Welcome ladies and gentlemen to the Casual Male fourth quarter and fiscal 2008 earnings conference call. (Operator Instructions) I now would like to turn the conference over to your host, Jeff Unger. Please go ahead sir.

Good morning. Thanks [Pablo] and thanks everyone for joining us this morning. On our call today is David Levin, President and CEO and Dennis Hernreich, Executive Vice President and Chief Financial Officer and Chief Operating Officer. I’d like to read our forward-looking statements and then turn the call over to David this morning. Today’s discussion will contain certain forward-looking statements concerning 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 differ materially from those assumptions mentioned today due to the effect of 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. You can find our complete Safe Harbor statement available at casualmalexl.com. David, I’d like to turn the call over to you.

Thanks Jeff. Welcome everybody. As many of the specialty retailers have already reported their fourth quarter sales and earnings, there’s not a whole lot I could add to the voices of other CEOs. No doubt the current state of retail is in the worse shape that any of us have experienced in our lifetime. The precipitous drop in consumer spending has impacted everyone and we were no exception. Our comp sales were flat in the first half of 2008 and then things started to turn on us rather quickly in the back half of the year. In the third quarter sales were down 5% and accelerated to a negative 9.3% in the all important fourth quarter. While our financial results were disappointing, I am extremely proud of our management team as to how they responded to this unforeseen downturn in consumer spending. We actually missed our original 2008 sales plan by $40 million. However, we ended the year with $19 million less in inventory, substantially higher than our plan of a $10 million reduction. We started to make adjustments to our plan during the fall season and became more aggressive as we saw the economy go into a tailspin. The good news is that our inventories are in the best shape they have ever been, and with the adjustments we’ve made for 2009 we anticipate getting our margins back to where they were in 2007. With the forecasted plan of negative high single-digits for this year, we should not have gross margin concerns even if business remains challenging throughout the balance of this year. I also commend the management team with its focus on maintaining a strong balance sheet and working towards generating as much cash flow as we can, even with the down trend in sales. And Dennis will…

Thank you David. The current economic slump began to impact our business as early as the second half of 2007 when our sales slowed from a 5% comparative sales growth in the spring of that year to a decline of 0.6% in the second half. During the first half of 2008, sales trends continued as they were during the second half of 2007 with a further decline of 0.8%, but then accelerated in the second half of 2008 to a negative 7.8%, particularly in the fourth quarter which had a decline of 9.3 resulting in an overall sales drop for the year of 4.3%. In spite of this drop in sales, which represented $20 million from 2000 levels, we did not allow our financial position to erode. We decreased our inventory position at the end of the year by $19 million or 16% as compared to the prior year. We reduced our capital expenditures by almost $9 million or 41% from prior year levels. At the end of the year, our total outstanding debt decreased by $7 million or 12% and our availability under our credit facility stood at just over $30 million. Our free cash flow for 2008 improved by over $20 million from the prior year and was approximately $10.6 million compared to negative free cash flow of $9.7 million in 2007. Our primary focus has shifted to optimizing our free cash flow; maximizing our liquidity available under our revolving line of credit; efficiently managing inventory levels and monthly receipts to optimize gross margins; tirelessly evaluate our approach to our businesses; seek further efficiencies; and lower SG&A levels; and continuing to develop and implement innovative practices and technology to improve customer service. With this in mind, we have taken further measures to maintain a positive free cash flow…

Thank you. (Operator Instructions) Your first question comes from [Evelyn Greenwald].

It’s actually Tom Filandro. The question here is a broad question. First is what percentage of your customers shop both brands? Do you know the answer to that?

Yes, we’ve been looking at that because of the hybrid situation. Approximately 25% of our Rochester customers shop Casual Male.

Okay David, so here’s my question, was the convergence of the luxury spender clearly trading down, which we know that may represent a secular trend, why not simply converge both of your brands into one, seeing as the customer base is similar although the percentages aren’t that great? But they are clearly a similar customer base. I would expect that the savings would be significant if you were to do that and that would also provide maybe a more potent marketing message or marketing point of view. And just my simple view is here is that Rochester brand has greater brand equity, so you could just simply offer value priced Casual Male product in those stores where Rochester customer or that luxury customer still exists to some degree, as opposed to just this sort of testing of the hybrid strategy which seems like a baby step, where I think more drastic measures need to be taken in this environment.

I think it’s a good point but that’s, again, you know, baby steps in this environment, we don’t want to do something that could seriously fail on us. So I think we’re going to get a good read off these five stores to see exactly what happens and transfers and we’re going to be monitoring it, and then making the next move from there. I’m not saying that what you’re saying may not end up to be the end game, but there’s a lot involved in this and we want to do things prudently and make sure we’re – that this is going to work for us. We have a high degree of confidence on this conversion on these hybrids, and we’ll see where we go from there, but your point’s well taken. It’s something that we will – we may be looking to down the road.

Another point to add to that, Tom, is our highest volume and most profitable stores are Rochester stores. So we do have a fair amount of assets to protect as we make these steps.

Right, but Dennis I think David’s opening comment – and this is what made me think about this is the opening comments where you highlighted New York and London and Beverly Hills and Chicago, which are clearly markets which should be supporting Rochester-type, you have the appropriate support for a Rochester brand, but those stores all lost money last year. So if it is a secular trend, the asset value in that current position may be very different than it was in the past.

Those stores – no, those stores did not lose money last year.

Tom, the stores that I referred to that lost money are the new stores that we opened, not – you know we have 12 stores in those major markets that are our most profitable stores in the company. So I mean at this time we couldn’t see touching New York and Beverly Hills and Chicago by downgrading those into a hybrid at this time.

Okay. Okay. I understand now. All right. So I misinterpreted that.

It’s the new stores that we opened, for example, in suburban – outside of Chicago where we opened a store in Oakbrook, or outside of Boston where we opened a store in Natick. These are the ones that have really struggled for us.

And just a separate question directed at Dennis, have you guys run a – you highlighted that you are expecting to generate free cash flow. Have you run a sensitivity analysis at what level of comp – I mean, how bad can comps get?

Yes. Maybe I mumbled it, but I said Tom mid-double to high double digit of comps would render us cash flow neutral.

Your next question comes from Betty Chen.

I was wondering if you can speak to a little bit more, David, on the again on the hybrid strategy. Have you been able to do some tests, whether it’s placing some merchandise in the XL stores or in the Rochester’s vice versa to kind of get a sense of the acceptance? I think, just following up on what Tom said earlier, it certainly seems like Rochester has the stronger brand equity. Are you concerned at all that how you handle this test could in some way tarnish the branding at all? Kind of your thoughts there.

Yes. Well, again, there’s about 30 stores in the Casual Male chain that are somewhat hybrids where we carry collections like Calvin Klein and Polo. That’s about all they can handle. Again, what we’re seeing in these stores that we’re turning into the hybrid, they cannot support the high end product that we’ve put in there that we’ve put in other cities. They tend to do most of their business in those opening price point brands like Polo and Cutter and Buck and some of those other brands. So again we’re planning those markets to have a significant drop in the total Rochester sales, but we also plan on moving 100% of the sales over from the Casual Male customer. So again we’re turning these stores that really have no chance of really becoming profitable as Rochester stores and by putting the two together, with a reduction in the Rochester sales and the moving of the Casual Male sales, they net out much stronger, and they all end up in positive EBITDA. But we’re going to watch it closely. We are going to monitor very quickly what’s happening to the Rochester customer in these markets. But we also have the catalog to support the Rochester stores. And as you saw that our average store inventory is down 20% in Rochester, our catalog sales from the store levels are growing significantly because the stores are being trained to sell product that they can’t support on the floor on a regular basis.

And I was wondering, certainly it seems prudent to be looking at all cost measures including marketing, but it does appear that so far, you know, 2009 has started off to be another highly promotional environment. How should we think about not losing market share like you mentioned, but also staying top of mind for your shoppers? And especially in the case of the hybrid, I understand it’s only for five locations, but how will we also try to market to those customers as the change is happening? Thank you.

Well, we still have a very robust marketing plan for 2009 which includes over 200 million emails going out to our database, as well as a fairly regular direct mail campaign to not only our catalog web shoppers but also to our retail shoppers. So I don’t – that’s what we have most in mind is to keep us top of mind as guys remind themselves that they need a pair of shorts or what have you. So I don’t think what we have done so far will take away at all from staying top of mind in our customers. And there is a special campaign, specifically to help introduce the hybrids into those markets.

Just lastly, could you comment a little bit on the progress going on in Europe in terms of the e-commerce website launch?

Europe has launched. We are seeing good traffic but low conversion. I think there’s a number of website branding items that need to improve which are in progress. There’s some infrastructure improvements happening, all of which we think will have a positive impact on conversion. But it started slow, Betty, and our expectations are fairly moderate for 2009. However, it’s also fairly benign to our overall P&L and so we’re taking a sort of a slow go towards growing this business.

Your next question comes from Tom Filandro.

My question’s on Living XL. Are you guys seeing anything in particular there, as that business has evolved, in terms of shift in product mix or pricing? And what if anything are you thinking about? I know you’ve kind of tested putting chairs in some stores, in terms of maybe putting Living XL products in these hybrids.

We tested some product in the stores. It doesn’t seem to do much other than, you know, all the stores sell the chairs. In terms of growth, again because of the conditions we’re in right now we’re not going to do a lot of prospecting this year. So we have a fairly conservative plan for Living XL. Our price points have come down somewhat as we’ve been able to get some quantity buys out there and our goal is still to try and penetrate more into the women’s side of the consumer market, because about 50% of our sales on the Internet are to women. And so we’re continuing to probe that to try and figure out ways to increase our sales to the female side of the customer. But again we have a pretty conservative plan this year. We’re not going to do anything crazy in any of our new businesses to try and grow it dramatically at the expense of profitability. So as we’ve said in the past, the new businesses should not have any negative impact on our earnings this year.

Thanks David.

Tom, Living’s making money this year.

It is making money you said? Living XL is making money?

In 2009.

Okay. Terrific. Thank you.

Okay. I guess there’s no further questions so thank you for joining us on this call. We’ll talk to you in a few months about our results for Q1. Thank you very much.

Thank you ladies and gentlemen for attending this conference. You may not disconnect and have a great day.