The following discussion and analysis of financial condition and results of operations are based upon our Consolidated Financial Statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP"). The following information should be read in conjunction with our financial statements and the related notes included in Item
1. Financial Statements. Executive Overview
We had strong performance in the first quarter of 2012. Our operating income increased $76 million to $293 million and our operating income rate improved to 13.6% from 9.8%. Our 2011 operating income included a $50 million expense associated with a pledge to our charitable foundation to fund our charitable activities on a multi-year basis. Comparable store sales increased 7%, and net sales were $2.154 billion compared to $2.217 billion last year. First quarter 2011 sales included $214 million attributable to the third-party apparel sourcing business which was sold in November 2011. At Victoria's Secret, sales increased 8% and operating income increased 13%. At Bath & Body Works, sales increased 5% and operating income increased 11%. For additional information related to our first quarter 2012 financial performance, see "Results of Operations."

The global retail sector and our business continue to face an uncertain environment and, as a result, we continue to take a conservative stance in terms of the financial management of our business. We will continue to manage our business carefully and we will focus on the execution of the retail fundamentals.
At the same time, we are aggressively focusing on bringing compelling merchandise assortments, marketing and store and online experiences to our customers. We will look for, and capitalize on, those opportunities available to us in this uncertain environment. We believe that our brands, which lead their categories and offer high emotional content at accessible prices, are well positioned.

Store Data
The following table compares the first quarter of 2012 store data to the first
quarter of 2011:
                                             2012      2011      % Change
Sales per Average Selling Square Foot
Victoria's Secret Stores (a)               $   181    $  163       11  %
Bath & Body Works (a)                          125       118        6  %
La Senza (b)                                    86        83        4  %
Sales per Average Store (in thousands)
Victoria's Secret Stores (a)               $ 1,073    $  963       11  %
Bath & Body Works (a)                          298       279        7  %
La Senza (b)                                   286       275        4  %
Average Store Size (selling square feet)
Victoria's Secret Stores (a)                 5,950     5,907        1  %
Bath & Body Works (a)                        2,374     2,372        -  %
La Senza                                     3,318     3,319        -  %
Total Selling Square Feet (in thousands)
Victoria's Secret Stores (a)                 6,009     6,031        -  %
Bath & Body Works (a)                        3,758     3,802       (1 )%
La Senza (c)                                   660       830      (20 )%


________________

(b) Metric is presented in Canadian dollars to eliminate the impact of foreign currency fluctuations.

(c) During the fourth quarter of 2011, we initiated a restructuring program designed to resize a portion of La Senza's store fleet. Under this program, we closed 38 underperforming stores. Of these stores, 12 were closed as of January 28, 2012. The remainder were closed during the first quarter of 2012. For additional information, see Note 4 to the Consolidated Financial Statements included in Item 1. Financial Statements.

The following table compares first quarter of 2012 store data to the first quarter of 2011:

Number of Stores (a)        2012      2011
Victoria's Secret U.S.
Beginning of Period        1,017     1,028
Opened                         -         1
Closed                        (7 )      (8 )
End of Period              1,010     1,021
Bath & Body Works U.S.
Beginning of Period        1,587     1,606
Opened                         2         -
Closed                        (6 )      (3 )
End of Period              1,583     1,603
La Senza
Beginning of Period          230       252
Opened                         -         -
Closed (b)                   (31 )      (2 )
End of Period                199       250
Bath & Body Works Canada
Beginning of Period           69        59
Opened                         -         -
Closed                        (1 )       -
End of Period                 68        59
Victoria's Secret Canada
Beginning of Period           19        12
Opened                         1         -
Closed                         -         -
End of Period                 20        12
Henri Bendel
Beginning of Period           19        11
Opened                         -         -
Closed                         -         -
End of Period                 19        11
Total
Beginning of Period        2,941     2,968
Opened                         3         1
Closed                       (45 )     (13 )
End of Period              2,899     2,956


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(b) During the fourth quarter of 2011, we initiated a restructuring program designed to resize a portion of La Senza's store fleet. Under this program, we closed 38 underperforming stores. Of these stores, 12 were closed as of January 28, 2012. The remainder were closed during the first quarter of 2012. For additional information, see Note 4 to the Consolidated Financial Statements included in Item 1. Financial Statements.

Segment Reporting Change
In the fourth quarter of 2011, we ceased aggregating La Senza with Victoria's Secret. While this reporting change did not impact our consolidated results, segment data for previous years has been recast to be consistent with the current year presentation throughout.

Results of Operations
First Quarter of 2012 Compared to First Quarter of 2011
Operating Income
The following table provides our segment operating income (loss) and operating
income rates (expressed as a percentage of net sales) for the first quarter of
2012 in comparison to the first quarter of 2011:

                                               Operating Income Rate
                         2012       2011        2012           2011
First Quarter             (in millions)
Victoria's Secret      $   278     $ 245        18.9  %        18.1  %
Bath & Body Works           60        54        11.9  %        11.3  %
Other (a) (b)              (45 )     (82 )     (25.0 )%       (21.5 )%
Total Operating Income $   293     $ 217        13.6  %         9.8  %

(a) Includes Corporate, Mast Global, Henri Bendel and our international operations including La Senza. In the fourth quarter of 2011, we divested 51% of our third-party apparel sourcing business. As such, results of this business are included in the first quarter of 2011 but not the first quarter of 2012. For additional information, see Note 8 to the Consolidated Financial Statements included in Item 1. Financial Statements.

(b) 2011 includes a $50 million expense associated with a pledge to our charitable foundation to fund our charitable activities on a multi-year basis.

For the first quarter of 2012, operating income increased $76 million to $293 million and the operating income rate increased to 13.6% from 9.8%. The drivers of the operating income results are discussed in the following sections. Net Sales
The following table provides net sales for the first quarter of 2012 in comparison to the first quarter of 2011:

                           2012       2011      % Change
First Quarter               (in millions)
Victoria's Secret Stores $ 1,088    $   987       10  %
Victoria's Secret Direct     382        369        4  %
Total Victoria's Secret    1,470      1,356        8  %
Bath & Body Works            505        480        5  %
Other (a)                    179        381      (53 )%
Total Net Sales          $ 2,154    $ 2,217       (3 )%

(a) Includes Corporate, Mast Global, Henri Bendel and our international operations including La Senza. In the fourth quarter of 2011, we divested 51% of our third-party apparel sourcing business. First quarter 2011 sales included $214 million attributable to the third-party apparel sourcing business. For additional information, see Note 8 to the Consolidated Financial Statements included in Item 1. Financial Statements.

The following table provides a reconciliation of net sales for the first quarter of 2012 to the first quarter of 2011:

                                   Victoria's         Bath &
                                     Secret         Body Works          Other           Total
First Quarter                                             (in millions)
2011 Net Sales                   $      1,356     $         480     $       381     $     2,217
Comparable Store Sales                     87                24              (2 )           109
Sales Associated with New,
Closed, and Non-comparable
Remodeled Stores, Net                      14                 -               9              23
Foreign Currency Translation                -                 -              (2 )            (2 )
Direct Channels                            13                 1               -              14
Mast Global and Other                       -                 -               7               7
Divestiture of Third-party
Apparel Sourcing Business                   -                 -            (214 )          (214 )
2012 Net Sales                   $      1,470     $         505     $       179     $     2,154

The following table compares the first quarter of 2012 comparable store sales to the first quarter of 2011:

First Quarter                    2012    2011
Victoria's Secret Stores          9 %     19 %
Bath & Body Works                 6 %     11 %
Total Comparable Store Sales (a)  7 %     15 %

(a) Includes La Senza, Bath & Body Works Canada, Victoria's Secret Canada and Henri Bendel.

For the first quarter of 2012, our net sales decreased $63 million to $2.154 billion and comparable store sales increased 7%. First quarter 2011 sales included $214 million attributable to the third-party apparel sourcing business which was sold in November 2011. The change in our net sales was driven by the following:

Victoria's Secret

For the first quarter of 2012, net sales increased $114 million to $1.470 billion and comparable store sales increased 9%. The increase in net sales was primarily driven by the following:
• At Victoria's Secret Stores, net sales increased across most categories including core lingerie, Pink and beauty, driven by a compelling merchandise assortment that incorporated newness, innovation and fashion as well as in-store execution; and

• At Victoria's Secret Direct, net sales increased 4% related to increases in Pink, swimwear and knit clothing.

The increase in comparable store sales was primarily driven by an increase in higher average dollar sales at Victoria's Secret Stores. Bath & Body Works
For the first quarter of 2012, net sales increased $25 million to $505 million and comparable store sales increased 6%. From a merchandise category perspective, net sales were driven by growth in the home fragrance, Signature Collection, and antibacterial categories which all incorporated newness and innovation. The increase in comparable store sales was driven by an increase in average dollar sales.
Other
For the first quarter of 2012, net sales decreased $202 million to $179 million primarily related to the divestiture of the third-party sourcing business in the fourth quarter of 2011 and a decrease in sales at La Senza due to store closures. This decrease was partially offset by growth in Victoria's Secret and Bath & Body Works sales in Canada.

Gross Profit
For the first quarter of 2012, our gross profit increased $60 million to $902 million and our gross profit rate (expressed as a percentage of net sales) increased to 41.9% from 38.0%, primarily driven by the following:
Victoria's Secret

For the first quarter of 2012, the gross profit increase was primarily driven by the following:
• At Victoria's Secret Stores, gross profit increased due to higher merchandise margin dollars as a result of the increase in net sales. The increase in merchandise margin dollars was partially offset by higher buying and occupancy expenses due to an increase in occupancy expense driven by higher net sales and store related activity; and

• At Victoria's Secret Direct, gross profit increased primarily due to higher merchandise margin dollars as a result of the increase in net sales.

The gross profit rate was roughly flat driven primarily by a decrease in the merchandise margin rate due to increased product costs and gift with purchase programs offset by a decrease in buying and occupancy expense rate due to leverage associated with higher sales.

Bath & Body Works

For the first quarter of 2012, the gross profit increase was driven by higher merchandise margin dollars related to the increase in net sales. The increase in merchandise margin dollars was partially offset by an increase in buying and occupancy expenses driven by higher occupancy costs related to the increase in net sales and store related activity. The gross profit rate decreased driven primarily by a decrease in the merchandise margin rate due to increased costs and promotional activities, partially offset by a decrease in buying and occupancy expense rate due to leverage associated with higher sales. Other

For the first quarter of 2012, the gross profit increase was primarily driven by higher merchandise margin dollars at Mast Global related to net sales increases to our internal brands and higher merchandise margin dollars related to net sales increases in our Canadian Victoria's Secret and Bath & Body Works stores. The increase was partially offset by a decrease in gross profit related to the divestiture of the third-party apparel sourcing business. The gross profit rate increased significantly primarily driven by the divestiture of the third-party apparel sourcing business in the fourth quarter of 2011 which removed lower margin sales.

General, Administrative and Store Operating Expenses

For the first quarter of 2012, our general, administrative and store operating expenses decreased $16 million to $609 million primarily due to the $50 million expense associated with a pledge to our charitable foundation in the first quarter of 2011. This decrease was partially offset by:
• An increase in store selling expenses related to higher sales and other investments to improve the customer experience, including investments in training and technology;

• An increase in expenses resulting from increased international expansion; and

• An increase in severance expense.

The general, administrative and store operating expense rate increased slightly to 28.3% from 28.2% primarily due to the factors mentioned above. Other Income and Expense
Interest Expense
The following table provides the average daily borrowings and average borrowing rates for the first quarter of 2012 and 2011:

First Quarter                             2012        2011
Average daily borrowings (in millions)  $ 4,454     $ 2,954
Average borrowing rate (in percentages)    6.63 %      6.98 %

For the first quarter of 2012, our interest expense increased $23 million to $78 million primarily driven by an increase in average borrowings related to the February 2012 $1 billion note issuance, partially offset by a decrease in the average borrowing rate.
Other Income
For the first quarter of 2012, our other income decreased $89 million to a $2 million loss primarily driven by an $86 million gain related to the sale of a portion of our shares of Express, Inc. common stock in the first quarter of 2011.

Provision for Income Taxes

For the first quarter of 2012, our effective tax rate was 41.6% as compared to 33.6% in the first quarter of 2011. The first quarter 2012 rate was higher than our combined estimated federal and state rate of 39.0% primarily due to losses related to certain foreign subsidiaries. The first quarter of 2011 was lower than our combined estimated federal and state rate primarily due to favorable resolution of certain tax matters.

FINANCIAL CONDITION
Liquidity and Capital Resources
Liquidity, or access to cash, is an important factor in determining our financial stability. We are committed to maintaining adequate liquidity. Cash generated from our operating activities provides the primary resources to support current operations, growth initiatives, seasonal funding requirements and capital expenditures. Our cash provided from operations is impacted by our net income and working capital changes. Our net income is impacted by, among other things, sales volume, seasonal sales patterns, success of new product introductions and profit margins. Historically, sales are higher during the fourth quarter of the fiscal year due to seasonal and holiday-related sales patterns. Generally, our need for working capital peaks during the summer and fall months as inventory builds in anticipation of the holiday period. Our total cash and cash equivalents held by foreign subsidiaries were $530 million as of April 28, 2012. Under current tax laws and regulations, if cash and cash equivalents held outside the U.S. are repatriated to the U.S., in certain circumstances we may be subject to additional U.S. income taxes and foreign withholding taxes.

The following table provides our long-term debt balance as of April 28, 2012, January 28, 2012 and April 30, 2011:

                                                     April 28,      January 28,      April 30,
                                                        2012           2012            2011
                                                                   (in millions)
Senior Unsecured Debt with Subsidiary Guarantee
$1 billion, 5.625% Fixed Interest Rate Notes due
February 2022 ("2022 Notes")                        $    1,000     $         -     $         -
$1 billion, 6.625% Fixed Interest Rate Notes due
April 2021 ("2021 Notes")                                1,000           1,000           1,000
$500 million, 8.50% Fixed Interest Rate Notes due
June 2019, Less Unamortized Discount ("2019 Notes")        488             488             487
$400 million, 7.00% Fixed Interest Rate Notes due
May 2020 ("2020 Notes")                                    400             400             400
Total Senior Unsecured Debt with Subsidiary
Guarantee                                           $    2,888     $     1,888     $     1,887
Senior Unsecured Debt
$700 million, 6.90% Fixed Interest Rate Notes due
July 2017, Less Unamortized Discount ("2017
Notes")(a)                                          $      723     $       724     $       700
$350 million, 6.95% Fixed Interest Rate Debentures
due March 2033, Less Unamortized Discount ("2033
Notes")                                                    350             350             350
$300 million, 7.60% Fixed Interest Rate Notes due
July 2037, Less Unamortized Discount ("2037 Notes")        299             299             299
5.25% Fixed Interest Rate Notes due November 2014,
Less Unamortized Discount ("2014 Notes")(b)                220             220             216
6.125% Fixed Interest Rate Notes due December 2012,
Less Unamortized Discount ("2012 Notes")(c)                 57              57              58
Total Senior Unsecured Debt                         $    1,649     $     1,650     $     1,623
Total                                               $    4,537     $     3,538     $     3,510
Current Portion of Long-term Debt                          (57 )           (57 )             -
Total Long-term Debt                                $    4,480     $     3,481     $     3,510

(a) The balances include a fair value interest rate hedge adjustment which increased the debt balance by $24 million as of April 28, 2012, $25 million as of January 28, 2012 and $1 million as of April 30, 2011.

(b) The principal balance outstanding was $213 million as of April 28, 2012, January 28, 2012 and April 30, 2011. The balances include a fair value interest rate hedge adjustment which increased the debt balance by $7 million as of April 28, 2012 and January 28, 2012 and $3 million as of April 30, 2011.

(c) The principal balance outstanding was $57 million as of April 28, 2012, January 28, 2012 and April 30, 2011. The April 30, 2011 balance includes a fair value interest rate hedge adjustment which increased the debt balance by $1 million.

Issuance of Notes
In February 2012, we issued $1 billion of 5.625% notes due in February 2022 utilizing an existing shelf registration under which debt securities, common and preferred stock and other securities can be issued. The 2022 Notes are jointly and severally guaranteed on a full and unconditional basis by the Guarantors. The proceeds from the issuance were $985 million, which were net of transaction costs of $15 million.
In March 2011, we issued $1 billion of 6.625% notes due in April 2021 utilizing an existing shelf registration under which debt securities, common and preferred stock and other securities can be issued. The 2021 Notes are jointly and severally guaranteed on a full and unconditional basis by the Guarantors. The proceeds from the issuance were $981 million, which were net of transaction costs of $19 million.
Revolving Facility
On July 15, 2011, we entered into an amendment and restatement ("Amendment") of our secured revolving credit facility ("Revolving Facility"). The Amendment increased the aggregate amount of the commitments of the lenders under the Revolving Facility from $800 million to $1 billion and extended the termination date from August 1, 2014 to July 15, 2016. In addition, the Amendment reduced fees payable under the Revolving Facility which are based on our long-term credit ratings. The fees related to committed and unutilized amounts per year were reduced from 0.50% to 0.325% per annum and the fees related to outstanding letters of credit were reduced from 3.00% to 1.75% per annum. In addition, the interest rate on

outstanding borrowings was reduced from the London Interbank Offered Rate ("LIBOR") plus 3.00% to LIBOR plus 1.75%.
We incurred fees related to the Amendment of the Revolving Facility of $7 million, which were capitalized and are being amortized over the remaining term of the Revolving Facility.
The Revolving Facility contains fixed charge coverage and debt to EBITDA financial covenants. We are required to maintain a fixed charge coverage ratio of not less than 1.75 to 1.00 and a consolidated debt to consolidated EBITDA ratio not exceeding 4.00 to 1.00 for the most recent four-quarter period. In addition, the Revolving Facility provides that investments outside of the Guarantors and restricted payments may be made, without limitation on amount, if
(a) at the time of and after giving effect to such investment or restricted payment the ratio of consolidated debt to consolidated EBITDA for the most recent four-quarter period is less than 3.00 to 1.00 and (b) no default or event of default exists. As of April 28, 2012, we were in compliance with both of our financial covenants and the ratio of consolidated debt to consolidated EBITDA was less than 3.00 to 1.00. As of April 28, 2012, there were no borrowings outstanding under the Revolving Facility. Letters of Credit
The Revolving Facility supports our letter of credit program. We had $9 million of outstanding letters of credit as of April 28, 2012 that reduces our remaining availability under our credit agreements. Fair Value Interest Rate Swap Arrangements We have the following interest rate swap arrangements related to certain outstanding debt:

                                  Notional Amount
              April 28, 2012      January 28, 2012     April 30, 2011
                                   (in millions)
2012 Notes   $              -    $               -    $             57
2014 Notes                  -                    -                 213
2017 Notes                175                  175                 325
Total        $            175    $             175    $            595

The interest rate swap arrangements effectively convert the fixed interest rate on the related debt to a variable interest rate based on LIBOR plus a fixed interest rate.
The swap arrangements are designated as fair value hedges. The changes in the fair value of the interest rate swaps have an equal and offsetting impact to the carrying value of the debt on the balance sheet. The differential to be paid or received on the interest rate swap arrangements is accrued and recognized as an adjustment to interest expense.
In July 2011, we terminated interest rate designated fair value hedges related to the 2012 Notes with a notional amount of $57 million. In settlement of these hedges, we received $1 million. In August 2011, we terminated interest rate designated fair value hedges related to the 2014 Notes with a notional amount of $213 million. In settlement of these hedges, we received $9 million. In September 2011, we terminated interest rate designated fair value hedges related to the 2017 Notes with a notional amount of $150 million. In settlement of these hedges, we received $12 million. The carrying values of the respective Notes include the settlement amounts received upon termination of the hedges. The settlement amounts are amortized as a reduction to interest expense through the maturity date of the respective Notes.
Working Capital and Capitalization
We believe that our available short-term and long-term capital resources are sufficient to fund foreseeable requirements.

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