Richard Jaffe – Stifel Nicolaus John Morris – BMO Capital Market Kimberly Greenberger – Citigroup Linda Tasi – MKM Partners Rick Patel – Bank of America Merrill Lynch Janet Kloppenberg – JJK Research Brian Tunick – JP Morgan Margaret Whitfield – Sterne Agee Thomas Filandro – SIG Susquehanna Financial Group Dorothy Lakner – Caris & Co. Lee Giordano – Imperial Capital Analyst for John Zolidis – Buckingham Research Dana Telsey – Telsey Advisory Group

Welcome to today’s program, the Children’s Place third quarter conference call. At this time all participants are in a listen only mode. Later, you will have an opportunity to ask questions during the question and answer session. (Operator Instructions) Please note, this call may be recorded. It is now my pleasure to turn your conference over to Ms. Jane Singer, Vice President Investor Relations. JJ Thank you for joining us today for a review of the Children’s Place Retail Stores Inc. third quarter 2009 financial results. Participating on this morning’s call are Chuck Crovitz, Interim Chief Executive Officer and Sue Riley, Executive Vice President Finance & Administration. Dina Sweeney, Senior Vice President of Merchandising is on hand to answer questions at the end of management’s remarks. Before we begin, I’d 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. These forward-looking statements involve risks and uncertainties that could cause our actual results to differ materially. The company undertakes no obligation to publically release any revision to these forward-looking statements to reflect events or circumstances after the date hereof. Please also note that a reconciliation of certain non-GAAP financial measures discussed on the call this morning is contained in this morning’s press release which can be found on our www.ChildrensPlace.com website and now I will turn the call over to Chuck for his opening remarks.

We’re very pleased to have delivered sales and earnings growth in the third quarter of 2009 despite the ongoing economic uncertainty. The Children’s Place delivered top line growth of 3% and income from continuing operations increased 34% to $38.2 million. Earnings per diluted share were $1.38 compared to $0.96 per share in the third quarter last year. We were also pleased to see customer transactions increase during the third quarter. While customers remain somewhat price sensitive we were encouraged to see a 1% increase in transactions during the third quarter following a 7% decline during the second quarter. Comp sales declined 2% due to the impact of promotional pricing on average transaction size which is consistent with what’s going on in the industry. We attribute our success primarily to the resiliency to the children’s apparel market which has outperformed the sales of adult apparel. We believe the children’s category will continue to outperform the adult apparel because it is more need based. Growing kids just simply can’t wait for the economy to improve but mom’s can make their budget’s stretch further by buying more of their children’s clothing at value oriented retailers. The Children’s Place has grown market share among specialty retailers over the past year by offering a combination of trend right, high quality merchandise at great value price points. During the third quarter our wear now apparel and key items drove sales as we believe customer look to get the most value out of every purchase. Customers also reacted favorably to specialty items we offered to update children’s wardrobe such as our look maker fashion items, shoes and accessories. Our primary focus this year has been to maximize profitable sales while maintaining costs in order to minimize downside risk as we operate in this difficult economic environment. This…

My discussions today will focus on continuing operations of the Children’s Place business only. As previously disclosed we have classified the Disney Store business as discontinued operations. Net sales for the third quarter ended October 31, 2009 increased 3% to $463.2 million compared to $450.6 million in the third quarter of 2008. Comparable retail sales which include online sales declined 2% in the third quarter of 2009 following a 4% increase during the same period last year. The decline in comp sales was the result of a 2% decrease in average transaction size which was partially offset by a 1% increase in the number of transactions. We ended the third quarter with a total of 950 stores this year compared to 920 stores last year. Gross profit dollars increased 3% to $201.8 million and gross margin was comparable to last year at 43.6%. During the third quarter of 2009, gross margin was favorably impacted by an increase in IMU versus last year which was offset by markdowns. During the fourth quarter of 2009, we again plan IMU to be higher than last year as holiday 2009 merchandise was purchased during a time period when global retail demand was particularly weak. In addition we have anniversaried the precipitous decline in the Canadian currency so we expect to see a modest benefit from the stronger Canadian dollar in the fourth quarter of this year compared to last year and we expect to have lower shrink expense since we have been accruing to a higher shrink rate all year this year. Partially offsetting these benefits, we may experience some occupancy and distribution deleverage during the quarter depending on comp sales. We continue to expect that gross margin for the fiscal year 2009 will be 50 to 100 basis points lower than last year.…

Operator we’d now like to open up the call for questions.

(Operator Instructions) Your first question comes from Richard Jaffe – Stifel Nicolaus. Richard Jaffe – Stifel Nicolaus: Just two quick questions, one is on IMU and the benefits you’ve seen and the sustainability of those benefits. I know the market was under, or the sourcing market was under a lot of pressure but it still appears to be, that is to say there remains a lot of excess capacity and wondering what your outlook is for spring merchandise deliveries for sourcing for 2010 and if some of those advantages will carry forward? Then a second question just about your promotional cadence in the fourth quarter?

IMU, we expect to continue through the first half of 2010 and so we would expect to see IMU benefit on the spring purchases which again, our cycle is relatively long so the spring purchases were made at a time when the global economy was still relatively weak and the capacity still plentiful. We expect that to mitigate somewhat by the third and fourth quarters of 2010. Richard Jaffe – Stifel Nicolaus: Depending on the environment or the world view?

Yes. Richard Jaffe – Stifel Nicolaus: A discussion about promotions in the fourth quarter, is there anything you can share with us that you’ll be doing that will be different year-over-year, whether it’s bounce backs or interactive outreach through the Internet or other such things?

I think for our fourth quarter the one new thing that we’re doing this year is something called the VIP passbook which is a handout we started handing out to customers in early November. It has several coupons and promotional offers that are being redeemed throughout the holiday season. It pushes people to our website, to Facebook and Twitter that will make several other promotional announcements as we go through the holiday season. I think in general we’re trying to run promotions that are on level, somewhat similar to what we ran last year in the fourth quarter but we’ll have to see how sales react. We do have a lot of contingency promotions that we’re able to run if sales are a little weaker. But, we are planning a big Black Friday event and we have almost all of our outlet stores will be opening around Midnight. About 90% of our Place stores will open at 5am. I think we’ve got a really aggressive plan for that day and the rest of the weekend with sales, some great key item promotions and some great price point promotions. I think for competitive reason I’m not going to get in to anymore of the details of that. I think we just feel like we’ve got a good program put together for the holiday season but it just really depends on the customer’s elections of where to shop.

You also may have seen that we just recently launched denim at $10. We really thought it was a great promotional vehicle for this time of the year. We are in a denim cycle so we thought as customer are out there it would be a great way to capitalize on what is going on out there from a trend perspective. That’s one other thing you’ll probably see. Richard Jaffe – Stifel Nicolaus: Could you just review stores by venue, mall stores, outlet stores, open air or street locations, the number of each?

We have about 60% of our stores are really traditional malls. Then we have another 10% of our fleet are in strip malls and we have another 10% that are kind of lifestyle malls and about 5% of our stores are on the street. That’s basically how it breaks down that means we start to look forward, we’re very excited about this value oriented centers that are really popping up now particularly in smaller markets so that’s an area where we may see more. Richard Jaffe – Stifel Nicolaus: Chuck, I may have missed one, mall was 60%, strip is 10%.

You have lifestyle at 10% you have street at 5% and outlets at 15%.

Your next question comes from John Morris – BMO Capital Market. John Morris – BMO Capital Market: First question is for Sue, I know Richard was just asking about the IMU, can you give us the better IMU from the better sourcing can you quantify in Q3 how much that component helped? Some kind of color there, how much did that help you and what can we expect the order of magnitude to be similar in the fourth quarter so we can think about the margin forecast there accordingly. With the bounce back that you saw in the quarter that you did, did it do what you wanted it to do in terms of execution, profitability contribution? I think the game plan there was to really drive higher transactions and get that going? Is that what you wanted it to do? Will you bring that back on a regular basis? It peaked our curiosity in terms of that being a new approach in terms of being something new out there. Are you going to continue to introduce newness in terms of the marketing promos?

The IMU, we don’t typically disclose how much benefit came from IMU. What I can tell you is that it was in fact offset as I said in my prepared remarks with higher markdowns which we thought was appropriate in the quarter and I expect the IMU sequentially fourth quarter versus third quarter to be more. We got a nice increase in the third quarter, we expect that to increase yet again in the third fourth quarter. John Morris – BMO Capital Market: So the offset was about equal, in other words it wasn’t the larger piece of the benefit?

Just about equal. John Morris – BMO Capital Market: And the bounce back?

The bounce back, it definitely created a lot of excitement in the stores and customers seemed to like it and we do think it contributed incremental volume particularly during the redemption period and we did see an increase in average transaction side for some of the customers. But, we are kind of continuing to analyze it and we’re getting more customer level data out and then we’ll decide kind of how much and what to add in to the promotional mix going forward. But, I think we’ve been all year long been experimenting with a lot of different kinds of promotions and that’s just sort of our way of business.

Your next question comes from Kimberly Greenberger – Citigroup. Kimberly Greenberger – Citigroup: I just wanted to ask, the -2 comp can you break down for us the US/Canada indirect? Then, in the gross margin line Sue, I wasn’t sure I there was any occupancy and distribution deleverage that may have been offset by some savings on the buying side? Then, if you could just remind us what is your sort of neutral leverage for occupancy, buying and distribution once all these costs cuts sort of work their way through the system?

I’ll start with the comp and Sue can talk about leverage. The US comp of stores was about -4, the Canadian comp -5 and the online comp 44.

On the leverage factor, we have to leverage in that we have to generate a comp in the low single digits in order to be neutral on a buying and occupancy leverage. It was pretty neutral in the quarter with some improvements in distribution relatively minor being offset by some deleverage on occupancy. Kimberly Greenberger – Citigroup: Can I just ask one follow up for Dina? I know you’ve been testing a lot of different promotions and if this isn’t the right forum then obviously we can talk about it off line but I’m wondering what has been your learnings from the various tests on the promos that you’ve done? What works better for Children’s Place and your customers? What hasn’t resonated quite as well? Just any color you’re willing to share would be great and if you prefer to do it offline, that’s fine as well.

We are seeing the customer continue to respond to traditional products that we provide them and the promotional cadence that we’ve traditionally offered on these items. We are trying a lot of new things, we’re seeing what works what doesn’t work. We are definitely seeing mom respond to those good price points and that’s where we’re going to stay focused, we’re going to stay with what we do best in terms of our promotional strategy and make sure that mom understands the value that we’re giving her.

Your next question comes from Linda Tasi – MKM Partners. Linda Tasi – MKM Partners: How far have you bought out inventories and how are you thinking about it in 2010?

We bought inventories, we’ve got the summer buy done, we have the process of kind of calibrating the fall now. As we think about our inventories planning, increases and decreases in 2010, we’ll be providing more color on that next quarter’s call but I’d say pretty consistent relatively conservative buys throughout 2010. The same cadence as what you’ve seen kind of managing the store inventories and then buying in to increases in ecom. Linda Tasi – MKM Partners: Then just a follow up for Dina, relative to 4Q in terms of the inventory mix, are there certain areas where you’ve invested deeper? And then, can you talk about it relative to performance in 3Q?

We’ve stayed focus on our initial strategy reducing our inventory investments in better and best products and shifting that in to good and that is what we saw the customers respond to in Q3 and that was our strategy there too so we’re just remaining consistent there.

Your next question comes from Rick Patel – Bank of America Merrill Lynch. Rick Patel – Bank of America Merrill Lynch: Can you just give us an early lead on your November performance? There have been some retailers out there that have talked about weak trends in late October that continued in to November and I’m just curious if you saw that as well?

We typically do not comment on the month before we get to the end, particularly where we’ve got this major event coming up next week. Rick Patel – Bank of America Merrill Lynch: Can you provide some details on the variable that drove SG&A lower in the third quarter perhaps in the buckets of importance and whether you expect those to continue going forward. And, as we think about modeling expenses in 2010, can you help us understand some of the factors that will impact expenses next year and how much of a change we should expect?

As we look at SG&A the components that really drove SG&A down were marketing expense, some of that was timing so we’ll see some of that come back in Q4. Store expenses have come down and that’s just really better management of supplies and really tight management of store payroll and supplies and then overall just across the board administrative expenses. I think as Chuck said earlier, we really have a culture here now of cost containment and cost reduction. I think it’s premature at this point to comment on 2010. We’ll really be getting in to that in our fourth quarter call but overall we’re very pleased with how we’ve been able to lower costs and how we’ve seen some acceleration in our cost reduction program, certainly in Q3 and in Q4. That’s pretty much it, those are the buckets.

Your next question comes from Janet Kloppenberg – JJK Research. Janet Kloppenberg – JJK Research: I was wondering if you could talk about the marketing expenditure in the third quarter versus the prior year and what it looks like for the fourth quarter? I know you talked about the promotional level but I’m wondering about the spend. Sue, I’m wondering about the costs that have been taken out so brilliantly and so much better than expected. I’m wondering if in fiscal ’10 if we’re fortunate enough to have the economy be stronger if you’ll have to be replacing some of these costs, building back up in certain areas?

I think in terms of the marketing spend Q3 to Q4, marketing spend was down somewhat in the third quarter. A lot of that was due to timing differences. Janet Kloppenberg – JJK Research: That’s versus Q3 ’08 Chuck?

Yes. But, I think that will reverse itself back in Q4 and we’ll probably end up spending a little bit more in Q4 relative to a year ago. I think overall for the year we’ll probably be down about 10% compared to ’08 in terms of the marketing spending. A lot of that is just being much more targeted in our marketings this year in terms of direct mail, email blasts, a little bit more focused on social media and out of traditional media. There are just a lot of efficiencies that we’ve gained this year. On the direct mail side for example, we haven’t had much of a change in circulation we’ve simply been able to get a bigger bang for our buck with productions and targeting efficiencies especially.

SG&A and carry forward in to next year, it’s really premature to talk about 2010 but I think you can expect to see there is going to be some give back in 2010 in SG&A. At some point there are some inflationary pressures.

Your next question comes from Brian Tunick – JP Morgan. Brian Tunick – JP Morgan: I guess one question for Sue and that’s basically for ex, I think it had a negative impact of I think 2090 basis points on the gross margin last year in Q4 and can we expect to get most of that back this year? Then, for Dina or Chuck, just curious on the competitive pricing environment when we see Old Navy or Gymboree, what they’re doing from a pricing standpoint, what kind of delta in prices do you think Children’s Place needs to keep versus your competitors to really be attractive to that shopper. Then finally, for Chuck on the online business if that should exceed $100 million in revenues next year, is this a nicely double digit margin business and should be accretive to the EBIT margin even if other things get a little tougher out there?

Foreign exchange, bear in mind that this year in the third quarter for ex was relatively neutral so we really hadn’t seen that huge decline in the Canadian dollar until really October of last year. In the fourth quarter of last year there were two components of fx, there was a margin component that was about $0.05 and then there was a translation component translating the Canadian dollar back to US dollars which was about $0.06. We expect to get some of it, not all of it back in the fourth quarter of this year but then again, it all depends on what rates you’re assuming for the fourth quarter but all things being equal, as you look at the fourth quarter of this year I would expect it to be positive but not to the extent of $0.11. Again, last year you’re comparing to the prior year so the Canadian dollar is not all the way back to where it was then but I do expect it to be somewhat positive in the fourth quarter, about 50% or so of that.

In terms of promotional competition we’ve seen that the Children’s apparel category has been highly promotional throughout the year and we believe that’s going to continue with us throughout the entire holiday season. We are planning, as Chuck had mentioned, some unique promotions to help drive traffic and sales. For example, the VIP passbook or the [HHH]. We do have contingency plans in place and we feel if we need to get more promotional we will but at this point we’re not planning on being significantly more promotional than we were last fourth quarter. In regards to Old Navy, look Old Navy is a terrific retailer, they had a solid third quarter as did we. It appears that many of the value retailers that are out there such as ourselves and Old Navy are continuing to gain market share in this economy. We will continue to do what we do best which is offer our customers trend right fashion and high quality merchandise at great value pricing. Brian Tunick – JP Morgan: Can you remind us what kind of Black Friday results you had last year?

We don’t disclose Black Friday specifically as a discrete date. Brian Tunick – JP Morgan: Finally for Chuck, the online business?

I think your observations are right, we feel really good about the online business, it is as you say a more profitable business on a contribution basis and it’s a business that is growing pretty dramatically and we expect it will continue to grow. I think there’s a lot of good natural growth as more and more customers are shopping online. I think we have some opportunity to pick up, I think the best retailers are able to operate in the mid teen’s in terms of penetration and I think that’s our goal as well. I think you are absolutely correct, I think it’s a profitable growing business that’s going to be accretive to earnings.

Your next question comes from Margaret Whitfield – Sterne Agee. Margaret Whitfield – Sterne Agee: A couple of small questions, most of the major one has been asked, could you give us some quantification of that market share increase? And, in terms of the December delivery of great gifts and spring preview in early December, could you elaborate as what’s involved in the great gifts and whether there is any change in timing there? I think spring preview might be new Dina if I’m not mistaken? Then finally, how many stores do you think it likely that you’ll open next year and how many will be in the Tech II format?

I’ll just jump in on the timing of great gifts and spring preview. We did actually have a spring preview line last year. This year it’s about the same size, it will occupy the front of the store, it’s a new collection just to offer some newness for mom. Then in terms of great gifts, we did set a small great gifts line last year, we are repeating that this year. It’s just some of the items are just more cross departmental so you’ll see the same items show up for all of the divisions to have more of an impact.

Then your market share question, my comment about getting market share, I was referring really to the share of specialty segment of the children’s apparel market where we gained over a point of share on a year-to-date basis which is basically through the second quarter. Margaret Whitfield – Sterne Agee: The outlook for real estate next year?

That we’re going to talk about a little bit more in our fourth quarter call, our outlook for next year.

But, I think you can kind of expect to see more of that Tech II format, that is our primary format as we open new stores.

And probably a little greater mix weighted towards these value oriented centers.

Your next question comes from Thomas Filandro – SIG Susquehanna Financial Group. Thomas Filandro – SIG Susquehanna Financial Group: Chuck, can you just maybe give us an update on what you’re seeing in shoes? I’d like to actually know how much of an impact the shoes are having on your online business? Are there any other categories that you’re currently either testing online that you don’t have in stores or are thinking about testing in the future?

Let me let Dina talk about shoes.

We are seeing shoes continue to perform really strong for us. We saw that in the first half of the year, we’re seeing that continue in third quarter. In terms of how much it represents the online business, it represents about 30 stores for us of volume. It’s not a huge portion of the online business but it clearly is helping us establish ourselves as a shoe retailer.

We’ve always carried a select number of shoes in our store and of course we have this new business that we’ve been experimenting with the last couple of years where we have an expanded assortment in about 50 to 60 stores. We’re real pleased with the progress son that, the possibilities coming up nicely but we still have some fine tuning to do on that before we commit to a vast and broad scale roll out on it. The other kinds of new businesses that we’re looking at, I think you see in a little bit of our stores right now but some of the accessories.

We have a select group of stores that currently have some books with plush that coordinate back to that. We’ve tried some meal time pieces that coordinate to the new born print group or necessity items and we’re going to continue to experiment with different opportunities that are out there both through the online channel as well as stores.

We do see a real opportunity in some mix brand of accessories.

Your next question comes from Dorothy Lakner – Caris & Co. Dorothy Lakner – Caris & Co.: Just going back at the different store types that you have, did you see over the last quarter big differences in traffic or the traffic patterns there? Secondly, where do we stand now with Ezra’s shares? Is the registration still effective, just a little bit more color on that? Then how many Tech II stores will you actually end up with at the end of the year?

In terms of the different stores and the traffic, I think that during the third quarter we saw the outlets probably performing strongest but the traffic was actually stronger in Place stores. I think what you saw in the third quarter was in the back-to-school environment people were kind of willing to drive out to the outlets and once there they converted strongly which is a little different than what we have been seeing most of the year. I think that was more of a third quarter situation. Our traffic was slightly stronger in our full priced Place stores but the overall sales results were still [inaudible]. Dorothy Lakner – Caris & Co.: No big differences really? People are still being driven to the stores by events and so forth but you saw that more strongly in the outlets?

In the third quarter. Dorothy Lakner – Caris & Co.: Yes.

We did in fact withdraw, Ezra did inform us on October 9th that he did not want to sell shares through the structured registration statements. We did stop that process. Then, he filed a 13D in October announcing basically that he had sold a million shares at that point in time on the open market. Given his share ownership now he’s not required to file as he sells more shares. The last information on his share ownership we had was that October filing where he said he had sold a million shares through that point in time. Dorothy Lakner – Caris & Co.: Which leaves him with?

Well, he owned about five million shares. We bought back 2.5 million and so he had that amount himself at that point in time so it would be about 1.5 million or so at that point of time. He may have sold more, we don’t know.

Then to your question about the Tech II, about 25 of the 35 stores that we’ve opened this year have been in the Tech II format and the remainder of them are really outlet stores so almost everything we’re building today is the Tech II format. Dorothy Lakner – Caris & Co.: Then next year I would assume the new stores would be in that format or are there still things that you’re kind of playing around with?

No, the Tech II is something we feel really good about.

Your next question comes from Lee Giordano – Imperial Capital. Lee Giordano – Imperial Capital: Can you talk a little bit more on category performance on the merchandise side, boys versus girls and also what items in categories are working and what might not be working well?

Year-to-date we are seeing accessories and shoes perform strongest overall from a comp perspective. Girls is performing relatively well mostly driven by big girls, the baby division is actually a bit tougher than the bigger division. In terms of newborn we did execute a new strategy starting in fall and the Q3 performance in newborn was significantly improved over the year-to-date performance or the first half performance so we were happy to see that some of those things were resonating with the customer. In terms of categories, in Q3 we definitely saw early on in the season that customers were responding to wear now categories so short sleeve shorts, etc. They were also responding to what we’re calling fashion look makers so things that might have been a little bit more pricy sitting in our better or best categories like our pleather, military jackets, items like that that they might not have had in their closest at this point. But, the bulk of the volume continues to come from the fashion items which are the two for key items which you see on the table.

Your next question comes from Analyst for John Zolidis – Buckingham Research. Analyst for John Zolidis – Buckingham Research: I just had a question on your merchandise margins, were they basically flat during the quarter?

Yes, merchandise margins were flattish for the quarter, yes. Analyst for John Zolidis – Buckingham Research: How are you planning merchandise margins for the fourth quarter?

We don’t disclose that at this point in time. But, I think you can back in to it if you take the guidance we have given on gross margins. What I did say on gross margins was really at this point in time it’s all about the top line. The merchandise is bought, it’s in the store, it’s here, it’s just really about what happens on the top line. It’s volatile right now, if we sell more on promotion or more on markdown our MMU could be flat to down versus prior year. If we have a really good December and good Black Friday it will be stronger so really at this point in time it all depends on the top line. Analyst for John Zolidis – Buckingham Research: What was the currency impact on sales for the quarter?

It was basically zero, flat.

Your last question comes from Dana Telsey – Telsey Advisory Group. Dana Telsey – Telsey Advisory Group: Can you talk a little bit about sourcing and what further benefits there are to get there? And also, on the outlook business, how is that doing relative to the core business and do you see any distinction in product categories that are performing and just Black Friday plans for that too?

On sourcing, as we said in my prepared marks we got a nice IMU benefit in the third quarter that was offset by markdowns. We expect yet more benefit from IMU in Q4 and we expect that to carry in to Q1 and Q2 next year. At this point, as we’ve said many, many times, we consider sourcing to be a core competency of the company so you’re not going to see dramatic changes in sourcing that are not driven by economic factors. At this point, global capacity will benefit from that, if the capacity really tightens up for whatever reason we’re likely to see a decrease in our IMU and decrease in our product costs. That’s really the story and we do expect the IMU increase that we’ve seen to carry through the second quarter of next year and then our expectation is, we haven’t finished the fall buy yet but our expectation is that they’ll be mitigated somewhat for fall and holiday next year.

In terms of our outlet business, it’s an important valuable part of our business but it’s an integrated merchandising strategy between our regular priced stores and our outlet stores. The principle differences on the outlet is they carry one additional season of clearance merchandise. So, when we get to Black Friday the promotions are in essence the same other than we have another traunch of older season merchandise that will have very attractive promotional prices on them. But, other than that the outlet business is as I say, sort of integrated to our overall business and distinctions in margins are really not that meaningful because of the way – it depends on largely where markdowns are taken and the timing of those markdowns. Thank you everyone for joining us today. Thank you for your interest in the company and have a great day.

This concludes today’s teleconference. You may disconnect your lines at any time. Thank you and have a wonderful day.