Good morning ladies and gentlemen and welcome to the Steven Madden Ltd. conference call. (Operator Instructions) I would like to introduce your host for today's conference, Ms. Leigh Parrish, of Financial Dynamics; please go ahead.

Good morning and thank you for joining this discussion of Steven Madden Ltd. second 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 Edward Rosenfeld, Interim CEO of Steven Madden Ltd.

Thanks Leigh, and thank you for joining us today. On today’s call I will review the company’s results for the second quarter ended June 30, 2008 and provide an update on our outlook for the remainder of the year. While our performance in the second quarter once again reflected the ongoing weakness of the economy we continued to build on our momentum from earlier in the year. In particular the results in our Madden Girl and Daniel M. Friedman divisions were bright spots as both experienced strong sales growth versus last year. While results of other brands such as Steve Madden women’s, and Steven continue to be more effected by the challenging environment we are beginning to see improvement in these divisions as well. Overall we are very pleased with our current position in the market. Our merchandise is resonating very positively with our wholesale customers as well as consumers. We recognize the challenges facing the industry however we are pleased with our current merchandise as well as new merchandise being introduced for the upcoming selling seasons. In addition we have seen promising new footwear trends emerging over the past few months. As always Steve and our design teams have been working hard to be in front of these trends across all of our brands in order to bring to market fresh and unique products that appeal to consumers. Overall we believe our business is healthier and better positioned to capture opportunities going forward. Now let’s turn to our financial results for the quarter. Consolidated net sales increased 1% in the quarter to $109.3 million from $108.3 million a year ago. Both our wholesale and retail divisions recorded top line increases of approximately 1%. Gross margin for the quarter was 41.7% versus 42% last year as a decline in margin…

(Operator Instructions) Your first question comes from the line of Scott Krasik - C.L. King & Associates Scott Krasik - C.L. King & Associates: Madden Girl was great, it wasn’t up all that much in the first quarter was there a timing issue there or can we expect this sort of rate of increase in the back half of the year?

Yes, there was a little bit of a timing issue but really the business is just accelerating and you’re going to see some pretty substantial growth in the back half as well. I don’t know that it will be 94% but certainly we think we can be up north of 50% in the back half. Scott Krasik - C.L. King & Associates: This is getting to be almost as big as l.e.i. was at its peak almost. Can it be bigger then that at this point?

Sure I don’t see any reason why Madden Girl couldn’t be a $60 million business over time. Scott Krasik - C.L. King & Associates: The inventory that you gave at $35.3 million how does that breakout wholesale versus retail?

We had $22.2 million of wholesale inventory and $13.1 million of retail. Scott Krasik - C.L. King & Associates: Planning on growing in wholesale obviously in the back half, retail how are you planning that business?

Retail should grow as well. Scott Krasik - C.L. King & Associates: We heard a lot in the spring about cancellations coming from retail customers, can you give a sense of how that affected you and do you think that’s going to be an issue in the second half of the year and if so when will those start coming?

No we haven’t experienced that. Certainly we’ve experienced wholesale customers trying to keep their inventories lean and being conservative in their budget and in their planning, but we haven’t experienced cancellations and because of the strong sell-through in our product, we’re really maintaining our budgets much better then we believe most of our competitors are. Scott Krasik - C.L. King & Associates: Generally I think you experienced some cancellation of reorders in sort of September timeframe last year, was that--?

We didn’t get reorders. There were some reorders that we didn’t get; I wouldn’t say they were cancelled. Scott Krasik - C.L. King & Associates: And then just generally the impact from these potential store closures from Mervyn’s or [Boscoe’s] or whoever else is next?

If you put those all together we do about $2 million with that group so it’s not a big loss on the top line for us and we’re protected as far as what we’re owed. Scott Krasik - C.L. King & Associates: I know you didn’t break it out but these write-offs for store closures and remodels and severance in the quarter do you know how much those were off hand?

The write-off of fixed assets was $672,000 in the quarter; the severance was approximately $300,000 so if you put those together it’s at $0.03 for the quarter.

Your next question comes from the line of Sam Poser - Sterne, Agee & Leach Sam Poser - Sterne, Agee & Leach: You talked in your press release that you’re taking a conservative approach to managing the business can you really talk about what that is because we’ve been at the show and so on, I think you were one of the busiest booths at WSA, the response to the product seems to be quite good especially in the Steve Madden line and in the Fix line, that’s what I was noticing the most, can you talk about maybe year-over-year order of what you’re seeing and backlog and what not?

We never talked specifically about our backlog but I will tell you that it is up from where it was a year ago and our backlog relative to the backlog the same time a year ago is better than its been in quite some time. That being said when you ask what do we mean when we’re being conservative; we’re still watching the inventory carefully. If this were a better economic environment and we had product performing as well as we do on the floor, and given the same kind of response from our wholesale customers about our new merchandise we would probably be a little bit more aggressive with inventory but we’re still managing that pretty conservatively right now. Sam Poser - Sterne, Agee & Leach: How are you seeing, you did a great job of managing your gross margin in the quarter and I assume that means you didn’t have the mark-down money requirements that you’ve had in the past, because you’re managing your inventory well, but as your products performing well these days, are you able to chase it down or are you just coming out with more new product more frequently. How are you managing that?

Yes certainly we are chasing product when we have a hot item but we’re also continuing with new fresh styles. Sam Poser - Sterne, Agee & Leach: Are you finding that when the retailers, are the retailers’ standards going up, are they looking for higher sell-through rates now then they were a year ago to give you fill-in order or to step back in?

Yes. Sam Poser - Sterne, Agee & Leach: Can you talk about what the standard has gone from and to?

I don’t want to get into specifics and its obviously there’s no hard and fast rule but certainly they’re more conservative so you have to have a very strong sell-through to get a reorder and also in the past where maybe they would buy, have four items for reorder, now its just the best two. Sam Poser - Sterne, Agee & Leach: You just said that the backlog, can we assume that the backlog may be higher then your guidance represents? You said its better then it was a year ago, and it sounds like its better then it might have been even before that so can we assume that the backlog might be, is looking better then that?

Our guidance reflects our best estimates for the business right now and backlog certainly is a consideration there. But keep in mind that our current guidance implies solid back half growth here over a year ago. Sam Poser - Sterne, Agee & Leach: On the retail side of things are you expecting to see positive comps on the retail side for the back half?

Yes we’re targeting low single-digits but positive comps. Sam Poser - Sterne, Agee & Leach: And you think you’ll see some margin turnaround there as well?

Yes. We’re going to be looking for margin improvement in the back half versus a year ago. Sam Poser - Sterne, Agee & Leach: That’s more product related based on the response you’re seeing?

Absolutely.

Your next question comes from the line of Jeff Van Sinderen - B. Riley & Company Jeff Van Sinderen - B. Riley & Company: As far as you can see and I know it’s still really early, but any color you can give us on the early back to school sell-throughs and maybe what we should expect, how we should expect things to unfold or your view of how things will unfold for back to school this year.

Well we have had some preseason sales in some of our big better department store customers and we had some very nice sell-in there particularly boots looking very good and there are a number of categories that we feel good about as we head into say back to school or early fall. Again back to school practically speaking happens a little bit later now then it used to because its such a buy-now-wear-now market and so we haven’t seen the full back to school selling yet but so far so good for us and particularly in the boots. Jeff Van Sinderen - B. Riley & Company: In your retail business obviously you can’t change the environment but you’re looking for increases in your comps for the second half, just wondering how you’re getting to that and what you’re focusing on in your retail business to improve margin contribution?

Number one is product and we think that we have better product then we did a year ago and we’ve started to see improvement over the last few months in our comps. Even this quarter, second quarter when we were down 3.3 and we had a tough April and we saw some improvement in May and June and then we’ve seen a little bit further improvement in July. But there are also a number of initiatives that we’re working on in retail. We’ve hired, we continue to beef up the team there, and we just hired a new merchandise manager in retail. We’ve hired a new VP in charge of the internet. And we continue to work on our open to buy process and refining that and we think we’re going to have a little bit more balanced assortments going into fall and more depth in key items based on some of the things that we’ve been working on and then as we look forward we’re also in the process of implementing this new merchandising allocation and planning system. We’re about 50% implemented there and when we get that up and running, the goal is to buy all of spring 2009 on that system. And that should drive sales and margin as well on the retail side. Jeff Van Sinderen - B. Riley & Company: I know you’re just announcing the Fabulosity brand, wonder if you can touch on how you’re approaching that brand and the launch of it?

It’s just something we’re real excited about. We think Fabulosity is a fantastic brand and we’re really pleased to be working with Kimora Lee Simmons who’s such a talent and a true fashion icon these days and Penney is really behind this in a major way so that’s exciting. The apparel has already hit the floor, it’s in I believe about approximately 600 doors and it looks great and it’s performing very, very well. We’re doing both the footwear and the accessories which is something we’re very excited about and we’re going to be delivering product probably for 01/25 deliveries and its just great news. And you have been asking us about what we’re going to do for JCPenney for awhile now so we’re pleased to have a brand to sell into that retailer.

Your next question comes from the line of Jeff Mintz - Wedbush Morgan Securities

On the retail business are you still looking to have about 101 stores by the end of the year?

A hundred stores.

Do you feel like you’ve gotten, you’ve closed the stores that you need to close now or are there potentially some additional store closings upcoming?

No the hundred does not include any more store closings through the balance of the year but we have about six stores that we’d like to close if possible. We’re negotiating with landlords on those stores and to the extent we can make a deal that makes sense, we would get out of those.

On the Adesso Madden business have you seen any trend change there in terms of what those customers are doing? Obviously the environment is still tough but has the trend shifted either up or down recently?

It’s getting a little bit better. The first half was very tough. We just didn’t get the reorders we were looking for. We’re starting to see some improvement. You’re going to see some improvement in Q3 although we’ll still be down year-over-year and then we would be looking to grow that business in Q4.

On the mold issue that impacted the Steven brand was that just one factory that was causing those issues and what have you done to prevent that from happening going forward?

This was a couple of different factories and this is something that, it’s a problem that’s really industry wide this year because of the rainy season in China. Many, many vendors had this issue so we put in a new process to try to contain this. We’re spraying the product and the boxes with fungicide. We’ve lengthened the drying process in the factory and we’ve stepped up our auditing in the warehouse of product and we think we’ve got this under control.

Your next question comes from the line of Heather Boksen - Sedoti & Company Heather Boksen - Sedoti & Company: Regarding Madden men’s wondering is there a strategy here to, I know every season or so we keep introducing some new sport product, what’s the strategy for getting that business back on track?

You’ve hit the nail on the head, that’s the key is the sport piece and I think I mentioned last time that we had hired a new designer from Puma who’s going to help us with the athletic piece. There’s a little bit longer lead time in that kind of product so you don’t expect to see the full impact of his efforts until spring of 2009. But that’s, we’ve just got to keep trying to improve the product. Keep in mind I want to point out the men’s business overall is very, very tough right now. Any time you have an economic downturn the men’s business is impacted more dramatically then women’s because on the whole men are just more likely to forgo new footwear purchases and stay in their old footwear when they’re feeling constrained financially. But nevertheless we acknowledge that we need to improve the sport product and we’re working on that.

Your next question comes from the line of Susan Sansbury – Miller Tabak & Co. Susan Sansbury – Miller Tabak & Co.: Is there any way you can shed more frosting on this licensing agreement, what you expect the near-term opportunities as well as I take it this is a five year license as well as how big this business might be three to five years out? More importantly what do you think the initial shipment rate is going to be if you can share that?

I really can’t, just to clarify one thing; it’s a three year license agreement with a three year renewal option. But I really can’t get into numbers. We haven’t even had our first meeting with JCPenney yet so it wouldn’t be appropriate for me to speculate on how big its going to be but as I said the apparel is in 600 doors. We would be targeting that for the shoes and the bags and we think it could be a substantial business. They are really putting a lot of marketing muscle behind this.

Your next question is a follow-up from the line of Sam Poser - Sterne, Agee & Leach Sam Poser - Sterne, Agee & Leach: On the men’s business, outside of what you’re doing in the athletic realm there, how about in the rest of the business because the athletic business has been fairly tough these days too. Can you talk sort of directionally how you’re looking at that brand being approached and what you’re doing to get the other changes done?

Well that’s the piece that’s weak unfortunately. The driving [mocs] continue to perform well. Our dress shoes are doing fine and actually we’re seeing a little bit of an uptick there. So it’s really the sport piece that even from a year ago, its down, it was 40% of the business a year ago, now its 20% and that’s really where the loss is coming from year-over-year. Sam Poser - Sterne, Agee & Leach: You showed those shoes at [Fanney] and at WSA, how has the response been?

The response has been good but they’ve got to perform on the floor. That’s what we’re looking for.

Your final question is a follow-up from the line of Scott Krasik - C.L. King & Associates Scott Krasik - C.L. King & Associates: Obviously you’re handbag business is pretty good, I assume belts are not doing that well on fashion yet, maybe talk about that and what’s driving the increases?

Belts you’re right are tougher although that business has stabilized a little bit. We’re not seeing the same kind of percentage declines that we saw for the last couple of quarters. But it’s really the handbags that are driving it. On the Betsey Johnson front it’s the Betsey Bell brand that is really growing very nicely for us. And then most importantly it’s the Steve Madden and Steven bags are both growing very nicely. Admittedly still off a relatively small base but we’ve got a nice trajectory there. We’ve been adding doors. We’ve been expanding the assortment and the products have been selling through so we’re very pleased about that. Scott Krasik - C.L. King & Associates: So what’s the distribution for Steven and Steve Madden in bags right now? How many doors, where?

Steven is in about 160 doors, Macy’s, Nordstrom, and then we’ve got two different collections in Steve Madden. We’ve got our Steve Madden what we call our club bags or clutches which are in 470 doors, all the number of better department stores, Macy’s, Belks, [Von Mauer] etc. And then we’ve got Steve Madden day bags in a similar distribution which is 230 doors right now. Scott Krasik - C.L. King & Associates: And the thought is continuing to add doors through the year and or you’re pretty set for--?

Yes we still have quite a bit of door growth opportunity here. Scott Krasik - C.L. King & Associates: And then maybe talk about since you work so close to season, how are the price or cost inflation out of China affecting you, are you raising prices for your August/September deliveries or are you waiting to raise prices and by what amount?

We already have raised prices. In fact our AURs in second quarter were up about 10% year-over-year and we haven’t received a lot of resistance to that. You’re still seeing, we’ve got costs out of China up 10% maybe a little more, you’re still seeing probably about 100 basis point gross margin impact the reason being that though we’ve raised our price 10% we’re also putting a little bit more into the shoes. We wanted to increase the quality of our shoes. But the good news is we haven’t seen resistance to the price increases. Scott Krasik - C.L. King & Associates: Does Brazil become a bigger option or Latin America in any way?

Yes, we’re doing more out of Mexico and we’re also doing a little bit more out of Brazil in the Steven division.

There appears to be no further questions at this time; I would like to turn the floor back over to Mr. Rosenfeld for any further or closing remarks.

Thank you very much for joining us on the call and we look forward to speaking to with you on the next call.