Good day everyone and welcome to theGenesco third quarter fiscal year 2008 earnings release conference call. (Operator Instructions) Just a reminder today’s call is being recorded. At this time, for opening remarks andintroductions, I would like to turn the call over to Mr. Hal Pennington,Chairman and Chief Executive Officer of Genesco. Please, go ahead sir.

Well, good morning and thank you forjoining us for our third quarter fiscal 2008 conference call. Participating with me on the call today areBob Dennings, our President and Chief Operating Officer, and Jim Gulmi, ourChief Financial Officer. As always wewill make some forward-looking statements in this call. They reflect our expectations as of today,but actual results could be materially different. We refer you to our earnings release and toour recent SEC filings including the 10K for the fiscal year 2007 and thesecond quarter 10Q for some of the factors that could cause differences fromour expectations. And, for thoselistening to the replay of this call on the Internet, some of these factors canbe read on the opening screen. I want to remind you that my remarks todaywill focus on the business. They willnot address our pending merger or the litigation connected with it. For the third quarter we reported a netsales increase of 2.3% to $372 million dollars. Earnings before interest, taxes, merger related costs and store closingcosts were $20 million dollars compared with $30.5 million dollars last year ora decrease of 34%. Earnings per share were $0.23, whichincludes an estimated $0.16 in costs primarily related to the merger. And, Jim will have more to say about thenumbers in his portion of the call. Journeys as well as Hat World andUnderground Station showed the affects of a difficult retail climate in thequarter by contrast both Johnston & Murphy and Dockers Footwear producedanother set of strong quarterly results. And, now lets talk about each business inmore detail. Comps for the Journeys Group were negative3% for the quarter and comps in the Journeys’ stores were down 3.4% compared toa 9% increase last year. This was animprovement over our second quarter performance but below our earlierexpectation of low single positive comps in the quarter.…

Thank you Hal. I will now run through the P&L for thequarter starting at the top. Thirdquarter sales increased 2% to$372 million dollars compared to $364 milliondollars last year. Comp store salesdecreased –3% in total. Journeys Group sales increased 1% to $183million dollars and comps were down 3%. Hat World Group sales rose 13% to $88million dollars and comps increased 2%. The Underground Station Group sales weredown 23% to $27 million dollars with comps down 19%. Johnston & Murphy Group sales increased4% to $46 million dollars. The Johnston& Murphy retail shops had a 3% comp increase. And, Johnston & Murphy wholesale salesare roughly equal to last year at higher levels of regular priced shipmentsthis year offset higher closeout sales last year. Licensed brand sales increased 26% to $29million dollars on top of a 31% increase last year. Dockers’ increase was 9% while theremaining increase was due to the introduction of the new Chaps product line weare sourcing for Kohls as Hal mentioned. Now, turning to gross margin. Total gross margin for Genesco increased to50.5% from 49l8% last year. Thisimprovement was good to see especially after gross margin was down 50 basispoints in quarter two compared to last year. Gross margin rates increased across all the footwear businesses duringthe quarter. Journeys Group gross margin increased 30basis points despite the previously discussed weakness with Heelys. Underground Station Group gross marginincreased150 basis points in the quarter. Hat World’s gross margin declined 130 basispoints due to shifts in the sales mix as well as more targeted markdowns andpromotional activity to clear slow moving inventory. Johnston & Murphy Group’s gross marginwas, again up strongly. Increasing by390 basis points. This was driven bycontinued sourcing improvement and lower markdowns across all segments of thisbusiness. License brands also posted a strongimprovement in gross margin of 250 basis points.…

Thank you Jim. Having spent many years in a [audiodistortion] business influenced by external factors and product trends, I cansay that it never gets any easier to live through a down cycle. While short-term external factors do affectus, what is most important for the long term strengths of our individualbusinesses, some of which we tried to highlight on the call today. And, the strategic power within our portfolioof businesses. We also believe thatwe’ve taken appropriate action to be sure that we deal with current marketconditions and to maintain our prospects for long term growth. Now, before we open the lines for Q&A,I need to remind you again, that we will focus on the business and that we willnot be able to address any questions about our pending merger or the litigationconnected with it. And, after that,let’s open it up for questions. JeffKlinefelter – Piper Jaffray: Yes. My questions, guys will focus on brand trend. You did discuss at length and it was helpfulon the Heelys’ performance and challenges, but could you talk about any otherbrand trends that kind of stands out from the positive or negative side? Some of your key contributors last year,Crocks, Ugg in the boot area, DC Rocket Dog that you can share with us on thetrend there? And, then in terms of yourcomps, you said that Black Friday weekend or the start of the season was alittle bit less than expected, if you’d give us a more specific guidance orthoughts as to where you would expect your comp trends for the third quarter inJourneys and Hat World?

I’ll address the product questionfirst. With regard to Journeys, thewomen’s fashion is performing well. Thewomen’s boot category, now that we have some cooler weather is showingpromise. Casuals in the suede or thatwith any fleece with it seems to be performing well. Wedges; I think the overall women’s casualproduct is showing some nice improvement. In the men’s area, the casual category isnot as strong. The skate brands continueto perform well for us. The overallathletic category in itself continues to perform well, which skate being a bigpart of that. Over in the Underground Station Group,there are some things such as you might expect, Echo, some of the Apple Bottomproduct, Polo is performing well there. Those are the few that come to mind. The children’s category, there were severalbrands – some of those brands have just expanded their offering into moreavailable product for the younger kid, if you will. Some of the ones that you might expect, of coursePuma, the Nike and Converse area, those were the ones. During the third quarter there was stillbecause of the extended warm weather pattern in most of the country, during thethird quarter canvas continued to be a big item and Crocks continue to be apart of our mix.

Anything else, Mr. Klinefelter? JeffKlinefelter – Piper Jaffray: Yes. My second question was on the sales trends, Black Friday and then whatdo you expect going into the fourth quarter for comps?

Well, we’re really – in terms of going intothe fourth quarter on comps we’re really not going to give any guidance goingforward. We’re just giving guidance in relation to what Hal had saidearlier. I think over Black Friday…

This is Bob, Jeff. Black Friday was a little disappointing to usas Hal said, and we’re still trying to figure out what the rest of the industryseems to have seen. We think the storesare all set pretty well for holiday, and so, as you probably know, there’s alot of questions about exactly how well the consumer will shop. I think Hal said it well when he said, “wethink we’re well set to get our fair share of what the consumer spends.” So we think the stores are all properly set,it’s just a little hard to say just how robust the Christmas season will be. JeffKlinefelter – Piper Jaffray: Okay. In terms of that Black Friday weekend, how did you approach itpromotionally this year versus last year? And, sounds like seasonal product did improve, I guess Hal referencedthe boot category, that sounds like that was the trend either was a door buster,some kind of a promotion that really converted most of that traffic. So, how did you think you compared to otherretailers in the mall with respect to your seasonal sell throughs or yourpromotions?

Well, in terms of promotions, Jeff, as youprobably know, we’re not – we don’t use price as a traffic builder. We’ll use price really only to clearmerchandise that we’re having trouble selling. In this instance that would have been Heelys. But, even with Heelys, we stayed at the highend at the of the pricing for that weekend. So, I thing year-over-year we were pretty consistent with maintainingsome pretty good price integrity and not getting overly aggressive in terms oftrying to meet what everybody else is doing in the marketplace. JeffKlinefelter – Piper Jaffray: Okay. Thank you.

Moving on, our next question will come fromMr. Scott Krasik from CL King. Your lineis open, please go ahead. ScottKrasik – CL King: Hi guys, thanks. Continuing to Journeys, I know you said thatthere’s no trends emerging, but what are you hearing from your product guys ona go forward basis? It seems like theremight be some new interesting things in technical athletic under cross-trainingor running side next year. Do you stillsee yourselves as primarily a skate outlet going into 2008?

We still take the position that ourathletic is fashion with a large part of that being skate. We don’t consider ourselves a destinationshop for the performance footwear. Wewill leave that to some others. But, oursis focused on that teen who is looking for fashion and we believe we are thedestination shop for that. ScottKrasik – CL King: So for next Spring, is it same brand? Are you trying anything new or different?

There would be some new initiatives there Ithink as far as some styling and perhaps as testing of some other brands butthat I won’t go into. ScottKrasik – CL King: Do you think any of the weakness on thecasual side, you went too far in the direction of your own house brand asopposed to keeping the branded product?

We did not go too far on our house brands,the casual product in that we have a low profile aspect of the casual productis not as strong as it has been and I think that’s pretty wildly know, but nowe do not believe that we have gone too far with our private brand, ourin-house brands or the smaller brands, if you will. We still consider ourselves a destinationshop for brands and we realize brands are important for our customer inJourneys. ScottKrasik – CL King: Yes. Okay, and lastly Bob, I know you don’t want to give guidance, but justlooking at Hat World next year, you obviously having the Urban issues, theMajor League Baseball issues in the first half of the year. Is it better to use 2005 as a model in termsof profitability than 2006 for the first half of next year?

You’re absolutely correct that we’re notgiving guidance. There were a lot ofthings that went on with Hat World this year –a lot of things that went on theyear before, so this year one of the big things that did go on was a rotationout of that more hip-hop inspired fashion baseball and that gave us somepressure on margins. We’ve got thatinventory now right sized assuming that all of our inventories stay reasonablybalanced, that we don’t make another big adjustment you can anticipate somerecover on the margin line year-over-year. ScottKrasik – CL King: And given the assortment of the mix youhave now, return to historical margins is not out of the question assuming youget some sales follow-through.

Well, there’s a bunch of mixed things goingon as well. When our college businesscame down we gave up margin because the college business is the most profitableof the large categories that we compete in, so in order to get all the way backto historical levels, I’d argue that we’d need the college business to becomemore important in the business again. ScottKrasik – CL King: Okay, thanks guys.

Moving on, we will now hear fromSusquehanna’s John Shanley for our next question. Please go ahead.

Thank you. Good morning folks. Jim or Hal, I wonder if you could just clarify forus a little bit the operating margins on Journeys. Obviously, you went from 13.7 last year to8.4 in the third quarter of this year. But, the gross margin as you pointed outwas up 40 bips. Can you give up a sense, was this due to a de-leverage because of the 1% sales decline or the 3%comp decline or did the under-performance of the Heelys brand play an intricatepart of that overall operating margin decline for the Journeys’ business?

Well, John, of course Heelys played a partin it. We talked some about the effecton gross margin. We also talked aboutthe affect on sales. And, so thede-leveraging, and it is de-leveraging obviously, gross margins was slightlybetter. It was a combination of things,I think. One is the negative compcertainly hurt and we talked all along that we need a positive comp in order tobegin to leverage. And, with thatnegative comp it’s obvious, we’re just not able to. And the second issue here is that we’reopening stores and so we have additional store growth and the productivity ofthe newer stores. And, we’ve talked manytimes about how in the Journeys’ stores themselves in the first year they doabout 75% of may be what the average does. So, I think it’s primarily a combination of the negative comps, plus thenew store growth. If you look at the absolute dollars ofexpenses, there not far off what we thought they would be, so it’s more of aquestion of top line growth as being the issue and then also the new storegrowth is affecting the leveraging.

Was Heelys really wasn’t really anintricate part or was just a kind of corollary part?

No, no. It did have an impact because gross margin would have been betterwithout them. It would have had someaffect, but also sales were off, which we talked about, which had animpact. Obviously the top line had animpact on the leveraging factor.

Okay, I understand. The next question I have is really for you aswell. Litigation expenses are clearlybecoming a very significant costs factor for the company. Is there anyway that you can give us somesense in terms of how much litigation expenses with all the law firms thatyou’ve hired basically battling all the UBS and Finish Line law firms. What could the nut be going forward on thisthing, particularly in the fourth quarter? You must have a sense as to how much all these law firms are going to becharging you?

John, we not giving any forward-lookingcomments here and plus, who knows? Imean, I really don’t know at this point. We’re in the middle of all this and we just don’t know what’s going tobe.

Do you think it could be as much as it wasin the third quarter?

John, I don’t know.

Okay. Alright, it would be helpful, if you could try to give us some guidanceon that whenever you’re in a position to be able to do so. All right. Thank you very much.

Thanks John.

And, at this time Mr. Pennington, I wouldlike to turn the call back to you for any additional or closing remarks.

Very good. Well, thank you for joining us for our call today, and have a good restof the day.

Thank everyone for your participation andthat does conclude today’s conference. Thank you for your participation and have a great day.