Cache Inc. to Launch New Cache Luxe Concept; Company to Exit Lillie Rubin Business; Company to Convert 17 Locations to New Cache Concept; Company to Host Conference Call Tuesday, May 16, 2006 at 9:00 am EST

Business Wire, May 15, 2006

NEW YORK -- Cache Inc. (NASDAQ: CACH), a specialty chain of women's apparel stores with 304 stores, including 265 Cache and 39 Lillie Rubin locations, today announced plans to exit its Lillie Rubin business. In conjunction with this announcement, the Company also announced plans to introduce a new concept, Cache Luxe. The Company intends to convert 17 Lillie Rubin locations to Cache Luxe stores, and 2 Lillie Rubin locations to Cache stores. The remaining Lillie Rubin locations are expected to be closed by the end of the fiscal third quarter.

All of the Cache Luxe locations will be in malls that also contain a Cache store. The Cache Luxe concept will enable the Company to offer a larger selection of casual and evening apparel and accessories at higher price points. In addition, Cache stores located in malls containing a Cache Luxe store will have increased capacity to offer an expanded casual assortment.

Commenting on the announcement, Brian Woolf, Cache's Chairman and Chief Executive Officer, stated: "Following careful evaluation, we made the strategic decision to exit our Lillie Rubin business and focus our efforts on the significant growth opportunities offered by our Cache brand. Lillie Rubin's results have negatively affected our earnings for the past two years and we believe the time is right to exit this business and capitalize on the strong growth and significant customer loyalty of our Cache brand."

"We are very excited to extend our Cache brand with the planned introduction of Cache Luxe, which we believe represents an excellent complement to our existing Cache locations," Mr. Woolf continued. "The Lillie Rubin stores we plan to convert to Cache Luxe are in premier locations and we are eager to benefit from the tremendous opportunity and growth in the day-into evening apparel and accessory categories. Finally, we believe that we can better capitalize on Cache's strong brand recognition with our Luxe concept, as we take advantage of Cache's significant customer loyalty and national advertising campaign."

The Company expects to incur a pre-tax charge of $4.5 million, $3.8 million of which will be non-cash, to close the remaining Lillie Rubin locations. The charge does not include any settlement costs for exiting leases.

Fiscal 2005 and First Quarter Fiscal 2006 Results

----------------------------------------------------------------------
( $ in million, except
 per share amounts)     First Quarter 2006      Full Year Fiscal 2005
                       -----------------------------------------------
                              Lillie                   Lillie
                       Cache   Rubin  Total     Cache   Rubin   Total
                       -----------------------------------------------

Sales                  $58.9    $4.9  $63.8    $243.8   $22.5  $266.3

Operating Income
 (Loss)                  3.8    (1.5)   2.3      24.0    (4.0)   20.0

Net Income/(Loss)        2.6    (0.9)   1.7      16.0    (2.6)   13.4

Diluted EPS            $0.16  $(0.05) $0.11     $0.99  $(0.16)  $0.83
----------------------------------------------------------------------



Guidance
----------------------------------------------------------------------
                                          Second Quarter 2006E
                                  ------------------------------------
( $ in million, except per share                   Previous     2005
 amounts)                              Guidance    Guidance    Actual
                                  ------------------------------------
Total Sales                              $70-$73      $70-$72   $67.0

Lillie Rubin Sales                     $4.8-$5.4    $4.8-$5.0    $5.4

Sales Excluding Lillie Rubin         $65.2-$67.6  $65.2-$67.0   $61.6

Diluted EPS*                         $0.08-$0.10  $0.25-$0.27   $0.19

Losses Related to Lillie Rubin            $(0.06)              $(0.04)

Restructuring Charge                      $(0.17)

Pro Forma Diluted EPS* Before
 Restructuring Charge and Lillie
 Rubin Losses                        $0.31-$0.33                $0.23


                                              Fiscal 2006E
                                  ------------------------------------
( $ in million, except per share                   Previous     2005
 amounts)                              Guidance    Guidance    Actual
                                  ------------------------------------
Total Sales                            $276-$282    $280-$286  $266.3

Lillie Rubin Sales                       $17-$18      $21-$22   $22.5

Sales Excluding Lillie Rubin           $259-$264    $259-$264  $243.8

Diluted EPS*                         $0.79-$0.82  $0.92-$0.94   $0.83

Losses Related to Lillie Rubin    $(0.12)-$(0.14)              $(0.16)

Restructuring Charge                      $(0.17)

Pro Forma Diluted EPS* Before
 Restructuring Charge and Lillie
 Rubin Losses                        $1.08-$1.13                $0.99
----------------------------------------------------------------------

*2006 second quarter and full year diluted earnings per share
include $0.02 and $0.07, respectively, for stock option expense, which
was not incurred in 2005.