Welcome to the Genesco second quarter fiscal year 2009 release conference call. (Operator Instructions) At this time for opening remarks and introductions, I would like to turn the call over to Bob Dennis, President and Chief Executive Officer of Genesco.

Participating with me on the call are Hal Pennington, our Chairman, and Jim Gulmi, our Chief Financial Officer. As always, we will make some forward-looking statements in this call. They reflect our expectations as of today but actual results could be materially different. We refer you to our earnings release and to our recent SEC filings including the 10Q for the first quarter for some of the factors that could cause differences from our expectations. And for those listening to the replay of this call on the Internet, some of these factors can be read on the opening screen. We were pleased with our results for the second quarter especially in light of the challenging consumer environment. Net sales increased approximately 8% to $353 million. Total company same-store sales increased 4%. Through Monday, August 25, the last day for which we have reliable data, third quarter to date comps were positive 7%. We remind you that this represents a little more than three weeks of sales and we have a long way to go in the quarter. We are reporting diluted EPS from continuing operations of negative $0.27 per share for the quarter on a GAAP basis. This includes the tax anomaly we discussed in the press release and other items we break out on the schedule to the release which amount to $0.45 per share. Before those items on a basis consistent with our annual guidance and the pro forma disclosure we gave last quarter, EPS from continuing operations was $0.18 per share. We also effectively managed inventories. Year-over-year inventories were down 6% at quarter end. Journeys, Hat World and Underground Station all posted nice comp gains in the quarter. In fact, after a solid comp performance in the first quarter of this year same-store sales in all three…

I will now run through the P&L for the quarter starting at the top. Second quarter sales increased 8% to $353 million compared to $328 million last year. Comp store sales increased 4% in total. Journeys group sales increased 9% to $161 million and comps were up 2% for the quarter. Hat World group sales rose 13% to $102 million. Comp sales for the quarter increased 7% which is better than expected. The Underground Station’s group sales were down 4% to $24 million due to fewer stores versus the same period last year. The overall Underground Station group store count dropped 16% to 185 stores compared with 219 last year. Comps increased 9% for the quarter. Johnston & Murphy group sales were down 4% to $44 million. The Johnston & Murphy wholesale sales decreased 9% for the quarter. Comp sales for the Johnston & Murphy shops declined 3% and factory stores were down 7%. Licensed brand sales increased 16% to $22 million on top of an 18% increase last year. Now turning to gross margin. Total gross margin for Genesco was up nicely to 51.3% compared to 49.9% last year with increases in the Journeys, Underground Station, Hat World and Johnston & Murphy groups. Licensed brands gross margin for the quarter was down due primarily to mix and increased product costs. Now turning to SG&A. Total SG&A as a percentage of sales decreased to 49.1% in the quarter compared to 50.6% last year. This includes about $300,000 or 10 basis points of expenses related to the follow up to the merger-related litigation and settlement. In addition we incurred about $750,000 or 20 basis points in added bad debt expense for the licensed brand division in connection with recent bankruptcies, primarily Mervyns. Included in last year’s expenses were about $5.4 million…

We are pleased with our second quarter results. The consumer climate continues to be difficult as you all know. At the same time we are benefiting from year-over-year offsets in Journeys, Underground Station and Hat World which we expect will extend into the back half. Taking a longer term perspective, our teams continue to drive initiatives that build on the strong strategic positions we have in each of our businesses. Journeys continues to be managed as the destination fashion footwear store for the team. Their merchandise assortment remains unmatched. Underground Station’s turnaround and repositioning continues to succeed as our team develops an overall assortment that is truly distinctive in the mall. Hat World’s sharpened merchandising approach is delivering nice results and they too have a merchandise assortment that remains unmatched. Johnston & Murphy’s business is difficult but we are excited about the recent share gains, the brand’s future growth potential, and in particular our women’s test. We thank you for joining us and we are ready for your questions.

(Operator Instructions) Our first question comes from Scott Krasik - C.L. King & Associates. Scott Krasik - C.L. King & Associates: Jim, maybe if you could just comment on inventory. 6% down is great. What is it on the same-store basis? I assume it’s even better than that.

Inventories per square foot are down for total Genesco about 11%. Scott Krasik - C.L. King & Associates: Are you going to have to invest in inventory for the fourth quarter to get that comp or can you get these comps on this inventory level?

The inventories obviously in the back half go up relative to where we are now because of holiday. But on a year-over-year basis we think we’re much cleaner. We’re going to continue to be a little conservative with the way we buy. It’s an environment right now where you can chase products because most of the vendors are not as tied up as they normally would be with stocks. So we’re going to be conservative but we’re playing to our plan.

Let me add one thing there. The situation is we had too much inventory this time last year as I think you know, and we expect to by the end of the year we probably will not be down 6%. We’ll begin to build inventory. We still should be close to where we were last year but I don’t expect us to be down 6% at year end.

Our next question comes from Analyst for Jeffrey Klinefelter - Piper Jaffray & Co. Analyst for Jeffrey Klinefelter - Piper Jaffray & Co.: I just want to come back to the guidance comments you made. You give us a lot of great detail on the quarter and month-to-date but help us reconcile the strong performance across the P&L, sales and margins with the guidance. It would seem that you’re expecting a slowdown. And maybe just give us some direction on Q3, Q4 since we were a little bit out of range in Q2.

You were out of range in Q2 but we did not give any guidance in the second quarter and you were below our expectations, our internal numbers. Essentially we did do a little bit better in the second quarter but we certainly exceeded your numbers, the analyst average numbers out there, but it did not exceed our internal expectations by that much. Our back half we’re holding pretty close to where it was. We’ve added a little bit there but again we did not beat the second quarter by that much internally.

Our next question comes from John Shanley - Susquehanna Financial Group.

Bob, I wonder if you can comment on which division contributed most of the 150 basis point improvement in gross margin that the company reported in the second quarter. And also, is it possible that Journeys could get back to their historical double-digit operating margin in the near future?

John I’m going to turn the gross margin question to Jim Gulmi. He’s got the numbers in front of him. And then we’ll come back to Journeys.

John, we really had some nice gross margin improvement in both Journeys and Underground Station. They were the two largest and then Hat World also was up nicely. And then of course Johnston & Murphy was up also. But the two largest were I think Journeys and Underground Station but both Hat World and Johnston & Murphy were also up.

And on Journeys getting back to double digit, it’s a very strongly positioned retailer from a strategic standpoint again. It’s a destination store and it’s very unique, and that’s a profile that would typically get you to double digit operating margins. The key in your question is in the near future and what will drive it for Journeys will be comps. It will need a strong rebound from what we gave up in Journeys last year. And a lot of that is going to be hinged to when the consumer comes back and really starts buying in a slightly more robust way. Obviously we’re very pleased with Journeys comps so it allows them to maintain a little bit of leverage but to get the operating margin up they need a lot of leverage and to do that they’re going to need a pretty nice spike in comps. And to predict the timing on that is pretty tricky.

Our next question comes from Jillian Caruthers - Johnson Rice & Company. Jillian Caruthers - Johnson Rice & Company: I wonder if you could talk about the strength you’re seeing month-to-date in August, pretty strong numbers across the board, whether you’re seeing that mainly on average selling price or just higher traffic, and just kind of relate that to the promotional environment you see right now in back-to-school?

I don’t think we’ve really drilled down those numbers down to ASPs, not to have them handy here. We’re a little surprised by how strong it has started especially within Journeys. We’re obviously very pleased with it. There is a promotional environment out there but obviously thus far we’re doing fine. We’re not being very promotional. As you know, Journeys is really a full-price retailer with our discounting really related to items that we’re clearing at end of season or mid-season if they’re particularly slow sellers. But we’re not using promotions in the store to generate traffic. We’re just doing what we always do, which is really using the unique assortment we have to drive the business. We’re very pleased with the start; we’re actually a little surprised at how strong it is at Journeys; and we’ll see how the rest of the quarter goes.

Our next question comes from Mitch Kummetz - Robert W. Baird & Co., Inc. Mitch Kummetz - Robert W. Baird & Co., Inc.: First question on Heelys. Bob, what was the drag on Q2? I think you said it was a couple dollars in terms of ASP, but what was the drag in terms of the overall Journeys group comp on the quarter and the impact on the margin on that business in the quarter? And then when you look at the quarter to date results for Q3 there, how much of a benefit are you getting now that the decline there has been anniversaried? And just as a follow up, on Hat World I don’t want to get ahead of myself here but if the Cubs were to win the World Series, what kind of impact might that have on your back half if you can relate that to the impact that you saw with the Red Sox when they won it a few years ago?

Jim’s flipping through for your first question to get some numbers. On the Cubs, the Red Sox are the best model for it and I’d have to go back and look at what the comp gain was but it was an unusual gain. It was something that we had to call out because it was an outlier to what we were expecting. It surely is speculative of course because it is the Cubs. But as we get closer to seeing what the teams look like, we’ll probably do more analysis to quantify what the Red Sox meant to us so people can look at a model that would compare the two. And there’s no guarantee of course that the Cubs will reproduce what the Red Sox did but I think you’re correct in assuming it would be directionally like the Red Sox event. So we’ll get some more information out there as we get closer to the World Series.

And Mitch, that first question on Heelys was so long I’m not sure I’m going to be able to answer all of it. I’m not sure I remember all of it, but let me give you a couple data points on Heelys. The Heelys business for the Journeys group in the second quarter which is what you asked for was off about $4 million to $5 million but gross margin was up about 10 basis points. So we lost a couple million dollars from a gross margin standpoint over FY08.

Our next question comes from Scott Krasik - C.L. King & Associates. Scott Krasik - C.L. King & Associates: I guess this is a two-parter on Journeys. First, Bob can you quantify or do you have a sense of what sort of benefit you’re getting from the PacSun decision to exit the footwear category and how long that should run? And then secondly, ASPs being up across the board at Journeys is very, very good. How do you see that for the back half of the year?

On PacSun, because our stores overlap with PacSun virtually 100% it’s very difficult for us to try and doe the comparison of how much we’re getting from them. We’re assuming we’re picking up business anecdotally. We know that in some cases the customers even get referred in our direction. But it’s very hard for us to nail it. We assume we’re getting something and based on that assumption, we assume that we get that help all the way through to the time when we anniversary their reduction in footwear. So the back half should get help from that. In terms of ASPs, the pickup in ASPs in Journeys is largely related to mix and so to the extent that the customer continues to move with that direction in mix, with that mix shift, it should stay with us. Obviously as we get into the back half, boots play a bigger part in our business so the overall ASP goes up. We think we’re very well positioned for boots. We’re predicting that boots will be a strong season so that would probably be something that also supports ASPs nicely. But we’ll see.

Our next question comes from Sam Poser - Sterne, Agee & Leach. Sam Poser - Sterne, Agee & Leach: If you continue at the current comp rate, what kind of SG&A leverage would you see?

It varies by business but in the Journeys we’ve thrown out numbers around 4% or so depending on the growth rate. In Lids it’s lower than that, probably around 3%. In Johnston & Murphy a little higher. So for a total company if we’re at 4% or 5% comps, we should be leveraging. We leveraged this quarter as you can see even at this rate. Sam Poser - Sterne, Agee & Leach: And I wanted to follow up. You mentioned on the prepared remarks Bob about the Shi mix shift in women’s and how you were adding some higher-end brands. If you could give us a little more color there, and then if any of it was applicable to your other stores like Journeys?

We’re not going to be calling out brands Sam, so you can go in the store and you can see what we’ve bought. What’s really helping us we’re going to keep to ourselves. But what we’ve done is we’ve layered in another level of non-athletic branded women’s footwear. The customer in general is being very receptive to that layer that we’ve added on. That’s helping ASPs; it helps productivity in the store. On the other side of the store we’ve beefed up the athletic. When we first started doing athletic we were catching the downside of that low profile trend and so probably didn’t get good visibility because we probably were not that well positioned. Now we think we’re more on trend and the athletic business is turning out to be very good. We have some overlap with the Journeys assortment in the store but we’re convinced we get a very different customer within Shi so the overlap doesn’t concern us. So you’ll find some SKUs are the same but more of them are different than the same.

Our next question comes from Adam Kamora - Interest Capital.

My question is really on the guidance. It sounded like the guidance of $2.15 to $2.20 is predicated on a low single-digit comp increase for the year. Is that correct?

Yes.

And so far for the first six months, comps are up 3%. It sounds like we’ve accelerated it into the high single digits up 7% so far. I know we’re only one month in [inaudible].

Less than one month. Just a comment on that. Again we’re Adam very surprised at the start for August so our guidance does not in any way anticipate a continuation of that. We’re still seeing a very difficult economic climate out there; we see many of our peers struggling. So we’re keeping a more modest comp assumption in place for the back half of the year. We think that’s the right target to shoot for. Jim, do you want to add anything?

No. That’s basically it. We have not rolled forward these first three weeks into our comp estimate. We’re still pretty conservative in the back half. I think if it continues, obviously a lot of good things will happen.

Our next question comes from John Shanley - Susquehanna Financial Group.

I wonder if you could comment on how the Journeys stores have addressed the growing strength of technical athletic footwear while there still remains a growing interest in skate products. And also if you could finish Bob answering the question about what kind of comps the Journeys operation would have to have to be able to get back to a double-digit operating performance.

John on the technical footwear, as you know we’re not in the technical footwear business. There are other people who do that better than we do. We’re a small box and our focus is more on fashion footwear and to the extent that athletic has a big fashion component outside of technical, that’s where we play and that is predominantly skate right now as you know. So we’re really pressing on the skate category as the place where we make our major statement in athletic and if technical gets hot again we’re going to let the technical guys play in that space. In terms of what comp you need from Journeys, if you do the math John, you go back to last year Journeys comp’d down. Jim’s going to grab the number, but we need a year where we make that up to get back to where their comps were. So if you think about a 4% comp as being neutral in terms of leveraging the SG&A, then we need a 4% plus getting back what we gave up last year in order to bring the operating margin. We can have that happen in one year; that can happen in multiple years. And as I said before John I don’t think that happens without a change in the consumer environment. We were -4% so that means against SG&A leverage we gave up 7% because to stay neutral on leverage you need a 3% or a 4%. We were a -4% so we gave up 7% or 8%. We’ve got to get that 7% or 8% back on top of a normalized 3% to 4%. Does that make sense?

Our next question comes from David Turner - BB&T Capital Markets. David Turner - BB&T Capital Markets: I guess a question first on the ASP trends. There’s been a lot of commentary in footwear about inflation coming out of China and subsequently the vendor base charging more. I’m curious how much of the ASP improvement, if there’s any way to get this granular, was just pass-through or how much is mix and have you seen any change in your ordering pattern on costs? Are you paying more for the back half of the year into the holiday? Are your merchandise costs running higher?

Here’s the story on costs. Obviously we see it from both sides because we’re vertical and we’re dealing with factories at Johnston & Murphy and Dockers predominantly and then we’re dealing with vendors out of Journeys. All the factories are really working hard to push through cost increases because of the various pressures that they have in the currency and so we’re seeing that but it really isn’t flowing through that much to product that is flowing through a vendor and then landing in our retail stores. It is starting to probably squeeze possibly some of the vendors and we called that out for Dockers that one of the reasons that we had a little bit of a reduction in gross margin is costs are starting to go up. What you’ll have to look at is that timing difference between when price increases which are inevitably going to come, when those price increases hit the vendors and then when those price increases go to retail. Obviously what we’re trying to do with Journeys is any cost increase that we incur we want to translate that into suggested retail which is where we’ll be selling. So we hope to preserve margins on the side on that end. And obviously on our wholesale side what we’re trying to do is make sure that we can cover our costs with the next round of sales. So that push and shove hasn’t really come into play yet but it will be a big part of the back half and it’s a little too soon to predict where it comes out in terms of who’s taking the hit.

Our next question comes from Analyst for Jeffrey Klinefelter - Piper Jaffray & Co. Analyst for Jeffrey Klinefelter - Piper Jaffray & Co.: Just two follow ups. The first one is if there was any outperformance in the back half, where would you expect it to be generated? And then just to follow up on the last question on cost inflation, what magnitude are you seeing at wholesale and what are the components so far at retail that you’re passing through?

On outperformance it’s hard to say. We’re giving our guidance on our best judgment on how each of those businesses is expected to perform. The one you can obviously point to is the possibility at Hat World that the World Series situation gives them a lift, but other than that it would be tough for me to pick out a business that we would assign upside to it. The magnitude of the cost increases that we’ve seen at wholesale, we’re in the midst of negotiating a lot of that now both with the factories and with the retailers. It’s got all the dynamics that you would expect. We’re pushing back on the factories and trying to find out how much they’ll eat and we’re trying to get our retailers oriented to a realization that their cost and prices will go up. The happy news is the retailers seem to get it so in our wholesale businesses our retail customers largely recognize the inevitable so they’re writing their merchandise plans accordingly. So that should give us hopefully some room to pass on some cost increases.

Our next question comes from Mitch Kummetz - Robert W. Baird & Co., Inc. Mitch Kummetz - Robert W. Baird & Co., Inc.: Let me start with the housekeeping question, tax rate and shares. First of all in the second quarter given the $0.18 pro forma earnings, what was the tax rate that got you to that number? And also you guys are showing a basic share count, unless I’m not seeing something in the reconciliation, but what would the diluted share count have been to get to that $0.18? And then in terms of your guidance for the year, what kind of tax and shares are you using there? And a quick follow up, as I look at the operating income Q2 by division it looks like you saw the biggest increase at Hat World. And Jim I know you’d mentioned better gross margin and leveraging the SG&A. Could you be a little bit more specific as to what drove that big increase there?

For the first one in terms of the tax rate, the normalized tax rate that we’re using, and we referenced this also in one of the tables on the press release - just as a reference point, the normalized tax rate is about 40.2% we’re using now. In the second quarter to get to the $0.18 we were using a share count of about 23.3 million shares. And for the full year the share count that we’re using is about 24 million shares. The second question was Hat World that drove that increase. The increase at Hat World was the best of all possible situations in that we saw some very nice increase in gross margins and then due to the strong comps we also leveraged.

And to put it into business terms, here’s what’s going on there. Last year remember we were very long on MLB fashion, hip hop inspired stuff, and we were doing two things. We were trying to drive down that inventory both with markdowns and also with slower receipts. So we ended up really struggling on gross margin because of that and then we started to hit our sales line because we weren’t fresh enough. So what’s happening now is we’re using a much more fashion-driven markdown pattern within Hat World and that allows us to stay fresh. So we’re seeing a business that is run in that part of the store more properly as a fashion business. And then as Jim said, you get it both on the gross margin and the sales line and the sales line gives you leverage on the SG&A.

If the comp increases 7% and good expense control, you would expect to get good leverage and we did.

Our next question comes from David Turner - BB&T Capital Markets. David Turner - BB&T Capital Markets: Just one more question on the PacSun scaling back their footwear business. I know there’s no way to drill down on what it means in comp but I’m wondering if there’s been any change in product? A lot of the same brands ship to PacSun as they do to you, so are you getting more of the better product or are you getting fill-ins more quickly or has there been any way to look at it from a merchandise standpoint, the impact from the PacSun?

Well David, in the short term obviously there was some product available and our merchants took advantage of that where they thought it would benefit the business. Once the vendors have right sized their order flow to reflect what PacSun did, there really shouldn’t be that much change. There was no product that was big in PacSun that we now get access to because they’re not in the business any more. Pretty much anything they had we would be able to get.

That does conclude our question and answer session for today.

We just thank you all for your time and for your interest in Genesco, and we look forward to seeing you all soon. Thanks a lot.