Good day, ladies and gentlemen, and welcome to the Casual Male fourth quarter and fiscal 2007 earnings conference call. (Operator Instructions) I would now like to introduce your host for today’s conference call, Mr. Jeff Unger. You may begin, sir.

Thank you, Kevin. Good morning, all. Thank you for joining us. Today’s discussion will contain certain forward-looking statements concerning the company’s operations, performance, and financial conditions, including sales, expenses, gross margin, 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 a variety of factors that affect the company. Information regarding risk and uncertainties are detailed in the company’s filings with the Securities and Exchange Commission. Our complete Safe Harbor statement can be found at www.casualmalexl.com. I’d like to turn the call over to David Levin, our President and CEO. Thank you.

Good morning, all. The fourth quarter results for CMRG are a reflection of the slowdown in traffic we experienced in late November and throughout December and January. After 16 consecutive quarters of comp-store sales increases, we started to flatten out in the back half of last year. As consumer spending started to show signs of weakness, the men’s apparel business was at the forefront of the slowdown. Men historically in weaker economic times will curtail their apparel purchases before the rest of the household. All things considered, I believe CMRG has held its own because our conversion rate, which is the percent of customers who come in that actually make a purchase, continues to improve. Along with a higher average ticket out the door, we have managed to deliver relatively flat comp-store sales while traffic was off in the mid- to high-single-digits. In fact, our conversion rate and average ticket were both at an all-time high and that trend has continued into the first quarter of 2008. While our customers have curtailed their shopping experience in our store due to a macroeconomic issue, they are pleased with our assortments and responding accordingly with their purchases. We recently conducted a customer survey and 88% of customers who have not made a purchase from Casual Male in the last 12 months said that they plan on purchasing from us again. We are executing from a merchandising and selling perspective and we do not believe we are losing market share along the way. Since we started to experience negative traffic numbers in the fall, we aggressively pursued a conservative sales plan and budget for 2008. We shed a losing start-up business in Jared M. that had an after-tax loss of $3.5 million. We also decided to accelerate the merchandising turnaround or Rochester Big…

Thank you, David and good morning, everyone. Thank you for joining us. During the fourth quarter of 2008 [sic], the company’s performance from continuing operations generated earnings of $0.03 per share, a departure from the earnings expectations we provided early in the fourth quarter between $0.24 and $0.29 per share, and a drop in operating income from a year ago. The company was expecting a comparable sales increase of between 4% to 7% during the fourth quarter, but due to a drop in customer traffic of approximately 7.5% during the important peak holiday selling season, and therefore comparable sales were essentially flat, resulting in a lower sales from expectations of approximately $10 million during the quarter. In addition, our gross margin for the fourth quarter was negatively impacted 430 basis points by a charge of approximately $6.1 million in inventory reductions for writing off and clearing Rochester merchandise product, which is no longer relevant to its updated merchandise strategy, together with other related inventory adjustments. Additionally, to minimize excess seasonal inventory levels, the company accelerated discounting activity during the fourth quarter, which further eroded gross margins by another 140 basis points. In aggregate, these factors reduced operating earnings by approximately $14 million, or $0.19 per share. Lastly, the company incurred unanticipated and mostly non-recurring SG&A expenses of approximately $2.5 million during the quarter to fund additional distribution center start-up expenses associated with the company’s sortation systems, professional fees to resolve certain legal matters and institute certain tax planning strategies, recruiting fees for key additions to its senior management staff, and otherwise maintain store labor coverage in its stores during the important holiday selling season. Despite our limited sales growth and profitability during fiscal 2007, we made significant progress toward increasing the breadth of our direct businesses, which is in line…

(Operator Instructions) Our first question comes from Margaret Whitfield with Sterne Agee.

Good morning, everyone. I wondered, Dennis and David, if you could discuss the outlook for gross margins beyond this year. Do you still see opportunities improving your direct and private label?

I think we’re expecting gross margins to relatively plateau in 2008, but should be maintained thereafter.

Okay, and how about the square footage outlook beyond this year? Do you still see opportunities to increase your store base?

I think that’s a good point. We continue to see opportunities in the West Coast for Casual Male. We’ve just done a trip out there, but we kind of see high-single-digit, new store openings really starting to wane as far as store closings. We’re in a very good position right now. We’ve over the last four or five years, we’ve closed 40, 50 stores that were not really driving any margin for us. So our real estate is in very good shape right now and we see somewhat growth but not a real driver at this point in time.

And two modeling questions for Dennis; the D&A outlook for this year and the tax rate?

Tax rate, about 40%, Margaret, and D&A, about $17 million.

Thank you.

Our next question comes from Betty Chen with Wedbush Morgan.

Thank you. Good morning. I was wondering if you can talk a little about during the fourth quarter and perhaps so far in Q1, if you’d seen any sort of regional variations amongst different brands. And then secondly, to follow-up on the earlier question, can you give us the openings and closings by concept please for 2008? Thank you.

As far as opening and closing by concept, they would all be Casual Male -- I mean, I’m sorry, closings would all be Casual Male. Openings, we have one new store opening in Rochester and the rest are Casual Males. In terms of by market area, what we see going on, I think it’s consistent with what other retailers are saying. Our Florida market has been our weakest market now for several months. Surprisingly, where we’re hearing a lot of problems in Southern California, we are doing well there. I don’t -- don’t seem to be falling in line there. I think that could be a matter of operationally, we’re just much better positioned than we were a year ago. Outside of that, it’s been fairly consistent throughout the markets.

And then if I could on a follow-up for Rochester, following the accelerate write-down in Q4, how do you currently feel about the inventory mix that you have? It sounds like maybe you’ve already seen improvements. Is that mainly complete now in terms of the repositioning of the inventory?

No, I think what we’ve said is we will be positioned for Fall ’08 -- transition, getting it ready for Fall, we’re in much better shape than we were a year ago. It’s our sportswear piece business is ahead of our clothing piece, which would really be suits and ties and dress shirts. This really won’t be aligned where we want it until the Fall season.

Great. Thank you and good luck.

Our next question comes from Gary Giblen with Goldsmith & Harris. Gary Giblen - Goldsmith & Harris: Good morning, all. Just wondering if the Rochester customer is holding up in his general consumption pattern, given kind of mixed signals in the luxury sector recently.

Well, I think we’ve experienced the same thing in Rochester as Casual Male. It’s been a matter of the slowdown of the traffic coming into the stores. Certainly I think in the last couple of months, Rochester has seen the same traffic issues that are starting to show up in other luxury retailers. We’re watching it closely, keeping our inventories in line, but again when the customer is coming in, seems to be responding well to the assortments that we have right now. Gary Giblen - Goldsmith & Harris: Okay, great. And then to follow-up on one of the answers to Margaret’s question, the -- why would gross margin be expected to plateau in ’08 when I thought that there were continuous improvements in procurement and private label mix and so forth? I mean, I realize that you have the economy as a headwind now, but beyond that was there --

Well, I think we want to take a conservative approach. We have improved our margins by over 600 basis points. We’ve taken a lot of debt off the table as we’ve reached our plateau as a level of private label. Casual Male is certainly maturing at close to 80% private label. Rochester certainly has growth there but can’t move the numbers that much. But I think we want to take a conservative view on margin until we see a better consumer attitude towards shopping right now. We have to be -- we want to keep our inventory clean and fresh and if we -- and just concentrate on getting the sell-throughs that we need right now. Not to say that we can’t have margin opportunity. We’re just saying we’re taking a more conservative approach to the growth that we’ve had over the last few years. Gary Giblen - Goldsmith & Harris: Okay, understood. And final question -- the -- what was the -- what were the components of the other inventory related write-offs and might there be further inventory or fixture write-offs this year or nothing envisioned at this point?

No, I think it’s a one-time physical inventory adjustment, Gary, that won’t carry forward, mainly related to Casual Male. Gary Giblen - Goldsmith & Harris: Okay, so the other -- the item called other inventory related is Casual Male inventory. Is that what that --

Yes. Gary Giblen - Goldsmith & Harris: Okay. Thanks, Dennis. Thanks, Dave.

Our next question comes from Thomas Filandro with Susquehanna.

Thanks. A question on the marketing spend -- can you spend a little more time helping us understand how this spend as a percentage of sales plays out on a quarterly basis? And then my question is in the second quarter, where it sounds like the acceleration is going to hit, are you anticipating an immediate return on that investment or is it more of a back half investment? And then I have a follow-up question. Thanks.

Well, we said that the marketing campaign starts late April going up through Father’s Day. We’re going to monitor that closely on a daily basis to see the immediate reaction. What we have seen over the last several years is our best quarters of comp sales were always when we were running television. The problem was it was an expensive vehicle for us to use and layered on top of our other marketing initiatives, it impacted our operating margins. This time, we are ahead of the curve, we’ve made the adjustments in the other marketing areas that we can put this -- go on to a cable TV marketing campaign without taking on the incremental SG&A that we have in the past.

Okay, so in terms of percent of sales -- because it is going up though, David, right? Seven percent to 8%?

Correct.

Is it evenly weighted throughout the quarters? Obviously the first quarter it’s not, so what I’m -- my question is will we see a meaningful increase in ad spend as a percent of sales in the second quarter?

No, Tom.

We won’t. Okay. My second question is in terms of Rochester, obviously the write-down and you made, David, some positive comments on the average sale, I believe, and gross margins. Maybe Dennis, could you put a little meat on the bones on this one and help us understand how this division contributed historically to earnings or if it was a drag? Maybe the operating margin of the business on a pure basis and how we should view that go forward near and longer term?

Which division are you referring to?

The Rochester division.

Rochester division -- the Rochester division, if you recall, we acquired the business. It was generating about $3 million in EBITDA. Today it’s $8 million to $9 million and expected to grow further in 2008. It’s just basis points below operating margin relative to casual male, so it’s not really a drag, per se. And I think now with the improved merchandising strategy and some of the changes that have been made over the last two years, I think we’ll be able to now better optimize the true potential that Rochester has. Meanwhile, its direct business has been doing very well and has grown quite a bit since we’ve owned the business and that growth has taken place in the last few years.

What is direct as a percent of their total business, Dennis?

They are just over 20, Tom.

Twenty-percent, great. One final question, if I might; in terms of your overall view on comp for the year, could you just tell us at least in plan from a planning point of view, should we model a more negative comp in the first half versus the back half?

I think that would be good. When we lay out last year, first quarter was the best quarter of the year. We were high-single-digits. And as we hit the fourth quarter, it started to erode. So I would be definitely more conservative on the comps in Q1 and then again, we’re -- we’re foreseeing our opportunities still in the fourth quarter relative to the year. I mean, we’re still planning to be somewhat flat but we are hoping that by the fourth quarter, things will get better and again, we’re going to be up against some pretty soft numbers.

Okay, and one other -- that would suggest then we should take a more conservative and possibly down view of first half earnings, with the view that the second half is where the recovery is?

Certainly the second half is where the difference will be made in earnings compared to this year, not the first half.

Okay. Okay, gentlemen, thank you very much. Best of luck.

Our next question comes from Evren Kopelman with JP Morgan.

Thank you. Good morning. I had a couple of questions on your guidance. First, on the gross margin, so the 50 to 75 basis points, what is -- is that off of an ’07 number that includes or excludes the write-down?

Excludes the write-down -- 45.7 is your base for ’07.

Okay, and then the second question on that is I assume there’s some occupancy deleverage on a flat to down 2 comp, right? So you’re suggesting the merchandise margin should be up more than 50 to 75 basis points?

That’s accurate.

Okay, and then the second question, did you say you expect the direct business to grow 25% in ’08?

Inclusive of our --

Of new business?

Of the new business pieces, Evren.

Okay. How about excluding that? I’m sure I can run the number but if you had it quickly --

Excluding that will be just the core Rochester, Casual Male will be single digits.

Okay. And then could you give us the store only comp for Q4 in ’07?

Yeah, we were minus 2.5 in the stores during ’07, Evren.

And another quick one is the diluted share count at the end of the quarter?

43.1.

And then finally, I guess a broader question is on this 42- to 44-inch waist guy, it sounds like you have some initiatives going after that guy more directly this year. Maybe talk about your confidence in getting that guy into your store in terms of how much of an obstacle is it for that guy to go to a specific store, a special size store versus a regular store, versus just clearly he doesn’t have a lot of selection at a regular store but at least he doesn’t have to go to a specialized store and maybe the 42- to 44-inch guy just can’t admit to themselves that they are heavier now. So can you talk about maybe that and what percent share you think you can gain given some of these issues?

Well, that’s the big question. We know it’s out there. We were able to snag a segment of them simply by changing our name, which took a little of the stigma off the word big and tall. We know when that customer came in, he responded very well but we hadn’t done any marketing to get him in. Now, this commercial that we are running has already been tested and through focus groups and we specifically had only 42- and 44-inch guys who have not shopped Casual Male in the focus group watching the commercial. And they responded quite well and came out feeling that they would be interested in going into a Casual Male store. It’s a tough battle but we know for sure he’s very frustrated because especially a 44-inch, there is nowhere to shop for this guy. So I think it’s a long-term project but if we could just get a small percent of them, it’s a huge piece of incremental sales to us, so this is really the first time we are going to market directly to him. The commercial is one of these guys in a testimonial situation talking about where -- his limited choices and what Casual now has. But we’re excited about it. We’ll monitor it on a daily basis to see the response but it is a huge opportunity for us and we think that going through a television campaign is the best way to reach him.

What channels will it run on?

Well, we’ve spent a lot of research over the years on cable so we know the programs that do quite well for us -- ESPN, we know what markets are strong for the female side of the business. A lot of sport shows tend to do very well for us, lifestyle channels, but it’s strictly cable where we could get a good bang for our buck on the number of impressions we can make.

Thank you. Good luck.

Our next question comes from Richard Jaffe with Stifel Nicolaus.

Good morning. Just a couple of follow-on questions; you talked about a European initiative. Could you give us a sense of investment this year ’08 in Europe and when we should look for store openings, either further store openings in the U.K. or on to the continent?

Well, in terms of investing, our investment is really the inventory and the marketing we’ll do to get the business moving. The GSI is covering the expense side of it and they will revenue share in the sales that take place. We don’t -- we have no plans in ’08 to open any stores in Europe but we know the opportunity is there. Hopefully we could start the initiative in ’09 but what this will give us, since we are in six countries, we’ll get a good indication of where the best opportunities are to open stores based on the sales we are going to get.

And just a follow-on question to Rochester inventory, given the write-down we should assume inventories are where they should be, both in terms of dollars but also in terms of mix -- is that correct or is it really still a work in progress in terms of getting the mix right in Rochester?

Again, I’m very confident that starting in August, our inventory will be merchandised correctly. Again, we are still in transition, as I stated before. Our clothing inventory isn’t where we want it to be. Sportswear is certainly further along but we are going to say by fall, we’re going to have it where it’s going to be. In terms of units in the store, yes, now we are comfortable. That write-down really got to clean up the stores. Again, for those who have been in the stores a few months ago, if you came in today, you are going to see everything basically is back at full price and all the aged inventory, all our clearance inventory is out of the stores now.

Got it. Just a question about your loyalty program, in terms of your penetration or the percentage of shoppers who are using the loyalty program -- could you break that out for us or give us a sense of how that’s unfolded this year?

Well, we don’t give out the -- certain numbers we don’t give out for competitive reasons but again, we’re not having any problem at all in getting people signed into the program. They are using this as a purchase vehicle. When they come in, including the points they are getting, they tend to spend more on that return visit than they normally spend, which is exactly what we are hoping happens. So it is somewhat -- there is an expense too it and that’s certainly in our marketing dollars but it seems to be registering the way we want it to. They appreciate the points, they follow their points, and they are using their points.

Is the catalog expense considered part of your ad budget, the 8% you commented on?

Yes.

It is -- could you break that out or sort of piece it apart -- traditional print and media advertising versus the catalog direct mail?

We don’t break that out, Richard.

Okay. Thanks very much.

Our next question comes from David Cohen with Midwood.

-- into the free cash flow, Dennis, I thought you said $20 million to $24 million of operating income, take out interest expense, taxes, add back D&A, $10 million to $15 million of inventory reduction -- I mean, I’m coming out with a number for operating cash flow of 31 to 43. That’s after $6 million to $7.5 million of taxes. Where am I -- I guess what is in your free cash flow number? Is it anything besides operating cash flow minus CapEx?

Free cash flow, no, that’s about right. Taxes is -- we’re using NOLs to shelter cash taxes.

What kind of -- what level of cash taxes? Minimal cash taxes in the --

I would say approximately -- I would say approximately 5% for cash taxes.

Okay, so that’s a significant difference. From a working capital standpoint, is there anything just directionally -- inventory reduction of $10 million to $15 million is obviously the biggest one. Are there any other components that are a material source or use of cash?

Not material. There will be some reductions in some of the liabilities associated with inventory flow, as you would expect, but not terribly significant.

Maybe I’ll follow-up with you and/or Jeff offline and try to nail this down a little bit.

Be happy to.

Okay, thanks.

Our next question comes from Marc Bettinger with Stanford Group.

The August launch in the six countries in Europe, that’s all Casual Male, correct?

And Rochester.

And Rochester?

Actually, there will be 12 shopping sites in total.

Okay.

Six for each brand.

Six in each, okay -- and as far as Rochester in the United States, is it a real estate issue for only opening one store or can you comment on that?

I think again with the -- it gets back to that hunkering down. I think we want to be conservative. We’ve opened up some very high profile stores in the last year. We also have a relocation in Washington, D.C. that’s taking place actually next month. Again, we’re just taking a conservative approach and we’ll realign ourselves up for store growth when we see an improvement in the business.

Okay, and just one follow-up; Dennis, I think you said for 2008, you were looking for the comp retail to be down 2.5 and direct to be up 25%.

Yes.

Okay, great. Okay, good luck, guys. Thank you.

Our next question comes from Howard Tubin with RBC Capital Markets.

Thanks very much. Can you give us anymore detail on Living XL and how that performed in the fourth quarter and how it’s performing now going into the first quarter?

We’re seeing significant growth in it. It’s very difficult for us to measure that business because it’s a start-up and there’s a lot of prospecting involved and we are constantly moving up and down drops in circulation because our plan is to have that business break even. We don’t really want it to impact our earnings in ’08. So it’s a work I progress. The key to success of this business is product innovation. We have to constantly come out and add in new product to stimulate the customer over time. Still big items are any type of chairs, scales, seatbelt extenders really seem to drive the business. We’ve introduced some apparel into the catalog and that seems to be doing well but it is a work in progress and our numbers change every month as to what we think it will do this year but again, we are always trying to plan it to break even throughout the course of the year. But we are excited about it. It’s drawing in new customers. We’re getting a lot of the female shopper coming in and it’s a great extension for us without really any extra overhead expense to operate it.

Great, thanks. And would you be willing to give us Casual Male store same-store sales by month in the fourth quarter?

No, we don’t give out that granular information.

Okay, great. Thanks.

(Operator Instructions) Our next question comes from Erin Moloney from Merriman Curhan Ford.

Good morning. Dennis, first of all I apologize; I think I just missed your comments on this. Did you say what the revenue and then I think loss was for the new businesses in ’07 excluding Jared M.?

Just under $9 million, Erin, 8.9.

And for sales?

That is the sales.

Okay, and then what was the loss? Did you give that?

A loss of $1.5 million.

Okay, great. Thank you. And then looking ahead to ’08, you’ve talked about the launch of the new European business. What’s your outlook as far as launching new businesses, potential acquisitions? Does that continue to be ongoing? Are you kind of pulled back from that this year with the current business environment?

I think we always will be optimistic about finding the right fit for us. We’ve got an infrastructure here that could certainly take on new businesses but it would have to be the right business at the right time. But we keep an open eye on what’s going on out there. We believe long-term we can certainly leverage our management group and the systems we’ve put in this to take on more businesses. But nothing to talk about today.

Okay, great. And then just finally, again looking at the SG&A levels expectations for ’08, you’ve obviously talked a lot about the marketing spend being up. Are there other areas outside of marketing, direct being kind of -- are there other places where you are looking to cut expenses or control expenses in ’08?

We have reduced our corporate expenses, Erin, already by 6% to 7% and have cut other levels around the various businesses to maintain a steady slow rate of SG&A growth, and to allow and accommodate for these initiatives that we spoke about.

Okay, great. Thank you.

Our next question comes from Klaus Von Stutterheim with Deutsche Bank.

I want to ask a question about the European expansion. I don’t know your business, obviously, other than listening to you for a few years now but I’m skeptical about whether -- does this really translate well into a European operation? It seems so culturally tied to the U.S. and Europe is far away and involves a lot of travel, different customs, different languages -- why do you think that European expansion is a good idea? Can you explain that?

Well, we see what’s going on in the United States and if we look at our New York Rochester store alone, a very high percent of the sales come from the tourist market. They come from Germany, they come from Saudi Arabia, they are coming from the U.K. There’s a tremendous demand for what we have overseas. There’s nothing like this. Certainly I could share with you at some other point in time the statistics of big and tall in these European countries. It’s pretty high, so there’s a customer there. We’ve seen the market. It’s -- certainly there’s nothing like what we have to offer. We are doing -- we are approaching it in a conservative way by starting on the Internet, let it grow but we are very optimistic that there is a consumer out there that wants value at the Casual Male price and wants luxury at the Rochester prices that we have to offer. So we are very enthusiastic about this opportunity and we believe it’s going to do well.

You should also know that our site will be in the native languages and will basically be relatively seamless to a company, to a U.S. based operation and that’s -- we’ve been very careful about preserving our sites to make them look like they are coming from Germany and all the other countries we’ll be in.

Okay, that’s good. Thanks.

There are no further questions at this time.

Okay. Well, thank you all for joining us and we look forward to reviewing our first quarter results later in the year. Thank you very much.

Ladies and gentlemen, this does conclude today’s presentation. You may now disconnect.