Limited Brands (LTD)

Gross Profit

For the fourth quarter of 2007, our gross profit decreased 20% to $1.296 billion and our gross profit rate (expressed as a percentage of net sales) decreased to 39.6% from 40.1% primarily driven by the following:

Victoria’s Secret

For the fourth quarter of 2007, gross profit decreased primarily driven by:

Offset partially by:

The gross profit rate decreased driven primarily by deleverage of buying and occupancy expenses due to the Victoria’s Secret Stores real estate expansion activities and inclusion of La Senza’s results for the full quarter in 2007.

Bath & Body Works

For the fourth quarter of 2007, gross profit decreased primarily driven by lower net sales. The gross profit rate decreased driven by a modest decline in the merchandise margin rate related to promotional activity to clear seasonal merchandise and deleverage in the buying and occupancy expense rate associated with the decline in net sales.

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Gross Profit

For the first quarter of 2009, our gross profit decreased $93 million to $548 million and our gross profit rate (expressed as a percentage of net sales) decreased to 31.8% from 33.3% in the first quarter of 2008, primarily driven by the following:

Gross Profit

For 2008, our gross profit decreased 14% to $3.006 billion and our gross profit rate (expressed as a percentage of net sales) decreased to 33.2% from 34.6% primarily driven by the following:

Victoria’s Secret

For 2008, gross profit decreased primarily driven by the decrease at Victoria’s Secret Stores in net sales and the related decrease in merchandise margin dollars combined with increased buying and occupancy expenses related to our new and remodeled stores.

Victoria’s Secret Direct’s gross profit remained relatively flat as the impact of the 9% increase in net sales was offset by the impact of increased promotional activity to clear inventory and an increase in catalogue circulation.

The gross profit rate decreased driven primarily by an increase in the buying and occupancy expense rate as cited above.

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Bath & Body Works

For 2008, gross profit decreased primarily driven by lower net sales and a related decrease in merchandise margin dollars combined with an increase in buying and occupancy expenses associated with store real estate activity.

The gross profit rate decreased driven primarily by an increase in the buying and occupancy expense rate due to the factors cited above.

Gross Profit

Gross Profit

For the fourth quarter of 2008, our gross profit decreased 21% to $1.024 billion and our gross profit rate (expressed as a percentage of net sales) decreased to 34.3% from 39.6% primarily driven by the following:

Victoria’s Secret

For the fourth quarter of 2008, gross profit decreased primarily driven by:

The decrease in the gross profit rate was driven primarily by a decrease in the merchandise margin rate and an increase in the buying and occupancy expense rate due to the factors cited above.

Bath & Body Works

For the fourth quarter of 2008, gross profit decreased primarily driven by lower merchandise margin dollars as a result of a decline in net sales and an increase in promotional activity to drive sales and clear inventory. In addition, buying and occupancy expenses increased as a result of our store real estate activity.

The decrease in the gross profit rate was driven by a decrease in the merchandise margin rate and an increase in the buying and occupancy rate due to the factors cited above.

Gross Profit

For 2007, our gross profit decreased 13% to $3.509 billion and our gross profit rate (expressed as a percentage of net sales) decreased to 34.6% from 37.6% primarily driven by the following:

Victoria’s Secret

For 2007, gross profit decreased primarily driven by the following:

Partially offset by:

The gross profit rate decreased driven primarily by deleverage of buying and occupancy expenses and a decline in the merchandise margin rate associated with promotional activities and markdowns on certain categories in response to soft sales trends.

Bath & Body Works

For 2007, gross profit decreased primarily driven by the decline in net sales. The gross profit rate decreased driven by a decline in the merchandise margin rate due to increased promotional activities designed to drive traffic.

Gross Profit

For the fourth quarter of 2007, our gross profit decreased 20% to $1.296 billion and our gross profit rate (expressed as a percentage of net sales) decreased to 39.6% from 40.1% primarily driven by the following:

Victoria’s Secret

For the fourth quarter of 2007, gross profit decreased primarily driven by:

Offset partially by:

The gross profit rate decreased driven primarily by deleverage of buying and occupancy expenses due to the Victoria’s Secret Stores real estate expansion activities and inclusion of La Senza’s results for the full quarter in 2007.

Bath & Body Works

For the fourth quarter of 2007, gross profit decreased primarily driven by lower net sales. The gross profit rate decreased driven by a modest decline in the merchandise margin rate related to promotional activity to clear seasonal merchandise and deleverage in the buying and occupancy expense rate associated with the decline in net sales.

Gross
Profit

For the fourth quarter of 2007, our gross profit decreased 20% to $1.296 billion and our gross profit rate (expressed as a percentage of net
sales) decreased to 39.6% from 40.1% primarily driven by the following:

Victoria’s Secret

Gross Profit

For year-to-date 2008, our gross profit decreased $231 million to $1.982 billion and our gross profit rate (expressed as a percentage of net sales) increased to 32.7% from 32.3% primarily driven by the following:

Gross Profit

For year-to-date 2008, our gross profit decreased $203 million to $1.402 billion and our gross profit rate (expressed as a percentage of net sales) increased to 33.3% from 32.5% primarily driven by the following:

Gross Profit

For the first quarter of 2008, our gross profit decreased 19% to $641 million and our gross profit rate (expressed as a percentage of net sales) decreased to 33.3% from 34.4% primarily driven by the following:

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Gross Profit

For 2006, our gross profit increased 15% to $4.013 billion and the gross profit rate increased to 37.6% from 35.9% primarily driven by the following:

Victoria’s Secret

For 2006, gross profit increased primarily driven by the increase in net sales. The gross profit rate decreased due to a reduction in the merchandise margin rate driven by markdowns associated with strategic marketing activities designed to drive trial, build brand loyalty and increase market share. The reduction in the merchandise margin rate was partially offset by buying and occupancy expense leverage achieved on an 11% increase in comparable store sales.

Bath & Body Works

For 2006, gross profit increased primarily driven by the increase in net sales. The gross profit rate was flat compared to last year. The buying and occupancy expense rate improved, but was offset by a reduction in the merchandise margin rate. The reduction in the merchandise margin rate was due to increased promotional activity to drive transactions and the performance of the semi-annual sale events. Buying and occupancy expense was leveraged on a 10% increase in comparable store sales.

Apparel

For 2006, gross profit and the gross profit rate increased significantly over last year driven by lower product costs and reduced markdowns at Express. Additionally, buying and occupancy expense was leveraged despite the 2% decline in comparable store sales.

Gross Profit

For 2006, our gross profit increased 15% to $4.013
billion and the gross profit rate increased to 37.6% from 35.9% primarily driven by the following:

Victoria’s Secret

Gross Profit

For the thirteen weeks ended May 5, 2007, the gross profit rate (expressed as a percentage of net sales) decreased to 34.7% from 38.0% for the comparable period in 2006 primarily due to a decline in merchandise margin, particularly at Victoria’s Secret.

At Victoria’s Secret, the decline in the gross profit rate was primarily due to a decline in the merchandise margin rate as we responded to softness in the sales trend by promoting bra launches, pursuing a multiples pricing strategy for Pink panties and taking markdowns on certain merchandise categories. The buying and occupancy expense rate deleveraged driven by expenses associated with our real estate initiative, which results in the recognition of accelerated depreciation and increased rent related to newly executed leases prior to the realization of the benefits associated with the expanded stores.

At Bath & Body Works, the gross profit rate decreased compared to last year primarily driven by a decrease in merchandise margin rate. The merchandise margin rate decrease was partially offset by improvement in the buying and occupancy rate due to the ability to leverage expenses on a comparable store sales increase of 5%.

At the Apparel businesses, the gross profit rate was flat as a decline in the merchandise margin rate driven by an increase in shrink was offset by improvement in the buying and occupancy rate.

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Gross Profit

For the first quarter of 2006, the gross profit rate (expressed as a percentage of net sales) increased to 38.0% from 34.7% for the same period in 2005 primarily due to an increase in the merchandise margin rate at Express. The increase in the merchandise margin rate at Express was driven by fewer markdowns and lower average unit costs.

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At Victoria’s Secret, the gross profit rate increased compared to last year driven by the ability to leverage buying and occupancy expenses on a comparable store sales increase of 8%. Merchandise margin rates were flat for the quarter.

At Bath & Body Works, the gross profit rate decreased compared to last year primarily driven by a decrease in merchandise margin rate due to promotional activity and product mix. The merchandise margin rate decrease was slightly offset by improvement in the buying and occupancy rate due to the ability to leverage expenses on a comparable store sales increase of 4%.

Gross Profit

For the third quarter of 2005, the gross profit rate (expressed as a percentage of net sales) decreased to 30.7% from 32.3% for the same period in 2004 primarily due to a decrease in the merchandise margin rate at Express and Bath & Body Works and to the inability to leverage buying and occupancy expenses due to a comparable store sales decrease of 3%.

The year-to-date gross profit rate decreased to 32.1% from 34.2% in 2004, primarily due to a decrease in the merchandise margin rate at Express and, to a lesser extent, Bath & Body Works. This decline was offset by buying and occupancy expense leverage achieved at Victoria’s Secret and Bath & Body Works on sales increases of 4% and 6%, respectively.

The decrease in the third quarter and year-to-date merchandise margin rate at Express was primarily driven by significantly higher markdowns to clear slow-moving inventories in all significant product categories. The third quarter and year-to-date merchandise margin rate decreased at Bath & Body Works due to incremental sales of lower margin third-party products and increased markdowns on giftsets.

Gross Profit

For the second quarter of 2005, the gross profit rate (expressed as a percentage of net sales) decreased to 34.6% from 36.1% for the same period in 2004 primarily due to a decrease in the merchandise margin rate at Express and, to a lesser extent, Bath & Body Works. This decline was partially offset by buying and occupancy expense leverage achieved at Victoria’s Secret and Bath & Body Works on sales increases of 6% and 10%, respectively.

The year-to-date gross profit rate decreased to 32.9% from 35.2% in 2004, primarily due to a decrease in the merchandise margin rate at Express and, to a lesser extent, Bath & Body Works. This decline was partially offset by buying and occupancy expense leverage achieved at Victoria’s Secret and Bath & Body Works on sales increases of 5% and 8%, respectively.

The decrease in the second quarter and year-to-date merchandise margin rate at Express was driven by significantly higher markdowns to clear slow-moving inventories in all significant product categories. The second quarter and year-to-date merchandise margin rate decreased at Bath & Body Works due to increased markdowns on giftsets and costs associated with existing products as the Company introduces new products to the assortment.