Robert Atkinson – Vice President, Investor Relations Kent Kleeberger – Executive Vice President and Chief Financial Officer David F. Dyer – Chief Executive Officer

Kimberly Greenberger - Citigroup Michelle Tan - Goldman Sachs Tracy Kogan - Credit Suisse Adrienne Tennant - Friedman, Billings, Ramsey & Co. Liz Dunn - Thomas Weisel Partners Brian Tunick - J.P. Morgan Janet Kloppenburg - JJK Research Marnie Shapiro - The Retail Tracker Stacy Pak - SP Research Margaret Whitfield - Sterne, Agee & Leach Lorraine Maikis-Hutchison - Bank of America/Merrill Lynch

Good morning. My name is [Lori] and I will be your conference operator. At this time I would like to welcome everyone to the Chico's FAS fourth quarter earnings conference call. (Operator Instructions) I will now turn the call over to Robert Atkinson, Vice President of Investor Relations. Please go ahead, sir.

Thanks, Lori, and good morning, everyone. Welcome to the Chico's FAS fourth quarter earnings conference call and webcast. CEO Dave Dyer and CFO Kent Kleeberger are with me here at our Fort Myers' headquarters. Before Kent begins his review of the quarter I'd 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, express 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 security law filings for a description of other important factors that may affect the company's business results of operations and financial condition. 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, express or implied by such statements, will not be realized. The company reports its consolidated financial results in accordance with generally accepted accounting principals or GAAP; however, to supplement these consolidated financial results, management believes that certain non-GAAP operating results, which include impairment and certain other non-recurring charges, may provide a more meaningful measure on which to compare the company's results of operations between period. The company believes these nonGAAP results provide useful information to both management and investors by excluding certain [expenses] that it believes are not indicative of its core operating results. A reconciliation of fourth quarter and fiscal 2008 year end earnings per diluted share on a GAAP basis to earnings per share on a non-GAAP basis are presented in today's press release. 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'll turn it over to Kent Kleeberger. Kent?

Thanks, Bob. Good morning, everyone. While it is a disappointment to all of us to report a net loss for the period, we believe that we achieved important objectives that we set for ourselves back in October. First, our comp trend, albeit still negative, displayed a slight improvement from the third quarter when other missy retailers saw their comps deteriorate significantly. Second, our year end inventories - that's total inventories - were down 15% per square foot from a year ago, with the Chico's brand down 17% per square foot. That's an all in number, including goods in our distribution center and goods in transit, primarily from overseas, where we have taken title according to trade terms. Third, when you eliminate the impairment and restructuring costs in the quarter, we reduced SG&A by $24.6 million from fourth quarter 2007. And fourth, our cash and marketable securities balance at the end of the quarter increased 5% from the end of the third quarter to nearly $269 million. While these accomplishments do not outweigh or in any way offset the fact that we had a net loss for the quarter, we do consider that they are important steps in our movement back toward profitability. Now for a more detailed review of operating results for the fourth quarter: Chico's FAS had a net loss of $40.5 million or $0.23 per diluted share compared to a net loss of $20.5 million or $0.12 per diluted share for the like period last year. Included in the latest quarter was $9.1 million or $0.05 per diluted share for a non-cash impairment charge net of taxes related to the write-off of fixed assets at selected underperforming stores. Also included in the fourth quarter results were after-tax severance and work force reduction costs net of taxes of $6.6 million or $0.04 per diluted share related to our previously disclosed cost reduction initiatives and the obligations the company had under the separate agreement with the former Chief Executive Officer. Also you may remember that we previously anticipated impairment charges related to goodwill; however, upon further review, coupled with an increase in market cap, we determined that a charge was not required. Excluding the $15.7 million or $0.09 per diluted share in charges, the company had a net loss of $24.9 million or $0.14 per diluted share compared to the net loss of $20.5 million or $0.12 per diluted share for the 2007 quarter. As we reported on February 5, net sales for the fourth quarter totaled $373.4 million compared to $409.3 million for fourth quarter 2007. Comparable store sales for the company decreased 13% compared to the 15.7% decrease for the '07 period. By brand, Chico's comp decreased 16.5% compared to the 16.4% decrease for the like period last year, and White House | Black Market had a 5% decrease compared to a 17.4% decrease last year. The following are sales metrics for all frontline stores, meaning we exclude outlet stores and DTC results, but include non-comping frontline stores. For the fourth quarter the Chico's brand units per transaction were up almost 1% while average unit retail was down nearly 3%, netting to an average dollar sale or average transaction size being down about 2%. Chico's total frontline store transactions were down nearly 15%. For White House | Black Market, units per transaction were up 6% and average unit retail was up 3%, summing to an average dollar sale increase of almost 9%. Total White House | Black Market transactions per store were down nearly 13% for the quarter. Moving down the income statement, gross margin as a percentage of sales decreased 330 basis points to 44.4%. White House | Black Market had lower merchandise margins due to lower initial markups or IMU, coupled with slightly higher markdowns. Chico's merchandise margins also had lower IMUs, partially offset by an improved markdown rate. Additionally, the Chico's brand had higher buying costs, coupled with the deleveraging of these costs resulting from the negative comp for the quarter, which put added pressure on gross margins. SG&A expenses for the quarter, including the $23.7 million in pre-tax impairment restructuring charges, still decreased by a marginal percentage to $228.4 million. Excluding these nonrecurring charges, SG&A would have decreased 11% below a year ago to $204.7 million or, on a percentage of sales basis, 130 basis points below fourth quarter 2007. Within SG&A, store operating expenses decreased on a dollar basis from last year by $5.7 million, but increased about 230 basis points due to the deleveraging associated with negative same-store sales and because selling payroll did not flex in direct proportion to the negative comp. The company did see a reduction in supplies and shipping costs across all three brands. Marketing costs decreased $12.4 million and shared service expense decreased $6.4 million within SG&A for the quarter. These decreases were largely due to cost reduction initiatives and increased efficiencies we recognized in our direct marketing efforts and reduced throughout 2008. At this point it seems appropriate to recap our 2008 cost savings initiatives and which portion of the P&L the affect. By midyear we had identified $31 to $36 million of cost savings comprised of approximately $5 million for outbound freight to stores, $8 to $10 million in reduced market costs, including catalog page count and reduced prospecting, and $18 to $21 million in stores payroll and store-related expenses. With the collapse of the financial markets beginning in mid-September, we challenged the executive team and the organization to look for additional cost savings and identified another $15 to $18 million in further reductions. This second tranche of savings in '08 came from the elimination of certain open positions, further reduction in stores payroll and stores-related expenses, elimination of certain media advertising and reduction in shared services. By our calculations, that brought our total 2008 cost savings up to the range of $46 to $54 million, of which $37 to $43 million would come out of SG&A and about $9 to $11 million would be accretive to gross margin. On January 29 we announced additional expense reduction actions that included the elimination of approximately 180 positions or the equivalent of 11% of the headquarters staff. This work force reduction is expected to reduce our payroll and related benefit expenses by approximately $15 million over the 2009 fiscal year, with approximately $10 million of that benefiting SG&A. Consequently, this event increases the company's targeted expense savings goal for 2009 to a range of $35 to $40 million. Now let's look at the balance sheet. I've already mentioned that our cash and marketable securities were up 5% compared to the end of third quarter and none of our invested cash is in risk-laden option rate securities. Our total inventories decreased $11.8 million or 8.2%, resulting in a decrease of approximately 15% on a cost per square foot basis compared to fourth quarter last year. This is the lowest year end inventory per square foot for Chico's since 1999. This substantial decrease was achieved despite a $3 million increase in inventory in transit for the Chico's brand compared to last year. The company remains debt free and we have further enhanced our liquidity position by entering into the previously disclosed $55 million senior credit facility in late November. However, we do not anticipate any need to draw on this facility. In fact, we believe that our cash and cash generated from operations will satisfy our working capital and capital investment needs for 2009 and years to come. For the full fiscal year 2008 capital expenditures were $104.6 million, a 48% decrease from $202.2 million in 2007. For 2009 we expect CapEx to approximate $70 million, which would be a 33% reduction from 2008. Depreciation and amortization approximated $97.6 million, representing an increase of $5.6 million over the prior year. We anticipate depreciation and amortization to approximate $93 to $95 million for fiscal 2009. During 2008 the company's selling square footage increased 8.1% to 2.6 million square feet. We opened 62 new stores, closed 24, and completed 32 relocations and/or expansions. For 2009 we plan to open 20 to 25 new stores, mostly for SOMA and White House | Black Market, and close about the same number of total stores, as well as relocating, remodeling 10 to 15 existing stores. Thus we expect net square footage growth to be less than 1% for 2009. Our expectations on CapEx, depreciation, stores activity and first quarter comps is all we intended to provide for 2009, other than we expect 2009 to be extremely rocky, particularly in the first half. Thus, we are not providing earnings guidance for the first quarter or for the full year of 2009. However, we will say that we are estimating first quarter comparable store sales to decrease in the mid to low teens for the total company. Accordingly, we are planning inventories very much in line with our comp sales assumptions. With that, I'll turn it over to Dave Dyer for additional commentary. David F. Dyer: Hello, everyone. This is Dave. Quite a bit has happened over the last seven weeks. We've streamlined our organization, initiated expense reductions across the entire company, and brought a new brand presence for Chico's and a new Chief Operating Officer onboard. The entire company is reenergized and focused on improving our performance and serving our customers. I've spent significant time in the stores listening to our customers and to the field organization and time here in Fort Myers listening to what our headquarters staff has to say. I want to make sure that I understand the question before giving the answer; however, several short-term priorities rapidly emerged and those priorities are: one, improve Chico's performance; two, grow White House | Black Market and SOMA Intimates; three, build a direct-to-consumer business; and four, control expenses and rationalize expense structure. The Chico's customer is still passionate about our company. She's rooting for our success. She just wants her store back. She wants more sophisticated and unique merchandise, along with the great customer service that we're known for. We've become just a little too predictable and a little too cookie cutter, from store design to store assortment. Increased non-selling tasks have distracted our associates from job number one and that is delivering amazing personal service. We have begun to simplify store tasks and have placed renewed emphasis on the customer experience. We're beefing up store schedules during key selling periods. We are working to reduce overlapping coupons, improve our monthly mailings, and adding television back to the media mix for fall. And most importantly, we're laser focused on the product assortment. I asked fellow Director Verna Gibson to help me during this transition and she has made many positive merchandising changes for early fall. The energy and excitement level is definitely back in our Chico's merchandising team. Cinny Murray, our new Chico's brand President, has been on board for about a week. She's a great merchant and I know she will have significant impact on the Chico's business. Like me, Cinny is currently focusing on understanding the customer and visiting our stores. While Cinny will have input on late fall and holiday, spring 2010 will be her first full season impact. White House | Black Market is poised for growth. Even in these tough economic times, the business has the potential to positively comp each month. I have reviewed the product through fall and believe that each delivery is stronger than the last. We're adding marketing support for the brand to help position White | Black as a designer fashion brand and grow the business. Donna Noce and the White House team are hitting on all cylinders - great leadership, great product, great store presentation and great customer service. Last week I named Chuck Nesbit as President of SOMA Intimates brand. He is now able to concentrate entirely on our intimate apparel growth initiatives. Chuck and his team have developed a new store model for SOMA that is designed to breakeven in the first year of operations. We expect SOMA to make positive cash contribution to Chico's FAS by the end of 2010. SOMA has the potential for great future growth. Kent Kleeberger, our CFO, now has the added responsibility of planning and allocation. We anticipate a better financial check and balance process for our inventory investments. I also have announced that we have hired Jeff Jones as Chief Operating Officer of Chico's. Jeff brings tremendous retail experience as a CFO, Chief Operating Officer and CEO of companies such as Sears, Lands' End, and Shopko. Jeff will have IT, distribution, logistics and facilities reporting to him, as well as the direct-to-consumer business. His charge is to implement our new enterprise systems, build a state of the art DTC infrastructure and grow our Internet sales, improve technology to support our customer service efforts, and bring greater efficiencies to our operations. Currently, our direct-to-consumer is about 4% of our business. We believe that with improved infrastructure and attention to this channel we can set a near-term goal to become 10% of our business. While we have temporarily slowed our store growth, we've attacked expenses with a greater sense of urgency. We are willing to be opportunistic, to take calculated risk, and to invest appropriately when the opportunity arises. So a lot has happened in short order. The company is energized and focused on improving our performance. We believe that even in this tough economic climate our strong cash rich and debt free balance sheet gives us the ability to be aggressive where warranted and to increase market share as a result. I'm now going to turn the call back over to Bob.

Thanks, Dave. Before Lori gives us the procedure for queuing for questions, I would ask that each questioner limit themselves to one question and one follow up. In this way we'll be able to accommodate as many questioners as time permits. You are welcome to get back in the queue in the same manner you did originally. Lori, how may security analysts indicate a question?

(Operator Instructions) Your first question comes from Kimberly Greenberger - Citigroup. Kimberly Greenberger - Citigroup: Dave, I wanted to ask you about item number two on your list of priorities, growing SOMA. If you could first comment on how much SOMA lost in 2008, that would be helpful. And I think I heard you say that you expect the division to positively contribute cash on a four-wall basis by the end of 2010. Assuming that goal is achieved, how much will the division be losing at that point in time, including the corporate overhead allocation? David F. Dyer: Well, there's two things. First, we haven't released numbers on SOMA because that division so far is not material. It's included within the Chico's numbers. I will tell you that I do believe the SOMA division has the opportunity to be a $600 million to $1 billion business for the company over time. We currently have 80 stores and believe that we obviously have the opportunity to be a 300 - 400 store chain at some time. Right now we see in the next few years growing to somewhere around 120 to 150 stores, and we believe that somewhere over 100 stores that it reaches the proper scale so we can source better and more efficiently. And I think with the new store model that we have we're going to see them become a lot more productive a lot quicker. Kimberly Greenberger - Citigroup: Correct me if I'm wrong, but I think the cumulative loss for SOMA is around $100 million. It strikes me as material.

Actually, Kimberly, that's a fair estimate, but that's cumulative since we had the original startup. But I don't necessarily consider SOMA material in relation to the 2008 operating results. It's a development stage company. We're not going to disclose the results of operations separately. You can be assured that it's going to lose money [than] last year and that's all we're willing to say. Kimberly Greenberger - Citigroup: My follow up question's on inventory. It looks like you've made a nice down payment today in terms of starting to get the inventory back in line. Productivity versus peak is down over 30%. You've got inventory down from peak about half as much. Can you just talk about the opportunities you see to continue to further reduce inventory levels?

Well, I think there's a lot of opportunity still within the Chico's brand. I think that we're looking at the number of choice counts within areas of the business. We're also taking a look at smaller stores. We believe we're getting backed up in inventory in smaller stores and we need to determine what the right assortment is for smaller stores. And I think the other thing that's also come up as we're starting to take a look at the size of our purchase orders on individual styles because Chico's, like the White House | Black Market customer, likes to look unique and there's a chance that we might trim some of our allstore buys.

Your next question comes from Michelle Tan - Goldman Sachs. Michelle Tan - Goldman Sachs: A couple of questions, the first one on White House | Black Market. I understand you've been very positive there and the sales have been better, which is great. But at the same time, when we look at the merchandise margins, they've been deteriorating quite a bit. You're selling higher price points, but the markdowns are up, the IMU is down. So can you help me understand why we shouldn't be more worried about that division and think it needs more work before you get aggressive with rolling it out? David F. Dyer: Yes, I think that 2008 was a critical year in the history of White House | Black Market. I think there were a lot of great learns. I think one of the things that we knew going in is that there was a silly rule in the business that we weren't going to spend more than $3 a yard on piece goods and we did away with that silly rule in trying to upgrade the brand and, as a result, obviously we did see a decline in initial markup. On the other hand, I would tell you that as the mix changes - we have a great dress business; the accessories business is building in line with dresses - that we're actually going to see IMU increase from the White House | Black Market division. I think the other piece, as well, is that we are much better positioned in terms of inventory planning than when we started fiscal 2008. We upgraded the talent. We're actually planning the business on a week-by-week basis; it used to be planned on a monthly basis. And I think we have much better control over the inventory levels and, as a result of that, we should see a decrease in markdowns on a go forward basis. Michelle Tan - Goldman Sachs: And then my follow up was on Chico's, on the IMU being down there. How much of that is the higher buying cost versus lower ticket price or more planned promotions in the business? David F. Dyer: Buying costs are not included in the IMU calculations. When we speak to IMU on Chico's, it's not what I would call a large decrease in IMU. There has been some promotional and some value pricing effort that's been happening in the brand, at least for the last six months or so, which does put some pressure on initial markups.

Your next question comes from Tracy Kogan - Credit Suisse. Tracy Kogan - Credit Suisse: First, can you talk about your marketing strategy for next year and how do you expect your spend to be in '09 versus '08 and how do you see the types of marketing changing? And then secondly, can you just break down your CapEx expectations between new stores, remodels, IT and distribution center? David F. Dyer: Well, I think first, to talk just about the marketing strategy, I think it is different for each brand. When it comes to Chico's what we're doing is we're looking at our patterns of mailing and how deep we deal into the file. I think we've had some good learnings on both prospecting and the segments of our file that perform best, so I think we'll be refining our mailing strategy. And the second thing that we plan to do is to add television back to the mix. I think that the good thing that television does is that it brings new prospects to the brand and we have seen over the last couple of years, since we stopped television advertising, that our prospecting or new customer acquisition efforts have been down, so we plan to get that back. Our total marketing spend is down about 5% from the previous year, so some of this we're going to be buying from ourselves just by using other media and by being more efficient in everything that we do. But it's not one size fits all; it's a balance of marketing and media, and I do think television is going to be an important part to bring back into the mix this fall. When it comes to White | Black, that brand I really believe is ready to roll, as I said earlier the product, the presentation, and the customer acceptance and certainly the reaction in the stores. We have seen some very, very positive trends there and I expect for that to continue. We'll be adding a lot more marketing to them to help increase their perception as a designer brand alternative, which I do believe they are. It is great fashion at reasonable prices. And we'll be looking for a lot of events - PR and media events - for the consumer market over the next year. For SOMA it's refining the mailing. And also we've been very successful on television with our Vanishing Edge panty line, and we'll be looking at some way to do television, certainly in our major markets and our spot markets for SOMA. But overall it's really a reallocation and a rethinking of the marketing dollars. We got, I think, a little too used to just doing mailings, mailing and coupons and overlapping coupons, and I think that we're looking for that mix to change, which we believe can drive more profitable sales. Tracy Kogan - Credit Suisse: And just to be clear, what in terms of dollars were you looking for in '09 versus '08?

For marketing spend? Tracy Kogan - Credit Suisse: Yes, overall.

Well, I think this year we think we finished in the $80 million range, if memory serves me correct, before home office, so down about 5% is roughly about a $4 million reduction. Tracy Kogan - Credit Suisse: And then can you break out the CapEx?

Well, I think really the delta is with respect to the new stores. When we're going from $104.6 million down to $70 million, you can basically assume there's probably about a $35 to $40 million reduction in store CapEx. And then the balance is really shared between the home office and IT development.

Your next question comes from Adrienne Tennant - Friedman, Billings, Ramsey & Co. Adrienne Tennant - Friedman, Billings, Ramsey & Co.: My first question is on the DTC, Dave, can you talk about the type of infrastructure investment that needs to be made there and what you think the potential for the DTC business could be go forward? David F. Dyer: Well, the investment actually is probably less than $5 million and is in our capital spend this year. We have put ourselves on the ATG platform for the website and then we're implementing phase two of that, which will be the order management and flow and telephone and total order management piece of it, which will be in by early fall. We just did a large upgrade to our warehouse management system, which makes us have basically the total infrastructure that we need systems wise and now looking at facilities and how we reduce some of our distribution facilities or use them more efficiently to support debt-to-capitalization as the next step. But I feel that with Jeff Jones, our new Chief Operating Officer, on board, who will be overlooking this entire not only systems implementation but driving the direct-to-consumer business, that it gives us a great opportunity - and again, I said the short-term goal within the next two or three years, 10% of our business from 4%, so I want us to double it - and I think can be a very, very profitable and important piece of our business going forward. Adrienne Tennant - Friedman, Billings, Ramsey & Co.: That upgrade on the WMS, has that already been done? David F. Dyer: It was done over the weekend. Adrienne Tennant - Friedman, Billings, Ramsey & Co.: Okay, so you're running smoothly on that? David F. Dyer: Running smoothly. Adrienne Tennant - Friedman, Billings, Ramsey & Co.: And then - this is part of the same question - the difference between 1H and 2H. I mean, obviously your DTC, the direct business, was down year-over-year in the first half; you reduced circulation in the back half. What were the changes that helped you get more productive in the back half and turn it around?

In the DTC business, the recovery in the back half? Adrienne Tennant - Friedman, Billings, Ramsey & Co.: Yes.

I think that the power of the Internet and a lot of e-marketing, if you will. We've done outbound marketing with respect to most of the brands, sometimes twice a week. I think the other thing that we're noticing is that there's a clearance customer that's on the web. The inventory turns especially in the fourth quarter on the sale goods were nothing short of amazing, and so I think if anything we probably could have used a little more inventory on the markdown side. Adrienne Tennant - Friedman, Billings, Ramsey & Co.: And then my second question is can you talk about early spring merchandise and then kind of the pyramid of basics to novelty. Where are you current day and how should we think about seeing that change as we go into the back half of the year? David F. Dyer: Well, I'll talk about the pyramid and I'm going to talk specifically to the Chico's brand. Chico's is a very interesting brand. Having merchandised stores, been with companies such as J. Crew and even Hilfiger with our stores and watching it sell, it's a very, very different business. There is a lot more novelty and a lot more complete outfits sold at Chico's than anyplace that I have seen. The customer really likes to have the thrill of the hunt. We've said in the past there's always something new at Chico's every day, and I think that maybe we lost that. Kent was talking to some of the buys which we've bought too deep; we've bought novelty jackets in greater quantity than we should have. And I think that part of it is the sense of urgency to buy. In the past when you would come in if you didn't buy quick, it wouldn't be there. And I think that we're bringing some of that back to the business. That doesn't mean that we don't sell basics; we just sell them in a different way than most companies do. We really don't have to put our basics on the front table and pile them high as you see in most mall retailers. We can take them back in the business. And our salespeople are great, so they'll do a complete outfit and over the course of the season we'll wind up selling millions of units of basics. But it's just a very different way to sell them. So I would say that what we've got to get back into the brand is the uniqueness, the specialness and the customer service, which I think the most really unintended consequence of the extra markdowns that we've taken and many of the other things, operational issues in the business with product, is that it took a lot of task in the stores to handle the merchandise and probably took our eye off of some of the customer service that we've been known for. So I think that we're really onto it. We don't have in the Chico's merchandise - I think we went away from some of the more sophisticated and unique and special looks that we have; we're going to be bringing those back. But this is not a cookie cutter brand that you can roll out as you would another chain store. Chico's is really a collection of boutiques and you need to think about each store as a boutique versus a chain store. Adrienne Tennant - Friedman, Billings, Ramsey & Co.: Is there a targeted CC or SKU count reduction from spring to fall? David F. Dyer: I wouldn't say that there is a targeted number. I think that probably in some ways we may see more SKUs and classifications like novelty jackets, where we're buying less of each style but buying more styles.

Your next question comes from Liz Dunn - Thomas Weisel Partners. Liz Dunn - Thomas Weisel Partners: I guess a question regarding Chico's division. You mentioned in your prepared remarks and I've noticed, too - that you were one of the few women's retailers that didn't see a deterioration in the business in the back half of the year and yet we have this management change. So how do we sort of reconcile those two things? What are the things that went right in the back half of 2008 from your own perception, and how do you make sure that you hold onto those things as you transition to new leadership? David F. Dyer: Well, I think that the leadership change was necessary. We needed a new change in merchandising direction, and I think that the question is: Do you do things slightly better or do you do better things? And I think with Chico's we need to do better things. I think that really we were beginning to lose some of the essence of the brand and we are back on it, really focused on making this brand a fresh version of what it was in the past and to get the excitement back in the brand, stabilize certainly the sales. I hate to look at negative comps and it's certainly my goal not to look at them too long. So I think that we made the right change and positive changes and that Cinny Murray will be a great impact on the Chico's brand - have a great impact on the Chico's brand.

The other thing, if I can answer this, is that I think most of you will recall that we had basically about a handful of certain merchandise classifications when we started 2008 that were a real drag. I mean, the first two that come to mind were the travelers' collection as well as the accessories. And we've seen significant progress in each of those categories from not only when we started the beginning of the year, but from the first half of the year as well. Liz Dunn - Thomas Weisel Partners: Are they still underperforming the store overall?

They're still negative comping, but they've significantly improved performance from where they were before. Liz Dunn - Thomas Weisel Partners: And Kent, if I may just squeeze one more in, what's the sensitivity on the stock price? At what point might we be concerned about this goodwill writedown against

Well, I think that when I last looked at it, if we're somewhere, say, in the 3 - 370 range it'll force us to revisit the analysis that was previously done. But I would think that would have to drop quite a bit below that before we would have a significant issue, though.

Your next question comes from Brian Tunick - J.P. Morgan. Brian Tunick - J.P. Morgan: Dave, first for you, when you think about getting Chico's back to profitability, how much is dependent on the Chico's comps, let's say, improving to down mid single digits, versus more SG&A and inventory cuts than you're giving us today? And then maybe also talk about I think a couple of weeks ago you talked about Jim Frain might have been coming back for a consulting gig and also that you had hired Gordon Brothers to evaluate the size of the fleet and also some occupancy opportunities. Maybe if you could just talk about those couple of things. David F. Dyer: Well, I would say that when you look at the Chico's brand, it's all of the above. I mean, it starts with product and I think we have to get the assortment right. We have to offer product that the customer wants to buy. And I think that that has been certainly, as evidenced by negative comps, a big part of the problem. But we're also looking at any efficiencies that we can get in the organization, which are going to help it, too. We have talked with - maybe Kent could talk about the renegotiation of leases with Gordon Brothers. I did review the consulting that Jim Frain had done, and some of it was certainly very applicable, certainly with new customer acquisition and the reintroduction of television and we're going to do that. But I believe that there's other things that we can do in the stores, also, when we look at not only new customer acquisition, but also we have traffic stores and how do we take advantage of the traffic that we have in the stores? And I think that's one of the things that we're learning from the traffic count that we have in many of our stores. I mean, just the conversion rate alone, for every F point of conversion rate is, what, 4 points?

It's 2 points or half a point is worth about 2 points of comp. David F. Dyer: Two points of comp, 4 points for a full point of conversion. And so I think that if we can just do a better job with the product and with our salespeople in the stores, there's probably a lot more impact than new customer acquisition. However, new customer acquisition is certainly an important part of the business and you have to do it. If you want to continue to grow over time, you've got to continually attract new customers to the brand. So we're going to be doing both.

And if I can just add on - Dave was absolutely right; the path to productivity is the product but a subset of that is how well we control inventories, and I think that we've had a significant task since the start of 2008, but I think we have inventories more closely aligned with comp trend which should benefit us from improved margin via lower markdowns. As far as your comment about Gordon Brothers, it's a division of Gordon Brothers called DJM and they have a division that deals basically with distressed properties. And just to reiterate, our DNA here has been really opening new stores and relocating stores; we're not as experienced in terms of seeking rent relief as well as closing stores, so we've assigned a little bit over 200 leases to DJM to go out and seek rent relief. But I will also tell you that our real estate team, since they started on this in probably late October, I think has done a very good job in deriving roughly what amounts to be about $3.5 million in rent relief through 2012, of which $1.5 million of that will be realized in fiscal 2009. So we're just getting started, but I look to share improved results with you in the future.

Your next question comes from Janet Kloppenburg - JJK Research. Janet Kloppenburg - JJK Research: You did a great job on the SG&A levels coming down on a dollar basis in the fourth quarter. I'm not sure if we should be looking for that going forward. I'm hearing about marketing maybe increasing in both brands. It sounds like service levels in the stores may be increasing as well. So I wondered if you could comment on that. And I'm a little confused, but I'm thinking we're supposed to be looking for IMUs to be down in both brands in the first half as well.

Those are a lot of questions, Janet. Let me just speak to a couple of things. First of all, the marketing is, in fact, planned down 5%, so that $80 million number that we reported for fiscal 2008 will probably be in the $75 to $76 million range. And I think part of it, you should know, it's not that we're going to reduce our marketing efforts; we just have additional efficiencies. And given the current environment, this is absolutely the right time to renegotiate and try to enjoy some of those additional efficiencies in pricing. From an SG&A perspective, you may recall earlier in the script that we have a targeted goal of $35 to $40 million in expense reductions, which included the impact of roughly the $15 million reduction in force. The lion's share of those expense cuts will be in SG&A. The only thing that will present any headwinds is we have certain new stores that we'll have to anniversary in fiscal 2009. So we'll still have some additional payroll from new stores, we'll have some additional expenses in supplies; we'll certainly have some additional occupancy costs. The occupancy cost is probably the biggest challenge because currently the model is we need to get to close to about a 5 comp to lever occupancy. Absent that, then we really don't need a comp to lever the balance of SG&A. The IMU, it was really in relation to the White House | Black Market. I believe it was a onetime event. On a go forward basis, both brands are planning to increase initial markup; not so much Chico's in the first half, but in the second half. But White House | Black Market is absolutely planning an increase in IMU. Janet Kloppenburg - JJK Research: And then on Cinny Murray joining the company, I was just wondering, given lead times, etc., when you expected that we would first start to see her touch on the product? David F. Dyer: I think the first season that she's going to have impact is spring, 2010. She is certainly going to be involved in some of the late fall and the holiday, but her first full season impact will be in spring, 2010.

Your next question comes from Marnie Shapiro - The Retail Tracker. Marnie Shapiro - The Retail Tracker: I have one real estate housekeeping question. The stores that are closing, are those primarily Chico's? And the stores that you are remodeling and relocating, are any of them expansions?

As far as the store closings, it's pretty much across the board. And I would tell you that when we reviewed the 60 stores for impairment charges and identified the 25, it's pretty much split across the businesses. And the other part of your question was? Marnie Shapiro - The Retail Tracker: The remodels and the relocations, were any of those expansions as well?

Well, there's some slight expansions. These were items that were in the pipeline that, quite honestly, when things became rough we pushed back on the deals but the economics were compelling in some cases. We had percentage rent in lieu of a fixed rent; they increased the tenant allowance. And so we decided from a pro forma economic model that these deals made sense, so, yes, there are a few expansions. Marnie Shapiro - The Retail Tracker: And then can you touch on traffic a little bit, I guess? Were there any differences in traffic across regions or types of stores, be it mall, street or lifestyle? And then the demographic that you target for, let's say Chico's, for the most part, your biggest name, is one that's closer to retirement, one that may suddenly not be closer to retirement. Are you thinking about different ways to get her in the door? I guess the question is are your salespeople hustling a little bit now? David F. Dyer: Well, I think that our salespeople always hustled, but they hustle in the nicest sense and that is to provide really the amazing personal service. I thought I understood Chico's until I spent time out in the stores and really watched the customer interaction. I was in a Sarasota store at one of our openings for a remodel the other night. We did $40,000 in that store during the day. And I talked to, I don't know, probably 100 customers over the course of the time that I was in the store, and it's just amazing what you learn about the brand. It is a personal service. They're known by name in the store. They have their salesperson. They love the brand. They're just looking for us to give them what they want. It's our store. They're so concerned that we would change in a way and have changed, perhaps, in a way that they haven't liked, and they're rooting for our success. I mean, the customer is our greatest asset, and I think that our salespeople are our second greatest asset. They serve them better than anybody I've ever seen. It really is. I mean, the company says amazing personal service, but when you see it and experience it, it is amazing.

Well, I think the question was with respect to geography and location type. I'd rather have a separate discussion on the location type, but as far as the regions I think the one thing that both Chico's and White House shared in common in the fourth quarter is that the Northeast region was probably the most challenging of the regions. Obviously part of that was weather; I think we're all experiencing that over the course of the last couple of days. But that's one thing they do share in common. The only other thing I would offer up is that the Southeast has been a little bit challenging for Chico's as well.

Your next question comes from Stacy Pak - SP Research. Stacy Pak - SP Research: Just going back to the SG&A for a minute, can you clarify a little bit the marketing spend by quarter and the $35 to $40 million reduction with the pressure from payroll and occupancy from the new stores? Kind of help us think about that by quarter so we're getting a sense overall on how SG&A dollars should flex by quarter? And then second of all, Dave, could you address why you think it's right to do TV in the fall for the Chico's brand given Cinny's product isn't really - we're not going to really feel her impact until spring? I guess what I'm wondering is should we be sensing therefore that the product actually will be better by fall? Just kind of talk to us about that.

You know, Stacy, without getting too far into the weeds on spend by quarter, we obviously spend more marketing in the first three quarters than the fourth and similarly on payroll. Now part of that there's a phenomenon in the Chico's brand that really is a challenge to our business and how do we figure out fourth quarter because from a sales perspective that is the lowest volume quarter for the brand. That's really what's influencing anything different from a spending perspective. And I wasn't quite sure what your question was with respect to the $35 to $40 million. Most of those initiatives, since they relate to stores and overhead, pretty much occur throughout the year. Stacy Pak - SP Research: But equally by quarter on those?

Pretty much. I mean, it'll fluctuate a little bit. Some of that has to do with timing. Like, for example, when we reduce maintenance in the stores, it just depends when it's scheduled. If you have it scheduled three times, we go to twice, then it just really sort of depends. But we're not talking about a lot of dollars. Stacy Pak - SP Research: But overall more marketing in Qs 1 through 3, obviously?

Yes, typically that's the case. Stacy Pak - SP Research: And then Dave your thoughts on the TV and Chico's products? David F. Dyer: I do think the product is going to be improved for fall. It's going to be better edited and I think that certainly it's going to be an improvement over where we have been in the past 12 months. And I think the time to talk to the customer really is now and to tell them that Chico's is back and that we have product that they're going to enjoy. And then when Cinny gets in and has her touch in spring, she'll have customers ready to roll with her new product. So I believe that this fall is a great customer acquisition time. Most people in the industry are retrenching and, again, I believe that we're strong, that our product is going to look a lot better, our stores are going to be really concentrated on providing the customer service that we're known for, and we're going to invite her back in. We think that the time is right.

Your next question comes from Margaret Whitfield - Sterne, Agee & Leach. Margaret Whitfield - Sterne, Agee & Leach: You mentioned at the outset that Verna had been able to influence elements of the early fall line. I wondered what areas she has focused upon. And then your comment on the Q1 comps. I wondered if you could give us some idea of what you're planning for the two major brands - Chico's and White House - since there's been a big Gap between the two in terms of performance.

As far as the comp, I'm really not going to break it down. I think that you can pretty well bet that based upon the fourth quarter results you can use that as more or less a tool to break down the first quarter comps for '09. David F. Dyer: And I would say that, as I said earlier, that I do believe that White | Black has a chance to positively comp every month. That certainly is something that we would be hoping to see from that brand. Yes, Verna has come in and she has been a fantastic help. We have been able to reenergize the merchandising staff and I think to react to a lot of the product that was in progress and process. And basically what we've done is we've been able to edit a lot of the things that we didn't think were brand right. We've been able to change some of the buys, and I think we've been able to assort the Chico's product in a way that is going to provide a lot more compelling assortment for our customer. So we're excited about fall.

Lori, it's approaching 9:30 Eastern Time, so this will have to be our last questioner for this morning.

Your last question comes from Lorraine Maikis-Hutchison - Bank of America/Merrill Lynch. Lorraine Maikis-Hutchison - Bank of America/Merrill Lynch: You've detailed some pretty big goals for the direct-to-consumer business in the near term. I was just wondering how that changes the way that you view your total footprint. Will the web takes sales from stores? And I guess does that change the saturation point of the Chico's brand in your mind? David F. Dyer: The answer is I think the web will complement the stores. We're still going to be a store business. That's where we live and where we always will live. But I think I see a lot of synergy. If it's not in the store, rather than having to look it up in a very efficient way in another store, could we ship it from our distribution center? I think that it really complements the sales in the stores rather than takes away from the sales in the stores. And probably in that case we may actually credit the sale to the store. We haven't really figured that out yet, but there's a lot of things that we're looking at. If the sale is generated in the store, why not give them credit for it? David F. Dyer: And thank you all for joining us this morning. We apologize for not getting to every questioner, but please feel free to call me throughout the day if you do have a question. Please note that we'll be releasing first quarter sales on Thursday, May 7, and first quarter operating results on Wednesday, May 27, and we'll be hosting an 8:30 a.m. Eastern Time conference call and webcast that day. Also Kent and I will be representing the company at the Credit Suisse Retail Roundup in Boston March 17 and participating in the Tag Consumer Conference on Wednesday, April 1. Thank you for your interest in Chico's FAS.

Thank you. This does conclude today's Chico's FAS fourth quarter earnings conference call. You may now disconnect.