Matthew K. McCauley: We are experiencing the same pressures that everybody has. We are sourcing in new countries that are new to us that may not be new to a lot of other retailers out there and we are still growing in those countries.

That is offsetting some of the increases in cost of labor that you see more in China and at the same time, we are seeing an opportunity for us to see the IMUs go up with growing store counts. We are in a good position where we are actually opening stores. A lot of factories are excited to work with us because they see growth rather than retraction.

Thomas Filandro (Susquehanna Financial Group, LLLP): Is there any reason why UPTs are down that you can point to?

Matthew K. McCauley: Our assessment is that we are feeling the same pressures that most retailers are, that it’s harder to get people to spend. Fortunately we are offsetting that by getting more people to spend.

Those are the things that we feel like we can control a little bit more within the store. We are doing everything we can to drive those UPTs, give great customer experience and certainly trying to deliver the best product.

At this point we know that we are up against a little bit of a headwind and we are choosing to focus most of our energies and efforts on driving more customers in the doors and trying to offset the fact that the customer is probably just going to spend a little less at this time.

Thomas Filandro (Susquehanna Financial Group, LLLP): Can you give us a sense of what AUR looks like excluding the Outlet on a year-over-year basis?

Matthew K. McCauley: You saw a combination of things in the second quarter of Outlet growing in addition to the mix of rag and markdown and going forward our goal is to continue to increase the average unit retail and at this point it is very hard to predict which way we are going to have to go.

We are very reactive and responsive to the customer and certainly have a lot of strategies put in place to be prepared for whichever way that the customer goes and feel like we have got enough inventory to support whichever direction they go.

Adrienne Tennant (Friedman, Billings, Ramsey): What are you seeing with regard to rent trends?

Matthew K. McCauley: On balance in the better malls, the better malls are always in demand. Occasionally we are seeing a spot come available where we wanted to get into one of those malls that we may have been unable to get into before.

On some of the newer malls we are starting to see the development start to slow down a little bit there. The developers are pulling back a little but on some locations. They may not be getting their openings as rapidly as they had hoped to.

On the low end, probably some opportunities when we are doing renewals to see whether we can get some benefits there in the renewal process. A lot of the malls, they are owned by the same people so they tend to try to leverage us, the lower volume store against a higher volume store and so it gets to be a little bit of a challenging environment.

The biggest opportunity though is in managing where fill rates in the different malls are not up to that 85% rate and we can get some rent breaks, make sure we go through those.

Adrienne Tennant (Friedman, Billings, Ramsey): For Crazy 8 what types of malls have you found that are working best?

Matthew K. McCauley: What we are seeing is that in terms of revenues obviously the higher traffic malls are very strong for us. Where we have got a Gymboree already we are seeing that those stores are actually performing a little bit better and fortunately we are not seeing cannibalization beyond what we anticipated.

Adrienne Tennant (Friedman, Billings, Ramsey): Given that birth rates are on the rise, what else can you do to capture some of that secular of trend in demographics?

Matthew K. McCauley: One of the biggest opportunities is really around Play and Music. We have got a very large percentage of kids that are born in America going through Play and Music and we actually have about 70% of those moms are brand new moms.

Just by going to our own backyard and integrating the message and the benefits of being part of Play and Music in the Gymboree family is migrating a larger percentage of new customers to us than we had done in the past.

What we are also doing is placing some of our emphasis in marketing around maternity magazines. We have supported that with product, with a new emphasis on brand new with our product.