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Executives

Todd Vogensen - VP, IR

Dave Dyer - President, CEO & Director

Cinny Murray - Brand President - Chico's

Donna Colaco - Brand President - White House | Black Market

Mary Lou Kelly - SVP, E-Commerce

Kent Kleeberger - EVP, COO

Laurie Van Brunt - Brand President - Soma Intimates

Sheryl Clark - Brand President - Boston Proper

Pam Knous - EVP, CFO

Analysts

Chico’s FAS, Inc. (CHS) Analyst Day Call March 6, 2012 8:30 AM ET

Operator

Todd Vogensen

Thank you. Pleased that you could be with us today. And we are looking forward to a great day. . The objective of today’s meeting to give you a comprehensive update on our business strategy by giving you a chance to hear some of the key members of our management team.

A few housekeeping things that of course I have to do before we start. First I would like to remind you that today’s presentation and forward-looking statements which are subject to and protected by the Safe Harbor statement found in our SEC filings. These forward-looking statements are subject to a number of factors and uncertainties that could cause actual results to differ materially. The company does not undertake to publicly update or review its forward-looking statements even if experience or future changes make it clear that projected results expressed or implied by such statements will not be realized.

So with that we left an agenda at each of your tables, so that you could see the line up for the morning. We will start with our CEO Dave Dyer who will give you an overview of the company’s strategies; each our brand president will as well as our head of Ecommerce will give you an update on their brand positioning, growth strategies product and upcoming marketing and Kleeberger, our COO will give you highlights on our distribution center redesign efforts as well as an update on our global sourcing and batting cleanups will be Pam Knous our CFO.

Of course we hope you enjoy the great products, that is surrounding you this morning. And last, just a couple of administrative logistics. So first if you have breaking sounds on your cellphone, you will be (inaudible). Also, we did provide you Wi-Fi login and password as part of the agenda that is sitting in front of you. So feel free to connect and we do have a charging station over here off to your left that you can use in case your electronic needs a little bit of an energy boost. This meeting is being webcast, so the presentation will be available on chicosfas.com after the meeting. Also for those of you who are physically here, we will have copies of the presentation on flash drives that is at the back table after the meeting is completed.

Last thing, the restrooms are up here right. We do not have a formal scheduled breaks during lunchtime. So feel free to use the facilities or get some coffee or snacks out as needed and at the end of the day we are gong to bring up all the presenters, so that you will have ample opportunity to ask questions. At that point we would like to keep the presentation going without questions and so we do get to the end of the day and with that I would like to introduce our President and CEO Dave Dyer.

Dave Dyer

Thank you Todd and welcome to Fort Myers. This is a great day in Fort Myers and we are delighted that you are joining us in person or via our webcast. As Todd just reviewed we -- wow that is loud, Troy. Thank you. And ever anything goes wrong I just say oh Troy and he fixes it. So again as he just reviewed, we have a great line up for you here today featuring I believe the best executive team in women specialty retail.

I am extremely proud to lead this team and appreciate the opportunity to showcase their talent and our business promise. Before I kickoff the meeting with the state of the union for Chico’s FAS once again highlighting our growth colors and setting our framework for today’s presentation, I do want to briefly recap the highlights of 2011.

EPS of $0.84, a 31% increase for the year representing our third consecutive year of double-digit increases in earnings per share, comparable store sales of 8.2% capping off a three-year stack of 24%. On the cash flow, positive for the first time, a $132 million of capital investments in our businesses, primarily store; $213 million acquisition of Boston Proper generating a positive contribution in its first full quarter and a significant return of excess cash to shareholders totaling $217 million and we still ended the year with $248 million in liquidity and no debt.

And importantly the right leadership team is in place. Since becoming CEO, I basically have rebuilt my team with the exception of Donna who is the President of White House | Black Market who had joined us in 2007, all cheers of change. By the end of the session today I hope you will agree with me that we are well poised for the next phase of our exciting growth trajectory.

So let’s begin the Chico’s FAS state of the union. Chico’s FAS is a cultivator of brands, serving the lifestyle needs of fashion savvy women. We put customers first in everything that we do. Our objective is to be the most customer-centered company in women’s specialty apparel, offering compelling fashion-right merchandise, providing the most amazing personal service, forging deep relations through all of our interactions with our customers, no matter what channel.

Our commitment is to optimize each of our brand’s considerable potential, positioning ourselves for sustained, double-digit growth through relevance to our customers’ lifestyle in their shopping channel of choice.

We will execute our plans, driving for excellence across all function, setting priorities to ensure we meet our objectives and at the same time we will create the most amazing place to work, learn and grow by attracting and developing and retaining talent and aligning our corporate culture around the following values, you see some of them over there on the wall.

Customers are our top priority. Customers first, we expect honestly and trustworthiness 100% of the time. We have a passion for fashion and we love what we do. We have respect for our associates, our customers and our business partners. Our entrepreneurial spirit makes getting things done productive and we like to have fun.

Finally we are committed to fostering a high performance culture across the entire company.

Now a recap of pillars of our strategic growth plan; first, organic growth that delivers the trademark’s most amazing personal service. Second, innovative and highly creative marketing plans, built around definable and desirable product target audiences. Third, expense leverage, through best-in-class cared services and four, optimizing the potential of all four brands.

I covered our domestic organic growth opportunities with you in detail in the February 22nd call and today each of our brand Presidents will further highlight their specifics with you in their presentation. Just let me say that we are confident in our ability to open 120 stores domestically per year through the next several years, continuing to be one of the few specialty retailers that can dramatically and profitably grow square footage in the United States.

This brings us up to the question of whether or not there's an international opportunity for any of our brands. And if so, which country? Which brand? What's the timing? What's the size of the price? What are the risks, etcetera?

We do have some promising indications from the read of our international online sales. I am pleased to share with you that we have added [Rossman Kurt] to our team as Vice President of International Operations. Ross joins us from the Gap, where he had the oversight responsibilities for the Middle East, Eastern Europe and Africa. He is our international department of one, moving here from Dubai, reporting to me and since June he has jumpstarted our efforts to define the path forward.

We are in the first stages of the assessment but early indications point to the strength of our brands’ possessions in the international arena, whether through our own organic development, strategic partnerships or franchising or e-commerce. We look forward to updating you in the future on this exciting initiative as it unfolds.

The second pillar, innovative marketing; will be discussed by each of the four brand presidents, including a sampling of the few of the TV spots and some behind the scenes footage of some of our recent shoots.

Also, Mary Lou Kelly, our Senior VP of E-commerce will update you on the many activities that she oversee, whether it be digital acceleration, or garnering deeper customer insight by identifying individual customer behaviors or more targeted communications or ramping up our loyalty program.

Our direct-to-consumer effort is the priority objective, common across all brands to create top-of-mind awareness and to maximize our opportunity to grow multi-channel customer. Multi-channel customers, as we discussed last year and you know our most important customers, as they spend two to three times that of anybody, and who only shop in one individual channel.

We’re organizing ourselves around this new reality to better serve our customers in their medium of choice. When we announced the Boston Proper transaction back in August, I upped the company goals of online sales to 20% from 15%, as that acquisition had us bumping at the lower target.

The role of E-commerce is different for each of our brands. Today, Boston Proper is available only online. Soma with its small fleet of stores needs a robust online offering to attain a national customer and certainly our national TV has supported that effort. White House | Black Market customers are prolific users of all digital medium. It is interesting to see what happens online when we do something like our recent TV commercials. Even the Chico’s customers use these online tools and their usage is growing at a double-digit phase.

We are well on track for our goal of 20% of our total sales through our website in the next several years with each brand having its own unique target and its own unique digital initiative within the brand. We will continue to commit resources to this important traffic building initiative and we will be an innovator across all medium to further distinguish and distance ourselves from our competition.

Our third pillar, expense leverage, is the foundational underpinning of our ability to maximize the potential of each brand. We have aspirations to deliver the best-in-class shared services, be it in infrastructure investment and distributions in technology to leverage our sourcing department or to leverage our human resource leadership with the development of our people across all brands.

We will be implementing state of the art tool and functionality for each of our brands at a level no brand can afford individually. All this, to achieve the sales and profit targets that we had set. Kent will share with you two of our more significant initiatives that are well underway this morning.

And last but not least, the fourth pillar of optimizing the potential of each of our four brands. Our strategic vision is for this to be a company of high performing brand. What does that require? In addition, to providing customer right and compelling fashion which really is job number one. We need to provide it when and where she wants to buy it. It requires savvy leadership, stellar operational execution and sufficient capital resources to fund our strategic initiatives. These four elements, fashion, savvy leadership, stellar operational execution and capital, this company has in abundance.

To ensure our success we’ve also created a structure that allows each brand team to focus on the true differentiator. And that is design, merchandizing, marketing and all aspects of customer relations. The brand presidents have full autonomy over these areas and can focus all of their energy here with a confidence that the Shared Service teams I just mentioned will provide the necessary services in a cost-effective and efficient and expert way.

Another key ingredient in our ability to focus and align resources is that we are exclusively focused on women’s apparel for which Chico's FAS, has defined as women aged 30 plus. Women’s apparel market totals $108 billion in the US with specialty marketing or specialty apparel approximating $40 billion. This is a space we know well and intend to continue to know it better than anyone else.

Over the last three years, the women’s specialty apparel segment has grown by 5% which contrast to our three year CAGR of 11.5%. To not only win, we are clearly demonstrating our ability to not only win, but to truly outperform and grow market care in this space even in difficult times.

In fact, this exclusive focus on women’s apparel is an overarching principle that guides our strategic path as exhibited in the recent acquisition of a very complimentary brand, Boston Proper, as well as it serves as a unifying element for our brands, all playing in the same field, but remaining uniquely differentiated from each other.

Our compensation philosophy is also a critical element to our success. Our compensation program is designed to attract and retain talented leaders with an emphasis on pay per performance.

Our business imperatives must be aligned across the organization to drive increasing shareholder value through both earnings and return on net assets over both the long and the short-term. In 2012, we further enhanced our program by eliminating options for the top executives and increasing performance based shares based on RONA, [return on net assets], appropriate targets are set by brand and sufficient compensation is at risk to align the interest of management and shareholder.

My role in all of this is to set the overall vision for Chico's FAS, to establish goals and priorities for each brand, to allocate capital to the highest priority initiatives and to ensure the non-strategic activities are managed well by our Shared Services organization.

Ultimately, over the coming years, our expectation is that our actions will culminate in achieving mid-teen operating margin by leveraging the corporate and store growth occupancy expenses through sales growth, growing each of our brand’s online sales, maximizing profitable and increase investments such as the recent Boston Proper and continued gross margin improvement through sourcing and reduced promotional markdown.

Our objective today is to share with you the considerable Promus of Chico's FAS. Our portfolio of high-performing brands with compelling products, a seasoned, savvy leadership team with huge growth for our company and a great profit upside. I am sure you will find the presentation that follows insightful.

Now without further ado, first up, our Brand President for Chico’s and our Brand President for Chico’s and White House | Black Market, Cinny Murray and Donna Noce. Cinny?

Cinny Murray

Good morning. I am Cinny Murray, Chico’s Brand President. I am the Chico’s woman. I was born in 1957. Every year, more than 4 million women join my generation. That’s 6,000 a day, more than 200 per hour, about four per minute. That’s a lot of new friends, that’s a lot of customers to love. But there is more, more beyond the obvious.

Most importantly, our women are Chico’s customers have the perspective, wisdom and knowledge that can only be had with age and the cumulated experiences of living a big life, mother, daughter, wife, friend, community member, worker, survivor; Chico’s women lives her life without an expiration date. She is transitioning into the next part of her life with ease and with grade. She defines that she is and enjoys writing her own story. She is totally engaged in life, fulfilling her passion and is not afraid of taking chances. She enjoys looking and feeling good in what she wears, knowing that style doesn’t age; it evolves. Our customers earn the right to have fun and what she wears expresses her happiness and her joy.

Walk into any of our boutiques and you will see it is more than just shopping. It is the connection that we share with our customers. It’s about friendship and relationship. The relationship begins at the door where you are warmly greeted and if you are new, we introduce you to our special sizing. Today, in our front line boutique, we ask you are you here to pick-up your slimming jean, our greetings are very strategic and are used to make her feel like she has found a new home.

She comes to Chico’s for that special piece and wants us to create a unique look for her unique personality. There is not a formula to Chico’s original design, original print, original customer outfit for each customer. As our brand position states, chic, charismatic, passionate; we celebrate these values, in our brand, in our customers and in our fashion, on trend, expressive one-of-a kind designs created to illuminate the women wearing them. We promise a personal connection with our most amazing personal service, inspiring our customers to feel beyond fabulous. Our goal is to give her the feeling of confidence, the single-most beautiful thing that any women can wear.

Chico’s had a good fiscal 2011, total sales surpassed $1.2 billion reaching a new record with a comp increase of 5% or a three-year comp stack of 17%. Three of our four quarters had more full priced sales than the prior year. Yes, our customer pullback in third quarter surprisingly coming off robust sales and our strongest spring ever in sales and gross margin dollars, but not surprising as she is portfolio sensitive.

My team reacted with speed and agility, part of my amazing machine. We cut excess inventory immediately on slow categories and repositioned our on order for fourth quarter. We leveraged the fourth quarter environment to clear excess products and as you heard on the call, we cleaned up our inventory position and began the spring season with a strong position and fresh merchandise.

I am pleased to say that we are off to another strong start in spring in Chico’s brands and I am confident that we will continue to gain market share from our competitors as evidenced in our customer file growth. Our customer file growth filed was at 7%, the highest level ever achieved.

She responded to several favorable initiatives in direct mail, TV, and in store. Over 60% of our new customers joined the brands through our frontline boutiques, our Winder designs are original and no two must look alike. Each brand President in Chico’s FAS plays a different role. I run the Chico’s brand with one vision, to be the best in class. My fiscal role is to drive cash flow that will support Chico’s FAS growth and the growth of my sister brands.

They used to call me the cash cow, seriously have you ever seen a cow with just much jewelry. Thanks heavens Pam is here and now I am the cash chic. The Chico’s brand is a well oiled machine with revenues over $1.2 billion. We deliver 14 [state sets] and mailers annually in frontline and 12 new state sets annually in outlets ensuring fresh flow and newness to all parts of the brands.

In addition we create at least one monthly exclusive product offering for our online business. No one in the boomer arena delivers the scope of fashion that the Chico’s brand does and as a result it requires highly disciplined, air tight processes. The Chico’s brand will turn 30 next year but we are just getting started. We will continue to invigorate the Chico’s brand with expanding Ecommerce, profitable store growth, social marketing and incredibly exciting products.

Chico’s growth will come from four key areas. First, our online business. I'm very bullish about this channel. We had over a 25% increase in customers through our purchasing online, not to mention those who do research online and then go into our boutique. This provides us the opportunity to both expand our product categories as well as dazzle her with new ways to create exciting outfits. You will hear shortly from Mary Lou Kelley on all our exciting initiatives.

Our second area of growth will be our expansion in real estate. Chico’s currently operates 683 boutiques with potential to grow to over 800. We will be opening approximately 35 stores this year, 18 frontline and 17 in outlets.

We will close 5 boutiques as we exit larger, less productive location, so a net growth of approximately 30 new stores. We will continue to expand into targeted small markets. This is a very profitable venue for us. They typically pay for their investment within the first 15 months and with our unique product, we become the fashion destination in these small markets.

The outlets are a very successful model for the brand. We begin earning a profit the first year that we delivered our own product. If you visit our outlet, you will see it is not a typical outlet [formula]. Our fashion offering has separated us from other retailers. We’re currently in 70 of the top 100 outlet centers.

Our final growth area will be through both new and expanded product launches. The accessory business remains a key focus for the brand. Jewelry is the number one area that brings new customers of all ages to the brands as well as the number one area, bringing our last customer back to us. We will stay leaders in this category.

I am very bullish about spring 2012. Our assortments look fantastic in all three channels. We’re passionate about prints. Over 40% of our assortment is print for the spring season in all three channels. The Chico’s customer loves prints because they are original and colorful. We design over 250 original prints monthly, a 150 for the frontline boutique and an additional 100 for the outlet division.

The Chico’s women loves color. In spring 2012, we deliver over 50 new colors to her. We have amazing color in tops and amazing color in bottoms. We balance our color with neutral and this spring, they are feminine, fluid and fabulous. The average Chico’s customer is only 5’4, but she is already voting on her love of (inaudible) and dresses and as always the ultimate Chico’s touch is embellishment, sequins beadings and bling, she can’t get enough. Complimenting all of our fashion we oh so quietly sell several key items in its fashionable Chico’s way.

Like all fashion brands, product innovation is critical. You maybe aware at this point on the success of our registered So Slimming initiative. We started in the denim area and I am delighted with the results. We will expand into other product categories by early fall.

Additionally we launched our Black Label collection in our top 75 boutiques in online. This collection is positioned for a higher volume boutiques and online spender and has far surpassed our expectation. The collections are planned in float in between our monthly state sets providing us an additional visit from our top spender. We are also testing a golf collection for our green grass markets. This is just the beginning of many product growth opportunities that exists in the Chico’s brand.

Last and certainly not least, I want to spend a couple of minutes on marketing. Innovative marketing is equally critical to the brand as innovative products. I am sure you have noticed over the past three years, the Chico’s brand look and voice as expressed chiefly for our mailers and TV advertising has gone through nothing short of a dazzling transformation. We regard our (inaudible) mailer, as the true fashion magazine aimed at a fabulous and valuable target audience that the monthly fashion magazines out there, seemed to overlook.

As for our television campaign, which we initiated in the fall of 2009 we have used them principally to bring to life the fun, color and fashion that are uniquely Chico’s. While most of our campaign since then as featured out today, now and then we like to mix it up. Notably, last holiday, as you probably remember we had an absolute class, working with a true icon for millions of women of all ages. Diane Keaton’s appearance in our TV spot, mailers, online and in our windows brought Chico’s a lot of fabulous buzz, attracting millions of existing customers and customer to be.

I like to close with the shot behind the scenes video that will give you clue of just how fabulous it was working with Diane Keaton for energy in sheer working pages and following that, we will look at one of our current 30 second spot, which perhaps you have seen on air, is a campaign that began late February.

It is also something of a departure for us, in that it focuses solely on a single product, the new So Slimming Jean and I will close with our final spring spot on accessories. These are exciting times for the Chico’s brands, enjoy.

[Commercial]

Donna Colaco

Good morning. For those of you that I have not met and I have not had the opportunity to know, I am Donna M. Colaco, President of the White House | Black Market brand. Today I am going to introduce you to our brand and I am going to walk through three aspects of our strategy that defines our roadmap for the future.

First, what differentiates White House | Black Market from other specialty retailers? Second, the growth potential for this powerful brand and third, the critical role marketing plays in support of our growth and our unique brand position.

As you may know, White House | Black Market has been in existence for over 25 years. Originally, a unique boutique concept, defined by a simple, yet effective color palette, that evolved by the 2000 into a national retail chain.

In August of 2007, I joined White House | Black Market as President and my first priority was to develop a vision for the brand and a future growth plan. Then came the enormous task of bringing my decision to fruition; building a team; establishing both design and operations models to deliver the vision; and executing the strategy in a very planned manner, that would deliver consistent and profitable growth.

While the first four and half years had been nothing short of amazing, as White House | Black Market has fully transformed itself into a dynamic growth vehicle for Chico’s FAS bringing that vision to reality. Our mission statement to make women feel beautiful has truly come to life. Who we are is defined by what we believe; that making women feel beautiful is more than just selling clothes. It encompasses understanding who she is, defining and living our values everyday and ensuring that the decision to every single associate in the business is crystal clear.

I also want to note that the transformation from being a specialty store to being a brand is not easy. It entails developing a consistent voice, a style that is unique and very identifiable, making a promise that delivers a consistently high level of execution and relationship with our customers and our associates that are build on trust and creditability; easy to talk about, but very hard to execute.

The guiding principle for everyone in the White House | Black Market organization is to always make the right decision for our customer and it’s this commitment by our dedicated teammates that has lead to an unbelievable surge in sales, profit and outlook for growth.

So that brings me to very important point number one, what differentiates White House | Black Market from other specialty retailers? Our unique approach is to provide product, service and an experience that will be an alternative to a designer brand. We are affordable, secured and provide fashion savvy women ages 30 to 55 with a platform to express their individuality and create their own unique style; neither we, nor the wonderful women we engage [outperform]. There is nothing ordinary about us.

The key differentiators are number one our product assortment is distinctive with highly designed details, with attention to quality and inner beauty that is never taken for granted. We don’t take fend. We add it for our customer with a singular and consistent eye.

Secondly, and probably most importantly, we treasure the relationship we build with our customers and we bide ourselves on our commitment to genuinely make her feel beautiful with every interaction we have. Our marketing is a reflection of our personality, a view to a wonderful, wonderful creative win that captures our women and her aspiration. It is not a mask to impress or deflect, but rather a genuine representation of our brand.

And lastly, our elegant store designs are different. Crystal chandeliers, generous wardrobing room with beautiful drapery and furniture. Our boutiques are not cookie-cutters and often times are designed to be unique to a community or specific shopping venue.

The migration of the brands has evolved over the last several years. In 2007, the brand had a very, very narrow focus with only black and white, primarily on occasion destination it was the place to go when you had somewhere special to go. We are known for dresses and special tops, but the assortment was just not versatile enough to grow and increase the reach of the brand.

My vision for the brand evolved as we spend time traveling the country, holding focus groups and talking with customers. It became evident that there was a significant opportunity for White House | Black Market to expand its collections to appeal to a wide array of women’s lifestyles from casual to work to dressy.

We truly believe that our unique approach to products, our value proposition coupled with our unique customer service would fill a niche in the marketplace for women looking for a full lifestyle brand that they could depend on and trust. After establishing the necessary team and infrastructure and much research we launched down this path over the last several years.

First, I would like to highlight to you because I know it’s a very good question; the role color plays in the growth of our brand. Our intent is to stay true to the defining attribute of the brand, simple, yet unique palette and stay just white and black. That said, first and foremost, we listen to our customer and she clearly loves the surprise of a seasonal fashion color.

In 2008, for the first time, we introduced colors into our collection. Since that very first splash of color, our customers’ overwhelmingly positive response has inspired us to expand our selection. We’ve had tremendous learning from the past few years and that fine balance of just enough color, but not too much can truly drive incremental volume. However, we remain committed to our core DNA and carefully monitor the penetration of color to every season.

The Work Kit has become an extremely successful entry into the wear-to-work business. Our goal is to design modular work wear for the busy working women. The Work Kit allows to a start with new foundational fashion pieces and then every season, she can add the novelties and mix and match and update her wardrobe for work. Think about it. One short year ago, we barely had a wear-to-work business. Today, we are a destination and it’s just the tip of the iceberg for us.

Our casual assortment was also expanded by adding value-priced fashion items to the collection and repositioning our denim assortment. The customers’ response to our full lifestyle offerings had been overwhelmingly positive as evidenced by our comparable sales results; up double-digits the past two years along with a significant growth in new customers, the increased spend of our existing customers and highly successful new store launches.

While wear-to-work and value type casuals may not seem unique at base value, the way we design collections, merchandise our stores and create customer relationships is unequal. The reason we have been so successful and the reason we will continue to gain market share is that we approach everything we do with discipline design diligence and customer focus to ensure that every aspect of our product, our service and our marketing stays truly unique.

Our product is intricately designed and the collections meticulously coordinated, so women can build head-to-toe options appropriate for work, play evening or day. The pieces are worked and reworked to create versatile outfits that are fashionable and current; never ordinary, always extraordinary.

The last but not least differentiator for the White House | Black Market brand is the relationships we build with our customers. When someone enters a White House | Black Market store, it is critical to me that the experience is positive, memorable and special. Everyone should feel welcome and comfortable in our boutique.

As a result, we have worked hard both to recruit the right people and train our associates to appreciate the lifetime value of the relationship our customers has with the brand. We are not transactional. We focus on the opportunity value of every person that enters our boutique allowing us to create interactions that go far beyond the normal transactional nature of apparel retail and into meaningful profound relationships with our customer. So to go back to the original question, how do we differentiate ourselves, by living our vision statement in everything we do. Making women feel beautiful with the collections we offer, the shopping experience we create and the genuine relationships we build with our customers, vibrant women who want a uniquely feminine affordable alternatives to designer fashion.

Next, I would like to cover our growth potential and that is something that I am so passionate and excited about. With the foundation of White House | Black Market now well established, a very clear understanding of our niche and landscape, we have also developed a highly productive and highly profitable base of boutiques. I now lead a $700 million brand, an 18% increase over 2010 with sales per square foot growing strongly.

With 12 straight quarters of positive comp sales now we are ready to accelerate our pace of organic growth. Starting in 2011 and for the next several years I am very proud to say that White House | Black Market will represent over 50% of the company’s new boutique openings. We currently have 364 frontline boutiques in 27 outlets and as Dave mentioned earlier we envision being able to grow upwards of 600 to 700 total locations in the future. Amazing and all that means is that we are barely halfway through our potential which marks an incredible amount of upside for the brand. Regarding my vision for the outlet growth you know for those of you that don’t know I have quite a bit of experience and success in the outlet business. In my tenure at Ann Taylor I relaunched their outlet business and facilitated the transition from liquidations made for outlet products. Until now our focus at White House | Black Market has been to build the foundation for the overall brands. With that foundation in place we are now ready to advance out outlet growth and fully deploy our made-for-outlet product strategy. Today approximately 40% our merchandise and outlets is made for outlets.

By the end of 2012 we plan to grow that percentage to nearly 60% and double the number of outlet stores in our chain. Our early forays into made-for-outlet products have been very well received and I am confident in our ability to design and produce high margins, made for outlet products as well as preserve the ability to use our outlets as a pressure releaser valve for frontline store merchandise that we are unable to liquidate efficiently in our frontline or online.

And as Dave mentioned now outlet center growth is ramping up. So this is an ideal time for us to look for brand right location. And since the outlet centers tend to more than 20 miles from our nearest frontline boutiques we expect a minimal crossover. Ultimately I project our made for outlet products will approximate 80 to 90% of the total mix and can easily go to our outlets growing well over 100 stores in the future.

In a moment Mary Lou Kelly will talk more about our online opportunity but I did want to mention that online is an integral part of how we intend to increase brand awareness and to be available to our customer wherever and whenever it is convenient for her. It is no secret that a multi-channel customer is extremely valuable and spend considerably more than a boutique only shopper.

Our experience will transcend every touchpoint someone has with the brand. So to just to review our three significant growth drivers for our future our frontline boutique, outlet stores and our online business. The last thing I would like to share with you today is to touch briefly on our marketing strategy. Historically White House | Black Market has been print heavy with an emphasis on luxury fashion magazines.

With the growth and importance of digital medians and the influence of social media we have evolved our thinking regarding the allocation of our marketing spend. In 2012 we will reduce our spending trends putting additional funding into digital marketing, social platforms like Facebook and twitter as well as television.

We have been successful in all of these arenas and believe that our target demographics is active and engaged across all of them. Case and point, our customer is highly engaged on Facebook and our fan base is growing rapidly. We stage fan exclusive events and fashion editorials have all been well received and all build brand loyalty and engagement. We continue to explore opportunities in the social space and as an example we will be launching a live chat session on Facebook between me and our fans later this month.

We will continue with print and are better focusing our advertising to influence the greatest number of customers in our demographic. Strategic partnerships with magazines like our current effort in Marie Claire have been highly successful at driving brand awareness and acquiring new customers.

We ran our first test of TV last fall for the very small (inaudible). We were so pleased with the positive impact the commercial had on new customer acquisition that we are running a more significant slate of TV this spring. The commercial started in the week of February 20th and runs for five weeks.

I will close with the commercial. But first I want to summarize for you our commitment over the coming years to continue to drive sustainable growth and profitability. We are targeting to achieve sales of $1 billion in the long term by number one; differentiating ourselves in the market place with our unique products and a broader lifestyle appeal continuing to deepen our relationships with our customers, growing our reach through frontline boutiques, outlet expansion and online and raising the brand’s awareness and connections with our customers through creative and innovative marketing and social media.

Now to the commercial. In the fall of last year we introduced television into our marketing segment. And I must say our Feel Beautiful spot was small part of reason for an amazing second half performance. Not to mention the gratifying and very significant growth in our new customer files. This season beginning several weeks ago we gave you the brand new spot that to be honest they all laugh at me but they still give me goosebumps and they I have seen it at least a couple of hundred times, I would say actually like several thousand times by now because I keep replaying it on my [Kego], but it has created a huge amount of buzz in the fashion industry as well as with women who regularly in the evening, I repos on Facebook of women who said I have never heard the White House | Black Market before I like saw your television commercial. So it has been great.

And it stars an incredibly famous and fabulous model named Coco Rocha who actually started her career as a dancer and it is been quite a sensation out there in the blogosphere and social medias.

It is a celebration of our work kit and has been running on network prime time shows, indicative programs and cable network. I think you will agree, it’s a showstopper, an example of how we are extending the excitement of White House | Black Market in our customers overall lifestyle and in this case the office. Please enjoy it.

[Commercial]

Mary Lou Kelly

Good morning, I am Mary Lou Kelly Senior Vice President of E-Commerce for Chico’s FAS. Today I would like to acquaint you with three areas of focus for Ecommerce that will continue to grow and differentiate our amazing brand. First it goes without saying that expanding online sales remains the key component of our brand’s overall growth strategy.

Second the new and emerging marketing strategies will contribute to that growth including personalization mobile and social marketing to name a few and third we are committed to building most amazing personal relationships with our customers, an extension of our most amazing personal service to drive customer loyalty and truly differentiate Chico’s FAS.

One of the reasons that I joined Chico’s was the recognition that there was tremendous upside in online growth inherent in our brands whatever their life phase. Importantly casually met upsides had already been prioritized under David’s leadership and what I bring to the table is the expertise to deliver the unique potential of the digital space to create compelling online shopping experiences that facilitate customers’ interactions no matter the channel.

And as you can see in this slide, online sales growth has been significant with a compounded annual growth rate of 40% from 2008 to 2011. E-Commerce’s role as a shared service supporting multiple brands enables Chico’s FAS to do several things. One, recruit top flight talent, leverage vendor relationships, share best practices across all brands and a greater investment in technology and online capability.

We don't mean to leave the impression however that our focus is one size fits all. We also balance the unique needs of each brand to meet its goals of serving fashion-savvy women and enabling them to shop and connect with our brands and with each other in innovative and meaningful ways.

And to do so my team also has expertise dedicated to and immersed in each brand. Using technology we can foster deeper customer relationships leveraging our industry-leading loyalty data bases. Proof points are our penetration of multi-channel customers had doubled since 2008. A multi-channel customer spend over twice the amount as a boutique only customer and multi-channel customers spend over five times the amount as an online customer.

Our focus therefore is building a best-in-class customer experience in four key areas; online marketing, site improvement, brand alignment and seamless experiences. Highlights include; in online marketing in 2011 alone we implemented over 40 new programs including customer reviews, a best reviewers program and several new email initiative such as personalized welcomes, shopping bag abandonment and browsing marketing email.

In fact Chico’s FAS has named a [Chita] champion by our email vendor [Chita mail] for innovation and programs implementation and for good reason we know that online marketing on average contributes to over 2.5 times the sales in the boutique versus online building and supporting a most amazing personal relationship.

For example when we send an email campaign for buy search term, for every dollar in sales that it generates online it contributes to generating $2.50 in sales in a boutique. I would like to highlight just a few of the programs and the value that they add to our customers’ experiences starting with customer reviews.

For Chico’s, here's the Zenergy Cora Animal Swirl Vest and one of the reviews that went with it, Great vest, bought the Vinny Carlyle Cargo Crop to go with, a perfect match, add a white shirt and you have the clean summer look. She is giving outfitting advice as core of the Chico’s brand and the Chico’s customer.

For White House | Black Market here's the striped mid-length dress and the review says it all, don't be afraid of stripes. They listen to each other, it carries more credibility than if we wrote copy the red, don't be afraid of stripes. And in the second example a beautiful top, I would have never thought to try it on, but the sales people convinced me and I loved it. We found that when we launched customer reviews for boutique purchases within just a few weeks, nearly 50% of reviews came from customers who bought products in a boutique and then went to the website to review the product, therefore encouraging multi-channel behavior.

Here is one for Soma and the Vanishing Back bra and the last line in the review sums it all up. I am about to order four more just like it.

Coming out of reviews, we launched a best reviewers feature, starting in the Chico’s brand which will be extending to the other brands. The response to our initial outreach to our best reviewers, inviting them to be featured was simply overwhelming. This program not only recognizes the contributions of our best reviewers, it also gives other customers the opportunity to follow this reviewer and not surprisingly, she is among our best customers and this program deepens our relationship with her.

Turning to site improvement as a backdrop, here is the current White House | Black Market homepage, featuring the use of rich media to better communicate the breadth of the brand experience. In 2011, we made enormous competitive strides in website improvement and feel that our best-in-class websites are providing our customers with a great shopping experience. The most significant areas of improvement was a complete upgrade of our check-out process.

The experience is now easier and more convenient for all customers and for registered customers, the check-out process can now truly be two clicks and you’re done. We also integrated several personalized recommendations in the checkout process on the product pages and throughout the websites, again building most amazing personal relationships based on deeper customer insight and targeted personalized communications.

Another key focus area was implementing features that would help customers better virtually touch and feel products. Videos that show how a dress move or where a skirt’s hemline hit bring these products to life. Let me show you examples of Chico’s and White House | Black Market. Here is Ann wearing the Valerie Crochet Vest and as you can see a short simple video shows how the dress will really flow and fit in person.

[Commercial]

And for White House | Black Market here is the Matte Jersey Wrap Dress. With the video the customer can better see how beautifully the dress moves and how flattering the fit will be. For the Soma brand we developed how to guides in the voices of authority. The merchants who developed the products and who can best explain what a given bra does, how it has developed and how to wear it.

Here is a snippet from a Vanishing Back bra video.

[Commercial]

For brand initiative we opened a unique capabilities (inaudible) initiatives. For example behind the scene features that engage the customer in the worlds of our brands such as this video snippet from the current Chico’s book.

[Commercial]

(inaudible) in a seamless shopping experience. Customer use our websites, not just to research, view and buy products but also in 2011 over 400,000 customers checked product availability online for a given boutique and nearly two million customers used our website to fins the boutique location convenient to them. And I repeat, also use our fulfillment capabilities to locate and recollect and ship free of charge, directly to the customer, products that may be out of stock, but not carried in the given boutique but that are available online.

Because of the growth of online sales many of you were asking why we continue to invest in bricks and mortar locations. The size of phenomenal returns we achieved in our new stores, Chico’s might be unique in that we find that our investments in any of the channels results in increases sales in all channels. For example, when we open a store, customers who were previously online only, end up as valuable store customers and they also typically spend significantly more online after the store opens.

This is been all consistent with our plan, our strategy is to fully integrate our shopping experiences across the company to maximize our brand, sales potential. We want her to [look for] our brand wherever and whenever she wants.

Looking forward, we believe there are new and emerging marketing strategies that will fuel growth. These game changers are real and they have the potential to further enhance our most amazing personal relationship with our customer. The first of these is personalization through customer insight. Everything that we know about her will play a role in how, when and what we communicate and offer to her, resulting in increased engagement, frequency, loyalty.

And it could be as subtle as the differences between a new customer and a passport customer. A welcome versus the [old] and product category versus reinforcing passport benefits. I cannot overemphasize this. We believe that personalization will increasingly be a differentiator for all of our brands.

The second area is mobile. Mobile is now just how we lead our lives. In the future, we will have online experiences based on customers’ behavior and needs. Some traditional, be it a website; some mobile, some traditional, be it a website; a tablet, a phone, or who knows what in five years, and different plans for their [front robe] or all of these fronts of communication however, will enable personalized, relevant, information delivered to her, in near real-time throughout her entire shopping experience.

Turning to social marketing, you will notice I do not use the term social media. The life between social media, marketing and commerce are being erased. Social media will continue to be a powerful marketing tool and even in its nascent state has become a key element of our most amazing personal service. However, we also believe that S-commerce is real and here to stay and that the bottom line is that, our customers expect to access the consistency, across multiple touch points and that will result in deeper real engagement with our brands.

So what is the most amazing personal relationship. Well, when I first started in retail and direct marketing a lifetime ago, we mailed the customer catalogue through a book and in the Chico’s world she generally went to a boutique to make a purchase. And when I started my career in E-commerce and what seems like two lifetimes ago in digital years, life was still pretty simple, websites were for the most part simply transactional sites.

Today, there is a new customer reality. We still send her books. We also send her e-mails several times a week. She uses Facebook, Google and her website. She browses the blog and other destinations to do her research in shopping and ultimately she decides where, when and how simply to purchase in a boutique or online.

In other words, she wants what she wants, when she wants it and where she wants it. If a brand doesn’t know who she is and how to best serve her, she has tools to find alternatives. She also has family, friends and others like her who offer more credibility than much of the advertising aimed at her.

So what is optimum for her and a successful brand is a more efficient, effective blending of traditional and digital media, appropriate for her desires and behavior, which places enormous importance on how well we know her and integrate that knowledge in to our marketing program. Marketing program, messaging and a customer contact plan is more personalized, relevant and immediate to her.

How and why is Chico’s FAS uniquely positioned in specialty retailing to push the envelope, in building most amazing personal relationship? Fortunately, our over 90% customer capture rate provides a hugely rich database of knowledge about our customers. It goes well beyond simple demographics to enable greater and greater personalization.

Importantly, our DNA of most amazing personal service has built customer trust in our brands and our significant investment in data infrastructure and technology we believe create a significant competitive advantage and help us give her what she wants, when she wants it, where she wants it.

So a bit about product opportunity online. We are also able to meet more of our product needs through standard assortments exclusive to our online offerings. These opportunities vary by brand and include products that are appropriate for a limited number of boutiques in addition to online. Products that were through online sales were products where there simply isn’t enough space in a boutique to carry them.

For example beyond a certain lengths shortfall and size extensions in those product lines in Chico’s we saw the Black label line online and in boutique, an exclusive boutique. In White House | Black Market we are often able to think color into more silhouette and in Soma online led the brands expansion into swimwear.

To sum it up the customers came forever, the way she sees the world, the way she saw. And our ability to utilize technology to maximize the potential of e-commerce is a key driver of our brand’s overall growth, brand differentiation and building most amazing personal relationship, with efforts I am proud and excited to leave. Thank you.

Kent Kleeberger

Good morning everybody. We remember some of your faces out there. This morning I am going to talk about our Winder distribution center also known as Project Aurora and then I will give you an update on (inaudible). So the Project Aurora is in really two parts. We are going to spend roughly about $30 million in our two distribution centers up and running. So the first portion of it is DC-1 (inaudible). DC-1 is the original distribution center in the Winder campus and what we’ve done there is that we have expanded the pick lanes which will facilitate Soma to stay a little bit longer through June of this year, so we would move them over into DC-2.

And then we are also improving efficiency by investing in fluid unloading as well as truck-to-induct and also establishing cross dock capabilities. In addition to that, we are investing much, a great portion of the building which will increase our capacity for zone skip and pooled distribution.

Zone skip basically represents set of inducting packages into the FedEx delivery system [outlet]. We can actually load trailers with significant volume and put them into other FedEx or BSO. And full distribution is a method by which where we send product from the distribution center out to stores to an area that’s the stores bring on freights such as, Southern California (inaudible).

Really the guts of the whole Aurora Project is really Distribution Center-2 and essentially what we are doing there is we are spending a significant amount of money in automation to support the direct-to-consumer business which will also support both migrating the Boston Proper business as well as will earn replenishment for our apparel brands out of DC-2 along with Soma business. So basically we’ve designed configuration really to support our growth for actually the next few years.

So now I am going to spend some time going over a few visuals. This particular picture, the first picture is really the DC-1 receiving area, there is a lot of conveyor, a lot of movable conveyor here and what this does this allows to have break flexibility to cross dock as well as the product directly over to shipping. And the reason cross dock is important for two reasons, that’s how distribution centers gain their efficiency instead of putting products back in the warehouse and having it brought back out, but also since we will be running replenishment for our apparel brands out of DC-1 we have to, DT-2 rather, we have to stance the product out of DC-1.

The next picture is just another visual, the Transverse truck un-loader, so you can see that there is a lot of automation that’s taking place in DC-1.

This last slide for DC-1 represents the shipping area. We have what we have powered extendible conveyors and we can actually move these conveyors right into trailers and directly load within the trailer, so we gain a little bit of efficiency there. The other part of the project is that we are also adding zone skip and pooled distribution capacity as I mentioned earlier.

So now a little bit about DC-2. This is pretty exciting because this is basically about a 300,000 square foot warehouse if you looked in there about six to eight months ago, there was really about 200,000 plus of vacant space and now I can pretty much assure you, it is all occupied.

This picture here in the middle part is what do we call the pick towers, there are three pick towers. This facilitates the direct-to-consumer business and also replenishments to the apparel businesses. There are approximately 30,000 SKUs capacity for each level, roughly 40 units a cart, so we can put about 1.2 million units in each of the three levels. You see that spiral conveyor also known as the affectionately the water slide, what that does is that basically conveys pick modules from the pick towers into the major routing starter.

The next slide is really the key and it’s just a little bit hard to see in back, but in the middle of the slide, you can see there is one long diagonal, looks like bunch of plates together. That happens to be our cross belt sorter. We selected what I saw was best of breed, the Beumer cross belt sortation system. Beumer is the company that’s based in Beckum, Germany, near Düsseldorf and they have literally hundreds of installations. And so it’s part of our due diligence to select the process; we went to a number of their installs as well as went to the factory over in Düsseldorf.

And so this sortation system is basically an 843 lineal foot electrical configuration that circulates and there are chutes that rest on either side of the belt of products on the either side of the chutes.

On each end of the sorter are five induction platforms. And you can see those that are outlined by blue and that’s how project gets inserted into the sortation system, prudential delivery to chutes.

And so the next slide is really the chutes themselves. Again, on either side of the cross belt sorter. It has two chambers and we can either fix direct-to-consumer products and put it in and send it up to the packing station and we have a huge packing mezzanine that rests over the electrical sorter or we can put it in the sorter for the processing, I should say cartons and put into totes.

The last piece in terms of the DC-2, this is the shipping diverts. So as you can see, again, it’s highly automated. We’ve also added additional capacity to do just like in DC-1, additional zone skip and pooled distribution capacity.

So now I would like to move on and cover global sourcing update. So there is really four pieces to what I would gather as the global sourcing strategy. I am sure all of you are aware about; we have said it before about the China migration. Our next focus is to lower average unit cost. The other part of our strategy is the rebalancing of the supplier mix to support both the China migration as well as lowering our average unit cost. And then last piece I’ll give you an update on our Asia Technical Support office.

So on the next slide what this is intended to depict, this is a pie chart on the left represents our breakdown by country of origin at the end of fiscal year 2010, I don’t have the 2011 numbers yet, but we haven’t really say, but you can see that China represents a significant portion and that’s like 64% of our product for fiscal year 2010 were sourced out of China. Our goal ultimately is to hit roughly 40% to 45% that you can see in the pie chart on the right hand side.

I think the benefactors in terms of the migration will be India, Indonesia, Vietnam and perhaps even other western hemisphere points of origin. So we are making significant progress I can tell you that for the fiscal year 2011 I would say we are on track in our migration effort.

The next piece is lowering average unit cost, and I best can summarize lowering average unit cost by really consolidating the vendor base, you know, meaning the more. We are also taking a look at leveraging purchasing power on fabrics while we have been doing that for couple of years, but also taking a look at trim and components.

In fiscal year 2011, we are started seeing a little bit about $7.7 million of savings just on the consolidation in these areas. The other key set we’ve looked at is also First Sale savings where we are partnering with select FOB vendors where they basically have to complete and really show up that cost sheet, so we only pay duty on the actual cost of the fabric and the trim and the actual cost of produce and so we’re not saying duty on overhead and all the other ancillary thoughts. So we have some very great vendor partners. We delivered a $3.7 million fiscal year 2011 and we are looking to expand that next in the future.

And then of course the other part as I said which is going to lower average unit cost (inaudible) migration and I think the thing to keep in mind is that the reason we have sort of switched our focus that used to be IMU, but there is a difference between the retail selling price and the cost which with which we procure the product. But since the sourcing team doesn’t control the retail, their focus is shifted to really focus on average unit cost with the idea of course to lower cost unless of course there is pressures in terms of elevating product for either elevating the product or and changes the mix which impact the overall average unit cost.

The rebalancing, the vendor mix, this chart again a few charts here in 2010 represents where we were in terms of all of our vendors and then the chart on the right is our goal for 2014 and I think all of you are very well aware that two of our major vendors Mast and William E. Connor have been part of our business for quite some time.

If you look on the chart on the left, Mast about 20%, William E. Connor which we talked about for quite a while it is about 4% and on the right you will see that we have targeted Mast for roughly about 25% of the business. Connor is going to be roughly about 10% to 12% of the business and we are injecting one another strong vendor which is yet to be named and so again the whole idea behind that, when you become meaningful to the few, it helps you on flooring your average unit cost and I had a conversation with someone earlier in today.

The other part that concerns me from a sourcing perspective isn’t just about the average unit cost, it’s about making sure you have production capacity, as we've had some instances where we've had to fight over production capacity. So again if you can become meaningful to a select few that can be sure of your ability to fix that thing. The last piece is the China Asia technical support office. Essentially we opened that just last week on March 1st. We've got three people on the payroll so far. This was done in cooperation and partnership with (inaudible) so we currently use to do factory inspections both from a compliance perspective as well as a product and inspection process.

Our primary goal is to create margin improvement and efficiencies in the supply chain and the reason this office is important because part of our migration strategy when you are going to other country you are obviously going to a new factory and you need a technical support team that's over there, that's sort of like a jump team, that can help on board those new suppliers and new factory.

And then over time we expect the team to also focus on sample developments which hopefully will improve efficiencies and reduce time in the supply chain in terms of getting samples ready for the approval process over time as well as provide opportunities to reengineer product while it is in production. So we are very pleased to open this. This is not a sourcing office, but it really is more of a technical support office on board, our suppliers and services (inaudible) especially when we are trying to produce new products and new (inaudible). So I guess with that I think Dave is going to make a reappearance. So thank you for your attention.

Dave Dyer

Well, we’re moving in to the home stretch now and I am especially pleased to turn the things over to Laurie and [Tiro] who are doing such terrific jobs that someone in Boston Proper.

These are our two youngest person to really represent our future growth engine. Before I turn the podium over to Laurie, I wanted to provide a bit of context.

On the screen here, we have pictures representing Soma’s brand positioning since inception. To say we had a few search and stops is an understatement at best. As many of you know, Soma was started in 2004 as a sub-brand of Chico’s, hence the original name Soma by Chico’s. The look was brushy and dramatic and the target customer was the Chico’s customer.

In 2006, we dropped the buy Chico’s and moved towards more of a commodity or basic product, again, not very exciting. 2009 though is my favorite. Functional and technical as demonstrated by our models sitting on top of a washer and drier. Obviously, it was time to move on.

When we look back, we actually changed the brand positioning four times in the six years before Laurie’s arrival. When my tenure as CEO began in 2009, a couple of things were apparent immediately to me. First, at 70 stores, we were in retail versions of purgatory. We were too big to manage stores individually and way too small to meet purchasing minimum to gain any sort of leverage at all.

Second, the brand had gone through so many iterations, we didn’t stand for anything. At least nothing we could be proud of and third, if we were to succeed, we had to kickstart our brand awareness. As I have said before at that point it would have been easy for me to make the call to close Soma.

Nobody would have second guessed the opinion or the decision, but I saw a huge unique opportunity. Intimates is a $10 billion domestic market with no other meaningful specialty retailers besides Victoria’s Secret. The launch by vision for Soma we needed to gain scale quickly both stores and online we needed leadership to redefine the brand positioning and drive awareness, enter LVB Laurie Van Brunt who had outstanding experience in the intimates business. So Laurie what have you been upto for the last year and a half. Good.

Laurie Van Brunt

Thanks Dave. For those of you I have not met I am Laurie Van Brunt President of Soma and to answer Dave’s question we have been doing a lot during the last year and a half. First it was absolutely critical to reposition the brand. Today we are specialty brand offering beautiful and sensual lingerie loungewears and beauty. We pivoted from a brand that offered functions with no emotion to offering beauty with passion. We have elevated to a modern fashion aesthetic with a well defined assortments.

As Dave said Intimate is a $10 billion market. So before we discuss Soma’s strategies I want to give you a vision where we see how Soma fits in the market place. As most of you know women’s lingerie is a very unique market with Victoria’s Secret dominating the young women’s category followed by national chain and department stores with lots of women’s boutique filling the balance.

The opportunity for Soma is women over 35 who are entering a new life stage whether they are just getting married or having kids. A woman who wants a specialty boutique environment with personalized service and who has grown beyond Victoria’s Secret and the woman who is looking for an additive fashion, sophisticated assortment.

To win over those customers, we have focused the organization on three main strategies. First, rapidly expand our boutique space to build scale and reach as many potential customers as possible. Second, these are broad destination through driving fashion and innovation and providing personalized expert service. We are committed to being an innovator with exclusive bra design and we have a history of success, most notably our Vanishing Back bras.

In addition, we are incorporating the phenomenal service, a model from our sister brand and adding the element of broad expertise. Simply put, I am confident that when we get a woman into our boutique we will convert her to a Soma customer.

And third, brand awareness needs to be built to drive in new customers, after testing marketing vehicles in 2010, we started to launch TV with dramatic results. I will talk more about our TV’s success later.

Our goal, is for Soma to be the home for sensual and luxurious lingerie, loungewear and beauty; for real women, of any shape and size, and like any good home we will welcome her with open arms. Our resilient brochure show that when we build awareness as well as change a woman’s past loyalties we become her destination of choice.

As Dave mentioned earlier, one of our major focuses since my arrival is getting some of the scale as quickly as possible. We have accomplished this through our pop-up or fast store growth strategy. This has allowed us to test a variety of locations, demographics, boutique sizes and layouts. Today most of our frontline boutiques are in the fast format.

With these learnings in hand, Soma is now transitioning to favorable longer-term lease arrangements. As such, the last Soma pop-up will open in the first half of 2012. We will have approximately 40 new stores in 2012 and we will convert approximately 20 fast stores to traditional frontline locations and end the year with about to 210 to 215 stores.

We now understand what it takes to open successful boutiques and we can be confident that every boutique we open or convert will add to the company's profit in the very near term. One of our most important learnings from studying Soma’s history is that our boutiques mature over a longer timeframe, than many other specialty retailers.

To orient you to this chart, this shows the years across the bottom and sales relative to year one sales across the left. Each line represents the growth in sales for stores opened in a given year. As you can see, our data shows that both peak sales continue to ramp up at a double-digit rate, even in years four and five.

As we gain brand awareness and convert customer loyalties, our results also show our oldest stores are the most profitable stores and currently, we consistently generate store level profits by the second year of operation or in some cases even the first.

So during 2010, we realized the need to intensify our marketing effort to drive new customers to the brand. We waited until the time was right, our repositioning efforts were talking hold and we had enough national store presence.

At that point, we decided to fund national TV and TV was the game changer for us. In the fall of 2010, the magic behind Soma’s commercials was our focus on solution, featuring our narrowly defined Vanishing Edge panties, and Vanishing Back bra.

That small slide of commercials drove an immediate reaction on a national level and generated over 20% comps in the quarter.

In 2010, we elevated our image with commercials that portrayed both beauty and sophistication and introduced Soma’s new brand position Beautiful Begins Underneath.

Our spots featured more broadly the Vanishing Back, full coverage wire-free and online collection of bras. These were also a huge success, generating over 20% comps for the year.

We’re very proud of how far we’ve come in the last year and a half. Many of you have seen Soma as a project, eight years in the making. I am please to say that the current version of Soma reflects my vision. In 2011, sales grew to a 180 million with half the growth coming from new boutiques and half driven by comps.

And the topper is we drove a 700 basis point improvements in our gross margins both from refining our selection, the depth of our buys and from more effective promotional activity. These actions led to three huge achievements in 2011. We had record sales and margin rates. We were well profitable in every single quarter of the year and not only were we cash flow positive for the full year, we hit this goal a year ahead of schedule. As we discussed at our last analyst day we will continue to see sensational momentum in 2012.

And finally we have become known as the holiday fascination, destination for gifts, including pajamas, robes and beauty products. So what’s next? I am really excited about what the future holds for Soma. As Dave mentioned in his introduction we had confused so many customers in the past. Now, our strategies are working and they won’t be changing. We will build on our progress achieved and continue to listen to our customers to reach new milestones.

I believe that the key to our future success is to be laser-focused on our three big strategies, rapidly expanding our boutique base; becoming a broad destination; building awareness to drive new customers.

Next, I will address our future plans for each of these strategies. First we have already discussed our success in defining the right store model for SOMA. We believe that our repositioned store model is brand right and scalable. We will continue to grow stores square-footage through new stores and conversions, at approximately our current pace into the foreseeable future.

Second, bras and ties. Bras are one of the hardest categories in the industry to change a women’s loyalty. But once we do change her loyalty we can lock her in as a lifelong customer and we are clearly up for the challenge. Because of this focus, our bras have been driving our overcall comps. So you come to hear those things, it’s all about bras.

And as far as brand awareness in 2012 it is crucial that we take TV to the next level with beautiful and sensual creative and bigger and better media buy. We are continuing our brand strategy of Beautiful Begins Underneath with even stronger focus on bras and reaching a broader customer base.

Before we turn to our commercial, I want to tell you how excited I am to be leading the Soma brand to its full potential. Today, we are seeing strong returns from our investment, the business is continuing to pick-up momentum day-by-day and we see a very bright future for the Soma brand.

So without further ado, I would like to show you our new Vanishing Back average coverage and Ravishing Plunge Push Up TV commercial.

[Commercial]

Dave Dyer

We have come a long way; and now on to Boston Proper. I am equally excited today about the prospects of our newest sister brand Boston Proper. As I said on the day that we announced the acquisition in August, Boston Proper is a perfect fit for us. Boston Proper provides a great opportunity to further grow market share in the women’s 30 plus segment.

As you are going to hear from Sheryl’s presentation, we are reaching a new customer with lots of potential for growth and beginning in 2013, the first test of brick-and-mortar locations.

Overall, our priority is to accelerate the growth of Boston Proper’s online and catalog business by leveraging the expertise we have in Chico’s FAS, be it digital marketing, customer analytics and of course our state-of-the-art systems. The integration process is well underway and we are on plan to capture and deliver expected synergies and marketing circulation sourcing among others over the next several years.

As we’ve stated, Boston Proper will continue to operate under Sheryl’s leadership and her talented management team in Boca Raton. Prior to assuming President responsibilities at Boston Proper, Sheryl held many senior positions at the Gap. The Boston Proper business is strong with a historic operating margin of approximately 18% and it will be meaningfully accretive in its first full year.

Culturally, we are also a very good fit, as we share a common foundation, focused on building lifetime relationship with customers, offering high quality fashion merchandize and fantastic personal service.

Here is Sheryl to tell you about the Boston Proper story.

Sheryl Clark

Thanks Dave. I am excited to have the opportunity to introduce and share the Boston Proper brand with you today. To start, one question I am often asked is what are the origins of Boston Proper? While in case you didn’t figure it out, we’re not from Boston and we’re not very proper.

In 1992, Mark, Fore & Strike invited Tiernan family, acquired the Boston Proper name and the customer list in an asset purchase. Michael Tiernan had a vision of an aspirational lifestyle brand for affluent active baby-boomers. So with the list and a name for the company, the journey began.

The first new Boston Proper catalog was launched in 1994, with the focus on fashionable, sexy apparels and accessories, merchandise using aspirational, on location, photography. The original tagline was, ‘If you have the audacity’. In the past three years, we’ve evolved the tagline and our new tagline is, ‘Wear it like no one else’.

Through the years, Boston Proper has grown to be a nationally recognized, direct-to-consumer, specialty retailer, as better priced, distinctive women’s apparel, accessories and shoes, with the focus on quality, style and age appropriate fit. Our differentiated and exclusive product assortment works together to give our customers a complete head-to-toe look.

Boston Proper market is merchandized directly to it’s customers via distinctive catalog and online at bostonproper.com. Dramatic photography and a sensuous aspirational product combine even create eye catching catalog and a seamless online experience.

So when I talk to you about our purchase, Boston Proper exists for the women who knows sensuality is universal and style and there is nothing of age; seriously, feminine, be relative in the fact that femininity is one of the most important assets.

Boston Proper provides an effortless shopping experience, one that transports to world with scale and endless possibilities. A world where the self assured female forces embodies are celebrated and elevated.

What is our unique product and brand differentiation? We differentiate our brands with sensual aspirational photography and design that literally takes our customer with and it creates an emotional connection both for individuality and femininity.

Boston Proper has differentiated its product offering within the marketplace by providing on trend modern style with age appropriate fit. When we talk to our customers, [North] comes up as the place to shop for apparel and accessories when they are not shopping at Boston Proper.

So what they love about us is the added attraction for them, the added styles for her and she can get that complete head-to-toe look in one place without shopping through a whole store and digging through to try to find out what that head-to-toe looks like for her.

So now let’s talk about our market opportunities around who our customer is and how we will grow. Boston Proper targets active affluent women, 35 to 55 years old. This 20-year age span encompasses baby boomers and generation next. Our customer is typically college educated. She is married. She is very fit conscious. She lives in an urban or suburban setting. She has ample discretionary income for personal purchases and leisure travel. Our sweet spot is 45 and that has stayed consistent year-over-year. We focus on making sure we stay relevant to our niche and we do not age with this customer.

How will we grow, we will grow by maintaining a unique product positioning and assortment. [Inaudible] 0:01:00.2. We will grow by delivering inspirational marketing and we will continue to evolve our online presence. When I joined Boston Proper, the first thing I spent time on was defining our vision, mission and purpose. Then using this as a foundation, I developed the Boston Proper proposition.

So let me take you through the Boston Proper proposition. Boston Proper’s unique perspective is guided by five words. These words keep us focused from product development and selection to layout and designs and when we are working on marketing and event planning. Five words, that’s what my team focuses on every day. What we sell, how we market and the women who love us are clearly designed through the Boston Proper proposition.

Boston Proper is daring. Boston Proper encourages self expression that inspires fearless exploration resulting in inspired, unexpected solution. Boston Proper is distinctive. Boston Proper stands apart from the competition and beyond trends offering a unique and refreshing point of view to women who believe what makes you different, makes you beautiful.

Boston Proper is sophisticated. Boston Proper interprets the (Inaudible) of current trends and style through a worldly fashion point of view through an affluent and cultivated customer. Boston Proper is sensuous. Boston Proper celebrates the power and beauty of women in every facet of the brand. Beyond feminine, Boston Proper delights, indulges and gratifies the senses.

Boston Proper is self assured. Dressing the woman who dares to express herself Boston Proper confidently leads the way as a trusted source for those who seek individuality, quality, style. With those five words, guiding the brand, we profiled who the Boston Proper women was. She is stylish. For fashion inspiration she is the one her friends look up to as she gladly leads the way forward showing how to keep it sophisticated with a touch of a sensuous, appropriately fitting with an unexpected mix of (inaudible) and when it comes naturally to her she wears it like no one else.

She is independent, beyond runways, fashion magazines and leading trends, the Boston Proper woman wears it and styles it her way. After all what makes her different makes her beautiful. She is cultured and curious. She has developed her own signature style, she enjoys mixing up her look always evolving. She is on top of the latest trends across all borders, taking what works for her and appreciating the rest.

She is fearlessly feminine, she relishes the fact that femininity is one of her most powerful asset. There is nothing more exciting than a woman taking risk, going for it and daring to win. While dressing to accentuate her curves and indulge her sensuality, what makes her even more provocative is her utterly thought-provoking ideas.

In the last part of the Boston Proper proposition is the merchandize. These words guide our product selection. Age appropriate, we edit through trends to ensure our fashion is right for our demographic.

I am constantly challenging the team, would a 45 year-old wear that because I am the customer and I am 45, pretty easy to guide those decision-making processes.

Flattering, our styles are flattering on her figure. Our fit is not for a 20-year old. Our customer does not want to wear clothes that 20-year olds wear, her body is different, her fit requirements are different and therefore we cater to her needs around the fit.

Colorful, our customer loves color. She wants to stand out. She wants to be noticed. Our clothes must have an easy casual style that fits her perfectly with her natural casual lifestyle. Unexpected details, the products at Boston Proper must have unexpected details. When she opens up that package that comes in the mail, she needs to be delighted and we work really hard to ensure that happens with every person.

And our assortment needs to be versatile for her numerous occasions that she has in her life. Boston Proper proposition is key to making us different in the marketplace.

So now I am going to take you through our processes. It all begins with great unique products. Then we pull it off together for a seamless customer experience that includes the catalog, the web online email and social marketing. The catalog Boston Proper mails a new catalog to current and prospective customers every three weeks.

We have two seasons. Spring, summer which is 60% of our sales and fall holidays which is 40% of our sales. Each season cumulates with a sale catalog which allows Boston Proper to leverage proven winners at promotional prices to a larger circulation of prospective customers. In 2012 we will mail 16 regular priced books, two best of Boston Proper sale book and two clearance books. These events are designed to captivate the customers’ imagination and to drive sales.

The website. Since 1999 our website has offered the customer a fast reliable easy and seamless shopping experience while complimenting the brand’s look and feel. Bostonproper.com currently represents over 75% of our sales with consistent double-digit sales growth and traffic growth year-over-year. Bostonproper.com continues to lead the industry an above average performance in all key performance metrics.

There is two on the screen that I want to share with you. The first is our average online order value. $200 leading Ecommerce retailers have a medium of $139 with Victoria’s Secret at 125, Alabina at 139 and Gill at $360. Conversion, BostonProper.com conversion rate 5.8%, the median rate is 3% with [Gill] at three, Victoria’s Secret at five and Alabina 8.2. I am confident as part of Chico’s FAS, we will continue to lead the market in online key performance metrics as we learn from each other and share best practices.

E-mail marketing; we typically send out three distinct e-mails weekly notifying our customers new arrivals, fashion-must haves and much, much more to keep them engaged. E-mail marketing continues to drive revenue and customer engagement with above average results in all key industry metrics. These e-mails generate over the industry’s standard in revenue and over the industry standard in average sales per e-mail. We currently have over 900,000 names in our database and our transactional e-mail welcome, thank you for your purchase, abandoned cart and order confirmation are drawing a higher than industry responses and lots of sales for us at BostonProper.com.

On line marketing; Boston Proper continues to increase its investment and pays third in display advertising to target new and existing customer. Incremental demand at full price in this program is significant growing at over 50% per year. BostonProper.com also has a growing affiliate marketing program which drives new customer acquisitions and receive purchases at regular price. This program generates significant revenue and is also growing at over 50%. Our online marketing has increased brand awareness and attracted new customers to the brands. Over 25% of our demand now comes from customers who discovered us online.

Social marketing; the company launched social marketing in 2009 through Facebook and currently has over 40,000 extremely engaged and loyal fans. We actively post videos on YouTube of catalogue shoes titled Boston Proper TV in the [Proper Style] channel. Fans and customers can watch their favorite models on the set, behind the scenes and it gives them a more intimate, engaging real- life experience with the brands. Facebook, YouTube and Twitter have increased interaction and engagement between Boston Proper and its customers, allowing for a stronger, more emotional connection and instant customer insight.

Our focus on our redefined brand proposition has resulted in an assortment of fashion merchandise that drives sales and customer royalty. Since, I joined Boston Proper we have successfully grown revenue at double-digit rates from $87 million in 2008 to $125 million in 2011. We are efficient, flexible, deeply rooted in a culture that drives performance. Dealing more with less has allowed us to manage expenses and leverage infrastructure. At the same time, we are growing sales. We've more than doubled our operating margin percent with an operating profit rising to 18% prior to the acquisition by Chico’s FAS.

I am so excited to be part of the Chico’s FAS team. By leveraging the capabilities of Chico’s and their resources, we at Boston Proper can accelerate the brand’s strategic progress and capitalize on growth opportunities to a degree that was not previously possible.

And based on my experience, there are two things I will tell you, you can count on me for. Brand building and making money. And from that experience, I’ve seen that, once you’re good at those two things, everything else is in strong place, building shareholder values, delighting the customer, building your team and attracting talent.

So in closing, I want you to know I am so comfortable and confident in our ability to take this brands to the next level. Thank you very much for your time and your attention.

Pam Knous

Thank you Sheryl. Good morning everyone. We have covered a lot of ground in our presentation this morning. My objective is to review our recent financial accomplishment, the key point from today’s presentation and finally, provide a summary of how all of the pieces cohesively stick together, laying the foundation for the potential of Chico’s FAS.

So, first I would like to highlight our key financial accomplishments. Over the past three years, the company has realized a dramatic turnaround in results, going from a loss of $0.03 per share in 2008 to income of $0.84 per share in 2011.

This improvement in earnings has been driven by consistent, high single-digit comp, averaging 8% over the three years, in addition to overall store square footage growth of 17% for a combined three year sales CAGR of 11% or 10% when excluding Boston Proper.

We have simultaneously achieved strong gross margin results reflecting high customer approvals of our fashion offerings and marketing initiatives. And of equal importance, our commitment to discipline expense control improving SG&A leverage by 730 basis points over the same three year period. These exceptional results have generated substantial positive cash flow.

On this slide we have provided a proxy of cash flow by simply adding depreciation to our operating incomes for the last three years. Our profitable growth has generated positive cash flow, which we then use to self fund investments in our business.

Our philosophy on the use of cash is multifaceted. Importantly, we believe that it is prudent to maintain strong liquidity. Currently we plan to maintain at least $200 million in cash and marketable securities. When we look at uses for our cash, our priorities are; first, to invest in and grow our business; second to return any excess cash flow to shareholders.

In the past three years we have invested $273 million for capital including stores, market enhancing technology and distribution automation and $230 million for the acquisition of Boston Proper, an investment that was already accretive in its first full quarter, as well excess cash of $263 million was returned to our shareholders in the form of share repurchases and dividends.

As far as our philosophy for investments in our business, we have very robust processes for ensuring, we achieve overall significant positive returns on our capital. Over the long-term, we expect over half of our capital to be invested in stores as this represents one of our highest returns. Because of the growth of online sales, many of you are asking why we continue to invest in brick-and-mortar location.

Besides the phenomenal returns we achieved in our new stores, Chico’s FAS might be unique and that we find our investments in any of our channel have resulted in sales increases in all channels.

For example, when we open a store, customers who were previously online only end up as valuable store customers and they also typically spend more online after the store opens. This is all consistent with our plan. Our strategy is to fully integrate our shopping experiences across the company to maximize our brand sales potential. As Mary Lou said, we want her to shop with our brand wherever and whenever she wants.

Finally, to ensure executive management is well aligned with our shareholder objectives for meeting capital return, approximately half of our executive incentive comps is at risk and tie to return on our net asset metric. Commencing in 2010, based on our Board’s confidence and the company’s ability to generate excess cash, the Board instituted repurchase and dividend program committing over the long-term to returning excess cash to our shareholders.

Just recently, both of these programs were renewed. The dividend rate was just increased by 5% to $0.525 per share for shareholders of record on March 12th and in late November our Board authorized our second $200 million repurchase program of which $175 million was available for repurchase at the end of the year. The Board believes that the return of excess cash to shareholders is a good governing principle.

Now turning to some of the key points you've heard this morning, I first want to recap our pillars of growth. First, organic growth that delivers our trademark most amazing personal service. Second, innovative and highly creative marketing plans built around highly definable and desirable target audiences. Third, expense leverage through best-in-class shared services. And fourth, optimizing the potential of all four brands.

As Dave commented on our quarter four call, we plan to open at least 120 stores per year for the foreseeable future with about half of the stores reflecting our ramp-up of new store growth for White House | Black Market over the next three years. Now that you have heard Donna’s vision for growth, and have a better appreciation for the potential of this brand you will know why we are confident to take this step now.

While we do not disclose specific store economics, I will share with you that our Chico’s and White House | Black Market stores generally payback their initial investments within 12 to 18 months and Soma stores typically average three to four years due to the longer maturity profile Laurie discussed earlier.

Cinny and Donna both commented on improvements in store sales productivity, making great progress from the low point in 2008. To comparably measure our performance at Soma, we look at a pro-forma version of sales per selling square feet, adjusted for any excess square footage as a result of our pop-up strategy. Based on this pro-forma analysis, Soma has also made good improvement in productivity.

Finally, I want to again highlight Dave’s commentary regarding the opportunity for our brands on an international basis. We are very encouraged by the findings today.

Innovative marketing, our second pillar for growth was discussed by each of Brand President’s and Mary Lou. Nobody has said it yet today, but our commitment to dynamic and leading-edge marketing as a driver of brand relevance clearly sets Chico’s FAS apart from it’s competition, not only in the past, but continues to do so today and into the future. Just as television has accelerated our sales, we are constantly on the look out for new and emerging pathways to market.

One of our major accomplishments over the last several years has been our ability to maintain good cost discipline without negatively impacting the growth of our brands. One of Dave’s first initiatives as he took the reins as CEO was to bring the cost structure in line with sales and to develop a culture of mindful spending.

Today, we are realizing these benefits in our shared services structure. It allows us to lever the sheer size of our organization to cost effectively implement best-in-class processes and systems and most importantly to higher class caliber talent. We generated 730 basis points of SG&A leverage over the past three years and we expect to gain additional leverage in 2012. This focus is now engrained in our DNA and the ability to leverage sales is a key component of our march to a mid-teens operating margin.

The last of our four pillars for growth is optimizing the potential of our brand. To do this, we must first recognize where each brand is add in its stage of development and then put in place the talent and resources to achieve its full potential. I believe the very exciting aspect of the Chico's FAS portfolio, is that each of our brand is in a different stage of development.

First, let’s take Chico’s. Chico’s is the most mature of our brands. The Chico’s brand has been in existence since 1983 and clearly became a leader in its targeted demographic through its maniacal focus on its customer for desire for color and pattern, a comfortable fit and unique stylish head-to-toe outfitting.

Chico’s experienced phenomenal sales growth since its inception culminating in record sales in 2011. We believe there is strong growth potential remaining for this brand through demographic growth, expanded assortment and innovative product. And under Cinny’s leadership, it generates huge cash flow, more than sufficient to fund her own brand’ growth that do also fund that of her sister brand in the portfolio.

The Chico’s brand has successfully evolved and continuous to reposition itself to be trend right and highly relevant to its customers. The Chico’s brand serves as an important and growing demographic in the FAS portfolio, one in which we are committed to further growing market share.

White House | Black Market, as Donna just shared with you has recently repositioned itself to a full lifestyle brand and is now ready for accelerated growth. The necessary foundation has been built, the over-arching strategic imperatives are well understood. Her team is in place and the capital necessary is available. Growth will be achieved through boutique expansion, Ecommerce initiatives and delivering on Donna’s visions for made-for-outlet, increasing brand awareness through marketing such as our recent television advertising as well as all forms of digital media are critical components to success for this brand.

In contrast Soma is still in the earlier stages of its development with Laurie’s brand positioning just starting a year and half ago. Laurie’s focus on becoming a broad destination has resulted in sales growing to $180 million in 2011. Now with great products, growing customer loyalty and a store base for which scale is not a penalty, Soma is gaining greater customer reach and brand awareness with a potential for over 600 stores and a dynamic online offering. With a significant improvement in financial performance that we experienced in 2011, we believe now more than ever that Soma has huge upsides going forward.

And now to Boston Proper, the newest member of the Chico’s FAS family. Boston Proper is neither mature, nor a startup. It’s current direct-to-consumer business is well established with a fiercely loyal customer base and sales of a $125 million in 2011 and strong profitability. With the acquisition, we believe we can further drive by leveraging the Chico’s FAS infrastructure and tools to greatly enhance Boston Proper’s brand awareness and customer reach.

We also now have the opportunity to test a new brick-and-mortar concept. That story is yet to unfold. In either case we believe the use of $213 million of our excess cash to make this acquisition will drive new customer growth and market share for Chico’s FAS.

To wrap up then, we believe managing our brands as a holistic portfolio is key to our ability to optimize the potential for each of our brands. After our meeting today, there should be no doubt that the Chico’s FAS executive team thoroughly knows how to optimize the potential of each brand and deliver meaningful growth into the future.

In summary, our objective today was to share with you the considerable promise of Chico’s FAS. Our portfolio of high performing brands with compelling products, a seasoned, savvy, leadership team with sustainable growth and profit upside. Thank you. Here's Todd.

Todd Vogensen

Can everybody hear me. Looks like lunch is just being set up now. What we plan to do next was take a little bit of break and then get lunch. Later we get back and get settled and then we would go into Q&A. So also presenters that we’ve had today will sum up on stage and I will go through the Q&A at that point. So I know a lot of you have a lot of questions. Be patient. Once we get lunch and get back, so we will get a chance to more than amply to address all of your questions. Alright? And we will be back in probably 15 or 20 minutes.

[Break]

Alright we are ready to go on the Q&A session. [Brian], we haven’t even started and you are already raising your hands. So we have Jennifer Atkins in the back who has the microphone in her hand. When you have a question first raise your hands and she will hand the mic to you so that you can ask it and be heard over the webcast and we will go from there. Thank you.

Question-and-Answer Session

Unidentified Analyst

On the BHAG goal for [13] of a $1.50 and also on the limitation on couponing. And I wonder if you could give us an update on those two thoughts and finally any initial thoughts on what brand might be mostly likely for international for brands. Thank you.

Dave Dyer

That’s three questions in one there. So we will start and try to divide this one up. So let me take the BHAG goals. As I said again and you saw the chart and we lost $40 million, that’s $0.03 a share back in 2008 right as I guess and for 2008 right as I was coming in and 2009 I set the goal for the company to return to our historical performance and our best year for 2006 where we made a little over a $1 a share. So that is where the $1 a share came from. It was something that I believe that having done a number of turnaround that you need overarching goals. You need stretched goals. Generally to do things incrementally will not get you out of the situation you are in. You need to think differently, you need to do things differently and if I would have set a goal, say gee I would like to be profitable or I would like to be $0.50 or $0.75, which would obviously have been a good result in the next three years. I think that it wouldn't have caused us as distressed and think differently as much as we did. So that's why I set those goals.

It became obvious to me as we started moving into it that we had a real shock of hitting that $1 a share. So I came up with another long range goal, down the line, that was the $1.50 a share. Again big, very audacious goal, a stretch goal to think that let us think differently and act differently and do things differently as we move forward.

Obviously my ability to set big, very audacious goals that we achieved was not so good. However, as you saw the earnings that we had today I think that our success over the last three years is nothing short of remarkable. So, I guess when you look at those goals, and as I said back then they were not guidance, they were nothing more than internal goals that I set to stretch our people to do things differently and to do more.

So if you are looking at this guidance going out there it is not. And if you want to say is that off, then take it off, but we will continue to have internal goals. I just, I am not going to talk about them as publicly as perhaps I did before. A long-term. big stretched goal, I think is important in a company to have people act, think differently and to stretch themselves and to do things differently they would do within this incremental process.

Our results I think have at least moved in that direction. Now there is another part of that question which was couponing. Kent you are the coupon master from last year. You want to take that one?

Kent Kleeberger

Yeah. I think it’s fair to say we have made some progress on that. If you recall we had two primary focuses. One is that we had a significant amount of stacking for multiple coupons that were taking place at wrap desk in our stores . We have come down on that and have done some exceptional reporting and worked with the brands in order to focus on those stores and have made some inroads in terms of eliminating some of the stacking, although some of it still takes place.

I think, it wasn’t necessarily to eliminate coupons. What we are really doing is really looking at richness that they offer and I think White House in particular has made some good stride in terms of lowering the offer or should I say raising the threshold at which point you get the discount.

David Dyer

Great. And the last question is international and I will take that, as to which brands and where, obviously we are still looking at it? The brands that are more mature for us at Chico’s in White House | Black Market, so those will be the first that we take international. Although, I think over time there is room for our entire portfolio to go international and I wouldn’t say that we are much more than in the planning stage now, where we are out investigating.

We are looking a potential partner, potential market, potential locations and we will have more on that as we come into probably this time next year. We’ll have more analysis on that. Yes Adrienne, I’ll get back to you.

I am sorry. Phil, you’ve got one.

Unidentified Analyst

I guess, Pam said a couple of times, the mid-teen operating margin goals. So, just wanted to drill little more in to that. You didn’t talk about any synergies for Boston Proper yet, which we thought we’d hear about today. Curious about, what kind of level of productivity that you would expect that the business is to get to a mid-teen operating margin?

And then maybe diving in to Soma, is it the gross margin or the SG&A that prevents the company from making money at current revenue numbers?

David Dyer

Pam, you want to take that?

Pam Knous

Okay. I can take all three of those. I am the ones here who can take notes. We have not specifically quantified the synergies for Boston Proper. We have included our planning assumptions around Boston Proper, which included those synergies. So, that was something we made reference to in our fourth quarter report. But we have talked frequently about the areas for synergy, whether it be in leveraging the many opportunities that we have as the shared company in trading systems, processes, clearly sourcing to be a big area of opportunity for us and we said that we’re well on our way on those synergies actually. The fact that Boston Proper was actually accretive in its first full quarter to let you know that things are coming together quite nicely for us.

As far as the mid-teen operating percent, that was something that Dave specifically went through the components of that. A big part of that story is leveraging the sales. We’ve got this wonderful shared service structure that supports all of the brands, allows us to make investments in a very cost effective way and so clearly each time we grow sales we have the ability to leverage our infrastructure. Our brand teams are well built out and so as they talk to you about their growth plans, those will be things that we will be able to leverage as well.

And specifically as regards to Boston Proper we did share with you that their historical operating margins is already at 18%. So clearly it is a positive contributor to that target and last but not least for Soma. Soma is still in its infancy and it really has opportunity I would say all the across P&L. Laurie and her team has just made very significant strides in the last couple of years and we see good upside really all across the board and clearly growing the top line is going the be the biggest avenue for us there.

Unidentified Analyst

You talk about the inventory for the back half of the year whether we should about be thinking about it in terms units or dollars and if there is any major difference there and then for Sheryl, if you can talk about the changes at Boston Proper that has been made to date, about how your resourcing or the major facet of the business and what changes are onboard for 2012.

And then lastly back when you acquired White House | Black Market you had given us a product margin differential of about a 1000 basis points. Just to give us some perspective on the opportunities at Soma and Boston Proper, can you do the same thing and give us a perspective of the Delta in those margins and what was that equal to?

Dave Dyer

Well, I wasn’t here in 2003. I didn’t join the Board till 2007. So honestly I don’t know what was said then. Donna also joined in 2007, so I really can’t go back that far; I just don’t know what to tell you.

Pam Knous

No, we’re not temporarily disclosing margin by brands.

Dave Dyer

Yeah, right okay.

Pam Knous

And as far as inventory you know what we said was that we intend to have our inventory growth to be reflective of our comp stores sales assumptions and our square footage assumptions and so that’s the planning assumption that we have for inventory in dollars.

Sheryl Clark

Boston Proper, first thing you want to talk about a few things that are, I think there is a few areas where we've seen it, I think first of all, really the partnership with the shared service team that they talked through and paper and in postage and co-mailing and in shipping, all of that has been an opportunity for us to leverage their expertise and their bigness in the industry and really help us in that area.

We've also had a great opportunity from a people standpoint. We've got a couple of people on our team that came from Chico’s FAS, who are now a part of the Boston Proper team. So really helping us leverage the integration. I think the biggest thing that we’re looking out is integrating our system so that we will be on the Chico’s FAS systems and IT systems and tools and not be a big area that we are focused on.

From a sourcing standpoint, its kind of the same thing, we are leveraging their opportunity so massive, probably one of the biggest opportunities out there for Boston Proper and we are definitely engaging with them in opportunities to source our products.

Unidentified Analyst

Okay, for Dave and Cinny, I was wondering if you could talk a little bit about the third quarter fiscal ’11 when you had a great August and you invested upfront in (inaudible) was up a bit in September and October; I am wondering the learning from that and how you’ll handle that situation in the future?

And I think for Pam, there is a lot of talk today about marketing expense, about marketing expenditures and the opportunities for further market penetration? And I am wondering if we should be expecting that line item on the expense side to increase?

And lastly on Boston Proper, I was wondering if Sheryl could talk a little bit about possibilities of new product development, new category development opportunities in that regard and also a little bit more about your design and merchandising team? Thank you.

Dave Dyer

Well, let me just set it up for Cinny just a little bit. First, I think when we look at the plan, the plans that we do are really one that we all discussed that we work and we buy into. When you look at the spring momentum that the Chico’s brand had double digit comp. If you look at June where we had a 14% increase in Chico’s, July of 11% increase in Chico’s and we are planned for fall to have a mid-single digit plan up.

I don’t think that was a huge step. That was our plan, because business has been so good and the first half we accelerated some inventory to come in to support our sales, but the mid-single digit plan didn’t seem like a loss. Business obviously fell off the cliff as got to August with the financial concern and the world financial markets our customer pulled it in.

But what I wanted to say about Cinny and her team, it is not that we will get in to those problems where you have fashion brands, you are always going to have a season or so that you miss. The real thing this does is how do you get out of those problems, how do you react?

And if there is anything I want to tell you, I am very proud of the way she and her team had inventory liquidated in season. Fashion is like tomatoes. It doesn’t get better with time. She liquidated in season and she got the right breakdown in terms of business. Nothing short to spectacular and her business is moving forward the way it should again.

So with that, maybe you would like to say a comment or two on it, but I think she and her team did a fantastic job and I am very proud of what they did.

Unidentified Analyst

Great. I want to clarify my question. Was it not met as a criticism in any way shape or form; it was something that happened and I am wondering if you could talk about what the learning will permit and how you might handle again in the future? Thanks.

Cinny Murray

Yeah. I think as I alluded to in my presentation, there are moments when this customer becomes portfolio sensitive. It’s not consistent and part of our positioning in today’s presentation was to set up my role. I am not going to be the brand that’s going to take the risk and get out there high risk; it’s cash flow and the learning is for us, our ability which we were able to show that we had to move quickly and with speed.

And for me then, as I look at inventories go forward, I am going to be very, very conservative and make sure with the size of the brand that I am well in front of understanding and we now have another customer research that we are confidently talking to who would understand where our spending power is.

But as I said I am very pleased with how we starting playing and we were able to reposition fourth quarter. So I think it’s the agility of the Missy brand and we will be able to move that quickly and with a speed. That answers?

Dave Dyer

And you have another question embedded in there somehow I think?

Pam Knous

Well, she also asked about marketing expense and we did give planning assumptions around SG&A and so clearly that is embedded in there. But you know as an organization we are committed to leading-edge marketing; it’s a key component for brand, driving our brand, awareness for brand and so that will be an area that we will continue to evolve and we’ll provide color on it as appropriate as we go across the year.

And then Sheryl, new items for BP?

Sheryl Clark

We continue to look across product categories for opportunities for us to go deeper. And the ones we last holiday was really accessories and shoes which we went after in a big way in spring and summer and continue to go after and that was a great win for us.

As I commented, dresses continue to be successful, so we’ll continue to expand the dress lines. And then we listen to our customers, we really flex based on what we are hearing; if she is about pants then we are going to show her a lot of pants; if she is more into denim, we will do what’s right for her and what we are seeing from the sales and play that forward.

And then from a design and merchandising team, the Boston Proper merchants actually work directly with the sourcing and product development teams to develop product for the company. They use outside design firms. We don’t have internal design team and we have outside design firms and we source product direct to factory. And that team is just amazing, because so they are so in touch with the customer and so focused on what she wants that their whole focus is to get the right product and all of her events for her.

Dave Dyer

Before we go on for one second, I started talking about Cinny and the team and I said it in my remark, I believe I have the absolute best team in specialty retail. These guys are nothing short of phenomenal. There are couple of others in the room, if I could have Lee Eisenberg who is Head of Creative Strategy, Executive Vice President; Sara Stensrud who is our Executive Vice President of HR. I can see Rochelle, you are there in the back. Rochelle is Senior VP of creative, Gary King who is Senior VP of IT and Jen Atkins who obviously you know is the treasurer. Did I miss anybody else in the room, who is that? (inaudible). Okay. Next question and I think there is some up here in the front too when you get the microphone up yeah.

Unidentified Analyst

Thank you. I have a couple of questions. I wondered if the Chico’s brand and the So Slimming technology, are you going to expand it into skirts and dresses and anything else and I won’t ask all my questions at one time?

Unidentified Analyst

Okay, and then I know your store associate training is always evolving. I wondered if there were any callouts to add any of your four brands and then also when will you be offering the Soma product at Boston Proper, thank you?

Cinny Murray

I am going to take the So Slimming. We will expand another product categories in the fall, I am not in a position right now to talk about the categories, but my thought would be that we would roll this into several areas because she has had such an amazing response to the fit.

Donna Colaco

I can certainly speak on behalf of White House | Black Market. You know our associate training has been an enormous focus of George Reider who many of you have met in the past and you have been there and done store visits. He has done an incredible job, overhauling his organization over the past four and a half years.

You know associate training evolves. I don't, we have structured training but as our customer evolves and as we've grow and we open in new markets, it’s necessary to revisit it on a constant basis. I do, I feel very proud and I am confident that we are unequalled like my sister brands in our customer service because it is first and foremost on everyone’s mind, it is that woman that walks through the door, but we look to hire the right, it is not a in-stone program that we have.

Laurie Van Brunt

And regarding the Soma and Boston Proper, we are still looking at it and we haven’t determined when we are going to be doing that. For our service, for our stores, we are fortunate to be able to promote associates from Cinny’s brand last year and she really has done an amazing job of upgrading our talent and helping our results. So next year is really about training and really elevating our service to the next level.

Dave Dyer

We’re going to substitute so we can get to front, work the front and the back of the room. We will pass the level here up here. Jen, you can work the back of the room and we’ll ask John to work the front of the room with questions and we will go back and forth. We will make sure we get everybody who has a question.

Unidentified Analyst

Is the new team part of the reason why you’re increasing it so much of it. I was just curious what the backdrop is behind that situation and I am assuming it’s a good thing, but just curious about it. And then, for Boston Proper for Sheryl and Donna actually, given the success of the Work Kit, is there an opportunity or do you see an opportunity to do something similar like that at Boston Proper with that kind of focus and attention?

Kent Kleeberger

So, from a sourcing perspective, you know, early [Mast] informed us so with the transaction that was going down for those of you that may not be aware is limited, sold a 51% interest in their third party sourcing business to us, [Sycamore] partners. And you know, [Mast] which you saw the chart was 20% of our unit volume in 2010. The good news is that and Mast has a number of offices, whether they’re in Hong Kong, whether they’re in Shanghai, whether they are in South Korea, we were able to keep the team that was dedicated to Chico’s pretty much intact. So, we feel very good about that. The only issue from [Mast] perspective is that in a typical limited environment they’ve got three years to get up limited network and limited systems in there and where their offices are, but we are very confident that we’re not going to miss a beat.

Sheryl Clark

Just going to address the quick work issue. Really for us, work is not part of the lifestyle of our target customer. It allows us, one to be differentiated with the (inaudible) but two our customers’ work is very different. It is much more of an easy, casual lifestyle for her and so her work clothes are very different than the work kit clothes and so we have tried it a couple of times with the great pencil skirts and all that. It is not what she comes to us for. So I would rather focus my efforts and delivering to her what she needs from us and what differentiates us in the market place and let Donna make tons of money on the work kit.

Unidentified Analyst

Hey guys a couple of questions. First you talked about the payback period for a couple of your brand, can you maybe talk about how that has changed over times specifically over the last couple of years. Second gross margins, I know you don’t want to talk about it by brand but if you think about how they are all stacked up against each other. What direction should gross margin move in just based on mix shift, based on how you are growing, based on which brands are growing faster and then last I am just curious about the profitability of E-Commerce versus bricks and mortar? Thanks.

Kent Kleeberger

Yes so we don’t talk about E-Commerce and profitability separately. So let me not get into that one but in terms of paybacks and how they have changed over the last of couple of years clearly as sourced, productivity has improved or ability to generate that payback quicker is better and as we have gotten better information where our real estate works and the ability to really pinpoint our pro forma, that has helped us out quite a bit here, so no numbers but generally headed in the right direction.

Dave Dyer

And there has been a fundamental change in the way we look at real estate. You know when I joined as CEO in 2009 the real estate area was really bonus and incentive based on how many stores they open, not on how many profitable stores they open. We have changed that. There is a very, very robust discussion about every single location. If it can’t make the right return, then we will not open the store. I would rather not open the store, if it doesn’t have the potential to make the right long-term return and to open it.

So believe me, there are plenty of locations we have and we will turn down those that does not meet hurdle rates and our performance criteria. Obviously stores that are opening now are targeted above where our current operating profit is. Is there another question in there, out there?

Gross margin. In all of our brands, actually with the exception of Boston Proper, have very, very similar margins where they have high margins. Boston Proper we‘ve said before has slightly lower margin but also slightly lower SG&A. I believe overtime you will probably see Boston Proper look more similar to our other brands with the margin actually increasing not only due to sourcing but due to the store efforts that we have and likely their SG&A will come up a little bit as well.

So you will see us continuing to grow margin. Margin obviously is one of the big areas that we look at, to get to that mid-teen operating percent. We have to do a lot of different things and one is continue to grow margin. Yes.

Unidentified Analyst

Thanks. I was wondering if you could talk about the three to four year payback on Soma and is that an actual payback period calculated from the’04, ’05, ’06, ’07 openings and how long those openings took to pay back or is that an updated payback estimate, based on the stores that you've opened here over the last two to three years and when you expect them to pay back?

And then secondarily, what's your minimum return on capital for all of your projects whether the are real estate or otherwise and if your project don't hit that minimum threshold would you then be inclined rather to return that capital to shareholders? Thanks.

Pam Knous

Yes, the three to four year payback for Soma is based on our most recent stores for that current information. We have not publicly given out the minimum thresholds. There actually are some infrastructure type projects that don't necessarily have a positive return in many respects. They keep you from going negative if you don't continue to invest in your infrastructure. So, clearly our objective over any period of time is to deliver a return that exceeds our cost of capital and I think if you look at our results we clearly have been doing that. So I think that was the question that she asked.

Dave Dyer

Yeah, and I think when you look at [round it], that certainly speaks for itself that we are continuing to invest wisely. What she said is a lot of our infrastructure. We've talked about the infrastructure in our direct-to-consumer and replenishment distribution center in Winder, Georgia. She also didn't talk about the IT center that we put in up there two or three times capacity that we have now. That’s done in parts, so hopefully you guys would get a chance to show you that sometime in the future. It’s really a very interesting thing where all these investment are done for the long-term and we’ve built our infrastructure and our system that will last us for many years and obviously they take some time to pay back. But I can tell you, based on the way we used to run the business and kind of the dark ages of systems back in 2009, there is no way we can grow our business the way we are if we just didn’t have the infrastructure supportive. Can you imagine planning 2000 stores on excel spreadsheet? Impossible.

Okay, next question. That one, okay.

Unidentified Analyst

I am wondering if you could expand on the outlet strategy. It was mentioned a few times in different presentations. Obviously, it sounds like you’re expanding it as well as expanding the made-for outlet store merchandize. So what's behind that? Is it different merchandize? Are you going after different customer and what are the implications for margins from that expansion?

Donna Colaco

I guess, I will take it. Its White House margins discussions in terms of growing the outlet business. I will break it down. Starting with the customer and outlet. Certainly from a past experience, there are series of customers that shop at outlet stores. You know, there is, I call it aspirational customers who love to own a piece of brand but can’t necessarily afford it at full price.

There is, I call the transient customer because it’s an enormous brand, actually brands build there from an international perspective. These outlet shopping is heavily penetrated by international shoppers. So, here we have [cartloads] of customers that may take the opportunity to shop at both venues, I am sure we do but I believe we’re heading and will continue to head a different customer base and again some of that also, I believe will work in the favor of White House | Black Market in terms of brand building piece of it.

The made-for-outlet products and the implications on margin . You have to look at it in more than just a made-for-outlet product. The return on the outlet stores is as you are all very aware of that there are plenty of retailers and that’s one very, very highly profitable outlet division and it comes from the cost of the actual running the stores themselves but the margin implications have not been full liquidation and running stores that are four-walled profitable and pay for themselves is nothing but upside for the brand.

So as we continue to grow the MFO portion of it we are not facing any growth in abundance of liquidation in those channels. So the stores themselves will be profitable, which adds to bottom line. So you can look at it from margin perspective or you can look at it from a bottom line stand point. And really I think the outlet win is the bottom line profitability of the stores.

Dave Dyer

Any other question? Is there another part to that one, no. Next question.

Unidentified Analyst

Hi great I got three questions for you. The first is that continuing on the operating margin target, it requires expense leverage. I am just wondering of the shared services and I am just wondering what comp CAGRs needed for Chico’s and White House combined and over how many years, in order to get that expense leverage to get those mid-teens margin target?

The second question is on Soma. If you take the $180 million in sales I know you have a lot of pop-ups in there but that is roughly a million per store. How should we think about sales per store, in order to get that break even?

And third is on white house. You now have complete lifestyle offerings. How happy are you with your category penetration? What categories have more opportunity to grow and then if you are willing to share how big are the future of penetration and sales and how big they tend to be?

Pam Knous

Right. You know I think that we have said that our mid-teens operating profit margins is something that we’ve set in our sights for the next several years. We haven’t given the specifics for the time and really the main initiative that we shared with you today are important and key to drive us to that point.

So with Dave’s culture of mindful spending, clearly leveraging expense is important, but all the other things explained and this as well driving the top line executive marketing, better sourcing, automated distribution centers absolute every element of our activities are geared towards driving for improved operating margin.

As far as any additional specifics on Soma sales and its level of sales per store, we are not providing any information on that. And Donna if you can?

Donna Noce

Obviously, I am not going to talk specifically that category penetration. But, and as far as whether I am happy, I am never happy with anything; and that’s probably keep growing. I never feel like we’ve maximized to understand, what’s happening with the brand which is absolutely been wonderful is as we broaden the lifestyle of the brand, lots of the levers starts change with that, because you’re attracting a lot of new customers, you are servicing parts of her life that you’ve never serviced before and by the way the customers that we did have don’t have to go anywhere else.

So we have been learning over the past year, it’s been an enormous learning curve I believe for all of us which then I have to complement my team as well, because they just move so during past, we’ve been able to get the wind, keep the wind under our sales in terms of adjusting our category penetration. I think we still have opportunity to take a look at our casual part of the business.

So what casual means to White House | Black Market; its not a key item business, but certainly to keep looking at that and expand that more casual lifestyle for her, so that you know again we don't get overly penetrated in any one lifestyle, but flex with her and I think if she evolves we’ll continue to evolve the penetration as well.

Our dress business which is a very big part of who we are as a brand, that continues to evolve because all of a sudden we are not just about excess location dresses, but she is buying her work wear dresses, her more casual dresses from us, so we watch the dynamic actually of that business change quite a bit as we've added the lifestyle.

But I am pleased, beyond being pleased with this journey that we’ve taken into aggressive lifestyle, because it takes a lot of build credibility in categories and we’ve built it really fast and I believe it comes wholeheartedly number one from our customer service and our ability to really engage with our customers and new customers when they come to the door. We deliver on quality and we still maintain phenomenal, phenomenal value to the customer.

Dave Dyer

Great, next question. Have we exhausted the question? Here's one, right here, we've got two, one there, one back there, okay, go ahead. Okay, go ahead.

Unidentified Analyst

Just a quick question for Donna and for Cinny; have you guys seen any change in the average profile of your shop rating stores and is there any variance to your, as you said Donna you talked about adding new acquisition customers, is the profile different of that shopper that's coming online versus the stores?

Donna Noce

As of anything that we’ve heard recently, there is really not, the customer profile is still very much within the demographics that we described, you know, from an age perspective. So I don’t think there has been any major shift towards attracting more of those women that are looking for the destination that they can feel comfortable in. So, not a big shift in demographic.

Dave Dyer

Okay. We have another question?

Unidentified Analyst

Yeah, and just Dave, to you I guess. Just to follow-up on the operating margin goal, once again, I know, you said expense leverage is really the biggest driver to get to that level, but when I look at your gross margin, 500-600 basis points today below peak levels just a couple of years ago, it just seem like with all the initiatives you guys have on the table, sourcing initiative, obviously Boston Proper, would you be willing to quantify, is it 100 to 200 basis points opportunity down the road that you see in that line item?

And just to remind us, what kind of AUC pressures that guys experienced in the back half of ’11 and should we expect some tailwinds for the back half of ’12? And just trying to understand, I think, you guided gross margins down on the year and obviously inventories are in good shape and we should get some benefits from cost as well?

Dave Dyer

Yeah, that’s obviously several questions, so hopefully you’re getting them. But I didn’t say that we’re expecting to do this only through expense leverage. Obviously, I think this year our operating profit which we just said was first time little over 10%, 10.5% or so and if we talk about getting to mid-teens, that’s even say 15% that’s just 500 basis points. So we can’t do it all through expense. We need to do it through margin as well.

And I think that we need to have a lot of things play to reach that level, but certainly margins will be a major, major contributor and there are several parts of margin. One is through initial markup and the maintain markup is the most important and what that effects is how promotional markdowns we take and how much couponing we do and there in itself is the leverage. I mean right now we are in a very tough economic environment which has required us to be more promotional than perhaps we normally would be.

Donna has been able to wean herself and her brand off of it and as a matter of fact we have a lot less promotions than we had two years ago. She actually even uses the coupons a lot less than she did two years ago. Hers mainly are clearance markdown.

On the other hand, when we get into the Chico’s brand, it’s been very competitive; you have some of our major competition that has had very tough times and it’s been obviously boiling away, while to maintain market share we have to be competitive and we have.

So margin is a big piece, expense leverage is a big piece, but growing volume I think that what you are seeing is we have had tons of investment in this business. Again, when I go back, in 2009 we were in the dark ages; right now we are state-of-the-art. We have been making investments in infrastructure to support these businesses over last three years and honestly we’re not going to have lot more investments to make there.

So that’s one the ways that with additional volume we start to leverage all of the things that we put in place and actually I think we’ll be able to continue to reduce our expense. There was another part to those questions, you want to pickup?

Pam Knous

Yeah, there was a little bit about AUC, and actually for the back half of last year, our teams as well you know here today and forcing team has really did a pretty good job of mitigating cost increases which several other retailers were struggling with. What we shared in our fourth quarter call is that we are seeing kind of a low-single digit increase in the first quarter. That will be something that we need to cycle, but again we had the expectations that our sourcing team would be able to mitigate the majority of that as we move for the back half.

Unidentified Analyst

Dave I am wondering if you could remind us what’s embedded from a top line in your EBIT goal, does it include you getting you to the 20% of revenue on line and what was the sales productivity in your leader stores look like in order to get to that mid teens EBIT goal?

Dave Dyer

Yes and higher. Okay.

Unidentified Analyst

I had a question regarding Boston Proper, I think you mentioned that we will see the first pet stores may be in early 2013, can you share with us any early thinking regarding market, size of the prototype and any other metrics that you are willing to share with us, okay?

Dave Dyer

Obviously when we do, it’s a test. We want to make sure that we really understand it. So the stores are in her markets in South Florida, West Palm beach, may be down to Fort Lauderdale in that area and they will be over here on the West Coast. Those will be the first stores that will open up in 2013. We want to play a very close attention to it. We want to be able to live in the stores everyday, see what's working, what's not working and then based on the success of our initial test, obviously the great thing about having a direct-to-consumer business is it really ten points, where your concentration of customers are and how you can successfully rollout that store.

So we think that is going to be a big, big opportunity for us going forward and we are excited about the test. Sheryl has been very hard at work with a store design firm. We are actually looking and doing a lot of research, talking to customers actually going into customer’s homes and videotaping them and their closets and seeing what they are all about and taking all of that and putting it into our store design. We want to do something that's a little different, a little unique and I think we are well on our way.

At the same time we have a direct-to-consumer business that's great in itself and we think that over the years can certainly double from where you see it today. So you know although we are doing stores, we want to grow both channels at the same time because as we've seen there's tremendous synergy between the two channels. Yes.

How large will the stores be? They will be on the smaller size, most of our stores now are if you look at Boston Proper, it’s going to be 2200 to 2300 square feet and then I think Chico’s is our largest at 3300 and 3500, White House is somewhere just a little smaller than that and Soma is in that same as Boston Proper down in the 2200 to 2500 square feet.

Unidentified Analyst

I wanted to follow-up. You said at the outset you were a collector of brands. What your appetite might be down the road for additional M&A activity and also for Cinny with the issues of your competitors, are you gaining any traction with some of these customers of these other competitors in terms of building new businesses?

Dave Dyer

What I said is we’re a cultivator of brands and that’s something if you know a company has to learn about itself. You know, there is creators of brands and I think there is cultivators of brands. Limited you may say has created all their own brands from scratch and they’re very good at. We’ve been very successful with White House | Black Market as we bought a brand that already had scale and already has position, we bought it in and took it to the next level.

We had our struggles with Soma. Let’s be honest. You know, most places when you start up a brand, you would expect us to be a lot further along when we are, this much into it, but as we said, we had a lot of starts and stops, a lot of changes in the direction and so we got really solidly, knew where we were going and what we’re going to do and are we going to keep the business to get the right team in there. You know, it struggled. So, I think that we’re much better at acquiring a brand like Boston Proper than we are in creating one from scratch based on our own internal track record. So that’s what I meant by that comment.

Donna Colaco

As I mentioned in my presentation, our file growth is the highest that it’s ever been. So I am taking market share away from others and I have fairly aggressive plans to grow my new customer base.

Unidentified Analyst

Hi, just a follow up question. Well a couple of question. On just to be clear, on the three to four year payback time Soma, does that include the DCC component and as DCC is a fair component as that grows and that materially changes the pay back?

My the second question is how CapEx was. For the past couple of years they’ve been accelerating CapEx it seems like. But how does that look sort of on a normalized basis in from the out years and then the final question within some of the competitors have sort of dovetailed to Margaret’s question, but some of your competitors had a challenge affecting for the younger and as a cohort, you know may be the daughters of the Chico’s customers as an example ten years ago. You mentioned that there are 6000 or so new entrants as a cohort per day for you. Can you comment on attracting those younger customers in those band of your cohorts? Thank you.

Pam Knous

I will take the first one. The metric that we shared with you is a store metric., So it excluded DCC and then also as we look to capital to the future, even though we haven’t given any specific guidelines, I would just state you to back at this point, is the last couple of years the company has been investing significantly in infrastructure, both warehousing,. I think we shared with you that we have a new building on this campus and in effect take share of our growth here that is coming online as well as all of its significant investments that we’ve made into our merchandising systems. So to state that we are somewhat poised that in the next year or so we will pass those levels of investment in the infrastructure and our capital will be more focused on revenue generation capabilities whether that be through brick or mortar or online market driving opportunity for us to all of Mary Lou’s initiative. That would be our objective, over the long term would be to have our capital expenditure to be somewhat consistent with the level of depreciation expense. And then Cynthia, for you?

Cinny Murray

What I am seeing in the brand is multi-generation and that’s why I am so bullish on the accessory category. This is when I joined the brand three years ago, I spoke to 300 of my customers and I had such consistency. I asked everyone one question, what are the three things I need to do to bring this brand back to greatness. Hand down on every list was accessories. It used to be known for the great one of a kind and turned the brand back to the fashion brand as it is defined by a customer. And so I saw few years ago, I got a customer that came in. She might have bought a necklace but she didn’t really understand the model and as I think Donna alluded to it. It takes time to build that relationship with the customer. So I am thrilled about thing, the generation shopping today.

Dave Dyer

You have a question, yeah.

Unidentified Analyst

A couple of question, on the international front Dave, are you thinking about company owned stores or you thinking about some sort of franchise or royalty model and as far as Soma goes, you continue to invest pretty aggressively in the brand. So should we be thinking that it can become a profitable business on a fully allocated basis in the near-term or is that something that is still out in the future?

Dave Dyer

In terms of international, the answer is yes. I think it depends on the area of the brand. Obviously there is same places that you wouldn’t mind owning stores and there is others that you may do through a joint venture or may do it through a franchise arrangement. So I think it really depends on the market, the way we identify it. In terms of Soma, your question was what?

Unidentified Analyst

You expect is to improve or should given the investment that you are putting into the business should we expect that that comes maybe next year as opposed to this year?

Dave Dyer

Well profitability is going to continue to improve and I think that the first thing of that is as cash flow positive and we have to make sure and we have a profitable four-wall operating profit, we are profitable now, fully allocated, we want to make sure that we are making contributions. But you've got to look, Soma has made a tremendous contribution to the company from where it was three years ago. Just by the improvements that they have made today it’s been a significant contributor to our success over the last three years.

But yes, we do have profit targets for Soma, but if you look at it again it takes that build, the longer a store has been there, the more mature a store is, the better, the more profitable and larger it is. And so as we start adding a lot of new stores they obviously start off the flow and they build, build, and build. If you saw in our chart they were building double-digit comps for three or four years. They are still going double-digit profitability.

So as we look at the store growth, eventually we will have enough comp stores in our mix that new stores will start to play a less and less significant part on the overall profitability of our growth. So I think that's what we are doing as we continue to build out the fleet, it will, and that fleet time to mature it will become more and more profitable. Anything else?

Pam Knous

I was thinking maybe a nice way to wrap up today if you would, if there aren't anymore question would be that each of our brand President would say a few words about their products. So let me just check; were there no questions left there in the audience?

Dave Dyer

We have exhausted you, and you have exhausted us. Thank you.

Pam Knous

Right. So here is Cinny.

Cinny Murray

Section C in the back of the room is our mid-April floor-set, obviously, one side of the floor will be cools and the other side will be the warms with some neutral and very high fashion top and what we called center stage.

Early in my presentation, I alluded to, we’re moving forward with amazing winter design and so you see some of the product that’s on the floor that are pillows and the prop, we actually had those made out of our prints. We’ve sent them on location. We used them in the mailer as well as we use them for our editor’s events and there are some things that we’re going to sell exclusively online to our customers which are very, very excited about; actually got a lot of people excited about home and we’re not going into home; they’re just props.

But as you see, as I mentioned in my presentation, we are full throttle in prints; our print business is very strong right now and this is our time. She just absolutely loves the color. You will start to see a lot of high color hit our floor in the next 10 days. So on the 319 mailer is our first pop of really strong color. And from that delivery floor to all the way through and through the summer season, you will see this level of color front and fabulous fashion.

Donna Noce

For White House, what is in the back of the room represents our high summer delivery. So you’re looking primarily at mid-May, through the month of June. Our signature, sort of shades of black and white, come back in a very big way in summer with all of the beautiful silver, gray metallic. We’re to work obviously, mostly focused around black and white, but we have a gorgeous blue palette that will hit our boutiques early part of May and it’s based in both deep royal blues as well as pretty turquoises which we expect to be very, very exciting. But we do go through tail-end of summer will be a cleansing time for us where we clean up our color as we get ready to move into fall.

Laurie Van Brunt

On the right of the April floor-set or as we call them corset; it’s featuring our Vanishing Back Bra collection which has been very well received by our consumers. The color palette is very huge and neutral and this also represents our Mother’s Day corset in timing which is a very big holiday for Soma, as well as our beautiful sensual lingerie and sleepwear with all the lace details.

Sheryl Clark

And for Boston Proper, we are seeing being a direct business we have a little bit of a different process, so all of my go forward product is pretty much having, they are as part as pretty much in the Dominican Republic right now. So this product is actually our Spring 2 product which delivered about two weeks ago and our state book which delivers in home this week, so they will pull it off from the distribution center.

And I think what I can tell you about the product is that it shows the different categories that she has; it shows you the different lifestyle that she has, so from the [five words] I talked to you about right, you can pick the daring one, the distinctive one right, you can go to sophisticated, self-assured and sensuous. So it really expresses the five words we talked about and I will tell you they are all trend appropriate, age appropriate and fit appropriate for our target customer.

Pam Knous

Thank you everyone. We greatly appreciate your coming to visit with us here today and we look forward to further dialogue with you. Thank you.

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