----

----

| Delaware(State      or other jurisdiction of incorporation or organization) 1706      Washington Ave., St. Louis, Missouri(Address      of principal executive offices) | 43-1256674(I.R.S.      Employer Identification No.) 63103(Zip      Code) |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------|

| (Title of each      class)Common Stock $.40 Par Value | (Name of each      exchange on which Registered)New      York Stock Exchange |
|-------------------------------------------------------|------------------------------------------------------------------------------|

| Indicate by check      mark if the registrant is a well-known seasoned issuer, as defined in Rule      405 of the Securities Act.  |   | o        Yes       |   | x No |
|-----------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------|--------|-----------|
| Indicate by check      mark if the registrant is not required to file reports pursuant to Section      13 or Section 15(d) of the Act.  |   | o        Yes  |   | x No |

| Indicate      by check mark whether the registrant (1) has filed all reports required to      be filed by Section 13 or 15(d) of      the Securities Exchange Act of 1934 during the preceding 12 months (or for      such shorter period that the registrant was      required to file such reports), and (2) has been subject to such filing      requirements for the past 90 days. |   | x        Yes |   | o No |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------|--------|-----------|

| Indicate      by check mark whether the registrant is a large accelerated filer, an      accelerated filer,  a non-accelerated filer or      a smaller reporting company.  See the definitions of “large      accelerated filer,”  “ accelerated filer” and “smaller      reporting      company” in Rule 12b-2 of the Exchange Act:  (Check      one):  |   Large accelerated      filerAccelerated filerNon-accelerated      filerSmaller reporting      company |   |   |   oxoo |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------|--------|--------|------------------|

| Indicate by check mark whether the registrant      is a shell company (as defined in Rule 12b-2 of the Act).  |   | o        Yes |   | x No |
|--------------------------------------------------------------------------------------------------------------------|--------|------------------------|--------|-----------|

----

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|          |   | Page                       |
|---------------|--------|----------------------------|
| PART      I.  |   | FINANCIAL      INFORMATION |   |   |
|          |   |                       |   |   |
|          |   | Item 1.                    |   | Financial      Statements: |   |   |
|          |   |                       |   |   |   |   |
|          |   |                       |   | Interim      Condensed Consolidated Balance Sheets |   |   |
|          |   |                       |   | November      8, 2008 (Unaudited) and February 2, 2008 |   | 1 |
|          |   |                       |   |   |   |   |
|          |   |                       |   | Interim      Condensed Consolidated Statements of Operations(Unaudited) |   |   |
|          |   |                       |   | 16      and 40 Weeks Ended November 8, 2008 and November 10, 2007 |   | 3 |
|          |   |                       |   |   |   |   |
|          |   |                       |   | Interim      Condensed Consolidated Statement of Changes in    Stockholders' |   |   |
|          |   |                       |   | Equity      (Unaudited) 40 Weeks Ended November 8, 2008 |   | 4 |
|          |   |                       |   |   |   |   |
|          |   |                       |   | Interim      Condensed Consolidated Statements of Cash Flow (Unaudited) |   |   |
|          |   |                       |   | 40      Weeks Ended November 8, 2008 and November 10, 2007 |   | 5 |
|          |   |                       |   |   |   |   |
|          |   |                       |   | Notes      to Interim Condensed Consolidated Financial Statements      (Unaudited) |   | 7 |
|          |   |                       |   |   |   |   |
|          |   | Item 2.                    |   | Management's      Discussion and Analysis of Financial Condition and Results |   |   |
|          |   |                       |   | of      Operations |   | 19 |
|          |   |                       |   |   |   |   |
|          |   | Item 3.                    |   | Quantitative      and Qualitative Disclosures about Market Risk |   | 28 |
|          |   |                       |   |   |   |   |
|          |   | Item      4.               |   | Controls      and Procedures |   | 28 |
|          |   |                       |   |   |   |   |
| PART II.      |   | OTHER      INFORMATION     |   |   |
|          |   |                       |   |   |   |   |
|          |   | Item      1A.              |   | Risk      Factors |   | 30 |
|          |   | Item      5.               |   | Other      Information |   | 30 |
|          |   | Item      6.               |   | Exhibits |   | 31 |
|          |   |                       |
| SIGNATURES    |   |                       |   | 32 |
|          |   |                       |
| EXHIBIT INDEX |   |                       |   | 33 |

Item 1

| thousands                                                         |   | November      8, 2008 |    |   | February      2, 2008 |   |
|-------------------------------------------------------------------|--------|-----------------------|---------|--------|-----------------------|--------|
|                                                              |   | (Unaudited)           |    |   |                  |   |
| ASSETS                                                            |   |                  |    |   |                  |   |
| Current      assets:                                              |   |                  |    |   |                  |   |
|         Cash and cash equivalents                       |   | $                     | 8,123   |   |                  | $      | 59,177 |   |
|         Accounts receivable:                            |   |                  |    |   |                  |   |   |   |
|            Trade                         |   |                  | 9,932   |   |                  |   | 7,469 |   |
|            Other                         |   |                  | 800     |   |                  |   | 4,030 |   |
|         Inventories                                     |   |                  | 11,685  |   |                  |   | 14,296 |   |
|         Prepaid expenses and other current assets       |   |                  | 12,084  |   |                  |   | 5,174 |   |
|         Refundable income taxes                         |   |                  | 89      |   |                  |   | - |   |
|         Deferred tax assets                             |   |                  | 14,117  |   |                  |   | 2,673 |   |
|         Assets held for sale                            |   |                  | 1,771   |   |                  |   | 16 |   |
|                                                              |   |                  |    |   |                  |   |   |   |
|         Total current assets                            |   |                  | 58,601  |   |                  |   | 92,835 |   |
|                                                              |   |                  |    |   |                  |   |   |   |
| Property      and equipment:                                      |   |                  |    |   |                  |   |   |   |
|         Land                                            |   |                  | 4,390   |   |                  |   | 5,065 |   |
|         Buildings and building improvements             |   |                  | 37,049  |   |                  |   | 34,666 |   |
|         Leasehold improvements                          |   |                  | 5,081   |   |                  |   | 5,426 |   |
|         Photographic, sales and manufacturing equipment |   |                  | 184,440 |   |                  |   | 166,404 |   |
|           Total                               |   |                  | 230,960 |   |                  |   | 211,561 |   |
|         Less accumulated depreciation and amortization  |   |                  | 167,522 |   |                  |   | 155,281 |   |
|         Property and equipment, net                     |   |                  | 63,438  |   |                  |   | 56,280 |   |
| Other      investments - supplemental retirement plan             |   |                  | 3,406   |   |                  |   | 3,508 |   |
| Goodwill                                                          |   |                  | 21,520  |   |                  |   | 18,049 |   |
| Intangible      assets, net                                       |   |                  | 41,041  |   |                  |   | 44,907 |   |
| Deferred      tax assets                                          |   |                  | 10,301  |   |                  |   | 14,439 |   |
| Other      assets                                                 |   |                  | 7,091   |   |                  |   | 6,499 |   |
|                                                              |   |                  |    |   |                  |   |   |   |
| TOTAL      ASSETS                                                 |   | $                     | 205,398 |   |                  | $      | 236,517 |   |
|                                                              |   |                  |    |   |                  |   |   |   |

| thousands,      except share and per share data                                                              |   | November      8, 2008 |     |   | February      2, 2008 |   |
|--------------------------------------------------------------------------------------------------------------|--------|-----------------------|----------|--------|-----------------------|--------|
|                                                                                                         |   | (Unaudited)           |     |   |                  |   |
| LIABILITIES                                                                                                  |   |                  |     |   |                  |   |
| Current      liabilities:                                                                                    |   |                  |     |   |                  |   |
|           Current maturities of long-term debt                                           |   | $                     | 1,150    |   |                  | $      | 8,697 |   |
|           Short-term borrowings                                                          |   |                  | 5,500    |   |                  |   | - |   |
|           Accounts payable                                                               |   |                  | 10,741   |   |                  |   | 14,369 |   |
|           Accrued employment costs                                                       |   |                  | 11,335   |   |                  |   | 10,330 |   |
|           Customer deposit liability                                                     |   |                  | 20,409   |   |                  |   | 21,255 |   |
|           Income taxes payable                                                           |   |                  | -        |   |                  |   | 387 |   |
|           Sales taxes payable                                                            |   |                  | 3,873    |   |                  |   | 4,884 |   |
|           Accrued advertising expenses                                                   |   |                  | 3,957    |   |                  |   | 1,266 |   |
|           Accrued expenses and other liabilities                                         |   |                  | 19,303   |   |                  |   | 21,863 |   |
|                                                                                                         |   |                  |     |   |                  |   |   |   |
|           Total current liabilities                                                      |   |                  | 76,268   |   |                  |   | 83,051 |   |
|                                                                                                         |   |                  |     |   |                  |   |   |   |
| Long-term      debt, less current maturities                                                                 |   |                  | 102,720  |   |                  |   | 103,022 |   |
| Accrued      pension plan obligations                                                                        |   |                  | 8,391    |   |                  |   | 10,490 |   |
| Supplemental      retirement plan obligations                                                                |   |                  | 3,498    |   |                  |   | 3,437 |   |
| Other      liabilities                                                                                       |   |                  | 20,729   |   |                  |   | 19,543 |   |
|                                                                                                         |   |                  |     |   |                  |   |   |   |
|           Total liabilities                                                              |   |                  | 211,606  |   |                  |   | 219,543 |   |
|                                                                                                         |   |                  |     |   |                  |   |   |   |
| CONTINGENCIES      (see Note 12)                                                                             |   |                  |     |   |                  |   |   |   |
|                                                                                                         |   |                  |     |   |                  |   |   |   |
| STOCKHOLDERS'      (DEFICIT) EQUITY                                                                          |   |                  |     |   |                  |   |   |   |
| Preferred      stock, no par value, 1,000,000 shares authorized; no shares      outstanding                  |   |                  | -        |   |                  |   | - |   |
| Preferred      stock, Series A, no par value, 200,000 shares authorized; no      shares outstanding     |   |                  | -        |   |                  |   | - |   |
| Common      stock, $0.40 par value, 50,000,000 shares authorized; 17,081,397 and      17,028,315             |   |                  |     |   |                  |   |   |   |
|           shares outstanding at November 8, 2008 and February 2, 2008,      respectively |   |                  | 6,833    |   |                  |   | 6,811 |   |
| Additional      paid-in capital                                                                              |   |                  | 28,350   |   |                  |   | 27,872 |   |
| Retained      earnings                                                                                       |   |                  | 202,141  |   |                  |   | 222,435 |   |
| Accumulated      other comprehensive loss                                                                    |   |                  | (10,663  | )      |                  |   | (6,725 | ) |
|                                                                                                         |   |                  | 226,661  |   |                  |   | 250,393 |   |
| Treasury      stock - at cost, 10,595,319 and 10,619,728 at November 8, 2008      and                        |   |                  |     |   |                  |   |   |   |
|           February 2, 2008, respectively                                                 |   |                  | (232,869 | )      |                  |   | (233,419 | ) |
|                                                                                                         |   |                  |     |   |                  |   |   |   |
|           Total stockholders' (deficit) equity                                           |   |                  | (6,208   | )      |                  |   | 16,974 |   |
|                                                                                                         |   |                  |     |   |                  |   |   |   |
|           TOTAL LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY                           |   | $                     | 205,398  |   |                  | $      | 236,517 |   |
|                                                                                                         |   |                  |     |   |                  |   |   |   |

| thousands,      except share and per share data                                                           |   | 16      Weeks Ended   |      |   | 40      Weeks Ended    |   |
|-----------------------------------------------------------------------------------------------------------|--------|-----------------------|-----------|--------|------------------------|--------|
|                                                                                                      |   | November      8, 2008 |      |   | November      10, 2007 |   |   | November      8, 2008 |   |   | November      10, 2007 |   |
|                                                                                                      |   |                  |      |   |                   |   |   |   |   |   |   |   |
| Net      sales                                                                                            |   | $                     | 115,849   |   |                   | $      | 135,392 |   |   | $ | 308,923 |   |   | $ | 261,256 |   |
|                                                                                                      |   |                  |      |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Cost      and expenses:                                                                                   |   |                  |      |   |                   |   |   |   |   |   |   |   |   |   |   |   |
|           Cost of sales (exclusive of depreciation and amortization shown      below) |   |                  | 10,785    |   |                   |   | 15,467 |   |   |   | 29,773 |   |   |   | 28,454 |   |
|           Selling, general and administrative expenses                                |   |                  | 111,397   |   |                   |   | 120,392 |   |   |   | 275,160 |   |   |   | 223,919 |   |
|           Depreciation and amortization                                               |   |                  | 8,668     |   |                   |   | 10,079 |   |   |   | 21,764 |   |   |   | 19,669 |   |
|           Other charges and impairments                                               |   |                  | 1,284     |   |                   |   | 2,025 |   |   |   | 2,397 |   |   |   | 3,471 |   |
|                                                                                                      |   |                  | 132,134   |   |                   |   | 147,963 |   |   |   | 329,094 |   |   |   | 275,513 |   |
|                                                                                                      |   |                  |      |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Loss      from continuing operations                                                                      |   |                  | (16,285   | )      |                   |   | (12,571 | ) |   |   | (20,171 | ) |   |   | (14,257 | ) |
|                                                                                                      |   |                  |      |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Interest      expense                                                                                     |   |                  | 3,866     |   |                   |   | 3,365 |   |   |   | 6,753 |   |   |   | 5,374 |   |
| Interest      income                                                                                      |   |                  | 87        |   |                   |   | 537 |   |   |   | 567 |   |   |   | 1,253 |   |
| Other      income, net                                                                                    |   |                  | 56        |   |                   |   | 42 |   |   |   | 59 |   |   |   | 48 |   |
|                                                                                                      |   |                  |      |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Loss      from continuing operations before income tax benefit                                            |   |                  | (20,008   | )      |                   |   | (15,357 | ) |   |   | (26,298 | ) |   |   | (18,330 | ) |
| Income      tax benefit                                                                                   |   |                  | 6,667     |   |                   |   | 5,341 |   |   |   | 9,100 |   |   |   | 6,374 |   |
|                                                                                                      |   |                  |      |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Net      loss from continuing operations                                                                  |   |                  | (13,341   | )      |                   |   | (10,016 | ) |   |   | (17,198 | ) |   |   | (11,956 | ) |
|                                                                                                      |   |                  |      |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Net      loss from discontinued operations                                                                |   |                  | -         |   |                   |   | (91 | ) |   |   | - |   |   |   | (197 | ) |
|                                                                                                      |   |                  |      |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| NET      LOSS                                                                                             |   | $                     | (13,341   | )      |                   | $      | (10,107 | ) |   | $ | (17,198 | ) |   | $ | (12,153 | ) |
|                                                                                                      |   |                  |      |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| NET      LOSS PER COMMON SHARE                                                                            |   |                  |      |   |                   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                      |   |                  |      |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Net      loss per share from continuing operations - diluted                                              |   | $                     | (2.06     | )      |                   | $      | (1.56 | ) |   | $ | (2.66 | ) |   | $ | (1.87 | ) |
| Net      loss per share from discontinued operations - diluted                                            |   |                  | -         |   |                   |   | (0.01 | ) |   |   | - |   |   |   | (0.03 | ) |
| Net      loss per share - diluted                                                                         |   | $                     | (2.06     | )      |                   | $      | (1.57 | ) |   | $ | (2.66 | ) |   | $ | (1.90 | ) |
|                                                                                                      |   |                  |      |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Net      loss per share from continuing operations - basic                                                |   | $                     | (2.06     | )      |                   | $      | (1.56 | ) |   | $ | (2.66 | ) |   | $ | (1.87 | ) |
| Net      loss per share from discontinued operations - basic                                              |   |                  | -         |   |                   |   | (0.01 | ) |   |   | - |   |   |   | (0.03 | ) |
| Net      loss per share - basic                                                                           |   | $                     | (2.06     | )      |                   | $      | (1.57 | ) |   | $ | (2.66 | ) |   | $ | (1.90 | ) |
|                                                                                                      |   |                  |      |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Weighted      average number of common and common equivalent                                              |   |                  |      |   |                   |   |   |   |   |   |   |   |   |   |   |   |
|           shares outstanding - diluted                                                |   |                  | 6,479,496 |   |                   |   | 6,401,943 |   |   |   | 6,467,352 |   |   |   | 6,385,645 |   |
|                                                                                                      |   |                  |      |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Weighted      average number of common and common equivalent                                              |   |                  |      |   |                   |   |   |   |   |   |   |   |   |   |   |   |
|           shares outstanding - basic                                                  |   |                  | 6,479,496 |   |                   |   | 6,401,943 |   |   |   | 6,467,352 |   |   |   | 6,385,645 |   |
|                                                                                                      |   |                  |      |   |                   |   |   |   |   |   |   |   |   |   |   |   |

| thousands,      except share and per share data                       |   |   |   |   |       |   |   |     |   |   | Accumulated   |   |   |         |    |   |   |   |
|-----------------------------------------------------------------------|--------|--------|--------|--------|------------|--------|--------|----------|--------|--------|---------------|--------|--------|--------------|---------|--------|--------|--------|
|                                                                  |   |   |   |   | Additional |   |   |     |   |   | other         |   |   | Treasury     |    |   |   |   |
|                                                                  |   | Common |   |   | paid-in    |   |   | Retained |   |   | comprehensive |   |   | stock,       |    |   |   |   |
|                                                                  |   | stock  |   |   | capital    |   |   | earnings |   |   | loss          |   |   | at      cost |    |   | Total  |   |
|                                                                  |   |   |   |   |       |   |   |     |   |   |          |   |   |         |    |   |   |   |
| Balance      at February 2, 2008                                      |   | $      | 6,811  |   |       | $      | 27,872 |     |   | $      | 222,435       |   |   | $            | (6,725  | )      |   | $      | (233,419 | ) |   | $ | 16,974 |   |
|                                                                  |   |   |   |   |       |   |   |     |   |   |          |   |   |         |    |   |   |   |   |   |   |   |   |   |
| Net      loss                                                         |   |   | -      |   |       |   | -      |     |   |   | (17,198       | )      |   |         | -       |   |   |   | - |   |   |   | (17,198 | ) |
| Total      other comprehensive loss                                   |   |   | -      |   |       |   | -      |     |   |   | -             |   |   |         | (3,938  | )      |   |   | - |   |   |   | (3,938 | ) |
|                                                                  |   |   |   |   |       |   |   |     |   |   |          |   |   |         |    |   |   |   |   |   |   |   |   |   |
|           Total comprehensive loss                |   |   |   |   |       |   |   |     |   |   |          |   |   |         |    |   |   |   |   |   |   |   | (21,136 | ) |
| Surrender      of employee shares to satisfy personal tax             |   |   |   |   |       |   |   |     |   |   |          |   |   |         |    |   |   |   |   |   |   |   |   |   |
|           liabilities upon vesting (8,596 shares) |   |   | -      |   |       |   | -      |     |   |   | -             |   |   |         | -       |   |   |   | (175 | ) |   |   | (175 | ) |
| Issuance      of common stock to employee benefit plans and           |   |   |   |   |       |   |   |     |   |   |          |   |   |         |    |   |   |   |   |   |   |   |   |   |
|           restricted stock awards (86,087 shares) |   |   | 22     |   |       |   | (225   | )        |   |   | -             |   |   |         | -       |   |   |   | 725 |   |   |   | 522 |   |
| Stock-based      compensation recognized                              |   |   | -      |   |       |   | 703    |     |   |   | -             |   |   |         | -       |   |   |   | - |   |   |   | 703 |   |
| Dividends      ($0.48 per common share)                               |   |   | -      |   |       |   | -      |     |   |   | (3,096        | )      |   |         | -       |   |   |   | - |   |   |   | (3,096 | ) |
|                                                                  |   |   |   |   |       |   |   |     |   |   |          |   |   |         |    |   |   |   |   |   |   |   |   |   |
| Balance      at November 8, 2008                                      |   | $      | 6,833  |   |       | $      | 28,350 |     |   | $      | 202,141       |   |   | $            | (10,663 | )      |   | $      | (232,869 | ) |   | $ | (6,208 | ) |
|                                                                  |   |   |   |   |       |   |   |     |   |   |          |   |   |         |    |   |   |   |   |   |   |   |   |   |

| thousands                                                                                      |   | 40      Weeks Ended   |    |
|------------------------------------------------------------------------------------------------|--------|-----------------------|---------|
|                                                                                           |   | November      8, 2008 |    |   | November      10, 2007 |   |
| Reconciliation      of net loss to cash flows (used in) provided by operating      activities: |   |                  |    |   |   |   |
|                                                                                           |   |                  |    |   |   |   |
| Net      loss                                                                                  |   | $                     | (17,198 | ) |   | $ | (12,153 | ) |
|                                                                                           |   |                  |    |   |   |   |   |   |
| Adjustments      for items not requiring (providing) cash:                                     |   |                  |    |   |   |   |   |   |
|         Depreciation and amortization                                                |   |                  | 21,764  |   |   |   | 19,669 |   |
|         Loss from discontinued operations                                            |   |                  | -       |   |   |   | 197 |   |
|         Stock-based compensation expense                                             |   |                  | 703     |   |   |   | 1,590 |   |
|         Loss on disposition of property and equipment                                |   |                  | 894     |   |   |   | 79 |   |
|         (Gain) loss on sale of assets held for sale                                  |   |                  | (2      | ) |   |   | 60 |   |
|         Deferred income tax provision                                                |   |                  | (9,753  | ) |   |   | (5,503 | ) |
|         Pension, supplemental retirement plan and profit sharing      expense        |   |                  | 1,310   |   |   |   | 1,611 |   |
|         Other                                                                        |   |                  | 517     |   |   |   | 458 |   |
|                                                                                           |   |                  |    |   |   |   |   |   |
| Increase      (decrease) in cash flow from operating assets and    liabilities:                |   |                  |    |   |   |   |   |   |
|         Accounts receivable                                                          |   |                  | 814     |   |   |   | (4,043 | ) |
|         Inventories                                                                  |   |                  | 2,248   |   |   |   | (2,558 | ) |
|         Prepaid expenses and other current assets                                    |   |                  | (6,983  | ) |   |   | (4,471 | ) |
|         Accounts payable                                                             |   |                  | (3,527  | ) |   |   | 4,224 |   |
|         Contribution to pension plan                                                 |   |                  | (2,693  | ) |   |   | (3,508 | ) |
|         Supplemental retirement plan payments                                        |   |                  | (135    | ) |   |   | (203 | ) |
|         Accrued expenses and other liabilities                                       |   |                  | (465    | ) |   |   | 6,321 |   |
|         Income taxes payable                                                         |   |                  | (440    | ) |   |   | (2,301 | ) |
|         Deferred revenues and related costs                                          |   |                  | (279    | ) |   |   | 10,201 |   |
|         Other                                                                        |   |                  | (428    | ) |   |   | 1,802 |   |
|                                                                                           |   |                  |    |   |   |   |   |   |
| Cash      flows (used in) provided by operations                                               |   |                  | (13,653 | ) |   |   | 11,472 |   |
|                                                                                           |   |                  |    |   |   |   |   |   |
| Cash      flows used in discontinued operations                                                |   |                  | -       |   |   |   | (197 | ) |
|                                                                                           |   |                  |    |   |   |   |   |   |
| Cash      flows (used in) provided by operating activities                                     |   | $                     | (13,653 | ) |   | $ | 11,275 |   |
|                                                                                           |   |                  |    |   |   |   |   |   |

| thousands                                                                                          |   | 40      Weeks Ended   |    |
|----------------------------------------------------------------------------------------------------|--------|-----------------------|---------|
|                                                                                               |   | November      8, 2008 |    |   | November      10, 2007 |   |
|                                                                                               |   |                  |    |   |   |   |
| Cash      flows (used in) provided by operating activities                                         |   | $                     | (13,653 | ) |   | $ | 11,275 |   |
|                                                                                               |   |                  |    |   |   |   |   |   |
| Cash      flows (used in) provided by financing activities:                                        |   |                  |    |   |   |   |   |   |
|         Repayment of long-term debt                                                      |   |                  | (8,410  | ) |   |   | (16,954 | ) |
|         Proceeds from long-term borrowings                                               |   |                  | -       |   |   |   | 116,062 |   |
|         Release of restricted cash                                                       |   |                  | -       |   |   |   | 1,000 |   |
|         Payment of debt issuance costs                                                   |   |                  | -       |   |   |   | (2,690 | ) |
|         Proceeds from short-term borrowings                                              |   |                  | 5,500   |   |   |   | - |   |
|         Surrender of employee shares to satisfy personal tax liability upon      vesting |   |                  | (175    | ) |   |   | (547 | ) |
|         Cash dividends                                                                   |   |                  | (3,096  | ) |   |   | (3,059 | ) |
|         Other                                                                            |   |                  | 44      |   |   |   | - |   |
|         Cash flows (used in) provided by financing activities                            |   |                  | (6,137  | ) |   |   | 93,812 |   |
|                                                                                               |   |                  |    |   |   |   |   |   |
| Cash      flows (used in) provided by investing activities:                                        |   |                  |    |   |   |   |   |   |
|         Additions to property and equipment                                              |   |                  | (31,198 | ) |   |   | (12,504 | ) |
|         Proceeds from sale of assets held for sale                                       |   |                  | 2       |   |   |   | 65 |   |
|         Adjustments (payments) related to the acquisition of    certain                  |   |                  |    |   |   |   |   |   |
|           net assets of Portrait Corporation of America, Inc.                  |   |                  | (7      | ) |   |   | (83,284 | ) |
|         Increase in assets held by Rabbi Trust                                           |   |                  | (44     | ) |   |   | (144 | ) |
|         Proceeds from Rabbi Trust used for supplemental retirement plan      payments    |   |                  | 146     |   |   |   | 213 |   |
|         Cash flows used in investing activities                                          |   |                  | (31,101 | ) |   |   | (95,654 | ) |
|                                                                                               |   |                  |    |   |   |   |   |   |
| Effect      of exchange rate changes on cash and cash equivalents                                  |   |                  | (163    | ) |   |   | 303 |   |
|                                                                                               |   |                  |    |   |   |   |   |   |
| Net      (decrease) increase in cash and cash equivalents                                          |   |                  | (51,054 | ) |   |   | 9,736 |   |
|                                                                                               |   |                  |    |   |   |   |   |   |
| Cash      and cash equivalents at beginning of period                                              |   |                  | 59,177  |   |   |   | 26,294 |   |
|                                                                                               |   |                  |    |   |   |   |   |   |
| Cash      and cash equivalents at end of period                                                    |   | $                     | 8,123   |   |   | $ | 36,030 |   |
|                                                                                               |   |                  |    |   |   |   |   |   |
| Supplemental      cash flow information:                                                           |   |                  |    |   |   |   |   |   |
|         Interest paid                                                                    |   | $                     | 5,807   |   |   | $ | 3,943 |   |
|                                                                                               |   |                  |    |   |   |   |   |   |
|         Income taxes paid                                                                |   | $                     | 1,019   |   |   | $ | 2,092 |   |
|                                                                                               |   |                  |    |   |   |   |   |   |
| Supplemental      non-cash financing activities:                                                   |   |                  |    |   |   |   |   |   |
|         Issuance of treasury stock under the employee Profit Sharing      Plan           |   | $                     | 521     |   |   | $ | 442 |   |
|                                                                                               |   |                  |    |   |   |   |   |   |
|         Issuance of restricted stock and stock options to employees and      directors   |   | $                     | 870     |   |   | $ | 2,683 |   |
|                                                                                               |   |                  |    |   |   |   |   |   |

| NOTE      1   - | DESCRIPTION      OF BUSINESS AND INTERIM CONDENSED CONSOLIDATED FINANCIAL      STATEMENTS |
|--------------------------------|-------------------------------------------------------------------------------------------|

| NOTE      2   - | ADOPTION      OF NEW ACCOUNTING STANDARDS |
|--------------------------------|-------------------------------------------|

|   | Level 1      - | Inputs were unadjusted, quoted prices in active markets      for identical assets or liabilities at the measurement  date. |
|--------|---------------------|----------------------------------------------------------------------------------------------------------------------------|

|   | Level      2 - | Inputs      (other than quoted prices included in Level 1) were either directly or      indirectly observable for the asset or liability through correlation with      market data at the measurement date and for the duration of the      instrument’s anticipated life. |
|--------|----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Level      3 - | Inputs      reflected management’s best estimate of what market participants would use      in pricing the asset or liability at the measurement date. Consideration      was given to the risk inherent in the valuation technique and the risk      inherent in the inputs to themodel. |
|--------|----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|        |                        | Fair      Value Measurements |
|-------------|-----------------------------|------------------------------|
|        |                        | Level      1                 |   | Level      2 |   | Level      3 |   | Total |
| Liabilities |                        |                         |   |   |   |   |   |   |
|        | Interest      rate swap (1) |                         |  $             - |   |  $          3.0 |   |  $             - |   |  $          3.0 |
|        |                        |                         |   |   |   |   |   |   |   |

| (1) | The      total fair value of the interest rate swap is included in Other      Liabilities as of November 8, 2008.  This financial instrument      was valued using the “income approach” valuation      technique.  This method used valuation techniques to convert      future amounts to a single present amount.  The measurement was      based on the value indicated by current market expectations about those      future amounts.  The Company uses its interest rate swap as a      means of managing interest rates on its outstanding fixed-rate debt      obligations.  The fair value of the interest rate swap at      November 8, 2008, is not significantly different than the fair value at      February 2, 2008. The      Company also uses fair value measurements when it periodically evaluates      the recoverability of goodwill, acquired intangible assets and long-lived      assets. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| NOTE 3   - | BUSINESS      ACQUISITION |
|--------------------------------|---------------------------|

|                               |   | First      Three Quarters |    |
|------------------------------------|--------|---------------------------|---------|
|                               |   | 2007                      |    |
| Revenue                            |   | $                         | 344,038 |   |
|                               |   |                      |    |   |
| Net      loss                      |   | $                         | (29,034 | ) |
|                               |   |                      |    |   |
| Basic      loss per common share   |   | $                         | (4.55   | ) |
|                               |   |                      |    |   |
| Diluted      loss per common share |   | $                         | (4.55   | ) |
|                               |   |                      |    |   |

| NOTE      4   - | DISCONTINUED      OPERATIONS |
|--------------------------------|------------------------------|

| thousands                                  |   | 16      Weeks Ended    |   |   | 22      Weeks Ended    |   |
|--------------------------------------------|--------|------------------------|--------|--------|------------------------|--------|
|                                       |   | November      10, 2007 |   |   | November      10, 2007 |   |
| Discontinued      operations:              |   |                   |   |   |                   |   |
|                                       |   |                   |   |   |                   |   |
| Net      sales                             |   | $                      | 166    |   |                   | $      | 231 |   |
|                                       |   |                   |   |   |                   |   |   |   |
| Operating      loss                        |   | $                      | (91    | )      |                   | $      | (197 | ) |
|                                       |   |                   |   |   |                   |   |   |   |
| Net      loss from discontinued operations |   | $                      | (91    | )      |                   | $      | (197 | ) |
|                                       |   |                   |   |   |                   |   |   |   |

| NOTE      5   - | INVENTORIES |
|--------------------------------|-------------|

| thousands                                |   | November      8, 2008 |   |   | February      2, 2008 |   |
|------------------------------------------|--------|-----------------------|--------|--------|-----------------------|--------|
|                                     |   |                  |   |   |                  |   |
| Raw      materials - paper and chemicals |   | $                     | 3,872  |   |                  | $      | 4,902 |   |
| Portraits      in process                |   |                  | 2,435  |   |                  |   | 2,244 |   |
| Finished      portraits pending delivery |   |                  | 736    |   |                  |   | 1,187 |   |
| Frames      and accessories              |   |                  | 467    |   |                  |   | 634 |   |
| Studio      supplies                     |   |                  | 2,852  |   |                  |   | 3,636 |   |
| Equipment      repair parts and supplies |   |                  | 815    |   |                  |   | 1,246 |   |
| Other                                    |   |                  | 508    |   |                  |   | 447 |   |
|                                     |   |                  |   |   |                  |   |   |   |
| Total                                    |   | $                     | 11,685 |   |                  | $      | 14,296 |   |
|                                     |   |                  |   |   |                  |   |   |   |

|  NOTE 6   - | ASSETS      HELD FOR SALE |
|--------------------------------------|---------------------------|

| Land                                     |   | $      | 675    |   |
|------------------------------------------|--------|--------|--------|--------|
| Buildings      and building improvements |   | $      | 1,096  |   |
|                                     |   |   |   |   |
| Assets      held for sale                |   | $      | 1,771  |   |
|                                     |   |   |   |   |

|  NOTE 7   - | GOODWILL      AND INTANGIBLE ASSETS |
|--------------------------------------|-------------------------------------|

| thousands                                   |   | November      8, 2008 |   |   | February      2, 2008 |   |
|---------------------------------------------|--------|-----------------------|--------|--------|-----------------------|--------|
|                                        |   |                  |   |   |                  |   |
| PCA      acquisition                        |   | $                     | 21,227 |   |                  | $      | 17,338 |   |
|                                        |   |                  |   |   |                  |   |   |   |
| Goodwill      from prior acquisitions       |   |                  | 512    |   |                  |   | 512 |   |
|                                        |   |                  |   |   |                  |   |   |   |
| Translation      impact on foreign balances |   |                  | (219   | )      |                  |   | 199 |   |
|                                        |   | $                     | 21,520 |   |                  | $      | 18,049 |   |
|                                        |   |                  |   |   |                  |   |   |   |

|                         |   |   |   |   |         |   |   | Translation    |   |   |    |   |
|------------------------------|--------|--------|--------|--------|--------------|--------|--------|----------------|--------|--------|---------|--------|
|                         |   |   |   |   |         |   |   | Impact      of |   |   |    |   |
|                         |   | Gross  |   |   | Accumulated  |   |   | Foreign        |   |   | Net     |   |
| thousands                    |   | Amount |   |   | Amortization |   |   | Balances       |   |   | Balance |   |
|                         |   |   |   |   |         |   |   |           |   |   |    |   |
| Acquired      host agreement |   | $      | 43,710 |   |         | $      | 2,920  |           |   | $      | (743    | )      |   | $ | 40,047 |   |
| Acquired      customer list  |   |   | 3,069  |   |         |   | 2,070  |           |   |   | (5      | )      |   |   | 994 |   |
|                         |   | $      | 46,779 |   |         | $      | 4,990  |           |   | $      | (748    | )      |   | $ | 41,041 |   |
|                         |   |   |   |   |         |   |   |           |   |   |    |   |   |   |   |   |

| NOTE 8   - | OTHER      ASSETS AND OTHER LIABILITIES |
|--------------------------------|-----------------------------------------|

| NOTE      9   - | STOCK-BASED      COMPENSATION PLANS |
|--------------------------------|-------------------------------------|

|                                                                                                                      |   | Options      Outstanding and Exercisable                                                                            |
|---------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------|
| Range      of                                                                                                             |   | Number      of Shares                                                                                               |   | Weighted-AverageRemaining      Contractual |   | Weighted-Average |   | Number      of Shares |   | Weighted      Average |
| Exercise      Prices                                                                                                      |   | Outstanding                                                                                                         |   | Life      (Years) |   | Exercise      Price |   | Exercisable |   | Exercise      Price |
| $                 12.21      - 13.58 |   |                   217,500 |   |                                 8.43 |   |  $                      13.04 |   |                                   - |   |  $                             - |
|                                                                                                                      |   |                                                                                                                |   |   |   |   |   |   |   |   |
| Total                                                                                                                     |   |                   217,500 |   |                                 8.43 |   |  $                      13.04 |   |                                   - |   |  $                             - |
|                                                                                                                      |   |                                                                                                                |   |   |   |   |   |   |   |   |

|                                         |   | 40      Weeks Ended   |
|----------------------------------------------|--------|-----------------------|
|                                         |   | November      8, 2008 |
| Expected      term until exercise (years)    |   | 3.45      - 8.09      |
| Expected      stock price volatility         |   | 41.97%      - 52.05%  |
| Weighted-average      stock price volatility |   | 44.23%                |
| Expected      dividends                      |   | 4.71%      - 5.24%    |
| Risk-free      interest rate                 |   | 2.55%      - 3.59%    |

| thousands                           |   |   |    |   | Weighted-           |   |
|-------------------------------------|--------|--------|---------|--------|---------------------|--------|
|                                |   |   |    |   | Average             |   |
|                                |   | Shares |    |   | Exercise      Price |   |
|                                |   |   |    |   |                |   |
| Balance      at beginning of period |   |   | 35,046  |   |                | $      | 15.56 |   |
| Cancelled      or expired           |   |   | (20,000 | )      |                |   | 16.50 |   |
| End      of period balance          |   |   | 15,046  |   |                | $      | 14.30 |   |
|                                |   |   |    |   |                |   |   |   |

| Options      Outstanding and Exercisable                                                                                                                                                              |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                  |   |   |   | Weighted-Average |   |   |
|                                                                                                                                                                                                  |   |   |   | Remaining      Contractual |   | Weighted-Average |
| Exercise      Price                                                                                                                                                                                   |   | Shares |   | Life      (Years) |   | Exercise      Price |
|  $                             12.96            |   |                     10,046 |   |                                 1.95 |   |  $                      12.96 |
|                                 17.00 |   |                       5,000 |   |                                 1.43 |   |                          17.00 |
|                                                                                                                                                                                                  |   |   |   |   |   |   |
| Total                                                                                                                                                                                                 |   |                     15,046 |   |                                 1.78 |   |  $                      14.30 |
|                                                                                                                                                                                                  |   |   |   |   |   |   |

|                                          |   | 40      Weeks Ended November 8, 2008 |    |
|-----------------------------------------------|--------|--------------------------------------|---------|
|                                          |   |                                 |    |   | Weighted-Average |   |
|                                          |   | Shares                               |    |   | Grant-Date      Value |   |
| Nonvested      stock, beginning of period     |   |                                 | 1,584   |   |   | $ | 18.95 |   |
| Granted                                       |   |                                 | 48,446  |   |   |   | 17.54 |   |
| Vested                                        |   |                                 | (4,095  | ) |   |   | 12.21 |   |
| Forfeited                                     |   |                                 | (3,554  | ) |   |   | 15.80 |   |
| Nonvested      stock, end of period           |   |                                 | 42,381  |   |   | $ | 18.25 |   |
|                                          |   |                                 |    |   |   |   |   |   |
| Stock-based      compensation expense related |   |                                 |    |   |   |   |   |   |
|        to restricted stock               |   | $                                    | 559,000 |   |   |   |   |   |
|                                          |   |                                 |    |   |   |   |   |   |

| NOTE      10   - | EMPLOYEE      BENEFIT PLANS |
|---------------------------------|-----------------------------|

| thousands                                      |   | 16      Weeks Ended   |   |   | 16      Weeks Ended               |   |
|------------------------------------------------|--------|-----------------------|--------|--------|-----------------------------------|--------|
|                                                |   | Pension      Plan     |   |   | Supplemental      Retirement Plan |   |
|                                           |   | November      8, 2008 |   |   | November      10, 2007            |   |   | November      8, 2008 |   |   | November      10, 2007 |   |
| Components      of net periodic benefit costs: |   |                  |   |   |                              |   |   |   |   |   |   |   |
|        Service cost                       |   | $                     | 83     |   |                              | $      | 101 |   |   | $ | 22 |   |   | $ | 23 |   |
|        Interest cost                      |   |                  | 923    |   |                              |   | 898 |   |   |   | 65 |   |   |   | 64 |   |
|        Expected return on plan assets     |   |                  | (996   | )      |                              |   | (904 | ) |   |   | - |   |   |   | - |   |
|        Amortization of prior service cost |   |                  | 14     |   |                              |   | 14 |   |   |   | 9 |   |   |   | 9 |   |
|        Amortization of net loss (gain)    |   |                  | 215    |   |                              |   | 274 |   |   |   | (18 | ) |   |   | (10 | ) |
|                                           |   |                  |   |   |                              |   |   |   |   |   |   |   |   |   |   |   |
| Net      periodic benefit cost                 |   | $                     | 239    |   |                              | $      | 383 |   |   | $ | 78 |   |   | $ | 86 |   |
|                                           |   |                  |   |   |                              |   |   |   |   |   |   |   |   |   |   |   |

| thousands                                      |   | 40      Weeks Ended   |   |   | 40      Weeks Ended               |   |
|------------------------------------------------|--------|-----------------------|--------|--------|-----------------------------------|--------|
|                                           |   | Pension      Plan     |   |   | Supplemental      Retirement Plan |   |
|                                           |   | November      8, 2008 |   |   | November      10, 2007            |   |   | November      8, 2008 |   |   | November      10, 2007 |   |
| Components      of net periodic benefit costs: |   |                  |   |   |                              |   |   |   |   |   |   |   |
|        Service cost                       |   | $                     | 207    |   |                              | $      | 251 |   |   | $ | 55 |   |   | $ | 60 |   |
|        Interest cost                      |   |                  | 2,305  |   |                              |   | 2,248 |   |   |   | 163 |   |   |   | 159 |   |
|        Expected return on plan assets     |   |                  | (2,488 | )      |                              |   | (2,262 | ) |   |   | - |   |   |   | - |   |
|        Amortization of prior service cost |   |                  | 34     |   |                              |   | 34 |   |   |   | 24 |   |   |   | 23 |   |
|        Amortization of net loss (gain)    |   |                  | 537    |   |                              |   | 684 |   |   |   | (46 | ) |   |   | (26 | ) |
|                                           |   |                  |   |   |                              |   |   |   |   |   |   |   |   |   |   |   |
| Net      periodic benefit cost                 |   | $                     | 595    |   |                              | $      | 955 |   |   | $ | 196 |   |   | $ | 216 |   |
|                                           |   |                  |   |   |                              |   |   |   |   |   |   |   |   |   |   |   |

| NOTE      11   - | INCOME      TAXES |
|---------------------------------|-------------------|

| · | Unrecognized      tax benefits were approximately $2.8 million at November 8, 2008, and $2.7      million at February 2, 2008.  If these unrecognized tax benefits      were recognized, approximately $2.8 million would impact the effective tax      rate.  It is not expected  the amount of these      unrecognized tax benefits will change in the next 12    months. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| · | The      Company recognizes interest expense and penalties related to the      above-unrecognized tax benefits within income tax expense.  Due      to the nature of the unrecognized tax benefits, the Company had no accrued      interest and penalties as of November 8, 2008, or February 2,      2008.                                                                                    |
| · | The      Company and its subsidiaries file income tax returns in the U.S. federal      jurisdiction, many states, Mexican and Canadian      jurisdictions.  The Company is no longer subject to U.S. Federal      income tax examination for the years prior to      2003.   Ongoing examinations by various state taxing      authorities date back to February 1,2003.         |

| NOTE      12   - | CONTINGENCIES |
|---------------------------------|---------------|

Item2.                 Management’sDiscussion and Analysis of Financial Condition and Results ofOperations

|                                               |                               | November      8, 2008 |   | November      10, 2007 |
|----------------------------------------------------|------------------------------------|-----------------------|--------|------------------------|
| Within      Sears or Sears Grand Stores:           |                               |                  |   |                   |
|                                               | United      States and Puerto Rico |                  | 891    |                   | 893 |
|                                               | Canada                             |                  | 110    |                   | 112 |
|                                               |                               |                  |   |                   |
| Within      Wal-Mart Stores:                       |                               |                  |   |                   |
|                                               | United      States and Puerto Rico |                  | 1,656  |                   | 1,703 |
|                                               | Canada                             |                  | 254    |                   | 252 |
|                                               | Mexico                             |                  | 118    |                   | 108 |
|                                               |                               |                  |   |                   |
| Locations      not within Sears or Wal-Mart stores |                               | 33                    |   | 32                     |
|                                               |                               |                  |   |                   |
| Total                                              |                               | 3,062                 |   | 3,100                  |
|                                               |                               |                  |   |                   |

| thousands,      except share and per share data                                                           |   | 16      Weeks Ended   |      |   | 40      Weeks Ended    |   |
|-----------------------------------------------------------------------------------------------------------|--------|-----------------------|-----------|--------|------------------------|--------|
|                                                                                                      |   | November      8, 2008 |      |   | November      10, 2007 |   |   | November      8, 2008 |   |   | November      10, 2007 |   |
|                                                                                                      |   |                  |      |   |                   |   |   |   |   |   |   |   |
| Net      sales                                                                                            |   | $                     | 115,849   |   |                   | $      | 135,392 |   |   | $ | 308,923 |   |   | $ | 261,256 |   |
|                                                                                                      |   |                  |      |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Cost      and expenses:                                                                                   |   |                  |      |   |                   |   |   |   |   |   |   |   |   |   |   |   |
|           Cost of sales (exclusive of depreciation and amortization shown      below) |   |                  | 10,785    |   |                   |   | 15,467 |   |   |   | 29,773 |   |   |   | 28,454 |   |
|           Selling, general and administrative expenses                                |   |                  | 111,397   |   |                   |   | 120,392 |   |   |   | 275,160 |   |   |   | 223,919 |   |
|           Depreciation and amortization                                               |   |                  | 8,668     |   |                   |   | 10,079 |   |   |   | 21,764 |   |   |   | 19,669 |   |
|           Other charges and impairments                                               |   |                  | 1,284     |   |                   |   | 2,025 |   |   |   | 2,397 |   |   |   | 3,471 |   |
|                                                                                                      |   |                  | 132,134   |   |                   |   | 147,963 |   |   |   | 329,094 |   |   |   | 275,513 |   |
|                                                                                                      |   |                  |      |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Loss      from continuing operations                                                                      |   |                  | (16,285   | )      |                   |   | (12,571 | ) |   |   | (20,171 | ) |   |   | (14,257 | ) |
|                                                                                                      |   |                  |      |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Interest      expense                                                                                     |   |                  | 3,866     |   |                   |   | 3,365 |   |   |   | 6,753 |   |   |   | 5,374 |   |
| Interest      income                                                                                      |   |                  | 87        |   |                   |   | 537 |   |   |   | 567 |   |   |   | 1,253 |   |
| Other      income, net                                                                                    |   |                  | 56        |   |                   |   | 42 |   |   |   | 59 |   |   |   | 48 |   |
|                                                                                                      |   |                  |      |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Loss      from continuing operations before income tax benefit                                            |   |                  | (20,008   | )      |                   |   | (15,357 | ) |   |   | (26,298 | ) |   |   | (18,330 | ) |
| Income      tax benefit                                                                                   |   |                  | 6,667     |   |                   |   | 5,341 |   |   |   | 9,100 |   |   |   | 6,374 |   |
|                                                                                                      |   |                  |      |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Net      loss from continuing operations                                                                  |   |                  | (13,341   | )      |                   |   | (10,016 | ) |   |   | (17,198 | ) |   |   | (11,956 | ) |
|                                                                                                      |   |                  |      |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Net      loss from discontinued operations                                                                |   |                  | -         |   |                   |   | (91 | ) |   |   | - |   |   |   | (197 | ) |
|                                                                                                      |   |                  |      |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| NET      LOSS                                                                                             |   | $                     | (13,341   | )      |                   | $      | (10,107 | ) |   | $ | (17,198 | ) |   | $ | (12,153 | ) |
|                                                                                                      |   |                  |      |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| NET      LOSS PER COMMON SHARE                                                                            |   |                  |      |   |                   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                      |   |                  |      |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Net      loss per share from continuing operations - diluted                                              |   | $                     | (2.06     | )      |                   | $      | (1.56 | ) |   | $ | (2.66 | ) |   | $ | (1.87 | ) |
| Net      loss per share from discontinued operations - diluted                                            |   |                  | -         |   |                   |   | (0.01 | ) |   |   | - |   |   |   | (0.03 | ) |
| Net      loss per share - diluted                                                                         |   | $                     | (2.06     | )      |                   | $      | (1.57 | ) |   | $ | (2.66 | ) |   | $ | (1.90 | ) |
|                                                                                                      |   |                  |      |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Net      loss per share from continuing operations - basic                                                |   | $                     | (2.06     | )      |                   | $      | (1.56 | ) |   | $ | (2.66 | ) |   | $ | (1.87 | ) |
| Net      loss per share from discontinued operations - basic                                              |   |                  | -         |   |                   |   | (0.01 | ) |   |   | - |   |   |   | (0.03 | ) |
| Net      loss per share - basic                                                                           |   | $                     | (2.06     | )      |                   | $      | (1.57 | ) |   | $ | (2.66 | ) |   | $ | (1.90 | ) |
|                                                                                                      |   |                  |      |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Weighted      average number of common and common equivalent                                              |   |                  |      |   |                   |   |   |   |   |   |   |   |   |   |   |   |
|           shares outstanding - diluted                                                |   |                  | 6,479,496 |   |                   |   | 6,401,943 |   |   |   | 6,467,352 |   |   |   | 6,385,645 |   |
|                                                                                                      |   |                  |      |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Weighted      average number of common and common equivalent                                              |   |                  |      |   |                   |   |   |   |   |   |   |   |   |   |   |   |
|           shares outstanding - basic                                                  |   |                  | 6,479,496 |   |                   |   | 6,401,943 |   |   |   | 6,467,352 |   |   |   | 6,385,645 |   |
|                                                                                                      |   |                  |      |   |                   |   |   |   |   |   |   |   |   |   |   |   |

| ·   | Net      sales for the third quarter of 2008 decreased $19.6 million, or 14.5%, to      $115.8 million from the $135.4 million reported in the third quarter of      2007. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Cost      of sales, excluding depreciation and amortization expense, was $10.8      million in the third quarter of 2008 compared with $15.5 million in the      comparable prior year period.   The decrease in cost of      sales is attributable to decreased production costs resulting from      lower overall manufacturing production levels, additional gains in      manufacturing productivity, savings on film and shipping costs that      resulted directly from the PMPS digital conversion, as well as decreased      overhead costs as operations have been further streamlined in connection      with the PMPS acquisition and digital  conversion. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Selling,      general and administrative (“SG&A”) expenses were $111.3 million and      $120.4 million for the third quarter of 2008 and 2007,      respectively.  The decrease in third quarter 2008 SG&A costs      is primarily related to reductions in expense due to the elimination of      duplicate costs, streamlining of operations related to the PMPS brand,      more effective cost management, particularly in the areas of employment      and insurance, reduced marketing expense primarily due to the timing of      promotional programs for the busy season, as well as reduced host sales      commissions due to lower sales.  These decreases were partially      offset by a $1.6 million increase in digital training and travel costs      related to the conversion of PMPS studios incurred during the quarter, the      recording of contingent commissions due to Sears as a result of the PMPS      acquisition and a nonrecurring 2007 reduction of $1.3 million attributable      to a change in the Company’s vacation and sick pay  policy. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                  ● | Depreciation      and amortization declined to $8.7 million in the third quarter of 2008      from $10.1 million in the comparable quarter of 2007 as a result of      certain assets, acquired in connection both with the 2005 digital      conversion of SPS and the 2007 acquisition of PCA, becoming fully      depreciated. |
|---------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                  ● | In      the third quarter of 2008 and 2007, the Company recognized $1.3 million      and $2.0 million, respectively, in other charges and impairments      associated with the PMPS Acquisition, which include severance costs,      severance accruals, cure costs related to contracts assumed and other      integration-related costs in connection with the PMPS      Acquisition. |
|---------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Net      sales for the first three quarters of 2008 increased $47.6 million, or      18.2%, to $308.9 million      from the $261.3 million reported in the first three quarters of      2007.   |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Cost      of sales, excluding depreciation and amortization expense, was $29.8      million in the first three quarters of 2008 compared with $28.4 million in      the comparable prior year period.  The increase in cost of sales      is attributable to the inclusion of forty weeks of PMPS cost of sales      in the first three quarters of 2008, compared to only twenty-two weeks for      the first three quarters of 2007, partially offset by decreased production      costs resulting from lower overall manufacturing production levels,      additional gains in manufacturing productivity, improved product      mix and savings on film and shipping costs that resulted directly from the      PMPS digital conversion, as well as decreased overhead costs as operations      have been further streamlined in connection with the PMPS acquisition and      digital conversion. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Selling,      general and administrative (“SG&A”) expenses were $275.2 million and      $223.9 million for the first three quarters of 2008 and 2007,      respectively.   The increase in the first three quarters      2008 SG&A costs is primarily attributable to the inclusion of forty      weeks of PMPS costs, compared to only twenty-two weeks in the first three      quarters of 2007.  The comparison is also affected by $4.6      million of digital training and travel costs related to the conversion of      PMPS studios incurred during the first three quarters, the recording of      contingent commissions due to Sears as a result of the PMPS acquisition,      as well as nonrecurring reductions in SG&A in the prior year period of      approximately $4.4 million from the deferred revenue purchase accounting      adjustment and $3.0 million attributable to a change in the Company’s      vacation and sick pay policy.  These increases were partially      offset by the elimination of duplicate costs, streamlining of operations      related to the PMPS brand, more effective cost management, particularly in      the areas of employment and insurance, reduced marketing expense primarily      due to the timing of promotional programs for the busy season, as well as      reduced host sales commissions due to lower  sales. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Depreciation      and amortization was $21.7 million in the first three quarters of 2008,      compared to $19.7 million in the comparable first three quarters of      2007.  This increase is attributable to the inclusion of forty weeks      of PMPS costs, compared to only twenty-two weeks in the first three      quarters of 2007, as well as increased depreciation in relation to      equipment purchased for the digital rollout.  These increases      were partially offset by a decline in depreciation as a result of certain      assets, acquired in connection both with the 2005 digital conversion of      SPS and the 2007 acquisition of PCA, becoming fully      depreciated. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | In      the first three quarters of 2008 and 2007, the Company recognized $2.4      million and $3.5 million, respectively, in other charges and impairments      associated with the PMPS Acquisition, which include severance costs,      severance accruals, cure costs related to contracts assumed and other      integration-related costs in connection with the PMPS      Acquisition.     |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| thousands                                    |   | 40      Weeks Ended   |    |
|----------------------------------------------|--------|-----------------------|---------|
|                                         |   | November      8, 2008 |    |   | November      10, 2007 |   |
| Net      cash (used in) provided by:         |   |                  |    |   |   |   |
| Operating      activities                    |   | $                     | (13,653 | ) |   | $ | 11,275 |   |
| Financing      activities                    |   |                  | (6,137  | ) |   |   | 93,812 |   |
| Investing      activities                    |   |                  | (31,101 | ) |   |   | (95,654 | ) |
| Effect      of exchange rate changes on cash |   |                  | (163    | ) |   |   | 303 |   |
|                                         |   |                  |    |   |   |   |   |   |
| Net      (decrease) increase in cash         |   | $                     | (51,054 | ) |   | $ | 9,736 |   |
|                                         |   |                  |    |   |   |   |   |   |

Item3

| Notional      amount        |   | $                       | 57,500,000 |   |
|-----------------------------|--------|-------------------------|------------|--------|
|                        |   |                    |       |   |
| Fixed      rate paid        |   |                    | 4.97       | %      |
|                        |   |                    |       |   |
| Variable      rate received |   |                    | 4.00       | %      |
|                        |   |                    |       |   |
| Effective      date         |   | September      17, 2007 |       |
|                        |   |                    |       |   |
| Expiration      date        |   | September      17, 2010 |       |

Item4.                      Controlsand Procedures

| a)   | Evaluation      of Disclosure Controls andProcedures |
|----------------|------------------------------------------------------|

| b)   | Changes in Internal  Control |
|----------------|------------------------------|

| c)   | RemediationActivities |
|----------------|-----------------------|

| ·   | Implementing      effective controls over tax depreciation amounts, which include the timely      resolution of reconciling items between the Company’s tax returns, the      Company’s tax depreciation records, and the calculations of deferred taxes      and income tax expense. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Establishing      management monitoring controls to ensure those reconciliation controls are      designed and operating effectively. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Establishing      policies and procedures to ensure the fair value of the interest rate swap      is properly determined andrecorded. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Establishing      management monitoring controls to policies and procedures over determining      and recording of the interest rate swap is designed and operating      effectively. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Establishing      policies and procedures to ensure the accrual for unpaid advertising costs      is properly determined andrecorded. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Establishing      management monitoring controls for policies and procedures over the      determination and recording of the advertising accrual to ensure controls      are designed and operatingeffectively. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

PART II

|   | CPI CORP.(Registrant) |                                                                                                    |
|--------|-----------------------|---------------------------------------------------------------------------------------------------------|
|   |                  |                                                                                                    |   |
|   | By:                   | /s/Dale      Heins                                                                                      |   |
|   |                  | Dale      Heins                                                                                         |   |
|   |                  | Senior      Vice President, Finance and Chief      Financial Officer (Principal      Financial Officer) |   |
|   |                  |                                                                                                    |   |

|   |   |                                                                                          |   |
|--------|--------|-----------------------------------------------------------------------------------------------|--------|
|   | By:    | /s/Rose      O'Brien                                                                          |   |
|   |   | Rose      O'BrienVice      President, Corporate Controller(Principal      Accounting Officer) |   |
|   |   |                                                                                          |   |

EXHIBIT

| 10.64  |   | Master      Lease Agreement between Wal-Mart Stores East, L.P., Wal-Mart Stores, Inc.,      Wal-Mart Louisiana, LLC,                      |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------|
|   |   | Wal-Mart      Stores Texas, LP, and Portrait Corporation of America, Inc.  The      Company received the confidential treatment |
|   |   | request      granted.                                                                                                                     |
|   |   |                                                                                                                                      |
| 10.65  |   | Employment      Agreement by and between CPI Corp. and Jim Mills, dated September 2,      2008.                                           |
|   |   |                                                                                                                                      |
| 10.66  |   | Chairman's      Agreement by and between CPI Corp. and David Meyer, dated September 22,      2008.                                        |
|   |   |                                                                                                                                      |
| 11.1   |   | Computation      of Per Common Share Loss - Diluted - for the 16 and 40 weeks ended      November 8, 2008 and November 10, 2007.          |
|   |   |                                                                                                                                      |
| 11.2   |   | Computation      of Per Common Share Loss - Basic - for the 16 and 40 weeks ended November      8, 2008 and November 10, 2007.            |
|   |   |                                                                                                                                      |
| 31.1   |   | Certification      Pursuant to Rule 13a-14(a) under the Securities and Exchange Act of 1934      by the Chief Executive Officer.          |
|   |   |                                                                                                                                      |
| 31.2   |   | Certification      Pursuant to Rule 13a-14(a) under the Securities and Exchange Act of 1934      by the Chief Financial Officer.          |
|   |   |                                                                                                                                      |
| 32.0   |   | Certification      Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of      the Sarbanes-Oxley Act of 2002          |
|   |   | by      the Chief Executive Officer and the Chief Financial    Officer.                                                                   |