Welcome to Carter's first quarter earnings conference call. On the call today are Fred Rowan, Chief Executive Officer; Joe Pacifico, President and Mike Casey, Chief Financial Officer. After today’s prepared remarks we will take questions as time allows. If you have any follow up questions after today’s call please direct them to Eric Martin, Vice President of Investor Relations. Mr. Martin’s direct telephone number is 404-745-2889; again that number is 404-745-2889. Carter’s issued its first quarter earnings press release yesterday after the market closed. The text of the release appears at Carter’s website at www.Carters.com under the press release section. Before we begin let me remind you that statements made on this conference call and in the Company’s press release other than those concerning historical information should be considered forward-looking statements and actual results may differ materially. For a detailed discussion of factors that could cause actual results to vary from those contained in the forward-looking statements, please refer to the Company’s most recent annual report filed with the Securities and Exchange Commission. Also, on this call the Company will reference various non-GAAP financial measurements. A reconciliation of these non-GAAP financial measurements to the GAAP financial measurements is provided in the Company’s earnings release. And now, I would like to turn the call over to Mr. Rowan. Please go ahead sir.

Good morning everyone and welcome to our call. It’s no surprise this remains an uncertain period. No one knows the depth of this recession, nor the timing of the recovery. Given that it makes it very difficult to gab market with any certainty. That dictates two things from us; one the very conservative which we are and two focus on what we have control of, which we are. Parts of our business units are performing quite well. A couple are having emerging successes. We are not pessimistic but we are realistic and determined. We have a clear focused and disciplined strategic agenda with muscle behind each of our major initiatives. We are committed to long-term quality growth, but we have to be sensible as we work through these headwinds. We have, however made materially -- strengthened our business through the new business models. You will hear this from Joe and Mike as we move through the models and more specifically about that and also during the questioning-and-answering period. To summarize our strategic agenda it goes as follows. The first is be certain we have and keep the core talent to execute the turnaround and position this company for long-term growth; secondly, to be the absolute leader at product value; third, to optimize both wholesale and the retail growth to powerful business models; fourth, to accelerate the turnaround of OshKosh; fifth, to make these key investments, both short and long-term and finally, substantially reduce our cost structure. I will turn the session now over to Joe Pacifico.

Thank you, Fred. Good morning. I will give you a brief overview of our first quarter performance and then Mike will provide additional details on our results. I will also share with you our strategic initiatives that we will begin implementing this fall. I will start with a quick overview of the Carter's brand and wholesale business. We had a good quarter in this segment with positive sales growth. Our over-the-counter selling of spring product was flat to last year and our top accounts in total saw a slight improvement in margin. The inventories are higher than last year at the end of the quarter but are at the appropriate level to support the second quarter retail sales brand, which is higher this year due to the calendar shift. As expected OshKosh wholesales were down in the quarter. In regards to over the counter selling, unit sales improved significantly. Our customer margins were up slightly to last year. Customer inventories are inline with plan and it should be cleaner at the end of second quarter than they were last year. Summer selling is off to a very good start. As we have told you before while spring was much improved as reflected in over the counter selling results, summer should be stronger and our goal is to build upon each subsequent line. Based on this product performance, we are rebuilding confidence with our accounts and we expect to see this reflected in our year-over-year bookings. I would like -- we would now like to focus on our strategic initiatives. I want to make sure you have a core understanding of the model that will kick off starting in fall ‘08. For the wholesale channel, we are implementing a far more competitive model. The model is stock-based and is supported by…

Okay, thanks Joe. Good morning, everybody. I will walk you through our results and also comment on our outlook for the balance of the year. For compared purposes keep in mind that our results in the first quarter of 2007 include the charge of $0.06 per share related to the closure of an OshKosh distribution center; because that charge impacts comparability I commented on our results excluding the impact of that charge. For the first quarter of 2008 we’re reporting earnings of $0.19 per share that’s down 14% to last year. Our earnings will lay down by an operating loss incurred at OshKosh, which was approximately $9 million in the first quarter or $0.09 per share. Net loss is about $6 million higher than the first quarter of 2007. Our earnings were also negatively impacted by disappointing performance of our “Child of Mine” brand. Partially offsetting the weakness at OshKosh and “Child of Mine” were significantly better performance, in our Carter’s retail segment and the strength of our “Just One Year” brand. With respect to sales in the first quarter total sales were up $10 million or 3% to last year. That growth was driven entirely by our Carter brands with sales up $80 million or 7%. Our growth in the quarter was led by the Carter's retail segment. Our Carter’s retail sales increased 15% with a 12% increase in comp stores sales. This increase was driven by a stronger products offering, a significantly better inventory position and better execution by the new retail team. We’re seeing acceleration in baby product sales, which is our highest margin business. Our brand stores continued outperform the outlets the brand store comps were up 18% in the first quarter, the outlets were up 11%. Sales in Carter’s wholesale segment grew 5% in the…

Thank you, sir. (Operator Instructions) For our first question we go to Omar Saad with Credit Suisse. Omar Saad – Credit Suisse: Good morning.

Good morning.

Good morning. Omar Saad – Credit Suisse: Quick question on the new model and I think it was very instructive laying out of that kind of five pieces to that model. On the sourcing side, especially as you look to increase customer profits and giving them better in that for margins and lowering pricing, how do you balance that on the souring side? There has been a lot of talk about inflation coming out of the Far East and you kind of always used that the agency model with you sourcing and restructuring. Have you thought about reconfiguring that or can you kind of give me your current thoughts on that side of the business?

Omar this is Mike. There is no question of cost in China, are going up. We’ve been staying very close to Li & Fung specifically; that agent model is kind of important part of our success and will continue to be. Because the costs are growing up in China, we’ve reduced our sourcing mix in China and we have shifted to lower costs countries like Bangladesh, Indonesia, Vietnam and we are seeing some very good performance from those countries. Our fabric as we talked about in prior calls, that’s the largest component of our product costs. So, for the past year we’ve been focused on nearing the scope of our fabrics, leveraging fabrics over multiple products and brands where appropriate. We equate complexity with costs, so we’ve been attacking complexity in the product development process, we’ve been narrowing the number skews particularly at OshKosh. We still feel as though the assortment for the consumer is too broad at OshKosh, for spring 2009, we’d estimate that we’ve cut the skews by about 20%. We’ll see a similar opportunity for fall, 2009 and the skew reduction enables a crisper point of view for the OshKosh product assortment for the consumer. It increases the efficiency in sourcing, enables us to increase our forecast accuracy and it also enables us to carry less inventory so there are a number of good initiatives that we feel so enables us to continue to lower cost structure and improve our margin. So I would say, we are making good progress and have a number of opportunities in the sourcing area and else where in the company to offset the rising costs in China. Omar Saad – Credit Suisse : Okay and so, but it is sounds like you are still very committed to the agency…

We are. Omar Saad – Credit Suisse: Agency, okay.

Yes we are. Omar Saad – Credit Suisse: All right switching gear a little bit on this, the store shops that we are talking about, how many are out there today? And I haven’t seen any of these, but are they radically different than the kind of your current format in the stores, and where can we go to see them?

Yes we think they are radically different, we have got three out there today, we are installing a few more before we get -- and the major push will start in the third quarter. Omar Saad – Credit Suisse : Okay and it is what Kohls and Penney's or which retailers are that going to…

Yeah Kohls and Macys and Penney's were working a plan on right now. Omar Saad – Credit Suisse: Got it. Okay and can you tell us where the three are that are out there today.

Yeah. Kohls in Sussex, Wisconsin. Macys is Dadeland and then -- Dadeland of Florida and then Apparel 34 Stream. Omar Saad – Credit Suisse: Got it. Thank you.

You are welcome.

For our next question we go to Brad Stephens with Morgan Keegan.

Hey guys good morning. It sounds like you guys actually have a pretty well laid out plan which I think Rob’s pretty excited about. The one question I think that I definitely have in the plan here is that you are going to take prices down and yet you expect margins to be up to the retailers, what does that mean for your margins though?

In terms of -- we are going to see near-term, we are going to see margins decline, our model support in the third quarter, margins would be comparably year-over-year, we see margins improving in the fourth quarter.

That’s from faster turn?

Yeah, that is primarily from correcting the inventory positions, if you think about the things that have weighed our margin down, it’s largely been OshKosh and the fact that we are out of balance in inventory, even in our retail stores -- Carter’s retail stores last year. If you’d look at these profitability of our Carter’s stores in the last couple of quarter the segment profitability is that they are up about 30% over the last two quarters. OshKosh was still the -- most of the decline in the first quarter came from the OshKosh retail stores in terms of much higher promotions year-over-year, but as we look at the models we’ll see some of that continuing to the second quarter, our models now show that the margins will improve meaningfully in the OshKosh stores in the second half of this year and in fact in the last couple of weeks, we’re starting to see the benefit of cleaning up the OshKosh retail store inventory. We put up positive comps with better margins year-over-year. So, we’re starting to see some signs of recovery and in my view I think we’re starting to see OshKosh kind of bottom out it’ll be helpful that we can see improvement from here.

Second question, Mike, to the inventory build, Q2, you said is going to be up 13% to 20% in part, to help alleviate any concerns about West Coast Dock Strike. How much of that is a build, you’re just bringing the shipments in early?

It’s entirely due to bringing the shipments in early. We’re probably going to carry an extra 18 days of inventory just to give ourselves a kind of safety net in the event that strike occurs. We’re safe today; it’s probably less than a 50% chance that occurs but back in 2002 when they went out on strike we did a similar type strategy to bring goods in earlier and we didn’t have any disruption in the flow of product. If your to strip out those extra 18 days our inventory mid year would probably be up mid-single digit. So, it’s entirely related to that and we feel good about the outlook for inventory at the balance of the year that will back to about mid-single digit growth.

Great. Your commentary about on the last call or you kind of said you thought earnings is going to be flattish now that it can be down 5% when I look at -- kind of how I looked at OshKosh in Q1 there was about $6 million dealt in profitability. So, one will OshKosh be break even this year better or worse in expected?

No, it could – it could be

It could be, so it could be another year of a loss?

Yeah it could be it could be flat to down this year in terms of contribution.

So, then the -- so, then you are only change release your outlook is OshKosh?

Probably I think that’s fair to say primarily OshKosh.

Okay, and I know you said you’ve seen some improvement, but are there any, milestones along the way, that they said “Look it just doesn’t work.”

We actually think the worse is behind us, OshKosh. This think in summary we will get terrific leaderships here now with a brand leader at over the brand and over Soho, we got a good leader and GM in our retail stores. It’s a vastly more competitive model for our wholesale accounts. We’re actually seeing good results for the wholesales, brands are selling well and the summer is off to a far better start. So the product is evolving as we mentioned in previous calls it’s been validated by our consumers, our customers that are pre-lining it and given as input. There is far or less complexity and in-lined as Mike said, which helps the cost margins story and there is a return to the organic core at this big denim offering, we will have the big classifications that are important, as we moved through the year. Just reminds you it’s a season by season evolving story where we have had good top meetings so far with their customers, they have think the brands are important and we are optimistic. We just – it’s going to take some time as we move through the year.

Okay. Then one last one; Joe could you tell us -- compared to maybe last year or just historically what percent of bookings do you have in at this point and our retailers holding out longer and longer, to give you those bookings?

Yeah actually we have got our fall bookings and we have had them in for a while, so we are in pretty good shape with fall and I think we created mid single digits out in all the three product markets so a long way to go but the initial booking look good.

All right guys, best of luck.

Thank you.

Thanks Brad.

For our next question we will go to Margaret Whitfield with Sterne Agee.

Good morning. I was impressed by your retail comps, I wonder if you could discuss if those trends have continued here in early Q2 and whether the comp and particularly in those brand stores were driven by ticket or traffic; if you could comment on how that work that’s the first question then I have wanted two more?

The strong performance as continues the second quarter. So, we are really encouraged by the progress we’re making in the Carter’s retail stores.

And is it fueled by ticket transaction, do you have those numbers?

I will get you the actual results, let me speak to Carter’s specifically and the first quarter of the 12 comp, it was driven largely by strengthen units per transaction. I mean the consumer loved what they saw and perceived the deal. The number of transactions were up about 4% and prices were up about 1%, so, nice to see a strong comp with a stronger margin and prices that were comparable to the last year.

Okay and then on the investments spending I think you have said Q2 $10 million did I hear that incremental investment.

Correct.

$18 million for the year, so would the reminder be primarily in the third quarter and if so what would be some offsets to that investment stand?

Yeah, actually Margaret, just the level of spending, the SG&A will be up $10 million for the year. We would say that incremental spending would be about $18 million. So, that included in that $10 million increase in spending on the second quarter are investments and it’s the other whole focus was on getting the right team in place in retail. You can see the benefit from that investment and the Carter’s retail performance. We are hopeful that Joe and his team could replicate that same type of performance beginning with second half of this year with OshKosh. I think, as Joe said, every key position in retail was upgraded, beginning with Joe and maybe your last year, so we didn’t have that expenses of the team in the first half and for the last year we were confident we are getting started now. We are funding incentives. Incentives this year will probably be some portion of the $9 million that were not in our spending last year and our new systems for retail, we have the fixturing program, the new shops that Joe talked about. We are investing in what we call retail marketers; people, were actually down and we’ll make sure those shops are executed properly and supported with good inventories, we get the inventory out of the back room and onto the fixtures, so, it’s a comprehensive approach to strengthen the presentation of the brand on the floor, if we are investing at research consulting, so 2008 were characterizing it is going to be a year of investment. Our whole focus is to make sure we are taking all the important steps necessary to get our sales back on our growth path we are getting it next year.

Well, it sounds like a lot these investments are going to fall also in Q3.

Sure.

But I take with you are planning on volume to offset it.

Actually, I think you should focus on four quarters, we are going to start to see the strength in the business. I think I would set your expectations that the growth this year, will start to come in the fourth quarter because, we are starting to roll these shops out and I think it is important for everybody to break the business down into its components at Carter's, these shops will start to roll out these new born shops in the third quarter, that will hit the floor sometime during the third quarter, but the full impact what we see until the fourth quarter. Carter's retail, we are going to continue to see terrific performance that we are seeing over the past couple of quarters, in the mass channel. Now we have had some issues with the Child of Mine brand in the first half. The dollars start to be corrected at is beginning in the third quarter but the full impact what we are seeing until the fourth quarter. When you go to OshKosh retail, the OshKosh retail is 80% of the sales and all of the profitability. So, we are going to see the performance getting better with OshKosh retail stores first and I will suggest that at beginning the third quarter and will continue to the fourth quarter. OshKosh wholesale are just encouraging, it is the smallest component of our business and will probably out lag the turnaround in OshKosh retail. Retail is the leading indicator and then OshKosh wholesale will follow book. To Fred’s point we are starting to see some pretty good selling over the counter with spring products and we are hopeful that's an indication thing that there are better days are ahead.

In terms of the wholesale I know you spoke earlier they were inventory cut backs early in the year mark down money request if those traditions continued here in Q2 with further cutbacks beyond your expectations.

Yeah, everything is in our plan and we have accounted for everything, combinations other than be budget and we think we actually been more proactive this year looking out at our order fall. So, we think we feel good about.

Okay. Thanks and best of luck.

Thank you.

We will go next to Jim Chartier with Monness, Crespi, Hardt. Jim Chartier – Monness, Crespi, Hardt & Co., Inc: Good morning. Just few questions on the direct balance side for the Carter’s and OshKosh, yeah, were you pleased with that and can you give us some metrics that enjoys the performance there?

We have significantly increased via model impressions and I think the payback we are still analyzing that, but with I think its definitely effective in the Carter revenue, it’s and in quarter two we expect to have about $17 million impressions for each brand. So, we are increasing the presence and we are starting to, track with our new point of sale system, and our CRM. But, I would say the -- I don’t have an exact number and redemption we can get back to you with an exact number, but it has been positive. Jim Chartier – Monness, Crespi, Hardt & Co., Inc: Okay and then how many -- you said you are going to service 1000 doors in the second half of the year. How many doors, you are servicing now, and how many where you servicing in the second half of last year?

I would say it’s probably, at least twice as in early more part around the 300 to 400 range this year, really out to 1000 in the second half. And then we planned to expand that in 2009. We think just potentially probably 2500 doors we would like target.

And I will take the top mains with our accounts this far it is going to land for the zero to 24 shops and servicing the slower managing and housekeeping at the floor. Jim Chartier – Monness, Crespi, Hardt & Co., Inc: All right and

We are very encourage about that Jim Chartier – Monness, Crespi, Hardt & Co., Inc: Okay. And then what is the inventory plans for OshKosh retails. It sounds like you have had some additional promotional activities are you taking inventories down there to moderate promotional dividend?

This is the levels year-over-year our comparable selling opportunity reduced as further its not so much the levels that is the mix we have talking with our sales with too much far and how they carry always we got promotional on that we have actually helped the retail group by taking some of what they would have other rise taking in spring and we are moving it out to be our price channel and taking some charges related to that. Our whole focus is and Jims plan is to make sure that is we are into that third quarter we got a better mix in level of the inventory as I mentioned you can see a significant decrease in the level, but the mix of the inventories what we’re focused on improving. Jim Chartier – Monness, Crespi, Hardt & Co., Inc: And how -- are you happy with the mix of the end of the first quarter.

Well, no, no, no. The mix of that inventory won’t get better until early in the third quarter. Jim Chartier – Monness, Crespi, Hardt & Co., Inc : Right, good luck, thanks.

Thank you.

(Operator Instructions) We will go next to Bob Kaynor with Ramius Capital..

Hi, thanks for taking my question. You talked about the potential for the West Coast Strike and the inventory build to mitigate that risk, are there incremental cost in the P&L that you are modeling for should the strike occur.

Yes. We are. Yes.

Okay, can you put a number to that?

No, I would rather not to be specific and that really we're working into the estimates.

Are those some costs or would you get those back if the strike doesn’t occur?

Yeah, a good question; if that strike doesn’t occur, that there is an opportunities to save the.

Okay. And it just a quick question, what was D&A in the quarter?

Bear with me a second.

And then maybe why you are looking for that and how much is left on the share repurchase authorization?

That about 22 million, about $23 million. D&A in the quarter was roughly $7 million.

Okay and can you just talk about the share repurchase plan, we are clearly an uncertain retail environment and you have a little bit of leverage can you just help us understand why that's a -- now it's a good time to be buying back or to be using that capital to buyback shares?

The program was put in place last year. I’d say the pace that we’ve been repurchasing shares has not been aggressive; its clearly an opportunity. Our leverage today is less than two times current EBITDA level of leverage we’re very comfortable with. Yeah, that’s clearly an economic benefit of repurchasing shares given what current valuation is relative to taking down fairly low cost debt. Our after-tax cost is borrowing is less than 4% and clearly we see a better economic benefit repurchasing this year. With that said our focus on the user cash is to fund our growth initiatives and to the extent we feel comfortable with per days is excess cash, those dollars will initially go to the share repurchase plan and then to debt reduction. If you look at our balance sheet we are carrying over $60 million of cash, we’re very clearly being cautious under how aggressively we get on that share repurchase plan. We will do it thoughtfully and we will do it over time, and you shouldn’t expect that we are going to get a really aggressively line of share repurchase.

I should probably know this but what’s the maturities schedule on that debt?

On the debt 2012.

Okay

It’s a fairly modest amortization requirements between now and then.

Okay alright thanks for taking my question.

You are welcome

And with that ladies and gentlemen we have no further question on our roster. Therefore Mr. Rowan I’ll turn the conference back over to you for any closing remarks.

Just a few comments in closing while these are rocky waters we are in we want to remind you and I will say this in just it’s not our first review. We have a history of dealing with this appointment, we have always believed in and continued to believe in the teams with the best talent and the best business models win. We think we have both there as we have unprecedented investments and people on our business models. We are much closer to the consumer and the customer. We feel the worst is behind us with OshKosh. We have a very disciplined approach to decision making and we will have a lower cost Company; all of which I feel is going to position us for quality growth. We always thank you for your participation and your quality questions. We look forward to our next call.