Dana Telsey (Telsey Advisory Group): Could you talk a little bit more about the research and the findings that you completed?

Susan P. McGalla: What we have focused on primarily is the girl because with some of the macro external and internal challenges around the women’s business we have really focussed on the AE brands girls demographic.

With some of the fashion cycle changes and how she spends her time, it is very important to her to have versatile product that she can dress up or dress down. You can say it’s day into night; for us it’s dressing up, dressing down. There’s versatility in terms of the way that fashion and outfitting is being put together.

The macro environment is putting an intense amount of pressure on value and they see us as a value brand. We just have to make sure that we are delivering that in a way from the key item and a fashion standpoint that satisfies their needs.

Dana Telsey (Telsey Advisory Group): On some of the new product lines that you have launched in aerie, any updates on those and what the next initiatives are?

Susan P. McGalla: We are very pleased with the aerie business overall. Particularly that the market share businesses of undies and bras. The amount of progress that we have made over the past 12 to 18 months is at or above our expectations in those key categories.

We are continually investing in how that assortment will expand within those categories and to external categories. The boxer business has been down trending, not only for us but for some other people, and so what we are doing is repositioning some things in dorm wear in the back half of the year that we think will really capitalize and round out some categories within the dorm wear side and sort of the wear inside/wear outside type of product that aerie really is a part of what that business is all about.

Dana Telsey (Telsey Advisory Group): How are you planning Holiday different than Back to School?

Joan Holstein Hilson: We will continue to invest in the same amount of newness and freshness to the floors that we have in years past. As it relates to key categories that we will be going after, we believe for both of our brands, AE and aerie, in giftability, market share in the sweater and tops categories, and you will continue to see us aggressively own denim into the fourth quarter in the AE brand for guys and girls.

Michelle Tan (Goldman Sachs): How is the accessory category doing overall?

Susan P. McGalla: We continue to see accessories struggle for us. What we are doing, though, is we are strategically phasing in key accessories categories and you will see some of those new ideas phase in in the third quarter, fourth quarter, and into 2009.

How we have made the decision of how we are phasing in some of those improvements is based on some categories that are trending out there in the external environment. There’s some seasonality issues that lay into how we are phasing in some of the improvements and newness in accessories, and as well as when we think the product is ready and right to deliver in an impactful way to our customer.

Todd Slater (Lazard Capital Markets): Is there something structurally you are doing to allow the merchants to be more creative and assertive and leading?

Susan P. McGalla: One thing we are doing is we have a new trend process that we are putting place. Identifying some things earlier and then periodically through the process and really pulling merchandising and design and getting agreement with the two groups a little differently than we have in the past, which feels very good to us right now.