Good day, ladies and gentlemen, and welcome to the Casual Male Retail Group First Quarter 2008 Earnings Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will be given at that time. If anyone should require assistance during the conference, please press * and then 0 on your touchtone phone. As a reminder, this conference call is being recorded. I would now like to turn the conference over to your host, Mr. Jeff Unger. Sir, you may begin.

Thank you, Shannon, and thank you all for joining us this morning. On our call today is Dennis Hernreich, Senior Vice President, Chief Financial Officer, Chief Operating Officer; and David Levin, Chief Executive Officer and President. Today’s discussion will contain certain forward-looking statements regarding the company’s operations, performance, and financial conditions including sales, expenses, gross margins, capital expenditures, earnings per share, store openings and closings, and other matters. Such forward-looking statements are subject to various risks and uncertainties that could cause actual results to defer materially from those assumptions mentioned today due to a variety of factors that affect the company. Information regarding risks and uncertainties are detailed in the company’s filings with the Securities AND Exchange Commission. Our complete Safe Harbor statement is available at www.casualmalexl.com. Now, I would like to turn the call over to David Levin. Thank you.

Thank you Jeff and good morning! Our first quarter sales results that we reported today were in line with our expectations. This trend is consistent with the performance we have now seen for the last three quarters. This has been a result of the slowdown in traffic in all our retail channels. We are pleased, however, that our sales have been stronger relative to the traffic issue. Traffic for the quarter was off in the mid single digits, but our comps were only off 2% due to a continued improvement in our conversions and the increase in our average ticket out the door. We continue to believe that the difficulty of the top line is the result of a challenging macroeconomic environment where consumer spending has slowed down in the apparel sector. We are, however, encouraged that when the customer does come in to buy, he is pleased with the product we offering and spending more than a year ago. It is interesting to note that the shortfall in sales all came in the month of March. April and May month to date have been trending with modest positive comps even though we still haven’t experienced a good shot of warm weather yet in the northeast. We are also encouraged that we are able to protect our merchandising gross margin in the first quarter and anticipate that to continue throughout 2008. We see no need to change our strategy from a promotional point of view, even in a tough retail climate. From a marketing perspective, we are optimistic that our strategy to improve store traffic through a new television campaign that we launched 3 weeks ago. The commercials are geared to attracting the 42- to 44-inch waist guy that is frustrated in the lack of assortment available in those sizes…

Thank you, David, and good morning, and thank you for joining us on this morning’s call to discuss Casual Male Retail Group’s earnings and performance for the first quarter of 2008. Although the company’s earnings from continuing operations dropped to flat earnings per share in the first quarter compared to $0.04 of earnings per share a year ago, we reiterate our guidance of $0.25 to $0.30 earnings per share for this year. The earnings drop in the first quarter was due to a sales decrease of 2.7%, mainly driven by slower customer traffic as David stated and the fact that last year’s first quarter comparable sales increase was at its highest for last year at 6.2%. At the same time, gross margins declined due only to deleveraging of occupancy costs as merchandise margins were flat last year, and SG&A was flat at last year’s levels as well. Looking forward for the balance of the year, our comparable sales will be up against softer 2007 results—a 3.9% increase in the second quarter, a 1.1% decrease in the third quarter, and a decrease of 0.3% in the fourth quarter. Let me take you through the components of the company’s performance in the first quarter. Sales were $107.6 million, or slightly down when compared to sales of $110.6 million for the first quarter of last year. The sales shortfall of $3 million was primarily driven by a decrease in our comparable sales of 2% and a comparable sales decrease of 4.7% from the company’s core businesses. Company’s non-core businesses--that is LivingXL, BT Factory Direct, and ShoesXL generated sales of $3.6 million compared to $0.5 million during the last year’s first quarter. Our retail channel had a comparable decrease of 4.1% for the first quarter which was partially offset by an increase of 9.4%…

(Operator Instructions). Our first question comes from Scott Krasik with C.L. King & Associates, Inc. You may begin. Scott Krasik - C.L. King & Associates, Inc.: Hi guys. The categories that you pointed out that we are doing well at Casual Male seem to skew younger. Is there some evidence that you’re getting a younger customer in there?

Well, as we’ve stated over time, we have plans to bring down the average age of our customer from 50 years old down to 45 years old, and we continue to see that younger guy lifestyle coming in. Our fastest growing lifestyle as a percent of sales continues to be 626 Blue which is definitely catered towards and influenced by Abercrombie and Arrow Pastel. For example, screen tees are just on fire right now. The good news is it’s a category we can catch up to relatively quickly, and we’re moving some more of our inventory dollars there. [inaudible] but anytime we’ve had pocket of weather, that’s category is doing very well. So, yes, we can [inaudible] younger influenced customers coming in and going for those categories. Scott Krasik - C.L. King & Associates, Inc.: Yeah, I don’t think 45-year-olds are wearing graphic tees. Maybe.

No, you’d be surprised. We actually monitor that, and they are wearing our tees. Our best-selling T-shirts have a lot of rock influences, like right now Led Zeppelin, Pink Floyd, and we can all remember those things. Scott Krasik - C.L. King & Associates, Inc.: Absolutely! Okay, what product are you focusing on for the European launch?

What product? Scott Krasik - C.L. King & Associates, Inc.: Is it going to be casual? Is it more dress? What’s the mix?

It’s pretty well the balance of what we carry in our stores and we would carry on the internet. Certainly, we do more sportswear internet-based than we would do on the clothing side, but we’ll have a balance of all products. Scott Krasik - C.L. King & Associates, Inc.: And do you have any expectation for sales for that business?

We do. We haven’t put and it’s not going to be impactful on this year. We’re committed to not coming in and delivering a big loss in a start-up like this. Our cost is really based on the amount of marketing we’re going to spend, and on the internet, it is efficient, but we’re not geared to have this influence our earnings one way or the other for 2008. We have to get a feel for what’s selling, what sizes work, how many bigs versus tall—these are all things we’ll have to monitor and make adjustments as we try to mature the business. Scott Krasik - C.L. King & Associates, Inc.: Okay, and then Dennis, if the sales plan doesn’t come in as you expect, is there more room to cut in SG&A, or are you pretty trim there?

No, it’s pretty trim, Scott. Not unlike what we’ve said in the past. Scott Krasik - C.L. King & Associates, Inc.: Okay. Alright. Thanks very much.

You bet!

Thank you. Our next question comes from __________ with RBC Capital. You may begin. Unknown analyst – RBC Capital: Thank you. Hi guys. I know you said that you expect inventory to slowly drop over the year, but do you know where you are expected to be at the end of second quarter?

At the end of second quarter, primarily flattish. I think much of the inventory level improvement you’ll start to see that in the third quarter and obviously at the end of the year. Unknown analyst – RBC Capital: Okay, great! Just one more question, in LivingXL, I noticed the new women’s apparel—mostly active wear and swim suits. Are you planning to expand into women’s apparel based on the customer base - you said it’s about 50%, or do you think it’s just going to be kind of a small part of the business?

I think it’ll be a small part of the business, but we’re probing. We are trying some things. We’ve put some items up on the internet where we didn’t have to make a major commitment. It’s something we’re watching, but I really think it’ll stay where it is. We’ll have some active wear, which would be similar to the types of apparel we’re offering on the men’s side. Unknown analyst – RBC Capital: Okay, alright. Great! Thank you.

Thank you. Our next question comes from Margaret Whitfield with Sterne Agee. You may begin. Margaret Whitfield – Sterne Agee: Good morning everyone! Your feelings on the new businesses, if you have changed your thoughts on what they could do for the year both on top line and bottom line - I think it was $20 million and break even.

I think we’re going to hold to that strategy. Between the three brands, we do move circulation up and down, which is really the only cost we have associated with these businesses, and they’re all still geared to break even, so circulation moves up and down, and if the sales go up at all, the marketing would probably move with it, or down, it would be the same scenario, so we’re still intent on having these new businesses break even for the year, and we’ll start talking about where we think 2009 could be in a few quarters from now. Margaret Whitfield – Sterne Agee: And Rochester, what did impact did Rochester have on your bottomline as well as the new business in Q1 – what kind of a loss?

We don’t break out profit and loss by area, but the only thing we would comment on is that the comp sales in Rochester were several points lower than casual male. Margaret Whitfield – Sterne Agee: What would be the timeframe you said Rochester would then transition? Would we expect to see better results in the second half, or is this sometime next year?

Yes, we think the second quarter will stay like the first quarter. We really geared our new inventory assortments for third quarter delivery, so we believe we’ll start to see a turn in that business in Q3 and improving through Q4. Again, when we made the decision to take the write-off on the inventory, we didn’t have inventory behind that to replace it, and with the lead times, our inventories are not balanced right now by store. We have shortfalls in certain categories by stores, so we believe that by third quarter, that should be balanced much better. Margaret Whitfield – Sterne Agee: And you saw a pickup in comps April into May, which are also an improving trend in traffic.

Better than it’s been. March is, I think, every retailer said we hadn’t seen traffic drop-offs like that for quite some time – for years, but yes, we’re seeing improvements in traffic. It’s hard for us to quantify if television has had an impact on the traffic yet, but we’ve seen the best sales trends in several months in the April and May. Margaret Whitfield – Sterne Agee: So, how bad was traffic in March? I think you said the quarter was down mid singles.

If you look at March, we were probably close to double digit loss in traffic, but we had a big bounce back in April. Margaret Whitfield – Sterne Agee: Would your TV spots feature more Father’s Day product or would it be the similar focused on the waist 42 to 44?

This is our campaign. It’s very focused, and this will run right up to Father’s Day as is. We have three different commercials running right now—all delivering the same message. Margaret Whitfield – Sterne Agee: And the same message for the fall TV that you’re planning?

Well, we’ll review that, but we like what we’re seeing, and we think that is our best long-term strategy, is to continue to penetrate for that smaller big guy because there are so many of them out there, and anecdotally, we know stories of some of these guys who have come in to a Casual Male store in the last several weeks, and they’re always pleasantly surprised. It’s always a positive experience when they come in and see the breadth of selection and the fact that we do have fashion in our stores, and that’s our long-term strategy. That’s going to be much easier for us to execute than trying to get our existing customer to shop 3 times a year, instead of two times a year. Changing behavior is rather difficult, so we have a big population of big guys out there who have never been in a Casual Male store, and that’s our strategy to get them to experience it for the first time. Margaret Whitfield – Sterne Agee: And you mentioned weather, and you have a large base of northern stores, but are you seeing any comp difference between the southern base and your northern tier?

It goes by week. We really haven’t had the warm spell that we look forward to in the Northeast. The one or two weeks where we have had favorable weather, our comps were certainly stronger in the Northeast. Overall things are pretty even all over, except as we’ve discussed in the past, our Florida market continues to be underperforming, but that’s been going on for at least 9 months now. Margaret Whitfield – Sterne Agee: Okay. Thanks and good luck!

Thank you.

Thank you. (Instructions). Our next question comes from Gary Giblen with Goldsmith and Harris. You may begin.

Hi, good morning! Following up on some of Margaret’s questions – is there any pattern of more affluent area doing better or worse than non-affluent areas? I mentioned that because of the Rochester comps doing worse.

No, nothing that we can tell by market area. Our rural or metro stores or our suburban stores, we haven’t seen any major difference in our sales patterns.

So, that would be more of the Rochester-specific merchandising transition that would…

We think Rochester is not as much of an economic issue as it is our own execution. Now, we’re hearing struggling from Neiman’s, Nordstrom’s – it seems everybody is struggling at that level. It’s certainly having an impact, but a lot of it has to do with our own execution.

Okay, and also you said things were pretty even through the country regionally, but how about California and is there any distinction between Northern California versus Southern California, because in Southern Cal, you’ve traditionally had a top-performing area?

I think we have a unique situation there because a year ago to this year, our operations are much stronger there. We have some really good people out there that have really upgraded the stores. We’ve upgraded the management. Apples to apples, from what we’re hearing, Southern California should be doing worse than it is, but we have some low-hanging fruit there, so we are not experiencing that today. Maybe we will if this trend continues that we’re hearing about in Southern California, but as of now, our only real pocket of problem is in that Florida market.

Okay, thanks. That’s very helpful.

Okay.

Thank you. Our next question comes from Betty Chen with Wedbush Morgan. You may begin.

Thank you, good morning! David, I was wondering if you can talk a little bit about the plans to go into Europe. I believe you said you’d obviously be evaluating the Merchandise mix. I was just curious what is your current marketing plan – obviously direct is the focus, and then I was wondering if that was included as part of your budget, and then I have a couple of followups.

Well, marketing is mostly geared towards the internet. We will use the same strategy that we use in the States. Google word searching, affiliate programs where we can, banner advertisements – pretty much the traditional way we do it here. I would say virtually all our marketing money will go into that approach. What was the next part of that?

Is the spend on that already included in your 2008 budget?

Absolutely, Betty, and as we go forward, once we’ve launched in six countries and our two brands, it would be our plan to follow that up with another 6 to 8 countries and be almost through …well, there are 39 countries in the European Union today. We’re going to be in not quite half of them, but we’re going to double the number of countries that we’ll start with into next year.

Great! That’s very helpful. Could you also talk a little bit about the reasoning for some of the gross margin improvement that you’re expecting? I think you said about 50-basis point this year, primarily coming in the back half. Is that mainly because of the Rochester repositioning should be done by then, and also maybe inventory coming down.

Hopefully inventory coming down. Last year, we weren’t quite positioned to absorb the change in our sales plan as it actually unfolded. If you remember, our spring season was very good, and that really switched around in the second half of the year, and we didn’t really position ourselves for that. Therefore, we had more seasonal inventory to have to clear than we had anticipated and that’s where we got some of the marked down rates. We don’t think we’re going to have quite that excess issue this year. Rochester should help because we did start to purge inventory in the second half of last year. We’re expecting to maintain our non-promotional cadence since it doesn’t resonate well with our customers, and therefore we will see some improvement in our marked down rates in the second half, as well as there are some cost decreases which we are expecting in the second half which will help our merchandise margin as well.

That’s very helpful, and then I was curious - you mentioned that inventory plans will be going down. How should we think about that for the back-to-school timeframe? I would imagine that could be another very meaningful market or opportunity timing for you and obviously I think a growing business as you start to look even younger, given some of the obesity trends that we’re seeing. What is the back-to-school inventory plan, and then are there also some marketing initiatives to support that as we look ahead?

Well, 626 is the lifestyling that you’re referring to. 626 has grown steadily, and our assortments will be well positioned for August. The last time, however, we tried to promote or to feature that brand in the back-to-school period, it seems that our guys don’t go to school so much because August is not – unlike our outlets, it doesn’t resonate well with our customers, but 626 will be an even more robust part of our assortment in the fall, and we’ll certainly be ready for them in the first part of August, and that is incorporated in our inventory plans. Expect that 626 my recollection is the assortments will be about 10% higher than they were this time last August.

Any new categories or maybe increased investments in certain classification for 626 to look for this year?

Yes, again as I mentioned before, screen tees are part of the 626 line which are doing extremely well. We’re also launching a new sub-brand called Synergy Jeans, which we’re really excited about. Our number one selling woven brand in Rochester is Robert Graham—definitely more fashion forward, contemporary line of clothing, and we’ve now interpreted that for our Casual Male stores at much more reasonable prices. These are shirts that were selling in Rochester day in and day out $200 to $225, and we’ll have those shirts in Casual Male for under $60. So we know already how well they’re doing in Rochester, so we’re pretty excited about that, and we’re coming out with a premium denim pant in Synergy also which will be a little more updated, and again we’re getting a lot of success with that in our Rochester stores in the premium denim brands.

Great! Thank you and good luck!

Thank you.

Thank you. I’m showing no further questions at this time.

Okay. Thank you all for joining us today, and hopefully, we’ll continue our current rate of business performance, and we’ll be talking to you next quarter. Thanks again.

Ladies and gentlemen, this concludes today’s conference. Thank you for your participation, and have a wonderful day!