Thank you, operator. Good afternoon, everyone.

Welcome to our 2012 first quarter conference call. Today, we will review our financial results for the first quarter of fiscal 2012 and provide general updates on our business, as well as provide guidance for the second quarter.

At the end of our remarks, we will open the call for questions.

I will now turn the call over to Barry Emerson, our CFO, to read our Safe Harbor statement.

Thanks, Steve. Except for statements of historical fact, any remarks that we may make about our future expectations, plans and prospects constitute forward-looking statements made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995.

Forward-looking statements involve known and unknown risks and uncertainties that may cause our actual results, in current and future periods, to differ materially from forecasted results.

These risks and uncertainties include those more fully described in our annual report on Form 10-K for fiscal 2011 and other filings with the Securities and Exchange Commission. We undertake no obligation to revise or update any forward-looking statements that may be made from time to time by us or on our behalf.

Thank you, Barry. Our results for the first quarter reflect continued macroeconomic weakness in our western U.S.

markets in the absence of winter weather across the vast majority of our geographies, which was extremely detrimental to demand for cold-weather and snow-related products.

Despite the lackluster sales of winter-related merchandise, we were encouraged by the strength of our non-winter products, which generally performed positively for the quarter as we continue to make progress on our initiatives to better align our product mix and promotional efforts with today's consumer. We believe these initiatives are gaining further traction in the second quarter as reflected by a number of improving trends in our business, which

we will speak to shortly.

But first, commenting on our first quarter sales, net sales were $218.5 million versus $221.1 million for the first quarter of fiscal 2011. Same-store sales decreased 2.9% during the quarter.

We believe the absence of winter weather in our markets was the major factor affecting sales for the quarter. We were particularly impacted during the first 2 weeks of the quarter following New Year's and over the period surrounding President's Day, which are historically key winter selling -- winter product selling periods.

This reduction in demand for cold-weather apparel and footwear and snow-related products led to decline of over 25% in sales of winter-related products for the quarter.

For the quarter, we experienced a low mid-single digit decrease in traffic, but achieved a low-single digit increase in average ticket. We were particularly pleased with this increase in our ticket, given the loss of higher dollar winter product sales.

From a product standpoint, the adverse weather conditions I've mentioned negatively impacted sales in all of our major merchandise categories, particularly apparel sales, which come down low-double digits for the quarter. Sales in our footwear and hard good categories were slightly negative for the quarter.

As mentioned, we were pleased that our non-winter products generally performed well for us for the period. Excluding sales of winter-related products, same-store sales for the quarter were positive in the low-single digit range.

Our merchandise margins were down 156 basis points for the quarter, reflecting the product sales mix shift away from higher margin winter-related products, particularly in January. We also lost some margin to increased promotional activity, including efforts to sell winter products later in the quarter in the absence of winter weather, as well as some continued and anticipated impact from product cost inflation.

At the end of the first quarter, our per-store inventories were up 1.8% from the prior year. Excluding winter products, our per-store inventories were actually down from the prior year at quarter end.

We obviously have more-than-normal carryover of winter product, and our plan is to buy judiciously around this mix of products for next year's winter season.

All in all, we are pleased with our inventory management through this challenging period. Our inventory comparisons have continued to improve in the second quarter.

And as we speak today, our per-store inventories are virtually flat with the prior year even including the excess winter product carryover.

Now commenting on store openings. During the first quarter, we opened one new store in Palm Springs, California, which is a relocation of an existing store that will close in the second quarter.

We currently have 407 stores in operation. During the second quarter, we plan to open 3 stores, one of which is a relocation.

In addition, we expect to close 4 stores, one of which is part of a relocation. The remaining 3 closures are locations for which we previously recorded impairment charges and which have leases due for expiration in 2014.

For the 2012 full year, we currently expect to open approximately 10 new stores, relocate approximately 6 stores and close 3 stores. Of the 6 stores expected to be relocated in 2012, we anticipate closing approximately 3 this year and the remaining 3 next year.

Thus, our current estimate is that we will end the year with approximately 416 stores in operation.

Now turning to current trends. While the economic environment in our markets remains challenging, we are encouraged by the early results of the merchandising initiatives that we spoke to on our last call.

Our same-store sales for the second quarter to date are up in the positive low-single digit range.

Our April customer traffic comparisons to the prior year are the best that we have experienced since last October, and we have seen an accelerating improvement in average ticket comparisons to the prior year for each month since January. As mentioned, we continued to improve our inventory position.

Additionally, our point-of-sale margins are trending in the right direction. Although still running down, merchandise margin comparisons to the prior year have improved for each month since January.

Now to update a few of the key merchandising and marketing initiatives that we believe are contributing to these improved results. We continue to selectively downsize certain product lines that have been underperforming, while expanding other product offerings that are showing strength.

As we refine our product mix, we are particularly focused on broadening the reach of our product assortment to include more in-line branded product, while maintaining our core value offering.

From a promotional standpoint, we continue to expand our digital marketing efforts and are seeing positive results. We are increasing both the subscriber base and sales generated from our e-mail marketing program, and we continue to build our digital online and mobile advertising platforms.

We believe these efforts will improve the reach of our message to consumers who might not be seeing our print advertisements. In addition, we are on target with plans to develop a robust product- and promotionally-focused website, which we expect to have in place during the fourth quarter.

All in all, we are very excited about our ongoing efforts to broaden our appeal to the consumer in the current environment and position our business for improved performance. We believe the positive trending of a number of key metrics in our business in recent months, which we reviewed today, reflects the early benefits of these initiatives.

We look forward to building on these efforts, as well as leveraging our core strengths and competitive advantages in the seasons ahead.

With that said, now I will turn the call over to Barry, who will provide more information about the quarter, as well as speak to our balance sheet, cash flows and provide second quarter guidance.

Thanks, Steve. Our gross profit margin for the first quarter was 30.9% of sales compared to 32.6% of sales for the first quarter of 2011.

The decline was mainly due to the 156 basis point decrease in merchandise margins that Steve discussed.

Our selling and administrative expense as a percentage of sales was 30.5% in the fiscal 2012 first quarter versus 30.4% in the first quarter of the prior year. On an absolute basis, SG&A expense declined $0.7 million due primarily to a reduction in employee benefit-related costs from higher-than-normal levels in the prior year period, as well as a decrease in debit card fees as a result of recent federal legislation.

Our effective tax rate for the first quarter was 35.9% compared to 36.1% for the first quarter of fiscal 2011. Reflecting our lower same-store sales for the first quarter, net income for the period was $156,000 or $0.01 per diluted share compared to net income for the first quarter of fiscal 2011 of $2.8 million or $0.13 per diluted share.

Turning to our balance sheet. Total chain inventory was $267.5 million at the end of the first quarter, up 4.7% from the prior year.

As Steve mentioned, on a per-store basis, our inventory was up 1.8% from last year, reflecting the impact of lower-than-anticipated sales of winter-related products. Other than our higher-than-normal winter product carryover as a result of unseasonably warm weather, we feel good about our inventory mix as we head into the spring and summer months.

As we progress through the year, we expect our inventory per store to further decline.

Looking at our capital spending. CapEx, excluding noncash acquisitions, totaled $1.6 million for the first quarter of 2012, primarily reflecting expenditures for 1 store relocation, existing store maintenance, MIS systems and DC equipment.

We expect total capital expenditures for 2012, excluding noncash acquisitions of approximately $14 million to $17 million, reflecting the opening of approximately 10 new stores and the relocation of approximately 6 stores.

We generated cash flow from operations of $11.4 million for the first quarter of 2012 compared to $4.2 million in the same period last year. The increase was primarily due to lower funding of merchandise inventory purchases, partially offset by a lower reduction in accounts receivable and lower net income for the current year.

For the first quarter, we continued to pay our quarterly cash dividend of $0.075 per share. Our long-term debt at the end of the first quarter was $60.2 million, up from $51.8 million at the end of the first quarter last year due primarily to higher inventory levels.

Our positive operating cash flow for the first quarter allowed us to reduce debt by $3.3 million from the end of fiscal 2011.

During the first quarter, we repurchased 172,471 shares of our stock for a total of $1.4 million. As of the end of the first quarter, we had approximately $11.8 million available for stock repurchases under our $20 million share repurchase program authorized in fiscal 2007.

Now I'll spend a minute on our second quarter guidance. Based on results to date, we expect same-store sales in the positive low-single digit range and earnings per diluted share in the range of $0.05 to $0.11.

This guidance assumes merchandise margin comparisons to the prior year will be negative but significantly improved relative to the year-over-year margin comparisons experienced in the first quarter. Our guidance also anticipates a small negative impact from the calendar shift of the July 4 holiday further into the third quarter this year, as well as an estimated charge of approximately $1.2 million or $0.04 per diluted share to provide for the closing of 3 stores.

For comparative purposes, in the second quarter of 2011, same-store sales decreased 1.7% and earnings per diluted share were $0.14, including a noncash impairment charge of $0.02 per diluted share.

Operator, we are now ready to turn the call back to you for questions and answers.

Could you talk a little bit about some of the new products that you put in the stores and what categories you're emphasizing and then how these might be marketed differently?

Sure, Dave. I mean it's pretty broad-based.

I mean the new products cover the gamut of all of our major merchandise categories: hard goods, footwear and apparel, a little more focus, in certain cases, of more branded product. In some cases, it's expanding the size and color runs.

In other cases, it's reaching out to some higher price points in an effort to appeal to a consumer who may have more discretionary income in today's environment.

And how might you go to market differently with -- or how are you making customers aware of these products on the outside?

Well, in some cases, I mean, it's through our traditional means of advertising. We're reaching out in our -- some of our digital marketing to communicate what we're carrying in our stores.

I mean through the similar means that we might have reached our customers in the past.

Okay. Do you anticipate as the year progresses that you will be doing a lot more of this?

Or do you think you've done the bulk of the changes already?

No, it's very much a work in progress. I mean, we're continually adding additional products.

We're testing a number of product offerings and in some cases, in selected stores. And we're getting great benefits from our business analytics, trying to analyze where we're achieving the best successes.

We're also developing our website to be -- we think a very robust website that will give us a terrific vehicle to help communicate our offering to our customer.

And just lastly, can you remind us how the months last year sort of played out in the second quarter, how the comparisons looked?

Yes. Let me go ahead and take that, David.

Same-store sales, as I mentioned, were down 1.7% in the second quarter last year. April, as we started the quarter, was negatively impacted by the shift of Easter when our stores are closed into the second quarter from the first quarter in the prior year -- in fiscal 2010.

So we had a negative effect from the shift into April last year. May sales were down largely due to unseasonably cold weather comparisons in our market, particularly around Memorial day.

And then June sales were slightly positive.

Steve, you just mentioned the business analytics, doing a little bit more work there. Can you give us an update what you guys are doing and when we could expect to see more benefits potentially in the P&L from some of the things that you're learning from your information technology investment?

I think we'll see benefit in the P&L over the course of, honestly, a number of years. I mean this is phenomenal information that builds upon itself.

Our ability with this information to very efficiently drill down and see more detailed reporting on item movement by stores, by size, by colors, by price points is terrific stuff, and it's helping us certainly in the buy, be able to model buys more precisely, understanding capabilities of individual stores and be able to do, we think, a much better job of getting the right products into the stores, to obviously improve our ability to move the merchandise.

Okay, and then, I guess, in terms of the improvements that you've seen in April, it seems like April is a little bit easier comparison than it may have been beforehand. But are there any particular product categories in terms of apparel, footwear, hard goods that you're seeing some renewed strength in the month of April?

Well, clearly apparel. Apparel, which was our weakest performing category, I guess, in the fourth quarter last year, as well as the first quarter.

We think much of it because the weather is our strongest performing category thus far in the second quarter. But yes, we're seeing very positive performance in footwear and across a number of our hard goods categories as well.

Okay, great. And then lastly, Barry maybe you can quantify for us, does that $0.04 per share that you're talking about in the press release from the pretax charge, does that include the calendar shift -- the negative impact from the calendar shift as well?

No, Sean. The $0.04 is really just the charge that we would be taking for the closing of these 3 stores.

The impact of the calendar shift, it's difficult to quantify, frankly. We are working on our advertising plan for the end of the quarter, and it's not firmed up specifically so the impact is not crystal clear.

But it's not dramatic, but there is an impact.

I was hoping you guys could detail the changes that you're making to your website and the desired impact of those changes.

Yes, certainly, Matt, sure. I mean for the past few years, we've been working to position our website, our e-mail marketing initiative, social media to be better drivers of sales into our stores, and generally been pleased with the process.

We're -- in terms of the changes, I mean, we're basically building out a database to be able to have our product offering on the website, enable customers to search and see what's available in our stores, lots more of product information. We should be able to leverage that into marketing and offerings through the digital platform obstacle [ph] to drive traffic into our stores.

We'll certainly have the capability that will provide us to move to an e-commerce platform should we choose to do that, and we're very actively evaluating that at this time. And the decision really is going to based on whether we can engage in, in a manner that we feel will be accretive to earnings, factor in the logistics and support requirements, and we're in the process of engaging outside consultants to assist us in that effort.

And when would you have a sense of whether e-commerce makes sense for you folks?

Well, I think over the course of this year, we're going to be rolling out the more robust website in the fourth quarter. And as we're doing -- in the process of doing that, we're evaluating an e-commerce strategy as well.

Okay, we thank you for being on the call today, and we look forward to speaking to you with our second quarter results. Thank you very much.