At Limited Brands' (NYSE:LTD), skimpy goods from Victoria's Secret led to full-bodied results in the first quarter. Fool contributor Stephen Simpson noted that this concept alone contributed to roughly 85% of the segment operating income. Net operating income for Limited Brands increased 57% compared to the same period a year ago.

With Victoria's Secret strutting its stuff, how are Limited Brands' other concepts like Bath & Body Works and Express faring? Bodhi Zappa and Hank Schofield join me as we analyze the company's latest quarterly earnings conference call. We'll be paying special attention to what is working for Victoria's Secret and what steps the company is taking to spur growth in its other concepts.

It looks like you're champing at the bit, Hank, so why don't you get us started?

Hank: Victoria's Secret is getting all the catcalls. Meanwhile, there's a stench coming from Bath & Body Works. While comparable same-store sales growth of 4% is OK, a $1.6 million decline in operating income is not. The loss was primarily due to a decline in merchandise margin, as management indicated that the product mix needs some work. It's funny, though. According to Neil Fisk, CEO of Bath & Body Works, between traditional product lines and new sub-brands, everything is selling well. Something doesn't seem to add up.

Bodhi: It may be that it's not any one line that's ailing, but rather that the merchandise mixture is to blame. Fisk indicated that the company is testing "reduced assortments to make the store easier to navigate and shop for our customer." A more focused display will allow it to highlight better performing lines like Japanese Cherry Blossom, Dr. Wexler, and C.O. Bigelow.

Jeremy: Quite frankly, I was left with mixed signals from Fisk. On the one hand, he mentions a reduction in assortments to focus on "making fewer, bigger, better statements," but on the other hand, he's talking about "planning additional line extensions." If customers are confused, I can see why. The idea of narrowing its product assortment does make sense, but can the company actually pull it off? On a positive note, Bath & Body Works has launched its first catalog, which will be followed by a second catalog in the fall. Fisk emphasized the "growth potential" in taking a multichannel approach to retailing, as the Web and direct-channel sales will also drive customers to its stores.

Bodhi: I have all the confidence that Fisk and company will pull it off ...

Hank: Surprise, surprise.

Bodhi: ... and I'm equally excited about the turnaround at Express. Ken Stevens, CEO of Express, stated that first-quarter results "exceeded our expectations." A 20% increase in transactions has me amped over this concept. Fewer markdowns, better sales on regularly priced items, and a better product assortment were all highlighted as positive contributors.

Hank: You raised a big red flag for me, Bodhi. A 20% increase in transactions? With comps only up 4% for the quarter, that means the company witnessed a 16% decline in average unit sales, so something isn't adding up. If the company is indeed employing fewer markdowns versus the year-ago period, either customers are still going after these discounted items or they're simply [buying] fewer regularly priced apparel pieces. Either way, you can hardly call this a success. With Gap's (NYSE:GPS) Banana Republic, Guess? (NYSE:GES), and Abercrombie & Fitch's (NYSE:ANF) REUHL all vying for the twenties crowd, Express doesn't appear to have a solid footing to contend with these heavyweights.

Jeremy: With the little time we have remaining, let's turn our attention to Victoria's Secret, shall we? CEO of Victoria's Secret Grace Nichols indicated that strong 8% comps growth was driven by all categories but in particular was supported by bras, panties, sleepwear, and beauty. Bras received a lift from Angel's Secret Embrace, the Body by Victoria IPEX wireless, and the Very Sexy Infinity Edge push-up. Victoria's Secret is looking to capitalize on these successes with its newest category launch called Sexy Sport that will emphasize, among other things, sport bras.

Bodhi: Is it getting hot in here, or is it just me? On top of in-store sales, Victoria's Secret Direct managed to increase revenues by 10%. Management has optimism for its direct sales business as it plans to open a new distribution center to support the operation. It will also be increasing its inventory investment during the remainder of the year in both Victoria's Secret and Victoria's Secret Direct as it plans for "substantial growth" in the quarters ahead.

Hank: A new distribution center doesn't come without costs. Limited is planning on spending roughly $650 million in capital expenditures in 2006, up from last year's level of $480 million. Approximately $100 million of this increase is for investments in its direct business.

The Foolish bottom line
Jeremy: Considering that Victoria's Secret is the company's best performer, it makes sense to ramp up investment in this area. But will bras and panties continue to carry Limited while it figures out how to revive Express and Bath & Body Works? I agree with my colleague Stephen Simpson, who argued that as long as Victoria's Secret continues to do the "heavy lifting," there's no reason to jump ship. But I'm also not convinced that for prospective investors, there's enough to compel one to jump onboard. As Victoria continues to strut her stuff, this show is perhaps best viewed from the sidelines.

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Fool contributor Jeremy MacNealy has no financial interest in any company mentioned.