Key questions and answers from the second quarter fiscal 2008 earnings call conducted by Stein Mart, Inc. (SMRT: chart) on August 25, 2008.

Robin Murchison (SunTrust Robinson Humphrey): What is your estimate of the traffic impact on the same store sales figure? How much do you think that accounts for cost?

Michael Ray: We won’t get into the specifics of that but traffic is definitely down in the stores where we track traffic.

Robin Murchison (SunTrust Robinson Humphrey): Are there any positive metrics in terms of either AUR or units per transaction that you can share with us?

James Delfs: All of those metrics are in the negative. The units are down as well as the average unit retail both for the quarter and for the half.

Robin Murchison (SunTrust Robinson Humphrey): When you look out to the department store sector and the ability that the department store sector has to weigh heavily on promotions, it seems like last year and in some prior years just for example a lot of times Macy’s has their big monthly sale the same weekend as maybe the 12 hour sale at Stein Mart, is there any way to get around whatever big promotional event that you are planning for a month with what some of the bigger guys are doing, or separate them somehow?

Linda Farthing: In this environment we’ve had to be much more promotional. We’re not up against Macy’s in many of our markets and we would, the 12 hour sale is one of our best sales of the year and those have continued to be strong for us.

Robin Murchison (SunTrust Robinson Humphrey): On Ann Taylor second quarter earnings call they talked about moving away from the suited traditional wear-to-work category, do you think that has any impact or do you think that that has any impact on how you might plan your business on a go forward basis?

William Moll: Structured sportswear both men’s and women’s has been difficult. I do believe we have a nice career business in Stein Mart and what we try to do is relax a lot of these jackets and relax some of the sweater offerings so where cardigans are doing very well right now, when traditionally you might have a more structured jacket that would do better. So yes, we are seeing exactly what’s taking place on that avenue and I think the new Attitudes area as the career part comes in this month and next month, you’ll see those changes.

Mark Montagna (CL King & Associates): During your prepared remarks you mentioned you have different merchandise initiatives at various stages, can you possibly talk about some of those. Any updates on other initiatives that you might have?

William Moll: We did do a jewelry test out there and it was inconclusive in some ways, it did show that we have a table opportunity in certain gift giving products for fourth quarter which we’ve gone ahead and moving forward on that on how we purchase tables and the product and getting prepared for the ever important fourth quarter. The kid’s test went in around the first part of August so it’s pretty inconclusive but its up and running in all 40 stores. One of our largest tests was Attitudes which we’ve been pleased with at this point in time. So those are the main initiatives that we talked about and have up and running.

Mark Montagna (CL King & Associates): Talking about tailoring assortment to customer research, can you expand on that topic? Is that driven by, is it as simple as just going into more brands?

Linda Farthing: Our customer research did say that they wanted to see more brands. They also said that they wanted to see a greater expanded size range. They mentioned size is an issue. They mentioned wanting many of our customers responded that they wanted to see younger looking Attitude product which is the Attitudes area is a result of that. That kind of summarizes some of the key findings that we’ve had. The size issue did come up and we have addressed that in our automatic replenishment program.

Mark Montagna (CL King & Associates): You mentioned non-merchandise procurement, some changes in contracts, can you expand on that so I can try to gauge the magnitude of expense savings that you might have?

James Delfs: Our focus has been on the indirect spend which are the non-merchandise procurement functions and we have been successful in renegotiating certain contracts. There will be some benefit in the back half of this year but obviously it’s in 2009 that we’ll recognize a full year’s worth of benefit off of those improvements and those contractual changes.

Mark Montagna (CL King & Associates): So there’s not, is there a big chunk of expense savings or is it a lot of singles as opposed to triples and home runs?

James Delfs: Most of its singles and a few doubles thrown in.

Mark Montagna (CL King & Associates): You mentioned marketing, and I’m just trying to understand how the marketing may change, are you going for a different message in terms of the, with the marketing that you’re going to do this fall?

Glori Katz: There’s really a couple of things that we’re looking at. First of all we have to make sure we’re spending our dollars as efficiently as possible so we’ve put a lot of emphasis on looking at what we can do from a media standpoint, direct marketing being a big chunk of that. But then of course the message is key. We have a new partnership, new advertising agency partnership; they have begun to show us work that we’re hoping we can put into test even before the end of this third quarter that can have some impact in fourth quarter. Certainly the message that we come up with for third quarter would find its way into our holiday advertising and it definitely needs to communicate our value proposition very strongly as we go forward.

Mark Montagna (CL King & Associates): In terms of the branded merchandise, it sounds like you’re going to emphasize brands more, how is the mix going to change? I’m looking in terms of what percentage of merchandise was branded last year in the third quarter and what percent will be branded this year in the third quarter and perhaps even beyond that, how do you expect it to change next year?

William Moll: That is definitely something that evolves because a lot of the brands have gone away with some of the changes mainly in the apparel market so it will take about until probably this time next year that we’ll be more pleased with where we’re taking it so it’s a slow process but the goal is to be well over 50% is our long-term goal, but we will see how this bubbles up and as we said in the remarks, men’s has had more opportunity of brands and ladies, we see many more opportunities coming in in the first quarter of next year and be much more aggressive on that. So 50% and exceeding that is our goal going into next year.

Mark Montagna (CL King & Associates): Where do you stand right now?

William Moll: Men’s is actually over that number, ready-to-wear is probably in the 40 percentile number.

David Mann (Johnson Rice & Company): On the move to brands, can you give us a sense on the margin impact that that may have?

William Moll: There will not be a margin impact on that.

Linda Farthing: We’re able to buy the brands advantageously so we’ll leave it at that.

David Mann (Johnson Rice & Company): On the 10 stores you’re closing, can you give a sense on what the operating performance on those stores are?

James Delfs: Only to say that certainly the reason they’re closing is because they were not making a positive contribution.

David Mann (Johnson Rice & Company): On the marketing side, are you going to be changing the amount you’re spending in the back half versus last year and on the message, will you be putting brands more integrated into that message?

Glori Katz: We’re going to keep our spend as a percentage of sales consistent to where we’ve been so there won’t be a change there but we are looking at a message that can really hit the value proposition on all the important tenants and certainly brands will be integrated into that message.