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Limited Brands Q2 2007 Earnings Call Transcript

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2007-08-23 11:03:37.0

Tags: Limited Brands Inc.

Question-and-Answer Session

Operator

Your first question comes from Kimberly Greenberger - Citigroup.

Kimberly Greenberger - Citigroup

My question is on inventory. I was hoping you could tell us how the non-apparel inventories compared this year to last year at the end of second quarter? I would assume that excludes the write-down of the inventory for the BBW.

Then just a follow-up to that. At the Bath & Body Works brand, do you think you have appropriately impaired inventory at this point or is there some risk that we're still running heavy inventories and might see another charge in the third and/or fourth quarter this year? Thanks.

Stuart Burgdoefer

On Victoria's and BBW in terms of where we ended the spring season on a per-foot basis we were down about 5% in terms of the prior year comparison. With respect to ongoing risk, with respect to the raw material and component inventories, we took a very hard look at that this quarter. There is always risk with anything, but we took a very hard look at it and think we made the right judgments based on what we know at this time.

Operator

Your next question comes from Dana Cohen - Banc of America Securities.

Dana Cohen - Banc of America Securities

Looking at these pieces and maybe it's not for this call, but is there any way to get a little more granularity on taking the loss of apparel and the mix of mass as a component to gross margin and SG&A just because it's hard to see how these pieces are coming together lumping them all together in both gross margin and SG&A.

Then secondarily to BBW, sort of following up on the last question, with only half of the gross margin erosion from the charge, what gives you the confidence that it reverses in the back half?

Diane Neal

As I've mentioned, we've made significant changes in our pre-Christmas business that went up last year, so we feel we've got enough newness and excitement going into this Christmas season, which as you know is a big part of our total fall season so I think we have gone against the risk that we think that we had last year and I think we've made significant changes to affect that.

Stuart Burgdoefer

Dana, was your question about the impact of these elements with respect to the second quarter actual or the future projections?

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