ChuckCrovitz – Interim Chief Executive Officer NealGoldberg – President TaraPoseley – President, Disney Store SusanRiley – Executive Vice President, Finance and Administration RichardFlaks – Senior Vice President, Planning, Allocation and Information Technology AmyHauk – Senior Vice President, General Merchandise Manager, Disney Store JillKronenberg – Senior Vice President, General Merchandise Manager, The Children’sPlace HeatherAnthony – Senior Director, Investor Relations

JohnZolidis – Buckingham Research KimberlyGreenberger – Citigroup PaulaKalandiak – Broadpoint Capital AnnaAndreeva – JP Morgan MargaretWhitfield – Sterne Agee JohnMorris – Wachovia JanetKloppenberg – JJK Research DanaTelsey – Telsey Advisory Group RobWilson – Tiburon Research Group

Good day,ladies and gentlemen, and welcome to The Children’s Place third quarterearnings call. At this time I will now turn the call over to Ms. HeatherAnthony. Please go ahead.

Thank you,Curtis, and good morning, everyone. Thanks for joining us today for a review ofour preliminary fiscal 2007 third quarter financial results. Joining us on thismorning’s call is Chuck Crovitz, Interim Chief Executive Officer, NeilGoldberg, President, Tara Poseley, President of Disney Store, and Sue Riley, ExecutiveVice President of Finance and Administration. Also on handto answer your questions at the end of our prepared remarks are Richard Flaks,Senior Vice President of Planning, Allocation and IT, Amy Hauk, SVP GeneralMerchandise Manager for Disney Store, and Jill Kronenberg, SVP GeneralMerchandise Manager for The Children’s Place brand. Today Chuckwill provide, sorry, will review key priorities for the company, as well asnear term focus areas. Sue will cover our preliminary financials. Neal will reviewThe Children’s Place business. And Tara will discuss Disney Store. Before webegin I’d like to remind participants that any forward-looking remarks madetoday are subject to the safe harbour statement found in this morning’s pressrelease. After ourprepared remarks we’ll be able to take your questions. Given the volume of thecompany’s reporting results this morning we ask that, in the interest of time,you limit yourself to one question so that we can speak with as many participantsas possible. With that outof the way I’ll now turn the call over to Chuck. Chuck, please go ahead.

Good morning,everyone. Thank you for joining us. I’m very pleased to be with you today. Itgoes without saying that the third quarter was challenging on a variety oflevels and clearly we are disappointed with the overall results. Ourperformance primarily reflects lower than planned top line results andsignificant margin pressure as we work through our high inventory levels. Thatsaid, I can say with confidence that despite these near term pressures theunderlying business is strong and I believe there’s tremendous long-termopportunity for the company. Even thoughI’ve only spent a short time in my current role, I am impressed with thestrength and potential of both The Children’s Place and Disney Store brands, aswell as the level of commitment and passion from our associates. This team iscommitted to working together to turn around the business and to maximize thelong-term potential of the company. Everyone has pulled together and is workingtowards this common goal and I am confident that this will yield tangibleresults. As previouslydiscussed, my two highest priorities were, number one, conducting the fullreview of the company’s financial reports and working with our independentauditors to become current in our financial reporting. And number two,conducting an assessment of the operations and identify actions that thecompany can take quickly in order to improve results and better position the businessfor the long term. Turning firstto priority number one, getting current with our financial filings, we’ve madeprogress in completing our outstanding SEC financial reports. Because of theongoing delay we’ve requested an additional extension from NASDAQ, which hasbeen granted until January 9th of 2008. I can assure you that theentire team is working diligently to become current with our SEC filings andNASDAQ listing requirements within this time frame. As we’ve said previously,we have not found any material financial miss-statements during thisprocess. Turning nowto priority number two, assessing the operations and identifying near termactions to improve the business, we are conducting a deep dive into thebusiness. We are analyzing the operations and have listened to management andour associates. Through this process we’re identifying what we view as thecompany’s key strengths, weaknesses and opportunities, and we have put togethera short list of key areas. We will talk about these initiatives in more detailas the quarters progressed, but we’ve narrowed down the areas where we need acritical focus in order to turn around the business and improve our operatingand financial position. In the nearterm we will, number one, take a more conservative investment strategy as itpertains to our inventory buys. Given our lead times we will be able topartially affect the summer ’08 buys, however this effort will fully impactnext back-to-school season. Number two,reduce the number of new store openings in 2008 and reduce our level of capitalspending, which Sue will get into in more detail. And numberthree, identify ways to reduce our expense structure through streamliningoperations, driving process improvements, and generating efficiencies. We needto ensure that our cost structure appropriately reflects our value positioningin the market. I’m confidentthat these critical areas will better position the company for the long termand we look forward to updating you on these initiatives in the future. Before Iclose I want to tell you how pleased I am with the strong team that we havehere across both brands. Over the past couple of months I have met so manytalented, knowledgeable, and committed people at every level across the companyand they are determined to make improvements that we need to regain our growth,which gives me great confidence in the future. Furthermore,I’m delighted to report that we’ve recently filled a number of key seniorpositions. They each bring very relevant experience and we are proud of thefact that we’re attracting this calibre of talent to our business. Aspreviously announced, Pat Gray has been hired as the general counsel, RichParadise , as we announced this morning, has been hired as the SVP of Financeand will become our CF. And Melissa Bowden has joined us as the VP of RealEstate. Like us, they all see the potential here and we look forward to themany contributions they will make to the company. In addition,as you know, the board of directors has formed a committee and retained thesearch firm Herbert Mines to conduct an executive search for a permanent CEOand that process is under way. Before I turnthe call over to Sue let me reiterate that the company has a very bright futureand we are committed to keeping the company on a path of sustainable growth andprofitability. With that I’ll turn it over to Sue for a detailed review of thefinancials.

Thank you,Chuck, and good morning, everyone. Before I begin a discussion of our thirdquarter results I want to remind everyone that these results are preliminaryand may be subject to adjustments. Due to our previously announced restatement,we are not providing full comparative financial results and we are onlyproviding selected balance sheet data. For ease of comparison, any referencesmade today to last year’s numbers are as reported in last year’s third quarterpress release and are likely to change as a result of the restatement and theimpact of the decision to reverse the majority of our long term equitycompensation accrual into 2006. As such, any comparisons to last year as madetoday are likely to change. Therefore, we are providing preliminary net incomeresults today. Preliminarynet income for the third quarter was $11.8 million compared to net income of$38 million last year. On a preliminary per-share basis we earned $0.40 versusearnings per share of $1.26 last year. This year’s net income and earnings pershare results include approximately $2.3 million pre-tax or $0.05 per share inpreviously disclosed investigation fees and $4 million pre-tax or $0.09 a sharein severance expense. Last year’s net income and earnings per share resultsinclude approximately $3.7 million pre-tax or $0.08 per share in stock optioninvestigation related expenses. On a segmentbasis, The Children’s Place recorded a third quarter operating profit of $46.4million versus an operating profit of $78.5 million last year. The DisneyStore’s operating loss was $1.3 million compared to a $10.4 million operatingprofit last year. And shared services reported an operating loss of $25.5million, a 9% improvement compared to $27.9 million last year primarilyreflecting lower bonus, equity compensation, and legal expense versus lastyear. Consolidatednet sales for the third quarter increased 7% to $587.4 million from $550.4million last year. Third quarter sales were comprised of $429.4 million fromThe Children’s Place brand, an 8% increase over last year, and $158 millionfrom Disney Store, a 3% increase over last year. Consolidatedcomparable store sales increased 1% for the quarter reflecting a 4% increase incomparable store sales transactions partially offset by a 3% decrease inaverage transaction size. TheChildren’s Place brands comparable store sales increase 1% on top of a 15%increase last year. Substantial unit sales increases were partially offset bysignificant AUR decreases in the third quarter, particularly at The Children’sPlace. Comparable store sales for Disney Store were flat compared to lastyear’s 11% increase. Consolidatedgross profit dollars decreased 6% to $225.6 million. Consolidated gross margindecreased approximately $530 basis points to 38.4% primarily driven bysignificantly higher mark downs at those brands, as well as increaseddistribution costs. Sellinggeneral and administrative expense as a percentage of sales was 31.4%, whichrepresents approximately 180 basis points of D leverage last year. AS Imentioned, SG&A both this year and last year includes previously disclosedinvestigation fees and this year we had the added impact of severance expenserelated to our former CEO. Excluding these items from both periods, SG&Awas 30.3% in this year’s third quarter compared to 28.9% last year,representing approximately 140 basis points of D leverage versus last year. TheD leverage primarily reflects store payroll, Disney E-com expense that we didnot have last year, and increased supplies expense as we sold more units duringthe quarter this year than we did last year. Partially offsetting the Dleverage was lower bonus accrual and lower long-term equity compensationexpense this year versus last year. During thethird quarter we incurred $947,000 asset impairment charge reflecting fiveunderperforming Children’s Place stores. Depreciation and amortization expenseas a percentage to sales was 3.5%, which represents approximately 50 basispoints of D leverage, reflecting our increased store base, our new distributioncenter, and accelerated depreciation of our Mickey stores. Operatingprofit for the third quarter was $19.6 million compared to an operating profitof $61 million last year. Our effective tax rate was 37% in the third quarterversus 38.4% last year. The lower tax rate is due to the mix of where we aregenerating earnings between higher and lower tax jurisdictions. Moving on tothe balance sheet, we ended the third quarter with cash and short-terminvestments of $111.2 million compared to $147.3 million last year. Cashchanged primarily as a result of our currently being in a loss position versusan income position last year, higher capital spending, and our inventory bills.In addition, last year benefitted from approximately $27 million in proceedsfrom stock option exercises. We had $108.9million of borrowings on our credit facility at quarter end compared to zero borrowingslast year. Currently, most of our cash reserves are outside of the UnitedStates. We had no long term debt this year or last year. At this timewe are currently projecting to end the year with approximately $135 million incash and $65 million in borrowing. Our cash outlook is approximately $30million below our prior guidance and reflects the shortfall in earnings and ournot having yet completed our equipment financing. Moving downthe balance sheet, total consolidated inventory at cost was at 30% or 22% on asquare foot basis. At The Children’s Place inventory at cost was up 23% on asquare foot basis above our previous guidance due to higher merchandise intransit. Importantly, Children’s Place carry over inventory per square foot asa percentage to total is comparable to last year at approximately 3%. Disney Storeinventory at cost was also up 24% on square foot basis, below our previousguidance, reflecting lower inventory in transit. Excluding Disney Store E-com,inventory per square foot was up 12%, also below our previous guidance. DisneyStore’s carry over inventory per square foot as a percentage to total was 6%versus 4% last year. Lookingahead, assuming sales and markdown trends experienced in the third quartercontinue into the fourth quarter, we expect The Children’s Place brand to endthe year with inventory per square foot up in the low teens. At Disney Store weexpect to end the fourth quarter with inventory per square foot up in the lowto mid-teens or mid to high single digits excluding E-commerce. During thethird quarter we opened 25 Children’s Place stores and closed one. Year to datewe have opened 47 Children’s Place stores and closed six. As of November 3rd,2007, we operated a total of 1,235 stores comprised of 907 Children’s Placestores in approximately 4.3 million square feet and 328 Disney Stores inapproximately 1.5 million square feet. As you mayrecall, our original store opening plan called for 20 new Disney Stores in 2007. In an effort to focus on quality we have slowedthe rate of these new store openings. At this time we expect to openapproximately 15 new Disney Stores in fiscal 2007 with the other five movinginto fiscal 2008. This will not impact our commitment for new store openingsunder the refurbishment amendment. At this time we plan to close approximately10 Disney Stores at the end of the year, as planned. We remain on track to open60 new Children’s Place stores this year. For fiscal2007 we continue to anticipate capital spending to be approximately $200million. As Chuck mentioned in his remarks, we are committed to lowering ourlevel of capital spending and to reducing store growth next year. Ourpreliminary 2008 capital spending budget is estimated at $150 million, downapproximately 25 percent from 2007. Approximately 85% of our 2008 capex budgetis dedicated to store projects, even though we anticipate opening approximatelyhalf the number of new stores compared to 2007. Morespecifically, we plan to open about 30 new Children’s Place stores and remodel17, and to open approximately 15 Disney Stores and remodel up to 65. It isworth noting that we have budgeted for more Disney Store remodels than we arecontractually obligated to complete in our 2008 capex plans for added assurancethat we meet our obligations under the refurbishment agreement. Additionalstore related spending reflects miscellaneous projects across both brands andour Disney Store refresh initiative. The remaining 15% of next year’s capitalspending budget reflects information technology projects and the build out ofour new headquarters, and other spending. Thanks, andnow I’ll turn the call over to Neal.

Thanks, Sue.Today I’ll briefly review the third quarter, the initial response to holiday,and discuss go-forward strategic initiatives. Our third quarter results reflectdisappointing response to our fall assortment and increased inventory position,both of which required us to take substantial markdowns to move through the units.Further compounding our challenges were the unseasonably warm weather and thecurrent macroeconomic environment. In October,however, we began to experience some positive initial response to our holidayassortment, particularly as the weather turned colder. We believe our holidayassortments are differentiated from fall in several key aspects. First, thecolour palette, particularly on the girls’ side, is drier and more cheerful.We’ve always stood for colour and it’s one of our key brand attributes. Second,focus. We are deeper and narrower than we’ve been all year, which we believe isevident when you walk in the store today. Third, ourvalue pricing is sharper than it’s been in a long time, which we believe willservice particularly well in this current environment. In addition, we willoffer more newness post Black Friday than last year with our great gifts floorsets in stores the week of November 26th. Customershave responded favourably to key items like graphics, thermals, and sweatersacross the store. Our holiday two floor set arrived in stores last week,similar to last year, and features our famous glacier fleece and rugby sweaterprograms. As we look atour holiday assortments and our go-forward business we are going back to ourroots. First, making sure we deliver a better balance across our good, better,and best merchandise pyramid. We believe our investments in these categoriesare skewed more appropriately with a bigger presence in good than we’ve hadover the last several seasons. Second, andas I mentioned previously, colourful coordinated outfitting is what ourcustomers always come to expect from us and what has always differentiated usfrom the competition. Third,offering our customers a strong value proposition, we are able to deliverthrough our sourcing expertise, very importantly ensuring our continued,relentless commitment to quality. We believe early progress is evident in ourholiday floor sets, where we will become more pronounced as the seasons goforward given our long lead times. Beyond merchandise planning, as Chuckmentioned, other opportunities to improve the business include buying ourinventory more conservatively, as well as simplifying the business. Forexample, reducing assortment variations across store types. In closing,while the year has been challenging, we believe we have identified the issues,are seeing some signs of initial progress, and are making the necessarystrategic changes from a merchandise pricing and planning standpoint. I want towrap up by saying how proud I am of our team at The Children’s Place. Everyoneis pulling together and working very strongly, and I’m so pleased to see howcommitted everyone is to improving upon every aspect of the business. Thanks, andI’ll now turn the call over to Tara.

Thank you,Neal, and good morning, everyone. The third quarter was challenging for DisneyStore. Several issues impacted our results. First and foremost, our storecount. At the time we planned the quarter, about a year ago, we planned to have344 stores in operation during the third quarter as opposed to the 323 storesthat were actually opened for business on average during the quarter. On a300-plus store chain this makes an impact on the business, not only from a topline perspective, but from a gross margin and expense standpoint as well. Other issuesfor the quarter included decreased mall traffic, which we are dependent ongiven that our real estate portfolio is nearly 100% mall-based. While our 1%traffic decline was not as steep as the 3% national mall traffic decline of thethird quarter, this negatively affected our results. Partially offsetting ourtraffic decline was a 40 basis point increase in conversion for the quarter,which as we’ve said in the past is a key strategic initiative for us. Next,hindsight being 20/20, while our plan was to launch Tweens as a catch in ourtop 70 stores, we should have been more aggressive at the outset given theimmense popularity of Hannah Montanaand High School Musical. We alsoexperienced some late toy deliveries in the quarter. And finally,we faced the difficulty of having to comp the success of last year’s Octoberplatinum DVD release of The LittleMermaid, which drove significant traffic in sales. Partiallyoffsetting these challenges was incremental sales volume generated through thelaunch of our E-commerce business, which just completed its first full quarterof operation. As a reminder, third quarter was a soft launch with the majorityof our categories now available for the fourth quarter. On the plusside, as we look at the quarter we were pleased with the response to our bigideas. Namely Role Play was a great success for us this year. We compedpositively both a sales and margin perspective. In addition, as I mentioned,the launch of Tween was a great win and we went live chain wide with an evenbroader assortment for the first week of November. The 70 stores in which we initiallylaunched our Tween offering posted a 60 basis point comp improvement during thequarter compared to the total chain, so we know its bringing incremental salesto the stores. An initial response to our holiday assortment has beenencouraging. During thequarter we introduced our new Disney Store prototype in Houston, Texas, at theWillowbrook Mall. Two additional remodels re-opened last Friday, both inCalifornia, and our first new store opens today. Initial response to the newstore design has been positive from both a guest reaction and a businessstandpoint. Turning tothe holiday season, we will once again offer a unique assortment of innovativeand elevated toys and other great gift ideas for the whole family. We haveexciting promotional strategies planned for the entire holiday season, as wellas traffic drivers like the DVD release of HighSchool Musical 2 and Pirates of the Caribbean:Dead Man’s Chest. We also look forward to the theatrical release of WaltDisney Pictures Enchanted featuringGiselle, a new princess from Disney. Giselle inspired merchandise has been instores for two weeks now and early response has been encouraging. Before I wrapup I’d like to echo Chuck and Neal’s comments about our great team. I’mhonoured to work with such a talented and creative team across the entireorganization and we are steadfastly working towards driving the businessforward. In closing, we look forward to the opportunities that lie ahead of us.In 2008 we will offer our guests more Disney Channel inspired merchandise, andwe’re also excited about all the new content Disney has to offer. Thanks, andI’ll now turn the call over to Chuck to wrap up.

Thanks, Tara.Operator, we’d now like to open up to questions.

(OperatorInstructions) Our first question comes from John Zolidis from BuckinghamResearch. Your line is now open. John Zolidis – Buckingham Research: Hi, goodmorning. Hi. Chuck, this is a question for you. I was wondering if you couldtalk a little bit more about the more conservative inventory planning thatyou’re doing for next year. I know you said that it will not impact reallyuntil the summer with the full impact being back to school, but can you give ussome idea of where you think the inventory should be relative to where they areright now? And then on asecond question, you know, with lower levels of capex taking down inventorywhich should yield a working capital benefit, what is your opinion on sharerepurchase? It’s been a topic of conversation on many calls in the past andwith some changes in the company’s emphasis on growth in the near term wouldlike to know what you think about share repurchase as a use of shareholderscash. And thenlastly, Sue Riley, can you just give us what the accelerated depreciationnumber was and how much that impacted the D&A. Thank you.

Okay. Youknow, in terms of the inventory position I think if we start to look at that,we’re looking, and I’m probably on The Children’s Place side down the singledigit down from where we have been in the past. I think on the Disney sidewe’re probably looking at about mid-teens down from where we were last year. Sothat, I hope, kind of dimension wise is where we’re seeing the inventory comedown. John Zolidis – Buckingham Research: That’s on aper square foot basis?

I thinkthat’s, yeah, that’s probably a per square foot basis. And then yoursecond question about the share repurchase, right now, I think as we previouslyannounced, we’re, the board is engaged in a strategic review of alternativesand I’m sure that will be one of many alternatives to consider. That process isjust beginning right now, so it’s premature to make any comments about how thatcomes out. And I think,Sue, I’ll let you answer the last question on depreciation.

John, toanswer your question, the impact of the accelerated depreciation in the quarterwas just under $1 million and it’s about just under $4 million year to date. John Zolidis – Buckingham Research: Four millionyear to date?

Yeah. Andjust under $1 million in the quarter. John Zolidis – Buckingham Research: Should we expectadditional accelerated depreciation before the end of the year?

Yes. John Zolidis – Buckingham Research: Okay. Thankyou very much.

Thanks, John.

Our nextquestion comes from Kimberly Greenberger with Citi. Your line is now open. Kimberly Greenberger – Citigroup: Great. Thankyou. Good morning. Neal, I was hoping you could just give us a little bit morecolour on the initial response to holiday that you’re seeing. Is it that themarkdowns are running less deep than they were throughout the third quarter,particularly the August-September time frame? Or are you seeing actual increasein traffic? Could you just help us understand this positive initial responsethat you’re seeing? And if you’re willing to comment on November month to datesales that would be helpful as well. Thanks.

You know,clearly we’ve always said the weather is a factor in our business and thecooler weather, as I said, has helped us. We think that many of the priorities,focuses that we’ve spoken about are much more evident in our holiday flow thanthey have been in fall. So you’re seeing the focus, you’re seeing colour, andyou’re seeing our value much more clearer. And I think that’s what’s helpingour business right now. Clearly the weather’s a factor and we’ve got a lot ofbusiness to look forward to over the next many weeks to come in the holidayseason. Kimberly Greenberger – Citigroup: Thanks, Neal.Could I just ask a follow up with Tara? Tara, I know that Disney had a reallyterrific fourth quarter last year. The CarsDVD release was helpful, the PiratesDVD release was helpful. Could you just help us understand how you look at thevarious media traffic drivers this year and the way that they compare to lastyear?

That’s right.Hi, Kimberly, how are you? I think we’re excited about, obviously we know thatDVD releases drive traffic into the store. You heard my opening comment, you’renot having the release of Ariel this year compared to last year and just havingJungle Book really affected ourtraffic and affected the business in October. But we’re excited about fourthquarter this year. We don’t have Cars,but we do, as I said in my opening remarks, have a DVD release of Pirates of the Caribbean: Dead Man’s Chest. We also, thefamous High School Musical DVDrelease, which we are excited about as well. We’re goingto have a full range of Tween in all of our stores in fourth quarter. And then Enchanted, which is the new Walt Disneyrelease for the fourth quarter and Giselle is our new princess, and we are soexcited. All of us have seen the movie here and it’s absolutely terrific. We’relooking forward to that launching today, actually, and have been quite pleasedwith the response to the Enchantedmerchandise that’s set two weeks early in our stores as we usually do and it’sbeen great to see that the customer is responding to that having not even seenthe movie yet. So that’s really how we’re thinking about the quarter. Kimberly Greenberger – Citigroup: Great. Thankyou. And good luck during the holiday.

Thank you.

Our nextquestion comes from Janet Kloppenberg from JJK Research. Your line is now open. Janet Kloppenberg – JJK Research: Hi. It’sJanet. How are you guys.

Hi, Janet. Janet Kloppenberg – JJK Research: First of all,so, I got on a few minutes late. Did you give guidance for the fourth quarter?You had given it earlier in the season. I didn’t know if you had updated ittoday.

No, we didn’tgive guidance for the quarter, Janet. We stated in our October 9thpress release that we weren’t going to be giving guidance, so we’re not givingguidance at this time. Janet Kloppenberg – JJK Research: Okay. Andwill you give us guidance during the quarter or do you think, I mean, I know youcan’t file until you have a deadline now of January 9th, so could welook for some update at that point, Sue?

At this pointwe’re not giving guidance and that’s all I can really say about our stance onguidance at this point. We do hope to file our financial statements well beforethat January 9th. Janet Kloppenberg – JJK Research: Okay. Thankyou. And Chuck, when you said that inventories would be up, I think, or Suesaid up mid-teens coming out of the fourth quarter and that they’d be, theinventory positions would be better going into back to school, could youelaborate on your outlook then for inventories in the first half? It soundslike they may continue to run at higher than expected levels.

Janet, thisis Richard. I can maybe answer that. Janet Kloppenberg – JJK Research: Hi, Richard.How are you?

Good. Andyou? Janet Kloppenberg – JJK Research: Good, thanks.

So on the TCPside we’re projecting inventory at the end of fourth quarter to be up in thelow teens. One of the strategy we hindsighted last year was we went intoFebruary-March with the changing weather and the wind now we wanted moreholiday product appropriately priced going into the first quarter, and that’swhat we are still sticking to. One of the things we did do is that we boughtmore holiday expecting to carry more into the first quarter. We already did cutback our receipts for spring. And in fact, the spring receipts were cut backrelative to last year to offset the increase in holiday. Janet Kloppenberg – JJK Research: Wait,Richard. I’m confused. Are you suggesting that you’re having holiday ’07product in the stores in February and March of ’08?

At markdown,that’s correct. Remember, we have a big outlet division and we still do a bigchunk of our business on clearance inventory during that time period. And it’sjust a mix thing. It’s how clean and how full price we want to be in Februaryversus last year. Janet Kloppenberg – JJK Research: I would thinkthat was just a residual effect of you having the level of inventories you haveright now. Do you really want me to think that you deliberately planned yourinventories to be in this shape in February and March?

You can goback to see what we’ve said over the last year and you’ll see we said it a longtime ago that this was our plan. Janet Kloppenberg – JJK Research: Okay. So goon. You’re spring receipts are now down versus last year. Is that what you’resaying?

Yes. And thenwe were able to impact summer. Not to the levels that we want to go forward,but we made some impact on summer and we’ll be able to fully impact back toschool with our new conservative strategy because we haven’t placed back toschool yet.

And Janet,that’s a function of the lead, it’s purely a function of our lead times. Janet Kloppenberg – JJK Research: Right. That’swhat I was trying to get at for spring, Sue. So on the spring receipts, springproduct, what is the investment look like versus spring ’07.

It’s slightlylower than spring of ’07.

But notmarkedly so. And we also, Janet, I can just say one more thing and then we’regoing to have t move on. Janet Kloppenberg – JJK Research: Yes. Thankyou.

We also wantto reiterate that we expect very little carry over as we move from season toseason. So as we look at our inventories now and we look at the fall that we’recarrying into holiday, certainly in The Children’s Place stores, under 5%. Janet Kloppenberg – JJK Research: And Sue,would you say that the markdown for that product, that fall product, has beenabsorbed in these numbers released today?

Yes.

Yes. Janet Kloppenberg – JJK Research: Okay. Manythanks. And lots of luck, you guys.

Thanks,Janet. Janet Kloppenberg – JJK Research: Thank you.

Janet, youwanted a Disney, I mean, we’ll just comment. Janet Kloppenberg – JJK Research: Yes, I wouldlove to talk, I would love to hear Tara. I just feel like I’m getting cut off.But anyway.

No, no. Noworries, Janet. Janet Kloppenberg – JJK Research: Okay.

Disney, we’regoing to be down at the end of, or at the end of the fourth quarter ourinventory without E-com per square foot at cost is going to be up 6% to lastyear. If you roll E-com into that, we’ll be up 12%. And then as you go intospring and summer, we actually were able to affect our inventory levels, and sospring is going to be down, our receipts for spring are going to be down in thehigh single digits. And then as you move into summer we’re going to be in thelow double digit decreases to last year in our inventory levels. Janet Kloppenberg – JJK Research: Okay. Great.And Tara?

M-hm? Janet Kloppenberg – JJK Research: Could youjust comment a little bit about if you had it to do over again what perhaps youcould have done to make the assortments more compelling at Disney if anything?Thanks.

Yeah. And Ithink I’ll, Amy’s here, too, so she’s starting to perk up because she loves tocomment on the inventory.

Yes.

Maybe I’lljust turn that over to Amy and let her take that one.

Janet, justquickly, it really comes down to one thing when I hindsight the business, weshould have had Tween in all stores. And we chased into the product, we got itinto all stores for November, and we are really excited. We’ve been working onbuilding a whole strategy around Disney Channel which touches our guests 365days a year 24 hours a day, and we’re really seeing phenomenal response in theTween category as well as the Playhouse Disney Block. So we’re really lookingforward to building product and assortment around that that we can count on dayin and day out to drive our business. And that’s how the guest is reallytouching Disney. So those are really the two things that I’m looking to exploitor maximize go forward. Janet Kloppenberg – JJK Research: Okay. Lots ofluck.

We have tomove on. We’ve only got 20 minutes left and we’ve got to take some other calls.

Our nextquestion comes from John Morris with Wachovia. Your line is now open. John Morris – Wachovia: Hey. Thanks. Question for Chuck, I think.Chuck, you’ve now since we’ve had a chance to review the remodels at Disney,the new prototypes and the division’s been through, as I’m sure you’re wellaware, a number of iterations. I’m wondering if you can give us a little bit ofyour take, and certainly Tara as well, obviously, on your thought about how thelatest in the align of the generation looks to you and your initial commentsand take. I mean, I’m particularly curious to know what your thoughts are andwhether or not you think we need to look at maybe even another generation.Thanks.

Yeah, no,I’ve looked at this format, the first one in Willowbrook that we opened severalweeks ago. And actually, Tara and I spent with her team all of yesterday in thestores looking at all the formats. I have to say that I think the new formatthat we’ve got is just a beautiful store. And we’re getting great guestresponse from it. We’re getting the expected early pops on that store. Andwe’ll have to give it a little bit more time to see how it all settles out. Ithink the initial takes could not be more positive. And we just feel greatabout that new store. I think we finally landed on the format that’s going tocarry us a long time into the future. Tara, I don’t know if you have anythingto add.

No. I mean, Ijust echo what Chuck has said. John, I was down in Willowbrook, I’ve been inSan Anita yesterday. Northridge, which is another store here in California,I’ve been spending a lot of time in the stores. And just standing there andwatching and observing the guests coming into our stores and hearing themawestruck over all of the different elements and hearing comments like, oh,Disney Store is back. Those type of things are just exhilarating for me. Aswell as just our team here. Many peoplewho hadn’t seen the new store opening who are on the design team, you know, ourcharacter artists, the folks, a lot of people who’ve been with Disney for along time who work here in this building and hearing them and their commentsand how excited they are about the store. It’s just been, for me, because it’sbeen such a big project that, you know, it was one of the first big projects Ihad to work on coming in here into the brand, it’s just exciting to see thiskind of response. And you know, as Chuck referenced, we’re getting greatresponse both from our guests as well as from a business perspective. So we’re veryhopeful, but remaining cautious. We’ve got some pent up demand in some of thesestores because they had been closed for a little while, but we’re reallycautiously optimistic about how these stores are going to perform. John Morris – Wachovia: All right.Thanks. And also I want to wish all the best to Heather in particular. Thankyou.

Our nextquestion comes from Dana Telsey from Telsey Advisors. Dana Telsey – Telsey Advisory Group: Good morning,everyone. Hi. I just wanted to direct this to Chuck for a second. Given yourexperience in volatile businesses that undergo change, how’s the merchandiseand product issues and just the business processes at place similar or dissimilarto what you experienced at The Gap? And just for all of you, what are you doingto stabilize the troops internally in this period of change and also recruitexternally for holes that you need? Thank you.

Yeah, I thinkthat The Children’s Place, if I look at it compared to Gap, certainly it’s asmaller organization, but like The Gap it has a lot of the same issues in termsof a really fast growing business that sometimes goes a little faster than theinfrastructure and the support systems. So I think there’s a great opportunitythere. I think the organization is really hungry to look at modernizing itsprocess and make sure it can support the level of growth that the brands arecapable of delivering. I think in mycomments about getting more efficiencies and really focusing on our coststructure, the way we’re looking at that inside is, we’re not trying to reducecosts for the sake of reducing costs, but we’ll use this as an opportunity tolook at our processes in great detail and to improve the processes. And throughthat I think naturally will come a lot of efficiencies. So I think that’s anexciting thing that the company’s ready for and I think it will yield greatbenefits over the long term. It’s just sort of a stage of evolution. The otherquestion about stabilizing our troops, we’re in these times of change, the mostimportant thing we think is just to have open and consistent and constantcommunication, which is what we’re doing. So we have some kind of message thatgoes out to the troops every week and we’re going to continue that. And the otherthing that we’ve done is to really look at our retention and compensationprograms. We’re always really concerned about retaining our talent. We’ve got agreat team here and we don’t want to lose it. So we are putting together a,what we hope is a compelling yet very competitive set of programs that willhelp us retain our key talent at all levels in the organization. So we feelgood about that. And in termsof external recruits, I think I mentioned that I think we’ve been quite pleasedwith the level and calibre of talent that we’re able to recruit in thebusiness. We have quite a few holes in our management ranks, but I think we’vefilled probably 60% or 70% of them at this point. So I think we’re makingreally great progress and we have people lined up on the other ones. So we’relooking forward to getting back to having a full team of really high calibrepeople. Dana Telsey – Telsey Advisory Group: Thank you.Best of luck.

Thanks, Dana.

Our nextquestion comes from Paula Kalandiak from Broadpoint Capital. Your line is nowopen. Paula Kalandiak – Broadpoint Capital: Thank you.Good morning.

Hi, Paula. Paula Kalandiak – Broadpoint Capital: Hi. Questionfor Neal. I don’t think that there was any mention of the footwear departments.I was just wondering if we could get an update on how those are doing.

Sure. As wesaid when we launched footwear this summer that we were going to take anattitude of really learning a lot from it and that’s why we made sure ourexpectations were measured. We started rolling out to stores in July. We’recurrently in 48 stores. And we’re learning a lot. We’ve done a lot of consumerinsight work. Some surprises, some challenges, but a lot of learnings. Enably,we still believe that children wear shoes and there’s an opportunity for thatforce in the future. And we’re just going to keep on learning and we’llcontinue to do some roll out. But over the next year we’ll slow down a littlebit and we’ll take those learnings and hopefully turn those into what will begreat action plans to really ramp up down the road. Paula Kalandiak – Broadpoint Capital: Okay. Great.Thanks, and good luck.

Thank you.

Our nextquestion comes from Jodi Love with CIBC World Markets. Your line is now open. Jodi Love – CIBC World Markets: Thank you.Hi, good morning.

Hi, Jodi. Jodi Love – CIBC World Markets: Sue, I knowyou’re not giving guidance for the fourth quarter, but directionally perhaps ona gross margin or even an SG&A perspective I was wondering if you couldgive us some clarity there. And Chuck, Iknow it’s early, but if you could perhaps give a bit more detail about the keyarea of expense reduction that you alluded to that you plan on targeting.Perhaps the potential magnitude of what they could amount to over time and/orsome of the areas that you are planning to target for improvement. Thanks somuch.

Yeah, hi,Jodi. I’ll start with the guidance question. I know it’s hard for you all withus not giving guidance. What we did say when we said that we weren’t going togive guidance any longer is that we do expect the current trend in sales andmarkdowns to continue through the end of this, certainly through the end of thefourth quarter. So for your modelling purposes I would basically assume acontinuation of the trends that we’ve seen in our business unless we tell youotherwise. And of course we will continue to report our monthly sales. Soyou’ll be able to gauge how well you think we’re doing as we report the monthlysales and comparable store sales. Chuck, do youwant to take the question on expense management?

Yeah. I thinkwe’re very early on in this process and we’re just now getting going on it, butI think that our primary focus is on the general administrative expense area,both at our shared services operation as well as within the brands. Again, Ijust want to add that what we’re looking for here is process improvement anddriving efficiencies with maybe targeted applications of small IT assistanceand really a much more focused on process. I think that will both help thecompany in terms of its operations and ability to grow, as well as yieldinggreat cost reductions for us. But that’s the primary focus here would be the generaladministrative expense areas. Jodi Love – CIBC World Markets: Okay. Great.Thanks so much. Happy Thanksgiving. And good luck, Heather.

Thanks, Jodi.

Thanks, Jodi.

I’m doing mypart to create more customers.

Our nextquestion comes from Margaret Whitfield with Sterne Agee. Please go ahead. Margaret Whitfield – Sterne Agee: Good morning,everyone. Question on toys. Toys have been in the news. A lot of consumerscutting back on toys made in China. I wondered, Tara, what you’re seeing andwhat you have in the offing for the Disney Stores in that category in Q4.

Amy and Ialways love to tag team our product questions, so, Amy, please jump in. Butwe’re not seeing, you know, as we’re getting our toys launched for the holidayseason we’re seeing really positive response. We’ve had some late deliveries,which has hurt us a little bit as we’re moving into Black Friday, but we’redoing everything we can to get those goods out of the DCs and into our stores.But we’re not seeing the resistance to toys. We’re actually seeing nice growthin that area. But one of the things that we definitely did for this holidayseason is we focused pretty dramatically on Role Play as well and tried tothink of other gift ideas beyond just the toy category and really send thatmessage in our store that it’s not, you don’t just have to give a gift of a toyto a child. That we’ve got a lot of other great opportunities with our RolePlay and some of the Role Play accessories. So again, initial guest responsehas been positive. And I don’t know if you want to add anything?

No. I thinkyou were direct and to the point with that.

Okay. Yeah.

And BlackFriday.

Black Friday.It’s all about Black Friday. Margaret Whitfield – Sterne Agee: Yeah. Couldyou comment on Black Friday, both Neal and Tara, in terms of what we might seeif we visit the stores? Did I hear correctly that, Neal, a gift assortment willbe in stores not this weekend, but next week?

Yes. Wetalked about our great gift floor set which sets the stores November 26. Wefeel, you know, we visited one of our stores, we always set up a store prior,and we were very excited that our, we’re very, very focused. We have our normaldoor busters. We think we’ve strengthened those and we think throughout theweekend, we just don’t look at Black Friday obviously as the one day. It’sspread across from Wednesday, Friday, Saturday, and Sunday. And we feel goodabout what we’re offering the customer. Margaret Whitfield – Sterne Agee: Could youelaborate what kind of key items will drive your business for the holidayseason? Last year you lacked, you said, good key items.

What we saidlast year is we lacked some key items and some depth, but our stores are set upnow. Please feel free to, we’d love you to visit. Margaret Whitfield – Sterne Agee: Okay. Tara?

Just,Margaret, on the Disney side we’re very excited about Black Friday and we’veworked, we’ve been actually working on the strategy for over 10 months for whatBlack Friday and the rest of December is going to look like. We have one-dayonly special pricing, early bird, as well as weekend only pricing, and a lot ofcontingency plans in place as we read the business. Every day look at thecompetition and react accordingly. And what’s going to drive our business isprincess. And that’s a key growth initiative this Q4. Margaret Whitfield – Sterne Agee: Okay. Great.Good luck to everyone, including Heather.

Thanks,Margaret.

Our nextquestion comes from Brian Tunick with JP Morgan. Your line is open. Anna Andreeva – JP Morgan: Hi. Goodmorning. It’s Anna for Brian.

Hi, Anna. Anna Andreeva – JP Morgan: Hi. How areyou?

Good. Anna Andreeva – JP Morgan: My firstquestion is on Disney remodels for next year. You guys have done a couple sofar this quarter. Could you perhaps give us some colour on just how we shouldthink about some of the top line disruptions from those remodels next year? Youhave quite a number. I think it’s 50 remodels you have to do in ’08.

Yeah, I mean,we’re going to have, as you’ve heard from Sue’s remarks, we’ve got 15 newstores, which obviously is not disruptive to the chain. But we’ve got 55remodels planned, 59 are contractual. And we have just spent a lot of time verycarefully planning out as stores are going dark and other stores are comingback on. As you can imagine, there’s a lot of planning and logistics behindthat, but I feel like we took it a little slower this year to make sure that wewere getting all the kinks worked out and making sure that we’re gettingprocess and procedures in place that as we move into next year we can reallyhit the ground running and make sure that we execute with perfect, which we allwant. Anna Andreeva – JP Morgan: Sure, sure.Should we expect at least a bulk of these remodels to take place in the first halfof the year?

That would,it’s going to be throughout the year, but of course we’re always trying to getthe bulk of them done in the first half of the year so we’re getting them donebefore third and fourth quarter, which are, you know, our prime time of yearand, as you heard in my opening remarks, that definitely hurt our business nothaving those 20 stores open in third quarter this year. So we’re doing everyeffort to make sure we’re getting those done in the first half of the year. Anna Andreeva – JP Morgan: Okay. That’sgreat. And on the Disney refresh there’s also first half skewed. And those ofcourse are less disruptive. You guys don’t have to shut down the stores, if I’mnot mistaken.

Exactly. Andthose we work on at night and basically the stores are able to stay open duringthat process. Anna Andreeva – JP Morgan: Okay. Okay.So that’s great. And on the Disney side also, just as we think about theholiday, how should we think about the AURs? You had some nice AUR increaseslast year.

We actually –

This is Amytalking.

Yeah, this isAmy speaking, Anna. We do have an increase in AUR and that’s driven off ofmissed opportunity in business and some of our big and bulky and larger itemswhere we saw opportunity increase penetration and drive incremental sales. Anna Andreeva – JP Morgan: Okay. Okay.That’s great. And also, just as you look at the next year in terms of the movierelease schedule. Of course, Disney is such a movie release levered type ofbusiness, how would you compare just the quality of the excitement of the scheduleversus this year.

I’m veryexcited. This is Amy again. First of all, I already mentioned that we’ll begoing after Disney Channel and that’s a huge growth initiative for us in 2008.We’ve been working very closely with the Walt Disney Company and with DisneyChannel to maximize that throughPlayhouse Disney Block and between opportunities and properties. In addition,we have 101 Dalmatians versus Peter Pan. We feel good about that. Wehave Wall-E, which is based on arobot, versus Ratatouille fromDisney/Pixar. And then this year for the platinum release we have Sleeping Beauty versus Jungle Book. We also have a Fairies direct-to-DVD release, as wellas High School Musical 3.

Theatrical.

Theatrical.So we are –

It’s anoutstanding year.

Yeah. It’s anoutstanding year. And as always, I mean, Disney takes opportunity and maximizesit, as well as the Giselle DVD release in spring of next year, as well. So weare very excited about the schedule for 2008. Anna Andreeva – JP Morgan: Oh, that’sgreat. Well, congratulations, guys, and good luck for the holidays.

Thank you.

Our nextquestion comes from Linda Tsai with MKM Partners. Please go ahead. Linda Tsai – MKM Partners: Hi. With 15% of next year’s capex goingtowards IT investments are there any investments or reconsideration of currentprocesses that could help you reduce your lead times? And then justone follow up. I know you’re not giving guidance, but could you give us a senseof what the tax rate is going to be like going forward?

Yeah. Let mejust clarify. The 15% was for information technology and other corporateprojects. So it’s not just IT related. But yeah, you’re absolutely right on. Wewant to leverage our IT expense in order to drive process improvement, which weas a company recognize that we really need. And that should over the long hauldrive our SG&A costs down. And further, we should be using IT to a greaterextent to reduce our lead time. So that’s all part of what we’re looking atgoing forward. With regardto the tax rate, it was lower this quarter than what we thought it would be at37%. And that’s primarily just because the earnings were lower than what wethought. We’ve had a mix of earnings, more earnings coming in in jurisdictionsthat have lower tax rates. I’m still expecting going forward that we’ll be atabout the 38%, 38.2% tax rate. Linda Tsai – MKM Partners: Great. Thankyou. Good luck.

Thanks.

Our nextquestion comes from Rob Wilson with Tiburon Research. Please go ahead. Rob Wilson – Tiburon Research Group: Yes. Thanksfor taking my call. Could you maybe give us some idea of what you’re doing formarketing in Q4 given that you’re quite dependent on marketing and may be what yourplans might be entering 2008 regarding marketing?

I’ll takethis for The Children’s Place. Marketing is fairly similar levels to last year.We are very reliant, you know, one of the things we’ve worked on is makingsure, again, our focus on our marketing is very clear to the consumer gettingthe value across. Next year, with our growing mailing list, we will continuethe same thing we’ve been basically doing with very strong magalot (sic)presence, continual magazine presence to get our value message out there andour fashion quality message out there. So no real material changes that we’relooking at right now going forward and/or during this holiday period.

So for theDisney side I’ll go ahead and answer. Our actual, we do have an incrementaldrop-the-holiday gift guide, which is an incremental three quarters of amillion that we’ll be dropping the first week of December to highlight greatgifts for holiday giving. Otherwise, our initial magalot, which we dropped atthe beginning of this month, is flat to last year.

(inaudible)

Yeah, goforward next year we’re looking at a marketing spend that’s flat to this yearas a percent to sales. Rob Wilson – Tiburon Research Group: Do I havethat right? The Children’s Place brand also flat to next year to this year?

We’re still vettingit out, but fairly consistent with what we’ve been doing in the last couple ofyears, yes.

And that’snot on dollar basis. Okay? Rob Wilson – Tiburon Research Group: Okay. And oneother question. Chuck, why not less than $150 million in capex next year as youenter your time there at Children’s Place? Why don’t you take more time tofigure out what the potential store counts should be and maybe lower that capexnumber next year?

Yeah, Rob, Ithink that we really tried to get our capex down significantly. The issue iswe’ve got a lot of stores that are already in the pipeline. So our approach onthat is then to deal with the ones we have in the pipeline and if there arewonderful opportunities, you know, sort of once in a lifetime opportunities inthese key locations, we’re obviously not going to pass those up. Otherwise weare, you know, we are pursuing a path of just stop, take a breath, make sure weunderstand where the business is going before we start, and ramp back up ourstore growth plans. So I think we’re in essence doing what you’re saying.

The otherthing, Rob, I just say is bear in mind we have a contractual obligation toremodel the Disney Stores and we’ve built a little bit of cushion because ofthe ramifications of the licence agreement and the amendment thereof, we’vebuilt some cushion in to that in terms of we’re planning to remodel more storesthan we’re contractually obligated to do next year to ensure that we meet theobligations. Rob Wilson – Tiburon Research Group: Well, Sue,would you say that some of those openings next year are just relocations ofolder stores?

Some of themare, yes. But some of them are in fact, you know, complete remodels of theMickey Stores that we had referred to, we had talked about in the past. Rob Wilson – Tiburon Research Group: Okay. Well,thank you.

Okay. Thanks,Rob.

It appears atthis time we have no further questions in cue.

Well, thanks,everyone, for joining us today and for your interest in the company. Wish youall a great Thanksgiving and a great holiday season, and I’m sure we’ll seemany of you out in the malls this Friday.

Thanks,everyone. Bye.