Good morning Ladies and Gentlemen and welcome to the Steve Madden Ltd conference call. At this time all participants are in a listen only mode. Later we will conduct a question and answer session and instructions will follow at that time. Any reproduction of this call in whole or in part is not permitted without prior express written authorization of the company. As a reminder, Ladies and Gentleman, this conference is being recorded. I would like to introduce your host for today's conference, Ms. Cara O'Brien, of Financial Dynamics.

Good morning everyone and thank you for joining this discussion of Steven Madden Ltd. first quarter results. Before we begin I'd like to remind you that statements in this conference call that are not statements of historical or current facts constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties and other unknown factors that could cause the actual results of the company to be materially different from the historical results or from any future results expressed or implied by such forward-looking statements. The statements contained herein are also subject generally to other risks and uncertainties that are described from time-to-time in the company's report and registration statements filed with the SEC. Also please refer to the earnings release for more information on risk factors that could cause actual results to differ. Finally, please note that any forward-looking statements used in this call should not be relied upon as current after today. I'd now like to turn the call over to Mr. Edward R. Rosenfeld, Interim CEO of Steven Madden Ltd.

Good morning and thank you for joining us today. On today's call I will review the company's results for the first quarter ended March 31, 2008 and provide an update on our outlook for the remainder of the year. Our performance in the first quarter continued to reflect the effects of weak consumer spending that we experienced in the second half of last year. However, given the challenging economic environment we are pleased with the sell-through of our merchandise and the general strength of our brands. Further, we did see some improvement in our results in the first quarter compared to the second half of 2007. We're beginning to gain a certain degree of momentum and we believe our overall business is well positioned in the current environment with very strong product. Our design teams consistently focus on creating fresh and unique styles that appeal to our wholesale customers and consumers across all our brands. As Creative & Design Chief, Steve continues to drive the designs for our footwear, accessories and other merchandise and we are pleased with the positive reactions we are currently receiving regarding our product. While we are mindful of the continuing challenging economic environment, we feel very good about the merchandise that we currently have in stores as well as that we have coming over the next few months. Before I turn to a view of our financial results, I want to note that at the end of the first quarter we completed our modified Dutch Auction tender. As you may remember this Dutch Auction was announced at the completion of our strategic review period in February. We accepted 2.6 million shares of common stock for purchase at a price of $17.00 per share totaling $44.2 million. These shares represented approximately 12.9% of the outstanding shares…

(Operator Instructions) Your first question comes from Scott Krasik - C.L. King & Associates, Inc. Scott Krasik - C.L. King & Associates, Inc.: Where are you guys with Penney's right now? Are you actually selling them anything?

We're doing some private label for them but we don't have a brand in Penney's right now. Excuse me, we do have a little bit with Stevies. Scott Krasik - C.L. King & Associates, Inc.: Okay. Is there a plan there? I know [Rule] didn't work out.

Yes. I mean, right now we're more focused on building the private label but we've been kicking around some ideas for a brand for them and we've been talking to them pretty regularly about doing something, so hopefully we'll have something to report by the end of the year. Scott Krasik - C.L. King & Associates, Inc.: And then Candie's obviously is a problem here. Is Kohl's starting to think about or getting frustrated with you guys and looking to do stuff themselves or?

Well, right now Kohl's is still giving us 100% of the business. We have orders through the end of third and some orders for fourth already with 100% of the Candie's business but we're certainly frustrated with our performance in Candie's. We're disappointed about the way that's gone in the last few quarters so we're making some changes here. In fact we've just this week put a whole new team on Candie's. We've got the team that has had such great success building our private label business for Target is taking over that business. They've done a great job in building a very big and successful Target business and so we're excited about getting them involved with Candie's and hoping to get that moving in the right direction. Scott Krasik - C.L. King & Associates, Inc.: And then maybe just talk about what people are saying that April sort of picked up a little bit from March, and you know is that what gives you some confidence for the outlook or is it increased you know at-once orders? What's giving you the confidence that you see for the rest of the year?

Well as you know, what we've been struggling with or were struggling with was a lack of fashion trends in the market and that has actually gotten considerably better. Now there are a number of things that have emerged, flat sandals are doing very well, wedges, gladiators are good, there are a number of categories that we're encouraged by and in particular at Steve Madden we feel very good about our product right now. We think our product is probably better than it's been in about 18 months and we're seeing, as you said, some pick up in April but also in our own retail stores but in the department stores, we're very very pleased with the sell throughs we're getting especially considering the very challenging retail environment right now. So we feel like we're starting to see some momentum. Of course, that being said there are some very significant headwinds with the consumer but we do feel good about our product and how we're positioned right now. Scott Krasik - C.L. King & Associates, Inc.: Do you think since footwear started to turn down more quickly than some other categories in 2007 that in some way you can outperform you know retail in general in 08?

Well you may see it rebound more quickly because in footwear we were struggling with the trend issue before we were struggling with the consumer issue. So we hope that we'll see footwear turn before everything else.

Your next question comes from Jeff Van Sinderen - B. Riley & Company, Inc. Jeff Van Sinderen - B. Riley & Company, Inc.: As far as your SG&A, I was just looking through that and it seems like it was a little higher than we expected, was there anything else unusual in SG&A this quarter besides from the charge?

No but maybe I'll just walk you through what the increases were. If you exclude the charge for the former CEO, the SG&A was up $3.7 million and almost all of that or $3.4 million came from retail. We had about $1.6 million, this is versus the prior year, $1.6 million of additional expense related to the new stores. Keep in mind we opened seven new stores in the back half last year and another one store in the first quarter of this year. Marketing was up about $500,000 in retail and most of that was on the Internet, we've been experimenting with some new affiliate marketing programs on the Internet; there was $800,000 of additional expense related to [Compo] which is the eCommerce business that we acquired, remember we acquired that in May of last year. So in first quarter it was $800,000 of additional expense about a quarter of which is just the amortization of intangibles with the acquisition. And then there's an additional $500,000 or so in retail of new hires, some of which you've heard me talk about before, an upgrade to high speed Internet, we were at dial up a year ago in the stores, legal expenses and depreciation. So that's really the bulk of it is in retail. There was $300,000 of additional expense in wholesale which is coming from DMF or Daniel M. Friedman and that's mostly coming just from bonus accruals, they did not accrue bonuses in the first quarter of last year so this is really a timing issue. And that covers it. Jeff Van Sinderen - B. Riley & Company, Inc.: And then let me ask you, as far as Steve Madden Girl which seems to be doing well, are you seeing strength there across the board in the retailers that you sell to? Is there any particular strength to point out? And then I'm assuming we should expect that business to continue to grow this year. And then also maybe if you could just touch on some of the early improvement you're seeing in the Steven business.

Sure. Well Madden Girl is just doing great. They're actually, they're really exceeding our expectations right now. The team's done a fantastic job and great styling with the product and as I alluded to on the call, we have been expanding the distribution there. We're in about 75 new doors in Macy's for spring and we're going to be going into probably an additional 50 or 60 new Macy's stores for fall. And we actually expect the growth on the top line to accelerate over the next couple of quarters from what you saw in Q1 so we're very pleased about that. And Steven we've also gotten some improvement there and again we feel very good. We actually made some changes there. We took about half of the production out of China and moved it into Brazil and we really improved the quality there, taking the prices up a little bit, and we're really building the business with Nordstrom and we've got a very nice, some very nice increases with Nordstrom just based on getting good sell-through particularly on our boots and our flat sandals in Q1 and we expect that to continue. So we're pleased about the progress we've made in Steven. Jeff Van Sinderen - B. Riley & Company, Inc.: And then as far as the retail business, it seems like your sales are pretty good there and I know you mentioned some liquidation of some product. I'm assuming that's just due to the overall environment. And then are you guys pretty much through the liquidation of the product that you felt you needed to get rid of and at this point are we cleaner in the retail business and should we expect gross margins to be a little better this quarter? How should we look at that?

Yes, you should. We've basically, we feel we're pretty clean with inventory right now. You could see a modest decline year-over-year in gross margin in retail this quarter but not to the same degree that you saw in first quarter.

Your next question comes from Heather Boksen of Sedoti & Company. Heather Boksen - Sedoti & Company: With respect to the wholesale gross margin in the quarter, if you - can you tell us what it would have been if you backed out Danny Friedman?

If we backed out Daniel Friedman, we were 37.6% versus 38.1% a year ago in wholesale footwear, but I would point out that if you backed out Candie's from that, we were actually up over 100 basis points in wholesale footwear. So we were up almost everywhere except for Candie's in wholesale footwear. Heather Boksen - Sedoti & Company: And I guess, would you say the markdown environment at department stores, at some of your department store accounts, would you say were kind of - I don't know, is bottoming a good term for it or is it easing for you guys somewhat?

Well we've really been very pleased with our sell throughs as I mentioned and we're actually seeing improvement year-over-year in our markdown allowances and percentages sales based on that better sell-through. Heather Boksen - Sedoti & Company: And lastly, the source and costs coming out of China, can you quantify I guess - I'm assuming those assumptions are in your guidance going forward and you know if that's correct, are you planning also on passing some of those costs along?

We are. As we talked about on the last call we've seen prices going up as much as 10% out of China. Like virtually all of our competitors we are attempting to pass that through to the consumer. We haven't gotten any resistance so far certainly from our wholesale customers or from the consumer when we've put it, the product, into our own retail stores but baked into our guidance we have put about 100 points, basis points, of gross margin pressure from that for conservatism.

Your next question comes from Jeff Mintz - Wedbush Morgan Securities, Inc.

A couple of questions. First of all, on the trends you were talking about, can you give us any kind of a sense of trends you might be seeing for fall that might be giving you some increased confidence going into the back half of the year?

Well unfortunately for obvious competitive reasons we never like to talk about forward-looking trends. We're happy to tell you what we see currently. I think I have alluded to before to the fact that we had some very good late selling of boots this year and we got some very good tests there, so we feel good about boots for the upcoming year. But there are a couple other categories that we feel good about and I'll be happy to tell you about them once we deliver them.

And then also I feel like I'm seeing a lot more of the Steve Madden brand in Nordstrom. Can you talk a little bit about what you're doing with that brand at Nordstrom and is it increasing and kind of how are you getting to that?

It's just we've had the styling right recently. Our sell throughs have been very, very strong in Nordstrom which has led them to give us some reorders and put more shoes in the stores and our business is just very good with Nordstrom right now and that's great because that's a very, very important account for us.

And then on the commission line and in particularly the Adesso-Madden and the private label, do you expect to see pressure there kind of as we go through the year?

You're going to start to see that get better. We're going to be down again in Q2 although not the same type of percentage decline as you saw in Q1, and then we'll be up in the back half there. That's a business that we have, take orders further out so we have a good sense for the back half in that business and we think we'll be up in the back half.

Is that increase coming from new customers or is it some of your current customers just planning their businesses up in the second half?

It's our current customers and we had some, a couple of our bigger customers were essentially in an overbought situation and really had to scale back orders for a quarter or two here, but they've cleaned through that and are ready to ramp up again starting Q3.

Okay, great. And then will you just comment on the CEO search, you know, obviously you can't name names but just kind of where you think it is and any kind of a timeframe where it might be completed?

We've retained an executive search firm and the search has been initiated. I can't really speculate on timing. The good news is that we have the luxury of taking our time here. We don't feel that we're in any rush because we feel very confident that we can manage and grow the business with the management team that we have. We have an experienced group here that's been together for a number of years and so we can take our time and find the right person.

(Operator Instructions) Your next question comes from Mike Lippold - Craig Hallum Capital.

Can you talk - now that Steve Madden Fix has been in the market for a quarter, can you talk about first how we should kind of model it over the next four quarters and then what you're seeing, what the long-term potential of the product could be?

Yes. We've gotten good earlier reaction to Fix. Obviously it's a tough time to be launching a new brand so we're taking a measured approach as I mentioned earlier and we think in this particular time launching a new brand slow and steady wins the race. So we're going to - we did go all doors Nordstrom but in our other accounts we've gone, we started out with selected doors in all the accounts but we're in all the accounts that we want to be in. We're in Nordstrom and Macy's and Belk and Dillard's as well as Journeys and Finish Line and dELiAs and The Buckle and we're getting good response there. I wouldn't look for big numbers this year. I'm not going to get into specifically what we're forecasting there but we do feel very good about it as a long-term growth opportunity.

Then on the international front you mentioned the GRI relationship in Asia. Anything else in Europe or anywhere else that we could see maybe this year?

Yes, we just started wholesale distribution in the UK with a group called OPS. They're the distributor for Aerosoles as well as have a big private label business in the UK. So that's something we'll be looking to build and we'll still be looking for other distributors throughout the rest of Europe.

And finally, do you still have a stock buyback in place from pre-strategic review?

Well there was $46 million left and we did $44.2 million in the Dutch so we only have a couple million dollars, although as the year moves on we'll still be looking at share purchases as an option and certainly the board will look at increasing the authorization again.

Your next question comes from Sam Poser - Sterne, Agee & Leach. Sam Poser - Sterne, Agee & Leach: Are you looking to, we spoke once before and I think you mentioned it that you were maybe looking for acquisitions or other uses for the cash other than buy-backs and so on to help expand the brand, maybe it be in apparel and so on, can you talk to where you are with that and what kind of things you might be looking for?

Sure. We're always willing to look at various opportunities that we think can help improve the business and certainly now is a time where there may be some properties that'll come into the market at a more attractive price because of the dislocation in the market. I think we would be willing to look at certain other categories as you said to expand our capability into other categories similar to the way we acquired Daniel M. Friedman to expand our capability from footwear into accessories. But we'd also be willing to look at additional footwear brands that we can sell - you know, Scott asked earlier about J.C. Penney's if we found a great brand that we could sell to J.C. Penney's that's certainly something we'd be interested in as well. Sam Poser - Sterne, Agee & Leach: Great. And I missed it but - I missed it at the beginning of the call - how was the Mens business for the quarter?

Mens business did $8.4 million versus $9.5 million a year ago. Sam Poser - Sterne, Agee & Leach: And the margins there?

The margin was actually a little bit better than a year ago. Sam Poser - Sterne, Agee & Leach: Is this the sign of a turn around or how should we look at that going forward?

Well we're in, I think we're in sort of the same boat that we've been in. We feel very good about the dress piece and the driving mocs and we're still struggling a bit with the sport piece of the business. That's now down to only a little of over 20% of our mix versus 40% a year ago and the key to getting the top line moving in the right direction will be to get that piece of it moving in the right direction. We do have some new more athletic looks coming at the end of second quarter and we also feel very good because we just hired a new designer from Puma who is very talented and I think is going to really freshen up what we do in the sport category. Sam Poser - Sterne, Agee & Leach: Originally you had some of the Fix products for Men. I think that vanished. Are you thinking about possibly going back that direction as well?

Fix is going to remain just a women's line for now. You never know down the road but right now it's just going to be women's.

Seeing no further questions, I'd like to now turn the floor over to management for closing remarks.

All right. Well thanks very much for participating on the call and I look forward to speaking with you in three months.

This concludes today's conference call. You may now disconnect.