Good morning hi Mike.

Mike Jeffries

Hi Janet, how are you?

Janet Kloppenburg - JJK Research

I am good. How are you? Couple of questions, I wondered if the change in AUR would be effective for back-to-school and if the fashion misses you addressed would be corrected for that period and going forward. And for Jonathan or Brian, I wondered if you could talk to us about the 70 stores that the leases are expiring and if those stores are EBIT positive or if they are still within that mix that are trending at EBIT levels well below the corporate average. And what the outlook is for those stores. Thanks.

Mike Jeffries

Okay let''s talk about AUR, effective back-to-school, the answer is yes. Fashion misses corrected for back-to-school, yes. And let''s just hope that when back-to-school is over we haven''t discovered something else but we think they have been corrected for back-to-school.

Jonathan Ramsden

Janet on the leases, within the 70 there are a smallish number of kick-outs where, almost by definition, the volumes are not at certain levels or other factors are in play, which make those not particularly profitable stores. Of the balance, if you look at the overall profile of our lease expirations, the healthiest group of leases is towards the middle of the range. The newest leases and the oldest leases are disproportionately the least well-performing. So within the next two years we have a significant number of leases that are towards the lower end of the contribution range and a number of which are also in models which we consider to be not at the higher end of the range in terms of where we want to be in general. So we are going to look at each of them and in general if a lease is not generating a positive contribution, at this point we certainly won''t be renewing it for a full 10-year term. We probably will have some closures this year and we will be looking to either potentially extend the other leases on a shorter-term basis or achieve rent reductions if we are going to renew them for longer than that.

Mike Jeffries

May I just hijack this question for a minute because I would really like to comment for a second about how successful our international business is and to restate the fact that our future is with the international business. Clearly, there is an appetite for our level of quality in product, store, store experience, on an international basis. I am not supposed to say this but I''m thinking about it. We opened a store in the U.K. yesterday, in a mall called West Key in South Hampton. That store opened yesterday with no advertising, no PR, with lines out the door for the opening and we did, on the opening day, in that store, this was yesterday, I maybe in trouble for telling you this about five times the average of a domestic Hollister opening day. The other Hollister U.K. stores are trending extraordinarily well. Our London flagship, after two years of operation continues to comp positively, and as a matter fact the rate for first quarter was greater than fourth quarter last year. We are seriously looking at the store base in the U.S. but let''s all look to the future. That''s an opportunity that is extraordinary.

Operator

We go next to Adrienne Tennant with FBR Capital Markets.

Adrienne Tennant – FBR Capital Markets

Good morning. Could you talk about the initiatives on product costing? You talked about trying to protect IMU and then I thought there was a secondary comment that there would be pressure on IMU because of the price increases in Q2 of 08. So at one point you have nine-month lead times. At what point do your IMUs flatten out and at what point can we see them expand, unless, I''m misunderstanding something?

Jonathan Ramsden

We''re just making sure we understand the question.

Adrienne Tennant – FBR Capital Markets

So earlier I think there was comment that Mike, you had made, you said the goal to protect IMU that you''re going to see meaningful AUR reduction. And then later on Jonathan, I think you had said that there would be pressure because of the compare to last year in the second quarter on IMU.

Mike Jeffries