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SECURITIES AND EXCHANGE COMISSIONWashington, D.C. 20549

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FORM 10-Q

|/x/ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|--- | ---------------------------------------------------------------------------------------

For the quarterly period ended July 29, 2000

OR

|/ / | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|--- | ----------------------------------------------------------------------------------------

For the transition period from  to

Commission file number 1-13814

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INTIMATE BRANDS, INC.(Exact name of registrant as specified in its charter)

Delaware(State or other jurisdiction of
incorporation or organization)

31-1436998(I.R.S. Employer Identification No.)Three Limited Parkway, P.O. Box 16000,Columbus, OH(Address of principal executive offices)

43216(Zip Code)


Registrant's
telephone number, including area code(614) 415-6900

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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes /x/  No / /

Indicate
the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.

Class A Common Stock

Outstanding at August 25, 2000$.01 Par Value

78,627,707 Shares


Class B Common Stock

Outstanding at August 25, 2000$.01 Par Value

411,625,902 Shares


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INTIMATE BRANDS, INC.

TABLE OF CONTENTS

|                              |                                                                                               | Page No.                                                                                             
|----------------------------- | --------------------------------------------------------------------------------------------- | -----------------------------------------------------------------------------------------------------
|Part I. Financial Information |                                                                                               |                                                                                                      
|                              | Item 1. Financial Statements                                                                  |                                                                                                      
|                              |                                                                                               | Consolidated Statements of Income
Thirteen and Twenty-six Weeks Ended July 29, 2000 and July 31, 1999
|                              |                                                                                               | Consolidated Balance Sheets
July 29, 2000, January 29, 2000 and July 31, 1999                        
|                              |                                                                                               | Consolidated Statements of Cash Flows
Twenty-six Weeks Ended July 29, 2000 and July 31, 1999         
|                              |                                                                                               | Notes to Consolidated Financial Statements                                                           
|                              | Item 2. Management's Discussion and Analysis of Results of Operations and Financial Condition |                                                                                                      
|Part II. Other Information    |                                                                                               |                                                                                                      
|                              | Item 1. Legal Proceedings                                                                     |                                                                                                      
|                              | Item 5. Other Information                                                                     |                                                                                                      
|                              | Item 6. Exhibits and Reports on Form 8-K                                                      |                                                                                                      
|                              |                                                                                               |                                                                                                      

2

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## 

PART IFINANCIAL INFORMATION

Item 1.  FINANCIAL STATEMENTS

INTIMATE BRANDS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(Thousands except per share amounts)
(Unaudited)

|                           |                                                      | Thirteen Weeks Ended |           | Twenty-six Weeks Ended |  
|-------------------------- | ---------------------------------------------------- | -------------------- | --------- | ---------------------- | -
|
|Net sales                  |                                                      | $                    | 1,149,779 |                        | $
|                           | Costs of goods sold and buying and occupancy costs   |                      |           | (699,657               | )
|                           |                                                      |                      |           |                        |  
|Gross income               |                                                      |                      | 450,122   |                        |  
|                           | General, administrative and store operating expenses |                      |           | (279,454               | )
|                           |                                                      |                      |           |                        |  
|Operating income           |                                                      |                      | 170,668   |                        |  
|                           | Interest expense                                     |                      |           | (5,350                 | )
|                           | Other income                                         |                      |           | 872                    |  
|                           |                                                      |                      |           |                        |  
|Income before income taxes |                                                      |                      | 166,190   |                        |  
|                           | Provision for income taxes                           |                      |           | 66,400                 |  
|                           |                                                      |                      |           |                        |  
|Net income                 |                                                      | $                    | 99,790    |                        | $
|                           |                                                      |                      |           |                        |  
|Net income per share:      |                                                      |                      |           |                        |  
|                           | Basic                                                |                      | $         | 0.20                   |  
|                           |                                                      |                      |           |                        |  
|                           | Diluted                                              |                      | $         | 0.20                   |  
|                           |                                                      |                      |           |                        |  
|Dividends per share        |                                                      | $                    | 0.07      |                        | $
|                           |                                                      |                      |           |                        |  

The
accompanying Notes are an integral part of these Consolidated Financial Statements.

3

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INTIMATE BRANDS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Thousands)

|                                           |                                       | July 29,
2000 |           | January 29,
2000 |   | July 31,
1999 |          
|------------------------------------------ | ------------------------------------- | ------------- | --------- | ---------------- | - | ------------- | ---------
|
|ASSETS                                     |                                       |               |           |                  |   |               |          
|Current assets:                            |                                       |               |           |                  |   |               |          
|                                           | Cash and equivalents                  |               | $         | 18,043           |   | $             | 76,373   
|                                           | Accounts receivable                   |               |           | 16,271           |   |               | 18,135   
|                                           | Inventories                           |               |           | 653,888          |   |               | 583,469  
|                                           | Store supplies                        |               |           | 41,971           |   |               | 42,103   
|                                           | Other                                 |               |           | 44,913           |   |               | 51,832   
|                                           |                                       |               |           |                  |   |               |          
|Total current assets                       |                                       |               | 775,086   |                  |   | 771,912       |          
|Property and equipment, net                |                                       |               | 455,156   |                  |   | 449,043       |          
|Other assets                               |                                       |               | 124,134   |                  |   | 124,036       |          
|                                           |                                       |               |           |                  |   |               |          
|Total assets                               |                                       | $             | 1,354,376 |                  | $ | 1,344,991     |          
|                                           |                                       |               |           |                  |   |               |          
|LIABILITIES AND SHAREHOLDERS' EQUITY       |                                       |               |           |                  |   |               |          
|Current liabilities:                       |                                       |               |           |                  |   |               |          
|                                           | Accounts payable                      |               | $         | 113,553          |   | $             | 102,446  
|                                           | Current portion of long-term debt     |               |           | 150,000          |   |               | 150,000  
|                                           | Accrued expenses                      |               |           | 214,423          |   |               | 248,729  
|                                           | Payable to The Limited, Inc.          |               |           | 275,765          |   |               | 23,741   
|                                           | Income taxes                          |               |           |                 |   |               | 128,845  
|                                           |                                       |               |           |                  |   |               |          
|Total current liabilities                  |                                       |               | 753,741   |                  |   | 653,761       |          
|Long-term debt                             |                                       |               | 100,000   |                  |   | 100,000       |          
|Deferred income taxes                      |                                       |               | 128       |                  |   | 816           |          
|Other long-term liabilities                |                                       |               | 48,818    |                  |   | 45,683        |          
|Shareholders' equity:                      |                                       |               |           |                  |   |               |          
|                                           | Common stock                          |               |           | 5,305            |   |               | 2,646    
|                                           | Paid-in capital                       |               |           | 1,209,939        |   |               | 1,217,806
|                                           | Retained earnings (deficit)           |               |           | (15,027          | ) |               | (113,067 
|                                           |                                       |               |           |                  |   |               |          
|                                           |                                       |               | 1,200,217 |                  |   | 1,107,385     |          
|                                           | Less: treasury stock, at average cost |               |           | (748,528         | ) |               | (562,654 
|                                           |                                       |               |           |                  |   |               |          
|Total shareholders' equity                 |                                       |               | 451,689   |                  |   | 544,731       |          
|                                           |                                       |               |           |                  |   |               |          
|Total liabilities and shareholders' equity |                                       | $             | 1,354,376 |                  | $ | 1,344,991     |          
|                                           |                                       |               |           |                  |   |               |          

The
accompanying Notes are an integral part of these Consolidated Financial Statements.

4

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INTIMATE BRANDS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Thousands)
(Unaudited)

|                                                     |                                                                                              | Twenty-six Weeks Ended             |                                      
|---------------------------------------------------- | -------------------------------------------------------------------------------------------- | ---------------------------------- | -------------------------------------
|
|Operating activities:                                |                                                                                              |                                    |                                      
|                                                     | Net income                                                                                   |                                    | $                                    
|                                                     | Adjustments to reconcile net income to net cash provided by (used for) operating activities: |                                    |                                      
|                                                     |                                                                                              | Depreciation and amortization      |                                      
|                                                     |                                                                                              | Changes in assets and liabilities: |                                      
|                                                     |                                                                                              |                                    | Inventories                          
|                                                     |                                                                                              |                                    | Accounts payable and accrued expenses
|                                                     |                                                                                              |                                    | Income taxes                         
|                                                     |                                                                                              |                                    | Other assets and liabilities         
|                                                     |                                                                                              |                                    |                                      
|Net cash provided by (used for) operating activities |                                                                                              |                                    | 12,291                               
|                                                     |                                                                                              |                                    |                                      
|Investing activities:                                |                                                                                              |                                    |                                      
|                                                     | Capital expenditures                                                                         |                                    |                                      
|                                                     |                                                                                              |                                    |                                      
|Financing activities:                                |                                                                                              |                                    |                                      
|                                                     | Dividends paid                                                                               |                                    |                                      
|                                                     | Change in payable to The Limited, Inc.                                                       |                                    |                                      
|                                                     | Repurchase of common stock                                                                   |                                    |                                      
|                                                     | Stock options and other                                                                      |                                    |                                      
|                                                     |                                                                                              |                                    |                                      
|Net cash used for financing activities               |                                                                                              |                                    | (8,688                               
|                                                     |                                                                                              |                                    |                                      
|Net decrease in cash and equivalents                 |                                                                                              |                                    | (58,330                              
|Cash and equivalents, beginning of year              |                                                                                              |                                    | 76,373                               
|                                                     |                                                                                              |                                    |                                      
|Cash and equivalents, end of period                  |                                                                                              | $                                  | 18,043                               
|                                                     |                                                                                              |                                    |                                      

In
1999, noncash financing activities include the addition of $0.1 million common stock and $544.9 million paid-in capital as a result of the 5% stock
dividend which resulted in the issuance of 23.6 million additional shares of common stock (see Note 2).

The
accompanying Notes are an integral part of these Consolidated Financial Statements.

5

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## 

INTIMATE BRANDS, INC. AND SUBSIDIARIES       NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1.  Basis of Presentation

Intimate Brands, Inc. (the Company) includes specialty retail and catalogue operations, which offer women's intimate and other apparel, personal care
products and accessories. The Company consists of Victoria's Secret Stores, Victoria's Secret Catalogue, Bath & Body Works, and Gryphon Development. The Limited, Inc. owns 84% of the
outstanding common stock of the Company.

The
consolidated financial statements include the accounts of the Company and all significant subsidiaries which are more than 50 percent owned and controlled. All significant
intercompany balances and transactions have been eliminated in consolidation.

The
consolidated financial statements as of and for the thirteen and twenty-six week periods ended July 29, 2000 and July 31, 1999 are unaudited and are
presented pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, these consolidated financial statements should be read in conjunction with the consolidated
financial statements and notes thereto contained in the Company's 1999 Annual Report on Form 10-K. In the opinion of management, the accompanying consolidated financial statements
reflect all adjustments (which are of a normal recurring nature) necessary to present fairly the financial position and results of operations and cash flows for the interim periods, but are not
necessarily indicative of the results of operations for a full fiscal year.

The
consolidated financial statements as of and for the thirteen and twenty-six week periods ended July 29, 2000 and July 31, 1999 included herein have been
reviewed by the independent public accounting firm of PricewaterhouseCoopers LLP and the report of such firm follows the Notes to Consolidated Financial Statements. PricewaterhouseCoopers LLP is not
subject to the liability provisions of Section 11 of the Securities Act of 1933 for its report on the consolidated financial statements because that report is not a "report" within the meaning
of Sections 7 and 11 of that Act.

On
June 15, 1998, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards No. 133, Accounting for Derivative Instruments and
Hedging Activities (FAS 133). FAS 133 is effective for all fiscal quarters of all fiscal years beginning after June 15, 2000 (February 4, 2001 for the Company).
FAS 133 requires that all derivative instruments be recorded on the balance sheet at their fair value. Changes in the fair value of derivatives are recorded each period in current earnings or
other comprehensive income, depending on whether a derivative is designated as part of a hedge transaction and, if it is, the type of hedge transaction. Management of the Company anticipates that, due
to its limited use of derivative instruments, the adoption of FAS 133 will not have a significant effect on the Company's results of operations or its financial position.

2.  Shareholders' Equity and Earnings Per Share

On May 2, 2000, the Company declared a two-for-one stock split in the form of a stock dividend distributed on May 30,
2000 to shareholders of record on May 12, 2000. Shareholders' equity reflects the reclassification of an amount equal to the par value of the increase in issued common shares
($2.7 million) from paid-in capital to common stock.

Additionally,
on June 22, 1999, the Company declared a five percent stock dividend to both The Limited and public shareholders of record as of July 2, 1999, which
resulted in the issuance of 23.6 million shares of common stock. Accordingly, common stock, paid-in capital and retained earnings were adjusted based on the fair market value of the
additional shares issued.

All
share and per share data throughout this report has been restated to reflect the above transactions.

6

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Weighted average common shares outstanding (thousands):

Thirteen Weeks Ended

Twenty-six Weeks EndedJuly 29,
2000

July 31,
1999

July 29,
2000

July 31,
1999Common shares issued

532,021

531,656

531,939

531,566Treasury shares

(38,652
)
(34,100
)
(35,935
)
(30,184
)Basic shares

493,369

497,556

496,004

501,382Dilutive effect of stock options and restricted shares

7,442

9,036

6,828

8,668Diluted shares

500,811

506,592

502,832

510,050


The
computation of earnings per diluted share excludes options to purchase 0.5 million and 0.1 million shares of common stock at quarter-end 2000 and 1999,
because the options' exercise price was greater than the average market price of the common shares during the period.

3.  Inventories

The fiscal year of the Company and its subsidiaries is comprised of two principal selling seasons: spring (the first and second quarters) and fall (the third
and fourth quarters). Valuation of finished goods inventories is based principally upon the lower of average cost or market determined on a first-in, first-out basis using the
retail method. Inventory valuation at the end of the first and third quarters reflects adjustments for inventory markdowns and shrinkage estimates for the total selling season.

4.  Property and Equipment, Net

Property and equipment, net, consisted of (thousands):

July 29,
2000

January 29,
2000

July 31,
1999Property and equipment, at cost

$
990,495

$
936,612

$
869,086Accumulated depreciation and amortization


(535,339
)

(487,569
)

(455,267
)Property and equipment, net

$
455,156

$
449,043

$
413,819


5.  Income Taxes

The Company is included in The Limited's consolidated federal and certain state income tax groups for income tax reporting purposes and is responsible for its
proportionate share of income taxes calculated
upon its federal taxable income at a current estimate of the Company's annual effective tax rate. Income taxes paid to The Limited during the twenty-six weeks ended July 29, 2000
and July 31, 1999 approximated $244 million and $183 million. Income tax assets of $2.7 million, which were net of income taxes payable of $39.4 million, were
included in other current assets at July 29, 2000.

6.  Long-term Debt

Long-term debt consists of notes which represent the Company's proportionate share of certain long-term debt of The Limited. The
interest rates and maturities of the notes parallel those of the corresponding debt of The Limited. The 71/2% debentures are subject to early redemption beginning in 2003 concurrent
with any prepayment of the corresponding debt by The Limited.

7

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Unsecured long-term debt consisted of (thousands):

July 29,
2000

January 29,
2000

July 31,
199971/2% Debentures due March 2023

$
100,000

$
100,000

$
100,00091/8% Notes due February 2001


150,000


150,000


150,00087/8% Note paid August 1999








100,000250,000


250,000


350,000Less: current portion of long-term debt


150,000


150,000


100,000$
100,000

$
100,000

$
250,000


Interest
paid during the twenty-six weeks ended July 29, 2000 and July 31, 1999, including interest on the intercompany cash management account (see
Note 7), approximated $10.7 million and $16.8 million.

7.  Intercompany Relationship with the Parent

The Limited provides various services to the Company including, but not limited to, store design and construction supervision, real estate management, travel
and flight support and merchandise sourcing. To the extent expenditures are specifically identifiable they are charged to the Company. All other service-related costs not specifically attributable to
an operating business have been allocated to the Company based upon various allocation methods, which the Company believes are reasonable. The Company and The Limited have entered into intercompany
agreements which establish the provision of services in accordance with the terms described above.

The
Company participates in The Limited's centralized cash management system. Under this system cash received from the Company's operations is transferred to The Limited's centralized
cash accounts and cash disbursements are funded from the centralized cash accounts on a daily basis. The intercompany cash management account is an interest-earning asset or interest-bearing liability
of the Company. Interest on the intercompany cash management account is calculated based on the Federal Reserve AA Composite 30-day rate.

The
Company's proprietary credit card processing is performed by Alliance Data Systems, which is approximately 31%-owned by The Limited.

The
Company and The Limited are parties to a corporate agreement under which the Company granted to The Limited a continuing option to purchase, under certain circumstances,
additional shares of Class B Common Stock or shares of nonvoting capital stock of the Company. The Corporate Agreement further provides that, upon request of The Limited, the Company will use
its best efforts to effect the registration of any of the shares of Class B Common Stock and nonvoting capital stock held by The Limited for sale.

8.  Segment Information

The Company identifies operating segments based on a business's operating characteristics. Reportable segments were determined based on similar economic
characteristics, the nature of products and services, and the method of distribution. The retail segment includes the store-based operations of Victoria's Secret Stores and Bath & Body Works,
and Gryphon. The Catalogue segment consists of the Victoria's Secret Catalogue operations. Sales outside the United States were not significant.

8

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Segment information as of and for the thirteen and twenty-six weeks ended July 29, 2000 and July 31, 1999 follows (in thousands):

2000

Retail

Catalogue

Corporate

TotalThirteen Weeks:Net sales

$
916,795

$
232,984




$
1,149,779Operating income (loss)


174,581


24,540

$
(28,453
)

170,668Twenty-six Weeks:Net sales


1,725,272


436,759





2,162,031Operating income (loss)


296,311


45,253


(54,625
)

286,939Total assets


1,179,233


165,736


9,407


1,354,376


1999

Retail

Catalogue

Corporate

TotalThirteen Weeks:Net sales

$
792,383

$
224,726




$
1,017,109Operating income (loss)


149,983


27,256

$
(21,301
)

155,938Twenty-six Weeks:Net sales


1,476,197


418,733





1,894,930Operating income (loss)


248,408


44,357


(42,133
)

250,632Total assets


978,660


184,440


2,983


1,166,083


In
addition to its operating segments, management also focuses on Victoria's Secret as a brand. Sales of the Victoria's Secret brand grew 11% to $788.7 million for the thirteen
weeks ended July 29, 2000, and 12% to $1.492 billion for the twenty-six weeks ended July 29, 2000.

9

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## 

Report of Independent Accountants

To
the Board of Directors and
Shareholders of
Intimate Brands, Inc.

We
have reviewed the accompanying condensed consolidated balance sheets of Intimate Brands, Inc. and its subsidiaries (the "Company") as of July 29, 2000 and
July 31, 1999, and the related condensed consolidated statements of income for each of the thirteen and twenty-six week periods ended July 29, 2000 and July 31, 1999
and the condensed consolidated statements of cash flows for the twenty-six week periods ended July 29, 2000 and July 31, 1999. These financial statements are the
responsibility of the Company's management.

We
conducted our review in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists
principally of applying analytical procedures to financial data and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit
conducted in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not
express such an opinion.

Based
on our review, we are not aware of any material modifications that should be made to the accompanying condensed consolidated interim financial statements for them to be in
conformity with generally accepted accounting principles.

We
previously audited in accordance with generally accepted auditing standards, the consolidated balance sheet as of January 29, 2000, and the related consolidated statements
of income, shareholders' equity, and cash flows for the year then ended (not presented herein), and in our report dated
February 16, 2000 we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance
sheet as of January 29, 2000, is fairly stated in all material respects in relation to the consolidated balance sheet from which it has been derived.

|/s/PRICEWATERHOUSECOOPERS LLP |  | 
|----------------------------- |  | 
|PricewaterhouseCoopers LLP    |  | 

Columbus,
Ohio
August 15, 2000

10

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## 

Item 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION

RESULTS OF OPERATIONS

Net sales for the second quarter of 2000 were $1.150 billion, an increase of 13% from $1.017 billion for the second quarter of 1999. Gross income
increased 14% to $450.1 million from $393.9 million in 1999, and operating income increased 9% to $170.7 million from $155.9 million in 1999. Net income was
$99.8 million, an increase of 12% from $88.9 million in 1999. Earnings per share grew 11% to $0.20 per share from $0.18 per share in 1999 (adjusted to reflect the
two-for-one stock split declared on May 2, 2000).

Second
quarter highlights included the following:



Net
sales for the twenty-six weeks ended July 29, 2000 were $2.162 billion, an increase of 14% from $1.895 billion in 1999. The increase was driven by
a 10% comparable store sales increase and an 11% increase in selling square feet. Gross income increased 16% to $834.5 million from $720.5 million in 1999, and operating income increased
14% to $286.9 million from $250.6 million in 1999. Net income was $167.7 million, an increase of 18% from $141.6 million in 1999. Earnings per share increased 18% to $0.33 per
share from $0.28 per share in 1999.

11

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Financial Summary

The following summarized financial and statistical data compares the thirteen week and twenty-six week periods ended July 29, 2000 to the
comparable 1999 periods:

Second Quarter

Year-To-Date2000

1999

Change

2000

1999

ChangeNet Sales (millions):Victoria's Secret Stores

$
556

$
485

15
%
$
1,055

$
908

16
%Bath & Body Works


355


303

17
%

659


561

17
%Other (principally Gryphon)


6


4

N/M


11


7

N/MTotal retail sales


917


792

16
%

1,725


1,476

17
%Victoria's Secret Catalogue


233


225

4
%

437


419

4
%Total net sales

$
1,150

$
1,017

13
%
$
2,162

$
1,895

14
%Comparable Store Sales:Victoria's Secret Stores


12
%

13
%



13
%

13
%Bath & Body Works


3
%

9
%



5
%

11
%Total comparable store sales increase


9
%

12
%



10
%

12
%


---

N/M  Not
meaningful

|                                                                    |                          | Second Quarter |       | Year-To-Date |  
|------------------------------------------------------------------- | ------------------------ | -------------- | ----- | ------------ | -
|
|Store Data:                                                         |                          |                |       |              |  
|Retail sales increase attributable to net new and remodeled stores: |                          |                |       |              |  
|                                                                    | Victoria's Secret Stores |                |       | 3            | %
|                                                                    | Bath & Body Works        |                |       | 14           | %
|Retail sales per average selling square foot:                       |                          |                |       |              |  
|                                                                    | Victoria's Secret Stores |                | $     | 139          |  
|                                                                    | Bath & Body Works        |                | $     | 134          |  
|Retail sales per average store (thousands):                         |                          |                |       |              |  
|                                                                    | Victoria's Secret Stores |                | $     | 619          |  
|                                                                    | Bath & Body Works        |                | $     | 278          |  
|Average store size at end of quarter (selling square feet):         |                          |                |       |              |  
|                                                                    | Victoria's Secret Stores |                |       | 4,443        |  
|                                                                    | Bath & Body Works        |                |       | 2,087        |  
|Selling square feet at end of quarter (thousands):                  |                          |                |       |              |  
|                                                                    | Victoria's Secret Stores |                |       | 4,008        |  
|                                                                    | Bath & Body Works        |                |       | 2,719        |  
|Number of Stores:                                                   |                          |                |       |              |  
|Beginning of period                                                 |                          |                | 2,144 |              |  
|                                                                    | Opened                   |                |       | 64           |  
|                                                                    | Closed                   |                |       | (3           | )
|                                                                    |                          |                |       |              |  
|End of period                                                       |                          |                | 2,205 |              |  
|                                                                    |                          |                |       |              |  

12

---

Number of Stores

Selling Sq. Ft. (thousands)July 29,
2000

July 31,
1999

Change

July 29,
2000

July 31,
1999

ChangeVictoria's Secret Stores

902

859

43

4,008

3,810

198Bath & Body Works

1,303

1,126

177

2,719

2,238

481Total stores and selling square feet

2,205

1,985

220

6,727

6,048

679


Net Sales

Net sales for the second quarter of 2000 increased 13% to $1.150 billion from $1.017 billion in 1999. The net sales increase was primarily due to
a 9% increase in comparable store sales and the net addition of 220 new stores.

In
the second quarter of 2000, retail sales increased 16% to $916.8 million from $792.4 million in 1999. Bath & Body Works' sales increase was primarily
attributable to the net addition of 177 new stores.
Victoria's Secret Stores' sales increased 15% to $555.8 million from $485.0 million in 1999. The sales increase was primarily due to a 12% increase in comparable store sales, with the
remaining increase coming from the addition of 43 new stores.

Victoria's
Secret Catalogue net sales for the second quarter of 2000 increased 4% to $233.0 million from $224.7 million a year ago. This sales increase was due to
favorable results on certain lingerie styles, sportswear and shoes.

Year-to-date
net sales in 2000 increased 14% to $2.162 billion from $1.895 billion in 1999. The net sales increase was primarily due to a 10%
increase in comparable store sales and the net addition of 220 new stores.

Gross Income

The second quarter of 2000 gross income rate, expressed as a percentage of sales, increased to 39.1% from 38.7% for the same period in 1999. The rate
improvement was primarily due to positive buying and occupancy expense leverage, driven by a 12% increase in comparable store sales at Victoria's Secret Stores. The buying and occupancy expense
leverage was partially offset by a decline in the merchandise margin rate, primarily due to increased markdowns and promotional offers at Victoria's Secret Catalogue.

The
2000 year-to-date gross income rate increased to 38.6% from 38.0% in 1999. In addition to the factors described above, the gross income rate was
favorably impacted by a decline in the buying and occupancy expense rate at Bath & Body Works.

General, Administrative and Store Operating Expenses

The general, administrative and store operating expense rate, expressed as a percentage of net sales, increased to 24.3% in the second quarter of 2000 from
23.4% for the same period in 1999. The rate increase was primarily driven by investments in product development and store selling at Bath & Body Works, partially offset by the absence of the
relocation costs incurred in 1999 associated with the move of Victoria's Secret's beauty business to New York City.

The
2000 year-to-date general, administrative and store operating expense rate increased to 25.3% from 24.8% in 1999, primarily due to the reasons
discussed above.

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Operating Income

The second quarter operating income rate, expressed as a percentage of net sales, was 14.8% compared to 15.3% in 1999. The rate decrease was primarily due to
the increase in the general, administrative and store operating expense rate, which more than offset the improved gross income rate.

The
year-to-date operating income rate was 13.3% in 2000 and 13.2% in 1999, as the improved gross income rate was offset by an increase in the general,
administrative and store operating expense rate.

Interest Expense and Other Income

Second quarter and year-to-date interest expense was $5.3 million and $10.7 million in 2000 compared to
$7.9 million and $16.8 million in 1999, respectively. The interest expense is primarily for the Company's long-term debt. The second quarter and
year-to-date decreases are due to the payment of $100 million in term debt in August 1999.

The
Company earned $0.9 million and $3.1 million of other income in the second quarter and year-to-date periods in 2000, compared to
$0.1 million and $2.0 million for the same periods in 1999. The other income was primarily interest income earned from excess net cash from operations managed through The Limited's
centralized cash management system (see Note 7 to the Consolidated Financial Statements).

FINANCIAL CONDITION

The Company's consolidated balance sheet as of July 29, 2000 provides evidence of financial strength and flexibility. A more detailed discussion of
liquidity, capital resources and capital requirements follows.

Liquidity and Capital Resources

Cash provided from operating activities and cash funding from The Limited's centralized cash management system provide the resources to support operations,
including projected growth, seasonal working capital requirements and capital expenditures. A summary of the Company's working capital position and capitalization follows (thousands):

July 29,
2000

January 29,
2000

July 31,
1999Working capital

$
21,345

$
118,151

$
79,519Capitalization:Long-term debt

$
100,000

$
100,000

$
250,000Shareholders' equity


451,689


544,731


280,826Total capitalization

$
551,689

$
644,731

$
530,826


Net
cash provided by operating activities totaled $12.3 million for the twenty-six weeks ended July 29, 2000 versus net cash used for operating activities of
$10.6 million for the same period in 1999. The change in net cash provided from operating activities was primarily driven by increased net income.

Investing
activities were for capital expenditures, which were primarily for new and remodeled stores.

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Financing activities in 2000 included two quarterly cash dividend payments of $0.07 per share. In addition, financing activities included the repurchase of 1.4 million shares
of the Company's common stock from its public shareholders for $31.4 million. Additionally, the Company repurchased 7.4 million shares from the Limited for $166.5 million. The
repurchases were proportionate and did not change The Limited's 84% ownership interest in the Company. The cash dividend payment and stock repurchase were offset by a $252 million net increase
in The Limited's intercompany cash management account payable (see Note 7 to the Consolidated Financial Statements).

In
1999, financing activities included a proportionate repurchase of 3.0 million shares of the Company's common stock from its public shareholders for $62.6 million, and
16.4 million shares from The Limited for $341.8 million.

Capital Expenditures

Capital expenditures, primarily for new and remodeled stores, totaled $61.9 million for the twenty-six weeks ended July 29, 2000, compared to
$66.4 million for the comparable period of 1999. The Company anticipates spending $270 - $290 million in 2000 for capital expenditures, of which
$225 - $250 million will be for new stores and for remodeling of and improvements to existing stores.

The
Company intends to add approximately 700,000 selling square feet in 2000, which will represent a 11% increase over year-end 1999. It is anticipated the increase will
result from the addition of approximately 250 net new stores and the expansion of approximately 40 stores. The Company expects that capital expenditures will be funded principally by net cash provided
by operating activities.

Adoption of New Accounting Standards

On June 15, 1998, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards No.133, Accounting for Derivative
Instruments and Hedging Activities (FAS 133). FAS 133 is effective for all fiscal quarters of all fiscal years beginning after June 15, 2000 (February 4, 2001 for the
Company). FAS 133 requires that all derivative instruments be recorded on the balance sheet at their fair value. Changes in the fair value of derivatives are recorded each period in current
earnings or other comprehensive income, depending on whether a derivative is designated as part of a hedge transaction and, if it is, the type of hedge transaction. Management of the Company
anticipates that, due to its limited use of derivative instruments, the adoption of FAS 133 will not have a significant effect on the Company's results of operations or its financial position.

Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995

The Company cautions that any forward-looking statements (as such term is defined in the Private Securities Litigation Reform Act of 1995) contained in this
Form 10-Q or made by management of the Company involve risks and uncertainties and are subject to change based on various important factors, many of which may be beyond the
Company's control. Accordingly, the Company's future performance and financial results may differ materially from those expressed or implied in any such forward-looking statements. The following
factors, among others, in some cases have affected and in the future could affect the Company's financial performance and actual results and could cause actual results for 2000 and beyond to differ
materially from those expressed or implied in any forward-looking statements included in this Form 10-Q or otherwise made by management: changes in consumer spending patterns,
consumer preferences and overall economic conditions, the impact of competition and pricing, changes in weather patterns, political stability, currency and exchange risks and changes in existing or
potential duties, tariffs or quotas, postal rate increases and charges, paper and printing costs, availability of suitable store locations at appropriate terms, ability to develop new merchandise and
ability to hire and train associates.

15

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## 

PART IIOTHER INFORMATION

Item 1.  LEGAL PROCEEDINGS

The Company is a defendant in a variety of lawsuits arising in the ordinary course of business.

On
January 13, 1999, two complaints were filed against the Company's parent, The Limited, and one of its subsidiaries, as well as other defendants, including many national
retailers. Both complaints relate to labor practices allegedly employed on the island of Saipan, Commonwealth of the Northern Mariana Islands, by apparel manufacturers unrelated to The Limited (some
of which have sold goods to The Limited) and seek injunctions, unspecified monetary damages, and other relief. One complaint, on behalf of a class of unnamed garment workers, filed in the United
States District Court for the Central District of California, Western Division, alleges violations of federal statutes, the United States Constitution, and international law. On April 12, 1999,
a motion to dismiss that complaint for failure to state a claim upon which relief can be granted was filed, and it remains pending. On September 29, 1999, the United States District Court for
the Central District of California, Western Division, transferred the case to the United States District Court for the District of Hawaii. On June 23, 2000, the United States District Court for
the District of Hawaii transferred the case to the United States District Court for the District of the Northern Mariana Islands, and on July 7, 2000 denied plaintiffs' motion for
reconsideration of the transfer order. Plaintiffs have filed a Petition for a Writ of Mandamus challenging the transfer order and Motion for Emergency Stay in the U.S. 9th Circuit Court
of Appeals, both of which are pending. A first amended complaint was filed on April 28, 2000, which adds additional defendants but does not otherwise substantively alter the claims alleged or
relief sought. The second complaint, filed by a national labor union and other organizations in the Superior Court of the State of California, San Francisco County, and which alleges unfair business
practices under California law, remains pending.

Although
it is not possible to predict with certainty the eventual outcome of any litigation, in the opinion of management, the foregoing proceedings are not expected to have a
material adverse effect on the Company's financial position or results of operations.

Item 5.  OTHER INFORMATION

The Company's Certificate of Incorporation includes provisions relating to potential conflicts of interest that may arise between the Company and The Limited.
Such provisions were adopted in light of the fact that the Company and The Limited and its subsidiaries are engaged in retail businesses and may pursue similar opportunities in the ordinary course of
business. Among other things, these provisions generally eliminate the liability of directors and officers of the Company with respect to certain matters involving The Limited and its subsidiaries,
including matters that may constitute corporate opportunities of The Limited, its subsidiaries or the Company. Any person purchasing or acquiring an interest in shares of capital stock of the Company
will be deemed to have consented to such provisions relating to conflicts of interest and corporate opportunities, and such consent may restrict such person's ability to challenge transactions carried
out in compliance with such provisions. Investors should review the Company's Certificate of Incorporation before making any investment in shares of the Company's capital stock.

16

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Item 6.  EXHIBITS AND REPORTS ON FORM 8-K

|15. |  | Letter re: Unaudited Interim Financial Information to Securities and Exchange Commission re: Incorporation of Report of Independent Accountants.
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------
|27. |  | Financial Data Schedule.                                                                                                                        



None.

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## 

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.

| |  | INTIMATE BRANDS, INC. (Registrant)
| |  | ----------------------------------
| |  | By                                

Date:
September 8, 2000

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