Karen M. Hoguet – Chief Financial Officer & Executive Vice President

Charles Grom – J. P. Morgan Lizabeth Dunn – Thomas Weisel Partners Michelle Clark – Morgan Stanley Lorraine Maikis – Bank of America Merrill Lynch Robert Drbual – Barclays Capital Theresa Donohue – Neuberger Berman Jeffrey Stein – Soleil-Stein Research, LLC. Bernard Sosnick – Gilford Securities, Inc. [Uti Verner – Sanford Bernstein] Dana Telsey – Telsey Advisory Group [Lance Potanza – Knighthead Capital Management] Todd Duvick – Bank of America Deborah Weinswig – Citigroup Andrew Berg – Post Advisory Group Adrianne Shapira – Goldman Sachs Christine Chen – Needham & Company David Glick – Buckingham Research Group Rob Wilson – Tiburon Research Mary Gilbert – Imperial Capital Leah Hartman – CRT Capital Holdings, LLC [Mike Suregass – Long Acre]

Welcome to Macy’s, Inc. fourth quarter earnings release call. This call is being recorded. I’d now like to turn the call over to your host Ms. Karen Hoguet. Karen M. Hoguet: Welcome to the regularly scheduled Macy’s 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 reconciliation 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 risk specified in the company’s most recently filed Form 10K and Form 10Q. The economic deterioration that accelerated starting in mid September led to depressed results in the fourth quarter and for 2008 as a whole. But, given that environment over which we have no control we were pleased with our results. I’d focus on two particular accomplishments. First, our comp store sales growth exceeded that of our peers in the fourth quarter and in fact consistently through the year. This indicates to us that our strategies are resonating with the customer. Second, we were able to conserve cash throughout the year such that we ended the year with more cash on our balance sheet than we had planned at this time last year. Although our sales were well below our plan we reduced capital spending, expense and inventory all of which contributed to our strong cash flow. We feel good about that accomplishment. This morning I will take you through some of the details of our fourth quarter performance and our annual cash flow. I will also fill in some of the key assumptions behind our 2009 guidance. The guidance itself has not changed since the announcements we made on February 2nd. Sales in the fourth quarter were $7.9 billion down 7% on a comp store basis. We were pleased in the quarter with the relatively strong performance in the My Macy’s pilot market. While absolutely results were not strong the performance of these stores relative to the legacy doors improved significantly in the fourth quarter. In the first half of the year the My Macy’s pilot regions performed five points worse than our other stores but in the fourth quarter the My Macy’s stores performed 1.5 points better. That’s a significant trend change. As we discussed on February 2nd we were encouraged enough by the performance in the My Macy’s district that we are now rolling it out to all of Macy’s. We also hit strong performance on the Internet with a 24% fourth quarter increase. We are see terrific synergy between the Internet and our stores. Customers shop in stores and then buy on line or the reverse. Or, the buy online and return in the stores and do other shopping while they are there. Or, if they can’t find what they want in the store and we order it online for the customer. The small tight channel integration is going to continue to help the company has we go forward. On the negative side in the quarter we saw a significant weakening of trend at Bloomingdale’s and in New York City we saw a decline in trend for both Bloomingdale’s and for Macy’s. For the quarter, our strongest families of business were women’s suits, fashion jewelry, cold weather accessories, shoes and house wares. These are all categories of what I would call practical merchandise that’s generally driven by strong value propositions and affordable newness. The weakest performing categories were those with more discretionary luxury assortments including bridge sportswear, handbags, watches, table top, Christmas trim, luggage, furniture and fine jewelry. Our average unit retail was down 2% in the fourth quarter although it was flat to the fall season and up 2% for the full year. Gross margin in the fourth quarter was 39.3% down 230 basis points below last year. We took significantly more markdowns than a year ago and our inventory shortage was disappointing. For the full year shortage was up only about 20 basis points but for the fourth quarter which is when our fiscal inventory is taken, it was up 50 basis points. But, we did end the year with comp store inventory down about 7.5% consistent with our sales trends as we head in to 2009. SG&A before consolidation and asset impairment charges in the quarter was $2,256,000,000 or 28.4% of sales. This is $26 million below last year but up 180 basis points as a rate. The rate increase is a function of the lower sales. Our expense dollars came in well below what we had anticipated. Expense was below expectations due to lower stock-based compensation and bonus expense, lower four wall expense due to lower sales and a gain associated with the proceeds from Hurricane Ike. These improvements were offset in part by lower credit income. We were pleased though with our ability to react as we did to the weak environment to reduce expenses as we were able to do given the sharp drop in sales in the back half of the year. Operating income excluding integration and asset impairment charges for the quarter was $647 million or 8.2% down from last year’s $1,222,000,000 or 14.2% of sales. In the quarter we booked $58 million of division consolidation expense and store closing costs and $161 million of asset impairment charges. The $58 million has three components, $17 million related to the My Macy’s consolidated expense from last year which brings the total for the year to $146 million compared to the anticipated $150 million. The $58 million also includes $11 million related to the cash part of the store closing costs announced in January and $30 million associated with the restructuring announcements of February 2nd of this year. The asset impairment charge has four components. First, $96 million associated with the write downs of properties who’s book values were not supported by the stores cash flows. Most of these are properties that we would like to close but can’t due to legal and other constraints. Second, it includes $40 million associated with the property write downs on the store closures announced in January. We also wrote down our 11.4% ownership of The Knot by $12 million to current market value and took a $13 million further impairment charge on the value of the Karen Scott and John Ashford trade names. Interest expense in the quarter was $143 million and tax expense was $194 million. Net income was $310 million and diluted earnings per share were $0.73 or $1.06 excluding the unusual items just discussed. This exceeds our most recent guidance of $1.00 to $1.02. These results of operation do not yet include a charge for goodwill impairment that is currently being determined and will be reflected in our 10K filed on April 1st. As you know, we have approximately $9.1 billion of goodwill no our balance sheet primarily related to the May Company acquisition. As a result of the deterioration in the economic environment and the resulting decline in our share price we are in the process of reviewing the goodwill for impairment. Due to the complexity of the process and the need to obtain third party appraisals of substantially all of the company’s assets we cannot make an accurate enough estimate at this time to book the write down. We are however, currently estimating the impairment charge will be between $4.5 and $5.5 billion or between $10 and $12.50 per diluted share. As I said, the financial statements in the 10K will reflect the reduction. Remember, that this goodwill impairment charge is expected to have no impact on our liquidity, on our covenants or our bond indenture. At year end we had $1.3 billion of cash on our balance sheet which is more than we expected and $723 million above a year ago. During the year our cash flow from operating activities less the cash used by investing activities was $1,088,000,000 as compared to $1,442,000,000 in 2007. Of the $354 million reduction, $255 million of that is due to the asset sales and the afterhours disposition related to the May Company acquisition. Excluding this, we produced cash flow before financing activities, only approximately $100 million less than a year ago which in a year like this we consider to be quite an accomplishment. Managing cash has been and will continue to be a top priority. So, let’s move on to 2009. Needless to say given the continued uncertainty and volatility it is hard to set specific goals. The key for us will be to perform the best we can given the environment. We are therefore focusing our efforts on producing comp store sales that continue to outperform our peers while at the same time aggressively managing our cash like we did in 2008. We are also putting a renewed focus on improving our return on investment. We will be working to pull the levers that will help us return this metric to historic levels. Some of those key levers on which we are focused include: one, increase sales and comparable stores; two, increase EBITDA as a percent of sales, we are still aiming to reach our 14% to 15% goal but given the economic environment it is going to take a while to do so; three, maximize the productivity of our capital spending; and four, continue to edit our assortments and improve inventory turnover. Like all retailers the recent sales declines have resulted in loss ground on our return and we need to work hard to become more productive again. It will take time but we do intend to get there. We made a series of announcements earlier this month that together are expected to help us achieve those objectives. Let me just quickly summarize these again. One, we are rolling out the My Macy’s structure designed to better localize our offering market-by-market and drive comp store sales. Two, we restructuring the company and cutting other expenses so that we can fund the My Macy’s roll out in dollars as well as in talent. The people part of this is very important because we believe the merchandising and planning talent that we were able to take last year from the divisions that were being consolidated help accelerate our success in the new My Macy’s district. Remember, even after these investments back in to the field we are saving expense of $400 million on an annual basis of which $250 million is expected to be experienced in 2009. This will involve $400 million of one-time costs of which $30 million was booked in 2008. Three, we cut capital spending to $450 million from the $900 million spent last year and our original budget of over $1 billion. Four, we’ve reduced our dividend saving approximately $138 million a year. Lastly, we completed a successful tender for $680 million of debt that was coming due later this year saving approximately $7 million in interest expense. We still expect to pay down the remaining $270 million when it matures in April and July. So, we feel good that we are managing as well as possible in this environment. Nevertheless with the economy and retail spending weak, the sales and earnings outlook is not what any of us would like. As you know, we are assuming a comp store sales decline of 6% to 8% in 2009 and given that sales assumption we are guiding to earnings per share on a diluted basis excluding the restructuring related costs of $0.40 to $0.55 per share. As we said before, we expect sales to be tougher in the spring season than in the fall. The good news is if sales are stronger which we believe is possible in the back half of the year, we are wired to convert a lot of that incremental volume straight to the bottom line. Assumed in the guidance is an increase in gross margin rate in the back half of the year due to the fact that we expect inventory to be at a level consistent with sales unlike in the fall of 2008. Apart from that opportunity, we think it will be tough to improve our gross margin rate given the economic environment and the resulting need to stimulate demand. For SG&A we are expecting lower dollars but due to the assumed sales drop, the rate will increase. We are assuming flattish interest expense for the year and depreciation and amortization approximately $50 million below 2008. Our tax rate is assumed to be approximately 37% although as you know it will vary quarter-to-quarter. As you think about cash flow projections for 2009 as opposed to the earnings, here are just a few of the key assumptions as of now. First, we mentioned the cap ex of $450 million. Two, the restructuring related costs of $400 million. While $30 million of this was booked in 2008 we are assuming all $400 million will go out in 2009 from a cash perspective. Three, pension contribution, in September 2009 we are expecting to make a $175 million payment although as the actuaries determine the liabilities as of 1/1/2009 combined with the impact of the poor returns last year this estimate could go up as high as approximately $250 million. In addition, this year we will be making quarterly contributions of $30 million per quarter. We are now required to make these quarterly contributions because we no longer have a credit balance based on our prior contributions above minimum requirements. The fourth assumption is that in 2009 we expect inventory to continue to be a source of cash as it has been in 2008. The bottom line is that given the assumed sales drop and the resulting EBTIDA drop in combination with the costs associated with the restructuring as well as the pension contribution, we expect lower cash flow from operating activities net of investing activities than in 2008 in spite of the much reduced capital spending. However, in 2010 and beyond when the restructuring costs are behind us we would expect to return to at least the 2008 levels of free cash generation. In closing, I think it’s important to note that Macy’s Inc. has been very aggressive and proactive in addressing the challenges in our business head on and doing what was necessary to prevent issues that could have become obstacles in the future. We’ve made many touch decisions, and taken what we consider to be bold actions to both drive sales, profitability and also to preserve cash. Given the opportunities we see ahead for both our Macy’s and our Bloomingdale’s brand, we see Macy’s Inc. better positioned than ever for the future. With that, I’ll take your questions.

(Operator Instruction) Your first question comes from Charles Grom – J. P. Morgan. Charles Grom – J. P. Morgan: On the $96 million charge for store impairment that you recorded, how many stores are in that bucket that you described earlier? Karen M. Hoguet: You know something, I don’t have the list in front of me. I don’t think it’s more than 10. It’s a relatively small number and as I said most of them are the ones that we’ve been talking about that we’d like to close but really can’t. Charles Grom – J. P. Morgan: Then on the cost savings that you outlined for the year can you breakdown how much you think that will flow through the P&L by quarter for this year just to help us model it out? Karen M. Hoguet: I don’t have it specifically by quarter but most if it – very little will happen in the first quarter and then it will start to feather in with more of it in the fall, third and fourth quarter than the second. Charles Grom – J. P. Morgan: The last question I had is just relative to your ’09 outlook can you just give me a sense for the EPS sensitivity for every one point comp move whether it’s up or down if you have that handy? Karen M. Hoguet: I don’t have it handy. The way we normally think about it is when sales drop below plan we try to save $0.15 of the dollar in expense and when sales increase above plan we try to add no more than $0.10 of the incremental sales. So, that may help you get a sense. Charles Grom – J. P. Morgan: My math I get to about $0.05 to $0.06 per one point comp move. Karen M. Hoguet: I don’t have that in front of me.

Your next question comes from Lizabeth Dunn – Thomas Weisel Partners. Lizabeth Dunn – Thomas Weisel Partners: I had a question about the deterioration you saw at Bloomingdale’s in the quarter. Is there any more detail you can share on that? Is there any kind of customer shopping partners that are standing out there? Are they similar to what you’re seeing at Macy’s? Karen M. Hoguet: Well, I think what’s happened at Bloomingdale’s is it is more like what you’re seeing with the upscale segment with what’s happening there. The good news is they continue to beat the upscale competition so they to relative to their peers Bloomingdale’s is doing well. I also think they’re getting hit by the weakness in New York City with obviously two major stores here at 59th Street and SoHo. Lizabeth Dunn – Thomas Weisel Partners: Is the inventory situation at Bloomingdale’s similar to where you’re positioned with Macy’s? Karen M. Hoguet: No, their inventory is down more as a result of their sales being weaker. Both Macy’s and Bloomingdale’s are well positioned in terms of their inventory relative to their sales trends. Lizabeth Dunn – Thomas Weisel Partners: Then finally, just a question on the mall environment overall with some mall operators shortening hours and a lot of vacancy, do you see this posing any additional risk to your business? Karen M. Hoguet: We are not hearing that as being a major issue right now. Obviously, weaker malls is not a good thing but we have not heard that as a major issue yet.

Your next question comes from Michelle Clark – Morgan Stanley. Michelle Clark – Morgan Stanley: The first question, in your comp estimate for the full year down 6% to 8% can you tell us what you’re assuming in terms of share gains from competitor store closures? Then the second question relates to credit and specifically what did you see in the fourth quarter in terms of penetration versus a year ago? Charge off and delinquency rates and the payment rate during the quarter? Karen M. Hoguet: In terms of we do expect a benefit from some of the store closures. I don’t have a specific number as to what that might be but obviously in any mall or market that we are in and there are store closures, we expect to get more than our share of that volume that’s freed up. Michelle Clark – Morgan Stanley: Is some of embedded in your guidance? Karen M. Hoguet: Yes. In terms of credit, in the fourth quarter we’ve continued to see an increase in usage of our card so the proprietary penetration went up significantly more than we had expected, about 190 basis points versus a year ago. But, like others with the credit business we’re clearly experiencing weaker trends in terms of delinquencies just like is prevalent throughout the industry today. Michelle Clark – Morgan Stanley: And the payment rate Karen, during the quarter? Karen M. Hoguet: You know something I don’t have that in front of me but I do know it is down from a year ago as it has been all year.

Your next question comes from Lorraine Maikis – Bank of America Merrill Lynch. Lorraine Maikis – Bank of America Merrill Lynch: Could you talk about your plans for private label in the context of My Macy’s? Do you expect that to increase or decrease as a proportion of your total store? Karen M. Hoguet: Last year private brand was about 19% of the store and I think we continue to look for opportunities where there are voids in the market so I think it’s early to be able to tell you if there’s any big opportunities but I know Tim Adams who is now running our private brand operation is working very closely with Jeff Gennette the new chief merchandising officer and Julie Greiner the new merchandise planning officer to see if there are more opportunities and I think we’ll know more six months from now as to whether there are more opportunities based on My Macy’s preferences. Lorraine Maikis – Bank of America Merrill Lynch: Then just to follow up, are you hearing from your customers that they want more entry price point products and do you expect to work with your vendors to provide those for them? Karen M. Hoguet: Honestly, what we’re finding is value is selling at different price points so I don’t think it’s so much the opening price points per say but obviously we’re trying to work with our vendors to get the most desirable assortments we can with the most value.

Your next question comes from Robert Drbual – Barclays Capital. Robert Drbual – Barclays Capital: I had some questions on the pension, can you give us at the end of the period the funded status? Exactly where it was in a percentage number for that? Karen M. Hoguet: The problem for that is it takes the actuaries until mid year to get to that funded status. As you know, we’re aiming to hit 80% but we won’t know until this summer, right before we have to make the September 15th payment what that number will be. Robert Drbual – Barclays Capital: Just from a clarification perspective I want to make sure I have this, are you saying that the pension contribution is between $175 to $250 plus four quarterly payments? Karen M. Hoguet: That is correct. Robert Drbual – Barclays Capital: As you look out a little bit further from the contribution perspective, for 2010 is there a way to think about that going forward for us? Karen M. Hoguet: Right now I’m focused on estimating 2009. My guess is we will be continuing to make contributions, will it be at this level, I don’t know. It obviously depends on what happens to the returns of the assets over the next year as well. Robert Drbual – Barclays Capital: Then just one final question, on the New York exposure is there a number that you would give us in terms of the percentage of your sales now that are generated from the New York City market? Karen M. Hoguet: I don’t know that percentage off hand Bob, sorry.

Your next question comes from Theresa Donohue – Neuberger Berman. Theresa Donohue – Neuberger Berman: A quick question for you, when you were talking about the performance of the already converted My Macy’s store you referenced a decline of over 5% relative to total stores in the first half reversing to a positive 1.5% spread. In the first half were those stores considered to have already been converted and have had the full benefit? Karen M. Hoguet: No, in the first half they had almost none. Remember we announced it this time a year ago and we were putting the new organization in place early second quarter.

Your next question comes from Jeffrey Stein – Soleil-Stein Research, LLC. Jeffrey Stein – Soleil-Stein Research, LLC.: I just want to make sure I understand on cost saves, you’re expecting $250 million of the $400 million to hit this year? Karen M. Hoguet: Correct. Plus, you’ve got the incremental $40 from last year. Jeffrey Stein – Soleil-Stein Research, LLC.: Can you talk about the new merchandise from the 230 or so pilot stores that were converted last year, is the merchandise coming in yet and are you seeing any signs of perhaps a further incremental lift? Karen M. Hoguet: It’s too early to judge it’s just been a couple of weeks in February so we’ll continue to update you as we go.

Your next question comes from Bernard Sosnick – Gilford Securities, Inc. Bernard Sosnick – Gilford Securities, Inc.: With regard to the goodwill write down, the asset impairment, the May stores were performing better closer to the Macy’s average as the year progressed. Can you give us a little bit of insight as to why the impairment charge is as large as it is likely to be? Karen M. Hoguet: I think, and I’ll try to do this simply, the way you determine step one of the goodwill charge is you projected out cash flows and discount them back. You then compare that value to the current market capitalization of the company and the difference is what’s called the premium between the two. The accountants are uncomfortable if that premium is too high. So, we’re limited to some degree because that premium is somewhat set and so therefore, you have a bigger write down than you might have expected because we’re only allowed to assume a premium of say 35% and given how depressed the stock price relative to what we believe the long term value of the assets is, you end up with a bigger write off. Bernard Sosnick – Gilford Securities, Inc.: So it’s the stock price. Karen M. Hoguet: It’s really the stock pricing driving it not the cash flows of the entity. Bernard Sosnick – Gilford Securities, Inc.: That being said, could you give us a little bit of a picture of what the former May stores look like relative to your expectations and Macy’s just so we have that? Karen M. Hoguet: We long ago stopped tracking that. I have no idea any more what’s a May store versus the Macy’s. That difference disappeared a long time ago and remember the goodwill is based on the total company not just May store performance.

Your next question comes from [Uti Verner – Sanford Bernstein]. [Uti Verner – Sanford Bernstein]: I have a question related to the malls that you’re in and I wondered to what extent you have been trying and/or successful in renegotiating some of the rents in the rented properties? And also, whether you are seeing landlord’s increasing common charges in the malls given that potentially some other tenants are falling out? Karen M. Hoguet: No, we have not seen an attempt to increase charges. Remember, we have long term agreements. Now, we have also not made a lot of progress in terms of reducing rent again, because of the long term agreements that we have. So, there are a few isolated cases but I would not say it’s been anything widespread. [Uti Verner – Sanford Bernstein]: Several of my clients have asked and so I am asking you, to what extent the deterioration in gross margin in the fourth quarter would have been a result of vendors being more reluctant to pay gross margin payments in the situations when you discount aggressively? And, to what extent that is a single of what’s ahead in ’09? Karen M. Hoguet: That really was not an issue. The issue is we took significantly more gross markdowns given the sharp decline in the sales in the fourth quarter and the inventory levels were not that low as we started the quarter. I can’t comment on every single vendor negotiation but we were very pleased with the partnership between Macy’s and our vendor partners as we got through the fourth quarter. [Uti Verner – Sanford Bernstein]: Finally, just a follow up on the goodwill, is there a scenario here where potentially the entire goodwill is written off and therefore taking all the equity of the balance sheet from a book value perspective? Karen M. Hoguet: I don’t think so. I think we’ve got a pretty good handle on the range it will be. [Uti Verner – Sanford Bernstein]: So this could be potentially the worse case, potentially better but not necessarily worse? Karen M. Hoguet: No, I think it should be within the range. I’ll learn more as we go remembering that we have to revalue every single asset in the Macy’s portfolio so there are some uncertainties but I think it should be within this range.

Your next question comes from Dana Telsey – Telsey Advisory Group. Dana Telsey – Telsey Advisory Group: Can you talk a little bit about the direct business and how the margin opportunities or structure how is that different or not compared to the retail business how it’s changing in this environment? Karen M. Hoguet: The direct business is really the same as the retail business. The truth is we manage it all as one so it’s really hard to give you any differences per say. Dana Telsey – Telsey Advisory Group: In terms of just vendors overall, anything different on timing of flows, price points of flows as you plan your business this year and in to next year? Karen M. Hoguet: Not that I’m aware of.

Your next question comes from [Lance Potanza – Knighthead Capital Management]. [Lance Potanza – Knighthead Capital Management]: I just have two, the first is can you give me a feel for how big New York City is in terms of percentages of revenue? Karen M. Hoguet: No, I’m sorry Bob had just asked that, I don’t have that on me. [Lance Potanza – Knighthead Capital Management]: I’ve been personally hearing anecdotes that the stores are too thinly staffed customers are leaving turned off. Have you been hearing the opposite of that or have you been hearing that? How do you gage that and is that something you are concerned about? Karen M. Hoguet: I’m always concerned about that if in fact it is happening and as sales have declined there’s always that risk. The only thing I can tell you is that we measure very carefully through customer response letters and feedbacks on websites and in 2008 it went up significantly from 2007 so at least the scores we would track seem to indicate that we’re doing okay. But, when you’ve got sales results that you’ve had and the result in expense cuts I do worry about the issue but it seems not to be as bad as what you’re implying.

Your next question comes from Todd Duvick – Bank of America. Todd Duvick – Bank of America: I appreciated the guidance you provided on cash flow and based on that it seems like you’re not going to have a material amount of free cash flows to buy back additional debt if that were an option. So, I guess what I’m wondering is you’ve pulled a lot of levers already in order to sure up the balance sheet and liquidity and maintain credit metrics, are there other levers that you have that you can pull such as asset divestitures or other things that I’m not seeing? Karen M. Hoguet: There really not a long list of major things that we could do. We could buy in more debt but most likely would not do that until after we get through our peak borrowing next November. Again, because given the uncertainty and the volatility in the environment we are conserving cash. So, even though we know there are some good deals to be had if we wanted to buy in now, chances are we are going to wait and see what happens with the environment.

Your next question comes from Deborah Weinswig – Citigroup. Deborah Weinswig – Citigroup: In terms of the [inaudible] relationship, we know it’s early days but could you please provide us an update there? Karen M. Hoguet: I think we continue to work on developing tests both in terms of how we communicate with customers but also further in to assortments and pricing and other issues as well. But, it’s just too early Deb to be more specific but as you said we’re very optimistic that it’s going to help us drive sales going forward. Deborah Weinswig – Citigroup: Secondly, we just heard from another retailer this morning about their precipitous decline in online sales in the fourth quarter which was definitely not your experience. Can you please share with us what you think is driving your strong online business? Karen M. Hoguet: You know, I don’t know honestly. I mean, we’re very pleased with it, I think the team working on Macys.com has done a terrific job of integrating it more and more with the store experience so I think that’s a piece of it. I think that the site looks better than ever, the assortments are sharp and were in stock. I have to believe that helps. But, I’m surprised. Deborah Weinswig – Citigroup: Last question obviously, a lot of focus in terms of expense reduction efforts, how should we think about your leverage point going forward? Karen M. Hoguet: Well, at this point I think we’re taking a larger chunk out this year but then once that comes out we’d be back to wanting comps of 1.5% or more before we could lever off sales.

Your next question comes from Andrew Berg – Post Advisory Group. Andrew Berg – Post Advisory Group: With respect to the restructuring costs and the $400 million, how much of that gets spent sort of 1Q versus 2Q? I assume that my the end of the second quarter it’s all spent? Karen M. Hoguet: Well, most of it is spent in the first half of the year but there will be some that continues in to Q3 and Q4 but it all should be spent this year. I don’t have a good estimate yet by quarter to even help you. Potentially looking at last year might help you a little bit. Andrew Berg – Post Advisory Group: On the cost for the pension you said there would be the $30 million per quarter in addition to the lump sum that may be in September? Karen M. Hoguet: Correct, the $175 to $250. Andrew Berg – Post Advisory Group: That’s all a cash flow item, none of that flows through the P&L? Karen M. Hoguet: That’s correct.

Your next question comes from Adrianne Shapira – Goldman Sachs. Adrianne Shapira – Goldman Sachs: Karen you had mentioned that you’re intensifying your returns focus and you were targeting getting back to 2008 levels in terms of free cash flow. Can you help us understand that that means for cap ex going forward? You have cap ex at about $450 million so what sort of normalized run rate would that imply? Karen M. Hoguet: That’s a very good question we are working very hard right now with the new team to really start almost zero based budgeting in terms of what the cap ex should be in 2010 and beyond. I don’t think we’ll get back anywhere close to the $1 billion level but it’s frankly premature to give you a number once we turn the spigot back on what that might be. Adrianne Shapira – Goldman Sachs: Then just a question, as you said you’re outperforming your peers with comps down 7. You had mentioned I think AUR down 2, does that imply traffic down 5? And, if that’s the case perhaps help us understand how you are achieving better traffic trends than your peers? Karen M. Hoguet: That was in the fall AUR was up 2% for the year as a whole. Flat for the fall and down in the fourth quarter. I think our assortments are compelling. I think the limited distribution merchandise and the brands that we offer both market brands and our own private brands are special and the customer recognizes not only the fact that it’s affordable fashion but it’s also a great value. I think our stores are doing a better job servicing the customer, our marketing has been very successful, the believe campaign in the fourth quarter hit unprecedented levels in terms of customer reaction and I think when you put it all together frankly it goes back to the four priorities that we’ve focused on for the last couple of years that really are paying off. Adrianne Shapira – Goldman Sachs: Then just lastly, you had mentioned you’re expecting sales to be tough in the spring season. We’re heading in to an Easter shift, any better color in terms of the near term how you would expect sales trends to flow in the near term? Karen M. Hoguet: Not really. There’s not a shift between quarters in terms of the sales so we’ll just have to see how it goes?

Your next question comes from Christine Chen – Needham & Company. Christine Chen – Needham & Company: I wanted to see within women’s are there certain product categories that are performing better than others? Is contemporary performing better than traditional misses? Karen M. Hoguet: I think what we have said, at least for the fourth quarter is women’s suites had done well. I think more traditional looks are doing well but there’s success within contemporary also. Christine Chen – Needham & Company: Can you comment just on how premium denim is doing and denim as a category? Karen M. Hoguet: No.

Your next question comes from David Glick – Buckingham Research Group. David Glick – Buckingham Research Group: Just a follow up question on My Macy’s, in your view what will be the first season where you’ll have the full impact of the My Macy’s buy where the districts will be able to roll up their plans on the infinity system and the merchants will be able to utilize them fully in front of their buys. Karen M. Hoguet: I think if we look a year ago we began to see some progress in the fourth quarter so I’m hoping to see that but it will really be spring of 2010 before we can make a major impact in terms of merchandise. David Glick – Buckingham Research Group: That’s why you’re viewing the flow of comps this year similarly in terms of how the My Macy’s districts performed and the pilot last year and trying to use the same thought process that the merchants in the My Macy’s structure won’t have as much of an impact until later in the year? Karen M. Hoguet: Correct. David Glick – Buckingham Research Group: Just to follow up on gross margin your inventory seemed to be much more in line, you’re expecting second half improvements should we think of the first half as flattish in your view or perhaps down modestly in the second half up modestly? Any color on that would be helpful. Karen M. Hoguet: I think David obviously we don’t know in this environment. My guess is there will be a little more pressure in Q1 than in Q2 but it’s just too hard to predict right now.

Your next question comes from Rob Wilson – Tiburon Research. Rob Wilson – Tiburon Research: Karen you’ve had about I guess to my count is $1.4 billion of restructuring charges since 2005 and we never really get a sense for what these costs are, what major buckets they fall in to. Can you give us some sense maybe going forward where the $400 million in ’09 is? Karen M. Hoguet: Sure. The major costs relate to the people and it’s severance and relocation. Beyond that it’s systems integration, some things like that. But, most of it relates to people related costs. Rob Wilson – Tiburon Research: So no major like lease exit costs that would be a major component of that? Karen M. Hoguet: No. Rob Wilson – Tiburon Research: One other question, is there a shift in marketing dollars in 2009 versus 2008 greater or lower than last year? Karen M. Hoguet: Well, given the sales decline we will most likely spend fewer dollars but obviously the rate will go up.

Your next question comes from Mary Gilbert – Imperial Capital. Mary Gilbert – Imperial Capital: I wondered if you could give us a little bit of guidance on the inventory reduction or the net cash that you expect to generate from working capital should we use the commensurate, the decline in revenues you’re giving us the kind of 6% to 8% decline? Karen M. Hoguet: It’s hard to give you that answer today because it will relate to what we are expecting for the sales trend in Spring 2010 because you’ll want to end the year with the right inventory levels there. So, it’s hard to give you a precise estimate right now but I would say that we’d want to end the year close to what we’re expecting for 2010 which obviously I don’t know yet. Mary Gilbert – Imperial Capital: So in other words when we look at the inventory we may not necessarily see a decline, is that fair to say? Karen M. Hoguet: Year-over-year you should see a decline. Mary Gilbert – Imperial Capital: It’s just the magnitude of the decline? Karen M. Hoguet: Correct. Mary Gilbert – Imperial Capital: Then how should we look at cash taxes? Karen M. Hoguet: That’s a hard one to help you with in terms of predicting. I don’t have a good estimate in front of me. I don’t know the answer to that. Mary Gilbert – Imperial Capital: Then also on the timing of the rolling out on My Macy’s, is that rolling out immediately and so that all of the regions will have that in place before the holiday season at the end of the year, is that correct? Karen M. Hoguet: What will happen is we’re in the process right now of restructuring and building the new organization here in New York for the merchandising, marketing, etc. and finance and HR in New York and Cincinnati. So, that’s all going on right now as well as beginning to fill the district jobs that we hope will be filled early in the second quarter like we had done last year. So, hopefully that will be in place by the end of the second quarter at the latest. Mary Gilbert – Imperial Capital: Then finally, with regard to the comp store sales trends, at the stores comp stores are running down 6% to 8%, is that correct? Karen M. Hoguet: We expect comp store sales to be down 6% to 8%. Mary Gilbert – Imperial Capital: At the stores? Karen M. Hoguet: I’m not sure what you mean by at the stores? Mary Gilbert – Imperial Capital: I mean it doesn’t include online? Karen M. Hoguet: It does include it because again, that’s all being run as one business. Mary Gilbert – Imperial Capital: So you don’t separate what the trends are in the stores? Karen M. Hoguet: Correct. Mary Gilbert – Imperial Capital: Than can you give us an idea of the magnitude of the declines at Bloomingdale’s versus Macy’s? Karen M. Hoguet: No.

Your next question comes from Leah Hartman – CRT Capital Holdings, LLC. Leah Hartman – CRT Capital Holdings, LLC: Just to follow up on Mary’s question about cash taxes, do you have that for the fourth quarter or not yet? Karen M. Hoguet: Well, you see the cash flow so that’s all the information that we’ve provided. Leah Hartman – CRT Capital Holdings, LLC: The cash rent expense for the year? Karen M. Hoguet: I don’t have that yet. Leah Hartman – CRT Capital Holdings, LLC: Looking rather far out just on the timing of site selection as we see certain malls and store closures from competitors as you look at a new site, once you make a site selection how long does it take to then open a store if it’s a previously built mall? Karen M. Hoguet: You’re talking about moving in to a competitor’s store? Leah Hartman – CRT Capital Holdings, LLC: Moving in to a new market. Karen M. Hoguet: With a store we have to build or a store that’s already there? Leah Hartman – CRT Capital Holdings, LLC: A store that’s already built. Karen M. Hoguet: So when a competitor closes we move in? Leah Hartman – CRT Capital Holdings, LLC: Yes. Karen M. Hoguet: It depends on the condition of the store. There’s no one answer.

Your next question comes from [Mike Suregass – Long Acre]. [Mike Suregass – Long Acre]: Do you know what kind of add backs are added back in your covenant calculation of your adjusted net debt to EBITDA? Karen M. Hoguet: You mean what’s added back in to EBITDA? [Mike Suregass – Long Acre]: Yes. Karen M. Hoguet: What doesn’t count are the restructuring starting in this quarter up to $500 million. [Mike Suregass – Long Acre]: And that’s beginning this quarter? Karen M. Hoguet: Beginning in January after the deal became effective and then also any non-cash asset impairment charges or write offs.

Your next question comes from Rob Wilson – Tiburon Research. Rob Wilson – Tiburon Research: Karen I believe on the last conference call a couple of weeks ago you said you had no cash flow negative stores going forward. Is that still the case? Karen M. Hoguet: No, we said we had no cash flow negative stores that we would be able to close. There are a few that are cash flow negative but we can’t close them. Rob Wilson – Tiburon Research: Also, depreciation expense, you said that’s going to be lower by $50 million. Why would that be this year? Karen M. Hoguet: Because the cap ex budget was lower last year and this year.

At this time we have no other questions. I’d like to turn the call back to Ms. Hoguet for any additional or closing comments. Karen M. Hoguet: Thank you and if you have any more questions let Susan or I know and we’ll do our best to provide answers. Thanks and have a good day.

That does conclude today’s call. Thank you again for participating. Have a good day.