Ladies and gentlemen, thank you for standing by and welcome to the Sally Beauty fiscal 2009 first quarter earnings call. At this time, all participants are on a listen-only mode. Later we will conduct a question-and-answer session. (Operator instruction) As a reminder, this conference is being recorded. I would now like to turn the conferences over to your host Karen Fugate. Please go ahead.

Thank you before we begin I would like to remind you that certain comments on matters such as forecasted financial information, contracts for business and trend information made during this call may contain forward-looking statements within the meaning of Section 21-E of the Security Exchange Act 1934. Many of this forward-looking statements can be identified by the use of words such as “may”, “will”, “should”, “expect”, “anticipate”, “estimate”, “assume”, “continue”, “project”, “plan”, “believe” and similar word or phrases. These matters are subject to a number of factors that could cause actual results to differ materially from expectations. Those factors are described in the Sally Beauty Holding SEC filing including this 2008 annual report on Form 10-K. The Company does not undertake any obligation to publicly update or revise its forward-looking statement. The Company has provided a detailed explanation and reconciliations of this adjusting item and non-GAAP financial measures in its earnings press release and on its website. Joining me today are Gary Winterhalter, President and Chief Executive Officer and Mark Flaherty, Senior Vice President and Chief Financial Officer. Now, I would like to turn the call to Gary.

Thank you, Karen and good morning everyone. Thank you for joining us for our fiscal 2009 first quarter call. I will begin today's discussion with a high level review of our financial results and business initiatives. Mark will then take you through the results in more detail. In the fiscal 2009 first quarter, Sally Beauty Holdings performed well in one of the most challenging economic environments in the Company’s history. Although the impact from unfavorable foreign currency exchange added pressure to year-over-year results, in particular to net sales and segment operating profit, we improved gross profit margin in both segments and held our operating margin above 10%. Same store sales as always reported on a consent currency basis ended the quarter slightly positive. While we compare our same store sales results to other retailers’ decline of several hundred basis points, I am pleased with our performance. On December 12, Standard and Poor's raised its issue level rating one notch and changed our outlook to stable. In light of the global credit crisis, we view this upgrade as a terrific affirmation of the stability of our business. Now, turning to the financial results. For the first quarter, we reported consolidated net sales of $646 million, a decline of 1.6%. Unfavorable foreign currency exchange of $24.8 million or 3.8% of sales and underperformance in the Sally UK and BSG's franchise business were significant drivers of this decline. Helping to offset revenue pressure was the addition of new stores of 1.3% and acquisitions of 1.8%. Same store sales growth, as reported on a constant currency basis was slightly positive at 0.04%. Net store count was 3,769, an increase of 3.8% or 138 stores over fiscal 2008 first quarter. Our long term growth initiative remains the same, to build our organic store base 4%…

Thanks Gary. Consolidated net sales for the 2009 first quarter were $646 million, a decline of 1.6% over the 2008 first quarter. Consolidated gross profit was $303.5 million or 41% sales, a year-over-year improvement of 30 basis points. The first quarter consolidated SG&A expenses were $225 million or 34.9% of sales, a 70 basis point increase from the 34 .2% in the year ago quarter. SG&A expenses increased $1 million principally due to rent and occupancy-related costs from incremental stores and higher advertising costs. Partially offsetting this increase was a decline in unallocated corporate expense of $1.7 million and a decline in share-based compensation expense of $2 million. Consolidated operating earnings for the first quarter declined $3.6 million to $66.3 million with operating margin down 40 basis points to 10.3%. The first quarter results were dampened by softer performance in our Armstrong McCall franchise and Sally UK business as well as higher advertising expenses. Interest expense, net of interest income for the 2009 first quarter was $39.7 million and included a $3 million non-cash charge related to our interest rate swap transactions. Interest expense declined approximately $7 million over the last year's quarter primarily due to lower rates on our ABL facility and our senior term loans. Adjusted EBITDA for the first quarter was $81.6 million, a 6.4% decline compared to $87.2 million in the prior quarter. Adjusted net earnings grew approximately 40 basis points to $18 million resulting in adjusted net earnings per share of $0.10. GAAP net earnings were $16 million, up 12% resulting in an earnings per share $0.09. Turning to the segments starting with Sally Beauty, net sales for the 2009 first quarter were $410 million, an increase of 20 basis points over the year ago quarter. We estimate the impact of unfavorable foreign currency exchange…

Thank you, Mark. In summary we delivered solid results given the current economic environment. We ended the quarter with slightly positive same store sale, gross margin expansion and net earnings growth. In the near term, we intend to respond to the ongoing economic challenges by focusing on cost containment and prudent capital investments. We plan to maintain a solid financial position and a capital structure that provides the ability to deliver the balance sheet while investing in long-term growth. We will now turn it back to the operator to take your questions.

(Operator's instruction) Your first question comes from the line of Grant Jordan - Wachovia.

My first question, I believe in the last call you said that in October, you had experienced positive same store sales. I was just trying to get a feel for how that progressed throughout the quarter particularly as we saw other retailers significantly underperformed your numbers.

Grant we do not really get into the detail of the monthly numbers. They did deteriorate a little bit in November. I think you saw as most retailers it seemed to have a tougher November than December but there was not a significant movement in the negative direction in anyone of those months as we told you before. October did remain positive.

That is helpful. As we move into this year, have you seen any significant change in your customers' behaviors as it relates to your business?

Well, what we actually said last time and we are still seeing, which I view long term is very positive. Our customer count is actually up and gaining strength in both of our businesses. What we are seeing on the professional side of the business is people are trying to buying hand-to-mouth. They are buying what they need and coming in more often. On the retail side of our business, we are seeing the customer count up nicely which I think is a trade down from some people that may not be visiting the salon just frequently but still want to do some of the services themselves and the average ticket is sought on the retail piece. However, a lot of the increase in the traffic that we are seeing is specifically being driven by this customer acquisition initiatives and the CRM program. We have very good visibility to that and we know exactly who those people are and the frequency and the reduction we are getting. So, I am looking at this thing very positively because I think when the economy does start to recover, we got a lot of new customers here, as well as a lot of customers who found us during tough economic times that will stay with us.

Along the CRM line, if I understood you right, you said you will have it rolled out 800 stores by March?

Yes.

Obviously, if you are seeing great results and you are still on a limited number of the Sally stores, do you have plans to ramp that up at some point this year?

Absolutely, but there is a cost to it, we are getting a great ROI on it and it is very tempting to just bite the bullet and blow and go with it but we are a bit conservative when it comes to that and I think if we see the same kind of results that we saw in the first 400 and keep in mind that this is like a 3 to 6 month program where we are contacting this people on a monthly basis. So, we want to make sure that the result we saw from the first round are the same in the second round and if we do, we will figure out a way to find the dollars to do it because it is very exciting.

Your next question comes from the line of Emily Shanks - Barclays Capital.

I just want to ask as you look at potential target acquisitions for the remainder of this fiscal year, do you have any in mind regardless of size or you are really dialing that back?

No, we are still looking at making, given our size, what would be very, very small acquisitions that are bolt on type acquisitions that would be highly accretive and very synergistic to our existing businesses but there is nothing in the queue right now there that would have any significant impact on our operations or our cash position or anything. They are very, very small.

Okay and then just the second question would be as you look at potentially utilizing that cash flow to pay down debt or to go towards debt reduction, have you looked at buying back your balance and would you? What is your latest thought on that?

Mark?

Yes. We have said in previous calls as well as in some of the analysts' conferences, we believe that the capital structure is appropriate to generate free cash flow for new store growth as well as the acquisitions Gary has talked about that meet our investment criteria. And then also to execute our, it falls in line with executing our long-term strategy to retire debt. One of the things that we looked at recently is that that is certainly a viable alternative. We constantly talked about it internally. In general, we are not prohibited from repurchasing our notes on the open market. However, as you probably are well aware is that we do have a credit agreement that have a restricted basket to it so, it does set some quantitative limit on the amount that we can buyback. And needless to say, our Board would have to approve such a transaction and currently right now, there is no transaction that has been approved or in the pipeline.

Okay and can you give us a sense of what that size is that the credit agreement limits it to?

Right now the restricted basket, it is a pretty simple calculation that you could do yourself. It is that if the cumulative net income from July 1st of 2006 forward and take that number and divide it in half, and that is your restricted basket. Right now, it sits at approximately $115 million.

Your next question comes from the line of Todd Harkrider - Goldman Sachs.

I know you do not give guidance but you continue to do a great job of increasing gross margins. Do you think that is going to continue in 2009?

Yes, I do for the same reasons that it has continued for the last 20 years and as we talk about often, our sales of our exclusive or controlled label brands continues to increase each year which is a bit better margin. Our customer mix in both of our businesses on the Sally side tends to shift more to the retail consumer which is a higher gross profit. And even on the BSG side, our store growth is more than our street sales consultant growth which is also a higher gross margin and we are getting some nice benefit from the low country cost sourcing on our electrical appliances and brushes that we started a little over a year ago.

That is what I was hoping you would say. And then with all the new stores causing the drag on your earnings, when do you think that will start rolling off some?

I do not think it is the new stores that are causing a drag in our earnings. The drag on our earnings at the present time is the UK. It is the major drag which I believe will be improving significantly due to the things I mentioned in my scripted remarks and the Armstrong McCall franchise business has been a difficult spot for us for the last year or so. But as I also commented on, I believe we are on the right track to doing the right things to fix that business stuff. That business is in a great part of the country. It is the Sun Belt. It is a growing population. We have good brands. The business is almost 50% in Texas alone and the Texas' economy as you probably know is doing quite well still. So, I am very confident that both those situations, which are the real, drag on our earnings, not new stores.

Actually one more if I may in regards to Armstrong McCall on the store closures, do you expect that to continue or was that more one time in nature?

No, it is a one-time situation. We had a situation with the franchise in Mexico that actually had about 6 stores that we had some issues with and we just had to terminate.

Your next question comes from the line of Karru Martinson - Deutsche Bank.

Just to follow up on that private label and gross margin question, where does private label penetration stand right now?

It is around 41% on a 12-month rolling basis.

Okay. Did you see that pick up during this past quarter in evidence of your trade down theory?

Yes, significantly but it is highly influenced by December. So, I do not want to start quoting those numbers. When I quote those numbers, I am usually always talking about a rolling 12 months. So, you get a better idea what the real growth is.

Ok, I appreciate that. In terms of the cost saving measures that you talked about here, the hiring freezes, deferring pays and so forth, what is kind of the scope or the magnitude that we are looking at for the year in terms of savings?

We have not provided that guidance because for the simple reason of if the economy starts to turn to the positive, we may actually go in a different direction and some of those initiatives maybe removed. So, we have not provided guidance for that very same reasons. We are just being very cautious about our approach. We tried to pull the appropriate levers to be defensive in the market conditions and we are taking a very cautious look and outlook towards the remainder of the year, but very optimistic.

I guess without trying to backend in one of our guidance, if we are looking at gross margin being up in these measures assuming the economy kind of stays the way they are, these measures are kind of designed to maintain SG&A as the percentage of sales, correct?. I mean, would that be the right way of looking at it?

It is certainly the spirit behind it.

Okay and just lastly really quickly, in term of the competitive landscape, some of your competitors have talked about rather dismal professional markets, consumers pulling back, others on the higher end like Ulta and so forth having less than stellar. What do you feel that is separate differentiating yourself from them or are you seeing some of the same things in your markets?

First of all, we have a very different business model and if you are referring to, we are just commenting on salon traffic being down, they are absolutely right. But we benefit actually in the couple of ways there. One way is what I mentioned earlier if the consumer is putting a little more time between their salon visits, they typically are looking for professional product or similar product to maintain their hairstyle between the visits. That is a plus for Sally. On the BSG side, what is happening is a lot of small and midsized salons are going out of business. The employees from those salons are finding it much easier to go to a salon as a booth renter and take their clientele with them than try and find an actual employment situation in a salon. That is great for the BSG store business because they then are buying their own supplies on a very frequent basis. So, we are not completely dependent on salon visitations and salon retail. Again, the BSG business only about 20% of our business is involved with selling products to salons that are then resold. So, our impact there is not as great. When you are talking about the Ulta, I think we have a completely different business model than Ulta. Ulta, is into a lot of product categories and higher price points than we deal with and they have a beautiful salon in the Ulta stores, I think they are probably feeling a little of the same thing that all salons are feeling from the visitation standpoint. And I also think that some of the higher end brands that they carry are feeling a little pressure with consumer trade down.

Your next question comes from the line of Carla Casella - J.P. Morgan. Carla Casella - J.P. Morgan Chase & Co.: Hi. Most of my questions have been asked and answered, just one follow on. Your traffic being up, it sounds like you are outperforming anything we have heard in terms of mall traffic. Would you say your traffic is up from the malls better than the rest of the mall that you are in, the strip malls?

The only way to compare that is with other retailers that are in the strip malls, and I do not know that there is any data available on strip mall traffic versus the stores that are in the strip mall, but as I mentioned I believe that our traffic is up for several reasons. The primary reason, I believe, in the Sally division that our traffic is up, is our CRM initiatives and our new customer acquisition program. Our marketing folks are doing a fabulous job with that. And on the BSG side, as I mentioned, the professional customers are coming in more often and we can track that specifically by customer. They are just buying a little bit less obviously because of the economic conditions. They are not carrying any depth of inventory. Carla Casella - J.P. Morgan Chase & Co.: Right. And then do you intend to, if this environment continues, would you intend to change your mix to more exclusives or private label than where you are even today? I know you have been increasing private label and will probably continue, but would you accelerate that?

I believe that we let that be the customers’ choice. We represent a lot of great brands in both Sally and BSG and really the exclusive brand is only on the Sally side, but we are not doing anything to drive those brands against the name brands, other than putting the product on the shelf at whatever prices is appropriate for the market, and I think though that because control label for the most part is a little more price competitive that we may be getting some of the benefit of that.

Your next question comes from the line of Peter Grodin -OSS Capital.

Mark, a couple of questions on margins. Gary, in the past, can you give us some idea of the margin differential between what the major stores are in Sally versus what the new stores are because you came in at a blended rate of a less than 16%, but trying to understand what the breakout might be there, even directionally.

We will break that out but I will tell you that the entire margin decline in the Sally business was relative to the international business.

Okay. So, it sounds like, I mean just being candid, it sounds like you took a pretty hard hit in the UK?

We did.

Okay. In qualitatively, can you sort of break out how much of that was due to operational things that you are addressing now, it sounds like pretty aggressively versus just, I mean everybody reads the papers how tough things are in UK right now.

Well, as I said the 20% or at this point, roughly 60 to 70 stores in the UK that we have on our replenishment program, if that is any indication, the issues we are having there are more operational than economic, and I am hoping that even though the economy there is extremely difficult that the rollout of assisted replenishment at this particular time will help us get through this environment and like I said in the 60 or 70 stores that we have put it in, we are seeing the kind of results we saw in Sally US back in 2000 where you have seen our charts many times, where our same store sales took a blip for two or three years, up in the 4% to 6% to 6.5% range.

Okay. That is helpful. Secondly, you talked about maintaining operating margins in your commentary. Can you give us a little more color on that what that means? I mean, maintaining operations from operating margin where you are now, where you were historically, just trying to get into that a little bit more.

I think we would like to see our operating margins continue to grow, obviously and the goal here is not and maybe we said it not in the right way. It was not really to maintain the operating margins. We would like to see our operating margins continue to grow, as they did slightly in the first quarter. We would hope for even better performance than that going forward. I guess if we are talking about maintaining something, we are trying to maintain our cost structure, but at the same time, invest in these programs that I have talked about because I really believe for our Company and all of the recessionary times in the past that we have been through, we have invested in the business during those times and came out of it with a better market share, which is what I hope to do here. I am not sure if that answers your question but if we have some extra margin above and beyond what we think a reasonable growth rate is, we are going to try invest it in programs like, instead of going to 800, going to 12, 16, 2000 whatever stores we can.

Your next question comes from the line of Linda Bolton Weiser - Caris. Linda Bolton Weiser - Caris & Company: Hi thanks. I was curious on your Unilever recently purchased TG professional hair care brand. Do you distribute that brand and do you think that Unilever has plans to bring that brand into the regular consumer retail channel to follow what Alberto Culver did with Nexus?

Linda, we do distribute the brand. We talked with TG’s management, as you may know they are right down the street from as here in Dallas, and they have told us that the same people that have been running it will continue to run it, and they intend on keeping it a professional brand. Linda Bolton Weiser - Caris & Company: Okay, great. Well, I mean, just to follow on that. I mean I guess I could ask Unilever, but do you think Unilever has intentions to get bigger in professional hair care and do you, I guess that to be a positive actually. Would you view that as a positive if they were to get bigger?

Yes. I think it is positive. Of course, you have to ask them what their intentions are but I would think that buying the business, they are going to want to grow the business, and I view that as a positive, it is another major international company coming into the professional industry with a lot of resources. Linda Bolton Weiser - Caris & Company: Right. And then, can you just clarify, I am sorry if I did not catch this, but when you are talking about the issues in the UK, is that implementing a system in the new stores you sort of fairly recently acquired or is the problem having to do with all the stores even the ones you have had for a while or can you just clarify that a little further?

Yes, it is all the stores. I would not characterize it as a problem but we rolled out replenishment as you know in Sally US in the early 2000. So, we would have done the UK sooner but quite frankly, we just finished the BSG rollout a little over a year ago, and then we have some significant programming to do on the UK before we could begin that rollout and we just started it last fall. We expect it to be done by June, but it is all the stores. Linda Bolton Weiser - Caris & Company: Okay. So, this is just a like temporary cost to implement the system?

There really is not much cost at all. Linda, it has to do with remerchandising the store, setting plan it guides, and getting the store on a replenishment system where most of the ordering work that is done manually is now automated. It is really quiet that simple. So, whatever cost we had and it was two years ago or a year ago in the programming for it, and of course, there is a little bit of labor when you reset a store over two or three days, but that is not significant. Linda Bolton Weiser - Caris & Company: Okay. And then, just on CapEx, is the reduction in the CapEx guidance range, is that related to the reduction in your expansion plans for square footage?

It is not a reduction for just an overall spend. It does not necessarily translate into a complete reduction in the number of stores or anything like that. It is really, we took a little harder look at the average spend per store, and took a more critical eye towards that category because obviously the new store growth is the lion’s share of our CapEx. We also took a look at some of our internal IT initiatives and look at if there were more efficiencies there in terms of what we were intending to do from a CapEx standpoint and what we really could get done during this year.

Your next question comes from the line of Jill Caruthers - Johnson Rice. Jill Caruthers - Johnson Rice & Company, LLC: Good morning. Trying to get a little bit more information on the BSG comp during the month, it dropped off significantly than what it has been churning over the past few years. It has been strong up for the high single digits. I know one factor that it is, you were kind of recouping that the lost of L’Oreal products, but could you just explain a little bit more that, is there a lack of opportunity out there to expand a new product line in regions and we should expect kind of this lower comp going forward or is it just a purely reflection of salon traffic down?

Well, as I said before, we are anniversarying some major territory gains and some major brands that we brought in a lot of which happened in Q1 of ’08. Having said that there is still opportunity, like I have mentioned the one with Schwarzkopf in bringing in other brands and expanding the distribution for our current brands into other geography, so I would certainly hope that the 0.76 same store sales is not indicative of where we expect to be going forward. My expectations would be more than that, but to say that and I think we have said in the past, that we could maintain high single digits same store sales growth, particularly in this environment probably a little bit of a stretch. Jill Caruthers - Johnson Rice & Company, LLC: Okay. And if you could talk about, I know last year, Easter shifting later this year, it looks like it will fall from your second quarter to the third quarter. Is that a big seasonal peak for you guys, and should we look at how that might influence the timing of comps between second and third quarter?

I was looking at two things between second and third quarter. One is Easter and you are absolutely right, a later Easter. Our Easter sales will be an April event this year as opposed to a March event. Secondly, keep in mind that we are on calendar months and we are short a day this year versus LY in February. So, there is going to be some same store sales impact probably for both of those events, obviously the day lost in February will not be made up in Q3, but the Easter sales will.

Your next question comes from the line of Erika Maschmeyer - Robert W. Baird.

Could you talk a little bit about performance by category at Sally, areas that were weaker and stronger? I know you have called out equipment as more of a holiday type item in the past. Tell me. Was that a tough category and anything else in that bucket? Maschmeyer - Robert W. Baird & Co.: Could you talk a little bit about performance by category at Sally, areas that were weaker and stronger? I know you have called out equipment as more of a holiday type item in the past. Tell me. Was that a tough category and anything else in that bucket?

Let me clarify one thing. I want to make sure you are not confusing equipment with electrical appliances.

Okay, yes. Maschmeyer - Robert W. Baird & Co.: Okay, yes.

Our salon equipment business, which is one of the salons buying new chairs and dryers and things like that it, is very soft right now, which you would expect with the economy. We really do not get into a lot of details on guidance with categories or results with categories but I will tell you there was nothing in the first quarter that was out of the ordinary, and some of the categories which you would expect from people doing more services at home showed some very nice improvements.

Okay, very interesting. Thank you. And then, could you talk a little bit about the impact from the BSG consolidation in Q1, and were you seeing any additional expenses there or have you started to realize any of the savings yet or is that more of a backend year weighted thing? Maschmeyer - Robert W. Baird & Co.: Okay, very interesting. Thank you. And then, could you talk a little bit about the impact from the BSG consolidation in Q1, and were you seeing any additional expenses there or have you started to realize any of the savings yet or is that more of a backend year weighted thing?

Most of it is back half of ’09, obviously we have had some expense reduction going into the year. The biggest benefit we have had in that program right now has been the inventory reduction.

Okay. And then, do you have expectations for tax rate over the rest of the year? Maschmeyer - Robert W. Baird & Co.: Okay. And then, do you have expectations for tax rate over the rest of the year?

I am anticipating our effective tax rate to this somewhere around 36.5.

Your next question comes from the line of Justin Holt -Chilton Investment.

I guess first question is TG. Can you give us some idea about what percentage of your sales that is, a very small amount, I would assume?

Yes. It is a very small. It is a key brand to us and in some geography, Justin; it is a very good brand for us. We do not distribute it everywhere and it has pockets as a brand where it is stronger than other pockets, but it is a very nice brand. We have always had a good relationship with them. We do a nice business with them. We are looking forward to the resources that Unilever can bring to bear here and we are looking forward to continuing to work with the same management group.

Gary, maybe I missed it but, is there any way all to quantify how much CRM and customer acquisitions is helping same store sales and maybe some idea of how long does the tail run on that? How long can it drive growth?

I cannot answer that because I think until you go through at least a year and then start measuring those same customers in their second year, we have to wait and see that. I will tell you that a nice percentage of the new customers that we are bringing in with the customer acquisition program are buying Beauty Club Cards, joining the club. So, that is a great indicator for us because we then stay in touch with them via email and other mailings on an ongoing basis and as I have said in my early remarks and told you many times that the Beauty Club Card customer is a very, very valuable customer in average spend and a transaction frequency.

When you talk about that one year, I guess, time period how far are we in that?

Well, for the first group, we are five months into that.

Okay. You previously said that the same store sales going negative, they would still be some operating leverage, I think you have, I do not want to put words in your mouth. Do you think that hold still?

Well, I think we have said if same store sales were flat, we believe we could get some operating leverage. And yes, I still believe that.

And auto replenishment of the UK, can you give us some sort of guide of how the 20% gets to 100% some sort of time table, how long it will take?

Yes. It will be finished by June.

Okay. And just one more question, I am wondering about if you manage FX at all and you took your, I guess the store guidance from four to five to three to five and an environment like this is international stealing a lot of growth and the dollar is getting strengthened. Why not just pull back for a little while on those numbers. Can you explain the thought process on that?

Yes, we are seeing some very, very attractive real estate deals where some of these shopping centers, Justin, are having a very difficult time with losing major tenants, now that is a two-edged sword. We do not want to go into a dead shopping center, but the other side of that is if you can cut some very good leases during this downturn, as you know, rent and payroll are our two largest expenses in the stores. So, I am not saying that we will do that, as I said in my remarks, if we can find really good values, we will continue to be in that 4% to 5% range. I am just saying that we could drop down to 3% because if we do not find the values, keep in mind also that a lot of the 3% or 4% or whatever it turns out to be, is going to be in Mexico and Canada, which are performing extremely well for us and we have a lot of virgin geography in both those countries.

Your next question comes from the line of Shawn Tesoro - BlackRock, Inc.

Are you guys have highlighted the FX headwinds, excluding that and then the weakness in the UK, what would the Sally comp have been or what is the North American Sally comp?

We do not break that up. Sorry.

Ok, I was hoping you would. That is it then. Thank you.

Your next question comes from the line of Mimi Noel - Sidoti & Company, LLC. Mimi Noel - Sidoti & Company, LLC: Gary, just one quick question and I apologize, I did not hear your early prepared remarks but would you update me on your current thinking on the market potential in South America and how you have adapted your approach there at all in the last few months?

I cannot say we have adapted our approach because we really have not done anything down there yet, Mimi. We may have made several trips down there. We are having active conversations with some potential partners down there. Obviously, the economy in most of the countries that you have think off first there is in somewhat of turmoil as well. However, as I just mentioned to Justin, we are doing extremely well in Mexico which is having its own issues with the currency and their economy. So, we still very much want to do business in South America and hopefully one of the partners that we are talking with we will end up doing the deal with. Mimi Noel - Sidoti & Company, LLC: If you can rank from number one to number ten, one being top priority, how would you prioritize South America at this point?

Countries within South America or just the overall priority of getting there? Mimi Noel - Sidoti & Company, LLC: Overall priority of getting there.

I would say probably 3 or 4, as I have said before we have a nice business going in Western Europe, the UK as I have said here many times in this call is difficult. Our business in Belgium and North Western France is going quite well. We see a lot of opportunity there. So, that is pretty high on our radar right now and expanding more in Canada specially and Mexico would probably be our second priority and Central South America would probably be third.

Your next question comes from the line of Maurice Deian - Genelle Management.

I note your comments about the exclusive brands performing the best and I presume that is related to the lower price points on them and people trading down but does that relationship hold as you go up the price point latter where the most expensive products are doing the worst or is it more of a barbell that you are seeing in the trends where they are holding up well also?

Keep in mind that I know I said a few minutes ago that the price value is an issue with our control label, but I have also said many times that do not view these as private label alternatives that like you would in a grocery store where it is simply a price issue. These are brands that have their own place in the industry. They are brands that we have purchased from within the industry and in many cases, they are as pricy or as a less pricy as the main brands. The other thing that I would keep in mind, I read actually I think it was some analysis that Alberto Culver did recently on Nexus that the reason Nexus, which is an upper end brand that is in retail now is doing so well is that customers coming out of the salon environment, for them to be trading down from Aveda or Pureology or Bumble and bumble to a Nexus, it is like half the price but Nexus is still considered a pricy brand. So, we are seeing a lot of same things, some of the brands within our control label portfolio that we would consider the pricier brands are still the significant value to the customer that is looking to trade down from an even pricier brand in a salon.

Got it, so then if I understand you, there is really no correlation necessarily between price point and sales trend?

We have not seen that. Obviously, when you get down to the very low end of the market where you are talking about shampoo that comes in gallons and things that lower income families, sure you will see some bump in that in this kind of economic times. But that is not a big piece of our business.

Thank you. Now, I would like to turn the conference back to Gary Winterhalter for any closing comments.

Thank you, operator. In closing, I would like to say again, we performed well in a challenging economic environment improving gross margins in both segments with likely positive same store sales. We remain optimistic about the remainder of the year and as always, thank you for your interest in Sally Beauty Holdings.

Thank you. Ladies and gentlemen, this conference will be maybe available for replay after 12 pm today until February 10, 2009 at midnight. You may access the AT&T executive playback service at anytime by dialing 1-800-475-6701 and entering the access code 983818. International participants may dial 1-320-365-3844 again with the access code 983818. That does conclude of our conference for today. Thank you for your participation and for using AT&T executive teleconference. You may now disconnect.