Paul Marciano - Vice Chairman of the Board, Chief ExecutiveOfficer Dennis Secor - Chief Financial Officer, Senior VicePresident, Principal Financial and Accounting Officer Carlos Alberini -President, Chief Operating Officer, Director

Christine Chen - Needham& Company Eric Beder - Brean Murray & Co. Jeff Klinefelter - Piper Jaffray Holly Guthrie - Janney Montgomery Scott Betty Chen - Wedbush Morgan Securities Erin Moloney - Merriman Curhan Ford Margaret Whitfield - Sterne, Agee & Leach

Good dayand welcome to Guess fourth quarter fiscal 2008 conference call. Before we getstarted, I would like to remind you of the company’s Safe Harbor language. The statements containedin this conference call which are not historical fact, including statementsregarding future plans and guidance for current and future periods, may be deemedto constitute forward-looking statements within the meaning of the PrivateSecurities Litigation Reform Act of 1995. Actual results might differmaterially from those suggested in such statements due to a number of risks anduncertainties as described in the company’s most recent annual report on Form10-K and other filings with the SEC. Now foropening remarks and introductions, I would like to turn the call over to PaulMarciano, Chief Executive Officer of the company. Please go ahead.

Thank you. Good afternoon and thank you for joining us todayto discuss Guess's financial results for the fourth quarter and fiscal year2008. Also joining me are Maurice Marciano,Carlos Alberini, and Dennis Secor. Carlos andDennis will later review highlights and fiscal ’09 outlook. In fiscal year 2008, we achieved exceptional results forrevenue increase of 40% and earnings growth of over 42%. I will discuss that infurther detail later. Q4 delivered very strong financial results in a challengingeconomic environment. We increased our revenue by 30%, expanded operatingmargin to 18.7%, and increased operating income by 35%. Once again, all ourproduct categories, Guess Apparel, footwear, handbags, watches, in every partof the world contributed to the top line growth as we increased our operatingearnings in the quarter. Our international business was a key driver of this growth,especially Europe, which had a revenue increase of 75%on top of an increase of 64% the year before. Operating earnings for Europeincreased 65% in the fourth quarter. Net earnings reached $55.2 million,representing an increase of over 20% versus last year and marking our 18thconsecutive quarter of earnings growth. Earnings per share reached $0.59, alsoa 20% increase from $0.49 last year. International continued to exceed our expectations and weinvest in the expansion on this market with a strong infrastructure and a greatteam. We are obsessed with execution as we are all about the quality of theproduct from unique washes for denim to a footwear styled to our Swiss watches.For that, assembling the right team for the right [execution] is vital for us. Europe concluded another excellentquarter with revenues of $152 million and operating earnings of $28 million. Thisbusiness alone contributed nearly 45% of earnings growth for the company. During the fourth quarter, we opened 42 new stores,including 19 in Europe, 19 in Asia,and four in Mexicoand South America. Our wholesale segment, which includesour Asian operation, had another excellent quarter with 63% increase inrevenues. Our licensing business had a very strong quarter with revenueincrease by 22% for the quarter and 35% for the full year. For retail in North America, weposted our 20th consecutive quarter of same-store sales increase, deliveringover 13% comp for the quarter and 14.6% comp for the year. Let me now highlight some of the achievements for the fiscalyear ’08. We reached $1.75 billion in total revenue. This represents a 40%increase from the previous year and nearly a 90% increase from two years ago. We increased our operating profit by 50% to $309 million,and improved our operating margin by 130 basis points to 17.7, even as we weremaking significant investments in [our] business, South Korea, Chinaand two new brands, Marciano and G by Guess. We increased our net earnings by42% to $186 million. As a result, our diluted earnings per share reached $1.99,which is more than three times the earnings per share we reported just twoyears ago. For the fiscal year, we opened a record 184 freestandingstores outside the U.S.and Canada, andwe have now 579 freestanding stores, including 302 in Asia,241 in Europe and Middle East,and 36 in Latin America. During the last few years, we have achieved a very balanceddiversification of earnings across our business segments around the world. Justas a reference this year, Europe, Asiaand licensing businesses combined generated 69% of revenue growth and 74% ofour growth in operating profit. For the first time in company history, earningsfrom Europe and the licensing business is 53% of ourtotal operating profit, surpassing North America at 47%. Now, key initiatives going forward -- basically thisobjective will reinforce three areas of existing business and place them on thetop of our agenda every day. One will be international retail expansion in Europe;two, retail and wholesale expansion in Asia; and three,e-com business. In Europe, we see a big opportunityto maximize our brand retail presence and visibility in Europeas we focus in key markets of France,Spain, Englandand Germany. Wefeel these markets represent tremendous opportunity for us in all productcategories and all store concepts. Last year, we opened 84 freestanding stores in Europeand Middle East and we plan to open 86 more retailstores in Europe this year across all concepts. That ofcourse will create a substantial increase in revenue not only for denim and[inaudible] line but for our footwear and handbag businesses as well. Asia -- Asiawas a key driver last year and we have developed a solid foundation for strongexpansion, especially in Korea,where we performed very well for the year. We just started there and we morethan doubled the revenue and ended the year with 46 freestanding stores. Wecontinue to believe that Koreacould be more than a $100 million business for us in the next two to threeyears, versus $24 million when we took over from our licensee just a year ago. In China,where we opened a flagship location in [key cities] during 2007, we arefocusing our [focus] this year on penetrating secondary markets and we betterthan ever now believe that the next largest expansion territory is Asiafor all concepts and all Guess brands. All together, we plan toopen 185 new international stores this year and 60 new stores in North America, which include 16 freestanding footwear stores worldwide. Again, I want to remind everybody that the size of ourinternational stores is much smaller than the average stores in the U.S.but still the amount of stores opening clearly demonstrates the global presenceand expansion of the Guess brand. About e-com, our third objective will be related to thee-com business. In the last 18 months, we have experienced a strong increase intraffic and business on the website and we see that the customers are shoppingonline as well as in our stores. For fiscal ’08, the e-com business had anincrease of 34% and year-to-date, it’s up 47%. With that in mind, we are investing more heavily in onlineadvertising through major search engines such as Google or Yahoo!, as well asother popular sites, new ones, as Facebook. In conclusion, we have operated with a clear vision andstrategy, all with one goal in mind -- the globalization of the Guess brand. Webelieve that the Guess business model is unique and strongly diversified inproduct categories as a complete lifestyle brand. Now Dennis and Carlos will take you through the numbers.Thank you.

Thank you, Paul and good afternoon. Let me now take youthrough some of the key financial details for the quarter. Total fourth quarternet revenues increased 29.9% to $514.6 million. Allof our segments contributed to this growth, led by Europe,which accounted for more than half of the growth. Strong comps in NorthAmerican retail and our growing Asian business were the other strongcontributors. Total company gross profit increased 31.9% to $233.5 millionand we expanded gross margin by 70 basis points to 45.4%. A greater mix ofEuropean business and Europe’s 390 basis point grossmargin improvement drove this expansion, which was partially offset by theimpact on store occupancy of one less week in the NRF calendar. During the quarter, the SG&A rate was flat to last yearat 26.7%. Total SG&A expenses increased 30% to $137.3 million. Theadditional spending supported our new businesses and infrastructureinvestments, as well as the increased sales volume in the quarter. For the quarter, the company’s operating profit increased by34.7% to $96.2 million, which includes a $5.4 million currency translationbenefit. We expanded operating margin by 70 basis points to 18.7%. Interest expense declined by $1.6 million, mainly due tolast year’s early debt retirement costs. Interest income increased $400,000.This quarter includes charges of $2.1 million mainly due to marking foreigncurrency contracts to market while last year’s quarter included gains of $1.5million from non-operating asset sales. Our fourth quarter tax rate was 42.2% compared to lastyear’s fourth quarter tax rate of 36.5%, which benefited from lost carryforwards. Greater profits and high tax jurisdictions, tax rate changes andstart-up activities in new markets contributed to the higher tax rate this quarter. Fourth quarter net income increased by 20.3% to $55.2million, and we increased diluted earnings per share by 20.4% to $0.59. Thisincludes the impact of several items that collectively affected the quarterlycomparison negatively by about $0.08 per share. Next, I’d like to quickly review our results by businesssegment. North American retail sales increased 10.4% to $270.9million. We accelerated our retail expansion during the quarter, which resultedin a net 8% increase in average square footage over last year. Operating marginrose to 18.2%. For the full fiscal year, we increased retail segmentrevenues by 16.4% and expanded operating margin 70 basis points to 14.9%. Ourfull year same-store sales growth was 14.6% and average square footage increasedby 5.3% through the addition of 49 stores and the closure of 10. Quarterly revenue for the Europesegment increased 75.4% to $152.2 million, with each of our Europebusinesses achieving solid growth, led by our accessories business. Product margins improved across all of our Europeanbusinesses. We continued to invest in Europe anddelivered on operating margin of 18.3% in the quarter, in line with ourexpectations. For the full year, European revenues increased 84.5% andoperating margin was 22.4%. Licensing revenues increased 22.4% to $26.5 million in thequarter. For the full year, licensing revenues increased 35%. Wholesale segment revenues increased 53.1% to $65.1 millionduring the quarter, with three-quarters of the increase coming from Asia.North American wholesale delivered a double-digit revenue increase and strongmargin improvement. Operating margin for the wholesale segment for the quarterwas flat at 18%. Margins expanded in North America,which were offset by lower margins in Asia, where wecontinued to invest. For the full fiscal year, wholesale segment revenuesincreased 69% and operating margin expanded 280 basis points to 19.3%. And now I’ll turn our attention to the balance sheet. Weended the quarter with $275.6 million in cash compared to $207.6 million a yearago. Accounts receivable increased by $111.7 million to $254.4 million,compared to the prior year. Over 80% of the increase supported the substantialgrowth in Europe as well as in Asia. Receivables also increased by about $24.3 million, due tothe strong Euro and Canadian dollar. Overall, days sales outstanding fromcomparable businesses improved slightly with the most significant DSOimprovement coming from our existing European business. Inventory reached $232.2 million, an increase of $58.5million, or 33.7%, within our expectations. This includes the acquisition ofour European kids business. We are very pleased with our inventory position,which we feel is clean and well-aligned with our sales plan. About half of theincrease supports new businesses, including Focus, G by Guess, Kids, Korea,and China. Theother half will support our existing European and North American businesses. Currency translation increased our endinginventory by $15.7 million. Finally, we continued to invest in retail and ininfrastructure. Full year capital expenditures net of tenants allowances was$89 million, lower than our previous guidance due to the timing of cashpayments. Our board of directors has approved a quarterly cashdividend of $0.08 per share payable on April 18, 2008, to shareholders of record at the close of business on April 2, 2008. Also today, we announcedthat our board of directors has authorized a new $200 million share repurchaseprogram. This share repurchase authorization does not have an expiration dateand allows the company to repurchase shares from time to time on the openmarket or in private transactions, including structure transactions. And now I’ll turn the call over to Carlos.

Thank you, Dennis and good afternoon. Let me now update youon our outlook for fiscal 2009 and provide our expectations for the firstquarter as well. We are very pleased with the results that we just reported.These results demonstrate the power of our brand and the strength of ourdiversified and global business model. For the current 2009 fiscal year, we continue to plan netrevenues in the range of $1.970 billion and $2.050 billion. Our Europeanbusiness performed extremely well in the fourth quarter and order activity forthe current season has been strong. We also expect to continue to benefit inthe year from a stronger Euro than we originally planned. Allthis should translate into higher European revenues from the initial guidancethat we provided for fiscal 2009. Regarding our North American retail business, given thestate of the consumer in the U.S.and economic uncertainty, we are now planning this business moreconservatively. For the total company, we are now planning this year’soperating margin at about 17.7%, which is flat to the year that we just closed.We expect our effective tax rate to be 36%. Allconsidered, we continue to expect diluted earnings per share in the range of$2.35 to $2.45 for the current year and we are very comfortable with thisguidance. For the first quarter of 2009, we are planning forconsolidated revenues to be in the range of $445 million and $460 million, andoperating margin to be about 15%. We expect first quarter diluted earnings pershare in the range of $0.44 to $0.046. Let me now address our capital expenditures plan for theyear and our outlook for each of our businesses. In fiscal 2009, we plan to make significant investments inretail expansion across the globe. We continue to plan capital expenditures ofabout $126 million net of tenant allowances for the year. For North American retail, as you know we posteddouble-digit comps in November and December last year. In January, our compswere in the high single digits and in February, they were in the mid singledigits. For the full fiscal year, we are still planning our business assuminglow single digit comps, consistent with our previous guidance. If this compperformance materializes, full year revenue would grow in the low teens. Thisassumes square footage growth of about 12%, as we plan to open 68 new stores inNorth America in the year. For the full year, we are now planning this business with anoperating margin of about 14.9%. We are planning our retail business prudently and conservatively.We will managed inventory levels very tightly, investing in key categorieswhere we see opportunity. We feel that we have the ability to react quickly toopportunities as they materialize. We will managed our costs carefully andcontinue to look for opportunities to gain leverage over our cost structure. For the first quarter, we are also planning this businesswith low single digit comps and revenue growth in the low teens. For the wholesale segment for both the first quarter and thefull year, we are planning revenue growth in the low teens, driven by our Asianexpansion. Operating margin for this segment should reach 17% for the year as aresult of our infrastructure investments in Asia tosupport this expansion. We expect licensing revenues for the first quarter and forthe full year to increase in the low single digits and operating margin to beflat to last year. In Europe, for the full year we planrevenue growth between 25% and 30%, which includes our newly acquired kidsbusiness, and for the first quarter we are planning to increase revenues in the40% to 45% range. Operating margin for this business should again exceed 22%this year. The spirit and excitement in the company with theopportunities that we have in any side of the business we look at istremendous. We need to continue to execute according to our beliefs and ourprincipals at Guess and we will. Thank you very much and with that, we are ready forquestions. Operator.

(Operator Instructions) The first question comes from theline of Christine Chen with Needham& Company. Please proceed. Christine Chen - Needham & Company: Thank you. Congratulations on a fabulous quarter, again. I’mwondering if you could share with us a little bit about category, merchandisecategory performance so far in the first quarter. What were some of the missedopportunities last year, what’s doing well right now? And then if you can talka little bit about Marciano and G by Guess. Thank you.

Okay. Are you talking about the fourth quarter? Christine Chen - Needham & Company: First quarter so far -- spring.

First quarter of this year -- we are not reporting on thefirst quarter, Christine. Christine Chen - Needham & Company: I know, but you talked about February comps, so I was justwondering in February, what categories so far have done well and what were someof the missed opportunities in spring last year?

No, we will prepare to discuss first quarter results at theproper time. We can tell you that some of the categories that were trendingpretty well out of the fourth quarter continue to be trending, such as dresses,denim is very strong. We had a great turn with outerwear, sweaters in the women’sbusiness. And you asked about Marciano -- Marciano is also trendingvery well. The product is outstanding. I’m sure if you had the chance to reallyvisit our stores, you will see. We are very, very excited about theopportunities there and the same thing is true for G by Guess, which we havemade significant changes to the assortment over time. The floor space has beenreallocated to those categories that were outperforming the rest of the storeand many of the changes that were done to the store itself and the concept havebeen very successful, so we are very excited about that as well. Christine Chen - Needham & Company: Great. Thank you.

Your next question comes from the line of Eric Beder withBrean Murray. Please proceed. Eric Beder - BreanMurray & Co.: Good afternoon. Congratulations. Could you talk a little --I guess I want to talk about the shoe business. Could you talk a little bitabout how your shoe business is doing well and why you think you are different?I mean, the shoe business is very tough domestically. Could you talk about howit’s worked internationally and just a little bit more depth on how the shoesare doing and the expectations you have for the new stores coming in?

The shoe business, if you have a little bit of history ofit, at the stage where we are, is kind of new to see because it’s only 2.5years. We had a licensee for many years and then we stopped and then we startall fresh with Mark Fisher. And our business across every continent right nowis doing well, especially in Europe, where we plan topass a landmark of a million pairs of shoes this year, after just starting twoyears ago. We are very, very pleased with that. In the U.S., definitely in our stores, I am sure that youvisit quite a few stores in California or in Las Vegas or anywhere, you willsee that the footwear is representing a bigger and bigger space in ourpresentation because the customer acceptance not only about the style butmainly what you cannot see from outside is the comfort. These shoes have atremendous acceptance percentage by consumers who come back and ask for thesame type of shoes. So we are very pleased about that. In general, I think the footwear outside our doors I thinkhas been a little bit challenging. For us, it’s a new business so we are inprogress every single quarter, every single season. And the other great thingthat we have is if you remember, we introduced footwear for Marciano as a newcategory in the middle of the year, so we are experiencing significant growthbecause of that, just annualizing the introduction. So some of the plans thatwe have for this year in terms of growth in the retail business is aroundshoes. Eric Beder - BreanMurray & Co.: Thank you.

Your next question comes from the line of Jeff Klinefelterwith Piper Jaffray. Please proceed. Jeff Klinefelter -Piper Jaffray: Congratulations, everyone, another fantastic year. I’ll justkind of sneak in one-and-a-half questions, if I could. Just a littlehousekeeping wise, could you comment on, since everyone seems to be focusedright now on these cash balances, Dennis, any exposure to ARSs? Is it purecash? Anything that you can point us to there? And then also on that inventory you gave us, the currencyimpact of $15.7 million, what would that impact have been last year, so we havean apples-to-apples comparison? And then I just have a follow-up for Paul.

Okay, so we’re talking about three questions, but withrespect to the cash, we’re primarily invested in municipal tax exempt moneymarket funds, same day liquidity and within that, most of the investments arein municipal bonds, with interest rates reset to an index. So we are notinvested in any auction rate securities. With respect to the inventory question, the $15.7 millionchange is the result of applying last year’s rate to this year’s balance -- perhapsI’m not understanding your question. Jeff Klinefelter -Piper Jaffray: You were saying this year’s inventory was positivelyimpacted by $15.7 million as a result of the impact to the Euro, correct?

No, he is saying that the inventory is increased as a resultof the stronger Euro in U.S. dollars relative to last year, if you had assumedthis same kind of exchange rate that was prevailing at the time at the end oflast year. Jeff Klinefelter -Piper Jaffray: I got it. Okay, thank you for that clarification. And thenjust in general, the European business is tracking well and obviously a veryimportant part of your business and you comment on France,Spain, England,Germany asgreat potentials. I know those are relatively under-penetrated. Overall, there’s some concerns about some European trends,some consumer spending trends like there are in the U.S.It would appear that those are not impacting you at this point. Could you justcomment further on, in Italyspecifically and then in Europe overall -- you justdon’t seem to be seeing that same sort of traffic slow down at this point?

In Italy,as you know, this is the most penetrated country we have for Guess. We havecurrently 63 freestanding stores, so we have a -- pretty much a good view ofwhat the consumers are and we are not experiencing anywhere any negative compstores in any [weeks] that we have. So our business has been strong, first ofall, again because very few companies, if any in Europehave the assortment of product that are as complete as we are. From the denimside to the handbag side to the footwear side to the watches side to eyewear,very few have this combination. We’ve [a tag] of being an American brand in Europe, so wehave not been -- and we are pretty new in the [scene there], so we have notbeen affected by that and when you realize that we only have four stores inEngland, only five stores in Spain, only zero in Germany and 15 in France, it’sabsolutely virgin territory for us. We have such a strong demand by thedepartment stores of [inaudible], and [Printemps] and [inaudible] in Spainand House of Frasier in England,we are new. So we are don’t have a 10-year or 15-year history to saywell, business is slowing down because we are the opposite. I mean, we keepcompounding positive on positive because the demand is so strong for a newbrand basically in Europe. Jeff Klinefelter -Piper Jaffray: Okay. Thank you very much.

Your next question comes from the line of Holly Guthrie withJanney Montgomery Scott. Please proceed. Holly Guthrie -Janney Montgomery Scott: Thank you and congratulations. I wanted to get some morecolor on inventory. I hate to go back there but could you just talk about --you said half of it has to do with the new business and half of it has to dowith the existing businesses. Could you just talk about the new business partof it? Is that the -- are you talking about the business, the stores thatopened in Q4 and are planning to open in Q1? I guess just kind of categorizewhat segments of new business and what timeframe you are looking at.

The business that we are defining would be Focus, they wouldinclude Koreaand China, G byGuess -- I think those are all of them. And that’s just to segregate for youand help you understand -- oh, that also includes our European kids business.So those are the new businesses and that represents about half of theadditional investment that we made in the quarter.

So Holly, we are very, very pleased with how we were able tomanage our inventory position because we have the inventory where we need it.You know, as you know, our European business is primarily a wholesale businessand we have orders for that business and as you also know, this operates withtwo big seasons -- spring and summer, which is the one that we will be shippingright now, and it’s a six month type of cycle. So you would expect, especiallyin a growing business, we are guiding to a pretty significant growth in Europe,that you will have a lot of inventory to be able to support those orders. If you look at our North American business, our inventorieswere remarkably low relative to the sales trend that we are experiencing, so weare very happy with the absolute dollar amount of the inventory and we areextremely happy with the composition and mix of it. Holly Guthrie -Janney Montgomery Scott: Great. Thank you.

Your next question comes from the line of Betty Chen withWedbush Morgan Securities. Please proceed. Betty Chen - WedbushMorgan Securities: Thank you. Good afternoon, everyone. I was wondering if youcan talk a little bit about the North America retailbusiness. Obviously I think you talked about the macro environment and that’snot a surprise to anyone but if you can talk about are you seeing that kind ofpressure across all the different business concepts, which parts of the regionwhere -- for example, in California where there may be some difficulty giventhe housing market. And then maybe talk a little bit about G by Guess andagain, what additional learnings you have gained during the holiday quarter.Thank you.

We are -- our retail business has performed remarkably welland of course, we are aware of all the macro issues that everybody reads aboutevery day, but we have seen an increased conversion rate, which has helped usin continuing to drive the kind of comp performance that we have seen. Now, that being said, you are right. There are some regionaldifferences. I think we are very privileged with the kind of store base that wehave of over 80% of our stores are in that -- that really capitalize on tourismand on the big cities in the country. And obviously we have experienced asignificant in-flow of customers coming from other parts of the world with avery strong currency and because we are a global brand and one that isrecognized by those international customers, we benefit from that in a prettysignificant way. So areas like Florida that for others I believe are underpressure for us have been and continue to be a driving force for our retailbusiness. That being said, we do have some slowness in California thatwe have experienced and of course, in areas such as the Midwest, things aremore difficult than in the other areas that I mentioned, such as the city ofNew York or Florida overall, as I said. Even Vegas continues to drive verystrong numbers. And I didn’t mention Canadabut Canadacontinues to do very well. Betty Chen - WedbushMorgan Securities: And then could you talk a little bit about G by Guess,Carlos?

Yeah, as I mentioned, you know, we have I believe veryrealistic expectations for G by Guess and I think we shared some of thoseexpectations the last time we talked. G by Guess we continue to believe is avery strong opportunity for the company and I think with the changes that themerchandising team and the general management that is driving that business, Ithink that we will continue to improve our opportunities there. We think thatthere is definitely a strong customer base for that concept and the conceptallows us to reach a customer that we couldn’t reach with our existing concept,so we are very excited about that. Betty Chen - WedbushMorgan Securities: Thank you. Good luck.

Your next question comes from the line of Erin Moloney withMerriman Curhan Ford. Please proceed. Erin Moloney -Merriman Curhan Ford: Just a question, following up on your North American retailbusiness, it looks like your guidance for the year now, it looks like you aremaintaining your revenue guidance but operating margin guidance quite a bitlower than what you talked about last quarter, so I’m just curious where thechange is coming from. Is it on the margin line? Just exactly where that changeis.

Yes, Erin, you are right. The guidance that we had providedbefore was 15.5% operating margin and we closed the year with 14.9. We areguiding to a flat operating margin. And there are a couple of reasons for that.I am sure you are aware there is more pressure on [IMU] at this stage with someincrease in costs across the board. We have been able to offset those but at thetime that we were talking, we had an expectation to significantly improve IMUand we are being more conservative on that expectation. And then there is a little bit of a lower expectation on thecost structure leveraging, because we feel that we have to continue to investin this business and we feel that providing strong customer service is going tobe critical in this environment. So those are the two main reasons. We have adjusted now thestore opening program and remodelings and that has a small impact on occupancybut the biggest drivers of the change in our expectations were the two that Imentioned. Erin Moloney -Merriman Curhan Ford: Okay, great, thanks. And then I was hoping we could just getthe store breakout by concept in North America for thefourth quarter.

Sure. So we ended with in retail, 187; in factory, 97;Marciano, 38; accessories, 17; and G by Guess, 34. Erin Moloney -Merriman Curhan Ford: Great. Thank you very much.

(Operator Instructions) Your next question comes from theline of Margaret Whitfield with Sterne, Agee & Leach. Please proceed. Margaret Whitfield -Sterne, Agee & Leach: Good afternoon and congratulations. You mentioned the directbusiness was a priority. You mentioned the percentage change but I wondered ifyou could size the business and tell us what your goals are down the road forbuilding this business?

You know, the business for us is very small. We see bigopportunities just looking at what others have been able to accomplish and thisis becoming a big priority for us. Obviously the business is highly profitableand highly leverageable, so we see a big opportunity. We are going to invest inthe business and we have new management, so we are excited about the opportunity. We have never disclosed the size of this business. I cantell you that it is probably -- it is higher than any one of our stores interms of volume but it’s not a very significant business. Margaret Whitfield -Sterne, Agee & Leach: So initially, it will be North American focused or will itbe global?

No, initially it’s North American focused, primarily U.S.focused. Margaret Whitfield -Sterne, Agee & Leach: In terms of Q1, the guidance range was below the consensus.My numbers sort of parallel the revenue and the operating margin. I wondered ifthere is a bump in the tax rate in Q1 as there was in Q4, or is it going to belike the year, which you said was 36%?

Yes, when we guide tax rate, we expect that that is the ratethat you are going to use for every one of the periods until we see thingsdifferently. But right now, that’s what we expect, a 36% tax rate across theboard. Margaret Whitfield -Sterne, Agee & Leach: And in terms of the yearly guidance, any thoughts on how weshould model gross margins and SG&A to get the operating margin in linewith your guidance?

Margaret, we do not want to get into that. We don’t thinkit’s productive because our business model is so complex. We have so manysegments. I think giving you operating margin by segment is plenty for you toreally come up with the right answer. Margaret Whitfield -Sterne, Agee & Leach: Okay, and in terms of any directional changes in fashion indenim or elsewhere? If Paul or Maurice could speak to that, to learn what wemight be looking at this year?

I’m sorry. I do not understand -- Margaret Whitfield -Sterne, Agee & Leach: The fashion changes which could stimulate demand or interestwithin the Guess stores?

I think you are one of the most familiar analysts aroundsince Guess exists and I think you are going to see a great emphasis and pushagain for the denim business for Guess, not only here but in Europe,in Asia, in the Middle East, in South America. Denim is going to take [inaudible] back to school, [frontand center] of our focus for the business. Accessories, needless to tell youthat across the board we have been doing incredible season after season andyear after year, but that doesn’t mean that we are going to get comfortablewith that because a lot of people are trying to focus on accessories and wekeep our eyes open and definitely we are working on that every day. Thank you. Margaret Whitfield -Sterne, Agee & Leach: Thank you.

Your next question is a follow-up from the line of HollyGuthrie with Janney Montgomery Scott. Please proceed. Holly Guthrie -Janney Montgomery Scott: Thank you. I was hoping to get just a little bit ofdirectional comments on SG&A. Last year you invested a lot in SG&A, Gby Guess, footwear, international -- I guess in all parts of your business andSG&A grew I guess around the same rate that sales did. I was wondering ifyou could just talk about what we can look for, SG&A growth, particularlyany that has to do with any kind of SG&A expenses this year.

Holly, with respect to the fourth quarter, keep in mind thata lot of those initiatives you mentioned were not annualized. So we talk aboutthe new headquarters in Europe, that was an initiativethat was put in place in the middle of the year so of course the fourth quarteris going to have the same kind of impact that we saw before, in this previousquarter, meaning the third quarter. The same thing is true for G by Guess, which was acompletely new initiatives that wasn’t put in place until the second quarterlast year. And I think that if we go through, you know, Korea’sthe same story, the whole investment in Chinais the same story. Many of these initiatives do not annualize until later onthis year, so you are going to continue to see that kind of impact on theSG&A line. We have a plan that would protect the operating marginperformance of the company and still allow us to continue to invest heavily inall those initiatives that we believe are the future of Guess and that is whatwe are planning to do. Holly Guthrie -Janney Montgomery Scott: Great. Thank you.

At this time, there are no further questions in the queue.

All right. Well, thank youvery much and we are looking forward to reporting to you on the first quarter.Thank you very much.

Thank you for your participation in today’s conference,ladies and gentlemen. All parties may nowdisconnect. Have a great day.