Michelle Tan (Goldman Sachs): How would the timing play out on seeing some of that unit cost benefit from deflation, quota restrictions easing into next year?

Sabrina Simmons: We definitely have opportunity in the first and second quarter. We have yet to place orders in the back half, but we think the opportunity is just as great if not greater in the second half.

Michelle Tan (Goldman Sachs): Does what you said to the last question tie into the fact that in this macro slowdown, Old Navy would actually be picking up customers and we have not seen that yet, does that fit into your thoughts here?

Glenn Murphy: We are not pleased that given the change in the consumer sentiment in 2008, really impacted us severely in October, that Old Navy was still working through its product mix challenges and its reposition.

We would rather not be operating in this environment, Old Navy serves a number of different purposes, but when consumer sentiment does turn down its job, on top of our portfolio brand, is to go out and fight on behalf of the company.

So yes, that brand is well positioned. It is much better than it was and this is the right time to go out and put the marketing campaign and have Old Navy take its rightful position within our portfolio brands, which is when the consumer is a little down and more value conscious, it is Old Navy's turn to gain a bigger share of wallet.

Brian Tunick (J.P. Morgan): How are the Old Navy new prototype locations, trending?

Glenn Murphy: In terms of the stores, we have done two in California. I would characterize them as about 50% to 60% right, but anytime you put a new model in place and try to reposition your business, that is probably an average score.

We have three more going in the ground between the end of April and the middle of May, and those will be probably 75% or 80% complete. So we are watching and learning, big discussions with customers, looking at all our metrics, including traffic, which is a key metric going forward, and so far we are pleased with the results shown.

Paul Lejuez (Credit Suisse): Is there anything unusual happening in the first quarter that is preventing more expense dollar savings?

Sabrina Simmons: We would not recommend extrapolating savings in any one quarter out to any other quarters because there are differences that we will try and point out when we get there and there is seasonality, etc.

We are now beginning to anniversary deep savings that we garnered last year. So in the first quarter of 2008 we actually saved over $90 million in the first quarter. So that is what we are beginning to anniversary.

We are making important investments in our business, so we feel committed to the Old Navy marketing campaign. We want to drive traffic, but at the same time balancing that against being really disciplined with our core expenses. And as you can see, we are still bringing expenses down overall.

The other areas of focus that don't just show up on that SG&A line, as Glenn mentioned, include, of course, the continuation of AUC. Savings in the areas of other non-merchandise procurement, logistics, and rent and occupancy.

Paul Lejuez (Credit Suisse): With 500 plus stores and their price point, does this environment say that you should think about pulling back on some of the U.S. Banana Republic stores and close some stores?

Glenn Murphy: There are about 450 stores in North America. If we felt the model no longer had customer appeal or the segment in which it was operating, was being squeezed out, we would be looking at its economic model and wondering whether we should have less stores.

We are disappointed and the team is working on it. Every now and then you have to make some adjustments and we are willing to make them, the team is committed to getting it done.

If there are stores inside of the 450 that do not perform, we will consider closing some of the 450.

Kimberly Greenberger (Citigroup): Can you share with us how you plan to go about getting more traffic into the stores?

Glenn Murphy: We have started to get focused this fall when it became clear to us that we could be a purist and we can put phenomenal product out and push our design team and merchandising team and run great stores and do promotions when it is needed to move through inventory, or we can look at our business in a very honest way.