maybe by brand by month just from a big picture perspective, stronger up front, or towards the end and maybe if you can remind us just of how your promotional calendar might tie into that.

Well the comment I would make is that we would expect November and December on a relative basis to be a little stronger then January as we’re trying to lessen the degree of promotional activity in January so we would see a lower relative comp in January vis-a-vie November and December, so that’s probably the big picture view that I’d pass along.

In Bath & Body Works our promotional calendar versus last year up through Christmas is about flat. Our goal is though is every week to manage this business and we’ve already started pulling back on some [reduntive] emails that we had last year so we are looking at it week by week to make sure that we’re maximizing everything that we can through holiday. And then our January [semi annual] sales, is a little bit shorter then last year so we anticipate January to be down a little bit as a result of that.

For Victoria’s Secret the biggest shift that we do have is our semi annual will shift from December into January. We will have less promotional activity on the floor because we have much less clearance and red line merchandise this year versus last year because of our controlled inventories. We have a lot more freshness and then we will continue to have our BOGO event but the timing will be different by weeks on the BOGO event. And just to clarify that’s the bra event.

Your next question comes from the line of Kimberly Greenberger - Citigroup Investment Research

I was hoping that you could talk about the balancing between trying to pull back on some of the promotions to improve the profitability and the negative impact that that may have on sales, if you could just step back and give us not the holiday outlook but longer-term, what are your goals for the brand. Would you like to get back to more of a full priced or everyday pricing posture and do you think that there is a four quarters of pressure potentially on the top line if you pull back on some of those promos.

Well anytime, its really about a balance and when you think about balancing it you’re balancing the impact on the brand, the impact from volumes, margin, also the customer and inventory. So when you think about that, that’s what you’re balancing. As we enter the fourth quarter we feel like that we have the right product, to actually service, to keep the customers and keep that customer [inaudible] growing which we have seen the customer growing with us. We have our inventory managed therefore we do believe through this exercise that we will see an improvement in margins. As its unknown to us as we enter into the spring season, we will be going against a lot of promotion but we think based upon the strength of the assortment and the things that we’ve learned, the ability to test, read and react with speed and agility that we can come closer to the comps with improved profit.

Your next question comes from the line of Lorraine Hutchinson – Bank of America - Merrll Lynch Lorraine Hutchinson – Bank of America - Merrll Lynch: I was just hoping to get a little bit more detail on some of the lower price point products at Victoria’s Secret and how those have performed. I guess just curious are you seeing a new customer come in, is the existing customer trading down, and then over the longer-term how do you think the lower price points will effect your sales productivity at Victoria’s Secret.

We have been encouraged by what we’re seeing with the three programs and there’s only three real programs in the opening price point today. What we are seeing is that there are bringing in a new customer. It is something that we’re watching very closely. This is a big difference in terms of the offering at the opening price point versus our best price point, in terms of the fashion that we bring in, in terms of the technology and then obviously all of our launch bras have been over the $40 price point. So we believe that this gives us an opportunity especially within the Pink space to continue to own the customer from her first purchase throughout her forever young lifestyle. So we’re very optimistic with the strategy, we’re watching it closely. Our expectation it will bring in new customers and not trade down existing customers.

Your next question comes from the line of Stacey Pak - SP Research

Can you clarify what you said about gross margin in Q3, what did you say the impact from Mast was and could you tell us what the occupancy impact was and another clarification is the fourth quarter comp guidance, if you could tell us VS versus BBW and then my question really is on the gross margin in Q4, you’re coming up against I think at least three years of gross margin declines. I know you’re guiding it up significantly but can you tell us what kind of opportunity you see from the cost side in gross margin, from better inventory management in gross margin and from recapturing markdowns.

So the Q4 question I got, can you restate your question with respect to the third quarter again please.

Just the third quarter, what did you say the impact on gross margin was for Mast and from occupancy, I don’t think you said occupancy and I think I missed Mast and the other clarification was your fourth quarter comp guidance, you’re saying down low to mid, where’s BBW and VS in that.

So with respect to the third quarter the Mast effect was about 150 basis points and if we removed that effect, merchandise margin in aggregate would be roughly flat. And then with respect to buying and occupancy there was meaningful deleverage in the quarter due to the negative comp. So that’s Q3. With respect to Q4 as I highlighted in the comments and for the reasons that you outlined in your question, we are expecting meaningful merchandise margin improvement apart from the Mast mix effect that we’ve seen for the last several quarters. So significant merchandise margin rate improvement in all of our significant businesses in Q4. I’m not going to get overly specific in quantifying that for reasons including the actual result will be a function of a lot of things including the environment and a lot of factors including those that Sharon outlined. So we do expect meaningful merchandise margin rate improvement in Q4 due to the inventory management, the cost reductions, all those things that you outlined in the tee up of your question.

Could you tell us how much cost should be down, is it more then the five to seven.

Its still in that range.

And then the comp break down for Q4 guidance.

We don’t break it down by brand, so in aggregate the comp down low to mid single in total.

Your next question comes from the line of John Morris - BMO Capital Markets

Congratulations on the quarter, first question, you mentioned sleepwear at Victoria’s Secret, casual versus glamour performance, can you highlight what you’re seeing, what’s behind the strength in casual versus some of the weakness or the offset in glamour and give us a little bit of a sneak preview about the opportunity for the spring season across really all classifications so we can kind of understand there and look forward. And then regarding the restage of anti bac, will you be changing the initial price points there and have you actually been doing testing on the restaging and what have you seen from that.

The first question in terms of casual sleepwear, our casual sleepwear is really targeted as a gifting category and as we always test, go out with an early test which we were very encouraged by, and were able to read and react into that, both in the direct channel and the store channel, the casual holiday sleepwear is exceeding our expectation. The glamour sleepwear is a category last year which we took very heavy markdowns in and [we’re] anniversary some of those promotions. This year we’ve narrowed the assortment, we have focused on the key items and therefore we should be much more profitable but we’re not anniversarying those heavy promotions. As I think about looking forward into the spring, obviously we remain focused on our key categories, the bra business, the panty business, and the beauty business and those we believe will be well positioned in the spring season to go forward with in terms of growth.

As far as the anti bac restage we actually did extensive testing this past spring for both packaging and formulas which [informed] to the restage. So we’re going into it feeling pretty confident that we’ve got the right formula and as far as price points, they remain the same.

Your next question comes from the line of Laura Champine - Cowen and Company

We were a little surprised by the decision to shut La Senza Girl, can you talk a little bit about what led to that and how that may or may not change your opinion of the market there for La Senza proper and also for Victoria’s Secret in Canada.

I think that frankly since the time of the acquisition we had had the thought that the La Senza Girl business would probably not be a go forward business for us as it has not been in the United States. As you know we’ve been spinning off Limited [Two] or [Tween] Brands. We have strategically decided that we are not in the girls’ business and so we’ve been looking at that business closely over the last two years as we’ve owned La Senza and discussing it with the La Senza management team. Its performance has been disappointing. It’s a distraction frankly versus the core lingerie and personal care and beauty strategy that we are now pursuing with La Senza and we’ve as a result of that, we’ve made the decision to exit the business. The other opportunity frankly that presented itself to us is that with our very solid success in the BBW openings and the Pink openings now and our expectation for VS we see so much other opportunity to stay focused on in Canada that we’re using that opportunity to frankly minimize the costs of getting out of the La Senza Girl stores because of our new relationships with the landlords in Canada and our ability to convert some of the La Senza Girl stores to BBWs, Pink stores or actually convert them over to La Senza lingerie stores.

Really no impact on your assessment of the Canadian market at all, or the viability of either of your other concepts there.

No just the opposite, I think it’s a matter of focus for us. We want to focus on our core brands and full distribution of those brands in Canada and the girl business is just not a go forward brand for us.

Your next question comes from the line of Monty Shapiro – The Retail Tracker Monty Shapiro – The Retail Tracker: I had a quick Pink apparel question just going on this apparel conversation that’s been ongoing, you’ve dabbled now in denim, you have some of the Collegiate stuff thrown in there, which is [inaudible] more lounging, my two questions are how and what is your thinking about Pink as far as apparel, true apparel not loungewear is concerned, and then can you talk a little bit about the price points on your Pink lounge and apparel as you’ve lowered some of the price points on bras and some of the items in core Victoria, are you seeing a discrepancy or is the pricing of Pink which is a premium still working for you.

The first question [inaudible] as Pink apparel, we are not focused on Pink apparel. We’re focused on the bra, panty and lounge business and that will be the core focus not only for Pink but also for the Collegiate licensing programs that we do have. We do have a good, better, best strategy within our loungewear today which we will continue to balance that. We have seen both ends of the spectrum performing very well in Pink whether its all the Bling, Hoodies and Fleece bottoms which are at the best price point continue to be some of our best sellers. So we will continue with the strategies that we do have in place in the loungewear category around good, better, best.

Your next question comes from the line of Richard Jaffe - Stifel Nicolaus

A question about Bath & Body Works and the opportunity to take that success and penetrate the web or use the internet more effectively to drive sales to stores and store sales to the web and create some synergy here, wondering if there’s any initiatives we should look for in the next 12 months and what you think is the opportunity there.

We currently use the web to drive traffic to the stores through email blasts, and different promotional activities plus our customer relationship marketing refund dollars directed to the web as well. So we work back and forth and spending much more time with them really figuring out strategies to grow both channels.

I guess the numbers aren’t large for the internet or in terms of my inbox and so I’m wondering if there’s a way to sort of light of fire under that or anything different we should look for in the next 12 months.

You must not be buying enough because we actually do send out quite a few emails but I’ll have to get your email address because we actually do send quite a bit out every week.

I’m certainly not buying enough to move the needle, I apologize.

Your next question comes from the line of Michelle Tan – Goldman Sachs Michelle Tan – Goldman Sachs : I was wondering if you could ballpark for us what a key bra launch generally represents, roughly as a percentage of sales or units of inventory and you mentioned you were pleased with the launch of Miraculous, we’ve been hearing good things about it as well. I was wondering if there are specific ways that you can take the successes there and expand them to more of the future launches and a bigger piece of the assortment in general.

So your first part of the question was how big can a launch bra be, there will be a range. So I’ll just talk to you kind of in units. The range in units can be on a lower launch around 75,000 units a week to a high launch of up to 220,000 units a week so the range in terms of as you’re in the launch week, those bras will be a higher penetration to the total bra business and then over time settles back down. So it could be during the launch week about 30% of the bra business but then it usually settles down to be about 8% to 10%. And Miraculous go forward, it has been, exceeded our expectation and as we think about the Miraculous we are expanding it into different fabrications, different trends. We see that this is a huge opportunity as we have gotten so much hits in terms of calling this a bomb shell and we believe that this bra will continue through holiday which we’ve been able to go in and work with our manufacturers to even get more goods in for December so we do think the whole Miraculous bomb shell franchise will be with us and something that we look forward to continuing to maximize through the holiday as well as through next year.

Your next question comes from the line of Kim Galle – Pioneer Research Fund Kim Galle – Pioneer Research Fund : Does your Q4 guidance encompass or contemplate an increase in operating income at Victoria’s Secret.

Yes it does. Kim Galle – Pioneer Research Fund : And can you perhaps quantify that in any way.

We can’t unfortunately. We don’t typically get into specific guidance by brand in terms of our earnings outlook. Kim Galle – Pioneer Research Fund : But you do expect the operating profit to be up for Q4.

Yes we do.

Your final question comes from the line of Jennifer Black - Black & Associates Jennifer Black - Black & Associates: Let me add my congratulations. I wondered if because you’re going to have less inventory at Victoria’s Secret, I wondered if you’re going to fill in with special makeup and I wondered [inaudible] and what position will you be in to chase and you’ve done a great job expanding [inaudible] and I wondered if there was room for [inaudible].

Jennifer I’m sorry, you’re breaking up a little bit and I don’t think we caught all of your question. Would you mind trying to repeat it.

Just give it a shot, we’ll listen closely. Jennifer Black - Black & Associates: Sorry, at Victoria’s Secret did you hear my question about special makeup, what percent will be special makeup because I would think it would be higher because you have less clearance for the [inaudible] and are you in a position to chase.

The special makeup, if you’re referring to that we do have our Heidi Klum, that we have in for the fourth quarter, we also had restaged and relaunched our very sexy makeup which has exceeded our expectation and we are chasing back into those goods. Also within the makeup collection we have our Beauty Rush which we have expanded our presentation so I feel very good about where we are. Its still a small percent to the total in the beauty business but it is something that we definitely has exceeded our expectation. I think that you asked me something about semi annual sales. Jennifer Black - Black & Associates: What I was asking is the percent of special made up goods—

The only thing that we will have special for semi annual sale in beauty would be any of our old fragrances or old classics that people have wanted that we will come back into for semi annual sale only so that is a small percentage of what semi annual sale will be but we do have some of our old tried and true classics that do come back for semi annual sales. Jennifer Black - Black & Associates: What I was referring to, I’m sorry I wasn’t clear, was sleepwear and bras and sometimes you do special made up goods for the sales to fill in.

We actually don’t in the intimate apparel category, we do not do special cuts for semi annual sale and we do not have any plans in our strategy to start that practice. Jennifer Black - Black & Associates: And then lastly the [Lacy] collection, [inaudible] your plans, is there room to grow there as well.

Yes and in fact for this holiday season you’ll even see more expanded styles and colors within the Lacy program as I talked about in my opening remarks, that is a category that we are really making bigger for this holiday. We have it in the windows as we go into our holiday season as well as in our holiday rotation, we will have a commercial around the Lacy. So we are continuing to play upon that strength in Lacy for holiday.

That concludes our call today. We’d like to thank everyone again for your interest and wish everybody a great Thanksgiving holiday. Just a note, I am in New York today but I will be returning phone calls so if you get my voice mail, just leave me a message and I’ll get back to you as soon as I can. Thanks and we’ll talk to you soon.