----

----

***FORM      10-Q***

| [                X  ] | QUARTERLY                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE                ACT OF                1934 FOR THE QUARTERLY PERIOD                ENDED NOVEMBER 12, 2005 |
|---------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**CPI      Corp.**

| 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) |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------|

----

----

**CPI      CORP.**

**INDEX      TO QUARTERLY REPORT ON FORM 10-Q**

**16      Weeks and 40 Weeks Ended November 12, 2005**

|                               |                                       |                                                                                                            | PAGE                |
|------------------------------------|--------------------------------------------|-----------------------------------------------------------------------------------------------------------------|---------------------|
|  PART                  I.     | FINANCIAL                 INFORMATION |                                                                                                            |                |
|                               |                                       |                                                                                                            |                |
|                               |  Item                1.               |  Financial                Statements                                                                       |                |
|                               |                                       |                                                                                                            |                |
|                               |                                       |  Interim                Condensed Consolidated Balance                Sheets                               |                |
|                               |                                       |  November                12, 2005 (Unaudited) and February 5, 2005                                         |    1 |
|                               |                                       |                                                                                                            |                |
|                               |                                       |  Interim                Condensed Consolidated                Statements of Operations (Unaudited)         |                |
|                               |                                       |  16                and 40 Weeks Ended November 12, 2005 and November 13, 2004                              | 3                   |
|                               |                                       |                                                                                                            |                |
|                               |                                       |  Interim                Condensed Consolidated                Statement of Changes in Stockholder's Equity |                |
|                               |                                       |  (Unaudited)                40 Weeks Ended November 12, 2005                                               | 4                   |
|                               |                                       |                                                                                                            |                |
|                               |                                       |  Interim                Condensed Consolidated Statements of Cash                Flows (Unaudited)         |                |
|                               |                                       |  40                Weeks Ended November 12, 2005 and November 13, 2004                                     | 5                   |
|                               |                                       |                                                                                                            |                |
|                               |                                       |  Notes                to Interim Condensed                Consolidated Financial Statements (Unaudited)    | 7                   |
|                               |                                       |                                                                                                            |                |
|                               |  Item                2.               |  Management's                Discussion and                Analysis of Financial Condition and   |                |
|                               |                                       |  Results                of Operations                                                                      | 11                  |
|                               |                                       |                                                                                                            |                |
|                               |  Item                3.               |  Quantitative                and Qualitative                Disclosures about Market Risk             | 19                  |
|                               |                                       |                                                                                                            |                |
|                               |  Item                4.               |  Controls                and Procedures                                                                    | 20                  |
|                               |                                       |                                                                                                            |                |
|  PART                II.      | OTHER                  INFORMATION         |                                                                                                            |                |
|                               |                                       |                                                                                                            |                |
|                               |  Item                6.               |  Exhibits                                                                                                  | 20                  |
|                               |                                       |                                                                                                            |                |
|  Signatures                   |                                       |                                                                                                            | 21                  |
|                               |                                       |                                                                                                            |                |
|  Exhibit                Index |                                       |                                                                                                            | 22                  |

**CPI      CORP.**

**Interim      Condensed Consolidated Balance Sheets - Assets**

**PART      I. FINANCIAL INFORMATION**

*Item      1*
*Financial Statements*

|                                                                                                                         |   | November                  12, 2005 |    | February                  5, 2005 |   |
|------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------|---------|-----------------------------------|--------|
| *thousands*                                                                                                                  |   | (Unaudited)                        |    |                              |   |
|                                                                                                                         |   |                               |    |                              |   |
| **ASSETS**                                                                                                                   |   |                               |    |                              |   |
| Current assets:                                                                                                              |   |                               |    |                              |   |
|     Cash and cash equivalents                                                                            |   | $                                  | 7,784   |                              | $      | 33,883 |   |
|     Restricted cash-collateral for                  outstanding letters of credit                        |   |                               | -       |                              |   | 6,154 |   |
|     Accounts receivable:                                                                                 |   |                               |    |                              |   |   |   |
|         Due from                  licensor stores                                    |   |                               | 16,509  |                              |   | 7,365 |   |
|         Other                                                                        |   |                               | 106     |                              |   | 326 |   |
|     Inventories                                                                                          |   |                               | 11,206  |                              |   | 10,521 |   |
|     Prepaid expenses and other current                  assets                                           |   |                               | 7,646   |                              |   | 6,905 |   |
|     Deferred tax                  assets                                                                 |   |                               | 9,030   |                              |   | 8,795 |   |
|                                                                                                                         |   |                               |    |                              |   |   |   |
|     Total current                  assets                                                                |   |                               | 52,281  |                              |   | 73,949 |   |
|                                                                                                                         |   |                               |    |                              |   |   |   |
| Property and equipment:                                                                                                      |   |                               |    |                              |   |   |   |
|     Land                                                                                                 |   |                               | 2,765   |                              |   | 2,765 |   |
|     Building improvements                                                                                |   |                               | 26,453  |                              |   | 26,684 |   |
|     Leasehold improvements                                                                               |   |                               | 6,436   |                              |   | 6,005 |   |
|     Photographic, sales                  and manufacturing equipment                                     |   |                               | 130,426 |                              |   | 183,979 |   |
|         Total                                                                        |   |                               | 166,080 |                              |   | 219,433 |   |
|     Less accumulated                  depreciation and amortization                                      |   |                               | 120,371 |                              |   | 177,775 |   |
|         Property                  and equipment, net                                 |   |                               | 45,709  |                              |   | 41,658 |   |
| Assets of business transferred under contractual                  arrangements:                                              |   |                               |    |                              |   |   |   |
|     Preferred security                                                                                   |   |                               | 7,000   |                              |   | 7,000 |   |
|     Accrued dividends on preferred                  security                                             |   |                               | 1,172   |                              |   | 689 |   |
|     Impairment reserve related to                  preferred security interest                           |   |                               | (8,172  | )                                 |   | (7,689 | ) |
| Other investments - supplemental retirement plan                                                                             |   |                               | 6,116   |                              |   | 6,141 |   |
| Deferred tax assets                                                                                                          |   |                               | 14,725  |                              |   | 11,734 |   |
| Other assets, net of amortization of $1,359 at                  both                  November 12, 2005 and February 5, 2005 |   |                               |    |                              |   |   |   |
|                                                                                                                         |   |                               | 1,358   |                              |   | 1,618 |   |
| **    TOTAL                  ASSETS**                                                                    |   | $                                  | 120,189 |                              | $      | 135,100 |   |
|                                                                                                                         |   |                               |    |                              |   |   |   |
| *See accompanying notes.*                                                                                                    |   |                               |    |                              |   |   |   |

**1**

**CPI      CORP.**

**Interim      Condensed Consolidated Balance Sheets - Liabilities and Stockholders’Equity**

|                                                                                                                                 |   | November                  12, 2005 |     | February                  5, 2005 |   |
|--------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------|----------|-----------------------------------|--------|
| *thousands, except share and per share                  data*                                                                        |   | (Unaudited)                        |     |                              |   |
|                                                                                                                                 |   |                               |     |                              |   |
| **LIABILITIES**                                                                                                                      |   |                               |     |                              |   |
| Current liabilities:                                                                                                                 |   |                               |     |                              |   |
|     Current                  maturities of long-term debt                                                        |   | $                                  | 8,580    |                              | $      | 8,580 |   |
|     Accounts                  payable                                                                            |   |                               | 11,946   |                              |   | 13,011 |   |
|     Accrued                  employment costs                                                                    |   |                               | 13,052   |                              |   | 12,463 |   |
|     Customer                  deposit liability                                                                  |   |                               | 26,547   |                              |   | 21,828 |   |
|     Accrued                  severance                                                                           |   |                               | 4,581    |                              |   | 4,205 |   |
|     Income                  taxes                  payable                                                       |   |                               | 1,796    |                              |   | 2,872 |   |
|     Sales                  taxes                  payable                                                        |   |                               | 2,647    |                              |   | 1,886 |   |
|     Accrued                  advertising expenses                                                                |   |                               | 2,147    |                              |   | 1,568 |   |
|     Accrued                  expenses and other liabilities                                                      |   |                               | 6,638    |                              |   | 5,348 |   |
|                                                                                                                                 |   |                               |     |                              |   |   |   |
|     Total                  current                  liabilities                                                  |   |                               | 77,934   |                              |   | 71,761 |   |
|                                                                                                                                 |   |                               |     |                              |   |   |   |
| Long-term debt, less current maturities                                                                                              |   |                               | 8,493    |                              |   | 17,050 |   |
| Accrued pension obligations                                                                                                          |   |                               | 13,127   |                              |   | 13,993 |   |
| Supplemental retirement plan obligations                                                                                             |   |                               | 3,881    |                              |   | 4,512 |   |
| Customer deposit liability                                                                                                           |   |                               | 3,133    |                              |   | 4,334 |   |
| Other liabilities                                                                                                                    |   |                               | 471      |                              |   | 564 |   |
|                                                                                                                                 |   |                               |     |                              |   |   |   |
|     Total                  liabilities                                                                           |   |                               | 107,039  |                              |   | 112,214 |   |
|                                                                                                                                 |   |                               |     |                              |   |   |   |
| **STOCKHOLDERS' 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; 18,514,686 and 18,432,779                              |   |                               |     |                              |   |   |   |
|     shares                  outstanding at November 12, 2005 and February 5, 2005,                  respectively |   |                               | 7,406    |                              |   | 7,373 |   |
| Additional paid-in capital                                                                                                           |   |                               | 54,764   |                              |   | 53,301 |   |
| Retained earnings                                                                                                                    |   |                               | 194,881  |                              |   | 206,812 |   |
| Accumulated other comprehensive loss                                                                                                 |   |                               | (9,943   | )                                 |   | (10,505 | ) |
|                                                                                                                                 |   |                               | 247,108  |                              |   | 256,981 |   |
| Treasury stock - at cost, 10,639,543 and 10,672,236                  at                  November 12, 2005 and                       |   |                               |     |                              |   |   |   |
|     February                  5,                  2005, respectively                                             |   |                               | (233,541 | )                                 |   | (234,031 | )  |
| Unamortized deferred compensation-restricted                  stock                                                                  |   |                               | (417     | )                                 |   | (64 | )  |
|     Total                  stockholders' equity                                                                  |   |                               | 13,150   |                              |   | 22,886 |   |
| **    TOTAL                  LIABILITIES AND STOCKHOLDERS' EQUITY**                                              |   | $                                  | 120,189  |                              | $      | 135,100 |   |
|                                                                                                                                 |   |                               |     |                              |   |   |   |
| *See accompanying notes.*                                                                                                            |   |                               |     |                              |   |   |   |

**2**

**CPI      CORP.**

**Interim      Condensed Consolidated Statements of Operations**

|                                                                                                                             |   | 16                  Weeks Ended    |      | 40                  Weeks Ended    |   |
|----------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------|-----------|------------------------------------|--------|
| *thousands,                  except share and per share data*                                                                    |   |                               |      |                               |   |   |   |   |   |
|                                                                                                                             |   | November                  12, 2005 |      | November                  13, 2004 |   | November                  12, 2005 |   | November                  13, 2004 |   |
|                                                                                                                             |   |                               |      |                               |   |   |   |   |   |
| **Net                  sales**                                                                                                   |   | $                                  | 78,470    |                               | $      | 78,820 |   | $ | 188,999 |   | $ | 182,366 |   |
|                                                                                                                             |   |                               |      |                               |   |   |   |   |   |   |   |   |   |
| **Cost                  and expenses:**                                                                                          |   |                               |      |                               |   |   |   |   |   |   |   |   |   |
| Cost                  of sales (exclusive of depreciation and     amortization                  shown below) |   |                               | 9,833     |                               |   | 10,576 |   |   | 25,178 |   |   | 24,938 |   |
| Selling,                  general and administrative expenses                                                                    |   |                               | 66,231    |                               |   | 69,300 |   |   | 158,540 |   |   | 157,537 |   |
| Depreciation                  and amortization                                                                                   |   |                               | 6,209     |                               |   | 4,893 |   |   | 15,258 |   |   | 12,434 |   |
| Other                  charges and impairments                                                                                   |   |                               | 803       |                               |   | 1,707 |   |   | 2,379 |   |   | 15,211 |   |
|                                                                                                                             |   |                               | 83,076    |                               |   | 86,476 |   |   | 201,355 |   |   | 210,120 |   |
|                                                                                                                             |   |                               |      |                               |   |   |   |   |   |   |   |   |   |
| Loss                  from continuing operations                                                                                 |   |                               | (4,606    | )                                  |   | (7,656 | ) |   | (12,356 | ) |   | (27,754 | ) |
|                                                                                                                             |   |                               |      |                               |   |   |   |   |   |   |   |   |   |
| Interest                  expense                                                                                                |   |                               | 440       |                               |   | 599 |   |   | 1,300 |   |   | 1,730 |   |
| Interest                  income                                                                                                 |   |                               | 91        |                               |   | 351 |   |   | 411 |   |   | 900 |   |
| Other                  income, net                                                                                               |   |                               | 20   |                               |   | 58 |   |   | 228 |   |   | 208 |   |
| Impairment                  and related obligations of preferred security     interest                       |   |                               | -         |                               |   | 9,644 |   |   |  - |   |   | 9,644 |   |
|                                                                                                                             |   |                               |      |                               |   |   |   |   |   |   |   |   |   |
| Loss                  from continuing operations before income tax     benefit                               |   |                               | (4,935    | )                                  |   | (17,490 | ) |   | (13,017 | ) |   | (38,020 | ) |
| Income                  tax benefit                                                                                              |   |                               | 1,837     |                               |   | 4,052 |   |   | 4,844 |   |   | 10,413 |   |
|                                                                                                                             |   |                               |      |                               |   |   |   |   |   |   |   |   |   |
| Net                  loss from continuing operations                                                                             |   |                               | (3,098    | )                                  |   | (13,438 | ) |   | (8,173 | ) |   | (27,607 | ) |
| Net loss from discontinued operations, net of income    tax benefit                                |   |                               | -         |                               |   | (7 | ) |   | - |   |   | (3,744 | ) |
|                                                                                                                             |   |                               |      |                               |   |   |   |   |   |   |   |   |   |
| **NET                  LOSS**                                                                                                    |   | $                                  | (3,098    | )                                  | $      | (13,445 | ) | $ | (8,173 | ) | $ | (31,351 | ) |
|                                                                                                                             |   |                               |      |                               |   |   |   |   |   |   |   |   |   |
| **NET                  LOSS PER COMMON SHARE**                                                                                   |   |                               |      |                               |   |   |   |   |   |   |   |   |   |
|                                                                                                                             |   |                               |      |                               |   |   |   |   |   |   |   |   |   |
| Net                  loss per share from continuing operations - diluted                                                         |   | $                                  | (0.39     | )                                  | $      | (1.73 | ) | $ | (1.04 | ) | $ | (3.48 | ) |
| Net                  loss per share from discontinued operations - diluted                                                       |   |                               | -         |                               |   | - |   |   | - |   |   | (0.47 | ) |
| Net                  loss per share - diluted                                                                                    |   | $                                  | (0.39     | )                                  | $      | (1.73 | ) | $ | (1.04 | ) | $ | (3.95 | ) |
|                                                                                                                             |   |                               |      |                               |   |   |   |   |   |   |   |   |   |
| Net                  loss per share from continuing operations - basic                                                           |   | $                                  | (0.39     | )                                  | $      | (1.73 | ) | $ | (1.04 | ) | $ | (3.48 | ) |
| Net                  loss per share from discontinued operations - basic                                                         |   |                               | -         |                               |   | - |   |   | - |   |   | (0.47 | ) |
| Net                  loss per share - basic                                                                                      |   | $                                  | (0.39     | )                                  | $      | (1.73 | ) | $ | (1.04 | ) | $ | (3.95 | ) |
|                                                                                                                             |   |                               |      |                               |   |   |   |   |   |   |   |   |   |
| Dividends                  per share                                                                                             |   | $                                  | 0.16      |                               | $      | 0.16 |   | $ | 0.48 |   | $ | 0.48 |   |
|                                                                                                                             |   |                               |      |                               |   |   |   |   |   |   |   |   |   |
| Weighted                  average number of common and common                                                                    |   |                               |      |                               |   |   |   |   |   |   |   |   |   |
|     equivalent                  shares outstanding-diluted                                                   |   |                               | 7,871,465 |                               |   | 7,751,697 |   |   | 7,846,450 |   |   | 7,927,306 |   |
| Weighted                  average number of common and common                                                                    |   |                               |      |                               |   |   |   |   |   |   |   |   |   |
|     equivalent                  shares outstanding-basic                                                     |   |                               | 7,871,465 |                               |   | 7,751,697 |   |   | 7,846,450 |   |   | 7,927,306 |   |
|                                                                                                                             |   |                               |      |                               |   |   |   |   |   |   |   |   |   |
| *See                  accompanying notes.*                                                                                       |   |                               |      |                               |   |   |   |   |   |   |   |   |   |

**3**

**CPI      CORP.**

**Interim      Condensed Consolidated Statement of Changes in Stockholders’ Equity**

|                                                                        |   |  **Forty                  weeks ended November 12, 2005** |   |
|-----------------------------------------------------------------------------|--------|----------------------------------------------------------------|--------|
|                                                                        |   |                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                        |   |                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                        |   |                                                           |   |   |   |   |   | Accumulated |   |   |   |  Deferred  |   |   |   |
| *thousands,                  except share and*                              |   | Common                                                         |   | Additionalpaid-in |   | Retained |   | othercomprehensive |   | Treasurystock, |   | compensation                  -restricted |   |   |   |
| *per                  share data*                                           |   | stock                                                          |   | capital |   | earnings |   | loss |   | at                  cost |   | stock |   | Total |   |
|                                                                        |   |                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance                  at February 5, 2005                                |   | $                                                              | 7,373  |   | $ | 53,301 |   | $ | 206,812 |   | $ | (10,505 | ) | $ | (234,031 | ) | $ | (64 | ) | $ | 22,886 |   |
|                                                                        |   |                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                  loss                                                   |   |                                                           | -      |   |   | - |   |   | (8,173 | ) |   | - |   |   | - |   |   | - |   |   | (8,173 | ) |
| Foreign                  currency translation adjustment                    |   |                                                           | -      |   |   | - |   |   | - |   |   | 562 |   |   | - |   |   | - |   |   | 562 |   |
| Total                  comprehensive loss                                   |   |                                                           | -      |   |   | - |   |   | (8,173 | ) |   | 562 |   |   | - |   |   | - |   |   | (7,611 | ) |
| Issuance                  of common stock to                                |   |                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     employee                  benefit plans, restricted |   |                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     stock                  awards and option exercises  |   |                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     (114,600                  shares)                   |   |                                                           | 33     |   |   | 1,463 |   |   | - |   |   | - |   |   | 490 |   |   | (940 | ) |   | 1,046 |   |
| Dividends                  ($.48 per common share)                          |   |                                                           | -      |   |   | - |   |   | (3,758 | ) |   | - |   |   | - |   |   | - |   |   | (3,758 | ) |
| Amortization                  of deferred                                   |   |                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     compensation                  - restricted stock    |   |                                                           | -      |   |   | - |   |   | - |   |   | - |   |   | - |   |   | 587 |   |   | 587 |   |
|                                                                        |   |                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance                  at November 12, 2005                               |   | $                                                              | 7,406  |   | $ | 54,764 |   | $ | 194,881 |   | $ | (9,943 | ) | $ | (233,541 | ) | $ | (417 | ) | $ | 13,150 |   |
|                                                                        |   |                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| *See                  accompanying notes.*                                  |   |                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

**4**

**CPI      CORP.**

**Interim      Condensed Consolidated Statements of Cash Flows**

|                                                                                                                                                                                                        |   | 40                  Weeks Ended    |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------|--------|
| *thousands*                                                                                                                                                                                                 |   |                               |   |   |   |
|                                                                                                                                                                                                        |   | November                  12, 2005 |   | November                  13, 2004 |   |
| Reconciliation                  of net loss from continuing operations to cash flows (used in)                  provided by                      operating                  activities: |   |                               |   |   |   |
|                                                                                                                                                                                                        |   |                               |   |   |   |
| Net                  loss from continuing operations                                                                                                                                                        |   | $                                  | (8,173 | ) | $ | (27,607 | ) |
|                                                                                                                                                                                                        |   |                               |   |   |   |   |   |
| Adjustments                  for items not requiring cash:                                                                                                                                                  |   |                               |   |   |   |   |   |
|     Depreciation                  and amortization                                                                                                                                      |   |                               | 15,258 |   |   | 12,434 |   |
|                          Stock-based compensation expense                                                                                                      |   |                               | 672    |   |   | 9 |   |
|     Loss                  on                  disposition of property, plant and equipment                                                                                              |   |                               | 374    |   |   | 1,058 |   |
|     Deferred                income                taxes                                                                                                                                 |   |                               | (3,226 | )  |   | (1,793 | )  |
|     Deferred                  revenues and related costs                                                                                                                                |   |                               | 3,004  |   |   | 7,414 |   |
|     Pension                expense                                                                                                                                                      |   |                               | 1,184  |   |   | 1,036 |   |
|     Accrued                  interest on preferred security                                                                                                                             |   |                               | -      |   |   | (484 | ) |
|     Accelerated                  vesting of supplemental retirement plan benefits                                                                                                       |   |                               | -      |   |   | 3,338 |   |
|     Impairment                  and                  related obligations of preferred security interest                                                                                 |   |                               | -      |   |   | 9,644 |   |
|     Other                  impairment charges                                                                                                                                           |   |                               | -      |   |   | 5,083 |   |
|     Other                                                                                                                                                                               |   |                               | 606    |   |   | 736  |   |
|                                                                                                                                                                                                        |   |                               |   |   |   |   |   |
| (Increase)                  decrease in current assets:                                                                                                                                                     |   |                               |   |   |   |   |   |
|     Receivables                  and                  inventories                                                                                                                       |   |                               | (9,609 | ) |   | (13,908 | ) |
|     Refundable                  income taxes                                                                                                                                            |   |                               | -      |   |   | (9,098 | ) |
|     Prepaid                  expenses and other current assets                                                                                                                          |   |                               | (53    | ) |   | (2,092 | ) |
|                                                                                                                                                                                                        |   |                               |   |   |   |   |   |
| (Decrease)                  increase in current liabilities:                                                                                                                                                |   |                               |   |   |   |   |   |
|     Accounts                  payable                                                                                                                                                   |   |                               | (1,064 | ) |   | (1,170 | ) |
|     Contribution                to pension plan                                                                                                                                         |   |                               | (2,050 | )  |   | - |   |
|     Accrued                  expenses and other liabilities                                                                                                                             |   |                               | 3,465  |   |   | 5,665 |   |
|     Income                  taxes payable                                                                                                                                               |   |                               | (1,076 | ) |   | - |   |
|                                                                                                                                                                                                        |   |                               |   |   |   |   |   |
| Cash                  flows used in continuing operations                                                                                                                                                   |   |                               | (688   | ) |   | (9,735 | ) |
| Cash                  flows used in discontinued operations                                                                                                                                                 |   |                               | -      |   |   | (2,736 | ) |
| Cash                  flows used in operating activities                                                                                                                                                    |   | $                                  | (688   | ) | $ | (12,471 | ) |
|                                                                                                                                                                                                        |   |                               |   |   |   |   |   |
| *See                  accompanying notes.*                                                                                                                                                                  |   |                               |   |   |   |   |   |

**5**

**CPI      CORP.**

**Interim      Condensed Consolidated Statements of Cash Flows      (continued)**

|                                                                                                                                                 |   | 40                  Weeks Ended    |    |
|------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------|---------|
| *thousands*                                                                                                                                          |   |                               |    |   |   |
|                                                                                                                                                 |   | November                  12, 2005 |    | November                  13, 2004 |   |
|                                                                                                                                                 |   |                               |    |   |   |
| Cash                  flows used in operating activities                                                                                             |   | $                                  | (688    | ) | $ | (12,471 | ) |
|                                                                                                                                                 |   |                               |    |   |   |   |   |
| Cash                  flows (used in) provided by financing activities:                                                                              |   |                               |    |   |   |   |   |
|     Repayment                  of                  long-term obligations                                                         |   |                               | (8,580  | ) |   | (8,580 | ) |
|     Reduction                  in                  restricted cash-collateral for outstanding letters of                  credit |   |                               | 6,154   |   |   | - |   |
|     Proceeds                  from                  option exercises                                                             |   |                               | 119     |   |   | 933 |   |
|     Cash                  dividends                                                                                              |   |                               | (3,758  | ) |   | (3,832 | ) |
|     Purchase                  of                  treasury stock                                                                 |   |                               | -       |   |   | (6,008 | ) |
|     Cash                  flows used in financing activities                                                                     |   |                               | (6,065  | ) |   | (17,487 | ) |
|                                                                                                                                                 |   |                               |    |   |   |   |   |
| Cash                  flows (used in) provided by investing activities:                                                                              |   |                               |    |   |   |   |   |
|     Additions                  to                  property and equipment                                                        |   |                               | (19,835 | ) |   | (13,212 | ) |
|     Proceeds                  from                  sales of property and equipment                                              |   |                               | 118     |   |   | 363 |   |
|     Proceeds                  from                  sales of assets held for sale                                                |   |                               | 49      |   |   | - |   |
|     Changes                  in loan receivable:                                                                                 |   |                               |    |   |   |   |   |
|         Borrowings                                                                                           |   |                               | -       |   |   | (37,593 | ) |
|         Repayments                                                                                           |   |                               | -       |   |   | 33,975 |   |
|     Increases                  in                  assets held by Rabbi Trust                                                    |   |                               | (232    | ) |   | (456 | ) |
|     Proceeds                  from                  Rabbi Trust used for supplemental retirement plan payments                   |   |                               | 257     |   |   | 1,935 |   |
|     Distribution                of                Rabbi Trust funds in excess of related obligations                             |   |                               | -       |   |   | 3,800 |   |
|     Cash                  flows used in investing activities                                                                     |   |                               | (19,643 | ) |   | (11,188 | ) |
|                                                                                                                                                 |   |                               |    |   |   |   |   |
| Effect                  of exchange rate changes on cash and cash equivalents                                                                        |   |                               | 297     |   |   | 1,058 |   |
|                                                                                                                                                 |   |                               |    |   |   |   |   |
| Net                  decrease in cash and cash equivalents                                                                                           |   |                               | (26,099 | ) |   | (40,088 | ) |
|                                                                                                                                                 |   |                               |    |   |   |   |   |
| **Cash                  and cash equivalents at beginning of period**                                                                                |   |                               | 33,883  |   |   | 51,011 |   |
|                                                                                                                                                 |   |                               |    |   |   |   |   |
| **Cash                  and cash equivalents at end of period**                                                                                      |   | $                                  | 7,784   |   | $ | 10,923 |   |
|                                                                                                                                                 |   |                               |    |   |   |   |   |
| Supplemental                  cash flow information:                                                                                                 |   |                               |    |   |   |   |   |
|     Interest                  paid                                                                                               |   | $                                  | 959     |   | $ | 1,278 |   |
|     Income                  taxes paid                                                                                           |   | $                                  | 128     |   | $ | 216 |   |
|                                                                                                                                                 |   |                               |    |   |   |   |   |
| Supplemental                  non-cash financing activities:                                                                                         |   |                               |    |   |   |   |   |
|     Issuance                  of                  treasury stock under the employee profit sharing plan                          |   | $                                  | 490     |   | $ | 554 |   |
|     Issuance                  of                  restricted stock to employees and directors                                    |   | $                                  | 1,200   |   | $ | 25 |   |
|                                                                                                                                                 |   |                               |    |   |   |   |   |
| Repayment                  of borrowings against cash surrender value of life                  insurance                                             |   |                               |    |   |   |   |   |
|     via                  liquidation of related policies                                                                         |   | $                                  | -       |   | $ | 1,548 |   |
|                                                                                                                                                 |   |                               |    |   |   |   |   |
| Executive                  retirement stock option modification                                                                                      |   | $                                  | 177     |   | $ | - |   |
|                                                                                                                                                 |   |                               |    |   |   |   |   |
| *See                  accompanying notes.*                                                                                                           |   |                               |    |   |   |   |   |

**6**

**CPI        CORP.**

**Notes        to Interim Condensed Consolidated Financial Statements**

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

**NOTE        2 - INVENTORIES**

| The                    following table sets forth the components of inventory: |   |                                 |      |                                |   |
|--------------------------------------------------------------------------------|--------|--------------------------------------|-----------|-------------------------------------|--------|
|                                                                           |   |                                 |      |                                |   |
| *thousands*                                                                    |   | November                    12, 2005 |      | February                    5, 2005 |   |
|                                                                           |   |                                 |      |                                |   |
| Raw                    materials - film, paper, chemicals                      |   | $                                    | 4,158     |                                | $      | 3,750 |   |
| Portraits                    in process                                        |   |                                 | 1,861     |                                |   | 1,555 |   |
| Finished                    portraits pending delivery                         |   |                                 |  917 |                                |   | 496 |   |
| Frames                    and accessories                                      |   |                                 | 1,222     |                                |   | 1,286 |   |
| Studio                    supplies                                             |   |                                 | 2,227     |                                |   | 2,197 |   |
| Other                                                                     |   |                                 | 821       |                                |   | 1,237 |   |
|                                                                           |   |                                 |      |                                |   |   |   |
| Total                                                                          |   | $                                    | 11,206    |                                | $      | 10,521 |   |

**NOTE          3 - BORROWINGS**

**7**

**CPI        CORP.**

**Notes        to Interim Condensed Consolidated Financial Statements**

**NOTE          4 - OTHER CHARGES AND IMPAIRMENTS**

**NOTE        5 - STOCK-BASED COMPENSATION PLANS**

**8**

**CPI        CORP.**

**Notes        to Interim Condensed Consolidated Financial Statements**

**NOTE        6 - EMPLOYEE BENEFIT PLANS**

|                                                                              |   |  16                        Weeks Ended    |   |
|-----------------------------------------------------------------------------------|--------|------------------------------------------------|--------|
|                                                                              |   |  Pension                        Plan      |   | Supplemental                        Retirement Plan |   |
| *thousands*                                                                       |   |  November                        12, 2005 |   | November                        13, 2004 |   | November                        12, 2005 |   | November                        13, 2004 |   |
|                                                                              |   |                                      |   |   |   |   |   |   |   |
| Components                        of net periodic benefit cost:                   |   |                                      |   |   |   |   |   |   |   |
|     Service                        cost                       |   | $                                              | 155    |   | $ | 157 |   | $ | 35 |   | $ | 62 |   |
|     Interest                        cost                      |   |                                           | 867    |   |   | 831 |   |   | 77 |   |   | 119 |   |
|     Expected                        return on plan assets     |   |                                           | (858   | ) |   | (903 | ) |   | - |   |   | - |   |
|     Amortization                        of prior service cost |   |                                           | 14     |   |   | 14 |   |   | 9 |   |   | 12 |   |
|     Amortization                        of net (gain) loss    |   |                                           | 294    |   |   | 134 |   |   | (6 | ) |   |   |   |
|     Settlement                        expense (gain)          |   |                                           | -      |   |   | - |   |   | - |   |   | (55 | ) |
|                                                                              |   |                                           |   |   |   |   |   |   |   |   |   |   |   |
| Net                        periodic benefit cost                                  |   | $                                              | 472    |   | $ | 233 |   | $ | 115 |   | $ | 138 |   |
|                                                                              |   |                                           |   |   |   |   |   |   |   |   |   |   |   |

|                                                                                |   |  40                          Weeks Ended    |   |
|-------------------------------------------------------------------------------------|--------|--------------------------------------------------|--------|
|                                                                                |   |  Pension                          Plan      |   | Supplemental                          Retirement Plan |   |
| *thousands*                                                                         |   |  November                          12, 2005 |   | November                          13, 2004 |   | November                          12, 2005 |   | November                          13, 2004 |   |
|                                                                                |   |                                        |   |   |   |   |   |   |   |
| Components                          of net periodic benefit cost:                   |   |                                        |   |   |   |   |   |   |   |
|     Service                          cost                       |   | $                                                | 389    |   | $ | 628 |   | $ | 86 |   | $ | 145 |   |
|     Interest                          cost                      |   |                                             | 2,169  |   |   | 2,078 |   |   | 192 |   |   | 292 |   |
|     Expected                          return on plan assets     |   |                                             | (2,146 | ) |   | (2,257 | ) |   | - |   |   | - |   |
|     Amortization                          of prior service cost |   |                                             | 34     |   |   | 34 |   |   | 24 |   |   | 22 |   |
|     Amortization                          of net (gain) loss    |   |                                             | 738    |   |   | 554 |   |   | (14 | ) |   | - |   |
|     Accelerated                          vesting                |   |                                             | -      |   |   | - |   |   | - |   |   | 3,338 |   |
|     Settlement                          expense                 |   |                                             | -      |   |   | - |   |   | - |   |   | 31 |   |
|     Curtailment                          expense                |   |                                             | -      |   |   | - |   |   | - |   |   | 230 |   |
|                                                                                |   |                                             |   |   |   |   |   |   |   |   |   |   |   |
| Net                          periodic benefit cost                                  |   | $                                                | 1,184  |   | $ | 1,037 |   | $ | 288 |   | $ | 4,058 |   |
|                                                                                |   |                                             |   |   |   |   |   |   |   |   |   |   |   |

**9**

**CPI        CORP.**

**Notes        to Interim Condensed Consolidated Financial Statements**

**NOTE        7 - CONTINGENCIES**

**Standby        Letters of Credit**

**Litigation**

**Contingent        Lease Obligations**

**NOTE        8 - SUBESQUENT EVENT**

**10**

*Item        2.*
*Management's        Discussion and Analysis of Financial Condition and Results of        Operations*

***EXECUTIVE        OVERVIEW***

**The        Company’s Operations**

|                                                                                    |   |                                 |   |                                 |
|-----------------------------------------------------------------------------------------|--------|--------------------------------------|--------|--------------------------------------|
|                                                                                    |   | November                    12, 2005 |   | November                    13, 2004 |
|                                                                                    |   |                                 |   |                                 |
|  United                  States and Puerto Rico:                                   |   |                                 |   |                                 |
|      Within                  full-line Sears mall-based stores |   | 859                                  |   | 860                                  |
|      Locations                  not within Sears stores        |   | 40                                   |   | 40                                   |
|      Within                  Sears Essential/Grand stores      |   | 36                                   |   | 4                                    |
|                                                                                    |   |                                 |   |                                 |
|  Canada                                                                            |   | 115                                  |   | 117                                  |
|                                                                                    |   |                                 |   |                                 |
|  Total                                                                             |   | 1,050                                |   | 1,021                                |
|                                                                                    |   |                                 |   |                                 |

**11**

***RESULTS        OF OPERATIONS***

|                                                                                                                                            |   | 16                    Weeks Ended    |   | 40                    Weeks Ended    |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------|--------|--------------------------------------|--------|
|  *thousands,                  except per share data*                                                                                       |   | November                    12, 2005 |   | November                    13, 2004 |   | November                    12, 2005 |   | November                    13, 2004 |   |
|                                                                                                                                            |   |                                 |   |                                 |   |   |   |   |   |
| **Net                    sales**                                                                                                                |   | $                                    | 78,470 |                                 | $      | 78,820 |   | $ | 188,999 |   | $ | 182,366 |   |
|                                                                                                                                            |   |                                 |   |                                 |   |   |   |   |   |   |   |   |   |
| **Cost                    and expenses:**                                                                                                       |   |                                 |   |                                 |   |   |   |   |   |   |   |   |   |
| Cost                    of sales (exclusive of depreciation and amortization     shown below)                          |   |                                 | 9,833  |                                 |   | 10,576 |   |   | 25,178 |   |   | 24,938 |   |
| *Cost                    of sales as a percentage of net sales*                                                                                 |   |                                 | *12.5* | *%*                                  |   | *13.4* | *%* |   | *13.3* | *%* |   | *13.7* | *%* |
| *Gross                    margin as a percentage of net sales*                                                                                  |   |                                 | *87.5* | *%*                                  |   | *86.6* | *%* |   | *86.7* | *%* |   | *86.3* | *%* |
| Selling,                    general and administrative expenses                                                                                 |   |                                 | 66,231 |                                 |   | 69,300 |   |   | 158,540 |   |   | 157,537 |   |
| *Selling,                    general and administrative expenses as a**    percentage                    of net sales* |   |                                 | *84.4* | *%*                                  |   | *87.9* | *%* |   | *83.9* | *%* |   | *86.4* | *%* |
| Depreciation                    and amortization                                                                                                |   |                                 | 6,209  |                                 |   | 4,893 |   |   | 15,258 |   |   | 12,434 |   |
| Other                    charges and impairments                                                                                                |   |                                 | 803    |                                 |   | 1,707 |   |   | 2,379 |   |   | 15,211 |   |
|                                                                                                                                            |   |                                 | 83,076 |                                 |   | 86,476 |   |   | 201,355 |   |   | 210,120 |   |
|                                                                                                                                            |   |                                 |   |                                 |   |   |   |   |   |   |   |   |   |
| Loss                    from continuing operations                                                                                              |   |                                 | (4,606 | )                                    |   | (7,656 | ) |   | (12,356 | ) |   | (27,754 | ) |
|                                                                                                                                            |   |                                 |   |                                 |   |   |   |   |   |   |   |   |   |
| Interest                    expense                                                                                                             |   |                                 | 440    |                                 |   | 599 |   |   | 1,300 |   |   | 1,730 |   |
| Interest                    income                                                                                                              |   |                                 | 91     |                                 |   | 351 |   |   | 411 |   |   | 900 |   |
| Other                    income, net                                                                                                            |   |                                 | 20     |                                 |   | 58 |   |   | 228 |   |   | 208 |   |
| Impairment                    and related obligations of preferred security     interest                                    |   |                                 | -      |                                 |   | 9,644 |   |   | - |   |   | 9,644 |   |
| Loss                    from continuing operations before income tax     benefit                                            |   |                                 | (4,935 | )                                    |   | (17,490 | ) |   | (13,017 | ) |   | (38,020 | ) |
|                                                                                                                                            |   |                                 |   |                                 |   |   |   |   |   |   |   |   |   |
| Income                    tax benefit                                                                                                           |   |                                 | 1,837  |                                 |   | 4,052 |   |   | 4,844 |   |   | 10,413 |   |
|                                                                                                                                            |   |                                 |   |                                 |   |   |   |   |   |   |   |   |   |
| Net                    loss from continuing operations                                                                                          |   |                                 | (3,098 | )                                    |   | (13,438 | ) |   | (8,173 | ) |   | (27,607 | ) |
| Net                    loss from discontinued operations, net of income tax     benefit                                     |   |                                 | -      |                                 |   | (7 | ) |   | - |   |   | (3,744 | ) |
|                                                                                                                                            |   |                                 |   |                                 |   |   |   |   |   |   |   |   |   |
| **NET                    LOSS**                                                                                                                 |   | $                                    | (3,098 | )                                    | $      | (13,445 | ) | $ | (8,173 | ) | $ | (31,351 | ) |
|                                                                                                                                            |   |                                 |   |                                 |   |   |   |   |   |   |   |   |   |
| Net                    loss per share from continuing operations - diluted                                                                      |   | $                                    | (0.39  | )                                    | $      | (1.73 | ) | $ | (1.04 | ) | $ | (3.48 | ) |
| Net                    loss per share from discontinued operations - diluted                                                                    |   |                                 | -      |                                 |   | - |   |   | - |   |   | (0.47 | ) |
|                                                                                                                                            |   |                                 |   |                                 |   |   |   |   |   |   |   |   |   |
| **Net                    loss per share - diluted**                                                                                             |   | $                                    | (0.39  | )                                    | $      | (1.73 | ) | $ | (1.04 | ) | $ | (3.95 | ) |
|                                                                                                                                            |   |                                 |   |                                 |   |   |   |   |   |   |   |   |   |

**16          weeks ended November 12, 2005 compared to 16 weeks ended November 13,          2004**

**12**

| ·   | Net                  sales for the third quarter of 2005 were essentially flat                  with the $78.8 million reported in the third quarter of                  2004.  The third quarter of 2005 includes approximately $615,000                  in sales related to new studios opened throughout fiscal 2005.                  The 2005                  third quarter sales performance was the result of a 25% decline                  in                  sittings almost totally offset by a 33% increase in average sale                  per                  customer sitting. Sales for the quarter were positively impacted                  by $3.7                  million resulting from a reduced backlog of portraits in                  process or pending delivery to customers at the end of the third                  quarter.                   This reduction in backlog is primarily attributable to the increased                  number of digital studios which, due to their faster processing,                  both                  through central and on-site fulfillment, have lower levels of undelivered                  portraits.  The Company attributes the sittings decline to a number                  of internal and external factors.  The Company’s marketing program                  has undergone extensive changes designed to transition to everyday                  values, reduce dependence on coupons and promotional activity,                  and prepare                  the way for a significant repositioning of the Sears Portrait Studio                  brand                  in conjunction with the completion of the digital rollout. At the                  same                  time, the Company broadly tested various offer changes designed                  to reflect the differentiated value proposition offered by its                  digital                  studios. While positively impacting average transaction size, these                  offer changes have resulted in the loss of more price-sensitive                  customers                  to lower priced competitors. Historically, sittings and sales have                  rapidly                  accelerated from October through the Thanksgiving and Christmas                  holidays.                  The Company believes that this acceleration has shifted forward                  in 2005                  due to customer reaction to shorter lead times related to both                  central and                  same day fulfillment. As a result, the Company’s third quarter sittings                  and sales were negatively impacted by this shift while the fourth                  quarter is expected to benefit. The Company also believes that                  the continuing proliferation of amateur digital photography may                  be                  reducing portrait activity, especially during periods such as the                  Company’s third quarter, which are marked by the absence of significant                  holidays. Finally, sales were also negatively impacted by the severe                  hurricane season that principally affected studios in Alabama,                  Florida,                  Louisiana, Mississippi and Texas. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·  | Cost                  of sales, excluding depreciation and amortization expense, was                  $9.8                  million in the third quarter of 2005 compared with $10.6 million                  in the                  comparable prior year period. Cost of sales as a percentage of                  net sales                  was 12.5% in the third quarter of 2005, compared to 13.4% in the                  comparable quarter in 2004. Correspondingly, gross margin rates                  were 87.5%                  and 86.6% in the third quarter of 2005 and 2004, respectively.  The                  decrease in cost of sales resulted from lower overall production                  levels                  due to the decline in sittings as well as savings related to reduced                  purchases of film and lower shipping costs, both resulting from                  the                  digital conversion. These decreases were partially offset by increased                  costs associated with the production of new and specialty products                  not                  previously available in the analog film environment. In addition,                  both                  periods were significantly affected by workers’ compensation costs.  |
|--------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Selling,                  general and administrative (“SG&A”) expenses were $66.2 million and                  $69.3 million for the third quarter of 2005 and 2004, respectively.                  As a                  percentage of sales, these expenses were 84.4% in 2005 and 87.9%                  in                  2004.   Selling, general and administrative expenses decreased                  primarily as a result of a decrease in studio employment costs                  of $1.2                  million, which is net of $552,000 of additional costs related to                  the                  reduction in sales backlog, a decrease of $625,000 in advertising                  costs                  and a decrease of $1.3 million in numerous other expense categories,                  all                  resulting from the Company’s ongoing cost containment efforts. The                  decrease in studio employment costs resulted from the decline in                  sittings                  volume as well as the positive impact of initiatives launched in                  the first                  half of 2005 to improve labor scheduling and productivity. Advertising                  costs declined principally as a result of the elimination of broadcast                  media and related production costs in the current year.  In                  addition, a more targeted focus in terms of type and frequency                  of media                  utilized also resulted in reduced                  spending. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Depreciation                  and amortization was $6.2 million in the third quarter of 2005,                  compared                  to $4.9 million in the comparable quarter of 2004. The increase                  in                  depreciation and amortization is entirely attributable to significant                  investments that have been made in connection both with a studio-wide                  hardware and printer upgrade in 2004 and the recently                  completed digital conversion of U.S.                  studios. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**13**

| ·   | Other                  charges and impairments reflect costs incurred from strategic actions                  implemented by the Company to restructure its operations, costs                  that are                  unpredictable and typical of the Company’s operations and additional                  charges due to asset impairments. In the third quarter of 2005                  and 2004,                  the Company recognized $803,000 and $1.7 million, respectively,                  in other                  charges and impairments.   The decrease in other charges                  and impairments primarily reflects third quarter 2004 impairment                  charges related to a change in technology strategy, partially offset                  by 2005 third quarter charges principally attributable to additional                  reserves and related costs associated with ongoing litigation and                  reduced                  by favorable settlements in other matters, coupled with write-offs                  and                  write-downs of assets in connection with the Company’s conversion to                  digital technology. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Interest                  expense was $440,000 in the third quarter of 2005 compared to $599,000                  in                  the comparable prior year quarter. The reduction in interest expense                  is                  the result of scheduled annual principal payments totaling $8.6                  million                  made in June 2005 reducing the outstanding balance of the Senior                  Notes.  |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Interest                  income was $91,000 in the third quarter of 2005 compared to $351,000                  in                  the third quarter of 2004.  The third quarter of 2004 included                  $193,000 of accrued preferred security dividends that were subsequently                  fully reserved in the fourth quarter of 2004 as a result of the                  deteriorating financial performance of Prints Plus, the Company’s former                  Wall Décor segment. Excluding these accrued dividends, interest income                  decreased between 2004 and 2005, partially offset by lower invested                  balances due to the impact of higher interest                  rates. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The                    impairment and related obligations of preferred security interest                    charges                    in the third quarter of 2004 related to an investment in an operating                    lease guarantees associated with its former Wall Decor segment,                    Prints                    Plus, totaling $9.6 million.  These charges were necessitated by the                    significant deteriorating financial performance of Prints Plus                    and are                    more fully discussed in the section of Management's Discussion                    and                    Analysis entitled "Contingencies" which                    follows.            |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Income                  tax benefits on losses from continuing operations were $1.8 million                  and                  $4.1 million in the third quarter of 2005 and 2004, respectively.                  These                  benefits resulted in effective tax rates of 37.2% in 2005 and 23.2%                  in                  2004. The lower effective income tax rate in the third quarter                  of 2004 was                  attributable to permanent differences associated with taxable gains                  primarily resulting from the surrender of company-owned life insurance                  policies held by a Rabbi Trust as funding vehicles for the Company’s                  supplemental executive retirement plan and non-deductible expenditures                  related to the termination of certain Company                  executives. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**14**

**40        weeks ended November 12, 2005 compared to 40 weeks ended November 13,        2004**

| ·    |  Net                  sales for  2005 increased $6.6 million, or 3.6*%,*to                  $189.0 million from the $182.4 million reported in  2004. The                  comparability of the sales for the first three quarters of                  2005 versus 2004 was not significantly impacted by the opening                  of portrait                  studios in new Sears Essential stores during the first half of                  2005.                   The overall increase in sales is due to a 22.1% increase in average                  sales                  per customer sitting, partially offset by a 15.3% year-over-year                  decline                  in sittings.  The Company attributes the increase in year-to-date                  sales to the impacts of the following initiatives undertaken throughout                  the second half of 2004 and continuing to                  date: |
|--------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| o   | The                    implementation of a significant computer hardware and printer                    upgrade                    which improved the performance of legacy systems while laying                    the                    foundation for a transition to                    digital. |
|---------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| o   | The                  successful conversion of all U.S. studios to full digital format                  which out performs the historical  analog film studio                  results.  Such conversion was completed ahead of                  schedule. |
|---------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| o   | The                  restoration of coverage and training hours in the studios that                  had been                  significantly reduced in the first half of 2004 in response to                  then-declining sales trends. |
|---------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| o   | The                  effectuation of various offer changes and targeted price increases                  as well                  as the utilization of more efficient advertising                  vehicles. |
|---------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Cost                of sales, excluding depreciation and amortization expense, was $25.2                million in  2005 compared with $24.9 million in the comparable prior                year. Cost of sales as a percentage of net sales was 13.3% for 2005,                compared to 13.7% in 2004. Correspondingly, gross margin rates were                86.7%                and 86.3% for 2005 and 2004, respectively.   The increase                in cost of sales is primarily attributable to start-up costs and                inefficiencies (both in-studio and central lab) in connection with                the                digital conversion and approximately $1.9 million of costs associated                with                new and specialty products not previously available in the analog                film                environment.  This was partially offset by lower overall                production levels due to the decline in sittings as well as savings                related to reduced purchases of film and lower shipping costs, both                resulting from the digital conversion, totaling approximately $1.3                million.  In addition, during 2004 the Company incurred high                costs associated with mark downs on merchandise sales of frames and                accessories in an effort to clear older inventory, the absence of                which                has had a favorable impact of $934,000.   |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**15**

| ·   | Selling,                general and administrative (“SG&A”) expenses were $158.5 million and                $157.5 million for  2005 and 2004, respectively. As a percentage of                sales, these expenses were 83.9% in 2005 and 86.4% in                2004.  Selling, general and administrative expenses increased                primarily as a result of an increase in studio employment costs of                $2.9                million and increased commission on higher sales of $965,000. Offsetting                these effects are decreases of $1.6 million in advertising                costs, $1.4 million in medical costs, and $900,000 in                numerous other expense categories, all resulting from the Company’s                ongoing cost containment efforts.  Studio employment increased in the                first half due to the restoration of scheduled reductions that were                in                place most of the first three quarters of 2004, an increase in the                average U.S. hourly rate which brought year-to-date cost up $1.5                million and additional costs related to the reduction in sales backlog                totaling $998,000.  This was offset by a third quarter 2005                decrease due to the decline in sittings volume and the positive                impact of initiatives launched in the first half of 2005 to improve                labor                scheduling and productivity.  Advertising costs declined principally                as a result of the elimination of broadcast media and related production                costs in the current year.  In addition, a more targeted focus in                terms of type and frequency of media utilized also resulted in reduced                spending.  Medical costs have decreased as a result of lower                claim volumes and an absence of materially high individual claims                during                the quarter. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Depreciation                and amortization was $15.2 million in  2005, compared to $12.4                million in  2004.  The increase in depreciation and amortization                is attributable to significant investments that have been made in                connection both with a studio-wide hardware and printer upgrade in                2004                and the recently completed digital conversion of U.S.                studios |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Other                charges and impairments reflect costs incurred from strategic actions                implemented by the Company to restructure its operations, costs that                are                unpredictable and atypical of the Company’s operations and additional                charges due to asset impairments. In the first three quarters of                2005 and 2004, the Company recognized $2.4 million and $15.2 million,                respectively, in other charges and impairments.  The decrease in                other charges and impairments primarily reflects 2004 charges related                to a change in technology strategy and executive retirements and                repositioning, partially offset by the incurrence of 2005                year-to-date charges principally attributable to additional reserves                and                related costs associated with management changes and ongoing                litigation and reduced by favorable settlements in other matters,                coupled with write-offs and write-downs of assets in connection with                the                Company’s conversion to digital                technology. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Interest                    income was $411,000 in 2005 compared to $900,000 in 2004.  The first                    half of 2004 included $483,000 of accrued preferred security                    dividends                    that were subsequently fully reserved in the fourth quarter of 2004                    as a result of the deteriorating financial performance of Prints                    Plus, the                    Company's former Wall Decor segment.  Excluding these accrued                    dividends, interest income slightly decreased due to lower                    average balances. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The                    impairment and related obligations of preferred security interest                    charges                    in the third quarter of 2004 related to an investment in and                    operating                    lease guarantees associated with its former Wall Decor segment,                    Prints                    Plus, totaling $9.6 million.  These charges were necessitated by the                    significant deteriorating financial performance of Prints Plus                    and are                    more fully discussed in the section of Management's Discussion                    and                    Analysis entitled "Contingencies" which follows. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Income                    tax benefits on losses from continuing operations were $4.8 million                    and                    $10.4 million in 2005 and 2004, respectively.  These benefits                    resulted in effective tax rates of 37.2% in 2005 and 27.4%                    in 2004.  The lower effective income tax rate in the                    first three quarters of 2004 was attributable to permanent                    differences associated with taxable gains primarily resulting                    from the                    surrendering of company-owned life insurance policies held by                    a Rabbi                    Trust and previously used as funding vehicles for the Company's                    supplemental executive retirement plan and non-deductible expenditures                    related to the termination of certain Company executives. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**16**

***LIQUIDITY      AND CAPITAL RESOURCES***

|                                                     |   |   |   | 40                  Weeks Ended    |   |
|----------------------------------------------------------|--------|--------|--------|------------------------------------|--------|
|  *thousands*                                        |   |   |   | November                  12, 2005 |   | November                  13, 2004 |   |
|                                                     |   |   |   |                               |   |   |   |
|  Net                cash (used in) provided by:     |   |        |   |                               |   |   |   |
| Operating                  activities                    |   |   |   |                               | $      | (688 | ) | $ | (12,471 | ) |
| Investing                  activities                    |   |   |   |                               |   | (19,643 | ) |   | (11,188 | ) |
| Financing                  activities                    |   |   |   |                               |   | (6,065 | ) |   | (17,487 | ) |
| Effect                  of exchange rate changes on cash |   |   |   |                               |   | 297 |   |   | 1,058 |   |
|                                                     |   |   |   |                               |   |   |   |   |   |   |
| Net                  decrease in cash                    |   |   |   |                               | $      | (26,099 | ) | $ | (40,088 | ) |
|                                                     |   |   |   |                               |   |   |   |   |   |   |

**Net        Cash Used In Operating Activities**

**Net      Cash Used In Investing Activities**

**Net      Cash Used In Financing Activities**

**17**

**Debt          Covenants**

**Off-Balance      Sheet Arrangements**

**Contingencies**

**Liquidity**

**18**

*ACCOUNTING      PRONOUNCEMENTS AND POLICIES*

**Adoption        of New Accounting Standards**

**Application        of Critical Accounting Policies**

**CAUTIONARY      STATEMENT REGARDING FORWARD-LOOKING INFORMATION**

*Item      3. Quantitative and Qualitative      Disclosures About Market Risk*

**19**

*Item          4. Controls and          Procedures*

**PART      II.**
**OTHER      INFORMATION**

*Item      6. Exhibits*

**20**

**CPICORP.**

**SIGNATURES**

**21**

**CPI        Corp.**

**E-1**

**EXHIBIT        INDEX**

| 10.84   | Amended                    and Restated Credit Agreement dated as of November                    30, 2005. (the "Credit Agreement"), among the Company, the financial                    institutions                    that are or may from time to time become                    parties thereto and LaSalle Bank National Association, an administrative                    agent and arranger                    for the Lenders (incorporated in reference to the                    Company's Current Report on Form 8-K filed with the SEC on December                    8,                    2005). |
|-------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.85   | Guaranty                    and Collateral Agreement dated as of November 30, 2005 among                    CPI Corp. and                    the other parties thereto, as guarantors, and LaSalle                    Bank National Association, an administrative agent                    (incorporated by reference to the Company's Current Report on                    Form 8-K                    filed                    with the SEC on December 8,                    2005). |
|-------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 11.1   | Computation                  of Per Share Earnings - Diluted - for the 16 and 40 weeks ended November                  12, 2005 and November 13,                  2004 |
|------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 11.2   | Computation                  of Per Share Earnings - Basic - for the 16 and                  40 weeks ended November 12, 2005 and November 13,                  2004 |
|------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 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 Executive Vice President, Finance and                  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 Executive Vice President,                  Finance and Chief Financial                  Officer |
|------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**22**