Peter Brown – Sr. VP, CIO & IR Matthew Serra – President & CEO Robert McHugh – Sr. VP & CFO

John Shanley - Susquehanna Financial Group Virginia Genereux - Merrill Lynch John Zolidis – Buckingham Research Robert Drbul - Lehman Brothers Omar Saad - Credit Suisse - North America

Good morning ladies and gentlemen and welcome to the first quarter 2008 earnings release conference call. (Operator Instructions) This conference call may contain forward-looking statements that reflect management’s current views of future events and financial performance. These forward-looking statements are based on many assumptions and factors, including the effects of currency fluctuations, customer preferences, economic and market conditions worldwide, and other risks and uncertainties described in the company’s press releases and SEC filings. We refer you to Foot Locker Inc.’s most recently filed Form 10-K or Form 10-Q for a complete description of these factors. Any changes in such assumptions or factors could produce significantly different results and actual results may differ materially from those contained in the forward-looking statements. If you have not received yesterday’s release, it is available on the internet at www.prnewswire.com or www.footlocker-inc.com. Please note that this conference is being recorded. I will now turn the call over to Mr. Peter Brown, Senior Vice President, Chief Information Officer and Investor Relations. Mr. Brown, you may begin.

Good morning and welcome to our first quarter conference call. As you will note from yesterday’s press release, our first quarter GAAP results reflected income of $3 million or $0.02 per share. Included in our net income was a non-cash impairment charge related to the write-down of a note receivable from a business that we sold in 2001 and expenses associated with closing under productive stores which totaled $18 million after tax or $0.12 per share. For comparison purposes, our first quarter net income excluding the impairment charge and closed store expenses was $21 million or $0.14 per share versus $17 million or $0.11 per share last year. Included in our press release is a reconciliation of our GAAP results to the non-GAAP adjusted amount to assist in your analysis and better enable you to evaluate the underlying strength of our business. Robert McHugh, our Senior Vice President and Chief Financial Officer, will begin the call with a discussion of our financial results and include a further discussion of these two charges. Matthew Serra, our Chairman and CEO, will follow with an operational review and strategic update. After our prepared remarks, we will leave time to answer your questions. As we go through our prepared remarks, our references to our 2008 first quarter financial results will exclude the impairment and store closing charges. Thus our first quarter financial results reflected the following. Comparable store sales decreased 2.9%. Our gross margin rate increased by 60 basis points, primarily reflecting lower markdowns. Our SG&A expenses, excluding the impact of more favorable foreign exchange rates was $1 million below last year. Depreciation expense declined $11 million and our cash position was $502 million, an $84 million improvement versus last year. I will now turn the call over to Robert McHugh.

Good morning, overall we are encouraged by our first quarter financial results which were in line with our expectations going into the quarter. The external environment, particularly as it relates to consumer confidence and spending, remained quite challenging during the quarter. The seasonal calendar shift with Easter in mid March and many of the school holidays occurring earlier in the quarter than the prior year was also not favorable for retailers. But the seasonal shifts were known and the challenging environment was anticipated, therefore we built both our merchandising and financial plans accordingly. As a result, our earnings per share for the quarter, excluding the non-operating impairment and store closing expenses, was in line with our plan and our cash flow exceeded our plan. At quarter-end, our financial position was strong with over $500 million of cash and short-term investments and just $219 million of balance sheet debt. Subsequent to quarter-end, we completed negotiations with our bank group on a new three year revolving credit facility for $175 million which includes a provision that will allow us to increase the size of the facility by $100 million for a total of $275 million under certain circumstances. Simultaneous with the closing of this facility, we repaid the remaining $88 million balance of our term loan. Upon completion of this transaction, our long-term debt was comprised of $129 million of 8.5% debentures due in 2022 and our total cash position and availability under our new revolving credit facility was nearly $600 million. Therefore our liquidity position is strong and we have more than adequate financial flexibility to execute our business strategy. As Peter mentioned during our prepared remarks we will focus on our financial review on net income before the impairment charge related to a disposed business and store closing expenses. I will provide the details on these non-operating amounts separately. First quarter comparable stores sales of our major divisions were as follows. Our combined US store operations decreased low single-digits with each business’ results closely aligned to this range. Footlocker.com sales were positive increasing low single-digits. Our international comp store sales declined mid single-digits with Europe down high single-digits, Foot Locker Canada up low single-digits and Foot Locker Asia Pacific up high single-digits. By month, comp store sales increased very low single-digits in February, declined mid single-digits in March, and decreased very low single-digits in April. Our first quarter gross margin rate increased by 60 basis points from last year reflecting a 130 basis point improvement in our merchandise margin rate and a 70 basis point deleveraging of our buying and occupancy rate. While the external environment remains challenging and negatively impacted our comp store sales, we successfully offset the impact of the sales loss on profits through a higher margin rate. Our merchandise margin rates are clearly benefiting this year from two key factors that has allowed us to better control our markdown rates. Our inventory level at the beginning of the year was better positioned than it was at the same time last year and we have taken a more conservative posture in planning and purchasing new merchandise receipts than in the recent past. While our first quarter tenancy rate was higher then last year on a constant currency basis, these costs were favorable to our plan and in line with the first quarter of last year. First quarter SG&A expenses increased $9 million versus last year. On a constant currency basis our first quarter SG&A expenses decreased by $1 million. Our store operations teams did another commendable job in managing store payroll by flexing store hours based on sales volume in each store while paying competitive wages. We also continue to be encouraged with new ideas that our associates develop to enhance our overall cost structure. Depreciation expense for the first quarter declined by $11 million versus the first quarter of last year. The decrease in depreciation expense stemmed primarily from the asset impairment write-downs last year in accordance with FAS 144. This was partially offset by increased depreciation expense as a result of stronger foreign currency rates. Net interest expense for the first quarter was $1 million, slightly higher then last year reflecting lower interest rates on our short-term investments. During the first quarter we recorded a non-cash charge associated with a note receivable due from the purchaser of the Northern Group, a business in Canada that we sold in 2001. This impairment charge totaled $15 million or $0.10 per share. The store closing expenses recorded during the first quarter were in line with a program that we initiated last year primarily to accelerate the closing of cash flow negative stores. Negotiated settlements with landlords associated with exiting 15 stores prior to lease expiration totaled $4 million pre-tax, or $0.02 per share. For the balance of this year we expect to close an additional seven stores under this program at an estimated incremental pre-tax cost of $4 million or $0.01 per share. Our first quarter income tax provision of $11 million reflects two key factors; the $15 million impairment charge is classified as a capital loss for which we may not receive a tax benefit unless an offsetting capital gain is realized. Additionally we recorded $1 million of incremental income tax expense as a result of an adjustment to actual amounts due in Europe. Therefore our nominal income tax rate on the first quarter net income, before the impairment charge and excluding this European adjustment was closely aligned to our forecasted rate of 35.5%. At the end of the first quarter our cash position net of debt was $283 million, $100 million favorable to the end of the same period last year and also higher then the balance at the start of the year. Our total cash and short-term investments totaled $502 million while our long-term debt stood at $219 million. Our merchandise inventory position of $1.4 billion at the end of the first quarter was $99 million or 6.6% lower then at the same time last year. On a constant currency basis our inventory was 9% lower then last year. This reduction is in line with a strategic initiative designed to reduce our inventory per store and increase our inventory turnover. For the full year we continue to expect that our year-over-year inventory position on a constant currency basis will decrease by approximately 7% to 10%. At quarter-end our shareholders’ equity stood at $2.3 billion, a book value of $14.68 per share, an amount higher then our current share price. An additional financial measurement that illustrates the strength of our financial position is our current ratio which at the end of the first quarter stood at a very solid 3.6x. As indicated in our press release, we currently expect our 2008 earnings excluding the impairment charge that was recorded during the first quarter, to be in a range of $0.65 to $0.85 per share. We are reconfirming our previously provided estimate given that we have achieved our first quarter earnings expectation but at the same time continue to be cautious given the potential impact of an uncertain external environment for the balance of the year. Our current forecast is based upon the following assumptions for the full year. Comp stores sales relatively flat to down low single-digits; gross margin rate 200 to 300 basis points favorable with last year, primarily reflecting an improved markdown rate particularly during the second and fourth quarters of this year; SG&A expenses on a constant currency basis relatively flat with last year; depreciation expense of about $135 million; interest expense of $3 million; store closing costs of $8 million and an income tax rate of excluding the impact of the first quarter impairment charge, of approximately 35.5%. We also continue to expect to generate a total of $200 million or more of positive cash flow in 2008 before dividends and any share repurchases or debt retirements. In summary our financial position is strong and we believe we are currently on track to deliver our financial plan for the year representing a meaningful profit improvement versus last year and generating positive cash flow to enhance shareholder value. I will now turn the program over to Matthew Serra.

Good morning. First quarter of 2008 remained challenging for both our company as well as for most of the retail industry. Slowing GDP, higher food and oil prices, declining real estate values, and lower consumer confidence have all contributed to lower spending at the retail level. Despite these economic headwinds we achieved our financial plan for the first fiscal quarter of 2008 and we believe that we are on track to also achieve our financial goals for the full year. Overall, our first quarter sales trend was uneven with comp store sales results flattish and in line with our plan in both February and April, our results fell short in March and impacted negatively by both unseasonable weather and an early Easter selling season. Our merchandise margin rate for the quarter was favorable to our plan and significantly better then last year. I’m also pleased that our SG&A expenses were favorable to our plan and below last year on a constant currency basis. So in summary, our first quarter results versus our initial expectations reflected slightly unfavorable comp store sales that were offset by a more favorable gross margin rate and SG&A expense rate. While the strength of the global economic climate remains uncertain, we believe that our company remains poised to achieve a meaningful profit improvement over last year. This view is supported by several factors that we believe will enhance our profitability including the following: A fresh flow of new merchandise into our stores, particularly [marquis] basketball and running styles which are selling well; new assortments of branded apparel for both existing and new suppliers is expected to provide a new level of excitement to our stores, our inventory position is much cleaner which we expect will continue to contribute to a lower markdown rate then last year for the balance of the year. The closing over the past six months of the unproductive stores makes the collective profits of our remaining store fleet more profitable. Our depreciation expense should continue to be approximately $8 million to $10 million favorable to last year for both the second and third quarters of this year before flattening out in the fourth quarter. As to the most recent quarter as Robert covered, our combined US stores posted low single-digit comp store decline. Our largest group of divisions in the US comprising of Foot Locker, Foot Action and Kid’s Foot Locker, represented approximately 50% of both our company stores and sales volume during the first quarter. This group which is led by [Keith Daley] generated a low single-digit comp store sales decline for the quarter but a very impressive and meaningful profit increase and Keith is off to a very good start in this responsibility. The first quarter profit increase of this very large piece of our business is very encouraging and a resurgent of a consumer trend back towards higher priced, technical footwear. It lends optimism for the balance of this year and I believe that performance footwear is now on an uptick. By family of business our total US stores generated a very low single-digit footwear increase while apparel sales decreased double-digits. Our men’s footwear business increased low single-digits, kid’s increased mid single-digits, and women’s decreased mid single-digits. Sales of both our men’s basketball and running shoes were very solid particularly in the higher priced marquis styles. Sales were also very strong at the lower priced canvas category led by various Converse, Chuck Taylor assortments. Except for some premier assortments from Nike, sales in the men’s classic, low profile and boot categories were very weak continuing a down trend that has been prevalent over the past several quarters. Our average footwear selling prices in the US increased mid single-digits enhanced by a lower markdown rate and mix shift towards selling a greater percentage of higher priced footwear. US apparel sales continue to be weak across most categories extending the trend that we’ve experienced since last year. We are working hard to correct the situation and believe it is an opportunity for us later this year as we begin to enhance our branded assortments. Our international business was mixed with strong results in the Asia Pacific, very solid results in Canada but disappointing results in Europe. Our Asia Pacific division, which is comprised of 92 stores in Australia and New Zealand, had a very strong quarter with a nearly double-digit comp store sales increase and strong division profit improvement. Over the past two years our management team in this region led by [Lou Kimble] have made significant improvements to both the merchandising and store operation aspects of this business. Our 130-store Canadian division produced a small comp store sales increase for the quarter and a division profit in line with our expectations. The productivity of this division remains high within the division margin rate for the full year and we expect to achieve a double-digit rate. In Europe where we currently operate 514 stores, both the footwear and apparel side of the business contributed to our comp store sales decline with both decreasing in the mid to high single-digit levels. The higher priced technical running footwear segment of this market continues to push back into fashion but not enough to offset the declines in the Fusion category. By region in Europe we generated a positive comp store sales gain in the UK as that market has stabilized offset by comp declines in each of our other large markets. We continue to refrain from trying to drive sales through a higher promotional cadence in this market. In fact, our markdown rate in Europe continues to be one of the lowest versus our other store divisions. Our near-term objective in Europe is to continue to operate this division without pushing on the promotional pedal, by carefully managing our inventories and using markdowns to keep our aging in line with company standards. Footlocker.com Eastbay sales increased low single-digits and produced division profit in line with our plan at a double-digit margin rate. Over the past several weeks we have experienced a meaningful pick up in sales through our internet sites which encourages us for the upcoming quarter. As for our franchise business, we ended the quarter with a total of 13 stores; 11 of which are operating in the Middle East and two in South Korea. During the quarter two new franchise stores were opened in the Middle East; one in Saudi Arabia and another in Kantar. During the first quarter we opened 33 new stores, remodeled or relocated 73 stores and closed 60 stores. As already mentioned 15 of our first quarter store closings were completed as part of a program initiated last year to shut under productive stores. The remaining 45 stores will close at lease expiration during the first quarter at a minimal cost. Our store plans for the full year remain essentially unchanged with approximately 60 store openings, 200 store remodels or relocations and 140 closures. As outlined on our fourth quarter conference call, given the uncertain external environment we have taken a more conservative approach this year then in the more recent past in planning and managing our business. This conservative approach applies to many aspects of our business including sales and profit planning, inventory management and capital spending on new stores. Our primary focus for 2008 is to improve the productivity of our base business by making our existing store fleet more profitable. Until we see more enduring signs of an improvement in consumer spending at the retail level we will remain very focused on generating strong cash flow and maintaining a strong balance sheet and it is always my intent to maintain a strong balance sheet. Our near-term focus is on improving the productivity of our base business by implementing several strategies as outlined on our last conference call. These initiatives include: reduce our inventory levels to increase our inventory turnover. We’re off to a good start with this initiative having reduced our inventory by $99 million versus the first quarter last year. To increase the quantities of our unique, exclusive and limited distribution marquis goods that we receive from our key suppliers is another key initiative. Our consumer research indicates that our core customer base continues to look to our stores first for the latest assortments of premier athletic footwear, particularly in basketball and running categories. This is a competitive strength and a core competency that we believe we can build on in the future. A third initiative is to rebuild our branded apparel business with most of our important supplies principally Nike and adidas, while adding some new highly recognized names such as Under Armour and newer emerging brands like Tapout which is exclusive to us in the mall distribution channel. We are going to rebuild our branded apparel business and it’s a very important initiative for us and we expect this meaningful opportunity to really enhance our business going forward. Under Armour apparel has been introduced at our Champs stores during the first quarter and will be expanded into Foot Locker in the fall season. Tapout is a new program that we first introduced in Champs late last year and continues to be very encouraging and will be rolled out to Foot Locker this fall. And again it’s an exclusive in the mall channel. New assortments for both Nike and adidas will be hitting our stores beginning in this current quarter. We have several other new programs as well that should add to new excitement that we are looking to bring to our stores. We will differentiate our store brands from one another through product initiatives, interior layout modifications and new fixtures and improve the look and feel of our stores with improved flooring, lighting and other modifications to provide a more pleasant shopping experience and in addition this initiative is designed to improve the productivity of our stores. These modifications are well underway and are expected to be completed before the start of the fourth fiscal quarter. We believe this near-term strategy is the first step in returning our business back to the profitability levels of our peak years. In closing we believe it is prudent to remain conservative in how we manage our business in the near-term until we see signs of improvement in the external environment. We are encouraged however with the recent fashion trends that are shifting back towards higher priced, technical footwear. We also believe that we have a meaningful opportunity to improve our apparel business over the next several quarters as we add new assortments for both well known and emerging vendors. We are off to a good start to the year with our first quarter pre-tax profit, excluding the impairment charges related to the disposed business. We are up 26% in pre-tax profit for the same period last year. Finally I would like to emphasize again that our balance sheet is strong. At the end of the quarter our book value was $14.68 per share and our cash position stood at $502 million and was in excess of $3.00 per share. I will now be happy to answer your questions. Thank you.

(Operator Instructions) Your first question comes from the line of John Shanley - Susquehanna Financial Group John Shanley - Susquehanna Financial Group: Matt, can you discuss the expansion of the House of Hoops concept into; I know its going into Chicago and some other major urban market areas. How important will this concept do you believe it will eventually become and how fast can it be rolled out?

As you know we opened our flagship store on 125th Street in New York City, up in Harlem, in December. The store is on plan. We are opening a store in Beverly Center out in California. We have a site in Chicago and one in Texas. Don’t forget we have had the House of Hoops concept in our stores for approximately eight or nine years now and we think that this new flagship concept will further enhance that whole concept of House of Hoops in our Foot Locker brand. So we’re not just testing it, we’re taking it a little slower then normal but we think it could be a very meaningful piece of our business. John Shanley - Susquehanna Financial Group: Would it eventually go into regional malls, normal regional malls aside from Beverly?

That’s yet to be determined. I think it has to be in very high impact basketball centric markets and there’s no question that the consumers have responded. They’re looking obviously for all the newest and most exciting basketball products that are being offered by the Nike organization. So we feel good about it. John Shanley - Susquehanna Financial Group: On the last conference call you mentioned that you expect some 70% of this company store base to be modernized by the end of fiscal ’08, are you still on track to achieve this goal and what’s been the results in terms of productivity levels of the modernized stores? Is there a substantial difference pre and post modernization?

Yes we generally get a lift after a modernization. I think this year we obviously have taken stock of ourselves and cut back clearly on the expansions and reinvesting in the base fleet and we are spending a considerable amount of money, particularly in the United States in freshening up the stores. It will be more than 70%. It’ll be in excess of 80% of the stores that will be fully modernized and we’ve embarked on a new program of a lot of new fixturing and presentation differences from our competitors. Tremendous new lighting programs and it’ll be a little boring but new flooring which adds a lot of cache to the stores. John Shanley - Susquehanna Financial Group: Is that 80% goal something you’re envisioning being done before the end of fiscal ’08?

Yes. John Shanley - Susquehanna Financial Group: Also on the fourth quarter conference call you had mentioned that you expected inventory levels to be reduced by some $200 million, obviously you achieved--

One hundred million, John. John Shanley - Susquehanna Financial Group: Inventory down $100 million?

At cost. John Shanley - Susquehanna Financial Group: Okay I was looking at it in retail, you obviously dropped the inventory levels pretty precipitously in the first quarter, and do you think that inventory levels can be down even more then the $100 million at cost by the end of the year?

Well our current inventory levels are running approximately 5% to 6% lower per store then last year. I think there is an opportunity to continue to drop them somewhat. You have to understand that we’re in a lot of marquis business and we have a lot of launch product. To get that launch product to the stores for the launch dates, sometimes inhibits your ability to lower the inventories as much as you would like because when you have a chain our size, you want that merchandise in there at least a week to 10 days before it’s going to be launched. You want to be sure it’s going to be there. That has been one of our turnover issues. But to answer your question, we’re working very, very hard on getting that inventory down and I think there is some room for some more reductions. John Shanley - Susquehanna Financial Group: Talking about the shift towards launch and marquis products, you indicated on today’s call that you felt that that was going to be a growing component of the business, can you give us an idea of what percentage of the domestic sales are now generated by marquis product and do you expect that that percentage is likely to increase over time?

Its about 33% to 38%. John Shanley - Susquehanna Financial Group: And will it grow even beyond that point?

It’s been as high as 40% in past years. Beyond that, I’m talking over $100 product. And in Europe it’s even a larger percentage. John Shanley - Susquehanna Financial Group: Marquis product, is that a significant factor in terms of European business? Is $100 plus product a significant part of the merchandise mix?

Its higher then the US. It always has been by the way. But what’s happened over there, as you know, over the last several years with the introduction of the Fusion or low profile product, it has lowered the pricing not only with us but a lot of our competitors and the customer has gravitated into that product. While our marquis business continues to do well and grow, we’re getting hurt over there on the lower priced product. John Shanley - Susquehanna Financial Group: Are the operating margins in Europe comparable to where they had been or are they off a little bit?

They’re off John. John Shanley - Susquehanna Financial Group: Do you expect that that situation is going to change any time soon?

I’m going to wait another couple of quarters before I comment on that because we are seeing some signs of light. John Shanley - Susquehanna Financial Group: Are you expecting any pop in terms of business opportunities with the June European Football Championships, will that help business to some degree?

That always does, all those events over there always stimulate business. It’s not long-lived though. It’s a week or two pop but it’s, I would say the kind of business we have not being in the football business big time, we do carry come cleats over there, we don’t get the same kind of pop that some of our, the big box guys get, where they sell all the products. John Shanley - Susquehanna Financial Group: We’re getting indications from our contacts in the Far East that there has been price increases being generated by the actual suppliers, they’re passing it on to the brand. Are you anticipating much of a price increase either for late fall ’08 or spring ’09 in terms of expenses that you may be charged by the brands for your merchandise needs?

We’re seeing price increases. They’ve crept into the system over the, quietly, over the past 12 months. I don’t think its going to be a major issue in our business where we’re so gated in the higher priced zone. John Shanley - Susquehanna Financial Group: Is that true also for apparel?

Yes, everything is going up? John Shanley - Susquehanna Financial Group: Robert, on the gross margin line, how much of the 60 basis points increase was due to merchandise margin improvement and how much was attributable to FX gains?

One hundred thirty basis points was the merchandise margin offset by 70 of deleveraging of the occupancy and buying rate.

Your next question comes from the line of Virginia Genereux - Merrill Lynch Virginia Genereux - Merrill Lynch: Can you talk about apparel and sort of on a, I feel like the sales productivity there, apparel sales per square foot must be down a ton. Is the Under Armour product helping any? What do you think, what bottoms that business? Can you reduce the square footage there or what’s your thought on what makes that eventually turn from a productivity and profitability perspective?

I think that we, I’m speaking for our company, have created a self-fulfilling prophecy. When the business slowed down we bought a lot less and I think we should have hung in there a little more aggressively and had a much more say in presentation in our stores. We have recently worked very hard with, particularly with Nike and adidas on getting some big programs back in place. We have Under Armour in Champs. It was just receipted about a month ago. It’s doing extremely well. It’s being rolled out in the fall season to Foot Locker, Lady Foot Locker and we know that that’s a very important business and that drove a lot of the big sales increases in the big box operations. One of the hot, hot things we have now, you need some excitement and some new and innovative merchandise. The Tapout product which is the mix martial arts product, Ultimate Fighting, is one of the, if not the fastest growing sport in the country, one of the fastest growing sports. We launched that last year at Champs. It did extremely well. Tested it and now we’ve got it in most of the doors. We’re rolling that out to Foot Locker in the early fall season into many doors and we think that the combination of rebuilding our business with the two key players in there, Nike and adidas, getting significant quantities of the Under Armour product and then taking this Tapout category and I don’t want to use the word distort it, but having it presented in a meaningful way. I think a lot of our competitors too have walked away from apparel but we, I think we did not do a good job in managing through the down cycle. We have in the past. In the past when a lot of our competitors have virtually abandoned it, we hung in there and we had some mid single-digit drops and we’ve experienced some high double-digit drops and it’s the old adage, what comes first the chicken or the egg. You have to have some merchandise to sell. Virginia Genereux - Merrill Lynch: Right and maybe the urban retailer downsizing maybe could help you a little bit do you think?

Yes but we’re initiating some initiatives there. We’re putting different kind of merchandise in like Foot Action as an example. We’re putting Sean John in there, Baby Phat, Coogi and you won’t see a lot of that in Foot Locker stores. There may be some urban locations. So its part of our differentiation program, we wanted to be sure that we’re reaching all the appropriate customers in the appropriate different formats. Virginia Genereux - Merrill Lynch: Robert, how are you able to reduce inventories, as affectively when the comp plan was a little light? How were you able to take the inventories down sort of coming out of January to end of April?

It’s really conservative buying, as we said in our prepared remarks, we’ve been careful on our purchasing plans as well and planning very modestly on the sales line and following a buying plan that mirrors that. Virginia Genereux - Merrill Lynch: So if comps had been flat would inventories have been down 150, they would have been even leaner?

Certainly, if we had higher comps we would have had less inventory I think, yes.

Let’s keep in mind, and part of our recovery this year is because of our mismanagement of our inventory last year and we expect a big piece of the recovery to come from that. We got rid of most of the poor performing merchandise last year so you’re starting the season with good, fresh inventory and you’re bringing in less but you’re not loaded up so-to-speak with unproductive SKUs. So you don’t need to bring in as much as you would normally. Virginia Genereux - Merrill Lynch: I was back to John Shanley’s question about could the inventories be down even for than 100. Then maybe on Europe, Matt, it would seem to me that that’s a pretty, that maybe you suffer more fixed cost de-levering there because it’s a more expensive market to operate in, so if you’re going to comp negatively there, if you’re comping negative mid singles, doesn’t that exert more pressure on the profits there and it sounds like the reason is this Fusion product kind of clearing. When does that get cleared and when do you think European comps might improve, or is the economy weakening there playing a growing role?

Clearly the economy is weakening there very, very quickly. A lot of our competition, particularly in the Latin countries are promoting very, very aggressively, tons and tons of BOGOs, coupons and all kinds of events which we played a little in that arena four or five years ago and it didn’t do a thing for us. That’s a very fashion market and they’re not as price-sensitive as other markets. So we’re going to continue to execute our regular price strategy. We’re going to slowdown our expansion over there and before we re-strategize expansion, I want to see two to three solid quarters of stabilization. I think we need to do a better job on focusing on a country-by-country strategy. I think one of the major dynamics that could be very helpful for us in Europe is the new proliferation of malls. They’re building malls at a very, very aggressive pace probably similar to what went on in the US in the 70s and the 80s. So we now stand at about 50% of our business being done on the high streets and 50% in malls. It’s a lot cheaper to operate in the malls. You don’t have key money. The rents are cheaper. I think that it’ll have an impact on our occupancy expense in a positive fashion. I’m not suggesting that the major towns and cities are going to be destroyed but we operate in a lot of tertiary markets with DMAs of about 100,000 to 125,000 people and all of a sudden in the last several years, they’re beginning to build two malls in each of those towns throughout Europe. We think that that could be a catalyst for getting the expense model down over there.

Your next question comes from the line of John Zolidis– Buckingham Research John Zolidis – Buckingham Research: I was wondering if you could talk about the currency exchange impact on overall profitability during the quarter. Obviously it was a positive benefit to top line but also there was an offset in SG&A and then secondly I was wondering if you could comment on overall SG&A and store payrolls and whether or not you believe that lower levels of inventory will help you reduce store payroll as we go through the year and whether there’s a larger opportunity to see improvement then what we’ve realized so far.

On the currency side, I think that the, it’s probably worth about $0.01 for the quarter, the rates last year versus this year. In terms of lower inventory having less payroll its certainly, what it allows really do in the store obviously it could save payroll but also allows the sales associates to spend more time selling then managing the stockrooms. There are some savings there but it also allows us to spend more time with the customers. John Zolidis – Buckingham Research: So basically you’ve chosen to kind of reinvest those payroll dollars into selling rather than restocking and managing the inventory?

Yes but I think its fair to say that we did a very good job this quarter in managing the payroll hours based on the volumes that did occur. We do flex the payroll quite a bit depending on what we see in the sales volumes and that’s really what we drive it by.

Your next question comes from the line of Robert Drbul - Lehman Brothers Robert Drbul - Lehman Brothers: Matt can you comment a little bit on what you’ve seen so far in May and how May is going versus what you saw last quarter and you talked about performance footwear on an uptick, can you maybe just elaborate on your thoughts on why you think this is happening and your expectations around it.

For the first three weeks of May our US operations are running a low single-digit increase in the US market. Our international operations are running an upper low decline; it’s not the same decline we experienced in the first quarter. Our internet business is extremely strong. It’s running double-digit for the month of May. Performance footwear, we’re seeing it with lines like obviously Nike and adidas, at all price ranges, and we could be hopefully on the cusp of reemergence in performance in a very important way. You’ve got lines like Asics kind of exploding and some of the real key technical running product from New Balance is doing extremely well. So we’ve seen these cycles before, obviously our company is much larger then it was the last time we experienced an uptick in performance. And the other factor is you have to measure this carefully. But generally always in an Olympic year performance footwear does extremely well. But we’ve been seeing this trend for a good three to six months and it’s beginning to snowball.

Your next question comes from the line of Omar Saad - Credit Suisse - North America Omar Saad - Credit Suisse - North America: We’re hoping you could provide some color on your marketing strategy in this tough environment and whether this could drive incremental sales this year.

Well our marketing strategy we believe continues to be exciting. There are obviously new methods of marketing vise a vie the internet, you’ve got the whole new YouTube era, text messaging, emailing; it’s a different marketing model certainly then we had 10 years ago when I joined the company. But we are receiving some increased marketing dollars from our partners and we’re getting out there in front. As you know we continue to support many of the major events around the country i.e. most all of the cross country running events for high school. We’re a big sponsor of the New York Marathon and a couple of other marathons around the country. So we’re out there. It’s a different kind of marketing model then you had in the past in that there’s underground marketing and this whole new exciting technological piece of marketing with the YouTube kind of generation. Omar Saad - Credit Suisse - North America: Given the negative three comp and square footage decline, could you help us reconcile this with the roughly flat overall sales growth? Was there a calendar shift for example or does perhaps your online performance account for the difference?

That was primarily the foreign exchange rate impact. So if you look in the release you’ll notice that excluding the effect of foreign currency fluctuations, our total sales for the first quarter decreased 3.7%. So that is really the difference. Omar Saad - Credit Suisse - North America: Is the comp constant currency? That negative three comp?

Always.

That concludes our program for this morning so we’d just like to thank everyone for their participation.