Paul Marciano - Chief Executive Officer Michael Prince - Chief Operating Officer Dennis Secor - Chief Financial Officer Russell Bowers - Chief Financial Officer, North American Retail

Erinn Murphy - Piper Jaffray & Co.: Shreya Jawalkar - Jefferies: Robby Ohmes - Bank of America/Merrill Lynch Omar Saad - ISI Group Betty Chen - Wedbush Diana Katz - Lazard Capital Markets Jonathan Hart - Buckingham Research Group Margaret Whitfield - Sterne Agee John Kernan - Cowen Dorothy Lakner - Caris & Company

Good day everyone and welcome to the Guess? second quarter fiscal 2013 earnings conference call. On the call are Paul Marciano, Chief Executive Officer; Michael Prince, Chief Operating Officer; Dennis Secor, Chief Financial Officer; and Russell Bowers, Chief Financial Officer, North American Retail. During today’s call the company will be making forward-looking statements, including comments regarding future plans and financial outlook. The company’s actual results may differ materially from current expectations based on risk factors included in the company’s quarterly, annual and current reports filed with the SEC, including economic conditions, business strategies, results of litigation, tax and other similar proceedings and currency fluctuations. Now, I’d like to turn the call over to Mr. Paul Marciano. Please proceed.

Thank you. Good afternoon and thank you for joining us today. The second quarter was both rewarding and challenging at the same time. With our national businesses offsetting North America we delivered revenue at the top end of our guidance we gave three months ago and posted earnings per share of $0.49. In our international businesses our performance was solid. Both Europe and Asia exceeded our top line expectation despite stronger currency headwind that we had planned, which also put additional pressure in our product margin. Our licensing business also outperformed expectation, giving us continued confidence in the strength of our brand worldwide. North America was our most challenging business where traffic was down specifically in tourist location. In Europe we exceeded our revenue directive even as the microeconomic environment remained uncertain, especially in the south, where a fall off in consumer confidence has certainly affected store traffic. We continue to make strides in growing our business outside of our more developed markets of Italy and France. Excluding these two markets revenue increased roughly 8% and both Germany and Russia posted double digit gain in the quarter. We were pleased with our retail store performance in Europe where overall comp improved from the first quarter and we experienced an increase from July. We continue to stir up with significant white space in the region and we plan to optimize our multi-channel distribution capability and pursue growths in many markets where our brand is under distributed. In Asia, our brand continued to gain traction and we exceeded both our top and bottom line expectation for the quarter. In South Korea, both new doors expansion and positive comp helped to drive double-digit top line growth in the quarter, a big improvement from the first quarter. So far this year we have opened 47 stores in concession in that region. Our team executed well in that period and we continue to be optimistic about the potential for G by GUESS in South Korea, where we have already opened 60 stores in concession. In China, our business grew by 40% in the quarter, fueled by strong positive comp. We ended the quarter with 161 stores in concession in this very important market for us and our goal is to expand another 45 location by the end of this year. Now, North America Retail was clearly a disappointment for us. We did not experience the result that we expected. The environment continued to be very promotional and with less profit, especially during the second half of the quarter. The summer months brought a sharp decrease in visitors from Europe in the store. Business in our tourist location and especially in accessory stores were the least performing in the chain. These contributed to a comp store sales that fell short of expectations. But regardless of traffic or tourist, the most challenging category continued to be accessories. We believe that our product line lacked value, key volume drivers and did not reflect the improvement we have made in the apparel line. We are committed to making the necessary change to reverse this trend and are working with our partner licensees to improve the product offering in our stores. In fact, the current handbag assortment in our stores is strong in my opinion and should improve the trend in that category for the holiday season and I am confident of that. Our women apparel line continued to be the best performing category in our full price stores. The customer has responded very well to the woven top assortment that has been featured prominently in our floors, while our knit top business was soft and did not meet our expectation. We are addressing that with basic knit program at entry price. Our denim line also continued to be successful in all our businesses, but we believe we have new opportunity in denim with new fit and printed denim. Our core customer is responding to the strategic decision to improve and elevate our product quality and position in the marketplace. Other international places, large markets like Japan, Latin America, India and Eastern Europe remained key markets for Guess?, where we have light presence to address by either joint venture or direct operation. Our goal is to carefully invest in these new markets where we see tremendous potential for growth. As we move forward, we feel that we are well positioned to carry out our strategic initiatives. We have an experienced management team and we have been adding to that with two senior executives in e-comm and President of Licensing worldwide. As a team, we are focused on growing our business and making investment that optimize our return. We plan to develop and invest in great products that would resonate to our customers and solidify our position as a global lifestyle brand leader, with high quality product a long-term strategy with discipline of what is under our control. The first quarter we invested $140 million to repurchase more than five million shares and in the last quarter a new $0.5 billion repurchase program was put in place. With that, I will pass it now onto Dennis to walk through the Q2 numbers. Dennis.

Thank you Paul and good afternoon. Let me start with the reminder that in last year’s second quarter we recorded a $19 million or $0.19 per share European logistic settlement chare. During this call all of our analysis will be on an adjusted basis, excluding the settlement charge to provide relevant period-to-period comparisons and better operational visibility; so now getting to this quarters results. Second quarter diluted earnings per share reached $0.49 within our expectation and down 42% compared to last year’s adjusted earnings per share of $0.84. Net earnings for the second quarter of fiscal 2013 declined 45% to $43 million. Second quarter revenues declined 6% to $635 million. In constant dollars revenues were up slightly to last year with growth in Asia and retail expansion in North America and Europe, offsetting negative retail comps and lower European wholesale shipment. Total company growth profit declined 15% to $252 million and gross margin declined 430 basis points to 39.6%. Product margins declined mainly due to the unfavorable impact of currencies primarily in Europe, along with Canadian pricing changes and product cost in North America. Our occupancy rate increased given the negative retail comps and retail mix. SG&A increased 5% to $194 million compared to last year’s adjusted SG&A and our SG&A rate increased to 340 basis points to 30.6%. The increase resulted from planned higher advertising and marketing investments, along with higher store selling expenses given our largest store base, offsetting the favorable impact of the weaker Euro. In Europe we also increased our bad debt provision, mainly related to our Greek distributor, which impacted the quarter’s EPS by $0.04. Adjusted operating profit declined 49% to $57million, which included a $5 million unfavorable currency translation impact. Operating margin declined 770 basis points to 9%. Other net income was $6 million and mostly represents net revaluation gains on foreign currency contract imbalances resulting from the weakening of the euro during the second quarter. Our effective second quarter tax rate was 32%, compared to our adjusted tax rate of 31.4% in the prior year. We are planning the full year with the 32% rate. Moving to segment performance, in North America Retail, second quarter revenues decreased 3% to $253 million. Traffic declined as a softer accessory business growth and 8.5% comp store sales decline and more than offset the 6% square footage expansion from last year’s second quarter. Operating income declined 49% to $17 million and operating margin decreased 600 basis points to 6.6%. Gross margins were negatively impacted by Canadian pricing changes and product costs, along with the higher occupancy rate given the cost. Our SG&A rate increased due to the deleveraging of our store expenses, as well as increased advertising and marketing investment. During the quarter we opened 13 new stores and closed five, ending the quarter with 511 stores in the U.S. and Canada. In Europe, revenues declined 15% to $247 million, while in local currency the top line performance exceeded our expectations with revenues declining 2%. We grew our business in newer markets, including Germany and Russia, so this growth was more than offset by declines in Italy and France. Our comp store sales results which were down in the mid single digits range were better than expected and a sequential improvement from the first quarter. In addition the anticipated timing of ship to wholesale shipments into the third quarter did not materialize the level we had anticipated. New store expansion continued to drive retail revenue growth compared to a year ago. At the end of the second quarter, we directly operated 227 retail stores, which include 26 stores that we acquired from one of our licensees during the second quarter. Overall wholesale revenues were consistent with our expectations, declining in the quarter, as the customers continue to be impacted by the weak economic conditions in our more mature market. Operating income decreased by 61% to $25 million. Operating margin declined 1200 basis points to 10%. Gross margins declined mainly due to the weaker euro and the occupancy rate increased due to retail expansion. The SG&A rate increased due to higher store selling expenses given the retail expansion, higher advertising and marketing investments and the Greek bad debt provision. In Asia, second quarter revenue growth exceeded our expectations, increasing by 21% to $67 million. We posted positive comp and double-digit revenue increases in both our Greater China and South Korea markets. Operating profit decreased 17% to $4 million and operating margin declined 280 basis points to 6%. Gross margins decreased slightly as product margin improvements were more than offset by an occupancy rate increase, our SG&A rate increase, given additional investments in advertising marketing and new door expansion. In North America Wholesale second quarter revenues declined 5% to $42 million; operating profit decreased 27% to $8 million and operating margin declined 550 basis points to 18.5%. The expected decrease in operating margin was driven primarily by product cost inflation, Canadian pricing changes and the impact of unfavorable currency fluctuations. In Licensing revenues declined 4% to $27 million and operating profit declined 9% to $23 million. Now turning our attention to the balance sheet. We ended the quarter with cash and short-term investments of $282 million, down $148 million compared to last year’s $430 million. This year-over-year decline was impacted significantly by $232 million in share purchases during that time, including our $140 million of 5 million shares in the second quarter. Second quarter operating cash flow was $8 million compared to $41 million last year. The second quarter repurchases favorably impacted Q2 EPS by $0.01. Accounts receivable declined 15% versus last year to $335 million. In constant dollars the decrease was 4%. Consolidated DSOs declined slightly compared to a year ago, as improvements in North America (inaudible) offset a modest DSO increase in Europe of roughly a week. At the end of the quarter about half of our total receivables and about two-thirds of our European receivables were supported by insurance coverage bank guarantees and letters of credit. Inventories increased 11% to $381 million. Most of the increase supports our international store growth, expansion of our G by GUESS businesses in the U.S. and South Korea, as well as early receipt of current season product in Europe. We have carryover products in Europe that we plan to sell through our outlet and in North America our inventories are higher than planned given the shortfall we experienced in comp. During the quarter we invested $42 million in CapEx, net of tenant allowances, primarily for new stores and remodels, as well as the stores we acquired in Europe. Our Board of Directors have approved a quarterly cash dividend of $0.20 per share of the company’s common stock. The dividend will be payable on September 21, 2012 to shareholders of record at the close of business on September 5, 2012. We are also currently working with our global banking partners to exercise the accordion feature of our existing credit facility to increase its capacity. With that, I will pass now to Michael to give an overview of our recent business trends and provide outlook for the third quarter and an update for the full fiscal year. Michael.

Thank you Dennis and good afternoon. As we look forward to the rest of the year, our general expectations for our international businesses remain very similar to what we laid out a quarter ago, but we are now planning with a weaker euro. In Europe, retail comp trends have been slightly better than we expected. In our wholesale business, all our fall-winter orders were very consistent with our plans and both cancellation and reorder rates have been trending at expected levels. We do expect slightly weaker product margins versus our previous expectations, due primarily to the current weaker euro. For the full year, we continue to expect euro revenues will grow in the low single-digits. Assuming the euro remains at prevailing rates, we now expect U.S. dollar revenues will decline in the high single-digits. For the third quarter, we continue to plan with wholesale headwinds and negative retail comps, so not as severe as in the recent past as we will have finally anniversaried last year’s significant downturn and consumer spending. With those factors, along with a larger retail store base, we are expecting third quarter euro revenues to grow in the low single-digits and for U.S. dollar revenues to decline around 10%. In Asia, our business trended slightly stronger than we had anticipated for the second quarter. For the full year, we continue to expect revenues to grow in the low to mid-teens range. For the third quarter, we expect revenues to grow in the mid-to-high-teens range. Now moving to North America Retail, we have made progress in our women’s apparel, and we are working hard to improve the product and trends in our accessories business. We will also continue to invest in market initiatives to connect with our consumers, and invite them into our stores. We feel these investments in marketing product may take longer than we had originally expected to pay back. So far for the third quarter, our comps have been trending down in the high single-digits and we are implying third quarter comps to continue in that range. Given that assumption, we’re implying third quarter revenues to be down in the low single-digits. For the full year, we are now assuming comps to decline in the mid to high single digits and the revenues will range from low single digit growth to a low single digit decline. In North America Wholesale, we continue to expect full year revenues to be roughly flat and the third quarter revenues to decline in the low single digits. In licensing we continue to expect royalties to decline in the mid single digits for the full year, and will decline in the low single digits for the third quarter. In the third quarter, we expect modest consolidated product margin declines as the benefit from the release of cotton prices is offset by currency headwinds along with target promotional activity in North America. Further impacting gross margins, we are planning with our higher occupancy rate, mainly due to the North American Retail comps and overall retail mix. For the full year, we expect to see a similar gross margin pattern. With respect to SG&A, we expect the SG&A rates to increase in the third quarter, due primarily to the additional investment in advertising and marketing, along with the impact of the negative comps and lower wholesale shipments on our fixed cost structure. Considering those factors for the third quarter we expect consolidated revenues in the range between $620 million and $630 million, operating margin between 9% and 9.5% and EPS in the range between $0.42 and $0.46 per share. For the full year we are now expecting revenues to range between $2.62 billion and $2.65 billion, operating margin between 10.5% and 11% and for EPS in a range between $2.15 and $2.30 per share. The vast majority of the change for guidance, which now also includes an impact of last quarter’s share repurchases will restore North America retail performance. Our quarterly and full year guidance assumes poor currencies remain roughly at prevailing rates and there seems no further share repurchases. Lastly for the full year we have reduced our CapEx plans and now expect to invest between $110 million and $120 million in capital, net of tenant allowances, primarily for new stores and remodels. With that, I will conclude the company’s remarks and open the call up for your questions. Before doing so, let me remind everyone to please limit themselves to one single part question. If time permits, we will allow people to ask a follow-up questions. Operator?

(Operator Instructions) Our first question is coming from the line of Erinn Murphy, Piper Jaffray. Erinn Murphy - Piper Jaffray: Great. Thank you for taking my question. Paul, I was hoping you could maybe talk a little bit more about your comments on Europe just being a little bit more stable. If you could maybe just help us understand some of the key country trends, maybe specifically you talked about Italy and France being still weak, so maybe focus on Spain and just some of the other markets there? Then perhaps just share your perspective on both spring and summer bookings in those key markets, how are they trending right now and can you just remind us how at this time last year, the spring-summer bookings were?

Yes, thank you. I think what’s happening in Europe, it’s positive in one hand and negative in another in many accessories. In Europe, the accessory, especially bag and footwear has been doing well, in fact better than what we expected and it’s the opposite here on the sense that we feel that the line became too, I would say too mono line and very clean, very, very I mean elegant and we have a base of bags that always had included a good portion of fashion. So, the result is what we see now and I think that Europe accessories total has been really doing well compared to U.S. and now if you go to the stores right now, you will see a change of the line and continue to change even more at the end of September, beginning of October for holiday, that’s one. What was your other part of your question?

She had asked some color on some of the country performance and I can help you with that. With the exception of Italy and France and you heard Paul say on the prepared remarks that everything else was up 8%. If I exclude those on a year-to-date basis, the rest of the countries are up 6%. We had strong double-digit growth in Spain, which has been a really good market for us. We’ve opened stores there and those stores are among the most profitable stores that we have in the chain in Europe. As we said, Germany has been growing, Russia grew, The Netherlands grew, U.K we saw growth in there. So, the business has been performing as we had expected. The fall-winter orders came in as we expected. We are not fully through spring summer, but we are expecting to see an un-easing of the headwinds, and so far about three-quarters of the way into the shipments, we are seeing the headwinds lighten on the spring-summer ‘13 orders. So again, the headline for us on Europe is it’s performing at or even slightly better than we had expected thus far this year.

Your next question is coming from the line of Randy Konik, Jefferies. Shreya Jawalkar - Jefferies: Hey, this is Shreya Jawalkar filling in for Randy, how are you?

How are you? Hi. Shreya Jawalkar - Jefferies: So, I was just wondering about your strategy to improve traffic in North America. So we had expected the higher marketing spend that you have budgeted for this year to help bring that metric up. So, can you just remind us when the higher marketing campaign kicked in, where you think it’s falling short given the weaker traffic trends, and also what kind of changes you are expecting to make here to deal with the traffic?

We really just got started with the marketing in North American Retail in Q2. The big campaign we did was centered around the 30th anniversary and that took place in May, which is when we have clearly the best traffic of the entire quarter. So it’s really going to be ramped up in Q3 and Q4. We’ve got a denim authority campaign going on our stores. We’ve got our affiliations with Tiesto and Elin Kling that we are going to be bringing to life and you’ll see that in the windows and we are going to also have a lot more in-store events and mailers are something we are going to push a lot more in the back half of the year than we did in Q2 for both fall and for holiday.

And also to add to that, this is Paul, definitely because our presence is so strong in Europe during the years that when the euro was very strong, we had a huge disproportionate number of customers coming from Europe to shop in our stores in tourist location. What we call tourist location is really New York, Florida, California and Las Vegas. And we saw through credit comps reform that the European have been really in the last two months declining a lot compared to the year before and year before. For two reasons, obviously one is weaker euro, but also because of their own problems in Italy and in France. But you combine that with the line of accessory who has been not exactly complete as we wish it would have been complete, that gives you the slow topic we have experienced and we are definitely focusing on that and we are definitely seeing some change even in the last two weeks. Shreya Jawalkar - Jefferies: Great, thank you.

Thank you.

Your next question is coming from Robby Ohmes, Bank of America Merrill Lynch. Robby Ohmes - Bank of America/Merrill Lynch: Thanks, good afternoon guys.

Good afternoon. Robby Ohmes - Bank of America/Merrill Lynch: Hey guys, just actually two quick questions. I guess the first question, I was wondering if you could give any color in North America on your sort of the breakout, a little more detail on how to say the factory stores were doing versus the full line non-tourist retail and an update on the G by GUESS stores in Marciano. Then just a second question maybe a question for you Paul; it’s just, on the accessories business could you remind us the structure and how much of that business and which parts are done in-house versus with the license partner and if you are thinking about maybe changing the structure so that you don’t get in a situation like this again?

Yes, so by concept G by GUESS was the best performing concept. Right there was the factory stores which they did soften, because they are very reliant on international tourists during the summer. GUESS was kind of in line with the entire chain, a little bit softer and the accessory stores and the Marciano stores were the weakest.

And for me, for the licensees, we have all the categories. Basically the most important which represent I would say 90% of the licensing product, which is handbags, footwear, watches and jewelry, they are all licensees and the majority are more than 20 years. So, it’s not that the situation was or is a bad situation is a direction that we as a licensor give them a direction to say we’ve underlined maybe a little bit more high end, because we want to follow what we are doing in apparel, but maybe we went a little bit too far on making the line monolithic, maybe just too much. So, I would not blame them. I would take 50% of that blame for my direction and the footwear is doing well. The watches, we have been also I think mainly suffering about the lack of traffic both from Europe and I think that this is – we don’t see unless something exceptional come up that we decide to make a merger by one of our licensees, but we don’t see anything like that happening in the near future. Robby Ohmes - Bank of America/Merrill Lynch: Got it. Thanks very much Paul.

Thank you.

Your next question is from the line of Omar Saad, ISI Group. Omar Saad - ISI Group: Thanks good afternoon.

Hey Omar.

Hi. Omar Saad - ISI Group: Paul, I wanted you to talk about what you are seeing in the marketplace in North America. Some of the apparel, fashion companies are doing better than others. There seems to be a little bit more of a shift towards faster, more contemporary fashion. I don’t know if you have a view on that. And are there things you can do in your supply chain to maybe make the stores a little bit more responsive and reflective of the latest trends or how you think about where the business fits in throughout all that?

I think you’re right on. You’re right on because I think you have visited our places in Europe and we run operation a little bit differently in Europe than we run in the U.S. It means that we have much more of immediate, what we call immediate delivery, like a short-term delivery. And definitely we see a tick-up on Europe performance because of the latest fashion we put at the last minute that we planned just eight weeks before, and not like six months before. And we are definitely going to address that and we are doing that right now in U.S. It’s exactly the right comment right now – is that, consumers are looking for more fashion, more last-minute thing instead to just the basic classic expected line, so that’s one. Two, I think what is also clearly, I don’t have to tell you that, you know that – is the malls are becoming more and more aggressive and more and more promotional, but it’s which also the factory malls. It used to be just the malls and now the factory malls are becoming extremely aggressive and this is new. On my view this is new. Maybe I am not aware about the whole market, but it’s new for me. And I am not talking about low-end brand, I’m talking higher brand getting really aggressive in factory malls. We have to continue to adapt to seize the surrounding, the environment and the competition and adjust to that. So that’s what we are seeing right now and trust me we are working on that every single day.

Hey Omar, this is Michael and into Paul’s point. We in our supply chain have set up what we call an immediates group and they are working on what we consider more trend right fashion items that you can get in the store at a much, much timelier manner than we have in the past, and even some of that production is done locally or done in North America so you can hit those stores in kind of four to six weeks and hit those trends where you need to. Omar Saad - ISI Group: Thanks guys, that’s really helpful. Good luck.

Thank you, thank you.

Your next question is from the line of Betty Chen, Wedbush. Betty Chen – Wedbush: Thank you, good afternoon.

Good afternoon Betty.

Hi Betty. Betty Chen – Wedbush: I was wondering if you can talk a little bit about the Canadian pricing changes you mentioned. Forgive us if we didn’t have it in our notes earlier. Were there some changes that happened in the second quarter? Are there any additional changes that we should think about for the second half or next year? And then Dennis, I think you also mentioned something regarding your Greek distributor. Was it just something related to the macro environment over there that there was this kind of one-time issue with them? Then lastly, in terms of accessories Paul, I appreciate the color you gave earlier. How would you think about it by category or by classification when you have to think about shoes versus bags versus jewelry or watches? Are some of those maybe going to be evident in terms of improvements faster than others, when we think about upcoming deliveries?

Hi Betty. This is Russ. In relation to the Canadian pricing, this is something we started at the beginning of the year, but the impact has become more significant in the second quarter, and we are now pricing a lot of our product up there at parity with the U.S. Those exchange rates have been at parity for about three years now and the customer is very educated and we felt that the old model was just not sustainable for the long-term. Our prices are still a little bit higher in general, but instead of that 15% gap, we’ve got maybe about 5% gap as we look at the whole store in total and we do see trends up there starting to improving the sales. It’s trending in Canada now, a little bit better than the U.S. this month and we haven’t seen that in a while.

Hey Betty, it’s Michael. Just on the Greece distributor, it was a one-time event, and as you guys know, Greece has been a very tough economic environment and we had a long-term partner who came to us and said, I can’t make my payment, so I can’t pay, and we are trying to work through a solution, but we felt like it was a prudent thing to do to go ahead and take the charge and see it as a one-time event.

For me Betty, about accessories, I will go by the one you will see the improvement right away, right now. In fact, if you go to our stores, any of our stores, the key doors, you would see the handbags trending to what I was mentioning, but I think the real big change will be end of September, beginning of October, which is early delivery of holiday. On the shoes also you would see a great assortment of boots and we are going to do major windows of boots right now in the next week or two. And watches; the cycle is a little bit longer, because it’s a cycle of eight months. So holiday will be on full speed, which I’m talking now Thanksgiving, not before. I don’t see that before that. That definitely missed as a free August category, but the two categories I just mentioned; handbags and shoes in Europe are the opposite right now. They are doing really well. Betty Chen – Wedbush: That’s very helpful.

Thank you Betty.

Your next question is coming from the line of Diana Katz, Lazard Capital Markets. Diana Katz - Lazard Capital Markets: Hi, thank you for taking my question. My first question was again on the North America comps. I guess, can you help me understand what’s getting worse in 3Q versus 2Q; if you expect a slightly weaker comp in 3Q that’s high single-digits, and maybe you can just go into some of the comp components in 2Q between traffic and conversion, as well as the differences between men’s, women’s and accessories? And then just finally, of the $20 million plan shift you had in Europe, how much of that did not materialize in the quarter?

Yes, hi Diana. This is Russ. As far as the comps, we are not expecting Q3 to get worse than what Q2 was. Our guidance was towards the -- relatively in line. So the way it broke down during the quarter, traffic was the biggest issue that we had. It was down 10% and again, it was improving in May from where it were in Q1, but it deteriorated pretty sharply once we got into the summer months. Conversion was up in the quarter, particularly in July, and our AUR, overall it was flat in the U.S. It was up slightly in the Guess? brand, and it was down slightly in the modern brand.

With respect to the timing shift in Europe, we had said that we expected about $20 million or roughly $0.06 a share that might shift out of Q2 into Q3, because we were anticipating maybe some slowdown on credit. We didn’t see that, which is good; that $0.06 became $0.02. So we were about $0.04 strong as we had anticipated going in. Diana Katz - Lazard Capital Markets: Great. Thanks very much.

Thank you.

Thank you.

Your next question is from the line of David Glick, Buckingham Research Group. Jonathan Hart - Buckingham Research Group: Hi, good afternoon. This is Jonathan Hart in for David Glick. A follow-up question on marketing expense. Can you remind us where you expect marketing expense to represent as a percentage of sales this year? Also, how should we think about marketing expense next year? I believe you are initially planning for a multi-year ramp starting this year, so should next year still look like another catch up year? Thanks.

No, what we did was, if you go back and look at the history we were much lower than a lot of our peer group. This year we’ll probably spend somewhere in the neighborhood of 2.5%, maybe a little bit less than that. Of course don’t forget that our licensees are also investing in marketing for the brand. So the impact that actually spent is larger than what hits our P&L. Going forward what we said and we haven’t specifically talked about next year is that we want to go through see what works and what’s the appropriate level of spending, what are the initiatives that work and what are the things that we want to modify going in. So we are going to look at it based on what kind of returns that we think we are getting and set next year and talk about that when we talk about the full year. So it’s still fluid for us. Jonathan Hart - Buckingham Research Group: Great, thank you very much.

Thank you.

Your next question is from the line of Margaret Whitfield, Sterne, Agee. Margaret Whitfield - Sterne Agee: Good afternoon everyone. I’d also appreciate some color on how the comps broke out in quarter two between the women’s business, which you said was the best to men’s and the accessories and if it changed at all thus far in August, including what the traffic trends look like here in August? And Maybe Paul if you could elaborate on anything new in terms of your plans to develop a joint venture in Brazil or going into Japan or India? And finally for Michael, any update on average unit costs in sourcing?

Okay. I’ll start off with the performance by category. In our full price stores, women’s was our best performing category. It was down low single digits still, but much better than the traffic base that we had coming into the stores. With men’s and accessories the weakest, men’s was still soft in the quarter. However, if you look into what we’ve seen so far this quarter, men’s is really the big change and we saw men’s start to turn around, so we are encouraged by that. Overall traffic for August so far is better than last quarter and that’s after particularly a rough first week.

Margaret, for Brazil and Japan; Brazil, we are at the final stage. I’m talking like a matter of days to close the joint venture in Brazil. We have a large company there, and the announcement should be on in the next two weeks. Japan, I will be there in the next four weeks to do the final tour and we will most likely, 90% sure, we will go direct in Japan like we did with Korea and like we did in China, which we have also then before that licensees. So then you have India. India, we have a distributor right now. We have an option to become a joint venture in the next two to three years, so we would evaluate that in the next two years, if we go in a joint venture or not. And finally, I think we don’t talk about that, but there is another continent existing somewhere that we have not expanded and that we have a big demand, because we are such a strong brand in South Africa is the rest of Africa. A lot of people demand the product in Africa, in countries who are very strong financially, but just concerned about the stability politically of this country. So that’s the overview quickly about the rest of the world.

Hey Margaret, it’s Michael. If you look at the back half of the year and we’ve been consistently saying this, last year we felt like we did a really good job managing the cotton prices and average cost. We think we are going to see some benefit of that in North America this year, even though we had a good year last year. But we were going to offset a lot of that, not most of it with some of the more targeted promotional activity you’re going to see in North America for the back half of the year. And then when you think about Europe, as the euro gets weaker, that actually works against us from a margin perspective, because you’re buying in dollars, and so you’ll have a margin impact on your product in the back half of the year in Europe. So all that should offset. You may see that be kind of flat to down a little bit though. Margaret Whitfield - Sterne Agee: One final question, what percent of North American sales are to tourists?

If you look at it in the summer months, it’s in the mid-30s. It’s really significant. Yes, and if you look at it from a whole year perspective, it’s still in the mid to high 20s. Margaret Whitfield - Sterne Agee: Thank you.

Thank you.

(Operator Instructions) Your next question is from the line of John Kernan from Cowen. John Kernan - Cowen: Good afternoon guys.

Good afternoon.

Hi john. John Kernan - Cowen: So, it seems like inventory is obviously a little bit higher than you’d like. Dennis, how are you planning that into the back half of the year? What do you think it will finish by the end of the year and how aggressively will you use your outlets, both in North America and Europe to clear some of this inventory?

Yes, this is Michael, and on the inventory if you think about it, inventory is up, and I’ll kind of walk you through the reasons why. You’ve got the G by GUESS growth in North America and Korea, so that’s part of it. You’ve got the European retail expansion, as well as China, that’s part of it. You’ve got the timing of some shipments that came in earlier than we anticipated for fall-winter product in Europe, and you’ve got a little bit of excess inventory in Europe. And in North America as Dennis said, the comps didn’t quite perform as we had expected. But we’ve got a great outlet program in North America and in Europe. They are setup to help their product and as we also said, you’ll see us probably get a little bit more focused on targeted promotions, which should clear some of that product out as well. But you should start seeing the inventories trend down in Q3 and a little bit more back in line with sales. John Kernan - Cowen: Okay, and then given some of the operating margin declines which are geographically both in Europe and North America and now Asia, would you ever consider your thought through slowing square footage growth in some of your own stores and focusing a little bit more on profitability or is the square footage growth story geographically going to continue into 2013? Thanks.

I think the square footage growth, you really need to look at it market-by-market and then within markets like the U.S. concept by concept. Where we see the opportunity here is with G by GUESS, which is a very young concept. It’s done well in its history and we see a lot of white space for that. To a much lesser extent there is still some opportunities in the other concepts in North America. You will see where we are opening our stores in Europe, in the markets where we are getting really good returns and where we see a lot of white space. Germany is a country we are opening stores. Spain, I believe I said earlier that its one of our most profitable in terms of the store portfolio. So we are really looking at it market-by-market and concept-by-concept where we see opportunity. John Kernan - Cowen: Okay great and Dennis, one quick maintenance question, what’s your cash cushion? Obviously there is a fairly aggressive share repurchase plan in place, what’s the cash cushion you’d like to have on the balance sheet?

Well, we’ve never particularly articulated that specific number. We look at a number of things where we are in the cycle and as we go through the rest of the year. This is the part of the year where we will accumulate a substantial part of our cash flow in the year. So we look at we are on the timing, we look at what other peers are doing and kind of what other companies are doing and we like to leave some cushion on the balance sheet, because we’ve operated that way historically. We also have cash overseas, so not all cash is created equally in the total company, but we haven’t specifically said what the number is that we managed to. We do like to keep dry powder, both in terms of cash position and access to other credit for other initiatives. John Kernan - Cowen: Okay, thanks. Good luck.

Thank you.

Thank you.

Your next question is from the line of Dorothy Lakner, Caris & Company. Dorothy Lakner - Caris & Company: Thanks. Good afternoon everyone.

Hi Dorothy.

Hi Dorothy. Dorothy Lakner - Caris & Company: Just to go back over a couple of things. On the inventory, the inventory I guess overhang or carryover you have in North America, are you kind of keeping that, going to run that through your full price stores or does some of that go to outlets, how is that going to sort itself out? Then on the accessories again, I think Paul, you were sounding as if things are – you do see better product in the stores as we speak, but we’ll see more impact in the fourth quarter or holiday relative to the third quarter. Just wondering, if I’m reading that correctly? And then just kind of looking forward, you do have some I guess diminished impact from the tourists stores as we move through the year. Does that get bigger in the fourth quarter or is it kind of -- does it continue at that lower rate in both the third quarter and the fourth quarter? Thanks.

Yes, so first on the inventory levels. Some of it’s going to clear to the full price stores, but I think you’re going to look at more of it going through the outlet stores. And in particular, the accessory sales have been soft, so we’ve got that to deal with. But the good news is, with accessories, they tend to respond really quickly when you do choose to do markdowns and we do have the right to return some of those to our partners in some cases. Dorothy Lakner - Caris & Company: Okay. So you will have a considerable amount of new product in the stores. It won’t just be the markdown product that you are dealing with?

Yes, that’s correct. We’ll still have new product for fall and for holiday hit as we originally planned and in factory as well. And then we have planned some of this. We have planned to send more of the full price product through the outlet channels this year more than we did a year ago. The question on the tourists; the impact of the tourists as far as the penetration, its highest in June through August and then it becomes less through the balance of the year. So with that being said, it should impact us less. One other things we saw that was interesting with the European business, that traffic wasn’t down a lot during the first half of the year until we hit the summer months being June and it dropped off a lot, which is probably due to relying more on families and people traveling for pleasure than they did during the first half of the year. Dorothy Lakner - Caris & Company: So, you’re sort of seeing some transfer. People who are coming here and shopping here from Europe are now just shopping in their local markets?

In fact, we have a large office in Florence and a large office in Lugano, which is at the Italian border, and most of the associate and people who work in offices in both of these places, which is by hundreds, none of them are traveling overseas, they are all staying in Italy. I mean that is significant. That could be also the fact that we are doing better local areas than what we expected on a sense about the accessories and all that. We see that on our own people who do not come to America in vacation. We used to see them coming here in the summer and they don’t.

I mean, we are stilling seeing our traffic hold up with the South American customers, which is an important component.

And for your question about the accessories Dorothy, is I think what I see now is much better, especially because handbag is such a large category for us, that I reviewed and approved the line for holiday and spring and I just finished to shoot the spring campaign of accessories. It’s one of the best I’ve ever done I think. It would be in the magazine in December time, but I think that the line will be very, very well received, I’m confident of that. Dorothy Lakner - Caris & Company: Okay, and just one more thing, just a little color on just the marketing, trying to bring the traffic up in North America. What are the kinds of things that we are going to be seeing going forward?

The biggest thing is to create a buzz around our stores, doing more in-store events. Like I said earlier, we’ve Tiesto and we are going to feature a capsule of his product and we are going to feature that in the windows as well and more mailers and I think that they are better mailers before. Then we are also sending out the mailers not just to our existing store base, but we are going to use it for prospecting for new customers.

And also for me on direct advertising I started the last 12 months to really put a good portion in besides the print media to advertising digital media, which is I think a natural right now. Dorothy Lakner - Caris & Company: Do you think things kind of sell-off after the big 30th anniversary campaign? If you had to do it all over again, would you have kept up a more sustained marketing pace? Do you think that would have made a difference?

I think we did. I mean the 30th anniversary was a big one, because we put from the windows to Claudia Schiffer to every magazine with the 30 years was a big impact.

Global too.

It was global. We did that all over the world. But I think really the question for us is two big factors, if you tell me what are the two big factors that really strikes right now for North America, what went not in the right direction, is a very heavy unusual promotion on a back-to-school time, which is a shock for me and then the tragic of tourists. I mean when the euro is at 1.50 and when it’s at 1.22, 1.23, that’s a big difference.

Yes, and we saw the 30th campaign have an impact globally. If you looked on all the regions of the world, we actually saw traffic and comps improve in the month of May when it was really going. So it had an immediate impact on that and to Paul’s point, we are now getting ramped up for Q3 on a lot of the other initiatives as well. Dorothy Lakner - Caris & Company: Okay, great.

Thank you.

At this time I’m showing no further questions in queue. I would like to turn the call back over to Mr. Paul Marciano for any closing remarks.

Yes, thank you. Thank you for participating in our call today. I want to just repeat what I continue to always say, brand is what to other company it seems they want day after day, and I think this time again, the same time we have to adapt a balance between competition, store performance, profit margin, cost, but always, always to keep in mind that the brand supersedes everything. We have to always think about that and that’s why we want to be here in 10 years from now, to celebrate the 40 years, not to celebrate 31 years or 32 years. We want to celebrate 40 and maybe 50 and why not more. So that’s what we are looking at and that’s why we are here every day for. So that’s it, and we will see you next quarter. Thank you very much. Thank you.

Ladies and gentlemen, that concludes today’s conference. We thank you for your participation. You may now disconnect. Have a great day.