Bob Atkinson – VP IR Scott Edmonds – President & CEO Kent Kleeberger – Exec. VP & CFO Michele Cloutier – President Chico’s Brand Donna Noce Colaco – President White House | Black Market Brand

Kimberly Greenberger – Citigroup Neely Tamminga – Piper Jaffray Tracy Kogan – Credit Suisse Jennifer Black – Jennifer Black & Associates Liz Dunn – Thomas Weisel Adrienne Tennant – Friedman Billings Ramsey Michelle Tan – Goldman Sachs Brian Tunick – JP Morgan Lorraine Maikis – Merrill Lynch Robin Murchison – SunTrust Robinson Humphrey

I would like to welcome everyone to Chico’s quarterly earnings conference call. (Operator Instructions) I will now turn the call over to Bob Atkinson, Vice President of Investor Relations; please go ahead sir.

Good morning everyone. Welcome to Chico’s FAS second quarter earnings conference call and webcast. Scott Edmonds, Chairman, President and CEO and Kent Kleeberger Executive Vice President and CFO will follow my remarks with their prepared comments. Before Scott begins I would like to remind you of our Safe Harbor Statement. Certain statements made this morning including, without limitation, statements addressing the beliefs, plans, objectives, estimates or expectations of the company or future results or events constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 as amended. Such forward-looking statements involve known or unknown risks including, but not limited to, general economic and business conditions and the conditions in the specialty retail industry. There can be no assurance that actual future results, performance or achievements expressed or implied by such forward-looking statements will occur. Users of forward-looking statements are encouraged to review the company’s latest Annual Report on Form 10-K, its filings on Form 10-Q, management’s discussion and analysis in the company’s latest Annual Report to Shareholders, the company’s filings on Form 8-K and other federal securities law filings for a description of other important factors that may affect the company’s business results of operations and financial conditions. The company does not undertake to publicly update or revise its forward-looking statements even if experience or future changes make it clear that projected results expressed or implied by such statements will not be realized. With that, I will now turn the call over to Scott Edmonds.

Thanks Bob and thanks to everyone for attending our second quarter fiscal 2008 conference call. With me on the call today is Kent Kleeberger, our CFO. Michele Cloutier, Chico’s brand President and Donna Noce Colaco, White House | Black Market brand President will join us during the Q & A portion of today’s call. Net sales for the second quarter ended August 2, 2008 decreased 7.1% to $405.2 million from $436 million for the fiscal 2007 second quarter ended August 4, 2007. Net income for the fiscal 2008 second quarter was $6.7 million of $0.04 per diluted share, compared to net income of $38.7 million or $0.22 per diluted share in the prior year’s second quarter. As previously reported comparable store sales decreased 15.9% for the 13 week period ended August 2, 2008 compared to the comparable 13 week period last year ended August 4, 2007 as same store sales decreased approximately 19% for the Chico’s brand and approximately 12% for White House | Black Market. The retail environment continued to be challenging as customers remained increasingly cautious in their spending across the entire retail sector especially in the missy category. While we anticipate consolidated comparable store sales for the fall season to remain negative, we expect to see an improvement in trends and continue to believe we will be profitable in the second half of the year. Although our second quarter results are disappointing, we continue to maintain a very strong balance sheet with cash equivalents and marketable securities totaling $278 million and zero debt. Further, we remain focused on reducing expenses and managing lower inventory levels without affecting our ability to serve our customers. We are also limiting capital expenditures to those that are necessary to sustain the business while targeting an acceptable return on where we choose to invest. The overall performance in the second quarter for the Chico’s core brand was disappointing. Our transactions were down 7.4% versus down 13% in Q1. Our average dollar sale was down 12% versus down 9% in Q1. As stated on the Q1 call, during the early spring time period we conducted focus groups that gave us valuable information about where we were winning and where we were falling short. Michele and her team reacted to this customer feedback and have repositioned the back half of this year based on these findings. As many of you are aware, we re-launched our travelers’ collection in August with a direct mail campaign and we are pleased with the customers’ reaction and the improved performance of this cornerstone category. Another key category we’ve spoken about is the jackets business. We are pleased with our current product assortment and initial sell-through and should get a better read on this category over the next few weeks. Accessories continue to be disappointing and the repositioning work on this category will not be completed until after the fourth quarter. In addition to accessories, the bottoms business including denim also continues to be challenging. I’d like to make a comment on the Chico’s marketing effort, since being named brand President of Chico’s on October 31, 2007, Michele has worked tirelessly to better align the marketing of Chico’s with the targeted customer, the baby boomer. Today the Chico’s catalogue and national media campaign look more on-brand then any time during the past 12 to 18 months. The three most recent catalogues have had the best response rate we’ve seen in the past year. And we continue to attract new customers to the Chico’s brand with 210,840 new customers shopping at Chico’s in the second quarter. Turning now to the White House | Black Market brand, the second quarter results for White House | Black Market showed continued improvement over the first quarter. Positive customer response to the collections drove stronger full price sales gains while lower inventory and reduced promotional activity did not anniversary the markdown sales from last year. With the reduced level of promotional sales in the second quarter our key metrics reflected decline in average store transactions but a healthy improvement to the average dollar sale and average unit retail. Our transactions were down 21% versus down 9% in Q1 but our average dollar sale was up 9% versus up 2% in Q1. The repositioning of the brand continued into Q2 with favorable response from the customer. Along with our signature black and white collections, the introductions of golden brown within the quarter were well received. She responded to the newness every delivery and the unique novelty embellishment, prints and fashion silhouettes drove the strongest results. We continue to make strides in the sportswear business with fashion, fit and quality. Casual and denim outperformed expectations and last year. Light inventory and seasonal silhouettes left opportunity in the later part of the quarter for shorts, white denim and fashion crops. The collection bottom’s business re-launches this fall with introduction of new fabrications and pant fits. The highlights include a new curvy fit in a fully washable season-less stretch based cloth. As we discussed on our first quarter call, the dress business was a main focus for our Q2 turnaround. Under new merchant leadership the dress business made a strong comeback and throughout the quarter delivered unprecedented full price performance achieving higher then historic level of sales and margin. It was a highly successful quarter in dresses reflective of a balanced assortment of dressy occasions, casual cottons, knits and fashion maxi silhouettes. The shoe and fashion accessory business gained momentum in the quarter delivering a solid performance in full price sales helping offset a soft jewelry season. Shoes in particular had an exceptional quarter driven by diversified assortment that offered more choices by end use and price points. The direct mail cadence was consistent with last year, mailer items are still key drivers both in store and online and we expect to be in a better position to fulfill demand on marketed items in the fall season. Our customer trends in second quarter showed a decrease in shopping frequency but an increase in spend per customer and average transaction value and we continue to attract new customers to the White House | Black Market brand with 297,880 new customers shopping at White House | Black Market in the second quarter. And now over to Soma Intimates brand, during Q2 Soma Intimates continued it strong positive comp store sales growth trend and the growth rate at Soma.com continued to accelerate. The brand significantly exceeded its sales and gross margin plans for both the quarter and spring season. As we move into fall inventories are inline with plan. All merchandise categories exceeded expectations for the quarter with bras, panties, shape wear and active wear enjoyed particularly strong results. New customer acquisition programs including television advertising, direct mail and e-marketing have increased the active customer database by 66% versus prior year. Strong top line sales volume growth resulted in significant leverage of SG&A expenses; one key indicator we are making substantial progress toward refining the brand’s economic model. Since launching the brand, we’ve often stated that a strong bra and panty business is essential to develop the customer loyalty required for a viable intimate’s brand. By the end of Q2, foundations, bras, panties and shape wear, comprised 60% of store sales, up from less then 50% last year. New bra styles particularly those with functional benefits and the success of vanishing edge panties were key factors in driving growth of our foundations business. Soma now has a much broader base of annuity bra and panty styles and the brand has seen a meaningful increase in the number of repeat customer visits per year. Total annual spend for active customers is also increasing. Over eight out of 10 new Soma customers first purchase a bra or panty and two-thirds purchase a bra and panty their first time at Soma. One additional measure of performance, the brand is realizing healthy traffic conversion rate improvements in both stores and online. And we continue to attract new customers to the Soma Intimates brand with 93,442 new customers shopping at Soma Intimates in the second quarter. The outlook for fall is positive with a major bra and panty product launch being supported with an additional television advertising investment in selected markets. The holiday product and marketing programs are shaping up to be the best Soma’s delivered since inception. The brand is well positioned to satisfy both the customer looking for unique fashionable gifts, as well as the shopper looking for key items at compelling price points. During the fall season and beyond Soma.com will continue to be a key vehicle for growing sales and building customer awareness of the brand nationally ahead of store expansion. In closing 2008 continued to be an extremely challenging year and we remain focused on: strengthening our product offerings across all three brands, evolving our marketing and customer loyalty programs, providing our customers with their most amazing personal service across all three channels of distribution; stores, internet and catalogue, inventory management and expense control, protecting our free cash flow and our strong balance sheet, we are encouraged by our loyal customers’ response to the re-launch of the Chico’s travelers collection and the subsequent improvement in this cornerstone category, the discipline Kent Kleeberger has brought to the entire company regarding inventory management and its expected impact on future markdowns, the progress Donna has made in her first year as brand President on repositioning the White House | Black Market brand as a more sophisticated upscale fashion brand, the continuous progress that Chuck Nesbit and the entire Soma Intimates have made in refining the Soma Intimates business model, the commitment that Chico’s FAS employees continue to show to the company in these very tough economic times, and most of all we are encouraged by the fact that 602,162 new customers shopped in one of our three brands during the second quarter. We believe that when the economy eventually improves these customers will translate into exciting sales growth for Chico’s FAS, Inc. And finally we were thrilled to have Debbie Phelps; mother of eight-time Olympic Gold Medalist Michael Phelps, wearing Chico’s the entire time she was at the Beijing Olympics. We were also delighted to have Michele Obama, wife of Democratic Presidential nominee Barack Obama, appear recently on national television wearing and bragging about one of our White House | Black Market dresses. And now over to Kent for his comments.

Thank you Scott and good morning everyone. The second quarter was clearly a disappointment to all of us at Chico’s FAS. We did not deliver the comparable store sales results we had targeted and accordingly had to take a greater then planned level of markdowns at the Chico’s brand in order to remain competitive in the basics portion of the assortment and align our end of spring season inventories closer to current sales trend. With few exceptions retailers have been reporting second quarter results that are below a year ago or below expectation. Further the outlook by many including ourselves for the back half of the year has become more cautionary as the US economy has moved past any benefit from the government stimulus package and faces any number of various economic indicators. To us that caution seems well placed. More on that in a couple of minutes, now let’s take a deeper dive into the numbers for the quarter just ended. Gross margin as a percentage of sales for the second quarter decreased 500 basis points to 52.7%. The majority of the decrease is attributable to lower merchandise margins at the Chico’s brand further exacerbated by a decline in merchandise margin at White House | Black Market primarily due to lower initial markups. Chico’s lower merchandise margins were largely a result of higher markdowns made necessary to liquidate inventory and bring levels closer to the current sales trend. In addition, given Chico’s negative comp for the quarter we were unable to leverage the brand’s increased product development and merchandising cost. While Chico’s markdown rate was higher then planned for the quarter it is important to note that we have managed the brand’s end of quarter inventories down to a level of 13% per square foot at cost below a year ago. This accomplishment is particularly important as we transitioned our merchandising from end of spring season July to early fall. Selling, general and administrative expenses or SG&A dollars increased 5.9% to $205.5 million primarily as a result of higher occupancy costs due to new and expanded stores, higher payroll costs and to a much lesser extent, higher marketing costs. SG&A as a rate of sales increased 620 basis points for the second quarter to 50.7%. Store operating expenses represented 480 basis points of that increase, again largely attributable to the higher occupancy costs, higher field payroll costs, along with the deleverage associated with the comp sales percentage decrease. The higher occupancy is a direct result of new stores and higher rents associated with the larger Chico’s and White House | Black Market stores we’ve opened over the past two years along with the changing mix within the total store base. Also in order to maintain minimum coverage we were unable to flex field payroll lower to be inline with the decreasing comp trend. Further as White House | Black Market and Soma Intimates become a larger part of the store base their current store operating costs as a percent of sales is higher then the Chico’s brand which adversely affects total store operating expense as a rate of sales. Marketing represented 70 basis points of the 620 basis point increase. Higher marketing costs came primarily from market research for Chico’s and some additional advertising for Soma accompanied by the deleveraging of these costs given the negative comp. Shared services represented an additional 70 basis points of the 620 basis point rate increase largely attributable to the deleverage from the negative comp and to a lesser extent an increase in information technology spend. It should be noted that a year-on-year basis shares services expenses are slightly lower then last year. Looking briefly at the balance sheet our end of quarter cash and marketable securities totaled $278 million versus $271 million at the end of first quarter and $274 million at the end of last year. We continue to focus on cash conservation during these difficult times. Our cash conservation practices are demonstrated by the slowdown in our real estate growth rate. During the second quarter the company opened 20 new stores, closed one, and completed seven relocations and expansions for an estimated 2.3% increase in selling square footage. It now appears our square footage growth rate for 2008 will land in the 7% to 8% range. By brand Chico’s opened eight new stores and executed four relocations and expansions, White House | Black Market opened 11 new stores and completed three relocations and expansions and Soma Intimates opened one store and closed another. Thus as to the third and fourth quarters we are expecting nominal net square footage growth in both periods. Accordingly our CapEx for 2008 will now fall closer to the bottom or slightly below the previous range of guidance of $120 million to $125 million. Net of construction allowances this amount should fall within the $90 million to $92 million range. We still expect depreciation and amortization of just under $100 million for the year. At the beginning of my comments I made mention of how a number of retailers who’ve released their second quarter results have also given a cautionary outlook on the second half of the year. It should come as no surprise that being dedicated to the missy sector we share that same opinion. The second half of 2008 fall season, we’re expecting negative comps but improvement from the high teen negative comp reported for the second quarter. In addition we expect to be profitable in the second half of 2008. Our cautious outlook on the back half of the year is matched by our conservative plan for inventories. We continue to review our inventory levels on a weekly basis and remain conservative in planned levels for the balance of the season. In this way we should mitigate the negative impact of markdowns on our margins attributable to excessive inventory levels while enjoying improved full price sell-through at all of our brands. As we’ve taken calls from and meet with investors certainly the number one question in their mind is when will Chico’s show noticeable improvement and when are comps going to be positive? The answer is I can’t predict when, however we are beginning to see noticeable improvement in select categories in Chico’s that have been problems in the past, such as travelers and jackets. As to positive comps first we want to see our comp sales trend move from double-digit negative to something in the single-digit negative range. To that end it would be helpful to all of us in retail to begin seeing greater consumer confidence and increased spending levels. But more importantly our focus needs to be on offering our customer the best in fashionable apparel and accessories with consistency of fit and the highest level of customer service. We believe we have three of the strongest brands in specialty retail today with more opportunity for growth especially for White House | Black Market and Soma Intimates, but right now, we have to play defense. Let me be clear, we have a financially strong company and a loyal customer base that despite spending less then last year due in part to lower average unit retails arising from higher markdowns, she is still coming in to shop. All of us on the Chico’s FAS team believe we are following the right strategy for reversing the trend and returning to increased profitability. We appreciate your continued support in those pursuits.

(Operator Instructions) Your first question comes from the line of Kimberly Greenberger – Citigroup Kimberly Greenberger – Citigroup: Could you address the differential on the inventory on your balance sheet versus your comments about the Chico’s brand? I’m just not able to get to the numbers that you’re talking about.

I think the Chico’s brand is down roughly about 13% per square foot, the White House | Black Market brand I believe is down about 3% per square foot and the Soma brand is up. Part of the issue we weren’t able to achieve as low a level in the White House | Black Market brand as we had hoped is because of in-transit inventory levels. We had a significant increase in inventory in-transit at the end of the quarter. Kimberly Greenberger – Citigroup: So there’s almost a 10% spread between what you’re talking about at the Chico’s and your total company inventory per square foot, that’s all inventory in-transit?

A good portion of it is the inventory in-transit. Kimberly Greenberger – Citigroup: So where would you expect the inventory on average to be throughout the third quarter on a per square foot basis?

I think the question is, is that we’ve gotten inventory levels down closer to the trend which has been to me a monumental task but great spirit of cooperation with Michele and Donna in particular. We’re going to continue to manage inventory levels closer to trend. Right now I don’t have a pinpoint target for third quarter because we’re seeing some slight differences in trend right now and we’ll adjust as we go along. But for intents and purposes I think the inventory levels are in pretty decent shape. Kimberly Greenberger – Citigroup: You have over 30% of your market cap in cash on the balance sheet, I’m just wondering why you aren’t out there buying stock.

Because I think that we’re not of the mindset that a repurchase program is part of our long-term strategy. To me to go out and repurchase stock is like declaring a special dividend, it’s a one-time event. And I’ve obviously had these types of discussions with a number of the investment bankers who want to advise the company on these types of transactions and virtually everyone I’ve talked to has said basically keep your powder dry and I wouldn’t repurchase stock right now. Kimberly Greenberger – Citigroup: Have you had that conversation with investors?

It’s come up in some cases, but it hasn’t, I would say that the majority of the people haven’t asked the question but a few have.

Your next question comes from the line of Neely Tamminga – Piper Jaffray Neely Tamminga – Piper Jaffray: It would seem to me going back when things go well for Chico’s, that the quarterly earnings pattern is actually pretty consistent from quarter to quarter, and so I’m just wondering here you are still positive earnings here for the year, you earned $0.11 in the front half of the year, is there anything that would preclude you from earning $0.11 in the back half of this year or more importantly could there even be some upside to that $0.11 in the back half?

I think you’re asking me to become a little bit more specific in guidance and we’re not going to go there because we’re really in a historical times and it’s very difficult to predict. I would tell you that the fact that we’re going to make money in the second half is and more so then last year, I think is an indication of where we see the business. It just so happens that the margin for error is a lot narrower then where we were previously and from everything that I can see with respect to the macroeconomic environment, I’m not hearing any good news out of too many people. So I think it’s better for us to remain cautious and not get people ahead of themselves. Neely Tamminga – Piper Jaffray: Can you give some guidance as to how we should be thinking about SG&A dollars just broadly speaking considering you’ve done a good job when you think of cost cutting and various different stages, but how should we be thinking about SG&A dollars?

I think absent the whole occupancy piece, my sense is the G&A dollars should be I’d say other then occupancy, should be basically flat to slightly down.

Your next question comes from the line of Tracy Kogan – Credit Suisse Tracy Kogan – Credit Suisse: Can you be a little more specific on the areas that you have for expense savings and how much you think you can take out of the business and then can you talk a little bit more about what you’re doing on the ecommerce to improve that business?

I think on the whole expense, I think we’re basically seeing opportunities in both gross margin and SG&A. In the gross margin line we’ve eliminated outbound freight to stores via air shipments. We’re continuing to take a look at opportunities to try to increase more of our shipments, convert them from air to ocean. I think those are probably the two biggest areas. Our distribution center team which is another component of gross margin, we just had their six month year to date review yesterday and they continue to identify areas to drive costs out of the structure, whether its in the four walls or whether its method of transportation, so we’re encouraged there and I haven’t really shared that type of news with respect to our cost savings. Below in the SG&A area, we’re laser focused to use Scott’s term, in payroll and the bonus areas. We’ve already identified savings on the bonus side. We’ll be testing some alternatives from the bonus plan for the Chico’s and White House | Black Market businesses. I still think we’ve got a ways to go in taking a look at the field payroll as a rate of sales. I see some opportunities in each of the brands. Other then that, we’ve been driving out a lot of other costs in the cost structure like between store supplies and taking a look at some of the maintenance that we’ve done in the store that quite honestly for example HVAC, we can instead of doing a four times a year, why not do it three times a year. To me that’s easy pickings. So we’ve been focused on keeping our shared services number lower then last year. That’s where we are year-to-date; I expect to continue that trend for the balance of the year. The other piece that was a big piece that we identified early on was the marketing spend where we were looking at page counts and becoming more efficient in our mailing patterns as it related to reactivation and prospecting and I will tell you that despite marketing expenses being up in the first half, we will see significant savings or I should say our spend below last year’s level in the third and particularly the fourth quarter so that benefit has yet to be realized.

And regarding the ecommerce, tactically aligning the inventory levels across the brands with the mailer items is driving significant growth in the ecommerce business and there’s a lot of focus on that by the brand leadership. Strategically we’re undergoing a project right now with a consulting group, BCG, to look at how we could triple our online and direct business over the next 36 months, looking at best practices, infrastructure, technology, both from a hardware and a software and the marketing side, what can we do to really ramp this up beginning in 2009 and really get the thing ramped up 3x over the next 24 to 36 months. So tactically its inventory levels strategically we’ll be looking at how we can really ramp the thing up over the next 36 months.

Your next question comes from the line of Jennifer Black – Jennifer Black & Associates Jennifer Black – Jennifer Black & Associates: How close are you to finding someone in the area of logistics?

We have a very strong candidate that’s coming back I think for about the third time to look at real estate. Jennifer Black – Jennifer Black & Associates: I wondered how much more you can reduce your choice count at the Chico’s brand.

As you know we as a brand have reduced our assortment year-over-year. This year down 10, last year I was down 30. So we continue to look for opportunities but we’re weighing the wide assortment that our customer expects and enjoys from us and balancing depth on item growth. So we are still undergoing that, we are always in testing mode to see where we can reduce but we are where we are right now. Jennifer Black – Jennifer Black & Associates: I wondered how many people received the Black Book Insiders survey and can you tell what the response ratio is or is it too soon?

No, it’s too soon. This is something that Elaine Boltz initiated along with the brand leaderships and we just rolled it out so we don’t really have any stats to report yet. Jennifer Black – Jennifer Black & Associates: I just wondered too the response to the color red at White House | Black Market?

Phenomenal. It far, far exceeded anything that we expected and you know we went into it cautiously because we really want to be sure that we protect the D and A of the brand but it was, the response has just been tremendous.

Your next question comes from the line of Liz Dunn – Thomas Weisel Liz Dunn – Thomas Weisel: On the accessories business, can you discuss what are the obstacles to turning that business, it appears that a lot of the magazines are highlighting statement jewelry as the big trend this fall and that seems like something that would play well for you? Why is your business taking longer to turn, specific to the Chico’s brand?

I’m going to speak specifically to jewelry because that’s the driving force, the only area in accessories that’s large for us itself, the jewelry business as we have been understanding where she’s willing to go, because again, repeating old styles has not worked for us. So it still needed to be evolved and we have been in testing mode to understand where she will respond. We have kept our inventories very lean in order not to over invest and therefore create additional markdowns. We are getting some very good reads right now on our jewelry in the past, I’ll call it three month’s worth, so we have started to increase our inventory investment as we approach the fourth quarter and we’ll see the returns. Liz Dunn – Thomas Weisel: Are you able to comment at all, we’re pretty far into August here, comment on August month to date?

No more really then what we’ve put in the press release consolidated at 10.7 through Sunday and then some of my commentary on the response to the travelers initiative relaunch if you will in early August which we were more then pleased with. That’s about all we’re prepared to talk about relative to August. Liz Dunn – Thomas Weisel: Can you update us on your thoughts on the environment for cost inflation?

I think that in each of the businesses we’re beginning to see some pressures on costs, part was self-inflicted in terms of raising the quality and the level of piece goods in the White House | Black Market business in particular, but more importantly we source about 55% of our goods out of China. We’re starting to see some significant cost pressures out of there. On the other hand we have huge opportunities to mitigate those cost pressures through the method of delivery which particularly in Chico’s we ship predominantly air versus ocean and so we have an opportunity to convert from air to ocean there as well as the opportunity to do more direct imports because we still have a substantial portion of our businesses in the aggregate on a landed duty paid basis. We obviously see opportunities to more then mitigate the increase in cost on a go forward basis.

Your next question comes from the line of Adrienne Tennant – Friedman Billings Ramsey Adrienne Tennant – Friedman Billings Ramsey: On the amount of air versus ocean, what’s the split right now and then where do you want to take it and what would the differential in costing be and then just to kind broaden that, historically you had thought that you didn’t want to take of a risk on the buying side and you wanted to take more of the risk upfront in the front line stores so you wanted to make that air freight decision? How does that change how you’re thinking about lead times and how much risk you’re going to take on the merchandising side?

Actually I don’t think it’s a question of taking risk, I think its really a question of just adhering to the product calendar so we can make certain go, no go dates when we cut piece goods in order to assure ourselves to have ocean delivery. I think right now I think the Chico’s business is as I recall somewhere around 80% air and I think that the White House | Black Market I think is probably closer to about 50% air. So and even the 50% is a nice improvement versus Chico’s. obviously there’s still some opportunity there but its really not a question about taking risk, its really just a question of adhering to the product calendar and trying to get the goods in and the lowest economical cost that we can achieve. Adrienne Tennant – Friedman Billings Ramsey: And what is it just to help us out thinking about this, what’s the price differential from air to ocean and the time differential?

When I last looked at it and I haven’t really taken a look in terms of what the fuel surcharges have been doing to us since yesterday’s distribution center review, but it could be anywhere in the order of magnitude from $0.80 to $2.00 a unit. So it’s a huge opportunity. Adrienne Tennant – Friedman Billings Ramsey: And then how much longer does it take? When you start moving, is that kind of what’s causing the in-transit inventory to be higher and we should we continue to see that going forward?

If you go back to the comment about the in-transit inventory with respect to White House | Black Market they have more ocean penetration in their mix and therefore that’s driving up the in-transit number. But it’s all good news. From a balance sheet it looks like inventory wasn’t as low as we wanted, on the other hand we’re being cost effective in converting more deliveries to ocean. Adrienne Tennant – Friedman Billings Ramsey: So we should probably see, I’m just trying to get a feel for what the true inventory is, the landed inventory so that, because we should probably expect to see this differential go forward for quite some time? So it’s hard for us to get a clear picture of where the true inventory stands.

I would say at least for this quarter I think, it’s a moment in time and I’m not willing to throw yet another metric out there to be measured by. So you’ll just have to stay tuned and you have to also take into consideration in addition to changing method we’re also changing mindset so it’s not something that we can do in 30 days, its going to take some time. Adrienne Tennant – Friedman Billings Ramsey: Would you please talk about some of the passport metrics? I know you talked a lot about the customers, but have you seen any changes in the passport penetration over the past couple of years and what are you doing to bolster that program again and make that all that it was previously?

The one thing that I think you’ve noticed is over the last probably six to 18 months we’ve pulled back on a lot of the passport information that we’re sharing. We just thought that it was too critical from a competitive set to keep laying out there exactly what was going on with our database. I would tell you that if I have an area of concern right now is in this economic environment where we’ve looked to cut some of the spend in marketing is trying to drill for new customers and prospecting if you will, and that’s starting to cause me some heartburn relevant to the number of prospects that we’re signing up. But it’s a direct relationship to the money we’re spending and I’m confident based on the sheer number of new customers we’re seeing come into the business without the prospecting that once we dial back up the prospecting spend that we’ll start to fill the pipeline of preliminary customers again but that’s probably the area that I have the greatest concern. Adrienne Tennant – Friedman Billings Ramsey: So basically the percentage of sales is coming from the passport members is significantly higher then it was because you’re not spending to attract new customers?

Not full passport members, no. It’s been pretty consistent on the percent of total spend by brand of the full membership, the full black book member and the full passport member hasn’t changed dramatically. And what we’re seeing is the prelims, we’re just not bringing the same number of prelims in quarter to quarter that we have been. I will say that in the last few mailings, we’ve seen more prelim interest because I think the marketing is much more reflective of the brands, much more on brand if you will, and even without spending additional prospecting dollars, we’re seeing the prelim pipe up a little bit.

Your next question comes from the line of Michelle Tan – Goldman Sachs Michelle Tan – Goldman Sachs: Where are sales per foot tracking year-over-year at both brands and then what is the longer term strategy at White House | Black Market from a price and IMU standpoint?

I can speak to that with respect to new store performance, I don’t have it at my disposal right now for the total but we’re probably in White House | Black Market we’re north of $500 a square foot and in Chico’s we’re a little south of that number on new stores. They’re the bigger square footage stores and expanded. Michelle Tan – Goldman Sachs: And then the longer term strategy at White House | Black Market from the price and IMU standpoint?

Our retails as we’ve talked about before have gone up slightly as we approach the fall season with the elevation of our fabrications on the quality level, the make of the garments, somewhere in the vicinity of about 7% or 8%. We do not anticipate it going any higher then that. From an IMU perspective as Kent mentioned earlier, as we were repositioning the business we are absolutely not getting the benefit or economies of scale in IMU right now. Again that will begin to level itself out as we get into 2009. We were in catch-up mode and things are beginning to level set now where we can get out there and we can research and negotiate, continue to put more product on both so we see the IMU gains happening in 2009 and retail staying about where they are now. Michelle Tan – Goldman Sachs: Where is profitability at White House | Black Market versus Chico’s now?

We don’t give that information out.

Your next question comes from the line of Brian Tunick – JP Morgan Brian Tunick – JP Morgan: Looking at some of the older Chico’s stores that have been expanded the past couple of years, do you have any updated [inaudible] on where you think average store volumes or sales productivity will bottom? Are we in the seventh or eighth inning now of the productivity declines? And then your enthusiasm on your Soma comments should we interpret that that you think Soma may be able to breakeven this year and how far away are the four wall margins at Soma before you think about making a bigger real estate push?

On the, you read the enthusiasm right, I’m enthusiastic about the brand. We do not believe that we’re going to get to a four wall breakeven profit this year. We still think that that’s somewhere in the future but the leverage on the store expenses, the leverage across the board as the volume ramps up is very attractive. We think that we will get there. Relevant to the productivity levels of the Chico’s stores, I would tell you that when I look at the performance of Chico’s in Q4 and Q1 that I believe that that’s the bottom of the trough.

Your next question comes from the line of Lorraine Maikis – Merrill Lynch Lorraine Maikis – Merrill Lynch: Could you give us an update on the bonus structure for field associates and generally what are you planning to do there and can you give us an idea of the magnitude of savings or opportunity there?

Kent, I would rather you speak to the magnitude of the savings because we do have associates that listen to this call too and they haven’t heard it yet and with all due respect to them I would rather them hear the bonus plan first and then the investment community. You could maybe talk about what you think the savings are going to be and stay away from where you think the bonus plan is going to go.

I agree 100% with you Scott. I think that there’s probably anywhere from say $2 million to $4 million but I think it’s a change in mindset to have people start thinking about not just in the bonus but also in the field payroll about taking a look at sales per associate hours. It’s all about productivity and that’s what we’re trying to focus on. Lorraine Maikis – Merrill Lynch: And once that’s in place will that help with the ability to flex up and down, the way that you had a problem flexing down this quarter?

I think it will certainly help us more from a rate perspective. When you talk about flexing there are really two functions. One is hours and one is rate. I think we can have some significant inroads in the rate. I think we do a decent job on hours but I still think there’s a little bit left to be desired.

Your final question comes from the line of Robin Murchison – SunTrust Robinson Humphrey Robin Murchison – SunTrust Robinson Humphrey: Earlier when you commented about SG&A and occupancy you thought that it should be flat to down I just want to visit on that in terms of the impact of minimum wage, does that consider the impact of minimum wage?

Yes it does. I would like to think that the minimum wage because of the nature of our associates both in the distribution center as well as a good portion of our field associates already make more then the minimum wage. We’re more heavily weighted to our full time versus part time in the field so yes it does take into consideration but the impact of which is nominal. Robin Murchison – SunTrust Robinson Humphrey: Any observations or differentiation you want to make in terms of performance in those four states; Florida, California, Arizona and Nevada, and noticeably in the monthly catalogue and I don’t know how to put this delicately, but the girth if you will, or the women, the models are certainly a little bit thicker then they’ve been in the past and I presume that this is based on your earlier comments about the reception to the catalogue merchandise over the past three months.

Clearly if you look back at the fall holiday campaign, anything would be heavier and wider.

Just the level set, the size of these models are an eight so if we consider that to be girth I don’t think that’s reflective of the consumer today and certainly not our customer. So we are very pleased with the size of the women and the way they look in our clothes because it’s much more reflective of who we’re targeting. Robin Murchison – SunTrust Robinson Humphrey: Just to be clear vis-à-vis in the past the way the catalogues were done.

Yes.

I think it’s good. I think it’s very astute that’s exactly where we wanted it to go. Robin Murchison – SunTrust Robinson Humphrey: What about the four states, anything to say there?

I don’t know why you’re asking us such tough questions on a state by state basis. We look at our stores on regions and I would say that the west coast which would encompass California and Nevada are probably, it’s probably one of the lower performing regions if you will for Chico’s as I recall. It’s not a huge gap but it is underperforming on at least the west part of the United States. Florida I have had discussions with a number of other retailers that the Florida for a number of others is in the tank. I don’t think our Florida performance is all that different from the rest of the areas of the country. It was that way I think earlier in the year when I first looked at it but I don’t see a noticeable difference presently.

Probably a little more impacted I think in the White House | Black Market brand and then clearly in the month of August, tropical storm Fay, was the most famous tourist we had in Florida; kept coming and visiting and has cost us quite a bit of business and I’m sure on the monthly release we’ll probably speak to dollar volumes what that storm has cost us.

Thank you all for participating in this conference call. Have a good day.