Karen M. Hoguet - Chief Financial Officer, Executive Vice President

Christine Augustine - Bear Stearns Hilary Morrison - Lehman Brothers Adrianne Shapira - Goldman Sachs Jeff Stein - Soleil Securities Deborah Weinswig - Citigroup Liz Dunn - Thomas Weisel Partners Dana Cohen - Banc of America Securities Todd Duvick - Banc of America Securities Steve Kernkraut - Berman Capital John Patrick Walsh - Wachovia David Glick - Buckingham Research Group Dana Telsey - Telsey Advisory Group Wayne Hood - BMO Capital Markets Eric Miller - Lehman Brothers Uta Werner - Sanford Bernstein Kai Yin - New York Life Michael Exstein - Credit Suisse Charles Grom - J.P. Morgan Steve Cirro - Conning Asset Management Jack Treatize - Holden Mark Flanagan - Wellington Analyst for Michelle Clark - Morgan Stanley

Good morning and welcome to the Macy’s Inc. first quarter earnings release conference call. I would now like to turn the conference over to your host, Karen Hoguet. Please go ahead, Madam. Karen M. Hoguet: Great. Thank you and good morning. Welcome to the Macy’s Inc. conference call. I am Karen Hoguet, CFO of the company. Any transcription or other reproduction of the statements made in this call without our consent is prohibited. A replay of the call will be available on our website, www.macysinc.com, beginning approximately two hours after the call concludes. Please refer to the investor relations section of our website for a discussion and reconciliations of any non-GAAP financial measures discussed this morning. Keep in mind that all forward-looking statements are subject to risks and uncertainties that could cause the company’s actual results to differ materially from the expectations and assumptions mentioned today due to a variety of factors that affect the company, including the risks specified in the company’s most recently filed Form 10-K and Form 10-Q. Sales in the first quarter were $5.75 billion. On a comp-store basis, our sales declined 2.6%. We are very pleased with our performance in the quarter relative to our competitors. This gives us comfort that the strategies we are executing are right and that customers are responding well to our offering. However, the overall economic environment remains challenging, as all of you know. Geographically, our sales were strongest during the quarter in the Northeast and in Texas, while our weaker performances were on the West Coast and in Florida. Additionally, our direct-to-customer business was strong in the first quarter. By major family of business, feminine apparel continued to be the toughest category in the quarter while men’s and center core did relatively better, and I would say that home was mixed. Our strongest businesses in the quarter were men’s furnishings, men’s collections, young men, cosmetics, fashion jewelry and watches, handbags, mattresses, and housewares. The weakest categories were as I had mentioned earlier, women’s ready-to-wear and home textiles. I should note, however, that not all of women’s apparel was weak. We continue to see more strength in the contemporary and denim-based brands. More casual looks are what is selling, especially value-driven pick-me-up items that refresh the customers wardrobe. Serious outfit and structured career dressing are not selling as well, and while value appears to be important in this economic environment, highly desirable premium brands are selling very well. I should also add that our private brands performed well relative to other brands in the quarter, since they do represent affordable fashion for our customers. Gross margin in the quarter was 38.6%, down 120 basis points from last year. We had expected a decline due to the weak sales, as well as the need to commonize assortments in the consolidated division. At the end of the quarter, our inventory was down 4%, demonstrating our continued discipline with regards to managing our inventory levels. SG&A dollars were down $10 million versus last year but up 90 basis points as a percent of sales. However, included in the SG&A was a $23 million charge for a potential settlement of litigation related to a wage and hour class action lawsuit in California. A settlement is contingent on final agreement and court approval. This increased SG&A by a rate of 40 basis points. Excluding this settlement reserve, SG&A was therefore $33 million below last year, demonstrating our expense discipline. However, because of the sales decline, the SG&A as a percent of sales was down 50 basis points. We benefited in the quarter from lower depreciation and amortization, which was $315 million this year and $329 million a year ago. We also benefited in the quarter from some early departures in the consolidated division. And as always, we worked hard to respond to the weak sales environment. Negatively impacting SG&A in the quarter were higher costs related to our investment in the direct-to-customer infrastructure and lower income than last year from our credit portfolio. While we sold our credit business to Citi, our economics are still impacted by the profitability of the portfolio, albeit to a much reduced degree than had we not sold it. The key challenge with our credit portfolio is the fact that bad debt remains high and we are now experiencing additional bankruptcy exposure. We and Citi are working together to take actions to mitigate the risk. Operating income before division consolidation costs was $117 million in the first quarter. We booked $87 million of division consolidation related costs in the quarter, primarily related to severance and relocation. Last year in the first quarter, we had $36 million in May company integration costs. Interest expense in the quarter was $136 million versus $125 million last year. The tax benefit in the quarter was $47 million, which is higher than our ongoing rate due to a $10 million tax settlement in California. Our net loss excluding consolidation expense was $4 million. Average share count in the quarter was 420.9 million shares. We did not buy back any stock in the quarter. We therefore lost $0.01 a share in the quarter excluding the division consolidation costs, and excluding the legal settlement of $0.03 per share, EPS would have been a positive $0.02 per share. Net cash provided by continuing operating activities was $21 million this year versus a use of $370 million last year, for a positive year to year spread of $391 million. And cash used by continuing investing activities was $99 million, which was $68 million unfavorable to last year, primarily due to the disposition last year of after-hours as well as the May related asset sales. CapEx and capitalized software was $108 million this year, below last year’s $150 million. We ended the quarter with $366 million of cash on the balance sheet. We continue to be pleased with our cash flow, which is strong even in this challenging economic environment. During the first quarter we completed the division consolidations and transitioned to the new regional structures in the former Macy’s, North Macy’s, Midwest, and Macy’s Northwest geographies. This included the systems conversions as well as the building of our new organizations. We are very pleased that we were able to source almost all of these new positions with internal, very strong talent. We’ve been very busy communicating the changes internally, as well as with our vendor partners and we are now moving on to training the new regional and district organization. The positive energy from the increased focus on localization and the voice of the customer is incredible. As we look forward, we are expecting the economic environment to remain challenging, at least through the third quarter. Our annual guidance for year-over-year change in comp store sales remains minus 1% to plus 1.5%, but we will need earlier and also stronger recovery if we are to hit the upper end of this range. Like you, we do not know when the environment will improve and therefore the key will be maintaining flexibility. What that means is that our merchants must stay liquid and be conservative in placing inventory orders and we also have to have contingency plans in place to be ready to reduce expense and CapEx further should our sales trends not start to improve. These are challenging times where our culture of being disciplined will be rewarded. We are expecting better gross margin results the remainder of the year relative to last year than we experienced in the first quarter, largely because our inventories were purchased after our sales expectations had been lowered and also because we now have the division consolidations behind us. Our hope is that gross margin will be flat to up slightly for the remainder of the year but to some degree, that will depend on the sales trend. SG&A in dollars is expected to increase during the remainder of the year, even with a $60 million cost savings from the division consolidations. This is related primarily to lower-than-expected credit income, the investment in our direct businesses, and expense associated with our stock-based compensation. We still expect depreciation and amortization for the year of approximately $1.3 billion, interest expense still of $560 million to $580 million, and an annual tax rate of 37%, although as you saw in the first quarter it could vary dramatically by quarter. We were expecting to book an additional approximately $63 million in division consolidation costs this year, bringing the total for the year to approximately $150 million, consistent with our guidance when we made the announcement. And as you saw in the press release, we still expect annual EPS excluding consolidation costs to be in the range of $1.85 to $2.15. The bottom line is that we are managing at least as well as any other fashion retailer through this very difficult economy. We are staying flexible so that we can react to changes in the environment quickly. Meanwhile, the My Macy’s localization initiatives are providing a way for us to be channeling positive energy into the business. We also have some interesting new merchandising and marketing programs on deck for fall, including Macy’s 150th birthday celebration and the launch of Macy's as the exclusive department store retail of Tommy Hilfiger apparel. At some point the economy will turn around and we will be very well-positioned when it does. Now, what questions can I answer?

(Operator Instructions) We’ll go first to Christine Augustine with Bear Stearns. Christine Augustine - Bear Stearns: I’m kind of curious about your affirmation of the $1.85 to $2.15; just given the economy and the uncertainty, why not just affirm to the lower end and see how the year plays out? I’m just wondering what your level of confidence is in that upper end. Karen M. Hoguet: Well, I think as you heard on the sales front, Christine, we are going to need to start seeing the economy improve and perhaps have a stronger recovery than many of us are thinking in order to achieve the higher end of the sales range. And without achieving the higher end of the sales range, it will be harder to achieve the higher end of the earnings range. But having said that, it’s only the first quarter. Christine Augustine - Bear Stearns: And could you update us on your thoughts with regard to the debt that’s coming due later this year? Karen M. Hoguet: We have $650 million of debt that comes due in the September/October timeframe and we are thinking about refinancing that. Christine Augustine - Bear Stearns: Okay, and then finally, did you take early markdowns in the quarter on the women’s apparel? Because some of the competitors have announced that, so I’m just wondering if that was partially what factored into the gross margin erosion? Karen M. Hoguet: I don’t know what you would call early. All of our markdowns are taken as a function of rate of sale, so if things are not selling, we take our markdowns on a timely basis and are extremely disciplined about maintaining the aging of inventory. So if something is not selling, it will get marked down. I don’t know if that’s early or late relative to what you are thinking. Christine Augustine - Bear Stearns: I was just thinking about some of the breaks have happened earlier, so I just wondered if you had to kind of follow suit. Karen M. Hoguet: Again, I don’t know and we really do try to focus our markdowns relative to what is selling and what isn’t. Christine Augustine - Bear Stearns: Okay. Thank you.

We’ll go next to Dana Cohen with Banc of America Securities. Hearing no response, we’ll move to the next question; we’ll go to Robert Drbul with Lehman Brothers. Hilary Morrison - Lehman Brothers: Good morning. This is Hilary Morrison calling in for Bob. Karen, can you talk about your -- have you factored any type of input cost inflation into your annual guidance and if so, can you give us a little color around your expectations for that? Karen M. Hoguet: We are beginning to see some increases in some of the raw material costs, like cashmere, leather, cotton, as well as overall inflation but I don’t think it will have a meaningful impact until 2009. Hilary Morrison - Lehman Brothers: And then also can you talk about your expectations for the level of coupon days relative to ’07 that is incorporated into your expectations for gross margin to be -- Karen M. Hoguet: It’s about the same. Hilary Morrison - Lehman Brothers: Okay, great. Thanks.

We’ll go next to Adrianne Shapira with Goldman Sachs. Adrianne Shapira - Goldman Sachs: Thank you. Karen, your comp performance, clearly impressive versus your peer group. Perhaps if you could give us a little bit more color in terms of traffic, ticket trends and also perhaps monthly, just a sense of how it trended during the quarter and where it finished at the end of the quarter? Karen M. Hoguet: Average unit retail continued to go up in the quarter. I don’t have good traffic data because it’s a question of traffic and conversion, so I don’t really know how to address that issue but obviously there’s fewer units being sold if the AUR went up and total sales went down. As you think about it by month, February and March were weaker than April relative to our expectations, as well as relative to last year. Adrianne Shapira - Goldman Sachs: Okay, and any sense in terms of early Mother’s Day and how, you know, since April? Karen M. Hoguet: I don’t want to make too much of a short period of time but early May has started off well also. Adrianne Shapira - Goldman Sachs: Great, that’s helpful. And then you had just mentioned as clearly you’ve got contingency plans in place in terms of expenses and CapEx if things don’t improve. Could you perhaps shed some light in terms of what those are and quantify that? Karen M. Hoguet: I can’t, sorry. I mean, it’s all over the board in terms of where we would find savings. Adrianne Shapira - Goldman Sachs: Okay. Any pull-back on the My Macy's program in that event? Karen M. Hoguet: Absolutely not. Adrianne Shapira - Goldman Sachs: Okay, and then just lastly, as you mentioned, clearly the higher end of the comp plan hinges on a stronger recovery. Could you just give us a sense in light of that how are you planning inventory? You obviously have done a terrific job heading into Q2 but if the higher end of the range perhaps is a little bit dicier, just give us a sense of how you expect inventory trends, how you are planning it, and where you would like to be as you head into the second half. Karen M. Hoguet: Well, as I mentioned earlier, we are trying to stay flexible in terms of our inventory purchasing so we are planning towards the lower end of the guidance in terms of what people should be thinking in terms of expense and inventory. Adrianne Shapira - Goldman Sachs: Great. Thank you.

We’ll go next to Jeff Stein with Soleil Securities. Jeff Stein - Soleil Securities: Good morning, Karen. I’m wondering -- you had talked a little bit about how your private label brands seem to have outperformed the market brands and I’m wondering too though on the margin side, given the fact that you are not in a position to get the kind of relief from your vendors on markdowns on private label, did your private label margins suffer more than branded margins during the first quarter? Karen M. Hoguet: Jeff, I don’t have that data in front of me. Usually that’s not a big issue. Jeff Stein - Soleil Securities: Okay. Can you talk a little bit about the Bloomingdale’s catalog and your decision to eliminate that and how that is likely to affect the direct sales and profits and maybe just discuss a little bit your rationale behind the decision to eliminate that? Karen M. Hoguet: Sure. I mean the key there is that Bloomingdales.com has a huge potential and we think that that’s where we should be investing our resources as opposed to the catalog, and it will have a minor impact on sales and no impact on profit as we discontinue that in 2009. Jeff Stein - Soleil Securities: Okay. Thank you.

We’ll go next to Deborah Weinswig with Citigroup. Deborah Weinswig - Citigroup: Good morning, Karen and a good performance in a difficult quarter. Can you talk a little bit about with My Macy's kind of the support you are getting from vendors, how you are working with them? And also, is there anything you are doing to share more info on terms of sales trends with your vendors? Karen M. Hoguet: Let me take a step back on the vendor subject. A couple of weeks ago, we had meetings in New York with over 750 of our key vendors, trying to educate them on what we are doing with My Macy's, because obviously we want their partnership to help us in the field both understand what we need to bring to those stores in terms of assortments and then making sure the vendors will be able to provide that. But also frankly to the degree we are reinvesting in our field organization, we’d like them to do that as well. And I would say the response has been very positive. Like us, they realize the sales potential from this and that would be good for both of us. Separate and apart from My Macy's, we’ve also been working on a project to provide the vendors with an easier way of getting more information about their sales in our stores and that’s happening also. It will be piloted later this year. Deborah Weinswig - Citigroup: Would that be something similar -- there’s a few retailers out there who have kind of -- basically it provides visibility to the vendors in terms of rate of sale, et cetera, by store level if they want it, region. Is that kind of the direction you are heading in? Karen M. Hoguet: I suspect so, Deb. I’m not the expert there but I suspect so and I suspect we’ll do it even better, since we’ve got the benefit of looking at what everybody is doing today. Deborah Weinswig - Citigroup: Okay, and there were a few press releases out yesterday regarding some store openings. Can you elaborate a little bit on that 120,000 square foot format that was mentioned? Is that an off-mall format that we could expect to be seen as a future growth vehicle? Karen M. Hoguet: Well, as you can imagine there aren’t a lot of regional malls being built in this country. The opportunities are in more of these lifestyle centers which tend to support a smaller door and so I think our growth going forward will be more of these smaller formats in the lifestyle centers. Deborah Weinswig - Citigroup: Okay, and then last question, you touched a little bit in terms of discontinuing the Bloomingdales catalog and there’s been obviously a lot of investment and obviously a good return with regard to the Internet strategy, and it was strong this quarter. Can you just talk about how you see that continuing to progress over the next few years? Karen M. Hoguet: Well, as you know we are expecting to do $1 billion this year in volume in our direct businesses and we expect it to continue to grow significantly from there. Deborah Weinswig - Citigroup: Great, thanks so much and best of luck.

We’ll go next to Liz Dunn with Thomas Weisel Partners. Liz Dunn - Thomas Weisel Partners: Good morning. Let me add my congratulations. I guess is there any way you can give us the magnitude of what you are seeing on the credit income for the balance of the year and how much Citi is seeing in terms of increase in delinquencies? Karen M. Hoguet: No, I’m sorry, that’s not public data. Liz Dunn - Thomas Weisel Partners: Okay. Is there any sort of regional trend to call out relative to that data? Karen M. Hoguet: I have not looked at it regionally so I don’t know the answer to that. Liz Dunn - Thomas Weisel Partners: Okay, and then just a follow-up to the last question about the store openings -- is there any concern that you have about opening in markets that have been notably soft relative to the rest of the country? Do you think that the issues that we are seeing relative to the housing market are short-term in nature or if those issues last for a longer period of time, are you comfortable with those openings nonetheless? Karen M. Hoguet: We are very comfortable. I mean, we’ve obviously done a great deal of analysis of the sales potential in these markets that frankly offer the highest growth potential of -- you know, they’d be in the highest growth markets, Phoenix and Las Vegas. So we feel very good about the long-term prospects and have as always have been very disciplined in analyzing the opportunity to make sure they would earn good returns on capital. Liz Dunn - Thomas Weisel Partners: Okay, great. Thanks. Good luck.

We’ll go back to Dana Cohen with Banc of America Securities. Dana Cohen - Banc of America Securities: Karen, can you hear me now? Karen M. Hoguet: I can, thanks, Dana. Dana Cohen - Banc of America Securities: Okay, great. A couple of questions; the tax rate benefit, was that $0.02? Karen M. Hoguet: I believe it is. I actually didn’t calculate it but yes. Dana Cohen - Banc of America Securities: Okay, just -- because I couldn’t get to net income. Karen M. Hoguet: I mean, the key with the tax settlement though is that’s going to be an ongoing kind of issues every quarter and when we give you guidance for the tax rate for the year, that was included in there. Dana Cohen - Banc of America Securities: Yeah, just it’s pretty material this quarter just because it’s a small quarter, so -- Karen M. Hoguet: Absolutely. Dana Cohen - Banc of America Securities: And then just help us think a little bit more on the SG&A because all the things you are talking about as to why SG&A dollars will be up in the subsequent quarters sort of were true for the first quarter too, so rate of change, what’s really different from first to second quarter so that dollars go from being down to up? Karen M. Hoguet: Well again, I was giving guidance for the remainder of the year, not just the second quarter. Depreciation is not favorable in the back half of the year and also the investment in the direct businesses increases as the year goes on in dollars because of the sales, so that’s a bigger factor when you are looking only at dollars. Dana Cohen - Banc of America Securities: And so those would be the primary deltas as you move through the year? Karen M. Hoguet: Yeah, and there’s lots of little things. I mean, I think you all sometimes lose sight of the amount of detail that goes into an SG&A number but there’s lots of items in there. But the biggest deltas would be those. Dana Cohen - Banc of America Securities: And just in terms of first quarter numbers, operating profit excluding all the items down $68 million, and it’s all at the gross margin level. Was there any major variances by division or is it similar to what you said in terms of the comp trends? Karen M. Hoguet: Again, as you know, this business is very dependent on sales and frankly, that’s why we were pleased with our minus 2.6, because that does bode better for the remainder of the year, as you think about that relative to our peer group. So the differences I margin would vary typically as sales do. Dana Cohen - Banc of America Securities: Okay, great. Thank you.

We’ll go next to Todd Duvick with Banc of America Securities. Todd Duvick - Banc of America Securities: Good morning, Karen. A quick question for you on the cash flow statement, a significant turnabout from year ago and it looks like a big item was in the increase in accounts payable, almost a $450 million variance year over year. Can you just talk about maybe some of the terms that you are working with in terms of your vendors and how that might have changed, or is there something else that is going on in the -- Karen M. Hoguet: It has not -- the terms with the vendors have not changed at all. To some degree, it has to do with receipts in the first quarter this year versus last year, because it’s a function of where were payables at year-end and where are payables at the end of April, so it’s sort of both pieces of that but there have been no changes in terms. Todd Duvick - Banc of America Securities: Okay and I guess going forward, can you just give us a little guidance in terms of if you expect any other major variances in cash flow or how you expect cash flow to hold up compared to a year ago? Karen M. Hoguet: We have not given guidance on cash flow. Todd Duvick - Banc of America Securities: Okay, and then finally with respect to the debt refinancing that you mentioned earlier, I assume that you could come opportunistically at any time -- are you planning to tap the debt capital markets or refinance with commercial paper closer to time? Karen M. Hoguet: Well, the issue on refinancing would be the debt capital markets. And again, I don’t know that we will or won’t do that but that’s what I meant by that statement. Todd Duvick - Banc of America Securities: Okay, very good. Thank you.

We’ll go next to Steve Kernkraut with Berman Capital. Steve Kernkraut - Berman Capital: Just a quick question in terms of your inventory position; you ended inventory down 4% but I’m assuming that you got it much more balanced, you got rid of a lot of the women’s merchandise, the women’s apparel merchandise that you needed to, so as we go forward in the year, where you are seeing you want to get inventory in balance with sales, we should be expecting inventory to be down in the mid-single-digits on a continued basis over these next few quarters, or is there going to be an increase because of the consolidation effect? Karen M. Hoguet: There should not be an increase. I don’t have the forecast in front of me, Steve, but I would -- there should not be an increase. Steve Kernkraut - Berman Capital: Okay, there should not be an increase due to that? Karen M. Hoguet: Right. Steve Kernkraut - Berman Capital: Okay, and could you just comment, because you said textiles, home textiles weren’t doing that well. Could you kind of talk about how some of the exclusive brands that you brought in, the Martha Stewart line, the new Tommy Hilfiger line, how those are doing in the stores? Karen M. Hoguet: Martha Stewart is actually doing very well and obviously we learned through the fall, making it even better for this year and we feel very good about that product. And while with Tommy it’s still early, it’s going very well even in the weaker apparel market. Steve Kernkraut - Berman Capital: Okay, okay. Thanks very much.

We’ll go next to John Patrick Walsh with Wachovia. John Patrick Walsh - Wachovia: Good morning, Karen. I just wanted to know, historically you guys used to finance your working capital builds through CP and I’m wondering as you look out towards the third quarter this year what your plans are going to be for financing that. Should we look for you to draw down your revolver or maybe potentially do a bigger, more permanent financing in concert with the other debt that’s coming due? Karen M. Hoguet: I think the key thing is, I mean, there’s a short period of time where we will have a higher financing need, as you are alluding to. And to the degree there is A3P3 commercial paper, we might access that but clearly we have the working capital facility exactly for this reason, so there is going to be plenty of liquidity and haven’t quite sorted out what we will do because we will have to judge market conditions at that time. John Patrick Walsh - Wachovia: Right. And then also, as you are looking at your various stores, obviously you have some that are performing better than average, some below average. I’m just wondering in the current environment, is it exacerbating the under-performance of some of your under-performing stores and how that might impact you in terms of thinking about pruning some of the under-performing stores? Karen M. Hoguet: I think the key thing is we are constantly looking at our under-performing stores, both for ones that should be closed and others that we think we can improve. So there is really nothing new with that. We’ll look at the results as we get through the year and see. We’ve been pretty disciplined about closing under-performing stores though, so I don’t expect -- there’s been a rumor circulating that we are going to announce a major store closing program and I don’t envision that. John Patrick Walsh - Wachovia: Okay. Thank you very much.

We’ll go next to David Glick with Buckingham Research Group. David Glick - Buckingham Research Group: Good morning, Karen. I was wondering if you could give us some additional color on the division consolidation process. Clearly you got through the first quarter in great shape. I presume the systems have rolled over. I’m just wondering if you can give us some more color on that, the steps you’ve taken to mitigate the disruption in the divisions that are now going to be managing a lot more stores, and also how the new planning and allocation systems are rolling out. Karen M. Hoguet: I think the key thing is the consolidations have gone well. We consolidated the systems for all three divisions last weekend and our systems group working with the divisions did a fabulous job with no glitches. So we feel very good about that and from a people perspective, the organizations, the new organizations have been put together and as I said, almost all of the jobs are filled already with internal, high quality talent, so we are feeling very good about that piece of it as well. The key to mitigating any disruption risk really gets to the My Macy's structure and we are feeling good that we will be able to mitigate any disruption there. David Glick - Buckingham Research Group: Great. Thanks a lot. Just one follow-up question; as you get through the second quarter, you are starting to come up against the time period last year where you reversed course a little bit in terms of restored some coupon days that you had been planning on cutting, and I’m wondering how you think about your comparisons going forward, since we are now coming up against that time period a year ago. Karen M. Hoguet: Well, there is no change in the promotions this year, so I don’t know that that is going to impact us. David Glick - Buckingham Research Group: Okay, great. Thanks a lot, Karen. Good luck.

We’ll go next to Dana Telsey with Telsey Advisory Group. Dana Telsey - Telsey Advisory Group: Good morning, Karen. Can you talk a little bit about the private label program? Martha Stewart is successful and I believe it’s 19% of the business -- where do you see that going? And you just made an announcement last week about international opportunities, what your thoughts are there. And just lastly from the real estate perspective of remodels and how that’s progressing. Thank you. Karen M. Hoguet: In terms of private brands, as I had mentioned earlier they are doing well and it was 19% of the business last year. As I answered a question a few minutes ago on Martha, that continues to perform very well. That’s not a private brand. It’s what we call an exclusive but also doing very well. In terms of the international announcement, as you might imagine we get numerous inbound inquiries about international expansion opportunities and we’ve taken Dan Edelman, who is an extraordinarily experienced Macy's executive, to spend full time just studying the opportunities for both Bloomingdale’s and Macy's. This is really so that frankly Kerry, me, others will spend less time on this and allow Dan to really learn. It doesn’t mean I expect any significant international announcements soon. Our focus right now is entirely on building the comp store sales in this country but we would be remiss not to take advantage of an opportunity international four, five years down the road. Dana Telsey - Telsey Advisory Group: Thank you. Karen M. Hoguet: And your last question I’m not sure I understand, related to remodels? Dana Telsey - Telsey Advisory Group: Real estate -- how are the store remodels going? I think half of your $500 million is being spent on remodels? How many more stores do you need to do on the remodels and what is the -- are you getting the expected sales benefit, even though the economy is not great? Are you seeing any expected sales benefits from the remodels? Karen M. Hoguet: The remodels will be an ongoing program forever and ever and ever. We just have to constantly reallocate space to fit trends, make the stores look better, fresher, et cetera. So that will continue forever. And at least through last year, the returns we were getting was consistent with what we had expected when we approved the capital. We tend to do that once a year so I haven’t looked at it over the last couple of months, but I suspect those stores continue to do just fine. Dana Telsey - Telsey Advisory Group: Thank you.

We’ll go next to Wayne Hood with BMO Capital. Wayne Hood - BMO Capital Markets: Good morning, Karen. A couple of things -- you mentioned that early May, sales had started off pretty well, which would lead you to be a little bit more optimistic but at the same time looking at the circulars and so on, you’ve got some pretty steep markdowns in entire stocks and collections and so on, so I’m just wondering -- it’s better but there’s an expense of doing that right now, so is it really better without those promotions or how should I think about those? Karen M. Hoguet: The promotions are comparable to a year ago. Wayne Hood - BMO Capital Markets: So you were 40% to 60% off on entire collections -- Karen M. Hoguet: Whatever you are seeing, there is really not a big difference, and as you know, we are aggressive about clearing what’s not selling. I mean, the choice is to have old inventory, so you frankly have no choice but to get rid of the goods. But I think we are managing it well and not adding promotions. We are getting the sales without that. Wayne Hood - BMO Capital Markets: Okay. Second question comes back to the financing piece. Would you consider doing a bigger deal during the summer and pulling forward some of the maturities that are coming due next year in light of that rates may be higher next year, or will you just do the refinancing piece that you’ve got due this year and not pull any forward? Karen M. Hoguet: I can’t comment. Obviously we’re cognizant of the future refinancing needs too and so we’ll look at market opportunities and decide what to do. Wayne Hood - BMO Capital Markets: Okay. My last question relates back to Liz’s question about credit -- in light of the problems that the credit card providers are experiencing in Florida and California, they’ve begun to tighten underwriting there, you know, borrowing limits and so on. And you have such a big exposure there -- to what extent Citigroup’s possible tightening in those markets would slow sales growth for you for those accounts? Karen M. Hoguet: There will clearly be actions taken that may, for example, reduce the approval rate slightly, but at this point we do not see that as having a risk to the sales line. Wayne Hood - BMO Capital Markets: Is the assumption that the default ratios and delinquency ratios would peak in the back-half of the year? Karen M. Hoguet: I believe so. Wayne Hood - BMO Capital Markets: Okay. That’s all for me. Thanks, Karen.

We’ll go next to Eric Miller with Lehman Brothers. Eric Miller - Lehman Brothers: Good morning. Thank you, Karen. My questions were actually already answered around the funding strategy. Thank you.

We’ll go next to Uta Werner with Bernstein. Uta Werner - Sanford Bernstein: Good morning, Karen. I was wondering if you have any expectations on the tax rebate checks and to what extent you might see a benefit later in the year? Karen M. Hoguet: We don’t have any expectations for seeing a benefit. We would like to but realistically, I don’t think we are going to see a big percentage of those checks. Uta Werner - Sanford Bernstein: Okay. You mentioned earlier that you had a conference with your 750 key vendors. In this tough environment, what’s your assessment of the health of these vendors? And to the extent that you will be able to work with them comfortably through the rest of the year as the economic environment continues to be tough? Karen M. Hoguet: We have confidence that we will be able to work with the vendors, so I don’t -- that’s not a concern of mine. Uta Werner - Sanford Bernstein: Okay. Thank you very much, Karen.

We’ll go next to [Kai Yin] with New York Life. Kai Yin - New York Life: Thanks. Pretty much all of my questions have been answered. Thanks.

(Operator Instructions) We’ll go next to Michael Exstein with Credit Suisse. Michael Exstein - Credit Suisse: Good morning. A couple of quick questions for you -- are you seeing any change in shopping patterns in terms of days of the week, or anything else like that? Number one -- number two, several of your competitors have had to deal with inventories in a slightly more delayed fashion than you all, and I’m wondering what you are seeing competitively out there. And finally, following up on some of those real estate questions, the four stores that you announced in the Southwest, are there going to be any offsetting closings to those or are you just bringing the net exposure to that area up? Thank you. Karen M. Hoguet: In terms of changes in shopping patterns, Michael, I have not heard that we’ve experienced anything there, so I don’t know but I’ve not heard that. In terms of our competitors dealing with inventories, we have not see that that’s had an impact on us. Typically when a retailer gets over-inventoried and starts taking markdowns, that doesn’t have a big impact on us, so I’m not too concerned. And in terms of the stores in the Northwest, those are incremental additions.

We’ll go next to Charles Grom with J.P. Morgan. Charles Grom - J.P. Morgan: Thanks. Karen, earlier you alluded to how you expect gross profit margins in the rest of the year to improve more so than what you did in the first quarter. Does that mean you expect GPM to be up or just perform better than the first quarter? Karen M. Hoguet: What we said is, and again, this relates to sales trend, but we would hope that they would be flattish to up slightly. Charles Grom - J.P. Morgan: So overall basis points up or flat slightly, you are saying? Karen M. Hoguet: That’s what I said. And that’s related thought to sales trends, so the two are linked. Charles Grom - J.P. Morgan: Okay, so if you come in closer to the high end of the comp range than we would expect GPM to be up? Karen M. Hoguet: I’m not going to be that specific. Charles Grom - J.P. Morgan: Okay, and then I was wondering if you would just give us a little bit of sense for how Bloomy’s performed in the quarter, given what we are hearing from some of the other high-end luxury retailers in terms of comps? Karen M. Hoguet: Like the other high-end retailers, Bloomingdale’s had a tougher quarter than they had had -- still doing better than Macy's but worse than they had been doing. Charles Grom - J.P. Morgan: Okay, fair enough. And then last question; it was interesting that you guys -- I believe like August started calling out home as a much better area, so this quarter it was mixed. I’m wondering if is it because you are facing some tougher compares or if there was some product miscues or if it’s just some general softness from some of the discretionary categories? Karen M. Hoguet: I think big ticket home continued to be strong, particularly mattresses. And in the small ticket areas, I said housewares was very strong. Textiles was weaker, so I would still say in total home was okay. Charles Grom - J.P. Morgan: Okay. Thanks.

We’ll go next to Steve [Cirro] with Conning Asset Management. Steve Cirro - Conning Asset Management: The stores you plan to open this year, will they be owned or leased? Karen M. Hoguet: Those are not stores that we are opening the ones that were announced yesterday. Those will be opened in future years. Steve Cirro - Conning Asset Management: But just any new facilities you are opening this year? Karen M. Hoguet: You know something, I don’t know the answer to that, which are owned and which are -- I suspect they are all owned but I don’t know that for sure. Steve Cirro - Conning Asset Management: Is a sale lease-back transaction something you would consider as a way of raising financing? Karen M. Hoguet: We’d consider anything, except usually those are not beneficial to the company from a financing perspective. Steve Cirro - Conning Asset Management: Okay, thanks.

(Operator Instructions) We’ll go next to Jack [Darfick] with [Holden]. Jack Treatize - Holden: Thank you. It’s Jack [Treatize]. I’m wondering if you could comment -- you mentioned your private label brands have been performing better than most of the other, most of the vendors. Was that a full price sell-through or was that at markdown? Karen M. Hoguet: It’s yes and yes. I mean, it’s a combination. Jack Treatize - Holden: Was that at first mark-through or second markdown? Karen M. Hoguet: Both. Jack Treatize - Holden: And if you can comment about any future, at least in this fiscal year, any future consolidation costs or any future restructuring charges you can foresee? Karen M. Hoguet: Well, we’ve talked about the fact that we are going to have $150 million this year, of which $87 million has been booked, so the remainder will be booked over the next couple of quarters. Jack Treatize - Holden: Okay. Thank you.

We’ll go next to Christine Augustine with Bear Stearns. Christine Augustine - Bear Stearns: Karen, on the My Macy's and the divisional consolidation and this whole new structure, how long will you, do you think at this point you will monitor it before potentially adding it to the entire chain? Karen M. Hoguet: I don’t know, Christine. One of the issues is it will take until early next year for the new planning structures to have an impact on the assortments. So we’ll just have to see as we go. Christine Augustine - Bear Stearns: Okay, so you probably -- I mean, earliest maybe 2010, right? Because you’ve got to get through all of ’09, I would think. Karen M. Hoguet: You know, I can’t comment. We’ll just have to see. That’s the logical answer but we may get a quick win sooner and feel more optimistic. Christine Augustine - Bear Stearns: And then, I can follow-up with Susan on this but I’m just -- I know on your site you’ve got your store count and footage as of March 1. I’m just wondering if there’s any kind of -- if anything else happened in the rest of the quarter for the store count and the footage. Karen M. Hoguet: I don’t think so but I’ll have Susan call you to be sure. Christine Augustine - Bear Stearns: Okay. I can follow-up with her on that. Thank you. Karen M. Hoguet: You bet.

(Operator Instructions) We’ll go to Mark Flanagan with Wellington. Mark Flanagan - Wellington: Karen, going back to the financing issues for a minute, could you just talk about what your own goals are from a ratings standpoint? You’ve seen some migration down. And then related to that, any strategies or thoughts you might have in terms of improving your access to the debt financing markets over time in terms of guidance you can give on credit metrics, et cetera? Karen M. Hoguet: I think the key thing is, as you know, being an investment grade company is very important to us and last year when we did the big stock buy-back announcement, we had actually worked with the agencies in advance to make sure that we would have a triple B rating, so that were there to be an economic downturn, we would be able to be downgraded a notch and still be investment grade. But nothing has changed in terms of our desired ratings. We like the triple B territory, so that again if something happens like it’s happening this year, we can sustain a downgrade and still be investment grade. And the key in terms of credit metrics is to achieve the ratios that would allow that to happen. Mark Flanagan - Wellington: And are you willing to provide what you think those are? Karen M. Hoguet: Well, I mean again, we can talk about what Moody’s and S&P and the specific adjustments they make, et cetera, et cetera, but we could do that at some point. Again, if we can achieve our stated objectives of the 2% to 3% comp increase with the EBITDA rates in the 14% to 15% range, every credit ratio will fall into play. Mark Flanagan - Wellington: Thank you.

We’ll go to Michelle Clark with Morgan Stanley. Analyst for Michelle Clark - Morgan Stanley: Hey, Karen. It’s actually [Chi Li] calling for Michelle. A clarification question -- when the guidance for FY08 was provided, I believe there was the expectation that buy-backs would resume in 2008. Can you give us a sense of what positive impact you had embedded into that guidance from buy-backs? Karen M. Hoguet: I can’t. I mean, you know, that’s just one of the factors that was considered then. Analyst for Michelle Clark - Morgan Stanley: Okay. Thank you.

And with no other questions, I would like to turn the call back to Ms. Hoguet for any additional or closing comments. Karen M. Hoguet: Great, well, thank you all for your interest in Macy's and we look forward to talking to you as we continue through the year. Take care.

That does conclude today’s call. Again, thank you for your participation. Have a good day.