Summary Results(1)(2)    --  Net sales for Q2 2009 decreased 3.6% to $60.0 million, as compared to       $62.2 million for the three months ended June 30, 2008 ("Q2 2008"),       largely reflecting the termination of Sassy's MAM Distribution       Agreement (the "MAM Agreement"), which accounted for $5.5 million of       sales in Q2 2008   --  Net sales for the six months ended June 30, 2009 increased 12% to       $116.2 million, as compared to $103.8 million for the six months ended       June 30, 2008, largely reflecting the inclusion of an additional three       months ($26.6 million) of sales in 2009 from the April 2008       acquisitions of LaJobi and CoCaLo, partially offset by the loss of       $11.0 million of sales from the MAM Agreement during the first six       months of 2008   --  Net loss from continuing operations for Q2 2009, which includes an       aggregate of $15.6 million in non-cash charges related to the       consideration received from the sale of the Company's gift segment       described below, was $5.7 million, or ($0.26) per diluted share, as       compared to net income from continuing operations of $2.6 million, or       $0.12 per diluted share, in Q2 2008   --  Adjusted net income from continuing operations(1) for Q2 2009 was $3.8       million, or $0.18 per diluted share, compared to net income from       continuing operations of $2.6 million, or $0.12 per diluted share, in       Q2 2008    --  Adjusted EBITDA from continuing operations(1) for Q2 2009 was $9.1       million, as compared to $8.2 million for Q2 2008   -------------------------------------   1. "Adjusted net income from continuing operations," and "Adjusted net      income from continuing operations per diluted share" for Q2 2009 and      "Adjusted EBITDA from continuing operations" for Q2 2009 and Q2 2008      are non-GAAP financial measures, which are described in detail under      the heading "Non-GAAP Information" below and are reconciled to GAAP      measures in the tables at the end of this release.    2. As a result of the sale of the gift business on December 23, 2008,      results of operations in this release present the Company's gift      business as discontinued operations for all periods and, unless stated      otherwise, all financial results reflect continuing operations only.   

Bruce G. Crain, Chief Executive Officer and President, commented, "We are pleased with our second quarter results, which demonstrate the strength and cash flow generating characteristics of our streamlined go-forward model, as well as our team's ability to continue executing well during a challenging economic environment. We continue to focus on introducing compelling, design-led and branded products that can drive our top-line, command higher margins and generate excitement in the marketplace, as well as on further improving our cost structure. With several new collections already in stores, and more scheduled for introduction in the second half of 2009 as retailers begin to stabilize their inventory levels, we remain cautiously optimistic for the opportunities during the remainder of the year."

Mr. Crain concluded, "We continue to assume some stabilization of the economy during the second half of 2009 and, as such, we currently anticipate that our earnings performance for the second half will reflect modest improvement over our performance for the first half of 2009, as adjusted for special items."

Second Quarter 2009

Net sales for Q2 2009 decreased 3.6% to $60.0 million, compared to $62.2 million for Q2 2008, primarily as a result of the loss of $5.5 million in Sassy sales generated by the MAM Agreement in Q2 2008 and an approximately 5% decline in Kids Line sales in Q2 2009. This was partially offset by strong sales growth at LaJobi and CoCaLo compared to the prior year period.

Gross profit in Q2 2009 was $19.0 million, or 31.7% of net sales, compared to $20.0 million, or 32.1% of net sales, for Q2 2008. The decline in gross margins, both in dollars and as a percentage of sales, was largely attributable to: (i) the Kids Line sales decline coupled with strong sales of lower margin, licensed products such as Carter's brand products; and (ii) increases in mark downs and advertising allowances provided to assist retailers in clearing existing inventory and to secure new product placements. This decline was partially offset by strong margin expansion at CoCaLo, primarily as a result of efficiencies captured by shifting certain CoCaLo production to Kids Line vendors, as well as gross margin percentage improvement at Sassy, which resulted from a renewed focus on typically higher margin, Sassy-branded products.

Selling, general and administrative expenses for Q2 2009 were $11.4 million, or 19.0% of net sales, compared to $13.4 million, or 21.6% of net sales, in Q2 2008. As a percentage of sales, SG&A decreased at all four of the Company's operating subsidiaries, primarily as a result of focused efforts to control spending in the current economic climate, as well as workforce reductions implemented by Sassy in late 2008. Only LaJobi experienced higher SG&A expenses on an absolute basis, driven by higher sales volume for the period.

As a result of a number of impairment indicators that arose primarily during Q2 2009, the Company recorded aggregate non-cash charges of $15.6 million in connection with assets related to the sale of its gift business. These charges consist of: (i) a charge of $10.3 million, to reserve against the difference between a note receivable from The Russ Companies ("TRC"), the buyer of the gift business, and deferred revenue liability; and (ii) impairment charges of $4.5 million and $0.8 million against the Company's 19.9% equity interest in TRC and the Company's Applause trade name, respectively (such charges, collectively, the "Gift Charges").

The income tax benefit from continuing operations for Q2 2009, which primarily resulted from the Gift Charges, was $3.9 million as compared to an income tax provision from continuing operations of $1.7 million Q2 2008. The Company's effective U.S. tax rate remained consistent at 39% for both periods.

Loss from continuing operations for Q2 2009 was $5.7 million, or ($0.26) per diluted share, compared to income from continuing operations of $2.6 million for Q2 2008, or $0.12 per diluted share. Excluding the Gift Charges, adjusted net income from continuing operations for Q2 2009 was $3.8 million, or $0.18 per diluted share.

As a result of the foregoing, reported net loss for Q2 2009 was $5.7 million, or ($0.26) per diluted share, compared to a reported net loss of $12.1 million, or ($0.57) per diluted share, for Q2 2008. The reported net loss for Q2 2009 was primarily attributable to the $15.6 million of Gift Charges, and the reported net loss for Q2 2008 was primarily attributable to a $14.8 million loss from discontinued operations.

At June 30, 2009, outstanding debt under the Company's credit facility was $90.6 million, which reflects the pay down of approximately $10.7 million of debt since December 31, 2008 and approximately $31.6 million over the trailing twelve month period ended June 30, 2009.

Conference Call Information

The conference call, which will be held at 10:00 a.m. ET on Thursday, August 6, 2009, may be accessed by dialing 800-254-5933 or 973-409-9255, access code: 22190174. Additionally, a webcast of the call can be accessed at http://www.russberrieij.com/, http://phx.corporate-ir.net/playerlink.zhtml?c=114140&s=wm&e=2357855 or at http://www.earnings.com/. A replay of the call will be available through August 13, 2009, by dialing 800-642-1687 or 706-645-9291, access code: 22190174.