Blair Lambert: You would see similar types of numbers. It is a reasonable expectation and then it turns around as you get into the fourth quarter.

Margaret Whitfield (Stern Agee): Would you see similar benefits from the product cost benefits that you had in the first quarter going forward?

Matthew McCauley: Essentially it is a target in the 100 basis point forecast we have given for the year are consistent throughout the year and we have baked those purchases.

Margaret Whitfield (Stern Agee): How many stores now have special occasion line at Janie and Jack?

Kip Garcia: Janie and Jack is only in a handful of stores right now and it is also online and we are going to expand it. It is in less than ten stores in Janie and Jack but we are expanding it as we go forward because it has been so strong and we have been looking for space opportunities in our stores to see where we can put it.

Margaret Whitfield (Stern Agee): With Talbot Kids going out of business does that represent an opportunity later in the year?

Matthew McCauley: Looking at it, we look at the big landscape and with a lot of the retailers struggling it presents a lot of opportunity but at the same time there is a lot of competition with promotional pricing competition so that could be an opportunity grab more market share, certainly offset by a lot of the other challenges with people being more promotional and dropping prices.

Margaret Whitfield (Stern Agee): Are thus far in May your comps in line with your plan for the quarter?

Matthew McCauley: Yes, we feel good about the guidance we have given for the quarter and May is supporting the guidance we have given.

Dana Telsey (Telsey Advisory Group): Can you talk more about the outlet business?

Matthew McCauley: What we are seeing in terms of the opportunity there is we continue to be thrilled with the sales growth we are seeing there. There is still a lot of opportunity in terms of store growth. We feel good about the direction we are headed with Gymboree. Four-wall contributions continue to be strong. Percent of rev is still strong. We are happy with that opportunity.

Dana Telsey (Telsey Advisory Group): The gross margin went up. Are you seeing it in IMU, merchant or product costs and how does it vary by concept?

Matthew McCauley: When we talk about merchandise margins and where that came from in the first quarter I will not break that out by department but I will tell you that we did have positive regular priced sales comp which we are happy about in the first quarter even though we were offset by lower averaging at retail a lot of that is driven by a larger mix of Crazy 8 and outlet selling which is at the lower average unit retail. The combination of our regular priced sales comp in addition to our cost of goods reduction that is what is driving a lot of margin growth there.

Dana Telsey (Telsey Advisory Group): Do you have any commentary on the margin improvements?

Blair Lambert: We had some good buying leverage in terms of leveraging some of the corporate costs. That was on the positive side. We had some downward pressure from Crazy 8 just the impact of having a new business with a lower margin impacting the mix. Those are the key components. You have better average cost but offset or in addition to that better full price selling offset by the Crazy 8 piece and negative occupancy expense leverage.

Brian Tunick (J.P. Morgan): Is it more because of the number of openings in the second quarter that you need to get 3% to 4% comps to get occupancy leverage or is that going to continue for the rest of the year?

Jeffrey Harris: On occupancy in the second quarter you just get lower volume levels when you are selling t-shirts and shorts at lower prices so that occupancy cost you have less room. It is just a bigger nut relative to the total PNL. It is relatively a fixed cost. We do not have a lot of stores that go into the percentage rent world. So going forward we have said we expect downward pressure from occupancy throughout the year. Coming into the year and we expect that for the full year.

Brian Tunick (J.P. Morgan): Could you talk about the inventory plans for the end of the second quarter and what categories you think are the biggest opportunities for back-to-school that you might have missed out on last year?

Kip Garcia: Looking at the quarter we purchased inventory down to last year. Last year we made some large investments going into back-to-school and felt good about that but we were also more promotional last year. We tightened that up and feel great about where we are headed. The big opportunities are going to be in denim, backpacks, polos, woven bottoms and dresses, all around buying up for that back-to-school time period at the end of the quarter.

Brian Tunick (J.P. Morgan): With the increased number of Crazy 8’s even though CapEx might go up more you are still going to be generating free cash and have cash. Are you looking for a new buyback program?

Kip Garcia: We are always looking at shareholder value and continue to assess all of the opportunities that are out there and buy back is one of them and we are constantly evaluating what the best return on the investment is for the shareholder. Nothing in the near-term plans but rest assured we are constantly looking at the best use of that cash.