The increase from the prior year is primarily attributable to the current year effect of 2008 store openings and the incremental pre-opening rent. Occupancy costs for the second quarter will be approximately in line with the first quarter in dollar terms and somewhat higher in the later part of the year due to 2009 store openings and pre-opening rent associated with expected 2010 store openings. We currently have approximately 70 lease expirations and expected kick-out provisions in 2009, the majority of which fall late in the year. We are looking closely at each of these lease expirations. We also have approximately an additional 210 lease expirations in 2010 and 2011. All other stores and distribution expenses, comprising selling, payroll, store management and support, distribution, DTC and other costs, were down approximately 10% on a year-over-year basis and represented around 30% of sales compared to approximately 25% of sales in the first quarter of 2008. We expect this de-leveraging effect to progressively reduce as we go through the year. On an average store basis and excluding DTC costs, these expenses are down approximately 16% year-over-year.

We announced this morning that we are in the process of conducting a strategic review of RUEHL, the outcome of which has not been determined at this point. However, based on this review, and on the refinements of FAS 144, we have determined that it is appropriate to record a non-cash impairment charge in the first quarter. The amount of this charge is in the process of being determined and is not reflected in the condensed consolidated financial statements distributed this morning but will be reflected in our Form 10-Q for the quarter. The maximum amount of the charge is approximately $55.0 million pre-tax, representing a net book value of long-life assets associated with RUEHL operations. In addition to the impairment charge, the outcome of the RUEHL review may result in additional material charges in future periods. As an update to our specific plans for new store openings in 2009, domestically, in addition to the Hollister flagship in SoHo we now expect to open ten stores in 2009. This figure includes two Abercrombie Kid stores, four Hollister stores, two Gilly Hicks stores, and two outlet stores.

Internationally, we remain on track to open A&F and Abercrombie flagships in Milan in October and an Abercrombie & Fitch flagship in Tokyo in December. We now expect to open seven Hollister mall-based stores in the U.K., one Hollister mall-based store in Germany, one Hollister mall-based store in Italy, one Abercrombie & Fitch store in Canada. Fiscal 2009 total capital expenditures are now expected to be approximately $200.0 million, including approximately $155.0 million related to new stores, store refreshes and remodels, and approximately $45.0 million related to IT, distribution center and other home office projects. The increase from the previously announced range of $165.0 million to $175.0 million includes the effect of store openings we are adding for 2009 and some capital expenditures we expect to incur later in the year associated with 2010 openings. We expect the increase in capital expenditures to be partially offset by an increase in landlord construction allowances. We also confirmed today that we have entered into a new lease for the Fifth Avenue Kids flagship store, replacing the prior lease. The new space is adjacent to the previous space, offers more store frontage, and has more favorable lease terms.

We anticipate an accelerated rate of opening for European mall-based Hollister stores in 2010 and 2011. As we have previously stated, our existing U.K. Hollister stores operate at productivity levels significantly higher than the average U.S. store. With regard to cash, we ended the quarter with $463.7 million in cash and cash equivalents, and outstanding debt and letters of credit of $143.0 million.

Now to Brian, who will provide some additional details on our first quarter financial performance.

Brian Logan – Principal Accounting Officer

Thank you, Jonathan. As reported earlier this morning, fiscal 2009 first quarter net sales for the 13 weeks ended May 2, 2009, decreased 24% to $612.1 million, from $800.2 million for the 13 weeks ended May 3, 2008. First quarter direct-to-consumer net sales decreased 21% to $49.1 million. Total company comparable store sales decreased 30%, average transactions per store decreased 27%, and average transaction value decreased 4%. Across all brands, average unit retail decreased 1% for the first quarter with the decrease in April being greater than in the earlier months. The reduction in the AUR is net of price increases that began to go into effect in the second quarter of 2008.

From a merchandise classification standpoint for the total company, the masculine categories continued to outpace the feminine categories, as male comparable store sales decreased by a high teen while female comparable store sales decreased by a mid-thirty. On the male side, denim, fragrance, and fleece were strongest, while graphic tees and shorts were weakest. On the female side, wovens and sweaters were stronger categories, while knit tops, fleece, graphic tees and shorts were the primary drivers of negative comparable store sales results. For the first quarter, the gross profit rate was 63.3%, down 350 basis points from last year''s first quarter rate of 66.8%, reflecting a higher markdown rate.

We ended the first quarter with inventories per gross square foot at cost, down 27% as compared to the previous year. We scaled back on spring seasonal inventory receipts during the first quarter in response to the declining sales. Stores and distribution expense for the quarter, as a percentage of sales, increased 13.1% to 55.8% versus 42.7% last year. For the first quarter, marketing, general, and administrative expense was $89.5 million, down 15% versus last year''s expense of $104.7 million. As a percentage of sales, MG&A expense increased 1.5% to 14.6% from 13.1% last year. Interest income for the first quarter was $1.4 million compared to $7.6 million for the first quarter last year. The decrease was primarily attributable to a lower rate of return on investments compared to last year. The effective tax rate for the first quarter was a benefit of 34.7% compared to an expense of 36.8% for the first quarter of 2008. The rate was lower in 2009 due to the recording of discrete items which reduced the tax benefit. For the first quarter, we reported a net loss of $26.8 million, compared to net income of $62.1 million last year.

The first quarter net loss for basic and diluted share was $0.31 before taking into account the non-cash impairment charge currently being determined in connection with the strategic review of the RUEHL business, compared to net income per diluted share of $0.69 last year. During the first quarter we opened six new stores and closed five existing stores, resulting in square footage remaining relatively flat to the end of the fourth quarter of 2008. We ended the first quarter with a total of 354 Abercrombie & Fitch, 212 Abercrombie, 515 Hollister, 29 RUEHL, and 16 Gilly Hicks stores, including 3 Abercrombie & Fitch, 3 Abercrombie, and 5 Hollister stores in Canada and 1 Abercrombie & Fitch and 3 Hollister stores in the United. Kingdom.

This now concludes our prepared comments. We are available to take your questions. Please limit yourself to one question so that we can speak with as many callers as possible. After everyone has had a chance, we will be happy to take follow-up questions. Thank you.

Question-and-Answer Session

Operator

Thank you, sir. (Operator Instructions) Ladies and gentlemen our question-and-answer session will be conducted electronically. If you’d like to ask a question please firmly press the * key followed by the digit 1 on your touchtone telephone. We will turn you in the order that you signal and if you find that your question has been asked and answered before you could ask it and you’d like to remove yourself from the question roster please firmly press the * key followed by the digit 2. Also if you are on a speaker phone please make sure that your mute button is disengaged so that your signal can reach our equipment. Once again that’s “*1” to ask a question and we’ll pause for just a moment to assemble the question roster. As for our first question we go to Jeff Klinefelter with Piper Jaffray.

Jeff Klinefelter - Piper Jaffray

Hi yes thank you. The question really Jonathan is on the guidance that you are providing for the income statement line items in the second quarter. Just curious if you could repeat the store and distribution expense directional guidance that you provided. You are anticipating the store-related expenses being roughly flat in dollars I believe that’s what you said but could you just go through the components of that and MG&A and how you expect that to trend versus Q1?

Jonathan Ramsden

Yeah absolutely and good morning Jeff, what we tried to do is to call out that there were two significant components within stores and distribution that behave somewhat differently, and I think probably one of the reasons why we were off from the consensus for the quarter is that we probably hadn''t done a good job of communicating the significance of those occupancy costs within stores and distribution expense. So just to recap, for the first quarter occupancy costs were 47% of total stores and distribution expense. In dollar terms, quarter-to-quarter, we see that being flat into Q2 and then we see it progressively increasing somewhat in the latter half of the year due to the additional store openings. The other piece of store and distribution expense, which is payroll, other variable costs and we also have DTC and DC costs in there, is the piece that is more variable with sales over time, so that one is harder for us to give more specific guidance on. What we are saying there is that the de-leveraging effect year-over-year in the first quarter, which was approximately 5% at this point that caption represented 30% of sales this year versus 25% last year. We see that de-leveraging effect reducing progressively quarter-by-quarter over the balance of the year.

The exact magnitude of that reduction will depend on same store sales and also our ongoing implementation of expense savings, but directionally, it''s going to reduce we think fairly significantly over the course of the year.

Operator