Thank you for calling Polo Ralph Lauren Second Quarter Fiscal 2009 Earnings Conference Call. (Operator Instructions) Now for opening remarks and introductions, I'd like to turn our call over to Mr. James Hurley. Please go ahead, sir.

Good morning and thank you for joining us on Polo Ralph Lauren Second 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 then Tracey Travis, our CFO, will provide operational and financial highlights from the second quarter in addition to reviewing our expectations for fiscal 2009. After that we will open the call up for your questions, which we ask that you limit to one per caller. As you know, we will be making some forward-looking statements 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 strong second quarter results that exceeded our expectations. We delivered a 10% revenue growth with a solid retail comp of 5%, and our diluted earnings per share increase of 45% compared to last year. Our year-to-date results are equally strong, and even more compelling when we consider the market challenges that have persisted for the last year and intensified during the second quarter. I believe these results confirm the vitality of our brand, the relevance of our strategy, the world-class capabilities of our management team, and the passion of our employees around the world, all of which is supported by the strength of our balance sheet. Without this powerful combination we would not have been able to achieve this high level of performance. Of course, we're not immune to macro challenges and our recent business trends have been affected by the global financial crisis that began to unfold in September. The impact has resulted in considerable volatility with customers in all channels of distribution pulling back on their spending, but in the context of tremendous uncertainty there are a few things I know for sure. First, we have one of the world's most desirable brands, and customers have consistently chosen our products over others. Second, our business has endured through good times and bad over the last 40 years, and we've always emerged stronger from any challenge. And finally, we have a solid strategy to grow shareholder value over the long term. This strategy is focused on elevating our brand and is grounded in three key areas – one, growing our international presence; two, expanding our direct-to-consumer reach; and third, our new merchandise development and product innovation. While these initiatives are primarily focused on creating long-term value…

First I would like to highlight for you the drivers of our second quarter net income and earnings per share performance. Then I will comment on our outlook for the balance of fiscal 2009. For the second quarter we achieved consolidated net revenues of $1.4 billion an increase of 10% over the prior year’s period. Our higher sales were achieved as a result of growth in global retail sales, where our comps rose 5.1% on top of a 4.5% comp in the prior year period, the strength of our international wholesale business particularly in Europe and the shipment of new products including American Living merchandise. These increases were partially offset by lower domestic shipments of our For Men’s, Women’s and Children’s wear products. Approximately 2.6 points of our 10% total revenue growth for the quarter was due to favorable currency exchange rates, primarily the Euro. Our gross profit dollars increased 13% to $788 million and our gross profit rate improved 170 basis points to 55.2% in the second quarter, compared to 53.5% during the same period last year. The growth in gross profit dollars and the expansion and gross profit rate reflect our higher sales, a decline in purchasing accounting amortization related to last year’s acquisitions, as well as strong full price sell throughs at wholesale and retail stores globally. Second quarter operating expenses increased 8% to $545 million compared to $503 million in the second quarter of fiscal 2008. Operating expenses as a percent of revenues were 38.2%, 50 basis points below last year. The operating expense leverage primarily reflects our revenue growth and a decline in purchase accounting amortization that was partially offset by our ongoing investment in product expansion and new store development. Operating income for the second quarter was $243 million, 26% higher than the prior…

(Operator Instructions) Your first question comes from Omar Saad – Credit Suisse. Omar Saad – Credit Suisse: Roger, and Tracey, the step down implied by your guidance kind of raises some questions around, and the nature of business around the health of the luxury consumer. We've been seeing what's been happening with some of the higher end department stores, monthly comps in this environment, and you obviously have a view, you have insight into even the more global view of that consumer. Can you help us understand how that consumer is behaving, what you're noticing, and how they're behaving, and is it different in the U.S. versus Europe versus Asia, and how you think that that part of the business will play out over the next 12 to 18 months?

So, Omar, nothing on the second quarter, just get right into the go forward. I love it. I think your observations are on the luxury consumer are correct. While the last 12 months have been a difficult economic environment, I think the last 45 days has seen an extraordinary series of issues that have affected both the psychology of the luxury consumer as well as their desire to spend on a discretionary level. So whether it's the high end large specialty stores in the U.S. that have reported difficult September trends and will report, I guess, tomorrow their October trends, or it's some of the smaller specialty stores, I think the luxury customer has contracted their spending in the last 30 or 45 days differently than the last 12 months. I think they're being more selective about purchasing. I think they're looking for something new and novel and different, and where you have it they are reacting positively. I think the Unites States was probably the first to feel that, but the recent reaction of the luxury customer in Europe, or even some of the markets like Russia where there's been great turbulence in the stock market there, I think the luxury customer around the world has become more careful with their spending. And even in the Middle East, which was riding the gloom of very high oil prices. I think a lot of that has made people at least psychologically more cautious. So it is something new and different or unusual, spending continues, but we're approaching the back half of the year with a sense that the luxury customer is going to behave differently than they have up until now. So Asia, I would say Japan is feeling it more than the other parts of Asia where growth continues unabated, and so it's really a country-to-country or market-by-market situation. And that's how we're viewing our business and reacting accordingly. Omar Saad – Credit Suisse: And just one follow-up if I may, the competition spread between your factory outlook and your full-price stores, do you think there's anything to read in that, vis-à-vis where customers are shopping for Polo Ralph Lauren?

Yes. The full price Ralph Lauren stores had a very strong July and August and then the back half of September softened, and so what I just said earlier about unique and distinctive product on one end and perhaps value on the other end is sort of a barbell affect of what we're seeing with the customers. We'll see what happens through the holiday shopping period. We think we have good assortments. We think we're well staffed and ready to go. We have compelling marketing. But I think you're seeing value shopping, whether it's through our own stores or through our wholesale channel of distribution, and then on the high end you're seeing novelty with the luxury customer being the motivator, so I think that's probably embedded in the second quarter numbers.

Your next call comes from Liz Dunn – Thomas Weisel Partners. Liz Dunn – Thomas Weisel Partners: Congratulations on a good quarter in a tough environment. Can you give any sort of specific examples about what you're seeing in the channel in terms of the deceleration – in the various channels in terms the deceleration and trend, be it in your own retail stores if you're not comfortable commenting on your retail partners?

Well I think, Liz, what we've seen through any of the channels that we have distributed product is a slowdown in footsteps more than a reduction in average unit sale or a reduction in the number of units per transaction, both of which we track very carefully. As a matter of fact, even in the second quarter we increased our units per transaction and total value of transaction to offset some of the slowdown in footsteps. So I do think the issues the customers are reacting to is just less traffic, and in some cases that's a reversal of the tourist, in some cases it's the local customer. Clearly the strengthening of the dollar or the weakening of the Euro, depending on how you want to look at it, will affect holiday shopping patterns. As you all remember, last year the holiday season in key markets was distorted with traffic from international buying, and I think that's going to be moderated, so I think it depends on the format and the channel. The one thing that we're also seeing is ongoing strength in the online shopper. I think you could see that in the 30% increases that we've run to date, so some of the slowdown may be transferring to an online customer and thank goodness we've invested eight years in building that up into the power house it is, but we'll see for the holiday period. Whether that's gift giving or whether that's self purchasing, I don’t think it's always clear to people how much of that November, December shopping trend is self purchasing while somebody's in to buy a gift. And so it maybe that the gift purchasing holds up better but there may be some reduction in the self purchasing going on during that experience, so and that’s I think based on our own results and through our third party distribution. Liz Dunn – Thomas Weisel Partners: Do you think with the slow down in sales trends is in the wholesale channel that your sell in, your inventory position at retail is still conservative enough to allow you to see what you seeing for the fist part of this year, which is improved rates of full price sell through?

Yes, I think [Jackie] and the wholesale team domestically for sure, work closely with our partners to get the inventory in alignment with sales expectations, which as you heard Tracey and I talk about did help improve our second quarter sell throughs. We've continued to approach this time period with the same logic. I don’t think anybody has clarity about what November, December will bring. But I think we feel good about the inventory we sold in, and our expectations on sell throughs are still strong. Liz Dunn – Thomas Weisel Partners: Okay, and then is there anyway I could get an update on handbags. I don’t think you mentioned what was going on with the whole handbag business. I think fall was supposed to be the re-launch, right?

Yes, I think that's a good question, and then after Liz we'll try to stick with one question per caller, since you got three in Liz. The accessory business, I think for us, represents large opportunities, and I think I did touch on the results of our footwear re-launches both at the collection level and at the Lauren level and our growing excitement over the success of that. Handbags is trailing that since we just got back the license, or the rights to do business there, at the end of the year, and we probably will not launch women's handbags until late in calendar '09 or early 2010, in our efforts to get it right. And I think the addition of high quality leadership there will help put us on that time table. And I think many of you have said the accessory business has been slowing and therefore does that make it a more difficult category to enter. And I think that on some levels it may have people looking for new resources or new product categories and while it may be slowing it's still an enormous merchandise category that has a lot of potential. So, timing of that is closer to end of '09 early '10 and we think we'll be ready for exciting launches at that point.

Your next question comes from the line of Robert S. Drbul – Barclays Capital Robert S. Drbul – Barclays Capital: Questions around the gross margin.

Okay Robert S. Drbul – Barclays Capital: Can you maybe give a little bit more on the buckets of the gross margin expansion, how much was from the sales mix benefit, or how much was from the decline in purchase price accounting, and how much was just from the core margin business overall?

Yes, for the second quarter? Robert S. Drbul – Barclays Capital: Yes.

I think while Tracey's getting the specifics, I would say that the interesting phenomena about the margin, beyond the purchase price accounting is the cost of goods efficiency that we're getting out of our manufacturing and our supply chain initiatives which have continued to allow us to manage costs of goods in a world that was seeing some inflation and expense. I think mix is also a part of it, as is the full price sell throughs given the lower sell ins. With that said, we can't predict the go forward positions other than the slow down in demand worldwide has created some capacity opportunities in factories, which have in fact helped manage what had been predicted as a cost of goods pressure problem for next fiscal year. So, I think all of the pieces and parts of that have helped both for the quarter and for the year-to-date. I think we'll try to get you those numbers offline and if we could so we could keep moving Bob. Robert S. Drbul – Barclays Capital: And, so hopefully I get another question then, Roger.

Sure, you're saying that I only gave you half an answer, okay. Robert S. Drbul – Barclays Capital: The other question that I have is when you look at American Living can just describe you what you've learned so far and sort of as you anniversary it, like the biggest changes that you're making going into next year?

Sure, we launched American Living, as Tracey said, in 50 merchandise categories last February, which means that product had been in the design process for the 12 months prior to that. So, really our concept and our product development was stretching out through '07, launched in '08, so, the first feedback we received was Spring of '08, summer and now fall. I think there was a great deal of excitement by the JC Penney customer, for both product, marketing and brand positioning. I think we've learned a lot about their desire for novelty and fashion. I think that we have learned a lot about the basics needing to be competitive with other core product categories on the JC Penney selling floor. I think we've also realized that in a market that has eroded in spring, summer and early fall, the JC Penney customer is very price conscious. So while they've reacted very well to product design and quality, I think we'd have to get some of those things in alignment, and that will take place for this coming Spring as it's the first time we've been able to react to what the customer's told us in spring of '08. So, lot of great things, lot of excitement, lot of learning; all of which will be baked into the spring of '09 and summer and fall products.

Bob, 100 basis points. Robert S. Drbul – Barclays Capital: That was 100 basis

For the purchase price accounting

Your next call comes from Robby Ohmes – Merrill Lynch Robby Ohmes – Merrill Lynch: Actually, two quick questions if I may, the first question Roger or Tracey the tougher, environment that you're talking about. Everybody heading into here as you plan more conservatively are you looking for domestic core to go even more negative than it's been in the last few quarters say relative to Europe? Do you see Europe still holding up because your in a roll out process there with Lauren, etc.? Or do you see Europe wholesale really stepping down? And then the second question is just on Japan and China, how soon could both of those become growth markets, either with owned stores in Japan that and maybe a strategy being executed in mainland China?

Well, let's deal with the first question, first. The projections we have going forward in our assumptions, are based on the domestic businesses and I think you're referring to the wholesale side of domestic businesses, continuing in the core merchandise categories to be aligned with what our domestic partners are saying about their sales trends. There is no doubt about our sell ins this fall have resulted in higher sell throughs and higher natural margins, I think all of which everybody's very excited about. So, we expect that to continue and that is a part of our thinking. I think the European business which for several quarters now people have asked about, really had a really very strong second quarter and we continue to believe that business has real growth. I think the things that temper our view of Europe are either country specific issues, where there's been a meaningful slow down in a country like Spain, and or exchange rates. So the European story of growth and high quality growth continues to be exciting and obviously the Lauren launch will help, but the exchange rates have changed pretty radically from this time last year. As far as Japan and Asia I go back to our headline strategy which is we believe one day Asia will be a third of our worldwide business, Europe will be a third of our worldwide business and the United States will be a third. With Asia today, being only 17% of our total that implies really rapid growth over the near term. And we think while we're getting our sea legs under us in Japan certainly China, which I didn’t need a reminder of, but when I was there several weeks ago, there's an explosive opportunity as is Hong Kong, Macau and all the other parts, but so is Korea, so is Vietnam, so is a lot of the countries in that part of the world. So I think you'll see effort and focus and capital spending and resources in that part of the world for a long time to come, and so we're actually quite excited about the long-term opportunity there. Okay next question, so we don’t run out of time.

Your next question comes from the line of Adrianne Shapira – Goldman Sachs. Adrianne Shapira – Goldman Sachs: Roger you pointed to very impressive inventory management across your own planning and with your customers, so I'm just wondering in light of the change in the recent weeks in trends, could you show us that any sort of cancellation in orders? How they compare to historic trends in light of obviously a pretty sharp drop off in business in recent weeks?

Yes, I think that's a fair question and it has come up a lot, really for the holiday and spring at this point, we really are working closely with our customers and our business is intact and we don’t anticipate much change. As you probably are aware, Adrianne, we worked very closely with our customers, in advance of markets opening to plan sales and receipts and inventories by door, by account. So, we're not really opening the door to a new line and hoping they like the line, and having people come in and view it. We have done extensive work with our customers around those. So we are feeling good about where we are. Our forecasts for the balance of the year include our best thinking on that subject and at this point we think we're fine. Adrianne Shapira – Goldman Sachs: And if I may follow up, Tracey just a question on the corporate expense, it looked quite impressive down about $5 million a reversal from the last two quarters. Could you give us any sense in terms of how we should be thinking about that line going forward and anything you see in terms of opportunities in the back half there?

Well, we're obviously, given the softness in sales, we're obviously looking at controlling corporate expenses and managing corporate expense on a go forward basis, Adrianne, and I'm looking at discretionary expenses and where we can cut back. And we've done that I think if you look at the first couple of quarters you will see that our expenses have been better than what has been anticipated. So, I would – we certainly plan to continue to manage that on a go forward basis.

Your next call is from the line of Evren Kopelman – JP Morgan. Evren Kopelman – JP Morgan: Very impressive quarter, my question is it sounds like your guidance assumes that the trends of the last 45 days continue into the next six months. And our question is could you be too pessimistic because October was an extraordinary month in the world financial market, and where could you be wrong and you're being a little too pessimistic? Maybe if you could touch on some categories or some segments?

Well, I think, your question is what we hope, which is October was a tsunami of sorts, both in the financial markets as well as with consumer spending. I think having done this now for 30 plus years, I've never seen a world economy or financial crisis resonate on a world wide basis with customers. So, the fact is it's premature to decide whether October was an unusual month or more of a permanent trend. As managers of the business the only thing we can really do is make assumptions and use our best judgment to protect our long-term strategies and then adjust where appropriate to inventories, or capital spending or expenses and if we turn out to be wrong and the customer is more resilient post election, there's a sense of optimism about change that would be good news and we'll be prepared for that. But as stewards of the business I think managing the balance sheet and managing the expenses and inventory as we've done, and we've certainly intensified in the last 12 months, is the right strategy for us to take and that's what we're going to do. Evren Kopelman – JP Morgan: If I can add a quick one are you assuming for the next six months the Euro around the current levels of about $1.29?

Yes we are.

Alright operator we'll take one more question, because I think we're out of time now.

Your last question comes from the line of Kate McShane – Citigroup. Kate McShane -–Citigroup: I was wondering if you could just remind us, can you layout a new product introductions over the next two quarters? So for example when the shipments of Lauren merchandise in Europe will impact your sales and if there are any new categories for American Living as well over the next two quarters?

Well, I think there's no new categories that are launching in the third quarter so any new product categories we're talking about really started in our fiscal fourth quarter. The major one in that case is the beginning of Lauren in Europe. We'll also launch watches at the Basel Watch Fair in Switzerland, but the products for that category will not start shipping until later in the spring so it will not affect fourth quarter. So really it's just the Lauren in the European arena that's incremental in the fourth quarter, offset by obviously the startup of American Living last year in the December through March period. So not dramatic incremental launches in the fourth quarter. So with that, we appreciate everybody staying on. It's obviously an important time of year for all of us. Our second quarter and first half of the year results in my opinion were extraordinary. I think we're well prepared and are taking the right action given the uncertainty of the consumer spending and the difficulty in predicting that, but I think we are well along the way in managing all the manageable parts of our business and we're actually feeling like the back half of the year could be an opportunity to gain share in a difficult environment. So thank you for your time and attention and we'll speak to you again in February.

And that does conclude today's conference. Thank you everyone for participating. Have a great day.