Although we can’t control the external environment, there are adjustments that we have made and will continue to make to put us in a better position. During what we expect to be an extended economic downturn, we are focused on reducing inventory, controlling expenses, and deferring CapEx related to store openings, remodels, and IT systems.

Turning now to our third quarter results, our third quarter sales were $324 million, a 5% decrease versus $342 million in last year’s quarter. Total company same-store sales decreased 7% during the period. Our apparel business showed a solid 7% same-store sales increase during the quarter and now represents 84% of our total sales. Although the transition out of footwear has impacted same-store sales and performance in the short-term, we expect that a greater concentration of apparel should lead to improved merchandise margins over the long-term. We will be effectively out of the footwear category by the end of the year.

Juniors’ apparel achieved same-store sales growth of 16% during the quarter and now represents 51% of our apparel sales. As a reminder, our peer group junior mix is typically greater than 60% of sales. Within our juniors’ category, bullhead denim, especially our skinny and super-skinny styles, and tops were the primary drivers for the quarter. We ended the quarter with our proprietary brands representing 57% of our junior apparel sales.

Our young men’s apparel business experienced a slight same-store sales decline during the quarter. Strength in bullhead denim and knits could not offset the weakness in tees and fleece. We ended the quarter with branded goods representing approximately 71% of our apparel assortment.

Our accessory business continued to be disappointing. Accessory same-store sales were down 28% and represented approximately 13% of our sales mix. Though we had planned to bring the accessory business down as a percent of total mix, this result was below our internal expectations.

In terms of inventory, it remains higher than we would like it to be in the current environment. We had previously planned to end the year with inventories flat to slightly up. Given the more difficult retail environment, we are now targeting significant reductions in inventory by year-end. To achieve this, we plan to raise our promotional level during the fourth quarter when mall traffic is at its peak. Although this will have a short-term adverse effect on margins and earnings specifically in the fourth quarter, we believe this is the right thing to do to position us for next year.

In closing, I remain confident that the steps we have taken this year, including closing our under-performing divisions, consolidating our distribution centers, and largely exiting the footwear business have made us a stronger company for the future. Unfortunately in the short-term, the benefits of these actions have been obscured by the continued weakening of the retail environment. Rest assured we remain committed to managing through the near-term challenges with a convincing and compelling product assortment and a clear focus on driving improved results and increased shareholder value over the long-term. I appreciate your continued support and will now turn the call over to Mike Henry.

Michael L. Henry

Thanks Sally. Results from continuing operations for the third quarter of fiscal 2008 versus the third quarter of fiscal 2007 were as follows: Total sales were $324 million this year versus $342 million last year. We ended the quarter with 940 stores versus 957 stores last year. Same-store sales declined 7% with transactions up 3% and the average sale down 10%. One-third of our stores are located in regions where same-store sales for the quarter decreased anywhere from 15% to 20%. On a positive note, e-commerce sales grew 46% during the third quarter to $10.6 million this year from $7.3 million last year. Gross margin declined 490 basis points to $93 million, or 28.7% of sales this year from $115 million or 33.6% of sales last year. Merchandise gross margins declined 360 basis points, due primarily to higher markdowns.

Non-merchandise gross margin costs were up 130 basis points. Occupancy was up 140 basis points and buying costs were up 20 basis points as a result of deleveraging these costs on the negative 7% same-store sales result.

Distribution expenses were down 30 basis points due to the consolidation of our distribution centers near the end of the first quarter this year. SG&A expenses, including goodwill and other store asset impairment charges of approximately $10 million increased 370 basis points to $95 million, or 29.5% of sales this year from $88 million or 25.8% of sales last year. On a dollar basis, excluding non-cash impairment and depreciation charges, SG&A for the third quarter was down $2 million from last year.

Asset impairments increased 260 basis points, primarily due to a $6.5 million goodwill impairment charge associated with two acquisitions the company made over 10 years ago.

Depreciation and store payroll each increased 50 basis points, primarily due to deleveraging these costs against the negative 7% same-store sales result for the quarter. Store payroll was down in dollars by over $620,000 year over year. All other SG&A expenses were up a combined 10 basis points.

Our income tax rate for the quarter was only 3% due to a year-to-date true-up of our expected annual effective tax rate to 35%.

Net loss from continuing operations was $3.5 million or $0.05 per diluted share, versus income from continuing operations of $17.1 million, or $0.25 per diluted share last year.

Turning now to our balance sheet, we ended the quarter with $108 million in working capital, including $5 million in cash. Inventories were up 12% per square foot year over year, consistent with our original guidance for the quarter of up low double-digits. Accruals for in-transit holiday deliveries accounted for two-thirds of this increase. Excluding in-transit accruals, inventories were up just under 4% per square foot year over year.

We ended the quarter with $43 million in direct borrowings under our $150 million credit facility, reflective of the annual peak period of working capital usage prior to the holiday season. As a reminder, our credit facility has a five-year term expiring in 2013, is backed primarily by our inventory, and contains no financial covenants unless we are drawn down to the last 10% of our total availability.

Year-to-date, capital expenditures were $69 million and depreciation was $59 million. During the third quarter, we opened four new stores and closed two stores.

Now turning to guidance, same-store sales are down low double-digits through the first 16 days of November. We are not currently expecting any significant improvement in the economic climate during the fourth quarter or early in 2009. Accordingly, we believe the best course of action over the short-term is to aggressively clear inventory while holiday traffic is available to us.

As a result, and assuming same-store sales decline in the high-single-digit range, we currently expect to report a fourth quarter loss of $0.03 to $0.08 per diluted share. This range includes an expected gain of approximately $0.11 per diluted share, resulting from the previously announced sale of our Anaheim distribution center. We are working very closely with the buyer and expect to close the transaction in the very near future.