![]() 0 Company highlights • Leading brands with worldwide recognition, high store productivity and a multi-channel platform • Differentiated merchandise and marketing that drives traffic and sales • Prudent inventory, expense and capital management • Capital-light focus on international market opportunities • Strong liquidity profile and continuing significant free cash flow generation • Experienced management team Exhibit 99.1 |
![]() 1 • Limited Brands continues to execute on its vision to make people feel sexy, sophisticated and forever young • Limited Brands has two premier brands, Victoria’s Secret and Bath & Body Works » Offering high emotional content at accessible prices • Limited Brands has additional growth opportunities » International » PINK » VSX » Swim » Bendel Accessories Concept • Other brands include PINK, La Senza, Henri Bendel, C.O. Bigelow and White Barn Candle Company Business overview 1 Adjusted EBITDA in these slides means EBITDA as adjusted to exclude certain items. 2 Includes La Senza 3 Other includes Corporate, Mast, Henri Bendel, Bath & Body Works Canada and certain centralized activities and assets that are not allocated out to the segments 2008 Adjusted EBITDA = $1.1 billion 2008 Sales = $9.0 billion 1 Works 6% |
![]() 2 Segment performance highlights • Intimate Apparel » We own three of the leading brands in intimate apparel: Victoria’s Secret, PINK, and La Senza » This segment generated $5.6 billion in sales in 2008, $620 million in operating income - Of the $5.6 billion, $1.5 billion was through Victoria’s Secret Direct » Victoria’s Secret has over 1,000 stores with over 5.9 million selling square feet » La Senza is a leading intimate apparel specialty retailer in Canada with 322 stores » La Senza has a presence in 45 countries internationally • Personal Care » Bath & Body Works generated $2.4 billion in sales through its retail and direct channels and $215 million in operating income in 2008 » Bath & Body Works Direct, which began in 2005, was profitable in 2008 and is growing rapidly » We ended 2008 with 1,638 Bath & Body Works stores, representing over 3.8 million selling square feet |
![]() 3 Leading brands – Victoria’s Secret Victoria’s Secret (VS) • Roughly a quarter of the U.S. intimates market • A number of the best-selling bras in the U.S. are Victoria’s Secret bras • Biofit (launched in March 2008) was the most successful bra launch in the history of the brand • Dream Angels is the #1 fragrance franchise in the U.S. – three years running • Icon in pop culture – world-recognized brand • Our annual fashion show is seen in approximately 90 countries • Victoria’s Secret Direct (internet and catalogue) is one of the most popular sites on the Web and is a significant contributor to the marketing and growth of the brand • Ranked #1 for dollar share of the intimate apparel market |
![]() 4 Leading brands – Bath & Body Works Bath & Body Works (BBW) • Extremely high brand awareness among women in the U.S. and Canada • BBW has the best overall in-store experience ratings versus direct specialty competitors and recently won the International Customer Service Excellence Award for Large Businesses presented by Customer Service Excellence Magazine • #1 selling specialty beauty brand in the U.S. • #1 fragrant body care collection in the U.S. (Japanese Cherry Blossom) • #1 spa collection in the U.S. (True Blue Spa) |
![]() 5 • Maximize sales and profits in our two key segments: Intimate Apparel and Personal Care • Intensive focus on executing retail fundamentals: » Differentiated merchandise and marketing plans that drive traffic and sales » Assortment management and inventory flow » Store selling and execution » Inventory investment levels » Deliver returns on capital spending » Management of overhead and SG&A expenses • Develop growth opportunities by expanding our presence in existing markets, and developing capabilities in new markets » BBW Canada » International » PINK » VSX » Henri Bendel/Accessories » Swim » Home Fragrance Strategic priorities |
![]() 6 Victoria’s Secret focus for 2009 • Focus on the core categories » Bras • Continued push-up innovation and newness • Expand full coverage and wireless offering • Expansion of product offerings at opening price points » Panties • Reinvent signature cotton panties • Expand lace offering • Supplement with new price points • Continue to grow PINK » Continued innovation of panties » Increased emphasis on growing bras » Continue to build the Collegiate Collection • Continued innovation to drive growth in Beauty: body care and fragrance • Continue to grow within our retail channel our swimwear line, which has always been a top performer for our direct channel • Continue to test and grow VSX, our line of athletic, sport-inspired apparel |
![]() 7 Bath & Body Works focus for 2009 • Focus on the core categories » Signature Collection Restage • Restage launched in all stores in February • Improved formulation in shower gel, with body cream and lotion to come • More sophisticated packaging • New fragrance launches in sophisticated scents (Butterfly Flower) and more youthful orientations » Home Fragrance • Rebranded to Slatkin with repackaged candles and new diffuser forms • Launching new odor elimination in 2009 » Antibac • Testing new packaging and formulations for a restage in 2010 • Capitalizing on systems capabilities » Segmentation opportunities within Signature Collection and Home Fragrance focused stores » Have improved in-stock levels on key items by 10 percentage points while at the same time substantially reducing inventory levels |
![]() 8 International opportunity • High awareness and demand for both Victoria’s Secret and Bath & Body Works with the Company’s international sales including La Senza, Bath & Body Works Canada and direct sales shipped internationally totaling $655 million in 2008 • First priority is Canada (company-owned operations: La Senza, BBW, VS, and PINK) » Six BBW stores opened during Fall 2008, and approximately 25 BBW stores and four PINK stores are planned for 2009 • The original six BBW Canada stores are performing at two and half times the volume of an average U.S. Bath & Body Works store » La Senza has 817 locations, 322 in Canada and 495 in 45 other countries • Approach to the rest of the world will be capital-light (franchising and joint ventures) • Laying the groundwork for opening stores and meeting with potential partners • Experienced international leadership team |
![]() 9 1 High productivity • Victoria’s Secret and Bath & Body Works are among the highest productivity specialty retailers 572 496 478 475 446 339 325 297 425 444 401 Aeropostale Victoria's Secret Stores Chico's Bath & Body Works American Eagle Outfitters Hot Topic Abercrombie & Fitch The Buckle Pacific Sunwear Gap Stores NA Wet Seal Average 427 Sales / Gross Square Foot – Fiscal 2008 Source: 10-Ks 1 Adjusted to reflect sales per gross square foot 2 Gap Stores data represents U.S. Gap Stores (does not include Old Navy and Banana Republic) 1 1 2 |
![]() 10 1 2 Strong cash flow across the fleet 98% of our store fleet is cash flow positive on an after-tax cash basis > $250k < $0 $0-$250K After-tax cash flow Note: Data are as of year end 2008 1 Only includes stores that have been open for at least one year and have not had construction activity for at least one year 2 After-tax 2008 store profit plus depreciation Total stores = 2,725 1,350 49.5% 1,328 48.7% 47 |
![]() 11 $1,061 $1,027 $1,212 $1,492 14.0% 12.0% 11.7% 11.6% 2006 2007 2008 LTM Q1'09 Adjusted EBITDA Margin Historical financial performance $10,671 $10,134 $9,043 $8,843 2006 2007 2008 LTM Q1'09 Revenues ($ millions) Adjusted EBITDA ($ millions) • While sales and Adjusted EBITDA have declined amidst these challenging times the results have been in line with our expectation |
![]() 12 1 2008 results • Our 2008 operating income declined 17% on a 9% decrease in comparable store sales 1 2007 adjusted to exclude gain/loss on apparel divestitures, gift card breakage recognition, gain on the sales of other assets and restructuring charges; 2008 adjusted to exclude impairment on La Senza goodwill, gain on joint venture sales and restructuring charges ($ millions) B / (W) 2007 2008 $ % Sales $10,134 $9,043 ($1,092) (11%) LL % (2%) (9%) Gross Margin 3,509 3,006 (503) (14%) % of sales 35% 33% Adjusted Operating Income 860 718 (142) (17%) Adjusted EBITDA $1,212 $1,061 ($151) (12%) |
![]() 13 2008 quarterly results ($ millions) • Our 2008 full year results were driven by weakness in the fourth quarter • Through the first three quarters, 2008 compared favorable y-o-y on an EBITDA basis 1 2007 adjusted to exclude gain/loss on apparel divestitures, gift card breakage recognition, gain on the sales of other assets and restructuring charges; 2008 adjusted to exclude impairment on La Senza goodwill, gain on joint venture sales and restructuring charges Q1 – Q3 Q4 B / (W) B / (W) 2007 2008 $ % 2007 2008 $ % Sales $6,858 $6,052 ($807) (12%) $3,276 $2,991 ($285) (9%) LL % (7%) (10%) Gross Margin 2,213 1,982 (231) (10%) 1,296 1,024 (272) (21%) % of sales 32% 33% 40% 34% Adjusted Operating Income 1 287 327 40 14% 573 391 (182) (32%) Adjusted EBITDA 551 577 26 5% $661 $484 (177) (27%) |
![]() 14 1 First quarter 2009 results • Our 2009 Q1 operating income declined 35% on a 7% decrease in comparable store sales 1 2008 adjusted excludes gain on joint venture sales ($ millions) First quarter B / (W) 2008 2009 $ % Sales $1,925 $1,725 ($200) (10%) LL % (7%) Gross Margin 641 548 (93) (15%) % of sales 33% 32% Adjusted Operating Income 100 65 (35) (35%) Adjusted EBITDA $184 $150 ($34) (18%) |
![]() 15 Prudent inventory and expense management • Actively managing inventories » Inventories per square foot were down for 19 consecutive months through March 2009 and are projected to end the year below 2008 levels » Assortments include a significant portion of seasonless basics » Continue to pursue turn improvement opportunities • New advanced planning systems » Provide end-to-end supply chain visibility to more productively react to current market conditions, including taking actions ranging from overhead reductions to delivering more targeted assortments at the store level • Reduced home office headcount by approximately 20% and annualized overhead by $350 – 400 million since 2007 » $100 million mid 2007 – mid 2008 » $50 million Fall 2008 » $150 million in 2009 » $50 - $100 million in 2010 |
![]() 16 Free cash flow ($ millions) • Despite lower volume, free cash flow generation improved in 2008 due to effective management of working capital, capital expenditures and expenses • We expect our strong free cash flow generation to continue for 2009 Average 2002 to 2007 2007 2008 2009F Net Income $718 $220 Depreciation and Amortization 352 343 Change in Working Capital (7) 109 Other 1 (298) 282 Net cash provided by operating activities $873 $765 $954 $550 - $650 Capital expenditures (468) (749) (479) (200) Free cash flow before dividends $405 $17 $475 $350 - $450 Dividends (227) (202) (194) Free cash flow after dividends ($210) $273 $156 - $256 1 2007 includes ($230 million) gain/loss on Express/Limited Stores divestitures, ($100 million) gain on Easton Town Center distribution and other assets and liability adjustments; 2008 includes $215 million goodwill impairment, ($109 million) gain on sale of joint venture, deferred income tax of $46 million, and other assets and liability adjustments |
![]() 17 Strong liquidity 84 936 916 Q109 Letters of credit — Available Revolver — Cash — Total Revolver: $1,000 million Total Liquidity: $1,852 million • Limited Brands maintains strong liquidity with total cash and available Revolver of $1,852 million at Q109 • The company has substantial cushion under its bank covenants – Total leverage covenant of 5.00x • 46% EBITDA cushion – EBITDAR / (interest + rents) covenant of 1.60x • 35% EBITDAR cushion |
![]() 18 Strong credit profile 1.1x 2.4x 2.7x 2.8x 2006 2007 2008 LTM Q109 Total leverage Rent-adjusted leverage Capital expenditures ($ millions) Rent-adjusted interest coverage 2.9x 4.0x 4.1x 4.2x 2006 2007 2008 LTM Q109 3.2x 2.7x 2.5x 2.5x 2006 2007 2008 LTM Q109 $548 $749 $479 $391 2006 2007 2008 LTM Q109 Note: These ratios do not reflect the Credit Facility covenants 1 Rent-adjusted leverage defined as: (Total debt + (8x minimum rent expense)) / (Adjusted EBITDA + minimum rent expense) 2 Rent-adjusted interest coverage defined as: (Adjusted EBITDA + minimum rent expense) / (interest expense + minimum rent expense) 2 1 |
![]() 19 2009 outlook • Economic environment » Global retail sector and our business continue to face a very uncertain and difficult environment • We have taken a conservative stance in terms of the financial management of our business • Pursuing opportunities in this market to bring compelling merchandise assortments, marketing and store experiences to our customers • International expansion » Anticipate opening approximately 25 Bath & Body Works and four PINK stores in Canada in 2009 • Six BBW stores opened in 2008 have exceeded our performance expectations, as have the two new openings in 2009 year to date » Continue to explore other international opportunities in 2009 • Capital expenditures » Plan to spend approximately $200 million on capital expenditures in 2009 • Majority relating to opening new stores and remodeling and improving existing stores • Expect to open approximately 60 new stores in the U.S. and Canada and to remodel approximately 50 stores during the year |
![]() 20 2009 guidance Guidance as of May 21, 2009 ($ millions) Source: Public filings, earnings transcripts, first quarter financial package 2008 2009 Outlook Comparable store sales (9.0%) (5.0%) – (10.0%) Gross margin rate 33.2% Flat to LY SG&A expense as % of sales 25.6% Up slightly to LY EPS $1.05 $0.67 - $0.87 Capital expenditures $479 ~ $200 Free cash flow $475 $350 - $450 |
![]() 21 Summary • We have a sound business with category-leading brands that generate substantial income and cash flow • We have been aggressively managing inventory, expenses and capital spending for the past two years » Continue to plan inventory, capital expenditure and expenses with a very conservative view of the business • We continue to emphasize maintaining a strong cash and liquidity position while optimizing our cost of capital • Our sales productivity remains among the best in the mall and our store fleet remains highly profitable across essentially all locations • We are focused on maximizing sales and margin opportunities in this challenging time |