Cache Revises Third Quarter and Fiscal 2008 Guidance

Cache Inc. (NASDAQ: CACH), a specialty chain of women’s apparel stores with 295 stores currently open, today announced that it is revising its third quarter guidance, primarily to reflect a softer than anticipated sales performance in the latter part of the period, as a result of a difficult homecoming dress season prompted by the tough economy. Sales were also negatively impacted by tropical storms that caused temporary store closings in Florida, Texas and Louisiana, where the Company has a significant presence. The Company is also revising its full year fiscal 2008 guidance to reflect its current third quarter outlook and an expectation that the difficult economy will continue to impact the fourth quarter. Cache expects to report full third quarter fiscal 2008 results during the week of October 20, 2008.

Thomas Reinckens, Chairman and Chief Executive Officer, commented: "As we began the third quarter, we were optimistic about our performance given solid July sales results and a favorable response to our fall assortments. However, our business became particularly challenging in the second week of September, as we experienced a softening in special occasion dresses, which typically strengthen in mid-September through mid-October coinciding with the homecoming season. We were also negatively impacted by temporary store closures due to hurricanes in some of our largest markets. On a positive note, our sportswear business continues to trend positively. Consequently, we expect September 2008 comparable store sales to decline approximately 6%, as compared to the prior year period.”

"During the period, we were successful in generating incremental traffic with our marketing vehicles, which drove a significantly higher percentage of our sales than in prior periods,” Mr. Reinckens continued. "We believe this demonstrates the effectiveness of our advertising, the strength of our loyalty program and excitement in our assortments. We also expect to end the third quarter with a strong balance sheet. Average finished goods inventory per store, at cost, is on track to end down, in the double-digit range, from the third quarter last year. As we look ahead, while special occasion dresses are less significant for holiday, as compared to homecoming in the third quarter, we believe it is prudent to revise our fourth quarter expectations, given the difficult economy. We have also reduced our inventory commitments, to reflect our current sales trends and we will manage expenses tightly. While we expect the holiday season to be challenging, we firmly believe that our strategies position us for increased market share and long-term sustainable growth.”

Outlook

The Company currently estimates net sales for the third quarter of fiscal 2008 to be approximately $58 million, which compares to its previous guidance range of $62 million to $64 million and actual third quarter fiscal 2007 net sales of $60.6 million. Third quarter fiscal 2008 comparable store sales are currently expected to decline by approximately 4%, as compared to a 4% gain in the third quarter of fiscal 2007. Third quarter fiscal 2008 net loss per share is currently estimated in the range of $0.12 to $0.14, which compares to the Company’s previous guidance for diluted earnings per share in the range of $0.01 to $0.02 and actual third quarter fiscal 2007 diluted earnings per share of $0.01.

For the fourth quarter of fiscal 2008, the Company currently estimates net sales in the range of $78 million to $80 million, which compares to its previous guidance range of $82 million to $84 million and actual fourth quarter fiscal 2007 net sales of $78.5 million. The current guidance assumes comparable store sales in the range of flat to a decrease in the low single digit range, as compared to a decline of 7% in the fourth quarter of fiscal 2007. Diluted earnings per share for the fourth quarter of fiscal 2008 are currently estimated in the range of $0.24 to $0.29, which compares to the Company’s previous guidance range of $0.38 to $0.40 and actual fourth quarter fiscal 2007 diluted earnings per share of $0.32.

For the full fiscal 2008 year, the Company currently estimates net sales in the range of $278 million to $280 million, which compares to its previous guidance range of $286 million to $290 million and actual fiscal 2007 net sales of $274.5 million. Diluted earnings per share on a GAAP basis for fiscal 2008 are estimated in the range of $0.10 to $0.17, as compared to its previous guidance range of $0.39 to $0.42. Guidance includes costs related to store closures and a management change totaling $0.14 per diluted share and incurred during the first quarter of fiscal 2008. On an adjusted basis, excluding store closing and management change costs, the Company currently expects fiscal 2008 diluted earnings per share in the range of $0.24 to $0.31, as compared to its previous guidance range of $0.53 to $0.56. This compares to actual fiscal 2007 diluted earnings per share of $0.40, inclusive of $0.04 per diluted share in legal settlement costs. Adjusted diluted earnings per share for fiscal 2007 were $0.44.

Participation in the Thomas Weisel Partners Consumer Conference

The Company today announced that it will be presenting at the Thomas Weisel Partners Consumer Conference being held at The Mandarin Oriental Hotel in New York City on Tuesday, September 23, 2008 at 9:10am ET. Tom Reinckens, Chairman and Chief Executive Officer, and Maggie Feeney, EVP and Chief Financial Officer, will host the presentation. The conference presentation will be webcast live at www.cache.com.

About Cache, Inc.

Cache is a nationwide, mall-based specialty retailer of sophisticated, social occasion sportswear and dresses targeting style-conscious women. Cache targets women between the ages of 25 and 45 who have a youthful attitude, are self-confident and fashion-conscious, and require a missy fit. We operate 295 Cache and Cache Luxe stores primarily situated in central locations in high traffic, upscale malls in 43 states, the Virgin Islands and Puerto Rico.

Certain matters discussed within this press release may constitute forward-looking statements within the meaning of the federal securities laws. Although Cache, Inc. believes the statements are based on reasonable assumptions, there can be no assurance that these expectations will be attained. Actual results and timing of certain events could differ materially from those projected in or contemplated by the forward-looking statements due to a number of factors, including, without limitation, ability to successfully open new stores, introduction of the Cache Luxe concept, dependence on management, dependence on vendors and distributors, reliance on foreign manufacturers, material weakness in our internal controls, industry trends, merchandise and fashion trends, competition, seasonality and changes in general economic conditions and consumer spending patterns, as well as other risks outlined from time to time in the filings of Cache, Inc. with the Securities and Exchange Commission.