Good morning and thank you for the calling the Polo Ralph Lauren First Quarter Fiscal 2009 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 at which time please limit yourself to one question. Instructions will be given at that time. Now, for opening remarks and introduction, I will turn the conference over to Mr. James Hurley, Please go ahead Sir,

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

Thank you Jim and good morning everyone. We're pleased to be reporting first quarter results that exceeded our expectations. We delivered a 4% revenue growth with a solid retail comp of 4%. And our diluted earnings per share increased 13%, compared to last year. While the first quarter sales growth was in line expectations, the margin performance was better than we had anticipated. I'm proud of the results we achieved considering the fact that the domestic retail environment continues to be challenging. Our first quarter reflects the successful benefits of our long term strategic initiatives. Primarily, our commitment to new merchandised development and product innovation, our ongoing attempts to expand our direct to consumer, and our growing international presence. This multi-prong strategy is designed to diversify our businesses, reduce our exposure to anyone reason of the world or channel of distribution and to give us more direct control over our brands. We believe our strategy positions us well for the future. At the same time, we have to focus on our short-term execution, particularly in uncertain environments. I believe our results over the last few quarters demonstrates that we are performing on a very high level. Our inventories are very well managed as they are below last year. And at the same time our retail sell-through rates have been strong and our profit margins have benefited as a result. Our cash flows have grown with more direct control we now have over our businesses, and we have made the right decisions in order to deliver a very strong balance sheet, with large growing cash balances and very little debt. Our entire management team has supported and delivered on these key short-term operating priorities. Because of this cross functional discipline, we are comfortable pursuing our long term initiatives. Beginning with our…

Thank you, Roger and good morning everyone. First, I would like to highlight for you the drivers of our first quarter net income in earnings per share performance. Then I'll take you to our revised guidance for fiscal 2009. For the first quarter we achieved consolidated net revenues of $1.1 billion, an increase of 4% over the prior year's period. Higher sales were achieved as a result of strong international sale, particularly, in Europe and growth in our global retail segment, where consolidated comps rose 3.9% during the quarter and that was on top of a 7.6% increase in the prior year period. Our ralphlauren.com sales also grew double-digit. Shipments of our newly launched American Living brand in the U.S., were more than offset, by lower shipments of our core domestic wholesale products. Approximately, half of our total revenue growth was due to the favourable Euro exchange rate. Our gross profit dollar increased 8% to $638 million, and our gross profit rate increased 200 basis points to 57.3% in the first quarter, compared to 55.3% during the same period last year. The growth in gross profit dollars and the expansion in gross profit rate reflect both are growth in sales as well as the benefit of the strong currency effect related to our international sales. We did also have a small gross profit rate benefit, compared to last year due to the drop off of the purchase accounting impact from last year's acquisition. First quarter operating expenses increased 10% to $492 million, compared to $446 in the first quarter of fiscal 2008. Operating expenses as a percent of revenues were 44.2%, 250 basis points higher than last year. The higher operating expenses primarily reflect the impact of the newly required and emerging businesses as well as higher occupancy expenses for…

Thank you. [Operator Instructions]. Additionally, please limit your self to one question. And we'll take our first question from Omar Saad with Credit Suisse.

Thanks good morning.

Good morning.

Roger and Tracey, wanted to see if you could elaborate on some of the comments on Europe and Asia and what you are seeing out there in these markets. We know the U.S. has slowed considerably over the last several quarters and probably will remain slow for sometime, but there is a big fear in the market place and some of these other market that have been favorite places to be are really going to experience kind of... become part of this global slowdown, are you seeing that in your business or do you are really kind of at a stage where your penetration is still so low that there is enough market share to be taken to offset kind of an overall macro pressure in these markets.

Well, Omar it's a good question. I think its been floating out there for the last three months whether the rest of the world will begin to experience some of what the U.S. has been going through for the better part of a year. Our business which is today is not small in Europe. We are over a $1 billion dollars. And have broadly distributed across high-end specialty, our own stores and key department stores continues to perform very well. And I think we said earlier, first quarter results were double digit and were forecasting the balance of the year to continue to be strong. If I broke that apart a little bit, there are differences by country. Certainly, Spain is feeling a pull back in what had been a very robust construction business. And there is a lot of building and a lot of speculation there that's coming back down. I think that is affecting the economy. But in most of the other Western European countries, our business continues to be strong both for the locals as well as their tourist business. Their port tourist business may be down in terms of U.S. visitors. But they are certainly getting heavy dose of Eastern Europeans, people from the Middle East and clearly the Russians who are in fact in Europe and buying aggressively. So I think overall, there is some concern in Spain. There is talk that may be England would begin to catch some of the cold we have. But as we sit here today we have not seen that manifest itself in our business. In Asia, and I think Asia needs to be split between Japan and the rest of the region. The market place in Japan is softer it has been for sometime. I'm not quite sure…

Okay. Great that's my one question. Thanks.

Thank you. Our next question comes from Liz Dunn with Thomas Weisel.

Hi, good morning. Congratulations on a good quarter. My question relates to the wholesale business. You talked about the domestic wholesale sell-in being down and I think that was in line with your plan. Could you talk about that relative to your expectations was it in line with your expectations. And then you talked about the American Living sell-in, but could you discuss that in terms of sell-through versus your own expectations?

Sure. Well, Liz I think when business started to soften last early fall from not many retailers domestically and then continued on to what many people said was the most difficult Christmas in a long time. I think the buys that were made for fall and holiday last year were bought six and 12 months in advance with higher expectations of sell-through. So as the business results began to playing down, there definitely was too much inventory in the marketplace which caused the lot of promoting. For the most part, early spring at that point had already been in place. So you really went from fall to holiday to spring with most retailers optimistic about selling trends and then the disappointment that followed, created this big gap of excess inventory in the marketplace. But first, we will buy that retailers, we are able to correct started with the summer buys and into fall, and it continued into holiday, where most of the major retailers have taken a position of more conservative inventory position holding tight at open to buy. In anticipation of tougher sales trends, I think the belief is that may be the natural margins will have a chance to rise and the sell-through would improve. With that knowledge, we did partner with all of our key retailers for a more carefully planned summer fall, holiday buy, and so the plan that Tracey talked about came to fruition. So we weren't surprised, we had no excess goods. It was mutually agreed upon that we would sell-in less in hopes of improving the sell-through. In fact that's what happened. Polo business in men's was quite strong results, compared to other men's brands or in fact the total stores were significantly up. So the natural margins and the natural sell-throughs were…

Okay, great. Congrats, again. Thanks.

Thanks, Liz.

Thank you. Our next question comes from Bob Drbul with Lehman Brothers.

Hi, good morning.

Hi, Bob.

Just some questions around the U.S. retail business. I guess when you think about, you said you saw some encouraging results the last few weeks and how are you planning for tourism? How much has tourism really helped your business? Can you, maybe quantify that, how strong was New York, versus the rest of the U.S.? And just how are you planning your comps exactly here in the domestic business for the remainder of the year?

Okay Bob, well overall as we said at the beginning of the year, we are sticking with a plan in retail that's about 3% comp. So that's about half the run-rate that we have experienced over the last five or six years when we performed pretty consistently in a five, six, seven comp. So we're planning or buying for, we are expensing for a comp rate of about three. As you can see the first quarter was in line or slightly better than that, so far so good. Within that there are definite pockets of the strength and weakness. I am sure you realized the Midwest, Detroit is not particularly strong market right now. There are for sure issues in Florida or California. But there also great strengths, New York for sure is being benefited by tourism. I think it started around the holiday shopping season. It's continued through the spring and the summer. We've seen strong business in all of our channels of distribution in New York whether it's Bloomingdales or Bergdorf's, or Saks Fifth Avenue or our own stores. So we are getting a benefit of that. One little statistic that might interest you, at Christmas time the foreign credit cards sales in the New York were up 45%. So that does give you some sense of the weak dollar and the strong international currencies and the impact it's having. While we did not plan the business that way in the holiday, I think our merchandise allocation by door is now anticipating or the balance of the year. There will be great strength in certain stores and markets and in some other places, some weaknesses. So I think we have a chance to pre-plan the flow of product, a little better and respond to that and that's what we are doing.

Thank you very much.

Okay Bob.

Our next question comes from Robby Ohmes with Merrill Lynch.

Oh, thanks. Excuse me. I think my one question here actually for Tracey. Tracey, can you just remind us with your earnings guidance, why we should be looking for flat to down earnings for fiscal back half of this year may be tie into that the sourcing costs outlook. Thanks.

I think that was two questions Robby, but that's okay. I think certainly as we talked about, we are very cautious as it relates to the sort fourth remaining three quarters. Then as we look at the environment, we did have a strong first quarter. We talked about Naigai and the impact of that which is dilutive. We did have some expenses Robby that we are planned for the first quarter that will be probably happening later in the year. So that will impact us a little bit in the later quarters. But I think primarily it is... we are conservative in terms of looking at the remainder of the year and very cautious. That is the best explanation that I can give you at this time, as well as the Naigai impact for us. And it relates to sourcing. I mean all of our expectations on sourcing have been baked into our forecast. So we have a tremendous sourcing team. We have done all of our negotiations as it relates to the sourcing in the process now. Obviously, we've placed our price for spring. All of our negotiations have been planned. And have incorporated all of the costing impacts related to all of the... everything going as it relates to China and all the negotiations that our sourcing team has done with the factories over there. So I mean they have done a tremendous job of negotiating the best cost possible, but we are constantly revaluating and negotiating and getting the best price that we possibly can obviously for all of our goods and Roger, don't you want to add anything to it --

Yes, I would only say to what Tracey is saying, that cost stability is really made up of variety of things that includes, raw materials, that includes the manufacturing, and it certainly includes the, what I call transportation. So, each one of those pieces has different variables to manage. And at this point, we are locked in with our costing through the balance of this year. We feel very strongly about what our team has been able to do on all three of those. And so at least from a margin point of view with the inventory position we have and we continue to mange to the improved sell through and our pricing expectations we feel pretty good about the margin opportunity through the balance of the year. And I would only add Robby to the guidance questions, you probably start a long time you know it's rare for us to increase our guidance after first quarter. It is the smallest quarter of the year. So there is no doubt the bulk of the year is ahead of us with fall selling, holiday selling and spring. So we'll see what happens and I think when we update in November which is more traditionally our time for mid-year guidance changes, at this point the first quarter was so robust that even in spite of the diluted impact of Niagara [ph] we felt the need to move it up somewhat, but I think we want to see fall sells and want to see the holiday begins to unfold and then we'll update more completely in November.

Great. Thank you very much.

Hey.

Thank you.

Thank you. Next we'll take our next question from Brad Stephens with Morgan Keegan.

Hey guys, good morning. Roger can you drill that on Europe a little bit more for us. I guess I looked at your K the last couple of years. In 2007 it's probably a 2350 wholesale door, last year you had 2075. So the number of doors going down but your European sales keep going to the roof. So could you give some more color that?

Yes, that a very good question and very astute of you. Not this similar to the United States strategy several years ago. We are closing doors in Europe, that we think are no longer representative of the quality of the brand and the positioning we want to be in. Many of those specialty stores in smaller markets could not get the brand and representation we were looking for and were buying it in a limited way that we think under shot market opportunity. So we have been on our campaign to reduce the bottom tier of the distribution and increase the volume with those stores that we think can give the brand its full complement whether its men's, women's, whether it's luxury or whether it's at the other price points. So quite frankly, our business in Europe has done from a $180 million when we bought it back to over $1 billion and we have less points of distribution today than we have back then. Every one of those is a conscious decision to reduce those stores that we don't think our brand appropriate any more.

If I can just ask a quick follow up then, as you reduced stores, how do we think about growth going forward. Is it taking more into Europe that footwear more space in these doors?

Well I think the announcement we made last quarter is that Lauren is going to Europe. It will be part of spring shipping commitments I think we have about a 100 major doors that we'll be opening Lauren in the back half of our fiscal year. We're very excited the retailers are very excited. Overtime other merchandise categories like footwear and other accessory categories for sure will be a source of great growth. I also believe model brand stores, standalone stores will be an important part of our growth strategy in Europe and the success we've had Moscow and the ongoing demand for our product in those emerging markets is enormous. So when you look at the Middle-East, you look at the Eastern Europe, European countries, you look at Russia. I think we're going to be seeing growth for many years to come beyond the traditional cities like London or Paris. So I think growth is going to come in many forms and that allows us to cut out the bottom tier of distribution.

All right thanks guys, good luck.

Thank you.

Our next question comes from David Glick with Buckingham Research.

Good morning and congratulations on the quarter.

Thank you, David.

Roger, just a follow up on the wholesale business. Given the improved inventory situation at your retail partners in the U.S and the better sell through particularly in men's and kids it sounds like some early songs of life in women's. Are there opportunities for may be higher replenishment orders or reorders may be selling less to half price. As we head into the second half of the calendar year. And if you could give us the sense of the flavour of conversations, I'm sure you're talking to your retail partners about plans for spring '09 and given sort of a change in the dynamic. The performance of their business with you could we see a kind of a reversal of the trends that you saw in the first quarter in your domestic wholesale business?

Okay David, let me respond with... again you guys are on your game this morning because your questions are insightful. We are partnering very aggressively right now with our key retailers about replenishment. I think it's fair to say that when the initial orders for new product is approached more conservatively and the mandate goes out to manage inventories more carefully; one of the things that inadvertently gets hurt is replenishment. And I don't think there is a store in the world who wouldn't want to be in stock on replenishment items that really go out at high full price margins and really with reduced traffic you want to make sure you get the best service to the customer. So I think this spring there is a recognition of that one of the by products we're trying to manage inventory down has been a fall off in the commitment to replenishment. And I think many of our retail partners in concert with Jackie and her team are working very hard on reinvigorating efforts this fall and into next year to be more diligent about staying in stock on key items. There is no reason to walk a customer on a basic and I think that's been a casualty of the inventory management initiatives. So I do believe and I think you're right there is an opportunity throughout the fall into next year to see the replenishment business which is margin rich to begin to move up in terms of priorities and I think we'll help drive sales for both of us. I expect that to be an important part of the sales repair activities. In terms of the spring plans for next year, we are not only deep into the planning we've had many of the buys committed to and I think while our business has performed well margins have come up and I think there is a lot of excitement of what we're doing. I believe stores are going to continue to be conservative in their buying till they see their retail trends begin to move higher. I think the uncertainty and the inability to plan with clarity sales performances for next spring are going to have the retailers continue to operate in a conservative manner. Of course, we'll begin to lap that so on a comparable basis it won't be the same as it is now and through the next nine months.

So it's fair to say you could see stabilization at least in your wholesale business ex-some of your growth initiatives like American Living and certainly the lift you're getting from Europe?

Could be.

Great. Thanks a lot good luck.

Okay.

Thank you. Our next question comes from Adrianne Shapira with Goldman Sachs.

Thank you, Roger what really impressive in the quarter obviously that big swing in margin expectations you are looking for that to be down. The 400 basis points and came in down only 40 basis points could you just walk us through and perhaps reconstruct where the big surprises were relative to your plan?

Sure, it's a good question. I would say that the biggest change relative to our plan and forecast was really the merchandise margins and because in this quarter which is April, May and June and the back part of the quarter June, really carries the burden for the cost of spring margin settlements and inventory clean ups. We really came through the spring in early summer in much better condition which allowed a 200 basis point improvement in margin which was not what we planned for. So certainly that was a major driver of the change versus the early guidance. I think while expenses were up, we also did a good job of managing expenses in the quarter. We are continuing to fund new projects, new initiatives but I think the company really like inventory, like our balance sheet took a hard line on expenses. And so we picked up somewhere to plan and I think that's the bulk of the delta.

Thanks, and just to make sure it sounds like it's more a function of an inventory management, you've been talking about rather than the currency benefits or sort of mix across geographies, is that fair?

That's correct.

Thank you.

Okay.

Thank you. Our next question comes from Jeff Klinefelter with Piper Jaffray.

Hi good morning this is Stephanie Wissink for Jeff, congrats on a solid quarter.

Thank you, Stephanie.

I would just like to follow up on one question Roger that you made regarding Europe, could you just talk more about the productivity per door efforts that you have, maybe speaking to the retail price difference in Europe and Asia versus the U.S and then your comment about mono-brand doors, just curious if those would be directly operated or if you're considering franchise and license agreements. Thanks.

Okay. Well interestingly and on the productivity in Europe, whether it's our own doors which we obviously know exactly and you all know how productive we are in our stores in the U.S. The productivity of our stores in Europe is 50% greater, so whatever we're doing here in the United States which is about a $1000 a foot, we're doing $1,500 a foot in Europe, so when you get it right, because of the locations, the traffic patterns, the appetite for our product and our controlled distribution strategies, we are getting a 50% improvement in sell through. So when we take that to the wholesale world and we look at a Harry's [ph] and Selfridge in a city like London, we have almost tripled the business in Harry's in the last four years and that's a result of an intensive effort on our European team to re-merchandise it, trade it up, make it more luxury as well as rebuild and expanding our presentations in all categories, men's, women's and children's. So I think that what we're seeing is when we get it right, both presentation and assortments and service levels. All of the international markets including Japan, Asia and Europe have an ability to distort their performance with the product. The sell through are higher the full price sell through are higher the margins are better and there's last left there is less left over for clearance which keeps the brand elevated. So it's a good news story when executed properly and that's what we're trying to take out to the rest of the world. I think generally productivity in the United States is lower. So to get an increase you have to work harder. And we are trying to balance that on a worldwide basis. Okay Stephanie?

Yes. Could you just speak a little bit a very quickly to the mono-brand that door comment, would those be directly or through franchise?

Sorry I forgot. Yes at the moment we have got both own stores and licensed stores certain territories like the Middle-East are licensed, the store we have in Moscow but the two stores and the third point of distribution are licensed. We look by market and we try to make a determination both from a brand point of view and an economic point of view. What is the right approach, we think over time there is tremendous opportunity to have a more complete network of mono-brand stores which would be indistinguishable to the customer whether it's owned licensed or joint-ventured. We would look to control the store design, we would look to control the location, merchandising presentations, how the products are presented and sold. So it should be indistinguishable from the customer. But we do think that's one of opportunities where we've done that well, when open Milan, we certainly think Paris will be like that, it's not only does a lot of business, it elevates the level of the brand in that market and the wholesale accounts get a halo effect as well. So it's really a multi-pronged strategy for Europe that has been time-tested and we're just going to continue to be aggressive while rolling it out.

Thank you, that's very clear. Good luck guys.

Thank you.

And our next question comes from Christine Chen from of Needham & Company. Christine Chen - Needham & Company: Thank you. Congratulations on another good quarter in a very difficult environment.

Thank you Christine. Christine Chen - Needham & Company: Wanted to follow up on, you mentioned that your guidance reflected the dilution from the acquisition in Japan. Can you help us think about how we should be modelling it out in the quarters? Or is it evenly spread out, is it more concentrated in one particular quarter in the back half of the year? Thank you.

You can think if it is evenly spread out. Christine Chen - Needham & Company: Okay, thank you very much.

And we will now take our final question from Kate McShane with Citigroup.

Hi, thank you very much. Most of my questions have been answered. I was under the impression with the SG&A guidance you gave last quarter, that a lot of cost is coming from your real estate projects. Did anything change with your expectations for these projects during the quarter and are some of those costs coming later in the year?

No, the projects that we articulated earlier continued to track as planned, but we did have expense savings in other parts of the base... of our expense base. So those projects continue unchanged, they stay on track but we did have some other expense opportunities thus we are trying that manage carefully and in what is an uncertain time.

Thank you.

Okay, with that I'll thank you all for participating. We look forward to updating you in November with a more complete thought on fiscal '09, but obviously we're off to a good start and I congratulate everybody at Polo for their hard work in this environment. Thank you very much.

Thank you. That does conclude today's conference. Thank you for your participation and have a great day.