Chuck Crovitz - Interim Chief Executive Officer Sue Riley - Executive Vice President, Finance and Administration Dina Sweeney - Group Vice President of Merchandising Jane Singer - Investor Relations

Betty Chen - Wedbush Morgan Rick Patel - Bank of America Kimberly Greenberger - Citigroup Brian Tunick - JP Morgan Richard Jaffe - Stifel Nicolaus John Zolidis - Buckingham Research Janet Kloppenburg - JJK Research John Morris - BMO Capital Markets Dorothy Lakner - Caris & Co. Linda Tsai - MKM Partners Marnie Shapiro - The Retail Tracker

Good day everyone, and welcome to today’s program. At this time, all participants are in a listen-only mode. Later, you will have the opportunity to ask questions during the Q-and-A session. (Operator Instructions) It is now my pleasure to turn the conference over to Jane Singer.

Thank you, Lundy. Good morning, everyone and thank you for joining us today for a review of The Children’s Place Retails Stores, Inc. second quarter 2009 financial results. Participating on this morning’s call are Chuck Crovitz, Interim Chief Executive Officer and Sue Riley, Executive Vice President of Finance and Administration. Dina Sweeney, Group Vice President of Merchandising is on hand to answer questions at the end of Management’s remarks, but I must warn you in advance that she has come down with a little bit of laryngitis, so if she has trouble talking later Chuck or Sue may jump in to help her out. Before we begin, I would like to remind participants that any forward-looking remarks made today are subject to the Safe Harbor statement found in this morning’s press release as well as in our SEC filings. These forward-looking statements involve risks and uncertainties that could cause our actual results to differ materially. The company undertakes no obligation to publicly release any revision to these forward-looking statements to reflect events or circumstances after the date hereof. Please also note that a reconciliation of certain non-GAAP financial measures discussed on this call is contained in this morning’s press release which can be found on our www.childrensplace.com website. Now I’ll turn the call over to Chuck for his opening remarks.

Thank you, Jane. Good morning, everyone and thank you for joining us today. We continue to face the challenging retail environment in the second quarter of 2009 and at the same time we are up against the best second quarter in the company’s history in 2008. We had a number of headwinds including the difficult economic environment, the negative impact of foreign exchange and lower mall traffic and these headwinds hampered our sales results during the second quarter. Nevertheless, we have made significant headway in our e-commerce business, our cost cutting initiatives and the rollout of our new value-engineered store format. To briefly highlight the second quarter of 2009 results, our net sales declined 7% compared to the second quarter of 2008 with comparable retail sales down 9%. Our loss from continuing operations, including unusual and one-time items was $12.4 million or $0.42 per share, compared to an adjusted loss of $0.03 per share last year. A couple of bright spots during the second quarter include the continued strong growth of our online business, which increased 24% this year on top of more than a 90% increase during the second quarter of last year and our shoe business which delivered a solid increase in sales and margin. To briefly update you on the progress we achieved on our three growth initiatives, I mentioned earlier that our e-com business is continuing to thrive, the move to the fulfillment center in Alabama which enhanced our efficiencies as well as increased levels of marketing support. During the second quarter of 2009 e-com accounted for 6.5 % of net sales compared with less than 5% last year. Also, we remain on plan to open approximately 35 new stores in 2009, which will increase our fleet by a net of approximately 30 stores for the year. About half the new stores opened year-to-date are in the new Tech II formats. This new format is easier to shop, it’s been engineered to with stand higher traffic and it costs 35% to 40% less to build than the previous prototype and this gives us greater flexibility in the types of locations and markets where we can operate profitably. More than half of the new stores we have built year-to-date are located in value oriented centers primarily in strip malls. Finally, we are ahead of schedule and realizing the plan $20 million in cost savings that we announced in February, significant progress has been made across the organization to increase efficiencies and lower spending which Sue will review in a few minutes. As we enter the important back-to-school season we are pleased with early customer response to our fall one line particularly the wear now product. Nevertheless, we are planning conservatively for the fall season due to ongoing weakness in the economic environment, cautious consumer sentiment and significant volatility we continue to experience in our business. During the past year we have observed customers shopping closer to need, shopping less frequently and waiting for great deals before making a purchase, and we have no reason to believe that these behaviors will change significantly during the latter half of 2009. Promotions are very important in this environment and we are testing new ways to offer our customers even greater value. For example, in July we offered a backpack promotion which required a minimum purchase of $30, and in August we offered a free graphic t-shirt with the purchase of two pairs of denim. In addition we continue to focus on promoting the tremendous value that we have by highlighting our price points, both in stores and online. Looking ahead, while we manage our business prudently during this difficult period we remain confident that the strategic initiatives that we are pursuing combined with our trend right fashion and great value pricing position us to achieve our longer term growth targets. Before I turn to Sue, for a review of operations I’d like to briefly comment on the agreement with former Chairman and CEO Ezra Dabah. On August 3rd the company purchased 2.45 million shares, which is 50% of the shares owned by Ezra and his family for $28.88 per share. We have also agreed to file our registration statement to facilitate a one-time marketed secondary offering of Ezra and his family’s remaining shares. In connection with this traction, Ezra and his father-in-law Stanley Silverstein have resigned from the company’s Board. The Board of Directors believed this development will create positive momentum in the CEO search and expects to name a permanent CEO before the end of the year. With that, let me turn the call over to Sue, who will review the financials.

Good morning everyone. Most of my discussion today will focused on continuing operations of the Children’s Place business since the Disney store business is classified as a discontinued operation. Net sales for the second quarter ended August 1, 2009 were $315.7 million, a 7% decline compared to last year’s second quarter net sales of $338 million. The decline in the value of the Canadian dollar relative to the U.S. dollar negatively impacted net sales by approximately $5.1 million compared to the second quarter of 2008. Comparable retail sales which include online sales declined 9% in the second quarter of 2009 following a 10% increase during the same period last year. The decline in comp sales was the result of a 7% decline in tractions and a 2% decrease in average transaction size. We ended the second quarter with a total of 937 stores this year, compared to 902 stores last year. Gross profit dollars declined 18% to $105.3 million and gross margin decreased 460 basis points to 33.4% compared to 38% in the second quarter of 2008. During our 2008 year end conference call, we mentioned that we expected gross margin for the first half of 2009 to be significantly lower than the first half of last year. Our gross margin was negatively impacted by de-leverage during the second quarter of 2009, in addition to more markdowns, higher shrink accrual, a lower IMU and a lower Canadian exchange rate compared to last year. During the second quarter of 2009, IMU will be stronger as merchandise purchases for the 2009 back-to-school and holiday seasons were made during a time period when the global retail demand was particularly weak, which is benefiting IMU for the back half of the year. In addition, we anniversary the precipitous decline in the Canadian currency toward the end of the third quarter, assuming there was no further change in the Canadian to US dollar exchange rate. Offsetting this, we are continuing to see high levels of promotional activity from children’s apparel retailers and we expect we may sell a greater proportion of merchandise on promotion during the third quarter of 2009 than we did last year. Also, we may experience some de-leverage during the quarter depending on comp sales. As a result, we now expect gross margin for fiscal 2009 to be approximately 50 to 100 basis points last year, again depending on comp store sales. SG&A as a percentage of sales was 33.6% in the second quarter of 2009, representing 230 basis points of de-leverage, including several unusual or one time items as follows. During the second quarter of this year we had a $3.1 million accrual reversal in SG&A resulting from the favorable settlement of an IRS employment tax audit related to stock options, which was offset by expenses associated with the recent proxy contest and 2009 restructuring costs. In the second quarter of last year, we had gains some transitional services income provided to Disney and the sale of a store lease, which were partially offset by one time professional and legal fees. Excluding those items which we believe to be unusual or one time in nature from both periods, SG&A expenditures were $106.7 million during the second quarter of 2009, compared to $111.9 million last year. As a percentage of sales, SG&A was 33.8% in the second quarter of 2009, representing 70 basis points of de-leverage. The de-leverage is due to lower top line sales. However, we were able to lower operating expenses on a dollar basis through our continued cost control initiative, including lower administrative expenses, better management of store payroll and expenses primarily related to supplies and lower professional and IT expenses. These savings were partially offset by higher pre-opening expenses, as we opened more stores during the second quarter of 2009 and slightly higher marketing expenses to support our growing e-commerce business. As Chuck mentioned earlier, we are ahead of schedule in realizing savings from the restructuring program that was announced earlier this year. As such, we expect SG&A dollar spending for fiscal 2009 will be at least $10 million lower than in fiscal 2008. Moving down to P&L, we had an asset impairment charge of $315,000 during the second quarter of 2009 for an underperforming store. Depreciation and amortization expense was $17.6 million during the second quarter, similar to last year which resulted in approximately 40 basis points of de-leverage. Operating loss from continuing operations before interest and tax was $18.7 million during the second quarter of 2009, compared to operating income of $4.9 million last year. Net interest expense was $1.5 million in the second quarter of this year, compared to $400,000 in 2008. We had a $38 million balance remaining on our term loan for the entire second quarter this year, whereas last year we had minimal interest expense in the second quarter as we did not close on the $85 million term loan until the end of July 2008. During the second quarter of 2009, we had a couple of one time items, which impacted our interest expense. We incurred $1.5 million in accelerated deferred financing fees and prepayment penalties associated with our decision to prepay the balance of our term loan on August 3, 2009. This was offset by a $1.5 million reversal in accrued interest as a result of the favorable settlement of the IRS employment tax audit related to stock options. Going forward, net interest expense is expected to be approximately $600,000 per quarter, which includes seasonal short term borrowings and fees related to our credit facility. Our effective tax rate for the quarter was 64%. The tax benefit for the quarter was increased due to a one-time tax benefit from excess foreign tax credits resulting from the repatriation of cash from our Canadian subsidiaries. We expect our effective tax rate for 2009, before one-time items to be approximately 42%. Net loss from continuing operations after tax was $7.2 million or a $0.24 loss per share in the second quarter of 2009, compared to net income of $2.7 million or $0.09 cents per share in the second quarter of last year. Our basic weighted average share count for the quarter was $29.6 million. We expect our diluted weighted average share count to be approximately $27.8 million for the third and fourth quarters as a result of the company’s repurchase of 2.45 million shares from former Chairman and CEO Ezra Dabah on August 3. Excluding the one-time items for both periods, second quarter adjusted loss from continuing operations, net of tax was $12.4 million or a $0.42 loss per share compared to $900,000 or a $0.03 loss per share last year. Foreign exchange negatively impacted our second quarter 2009 EPS by approximately $0.05 per share. GAAP net loss for the second quarter including the impact of discontinued operations was $7.1 million or a $0.24 per share net loss compared to breakeven in the second quarter of 2008. Moving onto the balance sheet, our quarter ending cash balance was a $152.2 million, compared to $146.7 million last year. As I mentioned earlier, we had $38 million of borrowings from our term loan this year compared to borrowings of $85 million at the end of the second quarter last year. At the end of the second quarter of 2009, we had improved our cash position by approximately $52 million net of debt, compared to the second quarter of last year. As I mentioned earlier, following the second quarter on August 3, 2009, we took two actions which impacted our cash position for the third quarter. We closed on a transaction to repurchase half the shares owned by Ezra Dabah and his family for approximately $70 million. We also prepaid the $38 million balance on our term loan. We’re comfortable with our cash position coupled with our $200 million credit facility and we expect to rebuild our cash position during the third and fourth quarters of 2009. Total inventory, including merchandise and transit at the end of the second quarter was up 13% per square foot, which is above our previous estimate. This increase is primarily due to timing as in-store inventory was down in the low single digits at the end of July and the level of prior season carryover inventory at the end of the quarter was comparable to last year on a dollar basis and slightly lower as a percentage of the total balance sheet inventory at 4.5% this year compared, to 5.4% last year. The increase in inventory at the end of the quarter is attributable to higher levels in our D.C. and in transit inventory at the end of July 2009 compared to 2008, as we purposefully slowed shipments of some fallen holiday merchandise until they were required for August replenishment and September floor sets. So we remain quite comfortable with the newness and overall level of our inventory. We expect to end the third quarter of 2009 with total inventory per square foot up low-to-mid single-digits. During the second quarter of 2009, we opened 15 stores. At the end of the second quarter, we operated 937 stores with a total of approximately 4.632 million square feet. During 2009, we plan to increase our net store count by approximately 30 stores with most of the new store openings occurring during the second and third quarters. Thank you and now I’ll turn the call back over to, Chuck.

Thanks Sue. Operator, I think we’d like to open the call up for questions.

(Operator Instructions) Your first question comes from Betty Chen - Wedbush Morgan. Betty Chen - Wedbush Morgan: Sue, I was wondering if we could speak a little bit about the cost savings. I think you’ve mentioned that we are on track to see about $10 million of SG&A dollar decrease year-over-year. I think the plan was for about $20 million in total of cost savings. Could you walk us through maybe the timing of that and whether we could potentially see more than the $10 million that you alluded to earlier?

I did say at least $10 million more in savings. So we’d just like to provide some cushion in that number of course, but the goal of the cost reduction program that we announced earlier this year was for $20 million and we remain ahead of schedule to achieve that $20 million. The $10 million in SG&A savings that we expect to achieve this year that includes new store openings and so bear in mind, we’ve got new store openings, which drive SG&A somewhat, but all things being equal, we are on track to achieve the $20 million and then some of restructuring program savings. Betty Chen - Wedbush Morgan: Any color you can give us on how we should think about that, because I think we were already starting to see some of the savings in Q2. How much should we think about for the Q3 and Q4 timeframe?

We had said that we expect it to annualize the $20 million of savings in Q3 and Q4. So expect about $5 million in each Q3 and Q4 of those savings kicking in. Betty Chen - Wedbush Morgan: Then just in terms of the inventory position, just wanted to clarify, I think you said that the carryover inventory is actually down year-over-year and then also the plus 13% per square foot actually includes in transit?

That’s correct. Betty Chen - Wedbush Morgan: Could you give us a sense of how much is in transit inventory and I know you also said that some of it is to help you position for August and September? Should we think that the in transit is primarily for the September floor set?

The in transit inventory is primarily, most of the in transit that inventory, that actual inventory number is for holiday, is a little bit of fall that’s in transit. However, last year we had fall in transit, so we had more fall that within transit as we were buying to replenish, we delayed some shipments until they were just needed to replenish into the August floor set. Another way to look at it, if you take in transits out, if you look at the 13% increase per square foot including in transit, if you take in transit out, we’re up about 8% per square foot and that includes DC inventory for fall and then our prior season inventory, which is spring and summer is about 4.5% of the total inventory balance compared to, I think I said 5.4% in the previous year. Betty Chen - Wedbush Morgan: Could you help us think about how that is positioned for e-commerce versus the retail stores, because definitely it appears that the e-commerce business has been growing very nicely and I know we had some capacity constraint earlier in the year, but now with the new DC and increase utilization, is there any sort of difference between your inventory position for online versus retail stores?

Yes. In fact, if you look at the retail stores on a per square foot basis, I said in my prepared remarks that the inventory was actually down per square foot in store and it is in fact up in e-commerce.

Your next question comes from Rick Patel - Bank of America. Rick Patel - Bank of America: Just a follow-up question , can you just give us some color on how we should expect comparable inventories to trend during the holiday season both in dollars and in units and if you had to, do you still have the ability to modify some of those orders for holiday?

The holiday buy is up about 6% versus prior year, which we’re actually very comfortable with, and again that’s consistent with, what we had been saying about inventories, that our in store inventory would be down slightly versus prior year per square foot and we are in fact buying more for e-commerce and also bear in mind just as background, last year, we had changed our inventory policy, the first season that could really be impacted by that was back-to-school last year. We had significantly reduced our inventory buys versus the previous year. So back to school and holiday inventories had already been corrected for our new inventory policy. So we think about 6% increase in the overall buy and that’s total buy not per square foot. So it’s actually lower than that on a per square foot basis. It’s about what we need in order to meet holiday demand.

Then in terms of the ability to change, you can only change things really on the margin at this point so we can get a few things in because we have a new program called fast fashion that enables us to make some commitments closer into the market, but the bulk of the inventory is already set. Rick Patel - Bank of America: Then a question on your product costs. Some retailers out there have mentioned a mid-single-digit decline in sourcing costs out of China for the back half of this year. I’m just wondering if that level makes sense to you and do you see these product costs reductions continuing into early 2010 as well?

It actually does make sense to us. I mean, that’s about the range that our product costs are down. They are down for both back to school and then down even more for holiday and we do expect that to some extent to carry into spring for next year.

Your next question comes from Kimberly Greenberger - Citigroup. Kimberly Greenberger - Citigroup: I wanted to just follow-up on the inventory discussion. Sue, it sounds like there’s a lot of timing issue involved with the balance sheet cutoff. Maybe you could step back and just tell us for the third quarter approximately how much did you buy total inventory up? I don’t know if there’s a way to disaggregate the piece that you bought for e-com versus the stores, for example if you bought the stores in e-com, up significantly for a blended of X. Maybe that would be helpful.

First, in terms of the total buy, I think I said, fall we did buy up slightly versus prior year consistent with our goal of having the in-store inventory down somewhat and then we did in fact buy for e-commerce. So it was with the increase in the buys, it results of our having allocated more inventory to e-commerce and then again slightly less in-store at any given point in time, because we’re also holding back inventory in the DC so that we’re replenishing into inventory that’s in fact selling in the store so that we don’t end up with inventory in the wrong stores. Again, consistent with our flow strategy of shipping it once as opposed to into the stores and then into DCs, our holiday buy I think I mentioned was up 6% again consistent with that strategy. Fall was up year-on-year about total fall buy is up about 4%, which again is what we’re very comfortable with. It just so happens this year that we have more of that 4% buy shifting into the second quarter than what we had last year where we had more of it in the third quarter. We also set fall a week later, so again, just some shifts in timing, but overall we’re very comfortable with our inventory level. Kimberly Greenberger - Citigroup: Just a follow-up on your 2009 gross margin expectation, I think the range you gave was 50 to 100 basis points. I didn’t hear if that was up or down to last year for the full year.

We actually said 50 to 100 basis points gross margin decline versus prior year and Kimberly, that’s a function of our having moderated our view on top line. The IMU that we’re expecting, we’ve made the buys so we absolutely expect to get the IMU. It’s really a function of de-leverage at this point in time. Kimberly Greenberger - Citigroup: Then one last thing too, the de-leverage in the second quarter. Could you just help us understand the sort of relative magnitude of the de-leveraging piece of the 460 basis point decline in gross margin? Thanks.

De-leverage was significant with the first item mentioned it was the over the most significant cause of that decline, representing almost half of that.

Your next question comes from Brian Tunick - JP Morgan. Brian Tunick - JP Morgan: Just a couple more questions on some details. So you talk about the IMUs a couple of times so far and we’re just trying to understand, how much pressure on the IMU did you see in the first half? How many basis points of upside did you see in the back half? We’re just trying to understand that versus the markdowns. Then the second piece on the occupancy opportunity in the back half, you look at your two year comp comparisons. Are you guys thinking with the inventories you have that same store sales should be flattish versus the down nine in Q2?

We don’t give guidance on same store sales, but we knew that IMU was going to be down and we had said that IMU would be down and it in fact was down in both the first and second quarters driven down by two things. Firstly, the cost of the buy, as you know spring and summer were bought before the economy really declined and as such so there were prior product costs for both spring and summer and then IMU was also impacted by the Canadian dollar where we’re buying product for Canada with a weakened dollar. Brian Tunick - JP Morgan: How much IMU growth are you expecting in the back half?

We haven’t disclosed specific amounts, but we do expect IMU to be favorable in the third quarter and then again more favorable in the fourth quarter. Again as a result of the buys that were done for back-to-school and holiday. Brian Tunick - JP Morgan: Then as far as the store base goes, I know strip center growth has been a lot of your growth in margin talk of the future. Can you just talk about how sort of the first half trended in sort of the strip or lifestyle centers versus your mall stores?

Yes, I think that in general we had less negative comp in the strip centers and in some of the value oriented centers than we did in some of the A & B malls. I think everything was down, but those were down less. We also in general saw outlets being a little softer as I guess people were not willing to cut drive out that far for outlets. So, that’s basically how it came out relative strength in strips and value centers. Brian Tunick - JP Morgan: Finally my third question is on the marketing side. Is there anything we should expect from any marketing direct magazine here in the back-to-school period versus last year?

No, I don’t think major changes in that. I guess versus a year ago, we probably invested a little bit more money in direct business driving, which is sort of more investments into the direct mail pieces and incrementally less in kind of magazine advertising, but the circulation of direct mail is pretty much comparable to where it was last year. The only real difference is just a lot more experimentation on in-store promotion, promotional pricing to try and react to this economy.

Your next question comes from Richard Jaffe - Stifel Nicolaus. Richard Jaffe - Stifel Nicolaus: Two quick questions; one would be did follow up on your comments that customer response to back-to-school. I’m wondering how you see that breaking out, whether it’s the product is right and that there’s not a lot of resistance to price or it’s really the magic price point, the promos you talked about earlier and the price points that are driving that business, then a follow on question regarding the shoe business. How that’s developing as a percent to total and how it’s represented in stores? I know all stores don’t have the full assortment, but wondering what the outlook for that is.

I’m going to actually start with the shoe piece first. Chuck had mentioned that the shoe sales were strong in the first half. We are continuing to make progress on the design [as we can] in the margins, allowing the inventories living longer on the floor and seeing that we are getting a lot of positive returns on those strategies that we have put in place. We are still experimenting with shoes, so we aren’t seeing a tremendous significant rollout plan yet, but as we continue to experiment, we will continue to elaborate on that. Then in regards to the product, what we are seeing the customer, the customer is continuing to respond to what we have talked about earlier on in the year, the key items and the basics are the major contributors. However, where we are offering unique fashion products customers are responding to that at full price level. So we are excited with that, we are seeing that continuing now into the early back-to-school time period.

Just a couple of additions, I think that we are feeling good about fall in terms of the early particularly the wear now product as I was mentioning before. I think the bigger issue is just the overall traffic and the propensity to shop in the mall. I think that’s sort of the bigger level of concern there and then just as a specific question, shoes is, I think around 5% of our total mix at this point. Richard Jaffe - Stifel Nicolaus: I guess while you can’t make traffic happen, do you have more irons in the fire or more tricks up your sleeve, if you will in terms of key items, promotion, gift with purchase, like the backpack or those kinds of things for later and back-to-school and the holiday season?

I’d say that’s right. I think we’re in sort of constant experimentation there trying a lot of different things that we haven’t tried in the past, because I think that’s sort of what’s required in this environment. Richard Jaffe - Stifel Nicolaus: I couldn’t agree more. The more clever you can be and it sounds like you’ve got the margin and the units to make something happen.

Your next question comes from John Zolidis - Buckingham Research. John Zolidis - Buckingham Research: Two quick questions; one, I think I heard you say that you were committed to bringing in a permanent CEO by the end of the year and I just want to ask you to clarify, did you previous committed to bringing in someone in the next 90 days? Is that correct and if so, what’s changed?

I don’t think there’s any change there. I think we’re just kind of hedging things. That was our expectation in that timeframe. John Zolidis - Buckingham Research: So I guess the end of the year would include the next 90 days and then on the full year guidance for gross margin to be down approximately 100 bips. As I recall, the last guidance you had said was similar to the previous year. Can you just clarify kind of what’s changed relative to that previous outlook?

John, the only change to that previous outlook is that we’ve moderated our view of the top line. So we’ve just taken the top line down somewhat, but relative to how we had them thinking about it before. So from the last guidance that we gave to this now, it’s really just a function of de-leverage. John Zolidis - Buckingham Research: So it doesn’t have anything to do with increased markdowns related to the inventory or anything like that.

Well, the lower top line, it does not have anything to do with decreased marked, increased markdowns having to do with inventory, but if you lower your top line and you have the units by definition you’re selling those units at a lower price. So it is a function of moderating our view of the top line in part because of higher markdowns, particularly in the third quarter. We did say that we expected markdowns could be higher in the third quarter of 2009 relative to 2008. Chuck mentioned earlier that we’re experimenting with some new promotions.

Your next question comes from Janet Kloppenburg - JJK Research. Janet Kloppenburg - JJK Research: I just wanted to elaborate on that for a minute, Sue then. What do you think about the fourth quarter? Do you think the easier comparison then will give you an opportunity for gross margin improvement in the fourth quarter and perhaps a better performance on the top line vis-a-vis the third quarter?

Fourth quarter we do have an easier comparison and in fact, fourth quarter we did see higher markdowns than what we had gone into the quarter expecting. So I do think, we kind of anniversary the markdown cadence in Q4. I think that there is some opportunity given that stronger IMU in Q4 to see margin expansion, but I just want to be cautious at this point in time. Again, just because we’ve moderated our view of the top line a little. It’s not a huge change, but we’ve just moderated our view of the top line just given the current environment. Janet Kloppenburg - JJK Research: Just to talk about the inventories for a second. If I have it right, it’s up a little higher than maybe we expected, because the in transit is higher and most of that’s associated with the fourth quarter receipts. I think that’s the way you want us to be thinking about it. So I’m just wondering if that is correct and if you’re comfortable with where your third quarter inventories are right now in light of your more conservative outlook for the top line.

We actually are. We’ve had, we’ve taken a conservative stance on our buys. Again as I said earlier, total fall is up about 4%, that’s base, that’s everything and bear in mind we have more stores this year than we had last year. So we are comfortable with our inventory buys. The in transit was up significantly and to be honest we should have done a better job of forecasting it, but it was up over 30% year-on-year with the lion’s share of that being earlier receipts than last year of holiday. So we are very comfortable with our inventory position. We’re also very comfortable with the newness of our inventory in that we are carrying less as a percentage of total inventories of prior season, which again is spring and summer into the third quarter. So we’re overall pretty comfortable with where we are. Janet Kloppenburg - JJK Research: Just lastly, can you guys comment on any product sourcing advantages you might be gaining for the first and second quarter of next year? Because I know there was something that you didn’t have the advantage of here in the first half of ‘09. I’m wondering what the outlook is for ‘10, because I think you’re probably placing those orders right now.

We are. I expect them to be safe, go ahead, Chuck.

No. It’s the same thing. When the demand is weak in the United States, the costs are better in Asia and it’s the basic opposition. So, as we continue to experience this weakness here, we’re going to continue to see favorable costs over in Asia.

Your next question comes from John Morris - BMO Capital Markets. John Morris - BMO Capital Markets: Question for you, one more inventory question, but I think maybe here’s how I want to ask it. I think maybe it would help to kind of understand a little bit better when you had talked about purposefully slowing shipment of inventories, I think I’m hearing that you say that that’s partially due to the new flow strategy and setting fall later. I think with the calendar shift, maybe we would have expected it to be kind of the opposite. So a little bit more clarification on why you would have purposefully slowed those shipments of inventory?

Let me apologize if I was not clear on that. We slowed the shipment of inventory last year, because we had to make decisions on when we wanted inventory to come in last year. You’re making those decisions months in advance and recall in the earlier part of 2008, we had not yet divested Disney, so we had other constraints around our business that caused us to want to slow some shipments last year. So we slowed some shipments of fall, so that we received the inventory just in time to replenish in August and then we slowed some shipments of holiday that were actually not received until September. This year, we didn’t have a need to slow the inventory, wanted to make sure that we had it in the United States in the right place at the right time and so we actually had more holiday that was loaded. It’s in transit it was loaded onto vessels. Its title passes when it’s loaded onto vessels and so we just had more holidays on the water than what we had at this time last year. John Morris - BMO Capital Markets: Now, was there any currency impact on the inventory?

It’s really minimal. The currency impact on it, because bear in mind Canada is only about 10% of our total business. You’re talking about, that’s very minimal impact. John Morris - BMO Capital Markets: Then my other question regarding SG&A, you gave us the full year guidance, which was very helpful in terms of where you’re planning SG&A. On Q2, you did de-leverage excluding the one-time items a little bit, maybe a little bit above your plan. Looking at Q3, could we expect, is it possible to see some leverage in Q3?

Again, it all depends at this point in time on the top line. On a dollar basis, I expect SG&A to be lower year-on-year notwithstanding the fact that we have more stores this year than what we had last year, but it really all depends on what happens on a top line basis. John Morris - BMO Capital Markets: Okay. So dollars for third quarter…?

Dollars for third quarter that should be down just by way of reference, last year we had 920 stores, this year we expect to have about 950 by the end of the third quarter. So we expect dollars to be down, but the leverage or de-leverage will depend on what…

Your next question comes from Dorothy Lakner - Caris & Co. Dorothy Lakner - Caris & Co.: I wanted to ask a question on gross margin, just on the components. So if you could comment a little bit on the higher shrink. Is that something, how far out of line is it? Is it something that you’re very concerned about? Just what kind of component was that of the gross margin de-leverage in the quarter? Then just a housekeeping question, on the number of stores right now that do have the shoes and lastly, I’ve seen that borders, for example, borders rewards is offering discounts at certain stores and I think places, one of them is that sort of something new that you’re doing, cooperating with other retailers to generate some traffic and is that something you’re going to do going forward?

So in descending order as you look at the gross margin decline, in descending order of importance, de-leverage was the single biggest reason for the margin decline. Second down it would be markdowns, which include markdown reserves. So basically markdown is number two, and then IMU is third. Shrink is fourth and then other cost it minor items. Shrink is concerning to us. We did see higher shrink in the fourth quarter of last year and we did our full year end inventory and so we are accruing to that higher level. By the time we get to the fourth quarter, we annualized an anniversary at the higher shrink rate. It’s concerning to us, to some extent, its part of doing business. We’re doing everything we can to minimize it, but nonetheless at this point in time we are accruing at that higher rate we saw in the fourth quarter of last year. Dorothy Lakner - Caris & Co.: So in the third quarter, again you’ll be accruing to a higher rate, fourth quarter that hopefully starts to flatten out?

I expect it to flatten out in the fourth quarter. Inventory comes, because we had a catch up in the fourth quarter of last year.

I will add to that that shrink has been a huge focus of the management team here. It’s something that I’ve become personally very involved in and we have a lot of programs that we have put in place this year, but do you think part of that is the environment, obviously. Turning to the shoe issue, I think we said about our shoe business, we’ve always had shoes in all of our stores, of a reduced amount we have an expanded two concept and both of those businesses are improving greatly in terms of margin. Dorothy Lakner - Caris & Co.: Both in store and then the side-by-sides--?

Yes. In the side-by-side is one of the experimental formats for the new shoes. We also have some new formats there that we actually feel more strongly about going forward in integrated format, but we do tend to think about core shoes, which are in all stores and expanded shoes, which are in all stores to accommodate a much enhanced selection of shoes. It’s sort of the difference of 50 SKUs versus 180. So that’s the difference between core and expanded. The expanded are in about 55 stores. Dorothy Lakner - Caris & Co.: That was the number I was thinking.

Then in then in terms of the borders thing, I have to plead ignorance on that one. We will have to figure that one and I’ll get back to you.

Your next question comes from Linda Tsai - MKM Partners. Linda Tsai - MKM Partners: Chuck, you made a comment about the new fast fashion program. Could you give us more detail on, what it entails and how it changes your currently replenished inventories?

I think that our sourcing, which we consider to be a real core confidence is probably a little bit on the longer side, because we’re optimized more for costs than for speed, but nevertheless, there are certain parts of our business that we feel we benefit by having more speed. So we’ve done is to take some important categories for ourselves starting with really denim and graphic tees and delay the decisions that we make on a significant portion of those lines until much closer into market. So we’ve been working on this program for nine months or so. We’ve really implemented heavily this fall and are pleased with the results so far, but it’s a bit early to see all the results, but it’s something that we feel very good about as an important component of our sourcing strategy. Linda Tsai - MKM Partners: Does this entail buying fabric and keeping it somewhere and then making it as trends come in?

It more has to do with getting set up on fabric and capacity, but postponing some of the decisions that we make until we can read the trends more clearly. Linda Tsai - MKM Partners: Then some of the retailers have talked about a strong start to denim. Are you seeing this as well?

Denim, we had a longer second quarter season in denim. So actually denim for us was a little bit slower than we initially anticipated, but we are seeing that trends change now.

Your final question comes from Marnie Shapiro - The Retail Tracker. Marnie Shapiro - The Retail Tracker: Could you just give a little bit more detail? You mentioned the store openings for the full year, but if you can just walk us through the third and the fourth quarter, if you wouldn’t mind and I wasn’t sure if you had mentioned 2010, and then just one further clarification on the direct business. Could you talk a little bit about the email and the marketing spend that’s been shifted towards direct and has it been successful, you’re getting good click through rates are you using your list more or are you using different avenues?

First in terms of the stores, as we said, we are thinking we are going to open about, 30 stores for the year. We are going to close some stores I think it’s we’re looking to open probably more stores in the third quarter and very few in the fourth quarter just because that’s the timing, that works out best. Now, in terms of the direct marketing side, we have done more investments in our direct mail, which is the mail that we send out. I just say we sort of maintain our, we have reduced some of our spending overall but we have protected the direct mail. We are definitely doing more spending in the direct channel than we have done before and with the focus on, getting more traffic and getting more conversions and those do seem to be, positive. They seem to be working for us, but in general, what’s happening in the marketing is they try to get a little bit more efficient in terms of how we spend the money and again focusing the spending from brand building to sort of more sales building in this environment. Marni Shipiro - The Retail Tracker: Do you ship internationally and are there any areas. I’m thinking particularly maybe South America where you’re seeing some click through on some sales?

No. We basically are U.S. website.

We have no further questions at this time.

Well, I want to thank you all for joining us today and thank you for your interest in the company and have a good day.

This concludes today’s teleconference. You may disconnect at any time. Thank you and have a great day.