(Operator Instructions)I will now turn the call over to Ms. Jane Singer.

Thank you for joining us today for a review of The Childrens Place Retail Stores, Inc. 2008 second quarter and year-to-date financial results. Participating on this morning’s call are Chuck Crovitz, Interim Chief Executive Officer, and Sue Riley, Executive Vice President - Finance and Administration. Also on hand to answer questions at the end of management’s remarks are Richard Flaks, Senior Vice President - Planning Allocation and Information Technology, and Dina Sweeney, Group Vice President of Merchandising. Before we begin I would like to remind participants that any forward-looking remarks made today are subject to the Safe Harbor statement found in this morning’s press release as well as in our SEC filings. And now I will turn the call over to Chuck for his opening remarks.

Earlier this morning we reported our second quarter 2008 financial results. We are very pleased with the solid top and bottom line growth The Childrens Place business generated for the quarter. Our improved results are the culmination of the ongoing hard work and dedication of our entire team to improve our merchandise assortment and implement several strategical imperatives that have improved our business performance. Some highlights of our financial performance during the quarter include a net sales increase of 16%, a comparable sales increase of 9%, and excluding unusual and one-time items we had a loss from continuing operations of $900,000 during the second quarter of 2008 compared to a loss of $17.8 million last year. On a per share basis this translates to a $0.03 loss this quarter compared to a $0.61 loss in the second quarter of last year. In retail as you know everything starts with the merchandise and over the past few quarters our merchant and design teams have worked diligently to optimize our assortment that we offer our customers. We’re remaining true to our brand routes by providing head-to-toe outfitting trend right fashion and colorful merchandise and we’re delivering all of this at a great value. Customers responded very positively to our improved merchandise assortments during the quarter as evidenced by our strong comp store sales growth and a 50 basis point increase in The Chidlrens Place market share to 3.9% of the US children’s apparel market as measured by NPD. Additionally we sharpened our e-commerce marketing and merchandising efforts which helped to drive web traffic and sales during the quarter. While we are encouraged by the positive trends we’ve experienced and the traction we gained in our business in the first half of 2008, we are mindful of the ongoing challenges in the macro…

Most of my discussion today will focus on continuing operations which is The Childrens Place business only. As previous disclosed the Disney Store business has been classified as discontinued operations in accordance with Generally Accepted Accounting Principles given our decision to exist that business. Net sales from The Childrens Place business for the second quarter ended August 2, 2008 increased 16% to $338 million from $290.5 million last year. Contributing factors to the sales growth were: Comparable store sales which increased 9% compared to a 1% decrease last year; e-commerce sales which grew more than 85% for the quarter; and modest growth in our store base. At the end of the second quarter 2008 our store count was 902 compared to 883 stores at the end of the second quarter last year. Our 9% comps for the quarter resulted from a 6% increase in store transactions and a 2% increase in average transaction size. Units per transaction increased in the low single digits. Average unit retail was flat as the lower mark-down rate was partially offset by a higher proportion of good compared to better and best merchandise in our product mix and an intentionally higher mix of summer compared to fall merchandise during July of this year. We had a modest increase in traffic and conversion during the quarter and all regions comp’d positively. Gross profit dollars increased 38% to $128.5 million. Gross margin increased 580 basis points to 38% from 32.2% in the second quarter of fiscal 2007. The increase reflects fewer mark-downs and lower occupancy expense as a percentage of sales and higher initial markup which were partially offset by higher distribution costs for our [Faltese] distribution center which anniversaried this July. SG&A as a percentage of sales was 31.3% in the quarter representing 630 basis points…

To wrap up, we’re very encouraged by our performance for the fiscal year to date and are pleased that we’ve begun to benefit from the actions we’ve taken to improve our business. Our second quarter financial results reflect substantial progress towards the goal of returning the business to its historical levels of profitability. Operator, I’d like to now open up the call for questions.

(Operator Instructions) Our first question comes from Thomas Filandro - SIG-Susquehanna Financial Group.

Chuck with your comments you made some comments on the sourcing side but you also made some comments on rising costs or upward pressure on costs. Can you help us understand how we should view [IMU] for the balance of this year and into 2009?

The forces I described, that we’ve got some things going up and some things coming down, I think our expectations at this point is that it will probably be slightly down going through the back half of this year.

And that will be mitigated we expect by lower markdowns year-on-year as Chuck mentioned because we’re not doing to repeat the same promotions that we had last year.

Another specialty retailer, a competitor of yours, talked about moms spending less, UPTs were a little bit of a drag, and they actually commented in terms of marketing they would market more aggressively earlier this year. And we do have five fewer days between Thanksgiving and Christmas. Just given your lower promotional cadence, is there any change in getting the overall value message more perceived out there in-store so you don’t lose market share in a less promotional environment?

I think what it is is we’re just probably not going to have to go as deep. Last year as you know we had a lot of inventory that forced a higher level of markdowns. I think it’s that that we’re not going to repeat. In terms of the normal level of promotions or marketing that we would have driven the business with long term I don’t see any big changes in that.

I think our marketers actually did something really smart, which is they curtailed the mailing of the Fall 1 magalog because you have Fall 1 set when summer’s still no sale in the stores and then they’re increasing the marketing focus on Fall 2. So again you have more magalogs out there when you have more full-priced selling.

The other thing that’s going on in the marketing side is we’re trying to find ways to deliver our marketing more efficiently and one of them is what Sue just mentioned - adjusting the timing. Another way is just to shift how we deliver the marketing in terms of say direct mail versus email and making small shifts in those areas in a way that we don’t’ think will affect sales in response but will lower the cost.

If I could add in one thing, although we are planning a lower level of marketing we are still positioning some level of contingency marketing for us to be able to - You say our competitors have said they’re going to pull the trigger earlier and that type of thing. We saw some level of flexibility into our marketing to be able to react as well if we need to.

Our next question comes from Dana Telsey - Telsey Advisory Group.

Can you talk a little bit about operating margin potential as you evaluate the business? Do you have the potential to get back to your historical operating margins? What are the levers to drive you there? And then also as you look at the search for CEO, any progress being made there? And lastly, any update on the expected use of the credit line?

I’ll take the second question on the CEO search. That is an ongoing search and we’re probably not going to comment on that much further than to say it’s an ongoing activity. Sue, do you want to talk about the long-term operating margin?

Long term we’ve said we believe that we can get back to historical operating margins. Maybe not quite the highs but certainly low double-digit margins, over time. And that’s going to take increasing our top line systematically through new store openings and programs of the company we’ll be initiating over the next two years; and as importantly, really curtailing expenses as we do so. But it’s going to take some time to get there.

Yes, it’s more about controlling the level of expense growth than it is necessarily making huge cuts.

And then your last question was the use of the credit facility. The credit facility is in place and as you know we did the $85 million term loan. I expect we’ll be pretty much this year relying on the term loan for balancing our financing as we are buying inventory for holiday, etc. more so than the credit facility.

What comp level do you need to leverage expenses?

Really it’s low single digit to leverage expenses.

Our next question comes from Kimberly Greenberger - Citigroup.

Sue, I’m wondering if you could provide any color in terms of the proportion of gross margin increases in the various items that you listed? I know you don’t want to give the exact basis points but any sort of proportional allocation would be helpful. And then secondarily, it looks like you’re on a run rate to achieve just about a 30% SG&A rate to sales this year. Does that look achievable to you or is that somewhat optimistic?

First with regard to the gross margin, the single biggest driver of the gross margin improvement was lower markdowns year-on-year filed by a long shot. And then second, when we list out the items that impact any given line item we do so in descending order but it was really driven by markdowns. And the SG&A question, we’re not giving guidance but I would say that the number you quoted the SG&A as a percentage of sales is reasonable.

And lastly, because of the oddity of Florida not repeating the sales tax holiday a number of other retailers have commented on August month to date, I know it’s not customary for you to do that under normal circumstances but I was wondering if you would consider commenting on August just given the uncertainty out there with what happened in Florida?

I think we just feel it’s too soon and with our timing of how we deliver fall, I think it’s just way too soon for us.

Our next question comes from Linda Tsai - MKM Partners LLC.

In terms of the $12 million that you’re taking out of the cost structure this year, what areas are you targeting to take out of your cost structure next year and where might the biggest opportunity be?

We haven’t detailed that at this point. It’s really a continuation I think of what we’ve started which is really just a lot of blocking and tackling as there’s attrition in the organization, challenging the organization not to replace those positions.

The new thing for this year is to start on a zero-based budgeting discipline and so I would expect given that that we’re going to start to see reductions across the board. There are certain areas we’ve identified as investment areas that support our growth but bottom line is I think our zero-based budgeting approach is going to give us across the board reductions.

Your comment on 2Q being down 14% on a per square foot basis, just a point of clarification. Will that be even lower in third quarter?

Yes, I said in my prepared remarks that we expected third quarter to be down, inventory per square foot to be down in the low double digits.

And just a question for Dina. In light of the heightened demand for the good pieces of business, how are you planning for next year? Are you investing more heavily in the good area now?

We’re focusing on a balance between that. I think we bought our levels down appropriately to where we wanted to be positioned with good, so yes we’ll continue down that same path.

Our next question comes from Betty Chen - Wedbush Morgan Securities.

Following on that earlier commentary, Sue could you talk a little bit about inventory’s down on a square foot basis but then you mentioned the carry over inventory’s a little bit higher. It sounds like it’s all in the outlets. Could you just maybe talk about that a little bit more?

Yes. It’s primarily and again I did say this in the prepared remarks but we intentionally sold less fall in July and we liked our summer line. Last year we weren’t as pleased with summer and as such we marked it down to get it out. This year we liked our summer line; it’s continuing to sell; we’ve moved it to the outlets; and we would like to see it continue and believe it can live in the outlets certainly through Labor Day and slightly beyond that. It’s really a function of liking the line and in being comfortable with it being where it’s being sold now.

Could you talk a little bit about obviously significant expense leverage in the second quarter from the comps? It sounds like also you’ve benefited from the marketing and the store opening plans being shifted into the back half especially the third quarter. How should we think about those two buckets as we kind of look at the estimates in the business into the balance of the year?

Marketing did shift as we said from the second quarter into the third quarter and so you will see more marketing expense in the third quarter sequentially and also as a percent of sales more than what we had spent last year. So you should see an increase in marketing in Q3. And then the store opening expenses, again we said the bulk of our stores, most of the 30 stores we’re opening will in fact be opening in the third quarter. So you’ll see more pre-opening expense in Q3.

It definitely seems like the web business continues to gain momentum. Is it the similar kind of earnings that you’re seeing in the retail business? Could you talk a little bit about that? And also, how should we think about the growth of that business going forward and what is the opportunity there?

I’ll take the second part of that first. We see the opportunity that’s there and we’re going to continue to manage towards that. I think a lot of what we’ve seen in the growth of e-commerce this year has been how we repositioned some of what we’re calling the marketing, the paid search and affiliate programs and how we’ve been dealing with our email campaign programs this year versus last year. In addition to that we have made some adjustments to how we’re merchandising on the site which is driven more towards how we’re aligning the brand towards the outfitting and more focused assortments there. So I think that definitely has helped the e-com business over the past year.

I will say strategically we see the e-com business as one of our major growth engines; certainly not the only one but one of the major ones. So it is an area of keen focus for us.

I’m not sure if I missed it earlier but could you tell us what was the cap ex spend in the second quarter and how we should think about that for the year?

We actually didn’t. We had provided a range of $65 million to $75 million for the year after the quarter. It’s $10 million in the quarter; $20 million year to date cumulative.

Our next question comes from [Janet Klothenberg - JJK Research]. [Janet Klothenberg - JJK Research]: Sue, if I look at the SG&A dollars on the statement, the P&L, it’s actually down on a dollar basis and I think I’m supposed to add back about $3.5 million between the lease sale and the professional fees that you’re singling out as one time. Is that correct?

That’s correct Janet. If you look at SG&A, add back was $5.4 million net of fees that we in fact received, and what that is is Disney had paid us for transitional services and so those represent the fees that we received net of variable expenses. And then $2.3 million for that lease that we sold. We were being moved to another location in the mall and didn’t want the new location so we opted out and did realize $2.3 million from the sale of that lease. And that’s partially offset by some professional fees in connection with the 8K filings that we did to restate The Childrens Place. That’s about $1.7 million. [Janet Klothenberg - JJK Research]: So then SG&A dollars were actually up in the quarter slightly?

They were in fact up slightly in the quarter relative to last year. [Janet Klothenberg - JJK Research]: Just looking forward into the back half of the year, I know you can’t tell us what it might be but could there be some of these one-time benefits as well in the second half of the year as you unwind Disney and the other store properties?

We’re not doing a whole sale in [inaudible] store properties. That just happened to be one property where there were in fact unique circumstances. And Disney will continue until such time as they decide they no longer need these services. So the answer is yes, you are likely to see some one-time bursts certainly through the third quarter. Fourth quarter I’m not sure about. [Janet Klothenberg - JJK Research]: The marketing expense will rise for the back half of the year as you shifted some of your event planning?

That’s right. A way to think about marketing is that it’s about flat as a percentage of sales with its SKU towards the second half. [Janet Klothenberg - JJK Research]: Maybe if you and Chuck could talk a little bit more about this new strategy of holding product in the stores longer. I understand you’re being more patient but it sort of makes me worry about if markdowns are being taken on a timely basis. If you could just talk a little bit about that, I’d appreciate it.

The strategy is not just a function of selling product where we used to and then waiting. We’ve made some shifts to the floor set strategy. So for example, in back-to-school we actually reduced the investment in Fall 1, I think Sue mentioned it earlier, which sets in in July and pushed more investment into August to improve the investment during the peak time period where the customer is shopping. [Janet Klothenberg - JJK Research]: What’s on the floor right now Richard? Is it Fall 1 or Fall 2?

It is now Fall 2. [Janet Klothenberg - JJK Research]: So there’s a higher investment in this assortment versus what we saw in late July?

That’s correct. And the other thing is last year we started heavily promoting the line pre-Labor Day. This year our intent is we will still have a Labor Day event. In the history we used to do our sales in the end of the first or second week of September. Last year because of how much inventory we had and the fact that the line wasn’t being well received, we basically started the event for Labor Day which is too early. The shoppers are still shopping. People are even going back to school and still figuring out what they want and still coming back. So it’s a shift in floor set strategy in conjunction with our markdown strategy. It’s not hold off on markdowns that need to be taken. [Janet Klothenberg - JJK Research]: Chuck or Sue, if you could talk a little bit about the shift in the marketing program? I sense from Chucks comments that that may affect the comp sales results on a monthly basis. Maybe you could give us some level or how you want us to think about that?

No, I didn’t mean to give that impression. [Janet Klothenberg - JJK Research]: Also the promotional cadence being different as well? Do you want us to be thinking about comps being perhaps not as strong as they were in the first quarter a) because you have less inventory and b) because you’re being non-promotional?

I guess two different sets of questions. One is about the marketing and the other is about the whole top line growth. I think that so much of last year was inventory driving us to make markdown decisions, just more stuff coming in that we had to make room for whereas this year I think we’ve put ourselves in a position where we can see how the merchandise is selling and make a decision week to week. So it’s just that we’re focusing now on how the merchandise is selling in terms of reaching markdown decisions as opposed to having the pressure of inventory behind us. That being said I think that last year because we had so much inventory and we had to liquidate it that really drove the top line very strongly. We did it at fairly unattractive margins which is some of why you’re seeing the tremendous growth in the gross margin in the second quarter. And I think it’s that we’re going to try to see more of that. We’re going to try and just focus more on running a quality business from a markdown standpoint and not being forced by a lot of inventory to generate a lot of top line growth that doesn’t yield a lot of money to the bottom line.

Our next question comes from Brian Tunick - J.P. Morgan.

Maybe just thoughts on the balance sheet management, we’re just trying to understand the rationale. You guys have net cash; you’re taking on some of these additional revolvers. Just trying to understand. Is a share repurchase program something you guys would consider? Just trying to understand that first on the balance sheet.

We did decide as we’ve mentioned before to proceed with the term financing and the simple fact is we’re in a very, very tough economy. I’m not seeing anything that says it’s going to get a lot better as we embark on 2009 and we felt as a company that we needed to have the liquidity on our balance sheet. At this time we’re not looking at a stock repurchase program.

E-commerce as a percentage of sales, what kind of base are we coming off of with these pretty amazing growth numbers?

5% of the total.

Could someone talk about the footage plans initially you guys are thinking about for 09? Maybe what’s happening with the average new store size? And then I guess that sort of adds in the footwear questions. Are you guys happy with footwear and how many stores is it in right now?

I’d say about the same square footage increase for 09 as what you saw in 08, approximately 30 stores.

And we’re sticking with our basic store advertised of 4,500 to 4,600 square feet. In terms of the footwear, I think the footwear is a work in progress. We’ve decided not to build more footwear stores until we really perfect the business so this year’s really one that’s focused on a lot of experimentation. And I think we’re pleased with where we are right now. We’re learning at a rapid rate; we feel like we’ve got good customer acceptance of the shoes themselves; and now that the inventory is coming better into balance the profitability is going up. We’re doing a lot of experiments at store level both operationally and how we display things, and we just want to make sure we’ve got a really solid business before we roll it out. But we’re still in the learning mode.

From a scale perspective, how are the gross margins right now on the footwear business?

They’re lower than the apparel business for a variety of reasons.

Our next question comes from John Morris - Wachovia Capital Markets LLC.

Thinking out Chuck, looking out over several years ahead, I don’t want to jump the gun here too much but clearly you guys have gotten the business back on track really nicely. So as you think ahead [inaudible] strategic plan, thoughts about new growth down the road. You’re up at about 902 stores; you clearly have some additional capacity to go; but what are you thinking about in terms of longer term growth at this point? And my other question for Sue is, are you thinking at some juncture about going back to giving guidance or what’s your thought process now that the numbers are more manageable?

As we think about the long term growth picture I think you’re right. I think there is more store capacity and we’ve looked at that and recently completed a real estate strategy, so I think we feel strong about that. We feel very strongly about the e-com and how big that can be. And we also see a lot of earnings growth potential with just the continued strategy we’ve talked about in terms of controlling our costs as we let our top line grow. We have started to discuss with our Board several other growth opportunities that we have for the company but it’s still work in progress. But I think in general we feel there are a lot of places where this brand can go.

And as to guidance, I don’t have probably the answer that you’re looking for but we don’t have a target date as to when we’ll reinstate giving guidance. As you know we missed a number of quarters last year and just felt that we wanted to have a better handle on the stability of our business before returning to guidance. So we’re just going to see how it goes. I expect that you won’t get guidance before the next couple of quarters.

Our next question comes from Steven Kernkraut - Berman Capital.

Most of my questions have been asked, but maybe you could try to calibrate the business. A lot of retailers have talked about how the rebate checks helped them in the second quarter. You guys had a 9% comp. But just so we can get a sense of what a more normalized run rate would be going forward, do you have a sense of how much the rebates helped you guys since you really cater in the value sector and Penney’s and Wal-Mart and Kohl’s all mentioned how it helped them so much?

We were sort of scratching our heads about how we would determine that amount. But no we did not have any amounts of what that contributed to us.

What we do know is that we saw a significant improvement in our business actually before the rebate checks were mailed but beyond that we don’t know how they impacted us.

Dealing with the real estate strategy where you’re saying you’re fine tuning it and have a much better of where you ought to be opening stores in the future, is there some way you could give us a sense of what that should do in terms of the operating margin on a longer term basis in terms of the business? Should that add a meaningful amount to your operating margin potential?

I think the guidance that we’ve talked about on the operating margin is simply the notion that over the next five years or so we see ourselves returning to a double-digit operating margin and that’s going to be a combination of the three strategies that we talked about with John in the previous question.

Our next question comes from Marni Shapiro - Retail Tracker.

I have a quick cleanup type of question. Could you remind me, last year you were liquidating your denim. Was that all in Q2 or did that carry into Q3, because you had a very nice increase in your transactions of 6% against that and I was just curious if that carried into the next quarter?

Are you talking about the current quarter into Q3?

Last year’s denim.

Marni, there are two pieces. Last year we had a $9.99 event on our denim which was all in Q2. It was in July. The liquidation denim is something that we do every year. We exit out of some fashion product and replace it. The lion’s share of it was dealt with in the early part of the year but there was some that was still being liquidated into Q3, as is there is some this year as well. It’s pretty comparable.

But the bulk of it was over by the end of the first half?

Yes.

If you guys can give a little bit more again on the direct business, have you been emailing out to your clients more and are you seeing better click-through rates? And if you could also talk a little bit about the metrics online, if you’re seeing the sell-through more with newborn versus boy or girl that’s different than what you’re seeing in the stores?

Our email campaigns basically are similar to where we’ve been doing two email campaigns a week. We are seeing more traffic and we are seeing more click-through rates. In terms of how we see it, online we are selling a lot more girl than we are newborn. Newborn is probably still one of our slower businesses on the online arena but we are happy with the results that we’re seeing in the girls division.

Have you been playing around any differently with the shipping and events like that that you’ve seen any kind of reaction to?

No. We’ve been maintaining our $5.00 flat rate shipping.

Our next question comes from Jim Chartier - Monness, Crespi, Hardt & Co., Inc. Jim Chartier - Monness, Crespi, Hardt & Co., Inc.: I just want to make sure I understood your comment on the shared services. Are you still on track for $12 million of savings next year or are you going to get that $12 million for savings in 2008?

We expect to get it in 2008 and for it to continue through 2009. Jim Chartier - Monness, Crespi, Hardt & Co., Inc.: Workforce reductions really didn’t start impacting until this quarter, correct?

No, it was really the first quarter we saw some impact from the workforce reductions. Jim Chartier - Monness, Crespi, Hardt & Co., Inc.: Can you quantify the benefit you’ve gotten from that in both the first and second quarters of this year?

That we can’t but you see that in the leverage so we’ve broken out all the one-time items for you and I think you can get to that by just looking at the leverage that we achieved in the quarter. Jim Chartier - Monness, Crespi, Hardt & Co., Inc.: On the Internet business, is the seasonality of the e-commerce business similar to the retail stores or are there any differences?

For third quarter? Jim Chartier - Monness, Crespi, Hardt & Co., Inc.: For the whole year.

Yes, they’re fairly similar. The only thing that we have to account for is sometimes it ends a little sooner, so defined seasons where Halloween would be a particular date we see the peak of that a little bit earlier based on when customers need to have that product. The same with holiday.

Our next question comes from Kimberly Greenberger - Citigroup.

I just had a quick follow-up question on the back-to-school merchandise. I think you said Fall 1 in the second week of July. We’ve had I guess 4+ weeks of selling so far on the new fall stuff. Any thoughts on the customer response to the fall products so far?

Fall 1 we were reasonably satisfied with what we saw. We had targeted the assortments to be more aware now and they definitely responded to that. They responded to the shorts, the short sleeve Tees, the dresses, that type of product. So we were relatively happy with what we saw there. The categories that were a little bit slower for us were obviously the heavier weight products. And in regards to Fall 2 we really just said that we’re heading into the peak now so I think it’s a little too early to comment on that.

Now I’d like to turn the program back to Chuck Crovitz for any further comments.

I just want to thank everybody for joining us today and for your interest in the company. We look forward to continuing to update you on our business on the initiatives and the progress throughout the year. Thanks again. Have a good day.