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 Michelle Tan – Goldman Sachs Tracy Kogan – Credit Suisse Adrienne Tennant – Friedman Billings Ramsey Chris Kim – JPMorgan Lorraine Maikis – Merrill Lynch Neely Tamminga – Piper Jaffray Margaret Whitfield – Sterne Agee Liz Dunn – Thomas Weisel Jeff Black – Barclays Capital Unspecified Analyst – UBS Jennifer Black – Jennifer Black & Associates Crystal Kallik – D.A. Davidson Robin Murchison – SunTrust Robinson Humphrey Liz Pierce – Roth Capital Partners Marnie Shapiro – The Retail Tracker Dana Telsey – Telsey Advisory Group

I would like to welcome everyone to Chico’s third 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. Bob Atkinson Good morning everyone. Welcome to Chico’s FAS third quarter earnings conference call and webcast. 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 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 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. Please note that the company plans to file an 8-K with the SEC that will include a transcript of today’s conference call and webcast. With that, I will now turn the call over to Scott Edmonds. Scott Edmonds Thanks Bob and thanks to everyone for attending our third quarter fiscal 2008 conference call. With me on the call today is Kent Kleeberger, our Chief Financial Officer. Michele Cloutier, our 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 third quarter ended November 1, 2008 decreased 5.2% to $394 million from $415 million for the fiscal 2007 third quarter ended November 3, 2007. Net income for the fiscal 2008 third quarter was $2 million or $0.01 per diluted share compared to net income of $23 million or $0.13 per diluted share in the prior year’s third quarter. As previously reported comparable store sales decreased 13.4% for the 13-week period ended November 1, 2008 compared to the comparable 13-week period last year ended November 3, 2007 as same store sales decreased approximately 17% for the Chico's brand and approximately 5% for the White House | Black Market brand. We believe our third operating results are reflective of the poor economy and consumers’ waning confidence. This is underscored by the approximate 10% decrease in company-wide transactions experienced during the quarter which contributed to the 13.4% decline in comparable store sales. Accordingly the lower level of sales and transactions necessitated a greater then planned level of markdowns and therefore a lower gross margin. We continue to strive to provide our customers with merchandise that is both compelling in fashion terms and affordable. While we are committed to keeping our balance sheet strong and preserving an appropriate amount of cash it is vital that we continue to invest in our brands and position ourselves to recapture sales and gain market share once the economy improves. Given the expectation of continued economic challenges for the foreseeable future we remain focused on reducing costs, limiting our capital expenditures to only what is necessary, managing inventories, and properly managing our cash. To date we have identified and implemented over $50 million in annual expense savings while trimming 2008 capital expenditures to approximately $110 million compared to the $202 million expended last year. The company’s capital position has been further strengthened by our recent entry into a new credit facility with SunTrust Bank. This new $55 million facility has an increased aggregate principal amount of $10 million above the prior $45 million facility and also has a $45 million accordion feature providing additional debt capacity if and when needed. The new facility is secured by certain assets and contains terms and conditions common to facilities of this type. It will expire in November, 2011. Secure in this new facility in these uncertain economic times is a testament to our financial strength. Our strong balance sheet which includes $256 million in cash and marketable securities, and no debt, accompanied by no immediate plans to draw on the new facility increases our financial flexibility and further reinforces our ability to successfully emerge from this economic crisis. And now I will provide some commentary on each of our brands starting with our core brand, Chico's. The Chico's brand posted a negative 17.2% comp for the third quarter. While we certainly aren’t satisfied with this number, it is a three-point improvement over the second quarter’s performance. Additionally we had 164,734 new customers shop at Chico's during the third quarter. As many of you know after a challenging spring season we had reposition the fall season with many of the findings from the focus groups and consumer insight we gained. We reworked the merchandise line and delivered what we believed to be the best product assortment in the past two years. Our customer agreed as the month of August and the first two weeks of September showed a significant improvement in performance over the spring season. On Monday, September 15, after the collapse of the global financial markets we saw dramatic declines in transactions that recovered only through promotional activity. However even in these very challenging times the performance in several key categories has shown significant improvement over the first half. Travelers, this category ran negative 43 comps in the spring season and is currently projected to be down in the high single-digit comp range for the fall season. The product and marketing of this cornerstone category have experienced improved customer response and will continue to deliver a compelling assortment that we believe will continue to improve this category. Jackets, this key category continues to improve with the fall season projected to deliver a negative single-digit comp performance up from a negative high double-digit comp performance from the first half. Novelty, including sweaters, jackets, and denim, we’ve continued to increase our investment in novelty and our customers’ response has been very positive. She continues to invest in new and novel items that she must have and does not already own. Value, we have definitely seen our customer respond favorably to sharply priced key items. New business categories such as active have been performing well all year and we plan to increase our investment in this important category into 2009. The bottoms and accessory businesses continue to be challenging and account for more then half of our comp loss for the fall. We continue to see our customers slowing her investment in items that she already owns that can take her through another season such as basic denim or a black pant. We have seen this category be highly promotional across our competitive set. With regard to the accessory business although we have definitely begun to see some fragments of positive undercurrents to the business it remains extremely challenging. Our focus for an improved trend in this business was positioned for the fourth quarter however, based on the significant change in the macro environment during the third quarter and now into the fourth it is difficult at this point to evaluate if we made enough progress with this product. On November 17 we launched our 25th Anniversary Celebration with a special limited edition collection of items. The mailer featuring this collection along with part of our holiday offering was just delivered last week and we’re seeing positive reaction from our customers specifically in the jacket, outerwear, and accessory areas. This mailer also featured Debbie Phelps, the mother of Olympian Michael Phelps, wearing one of our special edition jackets. We believe that this is one of the best holiday collections that we’ve delivered and we’re supporting it with our holiday marketing campaign. We will also be delivering a gifting mailer to our very best customers the first week of December. In the resort mailer which mails December 15, we will feature the winner of our jacket design contest wearing the design she created. We received an amazing 2,200 submissions all with incredible stories of our customers’ love for the Chico’s brand. Looking ahead we do not expect the retail environment to get any less challenging or promotional. We remain focused on continuing to improve the product offering and managing our inventories. We have positioned ourselves to compete promotionally in the marketplace but will be very strategic with our offers. We will continue to stringently manage our inventories for the fourth quarter and are projecting February VOM to be down approximately 10% for the Chico's brand on a cost per square foot basis. Turning now to the White House | Black Market brand, the White House | Black Market brand continues to show positive improvement in the overall business trend. Average store transactions improved from the first half of the year down 9.4%, versus down 21.8% in the second quarter. The average dollar sale continued to improve and was up 4.5% to last year and 272,015 new customers shopped at White House | Black Market in the third quarter. Despite the aggressive competitive environment the White House | Black Market customer responded positively to the fall collection. The elevation of quality and sophistication resonated with her and we were pleased with the performance of the new product direction. We continue to see strong growth in our bottoms, dresses, shoes, and accessory businesses. With the launch of our pants that fit who you are campaign in fall, we launched a new contour fit along with our core legacy fit. We achieved positive comp growth and are pleased with the initial results of the program. Our fashion denim business remains very healthy and has delivered positive growth for five consecutive quarters. Bottoms went from a negative 10% comp in spring to a positive 10% comp in the third quarter. Dresses continued to be a cornerstone of the White House | Black Market brand. Third quarter was the second consecutive quarter of strong business and positive growth. Our customers responded favorably to the expanded breadth of choices in styling, fabrication, and price point. We feel confident in our strategy to provide the customer with a compelling assortment of high quality, sophisticated, and unique dress. Under the direction of new leadership along with the improved trend in dresses, the shoe and accessory business accelerated throughout the third quarter. The results were exceptionally strong and driven by full price growth. We’re very pleased with the repositioning of the business and we feel that our footwear and accessories now reflect the same elevated taste level, higher quality, and fashion mix as our apparel collection. The introduction of the color red was a resounding success and the sales exceeded our expectations. Also well received was our silver label collection of [lux] jewelry and our one-of-a-kind limited edition silver label skirt. The limited edition, higher price point signature pieces have performed and we will continue to explore the opportunity in the upcoming seasons. We have however experienced some challenges in our top businesses and have struggled in categories that have not elevated to the same level of sophistication as the balance of the assortment. The team is working diligently to reposition this business and we expect to see an improvement in the fourth quarter and into early 2009. Moving on to marketing we’ve seen improved response to our fall books and during September in addition to our fashion book we also mailed a dress book that showcased our special occasion dresses, shoes, and accessories. We have been very pleased with the elevation of our mailers and national media campaigns and continue to believe they strongly present White House | Black Market as a premier fashion brand. Our customer trends in the third quarter showed a slight decrease in shopping frequency but an increase in spend per customer and our black book customer base continued to grow with 270,000 new customers shopping at White House | Black Market in the third quarter. And now on to the Soma Intimates business, during the third quarter the Soma Intimates brand produced positive front-line comp store sales although the growth rate slowed late in the quarter due to the softening economy and reduced TV advertising support. During the 2008 third quarter the brand ran one week of TV support versus six weeks of TV support in the third quarter of 2007. In early October we decided to concentrate TV advertising spending in the fourth quarter instead of competing with election year advertising and the bad economic news in the third quarter. During the third quarter 68,829 new customers shopped at our 70 Soma Intimates locations. The Soma e-commerce site, soma.com, continued to realize strong double-digit sales increases versus last year driven by significant increases in both site traffic and conversion. Direct to consumer sales of Soma products exceeded 25% of front-line store volume in the period. Major product introductions during the quarter including the vanishing edge lace panty line, vanishing lace bras, and a new camisole bra. Bras, panties, and active wear product categories all enjoyed double-digit comp growth. Sleepwear sales experienced negative growth in stores as customers shifted from discretionary purchases to essentials. Sales of shape wear were also challenged by late supplier delivery of new products. The brand leveraged SG&A expenses during the quarter thereby continuing to improve its economic model. A test of packaged vanishing edge panty program in 75 White House | Black Market stores had positive initial sales results. Also vanishing edge products were featured on an eight-minute segment on QVC during primetime viewing hours. The Soma products featured on the show achieved 100% sell-out and additional QVC appearances are planned for the coming months. We see QVC as an excellent venue for expanding national awareness and trial of the Soma brand. We expect the brands growth rate to be negatively impacted in the fourth quarter by the continued dramatic slowdown in consumer spending. However we anticipate that the shift that most of the third quarter television advertising spending to the fourth quarter will partially offset the broader economic conditions in the regional markets where the vanishing edge television commercial will air. Furthermore Soma has intensified its holiday promotion plans in stores and at soma.com to increase the appeal of key item gifts. The brand will also benefit from two new early fourth quarter store openings in Birmingham, Alabama, and Coconut Creek, Florida. Looking forward to spring 2009, Soma product launches will continue to feature compelling, problem solution foundations products, and on-trend active wear and sleepwear styles. In 2009 we will continue to take a conservative posture with respect to Soma store expansion by committing to only a handful of stores to date, while continuing to aggressively expand soma.com. In closing 2008 continues to be an extremely challenging year. We will remain focused on strengthening our product offerings across all three brands, evolving our marketing and customer loyalty programs, providing our customers with our most amazing personal service across all three channels of distribution, stores, internet, and catalogue, inventory management and expense control, and protecting our free cash flow and our very strong balance sheet. We are encouraged by the commitment that Chico's FAS associates have shown to cutting expenses, headcount, and capital expenditures out of the business. We are encouraged by the progress each of our brands are making on improving our product and marketing, and we’re encouraged by the recognition of the ongoing strength and sustainability of our brands by SunTrust’s new $55 million credit facility. And most of all we’re encouraged by the fact that 505,578 new customers have shopped in one of our three brands during the 13-week period. We continue to believe that when the economy eventually improves these new customers will translate into exciting sales growth for Chico's FAS, Inc. And now over to Kent. Kent Kleeberger Thank you Scott and good morning everyone. On our second quarter conference call on August 26th, I said the outlook on the second half of 2008 by any number of retailers including ourselves had become more cautionary as the US economy faced a number of [various] economic indicators. Unfortunately little did we know how prophetic those words would be. By the time we reported September sales on October 9th, the global economy had seemingly been turned upside down. The S&P 500 index had dropped 363 points or 29% and other international markets were down even more. It was on that same October 9th release we indicated that because of the deteriorating macroeconomic environment combined with the unstable financial markets we were withdrawing our earnings outlook for the second half of the year. And even though we have our third quarter results in, we see the fourth quarter with no greater predictability then we did seven weeks ago. Its also interesting to note that a number of other retailers have followed suit by withdrawing sales and earnings guidance for the holiday quarter as well. What we do know about the fourth quarter is that this holiday season has the potential to be the most challenging in many of our retail careers, certainly mine. There is no need here to list all the reasons customers aren’t spending. Two days from now we will get a good indication of how shoppers voted the cash register thereby demonstrating how this holiday season will compare to other retailers and past holiday shopping periods. For our part, we’re offering them great fashion within store holiday floor sets that we believe set us apart from the competition and we’re highlighting that fashion in our catalogues which include special savings coupons that stretch our customers’ apparel spend. We are also prepared to sharpen price points if and when necessary. Now I’d like to cover some financial points for the third quarter in addition to what Scott has already covered. Looking at gross margin our rate for the 2008 third quarter decreased 470 basis points largely attributable to a [430] basis point decrease in the Chico's brand merchandise margins coming from slightly lower initial markups along with significantly higher then anticipated markdowns taken in connection with controlling inventories and in reaction to the soft shopping environment. Chico's brand gross margin also reflected a 20 basis point decrease in rate due to the continued additions to product development and merchandising functions as well as the deleverage of many of these fixed costs as a result negative comparable store sales. White House | Black Market also had a merchandise margin decrease totaling 450 basis points due primarily to lower initial markups and higher markdowns as well. The lower White House merchandise margin which typically runs at a rate lower then the Chico's brand also pulled FAS gross margins lower as White House becomes a bigger part of the overall sales mix. SG&A expenses as a percentage of sales increased 130 basis points excluding last year’s gain on sale of our [Lucy] investment primarily attributable to the deleverage of these expenses as a result of negative comparable store sales. Within SG&A store operating expenses as a percentage of sales increased 280 basis points primarily because of higher occupancy costs and our inability to flex our store payroll despite the lower then planned sales. In addition the rate decline was further exacerbated by the mix of store operating expenses as a rate of sales as White House and Soma brands run at a higher rate when compared to Chico's stores. Marketing expenses were lower by $6.9 million compared to third quarter last year and as a percentage of sales decreased by about 130 basis points. The current year reflects the benefit of the cost reduction measures primarily as a result of improved efficiency in our direct mail efforts including reductions in circulation due to lower levels of prospecting and reactivation efforts. Shared service expenses decreased $2 million or 20 basis points attributable to our ongoing cost reduction measures. The company’s income tax provision for the quarter actually shows a benefit for the period. The effective rate for the third quarter reflects the reduction of our annual income tax estimate along with the benefit from the flow through of tax reinvestment interest income and our charitable contributions. At this point I’d like to turn your attention to our efforts on expense reduction alternatives and cash conservation. Admittedly I’ve been spending the majority of my time over the past couple of months challenging where we can make additional expense cuts within the FAS organization beyond what had been targeted earlier in the year. Previously we targeted over $30 million in annual cost that could be eliminated from the P&L without any harmful impact on the brands. These savings were in marketing, specifically efficiencies in our catalogue cost, store payroll including bonus and other store-related costs such as maintenance and store supply, and in the supply chain including our distribution center. With the upheaval in the financial sector beginning in mid-September all of the business units were challenged to identify and initiate an additional $12 million in savings. I’m glad to report our organization did better then that. We have identified and implemented approximately $18 million in additional expense reductions that were estimated to be realized starting in October and through the balance of 2008. These savings are coming from open headquarters, field, and merchandising positions that are either being delayed or will not be filled, savings in store expense again without any expected impact on what we believe is our most amazing customer service, reduction in media advertising and trimming catalogue circ, and we expect to see lower depreciation expense as we have reduced our capital expenditures below previous estimates. That reduction in CapEx about $10 million, is coming from our election to delay previously budgeted headquarters and distribution center investments along with miscellaneous store expenditures planned for the back half of 2008. We have financed and expect to finance the remaining 2008 capital expenditures with internally generated funds. Maintaining liquidity is among our highest priorities but to further ensure our strong financial position, we have recently negotiated a new credit line that gives us an additional $10 million in available credit beyond the former $45 million facility. The new facility provides for swing advances up to $5 million and issuance of letters of credit up to $10 million, and also provides the company the ability subject to satisfaction of certain conditions to increase the commitments available under the credit facility to $100 million through additional syndication. The facility will expire in November, 2011. We view our cash position, the absence of debt, our readily accessible credit line, and our ongoing cost reduction efforts and better control of inventories as defensive weapons against what is threatening to be an aggressive retail environment that may well continue into 2009. We believe we are up to this challenge and there are three points of reference. First we continue to hold our 2009 CapEx plans to about 10 or so new stores, and a similar number of remodels. This may result in a $35 million to $40 million reduction from [2000] CapEx levels. We are planning inventory levels lower across all three brands at the end of this year and into the first half of 2009. And finally I have to say there’s a pervasive mindset throughout all three brands in ownership of expense savings, inventory control, and preservation of cash while continuing to protect the strength of the brands over the longer-term. With that we are ready for your questions.

(Operator Instructions) Your first question comes from the line of Kimberly Greenberger – Citigroup Kimberly Greenberger – Citigroup On inventory over the last three to four years, your sales per square foot are down probably 20 to 30%, however your inventory levels on a per square foot basis have not declined at all and I’m wondering when can management get a little bit more aggressive about cutting the inventory levels to align them with the new lower sales [inaudible]? Kent Kleeberger Well I think we’re continuing to focus on cutting inventories. You may recall that we started in earnest at the beginning of the year. Unfortunately there was a significant amount of receipts that were already bought and committed to. But I think that each of the brands in particular, Michele and Donna are now aligned and with the idea of getting inventory reductions in line commensurate with the sales trends. I think as Scott alluded to that we’re expecting February VOMs in particular at the Chico's brand to be down 10% and that’s basically resembles our outlook at least for the first half of next year. Kimberly Greenberger – Citigroup It still doesn’t resolve the imbalance between your current sales productivity and your current inventory levels which at this point look to us to be at least 20% out of balance if not 30, so I’m just not sure how a 10% reduction in inventory per square foots even gets us half the way there if the sales per square foot is expected to fall another 10% in the first half of the year. Kent Kleeberger I think the other thing to take into consideration as well is that the business with the best of intentions and markdown increasing the size of the average store which basically decelerated our productivity and after having the benefit of hindsight for roughly about two-and-a-half years the business has begun targeting smaller stores, new store size, and therefore with the idea in mind of increasing productivity which will probably take about a 12 to 16, 18-month period to reverse that trend.

Your next question comes from the line of Michelle Tan – Goldman Sachs Michelle Tan – Goldman Sachs I was wondering if you could give us any color on what you’ve seen so far in November and then also just talk about the promotional strategy, how that’s changing for holiday and adding more in-season events maybe to drive earlier sell-through. Scott Edmonds We’re not going to make many comments on the November sales. I can tell you that a big part of the month is coming upon us in the next three or four days, so we chose not to release November based on what we’re looking at over the next four our five days. As far as promotional activity in key price points, we’re going to be as promotional as we need to be to get our customer in the door and to move through our inventory with the keen eye being on these inventory levels as we move through the back end of the quarter.

Your next question comes from the line of Tracy Kogan – Credit Suisse Tracy Kogan – Credit Suisse Of the $50 million in annual expense savings, how much was realized in the third quarter and how should we be thinking about expense savings going into 2009. And then what prompted the change in your credit facility. Was it more that you wanted a higher availability or is there now a lack of financial covenants on this new facility because its secured. Kent Kleeberger I guess I’d really say there were really two buckets, we had in the first half of the year identified approximately $32 million in annual expense savings so simple math would probably get you to at least $8 million and as it relates to the additional $18 million of expense savings, we’ve probably carved out I would say probably in the vicinity of $4 to $5 million in the last month of the third quarter. The reason for the financial facility really dates back to efforts that were made toward the beginning of the year. We had one sole service provider on our banking not just our credit facility but a whole host of other ancillary services and it was our intent to begin developing additional banking relationships in addition to that that the size of the facility that we had in place had been that size for quite some time and then it seemed to us that depending upon what courses we might take for the future, we want to have increased flexibility. So we decided to increase the initial availability plus provide us some greater flexibility that down the road we could increase the size of the line depending upon what facts and circumstances should arise. So its really something we’ve been working on for a long time. Our old facility was unsecured but it became pretty much clear to us that events in the markets that a number of other people were going towards the secured facility path and less financial covenants associated that versus an unsecured facility. Tracy Kogan – Credit Suisse Are there any leverage or coverage thresholds or is it not until you are drawn at a certain amount on the facility. Kent Kleeberger You’re exactly right, once availability has reduced and I can’t remember the exact number, but I think below 15% or $20 million then there is a financial covenant that comes into play from a fixed charge coverage ratio.

Your next question comes from the line of Adrienne Tennant – Friedman Billings Ramsey Adrienne Tennant – Friedman Billings Ramsey Along the same lines about the expense reduction, in the fourth quarter how should we be thinking about how much of that annualized savings is actually going to be recognized in the fourth quarter and then as we go into 2009 how should we be thinking about the annualized impact, the full year impact of the cost reduction initiatives that you started this year to 2009. Kent Kleeberger Again I think basically just to keep it simple, if we had $32 million of annual expense savings then roughly about $8 million or so would be in the fourth quarter and of the $18 million if we recognized $4 or $5 then its really kind of the balance to be recognized in the fourth quarter. Many of these expense savings will continue on into 2009. In fact, one way that I would look at it is that we have carved out a certain amount of expenses in our expense base that we’re starting off on a lower base as we begin to look to future years. Adrienne Tennant – Friedman Billings Ramsey Have you made any changes with regard to the bonusing structure in store payroll? Kent Kleeberger We’ve looked at beginning thresholds across the businesses but we are also currently in test so it’s a little premature for us to give any guidance or make any type of commitment in terms of any major restructuring.

Your next question comes from the line of Chris Kim – JPMorgan Chris Kim – JPMorgan So with the 30% declines in productivity over the past few years and what could be another 12-18 months before we see a turn back towards positive comps, at what point do you have to kind of throw in the towel and make more painful cuts to SG&A. I know you’re trying to avoid the negative impact to the brands but at what point would you have to throw in the towel there. Kent Kleeberger There’s really a couple of things to take into consideration, the decline in productivity isn’t necessarily directly tied to a decrease in comparable store sales, but admittedly there is a decline that we’re trying to stem the tide. Our efforts with respect to expense cuts is ongoing. Given where we were in the September timeframe, I’m proud of the fact that across all the brands that our team effectively reacted and delivered more then we were looking for but we certainly have ongoing expense efforts throughout various segments of the organization so its not just in reaction to a trend in declining productivity, its really an ongoing effort. Chris Kim – JPMorgan Could you talk about the timing and the implementation of the SAP to the Chico's and White House brands, when we should expect that? Kent Kleeberger Sure I think that the White House | Black Market brand will take the lead I believe that’s in the May timeframe, just toward the end of first quarter early second quarter and Chico's will follow suit probably within a say roughly 90-day timeframe. Scott Edmonds Just a follow-up comment on that SAP, we did convert some of the first [inaudible] in February of 2007 and just upgraded their software beginning September 15 and a lot of that work that we’ve done over the last two years on the Soma brand rolls right over to the White House | Black Market and the Chico's brand. So the current schedule is as Kent said, spring for White House, mid summer early fall for Chico's with the caveat that at any time we think that the brand is not ready to pull the trigger on the cutover, we’ll delay it.

Your next question comes from the line of Lorraine Maikis – Merrill Lynch Lorraine Maikis – Merrill Lynch It looks like you have a couple of moving pieces going on in what would effect initial markups, you’ve been trying to move more shipments to boat instead of air but at the same time you’re going to be cutting some orders for this lower sales trend and building some more quality into your garments, so how do you see that all shaking out and where do you think the initial markups are going? Scott Edmonds One piece of positive news there is with the slowdown in retail across the missy sector we’re seeing factories opening up, we’re seeing some vendors really starting to lend an ear to a little bit better margin for us. They’re looking at our balance sheet. They’re looking at the sustainability of our business. If anything we’re starting to see a little more opportunity in that area then I would tell you that we were looking at six months ago combined with our efforts that you just spoke about. Kent Kleeberger I think the thing to take into consideration on the margin is that obviously with everybody reducing orders there’s excess capacity and I think that’s providing us some improved costing at least in the near-term but I don’t think that’s going to be a continuing thing. We’re also trying to take a look at not only the way with which we source goods which means shifting more deliveries from air to ocean, we’re also taking a look at where we may have concentrations. Quite honestly I think we’re exposed to some degree in China which has experienced some significant inflation in labor and we have a conscious effort where we’re going to begin moving production from China to other parts of the Pacific Rim, specifically India, Sri Lanka, Indonesia, as examples. Its really a global supply chain initiative if you will and I think its been a big win for us as we were able to put together a small nucleus of sourcing capacity in the Chico's business in the first part of the year that will enable us to achieve these objectives.

Your next question comes from the line of Neely Tamminga – Piper Jaffray Neely Tamminga – Piper Jaffray Can you talk a bit about CapEx and free cash flow plans for next year, just giving us some of the components. I know you talked about store CapEx coming down but maybe the bigger picture CapEx number and then just going back to what a lot of people are asking in their questions, I think the spirit of the question here is do you need, rather do you need $800 in sales per gross foot to get back to 15% Op margin or can you actually do that at about 500, 550, something to that effect. Longer-term looking through all the mess that’s today, just wondering longer-term how should we be looking at that relationship between your once-stated 15% plus Op margin goal [with] sales productivity. Kent Kleeberger On the CapEx I think in our comments this year we expect to finish CapEx somewhere around $110 to $111 million and if we stand pat on our store expansion plans then its likely that we’ll have CapEx reduction of about $35 to $40 million from last year and that also takes into consideration delaying a good bit of the home office and [Winder], Georgia distribution center expansions which we’ve been able to amazingly figure out how we’re able to delay the expansion yet another year or so. I think that depending upon where we see from a comp perspective will provide incremental free cash flow for the business in 2009. Concerning the question about getting productivity back to $800 a foot, I think the $800 a foot is a goal that we have but in order to hit the 15% operating margins I don’t think we need to get to the $800 a square foot. I think its probably somewhere in between the $550 and $800 and the reason I say that is, is because there’s a lot of moving pieces. There’s a significant opportunity in the gross margin line that’s going to help us which will be the most significant factor in improving our operating margins. We continue to attack expenses as we have demonstrated which we should get a little bit of relief on that. I think its somewhere in between.

Your next question comes from the line of Margaret Whitfield – Sterne Agee Margaret Whitfield – Sterne Agee On merchandise it was interesting that the best business in White House | Black Market, bottoms and accessories, are the best businesses at Chico's. Any learnings from that and also all these new customers, any changes in the age as opposed to White House | Black Market in terms of average age or any changes of note in terms of the pendulum swinging older, younger. Scott Edmonds On the age group, we’re not seeing much difference in the age of the Chico's customer, we are seeing the White House customer through a lot of the consumer research that we’re doing now is a little younger then we thought. We sort of pegged her at 40 years old, 41 years old, and she’s actually in her late 30s. We have not seen much change in the Chico's customer. But I will tell you if you look at the age difference of those two customers, the fact that the bottoms business is strong at White House or the accessory business is strong at White House, there are some learings that we carry over to Chico’s but these are, the thing that we’ve come to understand about our three brands is they are three entirely different businesses. The intimate apparel business is a total different business then the sportswear apparel business that we’re in with Chico's and White House | Black Market. And further learnings is there is a dramatic difference in the Chico's customer and the White House customer. And even in this slowdown the Chico's customer is much closer to retirement. She is much closer to having to tap into her 401-K and we are seeing in her spending slowdown significantly more then the White House customer. So while we compare notes at brands we have to be careful not to act too drastically from brand to brand on what we learn. Operator Your next question comes from the line of Liz Dunn – Thomas Weisel Liz Dunn – Thomas Weisel In terms of the CapEx I know you gave the numbers for next year, can you just talk about what you will be spending on, what are the things that you’re still spending on? Kent Kleeberger I think the largest component of CapEx will continue to be stores. Its just that the amount expended will be significantly less. The next piece that comes to mind would be IT development because we have ongoing projects not just SAP although it has been the lion’s share. My sense is, is that our burn rate on CapEx will be down slightly in IT next year primarily as a reduction in our efforts on SAP. On the other hand while we haven’t directly quantified the amount, we expect to begin making some significant investment in the direct to consumer business and quite possibly some of that might spill over into customer relationship management as well. I would say that IT would be the next biggest piece. We also have a small portion of what I would call a combination of maintenance CapEx for all stores and in addition to that we do some refurbishment. We also do some fixture test as well. That’s probably the next biggest component and then it dramatically falls off with respect to anything we might do with our home office facility and distribution center. Liz Dunn – Thomas Weisel Is there any opportunity or would it even make sense to close any stores? Do you have stores that are not four-wall profitable? Kent Kleeberger I’m glad you asked that because I have a couple of points of reference for you, if we look at just the Chico's brand alone, we have 25 stores that produced a negative four-wall in the aggregate of $4.3 million and if I take a look at three stores that deliver a negative four-wall over $100,000 they account for $2.3 million of that number. So we don’t have a lot of stores in Chico's that are really bleeders that we could accelerate the closing and get any immediate relief. Likewise in the White House | Black Market there’s about 29 stores that in the aggregate lose about $3.7 million from a four-wall contribution but five of those stores lose $1.8 of that total so again we don’t have really any significant bleeders in any of the chain. We will of course when it makes economic sense continue to challenge some of those stores that lose money. Our analysis includes what business we can transfer to existing stores within that market so while we may from an MSA perspective have lower sales it might be four-wall and operating income positive contribution but on the other hand we also have to look at the costs associated with this not so much the write-off of the net book value, but in some cases an early termination will require us to pay as much as 12 months rent expense and quite possibly another situation, the unamortized construction allowance. So the short answer is we’re evaluating and on a step by step basis but I wouldn’t look for any significant number or acceleration in closures. Operator Your next question comes from the line of Jeff Black – Barclays Capital Jeff Black – Barclays Capital Can you just remind us of the Soma’s drag on earnings in the third quarter, what you expect for the full year, and then given that it sounds like you’re pretty committed to the brand, and comps are improving, when can we expect that to get closer to break-even. Kent Kleeberger We’re no longer giving visibility to the Soma dilution of earnings. The only thing I can tell you is that the results will be improved from where we were last year and I don’t want people to be focused because to me its really sort of we’re going through an R&D period and the good news is the loss continues to decline. Scott Edmonds There’s no question that we see it as an investment in the future and the growth, one of the strong growth vehicles for the company longer-term. Its really a blue-ocean opportunity up against one national chain of intimate apparel and when we look at the cumulative investment of somewhere around $100 million life to date, we continue to believe it’s a wise investment in the long-term growth of the business. Kent Kleeberger I think one of the things we recognize in terms of break-even is that we have said publically we expected the brand to get somewhere between 100 to 125 stores to become break-even. We’re continuing to challenge that model especially when we see the opportunity and the superior operating margins in the direct to consumer business which is one of the reasons why we’re investing not just for Soma but for all the other businesses. But I think the magic number is going to be at least 100 stores for Soma. Operator Your next question comes from the line of Unspecified Analyst – UBS Unspecified Analyst – UBS Just wanted to ask a question about something you alluded to in your opening remarks about customers responding well to value, just wondering how we could see that in the stores for holiday and into 2009. Michele Cloutier We sort of seen it all this year, we took a position in the early part of this year on really commodity items like key tee shirts. We went into a day in and day out two or more pricing strategy. We continued that into the third quarter again in the tee shirt program and started to introduce some key fashion basic sweaters again intentionally, strategically pricing them at sharp and what we see as competitive pricing and the response has been very strong. She still likes our fit, our color but the price is now driving the unit velocity. Operator Your next question comes from the line of Jennifer Black – Jennifer Black & Associates Jennifer Black – Jennifer Black & Associates I wondered at White House | Black Market if you could talk about suiting, what categories do you wish you had more of, what categories do you wish you had less of, how are sweaters versus woven’s and what kind of a focus do you have on woven’s. Donna Noce Colaco Let me start with the crystal ball, the woven’s is actually very strong. From a trend perspective we have seen somewhat of down trend in the sweater business since the beginning of the year actually. Its been a business that we have gone full circle with and I think just from a fashion perspective its woven’s so if I could wave my magic wand right now, I would have more woven’s in the store and as we look forward to 2009, we’re seeing that trend continue. Dresses is probably the other from a consistency basis what we’ve learned about the business is the dresses is such a cornerstone of the White House | Black Market brand that right now what we’re dealing with obviously is the combination of fashion which is about dresses, but also it is such a proprietary business for us so I feel as though we have a little bit of a dip in our dress business in October and early November from an inventory perspective. We’re starting to ramp that back up now. So I feel confident that we’ll be in a much better position as we move into fourth quarter with our inventory levels. Those are probably the biggest. I feel as though we’re pretty well balanced with where the business is right now in all our other categories particularly right now in the inventory. Jennifer Black – Jennifer Black & Associates And suiting, are you happy with the suiting. You’ve had some great suiting coming in like the hounds tooth. Donna Noce Colaco Yes, what we’ve learned is she does want us in her life for go to work, which is not really where the business had been positioned in the past but what we have learned is it has to be extremely unique, very special, a lot of details. She’s not coming to us for basic, basic suiting which we did test, more basic styling, but where we put our money was really in the more fashion and that’s what she responded to from us and that’s how we’re going to continue with that business go forward. Jennifer Black – Jennifer Black & Associates On conversion, maybe you talked about this but can you speak to conversion at both brands. Scott Edmonds I don’t think we’re going to speak specifically to conversion. I made some comments about the White House | Black Market brand where conversion rate was up but I’m not going to get into specific rates. We have been going through the process of putting in traffic counters now for about the last 18 months, we have about 600 deployed across the company now with about 100 of those anniversaring and giving us year-over-year traffic and so we have a much heightened sensitivity to conversion and its one of the numbers that we look at it on a day to day basis and is part of executive review weekly and a very strong focus. Kent Kleeberger I just don’t think that we have enough stores that have anniversaried themselves where we can rely upon the data. So I think you have to give us another six, eight months and we’ll feel a lot more comfortable. Jennifer Black – Jennifer Black & Associates I wondered if you could talk about travelers, where you are with your testing of fabrications, and also talk a bit about the black travelers which I’ve heard has not been so great, can you speak to that. Michele Cloutier Overall as you know we are very pleased with the progress we’ve made on travelers. I’m going to stay focused on that for a second. The mix within travelers, the growth has really been in the novelty side of travelers or the third piece which has been tremendous. In fact when that piece is right, its driving a solid piece of the business inclusive of black. Black has been challenging as you mentioned however if I had my wish list I’d have some more fashion black styles out there right now because the ones we have delivered we have seen a strong reaction again when balanced with the appropriate novelty. So its all in the outfit that’s driving the total. In terms of new fabrics, you know we were testing a new fabric called [wetfield]. Did not have a great response at this point to the fabric. We’re continuing to look for new avenues to offset the travelers business but with the current response rate from the customer I’m really happy with where we’ve taken it in terms of its evolution and level of sophistication and she is responding very favorably so we’re going to continue to invest there, continue to look at new offsets, haven’t found it yet. Operator Your next question comes from the line of Crystal Kallik – D.A. Davidson Crystal Kallik – D.A. Davidson I just wanted to clarify, I know you’ve been trying to give people as much granularity on this and just returning to the Q4 SG&A, it sounds like you expect about $20 to $22 million in cost savings but also wanted to talk about the marketing shift I think you said it was down about $6.9 million, so how much of that offset from the shift of marketing in Q4 when we look at the total piece. Kent Kleeberger I have to really go through the marketing cadence because we were up in the first half and we’re down $6.9 in third which obviously implies we’re going to be down in fourth but I’ll take that offline with you later. Crystal Kallik – D.A. Davidson I think you said you expect the depreciation now to be down and originally I believe you were looking for about $100 million, so could you give us some idea where you think the depreciation will come in. Kent Kleeberger I think that where we were close to $100 million, that number is probably closer to about $96, $97 million right now. Operator Your next question comes from the line of Robin Murchison – SunTrust Robinson Humphrey Robin Murchison – SunTrust Robinson Humphrey My questions is in regards to any change, how do we think about inventory at the end of the year vis-a-vie I think we have Chinese New Year interference and then could you comment on the synergy. Michele Cloutier The response as I said has been favorable all year. We have seen a really interesting swing in what you’re seeing out there from a more suited tailor business to a more casual lifestyle and we believe the trend will continue in that direction particularly for Chico's brand which is such a strength on the casual side of the business. Mainly being driven by a woven product with a mix of novelty and knit and again its really a collection business where we see here investing, she’s in most cases buying all three pieces of the full outfit. Again we’re pleased with the performance, we’re going to continue the investment, and we see it as a growth for us. Robin Murchison – SunTrust Robinson Humphrey But you’re over the product interruptions from Q2. Michele Cloutier We are over all the cancellations and delays, yes. Kent Kleeberger Regarding the inventory again I think if you look at the two biggest pieces which will the Chico's brand and the White House | Black Market we’re trying to get Chico's brand down in the roughly the 9% to 10% range per square foot at the end of the year and White House | Black Market is currently planned down negative low single-digits. Again we’re looking at that. And I also have to remind everyone about the in-transit number because at this point in time these are purely estimates and that one seems to have the wildest swing so if you heard earlier on that as much as $5 million contributes roughly about three percentage points to the overall comparison that’s the only caveat on that number. Operator Your next question comes from the line of Liz Pierce – Roth Capital Partners Liz Pierce – Roth Capital Partners Remind when you embarked on expanding the footprint of Chico's, was that two to three years ago and it went from kind of what to what on a new store? Scott Edmonds We actually embarked on it more like five years ago. When our comps were running, our productivity was north of $1,000 a foot Charlie and I were running around the market saying that we’ve got to bring that productivity down because there’s no way we can comp it. So we went out and tried to open up bigger footprint stores. So that process has been, we’ve been expanding, relocating and increasing the size of the footprint, in retrospect even though our comment when we were challenged on that was we’re taking our stores from 1,800 to 2,200, we’re not taking stores from 2,200 to 5,000 but with that being said, I think in retrospect we were probably a little too aggressive. So that’s been going on for quite some time. Liz Pierce – Roth Capital Partners You basically confirmed that what I have in my own notes was that four or five years ago the average footprint was 1,800 I think and you were doing well over 1,000 and then so I’m really trying to reconcile I guess the earlier question about how much of this is on the inventory and the productivity due to enlarging the box versus obviously what we’re seeing at retail and the compression or just the decline in transactions. Scott Edmonds Right and its important to note that both Chico's and White House | Black Market, both brands were running north of 1,000 a foot. Liz Pierce – Roth Capital Partners So what is the average on the stores that you plan to open in the foreseeable future, what should we be modeling on an average size? Scott Edmonds In the White House | Black Market brand, its like 2,300, 2,400 square feet and in the Chico's brand, its just under 3,000 . Liz Pierce – Roth Capital Partners And is that given what we’re seeing in the missy sector, are you still comfortable that 3,000 makes sense? Scott Edmonds On a gross basis, yes. Operator Your next question comes from the line of Marnie Shapiro – The Retail Tracker Marnie Shapiro – The Retail Tracker Just one housekeeping, what should we be using as a normalized tax rate for you and then if you could talk a bit about traffic trends, I’m just curious about two specific, mall versus non-mall stores and then anything on your outlet trends. Kent Kleeberger From a financial modeling perspective on the income tax, this is sort of how I get there, take whatever the operating income line is by quarter and add in roughly about $0.50 million because within our interest income below the line, most of that is from tax exempt municipal securities which are non-taxable and there’s probably roughly about $0.50 million a quarter that is taxable interest so take the operating income and the taxable interest component, use a rate of about 38.5%. Marnie Shapiro – The Retail Tracker And the traffic trends, are they different between your mall stores versus non-mall stores and any color you can give us on the outlet trends. Scott Edmonds They’re not much different. If you look at what Shopper Track put out for September and October, Shopper Track put out that retail was down like 9.3 in September and 12.4 in October. That’s not missy, that’s 50,000 stores. The Chico's brand was several points higher then that. The White House | Black Market brand was about flat to that in September and improved in October and our outlet stores we don’t have a whole lot of traffic counters in our outlet stores. Operator Your final question comes from the line of Dana Telsey – Telsey Advisory Group Dana Telsey – Telsey Advisory Group Can you talk about sourcing costs and elaborate on it and basically the complexion of air versus boat and bringing goods in and also can you talk a bit about as you think about the collection part of your business from platinum, denim, to travelers, how should the collection part of the business be assorted in the store. Do you look for it to be, is 10% of the store supposed to be travelers, what percent is supposed to be platinum, how do you want it arranged. Michele Cloutier On the air to ocean, obviously we’re starting to make significant improvement on our air to ocean as we continue to look at that as an expense that we are trying to control. Where we opened up the year at north of 85% in the air, we’re down to an annualized in the Chico's brand about down to 65% so we’re really making some improvement on that category. In terms of mix of collection, the way we do the Chico's brand, the entire store is a collection. It has to be. The outfit is the cornerstone to this customer from the accessories to the apparel so I don’t view the collection as being a percent, it needs to be the entire store. Underneath the Chico's brand we do see three very strong sub-brands; travelers, [zenergy] as we’ve talked about emerging, and platinum as you referenced in our denim collection. We believe those as three sub-brands. [Zenergy] and travelers almost self-contained collections and platinum a key base to the overall sportswear assortment. Kent Kleeberger When we ship air versus ocean there’s a premium we pay that is anywhere from about $1.00 a unit to $3.00 a unit. And the way I look at it within the Chico's brand alone, if we have a 10% shift going from air to ocean conservatively speaking its worth about $3 to $3.5 million on an annual basis. So I think you have the air to ocean opportunity. We also have an opportunity in taking more goods FOB. We still have a significant penetration within our business that are on a landed duty paid basis which means the markup or the commission to the supplier is not just on first costs, its also on all the ancillary costs including duty and freight and we view that as an opportunity but we’ll also have to take a look at our infrastructure that we may have to invest a little bit, not a lot, but a little bit in logistics infrastructure since we’re now taking command of those goods overseas and we have to make sure we develop our relationships, we also have to make sure we have good applications in order to track where the product is in the pipeline at any point in time. And then I think the other piece is that we see the opportunity at some point shifting business out of China to other countries as I alluded to earlier to get some improvement in terms of the costing.

Thank you all for joining us this morning. Please note that we’ll be releasing November sales results on Thursday, December 4th. Also the company will be making a presentation on Friday, December 5th, at the JPMorgan Small Mid [Cap] Conference. That presentation will be webcast. Check the Event Calendar section of our corporate website www.chicosfas.com for details. Finally we plan to release our fourth quarter results on Tuesday, March 3rd, 2009 and host and 8:30 am ET conference call and webcast. Thank you for your interest in Chico's FAS and Happy Thanksgiving.