Good morning and thank you for calling the Polo Ralph Lauren Fourth Quarter Fiscal Year 2008 Earnings Conference Call. As a reminder, today's conference is being recorded. All lines will be in a listen-only function during the presentation today. At the end of the presentation, we will conduct a question-and-answer session. Instructions on how to ask a question will be given at that time. Now for opening remarks and introductions, I will turn the conference over to Mr. James Hurley. Mr. Hurley, please go ahead, sir.

Thanks Elanda. Good morning and thanks to everyone for joining us on Polo Ralph Lauren's fourth quarter and full year fiscal 2008 conference call. The agenda for the call today includes Roger Farah, our President and Chief Operating Officer who will give you an overview of the year and comment on broader strategic initiatives. And then Tracey Travis, our Chief Financial Officer will provide operational and financial highlights from the fourth quarter and the full year in addition to reviewing our expectations for fiscal 2009. After that we will open the call up to your questions. As you know, we will be making some forward-looking comments today including our financial outlook. The principal risks that could cause our results to differ materially from our current expectations are detailed in our SEC filings. And now I would like to turn the call over to Roger.

Thank you Jim and good morning everyone. We are pleased to be reporting today strong financial results. We exceeded our expectations for fiscal 2008 even as severe macroeconomic challenges emerged in the back half of the year and we continued to make significant investments in long-term initiatives. During the year, we integrated newly acquired businesses, new territories and created an entirely new lifestyle brand. We ended fiscal 2008 in strong financial condition with an excellent balance sheet, characterized by a sizeable cash position, very little debt and well managed inventories. I believe our fourth quarter and full year results demonstrate the high level of operational control we have over our businesses. The results are also a testament to the relevance and vitality of the Polo Ralph Lauren brand and the hard work of all of our employees, who I would like to personally thank for their efforts. Highlights of the fourth quarter performance include 20% revenue growth, approximately 9% comps that are directly operated retail stores and diluted EPS growth of 47%. For the year, we delivered 14% sales growth with solid retail comps of 6% and our diluted EPS increased 7% to $3.99, which include the negative short-term impact of our recent acquisitions. As we highlighted to you when we provided our original guidance for the year, our earnings growth was weighted to the back half as many of our new product initiatives came on line and we cycled through the impact of purchase accounting. Internationally, our wholesale and retail businesses were strong across all regions of Europe and most parts of Asia. And as we communicated last quarter, business trends softened in the U.S. and Japan in the back half of the year. Fiscal 2008 was a year of milestones for each of our core long-term growth strategies,…

Thank you Roger and good morning everyone. First, I would like to highlight for you the drivers of our fourth quarter net income and earnings per share performance. Then I will take you through our guidance for fiscal 2009. For the fourth quarter, we achieved consolidated net revenues of $1.24 billion, an increase of 20% over the prior year's period. Higher sales were achieved through a combination of organic growth and acquisition. When we exclude the impact of the non-comp license acquisitions we have been discussing all year, and to remind you those are Impact 21 in Japan and new campaigning for small leather goods, our fourth quarter net revenue still increased by 14%. We experienced strong sales across all distribution channels in Europe. In the U.S., deliveries for the launch of American Living at JC Penney also contributed to our revenue growth and consolidated comps in our directly operated retail stores were up 8.9% during the quarter, which was achieved on top of a 6.3% comp gain in the fourth quarter of fiscal 2007. Our gross profit dollars increased 21% to $674 million and our gross profit rate increased 20 basis points to 54.3% in the fourth quarter compared to 54.1% during the same period last year. Excluding the full effect of the recent acquisition, our gross profit rate was 50 basis points below last year as increased promotional activity in certain of our domestic businesses occurred to achieve clean inventories at the end of the season. Fourth quarter operating expenses increased 21% to $530 million compared to $438 million in the fourth quarter of fiscal 2007. Operating expenses as a percent of revenues were 42.7%, 20 basis points higher than last year. The higher operating expenses primarily reflect the impact of the newly acquired businesses, both the non-cash…

Certainly. The question and answer session will be conducted electronically. [Operator Instructions]. We will take our first question from Omar Saad with Credit Suisse.

Thanks, good morning, congratulation on a great quarter and obviously with the very difficult environment.

Thank you.

Two quick questions. Roger, last quarter you talked about an environment here in the U.S. that you had never really seen before. Has there been any changes in your view in the last 90 days on that and are you seeing anything that is making you either more comfortable or less comfortable about what we are seeing here?

Well, I would say that when we talked last in the early part of February, we really had a chance to reflect on the fall and Christmas holiday business, which I did characterize and I continue to believe was the most difficult I had ever seen. I think the liquidation of that excess inventory through January and February for many people did not even provide a sales increase and the customer was really very selective about buying products, and that continued as you all saw with March comps. I think April and May has seen a bit of a stabilizing of the business as we have headed into the late spring early summer. I think while the customer is continuing to be selective and if you have the right fashion they want it, otherwise, they are looking for price. But I think the last 60 days, perhaps more than last 90 days, Omar, has seen a bit of a moderation in the trends. So it gives us some sense that the fall holiday business may have been the low point.

Okay, great. And just switching gears a little bit, I just want to ask you a question on China. I know you are very focused on Japan as you think about the Asian business and the opportunity there to grow it to one day kind of equate to potentially the size of the U.S. business. Where do you stand on the China license? It seems like there is a lot of European luxury brands going, there is a lot of nice retail opportunities. It's obviously generally a different marketplace with the department store format being different, a lot of mono brand retail. But given the growth there and the slowness that we are seeing in the U.S. market, what are your thoughts there? Can you give us kind of an update on that?

Yes, we think the opportunities in China are enormous and I can't underscore enough how important that market will be into the future not only in China, but as the Chinese begin to travel we can see the impact of that travel throughout Asia, whether it's travel into obviously Hong Kong that then spills over into places like Vietnam or Australia or other destinations. The Chinese business is going to be a dominant force in the world for luxury goods for years to come in my opinion. We had a license relationship with Dickson Poon that's based in Hong Kong. They have the rights to Hong Kong, China, Singapore, Taiwan, Malaysia and others. That license has a relatively short term to go and I think we have to look at that marketplace and decide how we want to proceed to take advantage of the opportunity that you are correctly calling out.

Perfect. Thanks.

Okay, you are welcome.

We will take our next question from Robert Drbul with Lehman Brothers.

Hi, good morning.

Good morning.

I guess the first question I have Roger, can you maybe elaborate a little bit more on the business in Europe, maybe the run rate of the business throughout the quarter and thus far in the first quarter in terms of are you seeing any bit of a slowdown from when the fourth quarter started to where you are thus far in the first quarter by categories or by country?

I am sorry, Robert, we are talking about Europe or in general?

In Europe specifically.

In Europe?

Yes.

The business in Europe has continued very strong. I think the western European markets, which for us are very much a focus, whether that's England or France or Italy, Germany, Spain et cetera have all shown good growth and continue to perform well from fourth quarter into first quarter. I would say the only real exception to that at the moment is probably Spain where you are probably familiar they are going through some pullbacks in the construction industry, which are a big part of their growth story in the prior couple of years. And I think that's put some pressure on the consumer there and so we are seeing some slower trends in Spain versus prior quarters or years. The rest of the markets there have continued very strong, whether it's our own retail stores or whether it's our key specialty customers or key shop in shop locations. So we are planning that business for the balance of fiscal '09 to be very strong and at this point haven't seen any signs of a slowdown. And they also are getting some interesting tourist business not only from the Asian customers, but some of the Middle East and emerging Eastern European countries, whether it's Russians or others, which today are prevalent in many of the major markets looking for luxury product. So as we push out in Moscow, or we push out in Istanbul and further establish ourselves as a luxury retailer in those markets, I think it's going to help even the more developed Western countries. So at this point, whether it's men's or woman's or kids, we are seeing strength continue through the European business.

Great. And then the second question I have is on American Living. Can you talk about maybe some of the early learnings that you guys have come across in terms of how you are thinking about any adjustments into the back half of 2008? And I guess the other question I have is when you think about start-up costs from last year versus the benefits of operating the business on a full year basis this year, like how should we think about that from a profitability perspective?

Okay, well, last year as you know we had 12 quarter... 12 months of expense and we had 4 months of shipping. So the impact over the course of the year was to carry the expense more or less on an even basis over the 12 months and then, as you know we started shipping in December and shipped steadily through January, February and March. As we head into the new year, expenses and shipments obviously are in alignment, although I am not sure that the December, January, February, March shipments will equal last year as we were obviously filling all the stores with all the products at the same time. So there is some offset in the back four months of the year when you want to think about how that will run through the P&L. Some of the early learnings, I would start with, is a very simple statement, which is we can do it. I am not sure when we started February a year ago that we were absolutely certain we could execute 40 merchandise categories in a new resource base, a new supply chain strategy and launch a new brand as well as we did, so my hats off to our people and to the JC Penney people who pulled that off. Early customer reaction has been very positive particularly in products that are fashion [ph] or novel or are different than what Penney's has. I think where it's more basics or more solids I think in the Penney's customer, which is obviously squeezed with the economic downturn, I think that's where price becomes more of an issue in their decision making process. So as we look to the balance of this year, recognizing that we had already made products for the entire year, that the first time we'll have a chance to adjust the new product really more completely is spring when we got customer feedback, this spring we'll really be able to put that into spring next year. But we are seeing unusual strength in things like dresses and kids and key parts of the business that the customer has reacted well to, particularly as we went through the pre-Easter and Easter period, I think JC Penney is known for their back to school business and their dominance in that category, so the kid business strength should serve us well there plus the launch of our new young men's business which is being delivered for this back to school. So I think the first three months have been interesting time of learning, and I think all brands that are this complete will take time for each of the merchandise categories to mature, but so far so good.

Okay. Thank you very much.

All right.

Moving on, we'll take our next question from Liz Dunn with Thomas Weisel.

Hi good morning, let add my congratulations.

Thanks Liz.

I guess looking at magnitude of the fourth quarter, be it in understanding some of that was obviously related to tax rate, but can you just help us get a sense of where you were you saw most out performance versus your own internal plan? Was any part of it sort of an earlier shipping of American Living orders versus your expectation? And then looking out of the first quarter, can you walk us through the factors that will result in margins being down sort of more significantly than your full year outlook?

Yes, sure, let's talk about the fourth quarter, the beat, clearly, we are a stronger continuing trend at our international businesses particularly in Europe. We obviously plan for a strong business but they out performed even the strong plan. We certainly did not plan for a comp performance of 8.9 in our own retail stores. That clearly exceeded our own internal planning forecasts as we talked in February with the trends coming out of October, November, December, I don't think we would have a right to believe we would have hit the 8.9. I think the performance of the key Asian markets, whether it's the license markets that we talked about or even the early reads in Japan out performed our expectations. So I would put all of those under the headline of beats. Clearly, a 36% increase in Polo or RalphLauren.com was not originally baked in our plan and exceeded our run rate for the year. So we saw some strength in interesting ways from a lot of the new businesses and the diversification we have been working on over the last couple of years. We did not ship American Living early. The only thing there we did, was when we originally laid out January, February, and March receipts, as you know since some of it was ready and since Penny wanted it, we moved some of that into December. So we clearly didn't ship any of that early. So the tax rate aside, the 20% operating earnings improvements I think were driven by those factors. If I look at the first quarter and the original... the preliminary guidance we've given, I think it's with a view of a more conservative retail performance. I think we believe that our plans for the year, which we planned retail closer to…

A lot of room in the year meaning a lot of conservatism in your guidance. Is that how I can --?

I think there is a lot of time left in the year.

Okay I see alright

Our fiscal year list.

Okay, got it, thanks good luck. C:Roger N. Farah: So aggressive this morning, Liz. Thank you.

We will hear next from David Glick with Buckingham Research.

Good morning. Congratulations on the quarter. Most of my questions have been asked and answered. Just a little bit of color on footwear. It sounds like you are being... you're a little more optimistic and it sounds like there is more energy in your voice talking about the footwear business. Can you give us some color on the traction you are getting and the opportunities in that business going forward?

Yes, and I appreciate you noticing that. We are feeling better about the footwear business. We started shipping new product in the November, December period to selected accounts which has then been increased in distribution with the spring shipments in January and February. We're seeing very high sell throughs, very strong desires for re-orders, and that's been manifesting itself in go forward orders that are more aggressive and more broadly distributed. So as you know, we had to sort of pull that business down, get rid of the off price part of that business and then begin to rebuild it. And the good news is we are now beginning to see products at retail being positively received both at the Ralph Lauren collection level, which is a more limited distribution product or the Lauren footwear level product, which is more broadly distributed. The other good news is, David, as we talked early on the call about the distribution of Lauren in Europe, overt time we will obviously be able to add the other pieces and parts of the Lauren sportswear business to further support that brand in a new part of the world. So we are feeling optimistic about footwear, it is one of the strong trending categories in the industry right now in the women's side particularly and we think we are beginning to play in a meaningful way there.

Well. Thanks for the color and just a quick follow up on the Lauren women's business, I mean clearly the women's business has been more challenging, you discussed that on prior calls, any sings of improvement there, may be closing the gap between the performance of men's and women's?

Yes. Well, the men's business continues very strong which is interesting its been a while since the men's business outperform the growth and women's. I think the Lauren business when we deliver, deliver the product with color... we actually are getting a more significant read and positive trends, but I think that business has sort of stabilized, and Spring salvers [ph] have been better than fall holiday and I think as we head in to the fall season, we feel better about the product, although the retailer has bought it more cautiously, given the overall environment and particularly the women's business, so its too early to say that's its time for sure, but the more casual aspect, to more active aspects, the denim aspects of that business of all experiencing strong results. The career sight of that business is the peace that goes softer.

Thanks a lot and good luck.

Okay, thanks David.

We'll take our next question from Brad Stephens with Morgan Keegan.

Hey good morning, congratulations on a very impressive quarter.

Thanks Brad.

Couple of questions. Can you give us an idea of how much of currency impacted your comps this quarter and then to that, not seeing a back in our charges that retail profitability was roughly flat on the comp and your planning for 3% comps next year, how should we think about profitability in the retail segment?

I will try the retail comps and then Tracy will give you the currency issues. We run strong retail comps throughout the last really 7 to 8 years, and I think it is prudent to plan over 3%. Some of the charges in retail that heard us you know about, I think it also fair to say that we were clearing our goods in January and February probably more than we would have wanted to in a perfect world and I think it impacted some of the gross margin in retails. So while we plan the retail performance from a comp point of view more conservatively, we are planning for some margin recovery in that business and would expect retail over the course of the year to show some improvement in their results. So we will see how that goes but with the inventories being so in line and our buying being in line with the 3% comp, we should be okay. Tracey?

Brad, and you asked in terms of the fourth quarter, the foreign currency impact on comps was about 2%. So the 8.9% would have been 6.8% comp adjusting for foreign currency impact. And then the second part of your question, can you just repeat that?

I think Roger got [ph] with the operating margin performance for next year.

Okay, terrific.

Alright. Thanks

Thanks.

We will take our next question from Jeff Klinefelter from Piper Jaffray.

Yes, also congratulations on a great fourth quarter, wanted to jump in a little bit to Europe a little bit further, looking at the country trends you give us a little color on the strongest markets but anything else you could share on your sharpen sharp strategy by country, kind of door to door expansion strategy, how do we think about this in terms of modeling future growth as we try to double the percent of the total company's revenue and then secondly would be on the marketing strategy and market spend, do you look at this as like sort of three or four distinct strategies at U.S. or Europe and Asian strategy may be splitting Europe and Asia a little differently in terms of how much money you are investing, investing with your partners in marketing and what the overall marketing in terms of medium really is?

Okay, well let me see if I can get all that out, the strategies in Europe that have driven the growth and we believe will continue to drive the growth, really include really a door concentration strategy less about new doors. So in the developed western markets that we are in. It's not that we're going to double the distribution points we have in the Spain or Italy or Germany or France or in England, it's about getting the volume per door up, we've gone from a ...93 source and a heritage [ph] to probably one of their top 2 or 3. We are seeing that kind of movement in every one of major large customers as well as growing importance in our specialty doors, as a matter of fact, we probably drop more points of distribution in the last couple of years than we have added in our effort to be very focused on who we would approach, having said that we have seen unusual growth in Italy, we have unusual growth in England, we have seen unusual growth in the Scandinavian markets, so there are plenty of places, where even with the growth we had today, we really think we are under penetrated in the luxury and high end product. Secondly for the first time we are beginning to bring brands that we have not had in Europe over the life long so if you know how important Lauren is here we are just beginning the distribution of that in Europe with spring of '09. So it will be a combination of focus on the existing doors plus some incremental in Western Europe certainly a growing interest in appetite in the Middle East and Eastern Europe as new markets up well open up and it is in the development of new product and new product categories. In terms of the marketing spend we really look at the U.S., Europe and Asia holistically in terms of branding, imaging and the advertising which is all done centrally here in the U.S. However, the spend rates by market and by country are individually developed and budgeted for base on where that market is and its development and the focus that we are trying to put on it. Initially, when we were trying to grow Europe of a smaller base, we were investment spending in the marketing at a rate higher than the sales would have justified. As sales have grown, we have been able to bring the spend rate in line, in addition to continuing to add incrementally and I think that's going to be the same in Japan. We will begin to incrementally invest there as we look to jump start a transformation of customer perception and then as the business grows, we will grow into that spend rate, so we do look at it individually by market.

So in total Roger do you look at your marketing or branding spend last year, this coming year over the next few years as fairly stable, in terms of a percent of your total corporate revenue or has that change fluctuated with all these new initiatives?

Well, we have actually continued to add to our marketing, advertising and PR spend every year for the last 7 or 8 years, in some cases in advance of getting the sales. And we have then turned around and gotten the payback because whether the advertising helps retail or wholesale or helps the license product category, it almost doesn't matter. We have been willing to spend in advance of the sales, even though with the sales growth we have had, I would say the percentages haven't varied that much.

Great, thank you.

You are welcome.

And we will take our final question from Christine Chen with Needham & Company. Christine Chen - Needham & Company, LLC: Thank you, I wanted to delve a little deeper I think on Liz's question. The 300 to 400 basis point of OM deterioration in Q1, is any of that attributed to continued investments in the newer businesses?

I think that the three main issues that I outlined for Liz are the three main issues, which are clearly a more conservative point of view about consumer spending and a more conservative retail comp plan. Two, the large core domestic wholesale businesses seeing a pull back in the initial orders by our large customers, and I would say the annualizing of expenses that we put in over the year to support some of the new businesses that are now hitting the first quarter that didn't hit it last year in what is a low shipping quarter. So that would be certainly the third, but a piece of it as well. Christine Chen - Needham & Company, LLC: Okay.

And then I think we'll see as the rest of the year plays out if it plays out as we have expected. That will not be a factor in our full year guidance we are comfortable with. Christine Chen - Needham & Company, LLC: And then as far as Japan is concerned for the year, do you still expect it to be accretive?

Yes. Yes, we do. Christine Chen - Needham & Company, LLC: And then the final question, there is a new line item on your income statement impairment of retail assets. Could you just describe a little bit what that actually is?

That's normal impairment. Every year we go through testing of stores, and so that's store impairment. So that's what that is. Christine Chen - Needham & Company, LLC: Okay. It's just the first time it's been broken out separately that I have seen, so thank you for clarifying. Good luck and congrats on a great quarter.

Thank you, and I thank you all for your interest. We look forward to updating you in August with our first quarter, but really congratulations to the whole organization for a spectacular year in a very difficult environment. So we look forward to further updates. Thank you.

That does conclude today's conference. Thank you all once again for your participation and have a wonderful day.