Good morning and welcome to the Coach conference call. (Operator Instructions) At this time for opening remarks and introduction, I would like to turn the call over to Senior Vice President of Investor Relations at Coach, Ms. Andrea Shaw Resnick; you may begin.

Good morning and thank you for joining us. With me today to discuss our quarterly results are Lew Frankfort, Coach's Chairman and CEO, and Michael Devine, Coach's CFO. Before we begin we must point out that this conference call will involve certain forward-looking statements, including projections for our business in the current or future quarters or fiscal years. These statements are based upon a number of continuing assumptions. Future results may differ materially from our current expectations based upon risks and uncertainties such as expected economic trends or our ability to anticipate consumer preferences. Please refer to our latest Annual Report on Form 10-K for a complete list of these risk factors. Also please note that historical growth trends may not be indicative of future growth. We presently expect to update our estimates each quarter only. However the failure to update this information should not be taken as Coach's acceptance of these estimates on a continuing basis. Coach may also choose to discontinue presenting future estimates at any time. Now let me outline the order of speakers and topics for this conference call. Lew Frankfort will begin with an overall summary of our fourth quarter and fiscal 2008 results as well as our plans for the new fiscal year. Michael Devine will then follow with details on financial and operational highlights for the quarter and year as well as our outlook for the first quarter and full fiscal year 2009. Following Michael we will hold a Q&A session that will conclude promptly by 9:30 a.m. I'd now like to introduce Lew Frankfort, Coach's Chairman and CEO.

Thank you Andrea and welcome everyone. As we announced our fourth quarter and fiscal year end results we are pleased with our performance and remain confident in our long-term prospects. We expected the current consumer malaise which affects retail spending will remain in place well into 2009 significantly impacting our business. At the same we expect to generate profitable growth although at a lower rate as we continue to use promotional activity to drive our factory business and price select new product more sharply to deliver compelling value. The opportunities both here at home in North America and abroad notably in emerging markets remain abundant. In fiscal 2009 we will invest notably in Greater China and to merchandising initiatives including what we call Collections. Our performance in FY 2008 was highlighted by an increase of 22% in both revenues and EPS. It was a year of many accomplishments including first, the opening of 47 total net new stores in North America; 38 net new retail stores; and nine new factory stores. Second a 10% increase in North American comparable store sales for the year. Third, continued strong growth in our indirect businesses driven by both productivity and location growth notably in international wholesale. And fourth another excellent year for Coach Japan, retail sales there rose 14% in constant currency and 23% in dollars to nearly $600 million despite flat category sales for imported bags and accessories in Japan. Coach strengthened its number two position in this market with an approximate 13% share this year, up from 11% last year. Finally we announced the phased buyout of our retail businesses in Greater China along with our development strategy for the region. Separately I would add how pleased I am with the creation of the Coach Foundation with an initial grant of…

Thanks Lew, Lew has just taken you through the highlights and strategies let me now take you through some of the important financial details of our fourth quarter and year end results. As mentioned our quarterly revenues increased 20% with sales of our direct business up 22% and the indirect business as expected up 11%. For the year total revenues rose 22% which sales generated by our direct channel rising 21% while our indirect revenues rose by 25%. Excluding the impact of certain one-time items which I will touch on in a moment, earnings per share for the quarter increased 20% to $0.50 as compared to $0.42 in the year ago period as net income rose to $172 million from $159 million. For the full fiscal year earnings per share rose 22% to $2.06 as compared to $1.69 posted in FY 2007 as net income rose to $742 million from $637 million. On the same basis our operating income rose 14% to $281 million in the fourth quarter versus $245 million in the same period last year. Operating margin in the quarter was 35.9% compared to 37.6% in the year ago quarter. For the full fiscal year operating income rose to nearly $1.2 billion, a 19% increase. Operating margin for the year was 37.1% compared with 38% even a year ago. In the fourth quarter gross profit rose 16% to $593 million from $509 million a year ago and gross margin was 75.9% versus 78.1% in prior year. During the year gross profit rose 19% to $2.41 billion as compared to $2.02 billion a year ago while gross margin rate was 75.7% versus last year’s 77.4%. Most of you I’m sure will remember in our third quarter due to the unprecedented single quarter move in the Yen we experienced a…

(Operator Instructions) Your first question comes from the line of Robert Drbul - Lehman Brothers

The question that I have is can you clarify exactly what you meant when you talked about sharply pricing new product, are you actually taking prices down or will you be bringing out more product at entry price points?

First, we’re not taking any prices down, what we were referring to is a strategy to deliver much more compelling value to consumers at a time when they’re reluctant to spend and as you know, for this year, we’re introducing a wide range of new collections and platforms which have an array of new materials as well as much greater make and what we typically do is we look for a certain margin based upon what the cost of these collections are we decided that we would take a shorter margin so that we can price them more sharply so that the consumer who is otherwise hesitant to spend will find it to be an exceptional value.

On the inventory in terms of the amount of inventory that was made for full price North American stores, how much of it has been sold in the factory outlet, how much are you converting over and selling in the factory that was actually originally full price product?

We’re very pleased with where we came out of the quarter inventory wise, the metric that you’ve heard us use many times in the past is kind of the flip side of that and what percentage that sold through in the factory channel was actually made for factory and that percentage stayed very constant in the June quarter at 75%. So our sell-throughs in full price are right where we wanted them to be and factory likewise and as you saw we came out of the quarter with inventory balances up less then sales and in fact the Yen actually hurts us in that compare year-over-year. So if you actually put in on a constant currency basis that compare would look even better.

Your next question comes from the line of Kimberly Greenberger - Citigroup Kimberly Greenberger – Citigroup: Could you give us the basis points associated with the gross margin change versus last year, how much was channel mix, I think you gave us the Yen impact at 80 basis points and then if you have any color on the SG&A line as well?

As we suspected we landed the gross margin rate adjusted for the Yen impact at the 75.9% level after having guided to 75% so we got 80 basis point good guy as I mentioned from the Yen. So we actually outperformed if you will our own expectations by about 10 bps. The majority though—so that was still down about 220 basis points over last year’s Q4. The majority of that negative movement was driven by increased channel mix as factory continued to do exceptionally well as we continued to present great value to that consumer, both in the US and in Japan. The next largest impact was the level of promotional activity, while we were able to drive consumers into the factory channel we were—kept our price points there very sharp as well to make sure we took advantage of the traffic and got the conversion. So that was the second largest impact; promotional activity primarily in our factory channels here and in Japan. So those were the two biggest drivers of the gross margin decline offset by help from the Yen. In terms of SG&A we also came in right where we anticipated with about 50 basis points of positive leverage driven largely by leverage through our corporate functions, our distribution center in Jacksonville and our corporate functions here in New York. On the retail P&L came in very consistently with the way we’ve talked about the business in the past. As you saw in the release we had a 7% comp and at a 7% comp the retail division did breakeven on their SG&A line so that’s pretty consistent with the way we’ve always modeled it. And CJI provided leverage to their own P&L but because of the strengthening Yen as it converted back into dollars we had modest negative leverage but if you were to adjust for constant currency they would have provided some nice leverage to the P&L. So all those puts and takes we landed at about the 50 basis points of leverage that we had projected. Kimberly Greenberger – Citigroup: Could you talk about product cost inflation and how you’re thinking about higher costs out of China as we work our way through fiscal 2009?

As we look forward into 2009 there definitely are some inflationary pressures, most notably some minimum wage increases, the tax environment in China is also getting a little more negative. The good news is though that the supply chain team here headed by [Angus Macrae] and his group have a lot of counter sourcing alternatives available to them. We are also seeing because of the overall macroeconomic backdrop leather is a little cheaper to us this year then it was last year so in terms of the organic price cost relationship, we’re feeling reasonably good as we head into 2009 that we have enough activities ongoing to offset the inflationary pressures. That being said though then what carries the day is what Lew spoke to about being more sharply priced on a select new introductions into 2009 and that’s where we’re going to see some negative impact to the gross margin rate going forward at least into 2009.

Your next question comes from the line of Michelle Clark - Morgan Stanley

As we look to the leverage point on North American retail for next year, I believe previously you said it’s about a 5% to 7% comp that you [inaudible] leverage expenses is there opportunity to bring that number down?

There is some opportunity although it is clearly our most variable channel in terms of driving SG&A as we see sales increase its driven by percentage rent and by increased store wages, also as we add new stores we add new ads to our occupancy line and to our headcount. So Michael Tucci and his team are managing it exceptionally tightly but at the 5% to 7% range we feel pretty good about that being the leverage point. And so as we’re projecting to be a little under that, we will rely more heavily on FY 2009 into managing our centralized expenses and trying to drive leverage through that portion of our SG&A spend and also notably going forward with CJI growing at 5% to 10% constant currency basis, we would also expect to get leverage from that part of our business as well. They will grow more slowly then the company as a whole.

As you look at the corporate expense base can you talk about any buckets of opportunity there?

Well there’s a number of them, we continue to year-over-year spend roughly the same amount in terms of our media outreach. We have one distribution center in Jacksonville, Florida which we’ve recently expanded and now gives us an opportunity to gain leverage on that portion of our SG&A line. And then really the majority of the administrative functions here, corporately, my own finance team, our technology group are really not going to be growing in any material way and certainly not nearly at the 13% top line growth we’re anticipating. So it those backroom functions are the ones that are really going to provide the leverage opportunity going forward.

Your next question comes from the line of Christine Chen - Needham & Company Christine Chen - Needham & Company: I just wanted to know what percentage of your sales is jewelry which we think looks really great and where would you like it to be long-term and also how much are you going to increase the SKU count for holiday?

First jewelry is running about 3% to 3.5% of our full price sales within our own stores and we believe we have great potential in jewelry and thank you for the compliment on the assortment. Its checking very well and longer term we believe it could comfortably approach or equal 10%. But again that’s a vision over the next few years until we get there, we won’t be there. For this holiday season, we’re particularly focused on expanding our sterling group. It did remarkably well. We first introduced sterling in a limited number of stored and it checked extremely well and we have expanded it many, many more locations and now we see it as a key group within our jewelry assortment.

Your next question comes from the line of Dana Telsey - Telsey Advisory Group

Can you talk a little bit about Japan, what you’re expecting Japan sales growth to be and also did their product assortment trend as it did in the US, did you see the same things? And in the US on the wholesale side, how are they ordering differently this year then last year?

First in terms of Japan, as Michael just referenced, we’ll looking for growth between 5% and 10% on a constant currency basis and as you know the Japanese retail environment is extremely weak, it actually weakened during the last few months and for us it continues to be a market share gain where market share this past year was 13% and we’re expecting it to grow based upon a market that will not grow. In terms of trends generally speaking we have not seen the same trends as we’ve experienced in the United States although accessory sales overall did increase somewhat because it was a sharp focus in Japan as it did in the United States. What we’re experiencing in Japan this summer is a very strong favorable reaction to our new Bleecker collection as we are in the States. So we feel real confident that the change in product is going to appeal particularly to the stylish Japanese consumer. With regard to US department stores they still have great confidence in Coach. We obviously have trended ahead of the stores themselves. We are by far the number one accessories resource and they’re planning us to be modestly up this year in an environment where they’re planning their business not to grow.

Can you just mention what percent of sales came from handbags $400 and over and was the difference between the high end and low end in terms of what you saw, ticket performance and just acceptance of product?

Across all of our direct businesses it was about 24%, up from 17% a year ago of handbag sales.

In terms of our lower priced bags, some of that occurred at the expense of lower sales in what we might call the lower priced bags as some consumers traded down to accessories.

Your next question comes from the line of Antoine Belge – HSBC Antoine Belge – HSBC: Related to the performance of your full price network versus factory, can you perhaps be more precise what has been the [closing] for price, was it still negative and if so how are you planning full price factory going into FY 2009 and second relates to the dilutive impact of the Greater China integration, can you talk us through the incremental sales, operating profits, i.e. explaining how you come up to the $0.03 to $0.04 per share dilution?

As we’ve said in the past, we use the full price channel to drive the brand forward and during challenging economic times since we do not go on sale in our full price stores, we have more marketing flexibility in our factory stores which we utilize. We have a different consumer and as recently as last month when we bumped up our relative data bases between full price and factory we have seen no migration whatsoever of full price customers to factory. It’s a discrete audience and we’re very comfortable with the way in which we’re approaching our retail business which we manage as an entity.

In terms of Greater China the real simple answer is that we’re putting a team on the ground, an infrastructure in place in advance of significant revenues so that we can capture revenue growth down the road but as you would imagine while we’re putting a modest regional team on the ground to manage the division there, as we transition to ownership of the stores obviously we’re going to pick up the lease costs, we’re going to pick up the store associates and the store wages associated with that. And as we’ve talked about a couple of times now, the revenues are relatively modest this year. We do have a phased approach, we’re taking over the Hong Kong and Macau stores here in the fall but the mainland stores not until the spring. So we won’t see a significant revenue pop in FY 2009 as much of the year will still be on a wholesale shipment basis while we build the team on the ground there so the net impact we believe this year will be dilutive to about that $0.03 to $0.04.

Your next question comes from the line of Adrianne Shapira – Goldman Sachs Adrianne Shapira – Goldman Sachs: Following up on the trends in the full line channel you talked about traffic being down, perhaps qualitatively give us a sense where traffic has been trending sequentially and then following on that just talk about you had some efforts to try and obviously with the product innovation to jump start traffic, talk about some of the promotions in the full line, how is that trending as you try and graduate some of those factory customers to the full line channel?

First with regard to traffic, it’s been fairly consistent from one quarter to the next and our focus is primarily on conversion. We at this point believe the biggest opportunity for us is to generate satisfied consumers by giving them a great product when they get to the malls. Now clearly we have a very vibrant internet available to us where we have over one million visitors per week and the internet is a principal communications vehicle to introduce new collections and we’re doing that through substantial targeted mailings. Also this holiday season we’re going to be conducting for the first time in recent years a substantial number of truck shows across the United States where we will be inviting our best customers to preview our new collections. Lastly we’re looking forward to a substantial increase in the level of editorial that we’re getting particularly in selling magazines this holiday as our reports and fashion editors have gravitated quite positively towards our new looks particularly the Madison collection which we’re launching in October. Adrianne Shapira – Goldman Sachs: Perhaps give us an update on that promotion, the invitation to the factory stores to full line, how that has been trending?

First it’s significantly profitable for us. First its too short a time for us to measure the amount in a reliable way how much future business we’re getting from these consumers in full price but what we are able to measure is they’re spend in factory. So the people that we have invited to the full price who are exclusive factory buyers have responded well to our offers in full price and are spending at the same levels that they did previously in factory which means that we’re getting substantial net plus business from there. In terms of converting them to full price without a promotion, that’s a much harder chore because these consumers are very value-oriented.

Your final question comes from the line of Paul Lejuez – Credit Suisse Paul Lejuez– Credit Suisse: Given the consumer environment do you expect any changes in consumer shopping behavior in terms of when they buy, maybe in other words, do you think you become more reliant on your second quarter sales and earnings, also wondering if you’re seeing any changes in the buying patterns of your core customer and what are the expenses, the $12 million of expenses associated with the one-time items, if you could just let us know what that’s all about?

First in terms of shopping cadence, in general consumers are spending much closer to the moment. That’s been a trend over the last several years and we expect that to continue. Second, we do believe that the holiday quarter on a relative basis might do somewhat better this year because of the strength of the Madison collection but in general we expect our seasonal spread to remain consistent.

In terms of the variable expense associated with the one-time items, it’s a compensation related, it’s the formulaic result of our bonus programs and based on the higher net income delivered and the other financial metrics, the outcome was $12.1 million. What I will pass along as well though, based on Lew’s recommendation and our Board’s agreement the top 13 senior members of management, what we call the operating group here at Coach, did not participate in the step-up in bonus programs driven by the one-time good guys.

Thank you all for joining us today and we look forward to taking your questions through the day. Have a good one.