Eric Cerny - Manager of Investor Relations Mike Jeffries – Chairman and Chief Executive Officer Jonathan Ramsden - Chief Financial Officer Brian Logan – Principal Accounting Officer

Jeff Klinefelter - Piper Jaffray Brian Tunick – JP Morgan Liz Dunn - Thomas Weisel Michele Tan – Goldman Sachs Jeff Black – Barclays Capital Paul Lejeuz - Credit Suisse Janet Kloppenburg - JJK Research Adrienne Tennant - Friedman, Billings, Ramsey Barbara Wyckoff - Guerrilla Capital Management Dana Telsey - Telsey Advisory Group Christine Chen - Needham & Company Robin Murchison – SunTrust Lorraine Hutchison – BAS-ML Kimberly Greenberger – Citigroup John Morris - Bank of Montreal Linda Tsai – MKM Partners Richard Jaffe – Stifel Nicolaus Michelle Clark – Morgan Stanley Jennifer Black - Jennifer Black & Associates Roxanne Meyer - UBS Marni Shapiro – The Retail Tracker.

Good morning and welcome to the Abercrombie & Fitch first quarter earnings results conference call. (Operator Instructions) At this time I would like to turn the conference over to Mr. Eric Cerny.

Good morning and welcome to our first quarter earnings call. Earlier this morning we released our first quarter sales and earnings, balance sheet, statement of operations and an updated financial history. Please feel free to reference these materials, available on our website. The figures in these materials, as well as comments we will make this morning regarding our financial results for the first quarter ended May 2, 2009, do not include the effect of a non-cash impairment charge, currently being determined, which is to be recorded in the first quarter in connection with a strategic review of the RUEHL business and will be discussed in greater length later in our prepared comments. This call is being recorded and the replay may be accessed through the Internet at abercrombie.com. Before we begin, I remind you that any forward-looking statements we may make today are subject to the Safe Harbor statement found in our SEC filings. Today’s earnings call will be limited to one hour. We will begin the call with a few brief remarks from Mike Jeffries, followed by a review of the financial performance for the quarter from Jonathan Ramsden and Brian Logan. After our prepared comments we will be available to take your questions for as long as time permits. Please limit yourself to one question so that we can speak with any many callers as possible.

Good morning everyone. Thank you for joining us today. The first quarter was clearly a difficult one for us with the challenging economic environment, we continue to face a headwind where the consumer is reluctant to spend on premium brands. There is a price consciousness dictating shoppers' purchases today, unlike anything I have seen before. We've spent years building our brands to compete on quality, aspiration, and the unique store experience, not on price. There are also fashion headwinds. We are currently in a cycle that lacks a dominant trend in the female business, trends that appear to have some traction but not the long-term trend of classic, casual, preppy, all-American sportswear that is core to our heritage. Our belief is that all of these phenomena are temporary, however, we are approaching the current conditions with a conservative mindset until we see a clear improvement. We see 2009 as a transitional year and are focusing our efforts on laying the groundwork for our long-term success and prosperity. We took a number of steps in this direction during the first quarter. First, we pushed forward with our international expansion efforts and continue to be more than excited about the extraordinary opportunity this represents. The future is tied to our international expansion. Second, there are actions we have taken to improve product and pricing. We are actively planning for meaningful reductions in our average unit retails, while remaining committed to protecting our initial mark-up percentage and providing quality product. We are pleased with the feedback from our customers regarding newness in fashion currently being offered in our assortment and we look for this to continue to improve in summer and back-to-school. We believe we missed some female fashion trends in the first quarter, but as you can see, we are addressing it. We continue to believe that we can take the trends that are doing well in female fashion and turn them into our handwriting. Third, we made significant changes at our home office that will enable us to operate more efficiently going forward and will also result in significant cost savings. These were difficult decisions but they were made with an eye to the future. As we have said before, examining our cost structure is an ongoing effort. Jonathan will provide more on this in a moment. We expect to reap the fruits of all of these efforts partly in 2009 but more significantly in 2010 and beyond. In the meantime, our long-term priorities will continue to be concentrated around protecting the brands, preserving cash, and growing internationally in a seasoned, disciplined and controlled way. With that, I will hand the call over to Jonathan but will available to answer your questions at the end our prepared comments.

While we are disappointed with the loss in the first quarter, as Mike said, we are taking steps to better position us to achieve stronger results going forward. For the first quarter, net sales reduced 24% to $612.0 million while comp sales decreased 30%. Our gross margin rate for the quarter was 63.3%, down 350 basis points, reflecting a higher mark-down rate for the quarter. We continue to test and evaluate our approach to mark-downs but anticipate continued pressure on the gross margin rate for 2009 as a result of mark-downs. As you know, over the last six months we have been focused on improving our cost structure, both for 2009 and the longer term. For the purpose of this exercise we have been using what we believe is a conservative view of medium term domestic sales levels and evaluating all of the actions we can take to improve our expense structure. This process is still ongoing, although we have made progress in a number of areas. As Mike mentioned, we implemented changes at our home office that will enable us to operate more efficiently in the future. These changes are reflected in our MG&A expense for the quarter, which was $89.5 million, down 14.5% versus last year's expense of $104.7 million. The reduction in MG&A includes savings related to employee compensation and benefits, travel, outside services, and marketing. The annualized effect of net home office headcount reduction since January, at a base salary only, is approximately $13.0 million and approximately $20.0 million relative to October 2008. Included in MG&A for the quarter is $1.1 million, arising from the net effect of a legal settlement, severance expense, and certain home office asset write-offs. We expect a comparable or slightly higher percentage reduction in MG&A expense in the second quarter relative to the prior year. We expect that the percentage reduction in MG&A will moderate in the latter half of the year as we begin to anniversary 2008 savings and potentially restore incentive and related accruals, if warranted by improved performance. Within stores and distribution expense, occupancy costs, comprising rent, depreciation, and other related charges, represented about 47% of total stores and distribution expense and were up approximately 15% versus prior year. This is a significant component of our cost base that, at least in the short term, is largely independent of same store sales levels. The increase from the prior year is primarily attributable to the current year effect of 2008 store openings and incremental pre-opening rent. Occupancy costs for the second quarter will be approximately in line with the first quarter in dollar terms and somewhat higher in the later part of the year due to 2009 store openings and pre-opening rent associated with expected 2010 store openings. We currently have approximately 70 lease expirations and expected kick-out provisions in 2009, the majority of which fall late in the year. We are looking closely at each of these lease expirations. We also have approximately an additional 210 lease expirations in 2010 and 2011. All other stores and distribution expenses, comprising selling, payroll, store management and support, distribution, DTC and other costs, were down approximately 10% on a year-over-year basis and represented around 30% of sales compared to approximately 25% of sales in the first quarter of 2008. We expect this de-leveraging effect to progressively reduce as we go through the year. On an average store basis and excluding DTC costs, these expenses are down approximately 16% year-over-year. We announced this morning that we are in the process of conducting a strategic review of RUEHL, the outcome of which has not been determined at this point. However, based on this review, and on the refinements of FAS 144, we have determined that it is appropriate a non-cash impairment charge in the first quarter. The amount of this charge is in the process of being determined and is not reflected in the condensed consolidated financial statements distributed this morning but will be reflected in our Form 10-Q for the quarter. The maximum amount of the charge is approximately $55.0 million pre-tax, representing a net book value of long-lived assets associated with RUEHL operations. In addition to the impairment charge, the outcome of the RUEHL review may result in additional material charges in future periods. As an update to our specific plans for new store openings in 2009, domestically, in addition to the Hollister flagship in Soho, we now expect to open ten stores in 2009. This figure includes two Abercrombie Kid stores, four Hollister stores, two Gilly Hicks stores, and two outlet stores. Internationally, we remain on track to open A&F and abercrombie flagships in Milan in October and an Abercrombie & Fitch flagship in Tokyo in December. We now expect to open seven Hollister mall-based stores in the U.K., one Hollister mall-based store in Germany, one Hollister mall-based store in Italy, one Abercrombie & Fitch store in Canada. Fiscal 2009 total capital expenditures are now expected to be approximately $200.0 million, including approximately $155.0 million related to new stores, store refreshes and remodels, and approximately $45.0 million related to IT, distribution center and other home office projects. The increase from the previously announced range of $165.0 million to $175.0 million includes the effect of store openings we are adding for 2009 and some capital expenditures we expect to incur later in the year associated with 2010 openings. We expect the increase in capital expenditures to be partially offset by an increase in landlord construction allowances. We also confirmed today that we have entered into a new lease for the Fifth Avenue Kids flagship store, replacing the prior lease. The new space is adjacent to the previous space, offers more store frontage, and has more favorable lease terms. We anticipate an accelerated rate of opening for European mall-based Hollister stores in 2010 and 2011. As we have previously stated, our existing U.K. Hollister stores operate at productivity levels significantly higher than the average U.S. store. With regard to cash, we ended the quarter with $463.7 million in cash and cash equivalents, and outstanding debt and letters of credit of $143.0 million. Now to Brian, who will provide some additional details on our first quarter financial performance.

As reported earlier this morning, fiscal 2009 first quarter net sales for the 13 weeks ended May 2, 2009, decreased 24% to $612.1 million, from $800.2 million for the 13 weeks ended May 3, 2008. First quarter direct-to-consumer net sales decreased 21% to $49.1 million. Total company comparable store sales decreased 30%, average transactions per store decreased 27%, and average transaction value decreased 4%. Across all brands, average unit retail decreased 1% for the first quarter with the decrease in April being greater than in the earlier months. The reduction in the AUR is net of price increases that began to go into effect in the second quarter of 2008. From a merchandise classification standpoint for the total company, the masculine categories continued to outpace the feminine categories, as male comparable store decreased by a high teen while female comparable store sales decreased by a mid-thirty. On the male side, denim, fragrance, and fleece were strongest, while graphic tees and shorts were weakest. On the female side, wovens and sweaters were stronger categories, while knit tops, fleece, graphic tees and shorts were the primary drivers of the negative comparable store sales results. For the first quarter, the gross profit rate was 63.3%, down 350 basis points from last year's first quarter rate of 66.8%, reflecting a higher mark-down rate. We ended the first quarter with inventories per gross square foot at cost, down 27% as compared to the previous year. We scaled back on spring seasonal inventory receipts during the first quarter in response to the declining sales. Stores and distribution expense for the quarter, as a percentage of sales, increased 13.1% to 55.8% versus 42.7% last year. For the first quarter, marketing, general, and administrative expense was $89.5 million, down 15% versus last year's expense of $104.7 million. As a percentage of sales, MG&A expense increased 1.5% to 14.6% from 13.1% last year. Interest income for the first quarter was $1.4 million compared to $7.6 million for the first quarter last year. The decrease was primarily attributable to a lower rate of return on investments compared to last year. The effective tax rate for the fourth quarter was a benefit of 34.7% compared to an expense of 36.8% for the first quarter of 2008. The rate was lower in 2009 due to the recording of discrete items which reduced the tax benefit. For the first quarter, we reported a net loss of $26.8 million, compared to net income of $62.1 million last year. The first quarter net loss for basic and diluted share was $0.31 before taking into account the non-cash impairment charge currently being determined in connection with the strategic review of the RUEHL business, compared to net income per diluted share of $0.69 last year. During the first quarter we opened six new stores and closed five existing stores, resulting in square footage remaining relatively flat to the end of the fourth quarter of 2008. We ended the first quarter with a total of 354 Abercrombie & Fitch, 212 abercrombie, 515 Hollister, 29 RUEHL, and 16 Gilly Hicks stores, including 3 Abercrombie & Fitch, 3 abercrombie, and 5 Hollister stores in Canada and 1 Abercrombie & Fitch and 3 Hollister stores in the U.K. This now concludes our prepared comments. We are available to take your questions. Please limit yourself to one question so we can speak with as many callers as possible. After everyone has had a chance, we will be happy to take follow-up questions.

(Operator Instructions) Your first question comes from Jeff Klinefelter - Piper Jaffray. Jeff Klinefelter - Piper Jaffray: The question is on the guidance that you are providing for the income statement line items in the second quarter. Just curious if you could repeat the store and distribution expense directional guidance that you provided. You are anticipating the store-related expenses being roughly flat in dollars but could you just go through the components of that and MG&A and how you expect that to trend versus Q1?

What we tried to do is to call out that there were two significant components within stores and distribution that behave somewhat differently, and I think probably one of the reasons why we were from the consensus for the quarter is that we probably hadn't done a good job of communicating the significance of those occupancy costs within stores and distribution expense. So just to recap, for the first quarter occupancy costs were 47% of total stores and distribution expense. In dollar terms, quarter-to-quarter, we see that being flat into Q2 and then we see it progressively increasing somewhat in the latter half of the year due to the additional store openings. The other piece of store and distribution expense, which is payroll, other variable costs and we also have DTC and DC costs in there, is the piece that is more variable with sales over time. So that one is harder for us to give more specific guidance on. What we are saying there is that the de-leveraging effect year-over-year in the first quarter, which was approximately 5%, that caption represented 30% of sales this year versus 25% last year. we see that de-leveraging effect reducing progressively quarter-by-quarter over the balance of the year. The exact magnitude of that reduction will depend on same store sales and also our ongoing implementation of expense savings, but directionally, it's going to reduce we think fairly significantly over the course of the year.

Your next question comes from Brian Tunick – JP Morgan. Brian Tunick – JP Morgan: Mike, you talked about these meaningful pricing changes. Just wondering if you could drill down between abercrombie and Hollister. When we visit the stores we see things that are higher price points and lower price points. Maybe just talk about that. And any learnings from the clearance events that there have obviously a lot of people talking about.

We constantly review price detail. As I said, the customer is extraordinarily price-sensitive. We are reducing AURs in all the brands but primarily Hollister and Kids. Let me talk about how we're going to continue to do it. There will be some additional opening price points in Hollister and Kids and we will continue to reduce the AUR with ongoing clearance. The important thing to note here is that we are, and we're saying they are meaningful reductions but clearly more meaningful in Hollister and Kids. The important thing to note is that we are going to buy for our initial level, our traditional level, high level of initial mark-up percentage. We are going to maintain quality in the merchandise. This is really a critical factor. We are not taking anything out of the quality of the merchandise, which obviously leads you to the way we are going to achieve this is through lower average unit cost. And we can achieve that because that's the kind of environment in which we live. But clearly the formula is high IMU, high quality, reducing our AURs with reduced average unit costs. We are achieving it and will continue to do so.

Your next question comes from Liz Dunn - Thomas Weisel. Liz Dunn - Thomas Weisel: I would like to ask a question on the fashion. You called out that you missed some female fashion and certainly we have seen a bit more color in a couple of dresses in the stores recently. Can you talk about what's brand-appropriate versus what we're seeing right now? Because I think in the past you have said dresses aren't appropriate and I think there's been some unwillingness to do certain colors and that sort of thing. So how are you thinking about brand positioning in fashion and what should we see in the stores as we move forward, just directionally. Big picture comments.

As I have always said, we have to protect the handwriting of the brand. We missed dresses first quarter and it was a major miss for us and we were wrong; I was wrong. You will see dresses being delivered into the stores aggressively this quarter. There will be more as we get into June and July. It was a miss. Our other major miss was print and pattern. As you can see what's happening out there is highly decorated goods seem to be selling. We have to put that trend into our handwriting. We are and have. I think the color issue has not been an issue. But clearly we missed dresses and clearly we weren't as aggressive with print and pattern as we should have been. We were wrong; I was wrong and we're correcting this as we go forward.

Your next question comes from Michele Tan – Goldman Sachs. Michele Tan – Goldman Sachs: Can you refresh us on the level of incremental pre-opening expense that you are expecting in the second half of the year versus last year? And then also, any sense of how we should think about the magnitude of gross margin pressure? Obviously the inventories are a lot leaner but there is some potential pressure from the pricing strategy and some of the ongoing clearance activity that you are expecting to do, so any sense of that relative to first quarter would be helpful.

As far pre-opening rent is concerned, I think it's easier if we probably give you a forecast of what we think the total pre-opening rent for the year is expected to be. We expect pre-opening rent for the full year of 2009 to be approximately $35.0 million, which is primarily made up of flagship and international, which is about $31.0 million to $32.0 million of that, and then the rest is domestic. Versus last year, we had pre-opening rent of about $30.0 million, which a larger part of it was domestic so we have had a reduction. But there was, also, some international. The incremental impact of pre-opening rent this year has come down from our previous projections primarily because of the Kids Fifth Avenue store. We are going to be taking possession later in the year, and also some of the more favorable lease terms are effecting some of the pre-opening rents. So hopefully that makes it a little clearer as to where we're going to be for the year.

In terms of gross margin for the year, as we've said, we do anticipate there will be continued pressure this year due to mark-downs. Over time, our intent is that will alleviate, we will be able to get lower product costing and are able to get to lower AURs while maintaining quality but protecting our IMU. But that's something that will work its way in over time rather than something that is going to be an overnight accomplishment.

Your next question comes from Jeff Black – Barclays Capital. Jeff Black – Barclays Capital: How do we understand how you guys are frame-working the MG&A and stores and distribution expense, just on a per-square-foot basis even. It seems like we're not back to full size levels yet on your guidance. Is there some per-square-foot number you are looking to, where you would like to drive those expenses down over time? And also if you could just address what have Gilly and RUEHL been costing over the past couple of years?

With regard to our MG&A, the perspective we have taken is to look at where we were three or four years ago and to look at what it would take to get back to those kind of levels and we feel that we have made pretty good progress in MG&A. We haven't specifically looked at that on a per-square-foot basis, or at least that isn't the specific metric we have used in terms of how we've been managing it. We have looked at it more in terms of when we go back in time, when we look at the level of the domestic business, what were the MG&A we needed at that point. Over time mostly there is some incremental MG&A associated with international expansion, but as we have said, we don't expect that to be a very significant component. On the stores and distribution side, clearly we have had a significant deleveraging effect, particularly because of the occupancy costs. In the first quarter there was this 5% de-leveraging on other stores and distribution costs and we are working on all of those. But I think it's partly a function of the abruptness of the decline and clearly we have added stores cumulatively and we've added capex and we're still cycling through the effects of that. So on the occupancy piece of it, it's going to take a little longer to realign that with sales levels. On the stores and distribution piece, we have implemented a significant number of savings initiatives and we have more in the pipeline, but there is also some de-leveraging effect of sales there but we think we can aggressively mitigate that and then hopefully we will have a sales recovery which will also help with that.

Your next question comes from Paul Lejeuz - Credit Suisse. Paul Lejeuz - Credit Suisse: Just a follow-up on the AUR. Mike, can you share with us the average AUR reduction that we are likely to see, either overall or by brand would be more helpful. And then just looking at the inventory, can you give us a sense of how much of the inventory decrease was a function of lower costs that you are already seeing on product, how much was from just taking mark-down hits currently, in the first quarter, versus the pure clearing of units. So I guess maybe it's helpful to know what the decline would have been in units and maybe what percent of inventory on hand is marked down versus last year.

I would love to give you that figure. I cannot. I am told I cannot. But it is a figure that we think is meaningful and it think that's where we have to leave that.

The reduction in units was somewhat less than the reduction in costs because of some of the higher mark-down rate and lower AURs that you alluded to. The reduction on a unit basis was down approximately 22%. And that's on a per-gross-square-foot basis.

We can say that the AUR reduction will be greater in Hollister and Kids than Abercrombie & Fitch.

Your next question comes from Janet Kloppenburg - JJK Research. Janet Kloppenburg - JJK Research: I wondered if the change in AUR would be effective for back-to-school and if the fashion misses you addressed would be corrected for that period and going forward. And for Jonathan or Brian, I wondered if you could talk to us about the 70 stores that the leases are expiring and if those stores are EBIT positive or if they are still within that mix that are trending at EBIT levels well below the corporate average. And what the outlook is for those stores.

Let's talk about AUR, effective back-to-school, the answer is yes. Fashion misses corrected for back-to-school, yes. And let's just hope that when back-to-school is over we haven't discovered something else but we think they have been corrected for back-to-school.

On the leases, within the 70 there are a smallish number of kick-outs where, almost by definition, the volumes are not at certain levels or other factors are in play which make those not particularly profitable stores. Of the balance, if you look at the overall profile of our lease expirations, the healthiest group of leases is toward the middle of the range. The newest leases and the oldest leases are disproportionately the least well-performing. So within the next two years we have a significant number of leases that are towards the lower end of the contribution range and a number of which are also in models which we consider to be not at the higher end of the range in terms of where we want to be in general. So we are going to look at each of them and in general if a lease is not generating a positive contribution, at this point we certainly won't be renewing it for a full 10-year term. We probably will have some closures this year and we will be looking to either potentially extend the other leases on a shorter-term basis or achieve rent reductions if we are going to renew them for longer than that.

May I just hi-jack this question for a minute because I would really like to comment for a second about how successful our international business is and to restate the fact that our future is with the international business. Clearly, there is an appetite for our level of quality in product, store, store experience, on an international basis. I am not supposed to say this but I'm thinking about it. We opened a store in the U.K. yesterday, in a mall called West Key in South Hampton. That store opened yesterday with no advertising, no PR, with lines out the door for the opening and we did, on the opening day, in that store—this was yesterday—but five times the average of a domestic Hollister opening day. The other Hollister U.K. stores are trending extraordinarily well. Our London flagship, after two years of operation continues to comp positively, and as a matter fact the rate for first quarter was greater than fourth quarter last year. We are seriously looking at the store base in the U.S. but let's all look to the future. That's an opportunity that is extraordinary.

Your next question comes from Adrienne Tennant - Friedman, Billings, Ramsey. Adrienne Tennant - Friedman, Billings, Ramsey: Could you talk about the initiatives on product costing? You talked about trying to protect IMU and then I thought there was a secondary comment that there would be pressure on IMU because of the price increases in Q2 2008. So at one point you have nine-month lead times. At what point do your IMUs flatten out and at what point can we see them expand? Unless I'm misunderstanding something.

We're just making sure we understand the question. Adrienne Tennant - Friedman, Billings, Ramsey: So earlier I think there was comment that Mike, you had made, you said the goal to protect IMU but you're going to see meaningful AUR reduction. And then later on Jonathan, I think you said that there would be pressure because of the compare to last year in the second quarter on IMU.

I think that is exactly right. As the year progresses we will see the benefits of the lower average unit cost. That's where we're directing ourselves. We are directing ourselves to that formula. Traditional IMU protecting the quality and lower AUR, we are able to achieve that as the year progresses. We still have a pressure on that line for second quarter because we haven't been as aggressive on the average unit cost reduction as we are going forward.

It's progressive but you're looking out to spring next year. I mean, that's obviously far enough out that we can be actively planning to have it fully cycle through by then in terms of the reductions we're going to be able to achieve.

Your next question comes from Barbara Wyckoff - Guerrilla Capital Management. Barbara Wyckoff - Guerrilla Capital Management: Mike, do you see any change in the shopping habits of the casual week-end female shopper and what is doing with the skirt and accessory business in all three brands?

We had seen a greater percentage fall-out on week-end than during the week and that continues, which indicates to us that the casual shopper is shopping or shopping as a weekend activity is down. I think that will abate over time. Our skirt business is not good. And it's a bet we made for first quarter as opposed to dresses. So as I said, I was wrong, the fashion miss in dresses, our bet was that the skirt business was going to emerge. It has not. And we are selling vented skirts, pattern skirts but that's about it. The accessory business is in line with the total business. The tote business is not particularly strong but we anticipate the accessory business improving for back-to-school.

Your next question comes from Dana Telsey - Telsey Advisory Group. Dana Telsey - Telsey Advisory Group: Mike, can you talk a little bit about Europe and the U.S., what do you see as compare and contrast the difference in product acceptance, what you're seeing at Hollister and Abercrombie & Fitch versus what you're seeing here. And as you expand to Milan and also Tokyo, will there be differences there, and also any difference in price point and IMU over there?

What we're seeing in the U.K. is just an overwhelming acceptance of our offering. It's quality, style of merchandise and store environment, store experience. This gives us great optimism for where we're going. We are testing a store in Germany as we stated, we're testing a mall-based store in Germany, we're testing a mall-based store in Italy this fall and based upon the European business that we're doing in all of our brands, all of our stores, we're highly optimistic of those results. I think the short answer is that there is an appreciation for what we do and we are not going to over-saturate the world with what we're offering. What do we expect in Milan and Tokyo? The same thing. Looking at the Italian business that we're doing currently, and the Japanese that we are doing, we're highly optimistic about the results in those two stores. The third part of the question, price difference, the prices in Milan and Tokyo are related to the Abercrombie & Fitch flagship prices in London.

Your next question comes from Christine Chen - Needham & Company. Christine Chen - Needham & Company: Mike, I was just wondering if you could comment, we certainly see more fashion in the stores as the year has progressed and I expect we will see more for back-to-school. What percentage of the mix would that be second half of the year versus what it's been first half of the year and which concept do you think has made the most progress?

I do not at the top of my head have a total figure. I can get it for you, I would be saying something that's wrong. It is a much higher percent of fashion than what we call core product. But I don't have an exact second or third quarter figure. But you're absolutely right that it's a percentage of—the business is higher. We have a much bigger SKU count in fashion than in core. And I think you are seeing that in the inventories right now. We can get back to you with that exact figure, we don't have it here.

Your next question comes from Robin Murchison – SunTrust. Robin Murchison – SunTrust: Am I right that your U.K. price points are remaining stable with lasts year and are international DTC sales growing?

The answer is that U.K. prices are stable, in pounds. And the answer to international direct-to-consumer is one that is difficult to answer right now. We have a system problem with some of the items on the international Web site. I think what we can say is that the—I can't really answer the question. We are going back up on the 18th with a full assortment of items on the international Web site because of some programming difficulties. We have had a limited assortment for the last two months.

Your next question comes from Lorraine Hutchison – BAS-ML. Lorraine Hutchison – BAS-ML: On the first quarter call you had spoken about some longer-term store and distribution cost cutting initiatives that we may see the benefit of in the back half. I'm just curious, I know you gave the guidance for the fixed piece of that, but are there any pieces of payroll, of any of the other variable costs that we could see continuing to decline as the year goes on?

We are continuing to look at all of those components, both in the occupancy side of it and the other more variable components and there are some initiatives that we have identified recently that will be going into effect over the next few quarters. It's a point about sort of structure going forward. I think it significantly comes back to the occupancy cost side of the equation where clearly we have had a significant de-leveraging effect. And that's more of a medium-term objective in terms of realigning that with sales. It's not something that we can immediately change in the short term.

One more comment about the international Web site just so that we are totally clear. We don't have clearance on the international Web site and by taking that off we eliminated the items that were a full assortment. That is why that business has been difficult to judge. But as of the 18th, those items will be back on the Web site but at higher retails for Europe. We're doing everything we can to protect the international business and brands.

Your next question comes from Kimberly Greenberger – Citigroup. Kimberly Greenberger – Citigroup: The RUEHL impairment charge that you are currently evaluating, I'm guessing that means that you don't expect the future cash flows of RUEHL to recover the investment you've got in it. At what point do you sit down with the board and just discuss should this be a place to deploy shareholder capital or do we need to make some more serious decisions about the future of RUEHL?

As we've said, we are conducting a review of RUEHL and are looking at different options that are available. The impairment charge is driving by the fact that from an accounting standpoint we were deemed to have had a triggering event to do a review, pursuant to the stage we were at in looking at the different options. So it doesn't denote a particular decision, it just denotes the fact that we had reached a point in the review where we did have, for accounting purposes, a triggering event and had to look at all of the potential options and outcomes and what that will potentially mean in terms of value of the RUEHL assets. So that is an exercise that we are currently completing, both from an accounting standpoint and then we have the strategic review itself.

Your next question comes from John Morris - Bank of Montreal. John Morris - Bank of Montreal: Mike, you talked a little about where you missed it but in addition to the comments that you gave in the prepared remarks, where did you guys just nail it, in terms of fashion, by abercrombie and Hollister? And my follow-up is what have the learnings been so far, or lately, on Gilly Hicks?

First, the wins in fashion, clearly woven tops. We expanded the assortment in fashion, quality and that's been a very, very good business for us across the brands. Sweaters have also been a very good business for us. Gilly Hicks, we learn about Gilly every day. I have to say I continue to be hugely excited about Gilly. Our at-home business continues to be excellent and we are making progress in bras, underwear, and personal care. What we are learning about the bra business is a lot in terms of fit. Assortment, service in that business, we are learning that the underwear and person care businesses for us are businesses where we are not going to compete as commodities or as commodity prices, and the underwear and the personal care business tends to be that. We are competing on fashion and quality and we think we have created niches that will enable us to win those businesses. So lots of learnings, we continue to learn and very optimistic about the Gilly business.

Your next question comes from Linda Tsai – MKM Partners. Linda Tsai – MKM Partners: Just a follow-up to John's question about Gilly. How comfortable are you with the ARU levels at Gilly or is it too soon to comment on that?

No, I think it's a really good question. Our AURs in the at-home business are exactly the Hollister AURs. As the Hollister's come down a bit, they will come down a bit in Gilly. We are in the bra business competitive with the biggest bra competitor and in the underwear business we will be higher because we are not going to be in commodity underwear business. We have a very clear game plan and we are comfortable with it.

Your next question comes from Richard Jaffe – Stifel Nicolaus. Richard Jaffe – Stifel Nicolaus: A question on the average unit retails coming down at Hollister. Will you simply through sourcing just pass the savings on to the consumer so your initial gross margin is identical to what it was? And then the savings through better sourcing will just be reflected in better values for the consumer. Is that a safe way to look at it?

Exaclty. But with the important caveat that we continue to improve quality and we're not taking anything out of the garments. But that' s the formula.

Your next question comes from Michelle Clark – Morgan Stanley. Michelle Clark – Morgan Stanley: In the press release out this morning there is a comment about a price-conscious consumer and that being relatively temporary in nature. What supports that view and if it's longer-term in nature, can you talk about the longer-term positioning of the brand.

We believe, I believe, that the biggest trend in the world, long-term trend, is a flight to quality. I absolutely believe that. That's what we founded this business on and over time it has proven itself to be true. To say that people are going to flee quality over time makes absolutely no sense to me. We are in a time that is difficult in this regard, but to say that society is going to change its point of view about this, just flies in the face of the history of the world. To me. There will be aspiration. That's the basis of what we're saying and continue to believe that. Look at our business in Europe at this point. There is a flight to quality. Quality in merchandise, stores, store experience. We will continue to stand for that.

Your next question comes from Jennifer Black - Jennifer Black & Associates. Jennifer Black - Jennifer Black & Associates: Have you figured out a store prototype, and this is a follow-up to Gilly Hicks, that you want to use on a go-forward basis and I'm wondering if you can get such great deals on real estate, you can actually make the economics work sooner rather than later?

That's a great question. The prototype for Gilly Hicks go forward is a smaller format than we currently have. The format is going to a 5,500 square foot store gross. And the answer to the second part of the question is, yes, we are getting better and better real estate deals and it will clearly affect when we can start aggressively going after that business. I can't give you a time to but can say that we working hard on developing the bra and underwear and personal care part of the business, but we are manipulating that model so that hopefully we can proceed sooner rather than later. But there's nothing we are not committing aggressively for the roll out of that store at this point.

Your next question comes from Roxanne Meyer – UBS. Roxanne Meyer - UBS: I wanted to ask about your change in strategy in terms of flowing in product to your stores, if you could give us an update there. And any changes that you anticipate further as we move to back-to-school.

The flow is constant. We deliver new merchandise to our stores weekly but have for quite a while. So there isn't really a change in that strategy. There is more flow because there is a greater percentage of the business that is fashion. For back-to-school, again, more fashion flow.

Your next question comes from Marni Shapiro – The Retail Tracker. Marni Shapiro – The Retail Tracker: I just want to say, I know it's been a really tough quarter and I want to say, I don't know if congratulations is the right word or thank you for sticking with the DNA of your company, even when times are really tough because so many times when things get difficult you see companies sort of go off the deep end in a direction that's not in the DNA of the brand. So it's nice to see you are sticking with that. I have two questions. In your opening comments you mention you plan to protect the brands and cash on international but you didn't mention direct, which up until this quarter had been a strong business for you on the international side. I was curious about it on the domestic side. And any update you can give on denim, because even pants in general, you had some cargos and twills that have sort of crept into the store here and there. Your denim inventory has been fairly lean but right. But there are some scary, and what I would call non DNA-appropriate trends out there in denim, like acid-wash, that are working. So I am just curious what your thoughts are about those two sectors and the direct business.

I think we have a real direct-to-consumer opportunity. We've been working very hard to make the direct-to-consumer a better reflection of the brands. We've been working on the presentation and I think it looks better. We have been looking at better flow in terms of information on newness, key items, and our goal is to make the direct-to-consumer an absolute reflection of the in-store quality and style that we project. We've not been there as well as we might. That's where we're going but it's a really good question and we think there is continued real opportunity in direct-to-consumer. On denim, acid-wash might be scary but there's something to the trend in terms of probably light wash that I would suspect we could twist to our taste level and handwriting. And that's where we are with the whole business. How do we take trend and put it into our taste level, our quality level, our handwriting. You won't see anything scary, I promise you, Marni.

Thank you for your questions. As far as out time, that's going to wrap it up for us. Thank you for joining us on our earnings call this morning.

This concludes today’s conference call.