Welcome to the Casual Male Retail Group’s third quarter 2008 earnings call. (Operator Instructions) I would now like to introduce your host for today’s conference, Jeff Unger.

Thank you for joining us today. On our call today is David Levin, our President and Chief Executive Officer as well as Dennis Hernreich, Executive Vice President, Chief Operating Officer and Chief Financial Officer. After I read the forward-looking statements, both David and Dennis will read prepared statements and then open up for question and answering. Today’s discussion will contain certain forward-looking statements concerning the company’s operations, performance and financial conditions, including sales, expenses, gross margin, CapEx, earnings per share, store openings and closings and other matters. Such forward-looking statements are subject to various risks and uncertainties that could cause an actual result to differ 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. David, the call’s open for you.

Today we announced third quarter comp sales decreased 5.3% from last year, with the comp sales being down 2% in the previous year. The most recent quarter showed about a 5% drop in sales trends from Q2. Consistent with other retailers, there was a significant fall off in traffic during the month of October. Also consistent with the market, the more problematic areas of the country were in the southeast and the southwest. On a positive note, conversion rates and the average transaction continues to improve over last year, so we have been able to offset some of the loss in traffic by improving our sales metrics. We’re confident that the loss in comp sales is not a result of losing market share. What we are seeing is the effect of macro economic conditions that have caused erosion in customer confidence and spending. It’s interesting to note that CMRG has two Big and Tall chains that cater to different demographics. We’re seeing that Rochester Clothing, our higher end luxury concept has felt the impact of the current economic situation to a much greater degree than the Casual Male. This seems to be consistent with the results reported last week by the higher end department stores, such as Neiman Marcus, Nordstrom’s and Saks. As the retail world has been turned upside down in the last 60 days, we have been quick and diligent to take appropriate actions where we can. Managing our inventory has become the central focus of our activities as we try to adjust to the slowdown at retail. Even with the shortfall in sales to our forecast, today our inventory is 7% less than a year ago in total and 10% less on a store average basis. And we believe by the end of our fiscal year, total…

Thank you for joining us on this morning’s call to discuss cash from our retail groups earnings and performance for the third quarter of 2008. Many of my comments may reiterate some of the points David has made, but I think it important to emphasize the attention and focus the business has in managing through a difficult business climate. For the third quarter of 2008 we had a net loss of $3.2 million or $0.08 per diluted share as compared to a net loss of $3.8 million or $0.09 per diluted share for the third quarter of last year. For the nine months ended November 1st we had a net loss of $1.2 million or $0.03 a share as compared to a net loss of a couple of hundred thousand dollars or $0.01 a share last year. What is the most significant part about the third quarter is the impact the macro economic trends had on the company’s business, which was not entirely apparent earlier in the year. During the third quarter the company experienced a significant downturn in the sales trends. Comparable sales during the first quarter and second quarters were minus 2.7% and plus 0.3% with August performing similar to the year-to-date trend. However in the third quarter comparable sales decreased by 5.3% due to significant drops in September and October which are continuing in November. As David stated sales trends deteriorated as traffic decreased, not only in our retail channel but also the direct channel as well. Being uncertain as to the depth and duration of this economic down cycle we have re-prioritized the company’s many initiatives to focus on free cash flow, inventory management and strengthening the company’s strong liquidity position under its revolving line of credit. At the end of the third quarter the company’s…

(Operator Instructions) Your first question comes from Scott Krasik – C.L. King & Associates, Inc. Scott Krasik – C.L. King & Associates, Inc: David, I know you don't typically do this, but can you give us sort of a monthly progression during the quarter of the same store sales, and then give us some indication of where they've gone in November?

No, we don't comment on current quarter. As Dennis said, we're seeing a continued shortfall in traffic and the same type of improvements we're seeing in conversion as we have in the second quarter, but I think it's consistent that things have not improved at all. Starting into the fourth quarter for us and what we've heard out there from everybody else we seem to be fairly consistent with what other retailers are reporting. Scott Krasik – C.L. King & Associates, Inc: I mean some people are putting on minus 20s, is that consistent?

No, but remember, they were coming from minus 15s or 12s. I mean I think our performance of minus 5 for Q3 was probably one of the better numbers out there. Scott Krasik – C.L. King & Associates, Inc: So now, I mean, obviously the traffic is weaker than you expected when you had originally planned inventory and whatnot. Since you haven't been successful in the past, and I don't think most retailers will be, promoting to get traffic – the inventory, they're probably still going to be too high at the end of the year, or?

No, I think I said that inventories should be down 5% to 10% less than year ago levels at the end of the year. We've been very aggressive and early to respond to the shortfalls in traffic and our merchandising teams have been very diligent in moving inventory. Again, one of the advantages we have at Casual Male is 50% of our inventory is core, which is programmable and that's very manageable for us to maneuver that inventory forwards and backwards. So our inventories look very good at this point in time, all things considered. Scott Krasik – C.L. King & Associates, Inc: Dennis, without giving specific guidance, can you give us sort of a range of where you potentially see the cash flow coming in for the year and what sort of range we could apply to the debt?

I think I said it's – the only range I can give you, Scott, is it is positive. Scott Krasik – C.L. King & Associates, Inc: You're going to pay some level of debt then.

Yes.

Your next question comes from Gary M. Giblen – Goldsmith & Harris. Gary M. Giblen – Goldsmith & Harris: I'm wondering what percent of your merchandise is sort of career wear, because maybe that's tied into one reason Rochester was comparatively weaker. Suits, obviously, tend to be career, work-oriented, but if you go across categories, do you know what percent it would come to approximately in both chains?

Casual Male is about 15% and Rochester is 25%. Surprisingly, our clothing business, suit business in Casual Male has been on the healthier side of our total sales. Gary M. Giblen – Goldsmith & Harris: I mean would you expect it to be related to broad changes in unemployment?

No, I think our assortments in Casual Male have gotten stronger. Rochester shortfall in sales is pretty well across the board. It's directly related to traffic.

Not unlike what you see in the higher end department stores, Gary. It's a very similar impact on the business.

The higher price points, the more challenging it's becoming and we're making adjustments for that for next year for Rochester, having a higher percent of our inventory at more moderate prices than our highest end product. Gary M. Giblen – Goldsmith & Harris: Within Rochester, are you seeing more pronounced weakness in financial center cities like San Francisco, or of course, the 6th Avenue store in New York?

Well, New York has held up pretty well. We remodeled that store. It looks great and there's been good response, but yes, we think the major markets certainly are having an impact and we're seeing that in our London store too. Gary M. Giblen – Goldsmith & Harris: An incremental weakness there, okay, and then I know gift cards isn't a big part of your business, but there's been a lot of talk about a big decline in gift card usage or purchases this time around. So, what do you see happening?

It's hard for us to speculate. We don't have – the gift card program really doesn't kick in until Thanksgiving weekend. Gary M. Giblen – Goldsmith & Harris: Finally, is your procurement, your buying power so to speak, the prices that you can negotiate affected by softer volumes or is it maybe improved because you're doing somewhat better than other retailers, so you're that much more important to the vendors or to the sectors?

Well, starting in spring '09, where our next receipts are going to be coming in, we have gross margin improvement planned mostly through our global sourcing division where we've been very aggressive and able to get better prices than we have in the past. So, we don't see any margin impairment. As I said, I think on the last call, the only area we're looking at price increases would be in branded footwear, which is coming out of China and it seems like every manufacturer has raised their prices across the board. But again, that's 5% of our total sales.

Your next question comes from Thomas Filandro – Susquehanna Financial Group. Thomas Filandro – Susquehanna Financial Group: Dennis, first question's to you. Can you just speak a little more about SG&A? You talked about marketing investment. I think you said flat to negative two on a dollar basis for the fourth quarter. Did you also say that is the type of number we should see for '09?

Yes. Thomas Filandro – Susquehanna Financial Group: In terms of the marketing piece, are we seeing marketing up year-over-year?

Well, marketing has been up year-over-year in 2008, and the point I intended to make was we're going to maintain that posture, not increase the dollars in '09, but certainly maintain our campaigns into '09 from '08. Thomas Filandro – Susquehanna Financial Group: Can you be more specific about how circulation plays into that, and just remind us too, TV, whether we're doing TV this year?

Yes, as you know we're doing TV this year in the fall, as the same posture as the spring and we intend on at this point to continue that into next spring and next fall. Our circulation in our cataloguing, as it relates to our current customer basis, our active files if you will, we're maintaining the same posture, same circ as we've been doing in '07 and '08, of course mailing to our new customers that have joined us, etc. But we have shifted many of the prospecting dollars that the catalog circ that was being used and instead, focusing on TV and mass media as the medium by which we'll prospect for new customers. Thomas Filandro – Susquehanna Financial Group: Is overall circulation – what was the overall circulation in the third quarter, up, down?

Overall circ is down because of the shift out of prospecting and into the TV. Thomas Filandro – Susquehanna Financial Group: Can you be more specific? How much it was down?

Top of my head, Tom, I want to say like 15% down. Thomas Filandro – Susquehanna Financial Group: And so that will be a similar trend in the fourth quarter?

That will be a similar trend in the fourth quarter. Thomas Filandro – Susquehanna Financial Group: As well as at least the first half of '09?

Yes. But don't forget that productivity of that part of our circ has always been very poor. Thomas Filandro – Susquehanna Financial Group: Okay, so core non-prospecting circulation I'm assuming is down but to a much lesser degree?

Actually it's slightly up. Thomas Filandro – Susquehanna Financial Group: Slightly up, okay. You've answered my question on that. Thank you. Can you tell us are there any covenants on the credit facility and if there are what they are and whether you're in compliance in your view as you go forward?

There's really no financial covenants at this level. The only covenant that does exist is in the event that our liquidity, our unused excess availability drops below $20 million and EBITDA covenant does kick in. But we don't anticipate getting close to that at all. Thomas Filandro – Susquehanna Financial Group: You made an IMU comment. I sort of missed it. You said something about lower IMUs which impacted the MMU –

I was talking core versus non-core businesses, Tom. Thomas Filandro – Susquehanna Financial Group: Oh businesses, not products. You’re talking about like the Shoes XL and –

Yes, our shoe margins are slightly less than our apparel margins and as shoes become slightly more higher penetration of our business it tends to drop the average slightly. Thomas Filandro – Susquehanna Financial Group: So with David's comments, your comments on the IMU front, should we continue to view MMUs coming under a little bit of pressure in the fourth quarter and then rebounding in '09? How should we view?

Yes, difficult to, well, the factors that are at play here, Tom, depending upon traffic and sales trends and our position to stay liquid on inventory, we may or may not have to discount and at what depth of discount will we have to maintain to continue to stay liquid with our current traffic. Thomas Filandro – Susquehanna Financial Group: Okay, but I just want to confirm what I'm hearing here that you had a 30 basis point decline in the MMU and then none of the negative factors you've highlighted were related to markdowns, they were all related to loyalty program which is in and of itself a markdown –

Yes, so far through nine months that is exactly right. Thomas Filandro – Susquehanna Financial Group: So at this stage of the game, unless of course the environment continues to get more challenging, your inventories are in good position and David, as you alluded to, you don't want to put pressure on gross margins just to drive sales. The likelihood is it would not be a huge fallout in MMU unless of course the environment changes dramatically. Is that a fair assessment?

That's a fair assessment, although our fashion part of our inventory, we will be aggressive if necessary to liquidate that inventory to stay current, Tom.

Look, we're not going to take our basic core product, promote it deep to try and generate traffic or sales. We will concentrate on anything that's perishable, seasonable, to get rid of it in this quarter so we come out clean for next year. And that's a moving target weekly as we make those price adjustments. Thomas Filandro – Susquehanna Financial Group: Just a couple more things, David A. Levin, the Rochester comment about coming in with some lower, more moderate priced product, that's a change. Clearly a reaction to what's going on in the environment –

Let me clarify that. It's not bringing in new assortments by brand; it's balancing the mix a little better because we're not bringing in any lower priced brands. It's just the percentage of sales we're going to get out of our opening price points that we currently have will increase and some of the very high price points will have to come down. That's what we're saying. We're not going to change the strategy really. Thomas Filandro – Susquehanna Financial Group: Okay, that was my question. And any thoughts on why you had strong traffic on the European operations but you didn't see as strong a conversion as anticipated? Any thoughts as to why that has occurred?

We're learning about that. I mean, we're glad that we’re getting a lot of exposure, and we’re learning about, through surveys and other means, understanding what our potential costumers are seeing and why they’re not converting quite at the rates that we see here domestically. Thomas Filandro – Susquehanna Financial Group: Dennis or Dave, how are you guys getting the message out, is it just like search engines, or how do people know that –

So, search engines, banners, we also circulate a catalog to our costumer base that has been accumulated out of our London store for the last several years.

Your next question comes from Tara Gary – RBC Capital Market. Tara Gary – RBC Capital Markets: Quick question on the debt balance, if you could just talk a little bit about your thought process behind continuing to pay down the debt versus holding onto the cash?

We’d rather reduce our debt. The interest savings I think is more than the interest to be earned on cash. To us it’s almost no difference quite frankly, and as debt is reduced it expands our credit availability and liquidity to the business.

Your next question comes from Margaret Whitfield - Sterne, Agee & Leach. Margaret Whitfield – Sterne, Agee & Leach: Most of my questions have been answered but I was curious, you had a lot going on with the EU, the Dahle acquisition and the three new businesses that were opened in the last year or two. Wondered if you can quantify the bottom line impact to your quarter from these new ventures or recent ventures?

Margaret, all told, it’s probably a loss of, on a pre-tax basis, Margaret, of some $400,000 for the quarter. Margaret Whitfield – Sterne, Agee & Leach: And would a loss be expected in Q4 as well?

Probably of that kind of magnitude, yes. Margaret Whitfield – Sterne, Agee & Leach: So you had TV in November. I guess you had TV starting at the end of October. Normally your consumer response, I take it, you did not see any pick up, or maybe it made it less negative than it would have been otherwise. Any comments on TV and how long does it go on for?

I think you said that. I mean, maybe it would’ve been less negative. It would have been more negative if we weren’t on TV. It’s always hard for us to measure, but again, all I could do is I compare ourselves to the other retailers out there and it seems we’re doing considerably better in holding our comp sales to what else is out there. That’s about all we can quantify at this point in time. We do get considerable phone calls into our call centers when we’re on television. We get a lot of requests for catalogs, but as far as it driving traffic to the stores, it’ very difficult for us to measure. Margaret Whitfield – Sterne, Agee & Leach: And when does the TV spots end, this month?

We go through week one of December, I believe. Margaret Whitfield – Sterne, Agee & Leach: Any holiday plans that are new and different this year in terms of maybe some hard lines, more of them in the stores, more giftables?

We’re pretty consistent with where we were a year ago. Our Thanksgiving promotion is the most aggressive we’ve ever been. But we've planned this six months ago, but we think we have a pretty compelling offers out there for Thanksgiving, and other than that, it’s pretty much the same promotional schedule that we had a year ago. Margaret Whitfield – Sterne, Agee & Leach: Given where the stock is, I think there are concerns about liquidity here. If you could be a little more specific on where the debt might be at year end, that would be very helpful I think? Is there any way you can give us a range, Dennis, on where you think you might end?

We expect our revolver balance to end somewhere between $30 and $35 million. And liquidity close to $50 million, Margaret.

Your next question comes from Betty Chen – Wedbush Morgan Securities. Betty Chen – Wedbush Morgan Securities: I was wondering if you can give us a sense of the sales mix or profitability contribution of the Rochester division given the some of the struggles you highlighted for the third quarter?

The Rochester business represented to us in the quarter about – just under 20% [base]. Betty Chen – Wedbush Morgan Securities: And is that usually the kind of profitability mix we would expect from them or is it higher given the –

The profitability mix is slightly to Casual Male's advantage, so it’s slightly less therefore as a penetration for Rochester. Betty Chen – Wedbush Morgan Securities: And then in terms of Europe, just to follow up on the earlier question, could you remind us, is the product offering the same in all those countries relative to the U.S. merchandise or what adjustments have you made to cater to the local preferences?

Well, we're learning about the local preferences. The assortments are pulled from our U.S. assortments so, they’re very much alike. Not 100% everything is available in Europe but almost everything. As we go forward we’ll learn more about those local preferences and they are the same. The assortments are the same in all countries right now. And not only will we learn about the lifestyle preferences, we’ll also learn about the sizing as well. And that might be having an impact on our conversion, and as we learn more about that we’ll make the appropriate adjustments. Betty Chen – Wedbush Morgan Securities: And are we seeing better traction in the UK given the established base with the Rochester store there relative to the other countries?

We're seeing good traffic into UK, but we’re pleased with the traffic in all the countries quite frankly. Betty Chen – Wedbush Morgan Securities: Now I know you mentioned the expected investment for Q4 in Europe. How should we think about that for 2009?

With our relationship we have with GSI Commerce, who’s helping us with the infrastructure part of this business, we expect to operate Europe at slight loss to perhaps even a breakeven into 2009. We’ll have a slight loss in the forth quarter of this year. Betty Chen – Wedbush Morgan Securities: And then in terms of the non-core business here, I know your management circulation. Should we still anticipate a breakeven this year and then what are the targets this year?

Non-core businesses will probably have a loss for the year of about $1 million. But we’re making the appropriate adjustments and expect that to be break even or perhaps slightly positive for 2009. Betty Chen – Wedbush Morgan Securities: And is the slow down the same across the board or is the Shoe doing better than Living XL and B&T?

I would say shoes are doing the best of the new concepts right now. It’s very consistent, growing at a good pace, and again, for Living XL, we’re still working on a longer term plan on that. We need to increase our base. We need to prospect more into the women’s side where we’re getting some good activity, continuing to mail catalogs to our existing customers. It slowly works its way down in revenue because a lot of this product is not replicable on a seasonal basis. Betty Chen – Wedbush Morgan Securities: And so David, when we think about that for next year, are we going to plan for circulation to be up a little bit to try to target that female customer base?

We’re working on that right now. I can’t give you any guidance on that. I should be able to have more color on that at the next call. Betty Chen – Wedbush Morgan Securities: And then just lastly, then, as you mentioned that CapEx will be approximately $5 million next year, how should we think about the allocation of that and, I’m sorry if I missed this early, did you say that there will not be any store openings next year?

I think we have like one store opening next year, Betty. So, the $5 million, basically that is a maintenance level type capital expenditure amount. Real estate probably takes up over half of that. We have on the board part of that real estate, much of that is for relocations that makes sense, even in this environment. And then we have some maintenance level type expenditures necessary on our IT side and in our warehouse center.

Your next question comes from [Klaus Von Stutterheim] – Deutsche Bank. [Klaus Von Stutterheim] – Deutsche Bank: I have two questions. You’ve got liquidity and you’re buying in debt, wouldn’t it be more accretive to buy stock?

It would be accretive to buy stock. I think that the companies posture is to be more defensive at this point in terms of its liquidity position, and make sure that the working capital needs are being supported for the business, and we’ll continue to evaluate that as we go through this. [Klaus Von Stutterheim] – Deutsche Bank: Right, now that makes sense, obviously, with given the price of the stock, a little bit of a buy back could make a big difference it would seem to me. So that was one question. The second one is, I can remember, do you guys have a poison pill?

No. [Klaus Von Stutterheim] – Deutsche Bank: Is that something that might be a good idea?

I think that our posture has always been to increase the shareholder value and to not put up artificial measures necessarily.

Your next question is a follow up from Thomas Filandro – Susquehanna Financial Group. Thomas Filandro – Susquehanna Financial Group: Hey David, just a quick question on, are you seeing any variance between the total business and the smaller size arena? Are you seeing maybe a better penetration there?

We’re doing a lot of analysis on that and we’re making a commitment to bring in more smaller sizes. Our information is telling us we're not keeping enough inventory levels in those small size direct connect to maximize the business and we are going to commit to expanding the in store commission on those sides. That’s a key priority to us. We continue to work on that and we get improvements but we see it’s got so much upside we should be doing even better than we are. Thomas Filandro – Susquehanna Financial Group: And any comments, I know in this environment it’s tough to get anything off the ground but Bold XL?

Well Bold XL is one of those things – it's a website that really has no overhead to it and because of expense tightening we’re kind of putting it on ice through traffic. Again, we’re generating sales but we’re not going to put a lot of capital or SG&A into that at this point in time. We’ll let it stay where it is and then attack it when we feel more comfortable about then environment out there.

(Operator Instructions) I’m showing no further questions.

Well thank you all for joining us on this call and we'll get back to you next quarter. Thank you very much.

Ladies and gentlemen, thank you for your participation in today's conference. This concludes the program. You may all disconnect and have a great day.