----

----

| [X] | QUARTERLY                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE                ACT OF                1934For                the quarterly period ended July 21,                2007 |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| [   ] | TRANSITION                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE                ACT OF                1934 For the transition period from __________ to                __________ |
|----------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**CPI      Corp.**

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

| Indicate                by check mark whether the Registrant [1] has filed all reports required                to                be filed by Section 13 or 15(d) of the Securities Exchange Act of                1934                during the preceding 12 months and [2] has been subject to such filing                requirements for the past 90 days. |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Yes                [X] |   |  No                [  ] |
|------------------------|--------|----------------------------------------|

| Indicate                by check mark whether the Registrant is a large accelerated filer,                an                accelerated filer, or a non-accelerated filer.  See definition                of “accelerated filer and large accelerated filer” in Rule 12b-2 of the                Exchange Act (check one): |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Large                accelerated filer [  ] |   | Accelerated                filer [X] |   | Non-accelerated                filer [  ] |
|-------------------------------------------------------|--------|--------------------------------------|--------|-----------------------------------------------------|

| Indicate                by check mark whether the Registrant is a shell company (as defined                in                Rule 12b-2 of the Exchange Act). |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Yes                [  ] |   |  No                [X] |
|-----------------------------------|--------|-----------------------------|

**CPI      CORP.**

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

**12      and 24 Weeks ended July 21, 2007**

|                           |   | Page                                   |
|--------------------------------|--------|----------------------------------------|
|                           |   |                                   |
| PART                  I.       |   | FINANCIAL                  INFORMATION |   |   |
|                           |   |                                   |   |   |
|                           |   | Item                  1.               |   | Financial                  Statements: |   |   |
|                           |   |                                   |   |   |   |   |
|                           |   |                                   |   | InterimCondensed                  Consolidated Balance                  Sheets |   |   |
|                           |   |                                   |   | July                  21, 2007 (Unaudited) and February 3, 2007 |   | 1 |
|                           |   |                                   |   |   |   |   |
|                           |   |                                   |   | Interim                  Condensed Consolidated                  Statements of Operation (Unaudited) |   |   |
|                           |   |                                   |   | 12                  and 24 Weeks Ended July 21, 2007 and July 22, 2006 |   | 3 |
|                           |   |                                   |   |   |   |   |
|                           |   |                                   |   | InterimCondensed                  Consolidated                  Statements of Changes in Stockholders' |   |   |
|                           |   |                                   |   | Equity                  (Unaudited) 24 Weeks Ended July 21, 2007 |   | 4 |
|                           |   |                                   |   |   |   |   |
|                           |   |                                   |   | InterimCondensed                  Consolidated Statements of Cash                  Flow (Unaudited) |   |   |
|                           |   |                                   |   | 24                  Weeks Ended July 21, 2007 and July 22, 2006 |   | 5 |
|                           |   |                                   |   |   |   |   |
|                           |   |                                   |   | Notes                  to Interim Condensed Consolidated Financial                  Statements (Unaudited) |   | 7 |
|                           |   |                                   |   |   |   |   |
|                           |   | Item                  2.               |   | Management's                  Discussion and Analysis of Financial Condition and Results |   |   |
|                           |   |                                   |   | of                  Operations |   | 14 |
|                           |   |                                   |   |   |   |   |
|                           |   | Item                  3.               |   | Quantitative                  and Qualitative Disclosures about Market Risk |   | 24 |
|                           |   |                                   |   |   |   |   |
|                           |   | Item                  4.               |   | Controls                  and Procedures |   | 24 |
|                           |   |                                   |   |   |   |   |
| PART                  II.      |   | OTHER                  INFORMATION     |   |   |
|                           |   |                                   |   |   |
|                           |   | Item                1A.                |   | Risk                Factors  |   | 24 |
|                           |   | Item                  4.               |   | Submission                  of Matters to a Vote of Security Holders |   | 25 |
|                           |   | Item                  5.               |   | Other                  Information |   | 25 |
|                           |   | Item                  6.               |   | Exhibits |   | 26 |
|                           |   |                                   |
| SIGNATURES                     |   |                                   |   | 27 |
|                           |   |                                   |
| EXHIBIT                  INDEX |   |                                   |   | 28 |

**PART      I.                      FINANCIAL      INFORMATION**

*Item      1.                 Financial      Statements*

**CPI        CORP.**

**Interim        Condensed Consolidated Balance Sheets – Assets**

| *thousands*                                                                                                   |   | July                  21, 2007 |    |   | February                  3, 2007 |   |
|---------------------------------------------------------------------------------------------------------------|--------|--------------------------------|---------|--------|-----------------------------------|--------|
|                                                                                                          |   | (Unaudited)                    |    |   |                              |   |
| ASSETS                                                                                                        |   |                           |    |   |                              |   |
| Current                  assets:                                                                              |   |                           |    |   |                              |   |
|     Cash                  and cash equivalents                                            |   | $                              | 42,641  |   |                              | $      | 26,294 |   |
|     Restricted                  cash                                                      |   |                           | -       |   |                              |   | 1,000 |   |
|     Accounts                  receivable:                                                 |   |                           |    |   |                              |   |   |   |
|         Trade                                                         |   |                           | 10,842  |   |                              |   | 7,308 |   |
|         Other                                                         |   |                           | 523     |   |                              |   | 489 |   |
|     Inventories                                                                           |   |                           | 15,440  |   |                              |   | 9,067 |   |
|     Prepaid                  expenses and other current assets                            |   |                           | 6,434   |   |                              |   | 5,157 |   |
|     Deferred                  tax                  assets                                 |   |                           | 5,134   |   |                              |   | 5,756 |   |
|                                                                                                          |   |                           |    |   |                              |   |   |   |
|     Total                  current assets                                                 |   |                           | 81,014  |   |                              |   | 55,071 |   |
|                                                                                                          |   |                           |    |   |                              |   |   |   |
| Property                  and equipment:                                                                      |   |                           |    |   |                              |   |   |   |
|     Land                                                                                  |   |                           | 5,065   |   |                              |   | 2,765 |   |
|     Buildings                  and                  improvements                          |   |                           | 34,235  |   |                              |   | 26,485 |   |
|     Leasehold                  improvements                                               |   |                           | 4,763   |   |                              |   | 4,383 |   |
|     Photographic,                  sales and manufacturing equipment                      |   |                           | 156,298 |   |                              |   | 123,518 |   |
|         Total                                                         |   |                           | 200,361 |   |                              |   | 157,151 |   |
|     Less                  accumulated depreciation and amortization                       |   |                           | 139,464 |   |                              |   | 130,458 |   |
|         Property                  and                  equipment, net |   |                           | 60,897  |   |                              |   | 26,693 |   |
|                                                                                                          |   |                           |    |   |                              |   |   |   |
| Other                  investments - supplemental retirement plan                                             |   |                           | 3,551   |   |                              |   | 3,588 |   |
| Deferred                  tax assets                                                                          |   |                           | 5,474   |   |                              |   | 4,005 |   |
| Goodwill,                  net of amortization of $1,359 at July 21, 2007 and                                 |   |                           |    |   |                              |   |   |   |
|     February                  3,                  2007, respectively                      |   |                           | 19,642  |   |                              |   | 512 |   |
| Intangible                  assets, net of amortization of $449 at July 21, 2007                              |   |                           | 43,562  |   |                              |   | - |   |
| Other                  assets                                                                                 |   |                           | 5,407   |   |                              |   | 810 |   |
|                                                                                                          |   |                           |    |   |                              |   |   |   |
| **    TOTAL                  ASSETS**                                                     |   | $                              | 219,547 |   |                              | $      | 90,679 |   |
|                                                                                                          |   |                           |    |   |                              |   |   |   |
| *See                  accompanying footnotes.*                                                                |   |                           |    |   |                              |   |   |   |

**CPI      CORP.**

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

| *thousands,                  except share and per share data*                                                                             |   | July                  21, 2007 |     |   | February                  3, 2007 |   |
|-------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------|----------|--------|-----------------------------------|--------|
|                                                                                                                                      |   | (Unaudited)                    |     |   |                              |   |
| LIABILITIES                                                                                                                               |   |                           |     |   |                              |   |
| Current                  liabilities:                                                                                                     |   |                           |     |   |                              |   |
|     Current                  maturities of long-term debt                                                             |   | $                              | 1,150    |   |                              | $      | 8,333 |   |
|     Accounts                  payable                                                                                 |   |                           | 9,005    |   |                              |   | 3,317 |   |
|     Accrued                  employment costs                                                                         |   |                           | 14,829   |   |                              |   | 12,770 |   |
|     Customer                  deposit liability                                                                       |   |                           | 22,350   |   |                              |   | 15,468 |   |
|     Income                  taxes payable                                                                             |   |                           | 662      |   |                              |   | 890 |   |
|     Sales                  taxes payable                                                                              |   |                           | 2,988    |   |                              |   | 2,564 |   |
|     Accrued                  advertising expenses                                                                     |   |                           | 1,636    |   |                              |   | 684 |   |
|     Accrued                  expenses and other liabilities                                                           |   |                           | 16,726   |   |                              |   | 5,381 |   |
|                                                                                                                                      |   |                           |     |   |                              |   |   |   |
|     Total                  current liabilities                                                                        |   |                           | 69,346   |   |                              |   | 49,407 |   |
|                                                                                                                                      |   |                           |     |   |                              |   |   |   |
| Long-term                  debt, less current maturities                                                                                  |   |                           | 110,862  |   |                              |   | 7,747 |   |
| Accrued                  pension plan obligations                                                                                         |   |                           | 14,168   |   |                              |   | 14,367 |   |
| Supplemental                  retirement plan obligations                                                                                 |   |                           | 3,481    |   |                              |   | 3,472 |   |
| Customer                  deposit liability                                                                                               |   |                           | 1,056    |   |                              |   | 2,508 |   |
| Other                  liabilities                                                                                                        |   |                           | 12,048   |   |                              |   | 2,862 |   |
|                                                                                                                                      |   |                           |     |   |                              |   |   |   |
|     Total                  liabilities                                                                                |   |                           | 210,961  |   |                              |   | 80,363 |   |
|                                                                                                                                      |   |                           |     |   |                              |   |   |   |
| 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; 17,005,728                  and                  16,975,343 |   |                           |     |   |                              |   |   |   |
|     shares                  outstanding at July 21, 2007 and February 3, 2007,                  respectively          |   |                           | 6,802    |   |                              |   | 6,790 |   |
| Additional                  paid-in capital                                                                                               |   |                           | 26,313   |   |                              |   | 25,510 |   |
| Retained                  earnings                                                                                                        |   |                           | 217,576  |   |                              |   | 220,460 |   |
| Accumulated                  other comprehensive loss                                                                                     |   |                           | (8,690   | )      |                              |   | (9,387 | ) |
|                                                                                                                                      |   |                           | 242,001  |   |                              |   | 243,373 |   |
|                                                                                                                                      |   |                           |     |   |                              |   |   |   |
| Treasury                  stock - at cost, 10,628,204 and 10,618,090 shares at July 21, 2007                  and                         |   |                           |     |   |                              |   |   |   |
|     February                  3,                  2007, respectively                                                  |   |                           | (233,415 | )      |                              |   | (233,057 | ) |
|                                                                                                                                      |   |                           |     |   |                              |   |   |   |
|     Total                  stockholders' equity                                                                       |   |                           | 8,586    |   |                              |   | 10,316 |   |
|                                                                                                                                      |   |                           |     |   |                              |   |   |   |
| **    TOTAL                  LIABILITIES AND STOCKHOLDERS' EQUITY**                                                   |   | $                              | 219,547  |   |                              | $      | 90,679 |   |
|                                                                                                                                      |   |                           |     |   |                              |   |   |   |
| *See                  accompanying footnotes.*                                                                                            |   |                           |     |   |                              |   |   |   |

**CPI      CORP.**

**Interim      Condensed Consolidated Statements      of      Operations**

| *thousands,                  except share and per share data*                                                                                     |   | 12                  Weeks Ended |      |   | 24                  Weeks Ended |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------|-----------|--------|---------------------------------|--------|
|                                                                                                                                              |   | July                  21, 2007  |      |   | July                  22, 2006  |   |   | July                  21, 2007 |   |   | July                  22, 2006 |   |
|                                                                                                                                              |   |                            |      |   |                            |   |   |   |   |   |   |   |
| **Net                  sales**                                                                                                                    |   | $                               | 68,642    |   |                            | $      | 56,345 |   |   | $ | 126,403 |   |   | $ | 116,014 |   |
|                                                                                                                                              |   |                            |      |   |                            |   |   |   |   |   |   |   |   |   |   |   |
| **Cost                  and expenses:**                                                                                                           |   |                            |      |   |                            |   |   |   |   |   |   |   |   |   |   |   |
|     Cost                  of                  sales (exclusive of depreciation and amortization shown                  below) |   |                            | 7,776     |   |                            |   | 5,806 |   |   |   | 12,673 |   |   |   | 11,375 |   |
|     Selling,                  general and administrative expenses                                                             |   |                            | 57,547    |   |                            |   | 44,822 |   |   |   | 102,866 |   |   |   | 91,181 |   |
|     Depreciation                  and amortization                                                                            |   |                            | 6,177     |   |                            |   | 4,046 |   |   |   | 9,590 |   |   |   | 8,232 |   |
|     Other                  charges and impairments                                                                            |   |                            | 1,261     |   |                            |   | 143 |   |   |   | 1,290 |   |   |   | 534 |   |
|                                                                                                                                              |   |                            | 72,761    |   |                            |   | 54,817 |   |   |   | 126,419 |   |   |   | 111,322 |   |
|                                                                                                                                              |   |                            |      |   |                            |   |   |   |   |   |   |   |   |   |   |   |
| Earnings                  (loss) from operations                                                                                                  |   |                            | (4,119    | )      |                            |   | 1,528 |   |   |   | (16 | ) |   |   | 4,692 |   |
|                                                                                                                                              |   |                            |      |   |                            |   |   |   |   |   |   |   |   |   |   |   |
| Interest                  expense                                                                                                                 |   |                            | 1,561     |   |                            |   | 563 |   |   |   | 2,008 |   |   |   | 1,166 |   |
| Interest                  income                                                                                                                  |   |                            | 410       |   |                            |   | 74 |   |   |   | 716 |   |   |   | 131 |   |
| Lease                  guarantee reserve reduction                                                                                                |   |                            | -         |   |                            |   | - |   |   |   | - |   |   |   | 300 |   |
| Other                  income, net                                                                                                                |   |                            | 56        |   |                            |   | 27 |   |   |   | 8 |   |   |   | 67 |   |
|                                                                                                                                              |   |                            |      |   |                            |   |   |   |   |   |   |   |   |   |   |   |
| Earnings                  (loss) before income tax expense (benefit)                                                                              |   |                            | (5,214    | )      |                            |   | 1,066 |   |   |   | (1,300 | ) |   |   | 4,024 |   |
| Income                  tax expense (benefit)                                                                                                     |   |                            | (1,812    | )      |                            |   | 426 |   |   |   | (453 | ) |   |   | 1,540 |   |
|                                                                                                                                              |   |                            |      |   |                            |   |   |   |   |   |   |   |   |   |   |   |
| **NET                  EARNINGS (LOSS)**                                                                                                          |   | $                               | (3,402    | )      |                            | $      | 640 |   |   | $ | (847 | ) |   | $ | 2,484 |   |
|                                                                                                                                              |   |                            |      |   |                            |   |   |   |   |   |   |   |   |   |   |   |
| **NET                  EARNINGS (LOSS) PER COMMON SHARE**                                                                                         |   |                            |      |   |                            |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                              |   |                            |      |   |                            |   |   |   |   |   |   |   |   |   |   |   |
| Net                  earnings (loss) per share - diluted                                                                                          |   | $                               | (0.53     | )      |                            | $      | 0.10 |   |   | $ | (0.13 | ) |   | $ | 0.39 |   |
|                                                                                                                                              |   |                            |      |   |                            |   |   |   |   |   |   |   |   |   |   |   |
| Net                  earnings (loss) per share - basic                                                                                            |   | $                               | (0.53     | )      |                            | $      | 0.10 |   |   | $ | (0.13 | ) |   | $ | 0.39 |   |
|                                                                                                                                              |   |                            |      |   |                            |   |   |   |   |   |   |   |   |   |   |   |
| Dividends                  per share                                                                                                              |   | $                               | 0.16      |   |                            | $      | 0.16 |   |   | $ | 0.32 |   |   | $ | 0.32 |   |
|                                                                                                                                              |   |                            |      |   |                            |   |   |   |   |   |   |   |   |   |   |   |
| Weighted                  average number of common and common equivalent                                                                          |   |                            |      |   |                            |   |   |   |   |   |   |   |   |   |   |   |
|     shares                  outstanding - diluted                                                                             |   |                            | 6,386,115 |   |                            |   | 6,368,778 |   |   |   | 6,374,780 |   |   |   | 6,373,607 |   |
|                                                                                                                                              |   |                            |      |   |                            |   |   |   |   |   |   |   |   |   |   |   |
| Weighted                  average number of common and common equivalent                                                                          |   |                            |      |   |                            |   |   |   |   |   |   |   |   |   |   |   |
|     shares                  outstanding - basic                                                                               |   |                            | 6,386,115 |   |                            |   | 6,342,321 |   |   |   | 6,374,780 |   |   |   | 6,353,585 |   |
|                                                                                                                                              |   |                            |      |   |                            |   |   |   |   |   |   |   |   |   |   |   |
| *See                  accompanying footnotes.*                                                                                                    |   |                            |      |   |                            |   |   |   |   |   |   |   |   |   |   |   |

**CPI      CORP.**

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

**Twenty-four      weeks ended July 21, 2007**

|  *thousands,                  except share and per share data*                                                                                                                      |   |                            |    |   |                                          |   |    |                                 |   |   |                                                                      |   |   |                                                          |   |   |   |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------|---------|--------|-----------------------------------------------|--------|---------|--------------------------------------|--------|--------|---------------------------------------------------------------------------|--------|--------|---------------------------------------------------------------|--------|--------|--------|--------|
|                                                                                                                                                                                          |   | Common                    Stock |    |   | Additional                    paid-in capital |   |    | Retained                    earnings |   |   | Accumulated                    othercomprehensive                    loss |   |   | Treasury                    stock, at                    cost |   |   | Total  |   |
|                                                                                                                                                                                     |   |                            |    |   |                                          |   |    |                                 |   |   |                                                                      |   |   |                                                          |   |   |   |   |
| Balance                    at February 3, 2007                                                                                                                                           |   | $                               | 6,790   |   |                                          | $      | 25,510  |                                 |   | $      | 220,460                                                                   |   |   | $                                                             | (9,387 | )      |   | $      | (233,057 | ) |   | $ | 10,316 |   |
|                                                                                                                                                                                     |   |                            |    |   |                                          |   |    |                                 |   |   |                                                                      |   |   |                                                          |   |   |   |   |   |   |   |   |   |   |
| Net                    earnings (loss)                                                                                                                                                   |   |                            | -       |   |                                          |   | -       |                                 |   |   | (847                                                                      | )      |   |                                                          | -      |   |   |   | - |   |   |   | (847 | ) |
| Total                    other comprehensive income, net of tax effect                                                                                                                   |   |                            |  - |   |                                          |   |  - |                                 |   |   |  -                                                                   |   |   |                                                          | 697    |   |   |   | - |   |   |   | 697 |   |
|     Total                    comprehensive income                                                                                                                    |   |                            | -       |   |                                          |   | -       |                                 |   |   | -                                                                         |   |   |                                                          | -      |   |   |   | - |   |   |   | (150 | ) |
| Surrender                    of employee shares to satisfy personal tax   liabilities upon                                            vesting    |   |                            | -       |   |                                          |   | -       |                                 |   |   | -                                                                         |   |   |                                                          | -      |   |   |   | (547 | )  |   |   | (547 | ) |
| Issuance                    of common stock to employee benefit plans and restricted                    stock     award                    (30,246 shares) |   |                            | 12      |   |                                          |   | 246     |                                 |   |   | -                                                                         |   |   |                                                          | -      |   |   |   | 189 |   |   |   | 447 |   |
| Stock-based                    compensation recognized                                                                                                                                   |   |                            | -       |   |                                          |   | 557     |                                 |   |   | -                                                                         |   |   |                                                          | -      |   |   |   | - |   |   |   | 557 |   |
| Dividends                    ($0.32 per common share)                                                                                                                                    |   |                            | -       |   |                                          |   | -       |                                 |   |   | (2,037                                                                    | )      |   |                                                          | -      |   |   |   | - |   |   |   | (2,037 | ) |
|                                                                                                                                                                                     |   |                            |    |   |                                          |   |    |                                 |   |   |                                                                      |   |   |                                                          |   |   |   |   |   |   |   |   |   |   |
| Balance                    at July 21, 2007                                                                                                                                              |   | $                               | 6,802   |   |                                          | $      | 26,313  |                                 |   | $      | 217,576                                                                   |   |   | $                                                             | (8,690 | )      |   | $      | (233,415 | ) |   | $ | 8,586 |   |
|                                                                                                                                                                                     |   |                            |    |   |                                          |   |    |                                 |   |   |                                                                      |   |   |                                                          |   |   |   |   |   |   |   |   |   |   |
| *See                    accompanying footnotes.*                                                                                                                                         |   |                            |    |   |                                          |   |    |                                 |   |   |                                                                      |   |   |                                                          |   |   |   |   |   |   |   |   |   |   |

**CPI      CORP.**

**Interim      Condensed Consolidated Statements of Cash      Flows**

| *thousands*                                                                                                    |   | 24                  Weeks Ended |   |
|----------------------------------------------------------------------------------------------------------------|--------|---------------------------------|--------|
|                                                                                                           |   | July                  21, 2007  |   |   | July                  22, 2006 |   |
| Reconciliation                  of net earnings (loss) to cash flows provided by (used in)                     |   |                            |   |   |   |   |
|     operating                  activities:                                                 |   |                            |   |   |   |   |
|                                                                                                           |   |                            |   |   |   |   |
| Net                  earnings (loss)                                                                           |   | $                               | (847   | ) |   | $ | 2,484 |   |
|                                                                                                           |   |                            |   |   |   |   |   |   |
| Adjustments                  for items not (providing) requiring cash:                                         |   |                            |   |   |   |   |   |   |
|     Depreciation                  and amortization                                         |   |                            | 9,590  |   |   |   | 8,232 |   |
|     Stock-based                  compensation expense                                      |   |                            | 557    |   |   |   | 371 |   |
|     Loss                  on                  disposition of property, plant and equipment |   |                            | 17     |   |   |   | 204 |   |
|     Loss                  on                  sale of assets held for sale                 |   |                            | 60     |   |   |   | - |   |
|     Deferred                  income                  tax provision                        |   |                            | (389   | ) |   |   | 1,488 |   |
|     Pension,                  supplemental retirement plan and profit sharing expense      |   |                            | 1,143  |   |   |   | 1,329 |   |
|     Lease                  guarantee reserve reduction                                     |   |                            | -      |   |   |   | (300 | ) |
|     Other                                                                                  |   |                            | 249    |   |   |   | 264 |   |
|                                                                                                           |   |                            |   |   |   |   |   |   |
| Increase                  (decrease) in cash flow from operating assets and                  liabilities:      |   |                            |   |   |   |   |   |   |
|     Receivables                  and                  inventories                          |   |                            | (1,361 | ) |   |   | 2,081 |   |
|     Prepaid                  expenses and other current assets                             |   |                            | (299   | ) |   |   | 472 |   |
|     Accounts                  payable                                                      |   |                            | 3,007  |   |   |   | 39 |   |
|     Contribution                  to                  pension plan                         |   |                            | (771   | ) |   |   | - |   |
|     Supplemental                  retirement plan payments                                 |   |                            | (120   | ) |   |   | (116 | ) |
|     Accrued                  expenses and other liabilities                                |   |                            | (6,750 | ) |   |   | (2,502 | ) |
|     Income                  taxes payable                                                  |   |                            | (726   | ) |   |   | 716 |   |
|     Deferred                  revenues and related costs                                   |   |                            | 4,589  |   |   |   | (1,319 | ) |
|     Other                                                                                  |   |                            | 250    |   |   |   | (393 | ) |
|                                                                                                           |   |                            |   |   |   |   |   |   |
| Cash                  flows provided by operating activities                                                   |   | $                               | 8,199  |   |   | $ | 13,050 |   |
|                                                                                                           |   |                            |   |   |   |   |   |   |
| *See                  accompanying footnotes.*                                                                 |   |                            |   |   |   |   |   |   |

**CPI      CORP.**

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

| *thousands*                                                                       |                                                                                                                  | 24                      Weeks Ended                                                                                                                    |
|-----------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                              |                                                                                                                  | July                      21, 2007                                                                                                                     |   | July                      22, 2006 |
|                                                                              |                                                                                                                  |                                                                                                                                                   |   |   |
| Cash                      flows provided by operating activities                  |                                                                                                                  |  $                 8,199                                     |   |  $               13,050 |
|                                                                              |                                                                                                                  |                                                                                                                                                   |   |   |
| Cash                      flows (used in) provided by financing activities:       |                                                                                                                  |                                                                                                                                                   |   |   |
|                                                                              | Repayment                      of long-term obligations                                                               |                                                                                                                                                   |                 (16,666) |   |                   (4,167) |
|                                                                              | Proceeds                      from long-term borrowings                                                               |                                                                                                                                                   |                 115,000 |   |                             - |
|                                                                              | Release                      of restricted cash                                                                       |                                                                                                                                                   |                     1,000 |   |                             - |
|                                                                              | Payment                      of debt issuance costs                                                                   |                                                                                                                                                   |                   (2,646) |   |                             - |
|                                                                              | Purchase                      of treasury stock                                                                       |                                                                                                                                                   |                             - |   |                 (32,539) |
|                                                                              | Surrender                      of employee shares to satisfy personal tax liability upon                      vesting |                                                                                                                                                   |                      (547) |   |                        (89) |
|                                                                              | Excess                      tax benefits from stock-based compensation                                                |                                                                                                                                                   |                             - |   |                          73 |
|                                                                              | Cash                      dividends                                                                                   |                                                                                                                                                   |                   (2,037) |   |                   (2,018) |
|                                                                              | Stock                      option exercises                                                                           |                                                                                                                                                   |                             - |   |                        203 |
|                                                                              | Other                                                                                                                 |                                                                                                                                                   |                             - |   |                        (55) |
|                                                                              | Cash                      flows provided by (used in) financing activities                                            |                                                                                                                                                   |                   94,104 |   |                 (38,592) |
|                                                                              |                                                                                                                  |                                                                                                                                                   |   |   |
| Cash                      flows (used in) provided by investing activities:       |                                                                                                                  |                                                                                                                                                   |   |   |
|                                                                              | Acquisition                      of certain net assets of Portrait Corporation of America,                            |                                                                                                                                                   |   |   |   |
|                                                                              |                                                                                                                  | net                      of cash and cash equivalents acquired of $102 (excludes unpaid                      costs                      totaling $408) |   |                 (82,596) |   |                             - |
|                                                                              | Additions                      to property and equipment                                                              |                                                                                                                                                   |                   (3,615) |   |                   (1,670) |
|                                                                              | Proceeds                      from sale of assets held for sale                                                       |                                                                                                                                                   |                          65 |   |                             - |
|                                                                              | Increase                      in assets held by Rabbi Trust                                                           |                                                                                                                                                   |                        (88) |   |                        (83) |
|                                                                              | Proceeds                      from Rabbi Trust used for supplemental retirement plan                      payments    |                                                                                                                                                   |                        124 |   |                        124 |
|                                                                              | Cash                      flows used in investing activities                                                          |                                                                                                                                                   |                 (86,110) |   |                   (1,629) |
|                                                                              |                                                                                                                  |                                                                                                                                                   |   |   |
| Effect                      of exchange rate changes on cash and cash equivalents |                                                                                                                  |                        154          |   |                             - |
|                                                                              |                                                                                                                  |                                                                                                                                                   |   |   |
| Net                      increase (decrease) in cash and cash equivalents         |                                                                                                                  |                   16,347                                     |   |                 (27,171) |
|                                                                              |                                                                                                                  |                                                                                                                                                   |   |   |
| **Cash                      and cash equivalents at beginning of period**         |                                                                                                                  |                   26,294                                     |   |                   34,269 |
|                                                                              |                                                                                                                  |                                                                                                                                                   |   |   |
| **Cash                      and cash equivalents at end of period**               |                                                                                                                  |  $               42,641                                                |   |  $                 7,098 |
|                                                                              |                                                                                                                  |                                                                                                                                                   |   |   |
| Supplemental                      cash flow information:                          |                                                                                                                  |                                                                                                                                                   |   |   |
|                                                                              | Interest                      paid                                                                                    |                                                                                                                                                   |  $                 1,567 |   |  $                    896 |
|                                                                              | Income                      taxes paid                                                                                |                                                                                                                                                   |  $                    828 |   |  $                    460 |
|                                                                              |                                                                                                                  |                                                                                                                                                   |   |   |
| Supplemental                      non-cash financing activities:                  |                                                                                                                  |                                                                                                                                                   |   |   |
|                                                                              | Issuance                      of treasury stock under the Employee Profit Sharing Plan                                |                                                                                                                                                   |  $                    442 |   |  $                    440 |
|                                                                              | Issuance                      of restricted stock to employees and directors                                          |                                                                                                                                                   |  $                 1,644 |   |  $                    785 |
|                                                                              | Executive                      retirement stock option modification                                                   |                                                                                                                                                   |  $                        6 |   |  $                      71 |
|                                                                              |                                                                                                                  |                                                                                                                                                   |   |   |
| *See                      accompanying footnotes.*                                |                                                                                                                  |                                                                                                                                                   |   |   |

**CPI      CORP.**

**Notes      to Interim Condensed Consolidated Financial      Statements**

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

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

**CPI      CORP.**

**Notes      to Interim Condensed Consolidated Financial Statements**

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

| Current                  assets                 |   | $      | 9,585   |   |
|-------------------------------------------------|--------|--------|---------|--------|
| Property                  and equipment         |   |   | 39,747  |   |
| Goodwill                                        |   |   | 19,107  |   |
| Intangibles                  (See Note 5)       |   |   | 44,011  |   |
| Other                  assets                   |   |   | 4,645   |   |
|                                            |   |   |    |   |
| Total                  assets acquired          |   | $      | 117,095 |   |
|                                            |   |   |    |   |
| Current                  liabilities assumed    |   |   | (25,280 | )      |
| Long-term                  liabilities assumed  |   |   | (8,709  | )      |
|                                            |   |   |    |   |
| Total                  allocated purchase price |   | $      | 83,106  |   |
|                                            |   |   |    |   |

**CPI      CORP.**

**Notes      to Interim Condensed Consolidated Financial Statements**

|                                                      |   | Second                  Quarter |    |   | First                  Half |   |
|-----------------------------------------------------------|--------|---------------------------------|---------|--------|-----------------------------|--------|
|                                                      |   | 2007                            |    |   | 2006                        |   |   | 2007 |   |   | 2006 |   |
|                                                      |   |                            |    |   |                        |   |   |   |   |   |   |   |
| Revenue                                                   |   | $                               | 90,935  |   |                        | $      | 108,501 |   |   | $ | 209,185 |   |   | $ | 236,623 |   |
|                                                      |   |                            |    |   |                        |   |   |   |   |   |   |   |   |   |   |   |
| Net                  loss                                 |   | $                               | (10,989 | )      |                        | $      | (8,938 | ) |   | $ | (15,493 | ) |   | $ | (8,873 | ) |
|                                                      |   |                            |    |   |                        |   |   |   |   |   |   |   |   |   |   |   |
| Basic                  earnings (loss) per common share   |   | $                               | (1.72   | )      |                        | $      | (1.41 | ) |   | $ | (2.43 | ) |   | $ | (1.40 | ) |
|                                                      |   |                            |    |   |                        |   |   |   |   |   |   |   |   |   |   |   |
| Diluted                  earnings (loss) per common share |   | $                               | (1.72   | )      |                        | $      | (1.41 | ) |   | $ | (2.43 | ) |   | $ | (1.40 | ) |

| ** NOTE                4   -** | **INVENTORIES** |
|----------------------------------------------------|-----------------|

| *thousands*                                            |   | July                    21, 2007 |   |   | February                    3, 2007 |   |
|--------------------------------------------------------|--------|----------------------------------|--------|--------|-------------------------------------|--------|
|                                                   |   |                             |   |   |                                |   |
| Raw                    materials - paper and chemicals |   | $                                | 3,517  |   |                                | $      | 4,086 |   |
| Portraits                    in process                |   |                             | 4,024  |   |                                |   | 777 |   |
| Finished                    portraits pending delivery |   |                             | 558    |   |                                |   | 369 |   |
| Frames                    and accessories              |   |                             | 711    |   |                                |   | 1,118 |   |
| Studio                    supplies                     |   |                             | 4,189  |   |                                |   | 2,083 |   |
| Equipment                    repair parts and supplies |   |                             | 1,585  |   |                                |   | 428 |   |
| Other                                                  |   |                             | 856    |   |                                |   | 206 |   |
|                                                   |   |                             |   |   |                                |   |   |   |
| Total                                                  |   | $                                | 15,440 |   |                                | $      | 9,067 |   |
|                                                   |   |                             |   |   |                                |   |   |   |

**CPI      CORP.**

**Notes      to Interim Condensed Consolidated Financial Statements**

| ** NOTE                5   -** | **GOODWILL                AND INTANGIBLE ASSETS** |
|----------------------------------------------------|---------------------------------------------------|

| PCA                  acquisition                  |   | $      | 19,107 |   |
|---------------------------------------------------|--------|--------|--------|--------|
|                                              |   |   |   |   |
|                                              |   |   |   |   |
| Goodwill                  from prior acquisitions |   |   | 1,872  |   |
|                                              |   |   |   |   |
| Accumulated                  amortization         |   |   | (1,359 | )      |
|                                              |   |   |   |   |
| Translation                                       |   |   | 22     |   |
|                                              |   |   |   |   |
|                                              |   | $      | 19,642 |   |
|                                              |   |   |   |   |

*”*

|                                     |   |                          |   |   | Accumulated  |   |   | Net     |   |
|------------------------------------------|--------|-------------------------------|--------|--------|--------------|--------|--------|---------|--------|
|                                     |   | Gross                  Amount |   |   | Amortization |   |   | Balance |   |
|                                     |   |                          |   |   |         |   |   |    |   |
| Acquired                  host agreement |   | $                             | 41,339 |   |         | $      | (227   | )       |   | $ | 41,112 |   |
| Acquired                  customer list  |   |                          | 2,672  |   |         |   | (222   | )       |   |   | 2,450 |   |
|                                     |   | $                             | 44,011 |   |         | $      | (449   | )       |   | $ | 43,562 |   |
|                                     |   |                          |   |   |         |   |   |    |   |   |   |   |

| ** NOTE                6   -** | **OTHER                ASSETS AND OTHER                LIABILITIES** |
|----------------------------------------------------|----------------------------------------------------------------------|

| ** NOTE                7   -** | **BORROWINGS** |
|----------------------------------------------------|----------------|

**CPI      CORP.**

**Notes      to Interim Condensed Consolidated Financial Statements**

| **  NOTE                8   -** | **STOCK-BASED                COMPENSATION PLANS** |
|----------------------------------------------------------|---------------------------------------------------|

**CPI      CORP.**

**Notes      to Interim Condensed Consolidated Financial Statements**

|                                                       |                            | Options                  Outstanding and Exercisable |
|------------------------------------------------------------|---------------------------------|------------------------------------------------------|
|                                                       |                            |                                                 |   | Weighted-Average |   |   |
|                                                       |                            |                                                 |   | Remaining                  Contractual |   | Weighted-Average |
| Range                  of Exercise Prices                  |                            | Shares                                               |   | Life                  (Years) |   | Exercise                  Price |
| $                                                          | 12.96                           |                                                 |   | 10,046 |   |   | 3.25 |   | $ | 12.96 |
| $                                                          | 16.50                  - $17.00 |                                                 |   | 25,000 |   |   | 2.72 |   |   | 16.60 |
|                                                       |                            |                                                 |   |   |   |   |   |   |   |   |
| Total                                                      |                            |                                                 | 35,046 |   |   | 2.88 |   |   | 15.56 |
|                                                  |                            |                                                 |   |   |   |   |   |   |   |
| Reserved                  for future grants at quarter-end |                            |                                                 | 1,020,639 |   |   |   |   |   |   |
| Exercisable                                                |                            |                                                 | 35,046 |   |   |   |   |   |   |

|                                                                            |   | 24                    Weeks Ended July 21, 2007 |    |
|---------------------------------------------------------------------------------|--------|-------------------------------------------------|---------|
|                                                                            |   |                                            |    |   | Weighted-Average |   |
|                                                                            |   | Shares                                          |    |   | Grant-date                    Value |   |
| Nonvested                    stock, beginning of period                         |   |                                            | 4,448   |   |   | $ | 17.99 |   |
| Granted                                                                         |   |                                            | 30,385  |   |   |   | 54.10 |   |
| Forfeited                                                                       |   |                                            | (139    | ) |   |   | 54.00 |   |
| Nonvested                  stock, end of period                                 |   |                                            | 34,694  |   |   |   | 49.47 |   |
| Reserved                    for future grants at quarter-end                    |   |                                            | 210,663 |   |   |   |   |   |
|                                                                            |   |                                            |    |   |   |   |   |   |
| Stock-based                    compensation expense related to restricted stock |   |                                            |    |   |   | $ | 557,152 |   |
|                                                             |   |                                            |    |   |   |   |   |   |

| ** NOTE                9   -** | **EMPLOYEE                BENEFIT PLANS** |
|----------------------------------------------------|-------------------------------------------|

**CPI      CORP.**

**Notes      to Interim Condensed Consolidated Financial Statements**

| *thousands*                                                |   | 12                  Weeks Ended |   |
|------------------------------------------------------------|--------|---------------------------------|--------|
|                                                       |   | Pension                  Plan   |   |   | Supplemental                  Retirement Plan |   |
|                                                       |   | July                  21, 2007  |   |   | July                  22, 2006 |   |   | July                  21, 2007 |   |   | July                  22, 2006 |   |
|                                                       |   |                            |   |   |   |   |   |   |   |   |   |   |
| Components                  of net periodic benefit costs: |   |                            |   |   |   |   |   |   |   |   |   |   |
| Service                  cost                              |   | $                               | 75     |   |   | $ | 97 |   |   | $ | 18 |   |   | $ | 17 |   |
| Interest                  cost                             |   |                            | 675    |   |   |   | 660 |   |   |   | 48 |   |   |   | 46 |   |
| Expected                  return on plan assets            |   |                            | (679   | ) |   |   | (647 | ) |   |   | - |   |   |   | - |   |
| Amortization                  of prior service cost        |   |                            | 10     |   |   |   | 10 |   |   |   | 7 |   |   |   | 7 |   |
| Amortization                  of net (gain) loss           |   |                            | 205    |   |   |   | 249 |   |   |   | (8 | ) |   |   | (5 | ) |
|                                                       |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                  periodic benefit cost                 |   | $                               | 286    |   |   | $ | 369 |   |   | $ | 65 |   |   | $ | 65 |   |
|                                                       |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

| *thousands*                                                |   | 24                  Weeks Ended |   |
|------------------------------------------------------------|--------|---------------------------------|--------|
|                                                       |   | Pension                  Plan   |   |   | Supplemental                  Retirement Plan |   |
|                                                       |   | July                  21, 2007  |   |   | July                  22, 2006 |   |   | July                  21, 2007 |   |   | July                  22, 2006 |   |
|                                                       |   |                            |   |   |   |   |   |   |   |   |   |   |
| Components                  of net periodic benefit costs: |   |                            |   |   |   |   |   |   |   |   |   |   |
| Service                  cost                              |   | $                               | 150    |   |   | $ | 194 |   |   | $ | 36 |   |   | $ | 34 |   |
| Interest                  cost                             |   |                            | 1,350  |   |   |   | 1,320 |   |   |   | 96 |   |   |   | 92 |   |
| Expected                  return on plan assets            |   |                            | (1,358 | ) |   |   | (1,294 | ) |   |   | - |   |   |   | - |   |
| Amortization                  of prior service cost        |   |                            | 20     |   |   |   | 20 |   |   |   | 14 |   |   |   | 14 |   |
| Amortization                  of net (gain) loss           |   |                            | 410    |   |   |   | 498 |   |   |   | (16 | ) |   |   | (10 | ) |
|                                                       |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                  periodic benefit cost                 |   | $                               | 572    |   |   | $ | 738 |   |   | $ | 130 |   |   | $ | 130 |   |
|                                                       |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

| ** NOTE                10  -** | **INCOME                TAXES** |
|-----------------------------------------------|---------------------------------|

| ·   | Unrecognized                tax benefits were approximately $2.7 million at each of February                4, 2007                and July 21, 2007.  If these unrecognized tax benefits were                recognized, approximately $2.7 million would impact the effective                tax                rate.  While it is expected that the amount of unrecognized tax                benefits will change in the next 12 months, the Company does not                expect                the change to have a significant impact on the results of operations                or                the financial position of the                Company. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The                Company recognizes interest expense and penalties related to the                above-unrecognized tax benefits within income tax expense.  Due                to the nature of the unrecognized tax benefits, the Company had no                accrued                interest and penalties as of February 4, 2007 or July 21,                2007. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The                Company and its subsidiaries file income tax returns in the U.S.                federal                jurisdiction, many states, Canadian jurisdictions and Mexican                jurisdictions.  The Company is no longer subject to U.S. Federal                income tax examination for the years prior to                2003.   Ongoing examinations by various state taxing                authorities date back to February 7,                1998. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**CPI      CORP.**

**Notes      to Interim Condensed Consolidated Financial Statements**

| **  NOTE                11   -** | **CONTINGENCIES** |
|-----------------------------------------------------------|-------------------|

**Standby      Letters of Credit**

**Litigation**

**Contingent      Lease Obligations**

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

***EXECUTIVE      OVERVIEW***

**The      Company’s Operations**

|                                                           |   | July                  21, 2007 |   |   | July                  22, 2006 |   |
|----------------------------------------------------------------|--------|--------------------------------|--------|--------|--------------------------------|--------|
| Within                  Sears or Sears Grand stores            |   |                           |   |   |                           |   |
| United                  States and Puerto Rico                 |   |                           | 893    |   |                           |   | 897 |   |
| Canada                                                         |   |                           | 112    |   |                           |   | 114 |   |
|                                                           |   |                           |   |   |                           |   |   |   |
| Within                  Wal-Mart stores                        |   |                           |   |   |                           |   |   |   |
| United                  States and Puerto Rico                 |   |                           | 1,703  |   |                           |   |   |   |
| Canada                                                         |   |                           | 254    |   |                           |   |   |   |
| Mexico                                                         |   |                           | 107    |   |                           |   |   |   |
| United                  Kingdom                                |   |                           | 5      |   |                           |   |   |   |
|                                                           |   |                           |   |   |                           |   |   |   |
| Locations                  not within Sears or Wal-Mart stores |   |                           | 33     |   |                           |   | 37 |   |
|                                                           |   |                           |   |   |                           |   |   |   |
| Total                                                          |   |                           | 3,107  |   |                           |   | 1,048 |   |
|                                                           |   |                           |   |   |                           |   |   |   |

***RESULTS      OF OPERATIONS***

| *thousands,                  except per share data*                                                       |   | 12                  Weeks Ended |   |   | 24                  Weeks Ended |     |
|-----------------------------------------------------------------------------------------------------------|--------|---------------------------------|--------|--------|---------------------------------|----------|
|                                                                                                      |   | July                  21, 2007  |   |   | July                  22, 2006  |     |   | July                  21, 2007 |   |   | July                  22, 2006 |   |
|                                                                                                      |   |                            |   |   |                            |     |   |   |   |   |   |   |
| **Net                  sales**                                                                            |   | $                               | 68,642 |   |                            | $        | 56,345 |   |   | $ | 126,403 |   |   | $ | 116,014 |   |
|                                                                                                      |   |                            |   |   |                            |     |   |   |   |   |   |   |   |   |   |   |
| **Cost                  and expenses:**                                                                   |   |                            |   |   |                            |     |   |   |   |   |   |   |   |   |   |   |
| Cost                  of sales (exclusive of depreciation and amortization shown                  below)  |   |                            | 7,776  |   |                            |     | 5,806 |   |   |   | 12,673 |   |   |   | 11,375 |   |
| *Cost                  of sales as a percentage of net sales*                                             |   | * *                        | *11.3* | *%*    |                            | * * | *10.3* | *%* |   | * * | *10.0* | *%* |   | * * | *9.8* | *%* |
| *Gross                  margin as a percentage of net sales*                                              |   | * *                        | *88.7* | *%*    |                            | * * | *89.7* | *%* |   | * * | *90.0* | *%* |   | * * | *90.2* | *%* |
| Selling,                  general and administrative expenses                                             |   |                            | 57,547 |   |                            |     | 44,822 |   |   |   | 102,866 |   |   |   | 91,181 |   |
| *Selling,                  general and administrative expenses as a percentage of                  sales* |   | * *                        | *83.8* | *%*    |                            | * * | *79.5* | *%* |   | * * | *81.4* | *%* |   | * * | *78.6* | *%* |
| Depreciation                  and amortization                                                            |   |                            | 6,177  |   |                            |     | 4,046 |   |   |   | 9,590 |   |   |   | 8,232 |   |
| Other                  charges and impairments                                                            |   |                            | 1,261  |   |                            |     | 143 |   |   |   | 1,290 |   |   |   | 534 |   |
|                                                                                                      |   |                            | 72,761 |   |                            |     | 54,817 |   |   |   | 126,419 |   |   |   | 111,322 |   |
|                                                                                                      |   |                            |   |   |                            |     |   |   |   |   |   |   |   |   |   |   |
| Earnings                  (loss) from operations                                                          |   |                            | (4,119 | )      |                            |     | 1,528 |   |   |   | (16 | ) |   |   | 4,692 |   |
|                                                                                                      |   |                            |   |   |                            |     |   |   |   |   |   |   |   |   |   |   |
| Interest                  expense                                                                         |   |                            | 1,561  |   |                            |     | 563 |   |   |   | 2,008 |   |   |   | 1,166 |   |
| Interest                  income                                                                          |   |                            | 410    |   |                            |     | 74 |   |   |   | 716 |   |   |   | 131 |   |
| Lease                  guarantee reserve reduction                                                        |   |                            | -      |   |                            |     | - |   |   |   | - |   |   |   | 300 |   |
| Other                  income, net                                                                        |   |                            | 56     |   |                            |     | 27 |   |   |   | 8 |   |   |   | 67 |   |
|                                                                                                      |   |                            |   |   |                            |     |   |   |   |   |   |   |   |   |   |   |
| Earnings                  (loss) before income tax expense (benefit)                                      |   |                            | (5,214 | )      |                            |     | 1,066 |   |   |   | (1,300 | ) |   |   | 4,024 |   |
| Income                  tax expense (benefit)                                                             |   |                            | (1,812 | )      |                            |     | 426 |   |   |   | (453 | ) |   |   | 1,540 |   |
|                                                                                                      |   |                            |   |   |                            |     |   |   |   |   |   |   |   |   |   |   |
| **NET                  EARNINGS (LOSS)**                                                                  |   | $                               | (3,402 | )      |                            | $        | 640 |   |   | $ | (847 | ) |   | $ | 2,484 |   |
|                                                                                                      |   |                            |   |   |                            |     |   |   |   |   |   |   |   |   |   |   |
| **Net                  earnings (loss) per share - diluted**                                              |   | $                               | (0.53  | )      |                            | $        | 0.10 |   |   | $ | (0.13 | ) |   | $ | 0.39 |   |
|                                                                                                      |   |                            |   |   |                            |     |   |   |   |   |   |   |   |   |   |   |

**Impact      of the PCA Acquisition**

*Deferred      Revenue and Undelivered Receivables*

*Depreciation*

*Amortization      of Acquired Intangible Assets*

*Acquisition      Related Interest Expense*

**12      weeks ended July 21, 2007 compared to 12 weeks ended July 22,      2006**

| ·   | Net                sales for the second quarter of 2007 increased $12.3 million or                21.8*%* to $68.6 million from the $56.3 million reported in the                second quarter of 2006.   The inclusion of operations from                the PCA Acquisition resulted in additional revenue of                $15.5 million.  In accordance with purchase accounting                guidance, PictureMe’s deferred revenue balance at the June 8, 2007 date of                acquisition was reduced by a purchase accounting adjustment to record                deferred revenue at its fair value in PictureMe’s beginning,                post-acquisition balance sheet.  This purchase accounting                adjustment has the effect of reducing revenue in periods subsequent                to the                acquisition for approximately one year.  The deferred revenue                adjustment resulted in a lower net sales of $8.1 million and an increased                pre-tax loss from operations of $3.4 million for the 2007 second                quarter. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

*%*
* *

| ·   | Cost                of sales, excluding depreciation and amortization expense, was $7.8                million in the second quarter of 2007 compared with $5.8 million                in the                comparable prior year period.   Cost of sales, as a                percentage of net sales was 11.3% in the second quarter of 2007,                compared                to 10.3% in the comparable quarter of 2006.  Correspondingly,                gross margin rates were 88.7% and 89.7% in each of the second quarter                of                2007 and 2006.  The inclusion of operations from the PCA                Acquisition resulted in additional cost of sales of                $3.2 million.  SPS cost of sales was $4.6 million in the                second quarter of 2007 compared with $5.8 million in the comparable                prior                year period.   SPS cost of sales, as a percentage of net                sales was 8.6% in the second quarter of 2007, compared to 10.3% in                the                comparable quarter of 2006.  Correspondingly, gross margin rates were                91.4% and 88.7% in the second quarter of 2007 and 2006,                respectively.  The decrease in cost of sales resulted                principally from lower overall production levels as a result of declines                in sittings, additional gains in labor productivity resulting from                the                continuing refinement of digital manufacturing processes and an improved                product mix. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Selling,                general and administrative (“SG&A”) expenses were $57.5 million and                $44.8 million for second quarter of 2007 and 2006,                respectively.  As a percentage of sales, these expenses were                83.8% in 2007 and 79.5% in 2006.  The inclusion of operations                from the PCA Acquisition resulted in additional SG&A of                $16.7 million.  SPS SG&A expenses were $40.9 million or                76.9% of sales.  Selling, general and administrative expenses                decreased primarily as a result of lower studio and corporate employment                costs totaling $2.8 million and net other reductions totaling $1.1                million                in various other cost categories reflecting the continued focus on                adjusting the legacy cost structure to reflect the new operating                environment.  Studio employment costs declined $1.6 million                principally due to a focused initiative to improve labor scheduling                and                productivity.  Corporate employment declined $349,000 resulting                principally from a flattening of the executive management ranks that                took                place in the third quarter of 2006.  Studio and corporate                employment costs declined an additional $832,000 during the 2007                second                quarter as a result of a change in the Company’s vacation policy announced                in the first quarter of 2007. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Depreciation                and amortization was $6.2 million in the second quarter of 2007,                compared                to $4.0 million in the comparable quarter of 2006.  An increase                in depreciation of $2.7 million and amortization of intangibles totaling                $449,000 resulted from the PCA Acquisition.  SPS                depreciation decreased $969,000 due to reduced capital spending                beginning in the fourth quarter of 2005 and continuing into the second                quarter of 2007 following the significant digital investments made                in 2004                and the first three quarters of                2005. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | 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 second quarter of 2007 and                2006,                the Company recognized $1.3 million and $143,000, respectively, in                other                charges and impairments.  Expense in 2007 primarily represents                costs associated with the PCA Acquisition, which include severance                costs                of $635,000, cure costs related to contracts assumed of $483,000,                travel                costs of $82,000 and other expenses of $34,000.  The 2006-second                quarter amounts relate principally to costs incurred in conjunction                with                the Company’s then underway review of strategic                alternatives. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Interest                expense was $1.6 million in the second quarter of 2007 compared to                $563,000 in the comparable period of the prior year.  The                increase in interest expense is primarily the result of higher average                borrowings after the refinancing of the credit agreement as discussed                in                Note 7 as well as slightly higher interest rates and increased fees                for                letters of credit. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Interest                income was $410,000 in the second quarter of 2007 compared to $74,000                in                the second quarter of 2006.  This increase is primarily                attributable to lower invested balances in 2006 as compared to 2007                due to                the purchase of stock in the Dutch Auction self-tender offer for                $32.5                million which was funded in early February                2006. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Income                tax benefit was $1.8 million in the second quarter of 2007 as compared                to                expense of $426,000 in the second quarter of 2006.  The                resulting effective tax rates were 34.7% in 2007 and 40.0% in                2006.  The decrease in the effective tax rate in 2007 is                attributable to deductions available since the Company is no longer                in a                net operating loss position. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**24      weeks ended July 21, 2007 compared to 24 weeks ended July 22,      2006**

| ·   | Net                sales for the first half of 2007 increased $10.4 million or                9.0%* *to* *$126.4 million from the $116.0 million                reported in the first half of 2006.  The inclusion of operations                from the PCA Acquisition resulted in additional revenue of                $15.5 million.  In accordance with purchase accounting                guidance, PM’s deferred revenue balance at the June 8, 2007 date of                acquisition was reduced by a purchase accounting adjustment to record                deferred revenue at its fair value in PictureMe’s beginning,                post-acquisition balance sheet.  This purchase accounting                adjustment has the effect of reducing revenue in periods subsequent                to the                acquisition for approximately one year.  The deferred revenue                adjustment resulted in lower net sales of $8.1 million and an increased                pre-tax loss from operations of $3.4 million for the 2007 second                quarter. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

*% *

| ·   | Cost                of sales, excluding depreciation and amortization expense, was $12.7                million in the first half of 2007 compared with $11.4 million in                the                comparable prior year period.  Cost of sales as a percentage of                net sales was 10.0% and 9.8% in the first half of 2007 and 2006,                respectively.  Correspondingly, gross margin rates were 90.0%                and 90.2% in the comparable periods.  The inclusion of                operations from the PCA Acquisition resulted in additional cost of                sales                of $3.2 million.  SPS cost of sales was $9.5 million in the                first half of 2007 compared with $11.4 million in the comparable                prior                year period.   SPS cost of sales, as a percentage of net                sales was 8.5% in the first half of 2007, compared to 9.8% in the                comparable period of 2006.  Correspondingly, SPS gross margin                rates were 91.5% and 90.2% in the first half of 2007 and 2006,                respectively.  The decrease in cost of sales resulted                principally from lower overall production levels as a result of declines                in sittings, additional gains in labor productivity resulting from                the                continuing refinement of digital manufacturing processes and an improved                product mix. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Selling,                general and administrative (“SG&A”) expenses were $102.9 million and                $91.2 million for the first half of 2007 and 2006,                respectively.  As a percentage of sales, these expenses were                81.4% in 2007 and 78.6% in 2006.  The inclusion of operations                from the PCA Acquisition resulted in additional SG&A of                $17.0 million.  SPS SG&A expenses were $86.2 million or                77.7% of sales.  Selling, general and administrative expenses                decreased primarily as a result of lower studio and corporate employment                costs totaling $4.5 million and net other reductions totaling $439,000                in                various other cost categories reflecting the continued focus on adjusting                the legacy cost structure to reflect the new operating                environment.  Studio employment costs declined $2.5 million                principally due to a focused initiative to improve labor scheduling                and                productivity.  Corporate employment declined $353,000 resulting                principally from a flattening of the executive management ranks that                took                place in the third quarter of 2006.  Studio and corporate                employment costs declined an additional $1.7 million during the 2007                second quarter as a result of a change in the Company’s vacation policy                announced in the first quarter of                2007. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Depreciation                and amortization was $9.6 million in the first half of 2007, compared                to                $8.2 million in the comparable half of 2006.  An increase in                depreciation of $2.6 million and amortization of intangibles totaling                $449,000 resulted from the PCA Acquisition.  SPS                depreciation decreased $1.7 million due to reduced capital spending                beginning in the fourth quarter of 2005 and continuing into the first                half                of 2007 following the significant digital investments made in 2004                and the                first three quarters of 2005. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | 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 half of 2007 and                2006, the Company recognized $1.3 million and $534,000, respectively,                in                other charges and impairments.  Expense in 2007 primarily                represents costs associated with the PCA Acquisition, which include                severance costs of $635,000, cure costs related to contracts assumed                of                $483,000, travel costs of $98,000 and other expenses of                $34,000.  Charges in 2006 represents $179,000 of charges related                to the write off of certain legacy equipment that will no longer                be used                in the business, $249,000 related to executive retirements and                repositioning and $106,000 of consulting and legal services in connection                with the then underway strategic alternative                review. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Interest                expense was $2.0 million in the first half of 2007 compared to $1.2                million in the comparable half of the prior year. The increase                in                interest expense is primarily the result of higher average borrowings                after the refinancing of the credit                agreement as discussed in Note 7 as well as slightly higher interest                rates                and increased fees for letters of                credit. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Interest                income was $716,000 in the first half of 2007 compared to $131,000                in the                first half of 2006.  This increase is primarily attributable to lower                invested balances in 2006 as compared to 2007 due to the purchase                of stock                in the Dutch Auction self-tender offer for $32.5 million which was                funded                in early February 2006. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The                lease guarantee reserve reduction recorded in the first quarter of                2006                represents a partial reversal of reserves initially recorded in 2004                related to operating lease guarantees associated with the Company’s former                Wall Décor segment, Prints Plus.  As the total guarantee related                to these leases has decreased with the passage of time, the payment                of                rents by Prints Plus and the settlement by the Company of certain                leases                rejected in bankruptcy, the related liability has been reduced to                reflect                management’s revised estimate of remaining potential loss.  This                reserve is more fully discussed in Note 11 in the accompanying Notes                to                Interim Condensed Consolidated Financial                Statements. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Income                tax benefit was $453,000 for the first half of 2007 compared to expense                of                $1.5 million in the first half of 2006.   The resulting                effective tax rates were 34.8% in 2007 and 38.3% in 2006.  The                decrease in the effective tax rate in 2007 is attributable to deductions                available since the Company is no longer in a net operating loss                position. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

*LIQUIDITY      AND CAPITAL RESOURCES*

| *thousands*                                              |   | 24                  Weeks Ended |    |
|----------------------------------------------------------|--------|---------------------------------|---------|
|                                                     |   | July                  21, 2007  |    |   | July                  22, 2006 |   |
| Net                  cash (used in) provided by:         |   |                            |    |   |   |   |
| Operating                  activities                    |   | $                               | 8,199   |   |   | $ | 13,050 |   |
| Financing                  activities                    |   |                            | 94,104  |   |   |   | (38,592 | ) |
| Investing                  activities                    |   |                            | (86,110 | ) |   |   | (1,629 | ) |
| Effect                  of exchange rate changes on cash |   |                            | 154     |   |   |   | - |   |
|                                                     |   |                            |    |   |   |   |   |   |
| Net                  increase (decrease) in cash         |   | $                               | 16,347  |   |   | $ | (27,171 | ) |
|                                                     |   |                            |    |   |   |   |   |   |

**Net      Cash Provided By (Used In) Operating Activities**

**Net      Cash Used In Financing Activities**

**Net      Cash Used In Investing Activities**

**Off-Balance      Sheet Arrangements**

**Contingencies**

**Liquidity**

***ACCOUNTING      PRONOUNCEMENTS AND POLICIES***

**Adoption      of New Accounting Standards**

**Application      of Critical Accounting Policies**

**Business      Combinations**

**Recoverability      of Goodwill, Acquired Intangible Assets and Long-Lived      Assets**

**CAUTIONARY      STATEMENT REGARDING FORWARD-LOOKING INFORMATION**

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

*Item      4.                      Controls      and Procedures*

**PART      II.                      OTHER      INFORMATION**

*Item      1A.                 Risk      Factors*

**The      Company may not be able to realize the anticipated benefits from the acquisition      of the PictureMe division.**

| ·   | Difficulties                in integrating and managing personnel, financial reporting and other                systems used by the PictureMe business into the                Company; |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The                failure of the PictureMe business to perform in accordance with the                Company’s expectations; |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Any                future goodwill impairment charges that the Company may incur with                respect                to the assets of PictureMe; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Failure                to achieve anticipated synergies between the Company’s business units and                the business units of PictureMe;                and |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The                inability to maintain Wal-Mart as a                host. |
|--------------------|-----------------------------------------------------------------------------|

*Item      4.    Submission of Matters      to a Vote of Security Holders*

| Name                                  |   | Shares                  For |      | Shares                  Withheld |
|---------------------------------------|--------|-----------------------------|-----------|----------------------------------|
|                                  |   |                        |      |                             |   |   |   |   |
| James                  J. Abel        |   |                        | 4,855,368 |                             |   |   | 329,956 |   |
| Michael                  S. Koeneke   |   |                        | 4,855,686 |                             |   |   | 329,638 |   |
| David                  M. Meyer       |   |                        | 4,855,365 |                             |   |   | 329,959 |   |
| Mark                  R. Mitchell     |   |                        | 4,855,589 |                             |   |   | 329,735 |   |
| John                  Turner White IV |   |                        | 4,855,589 |                             |   |   | 329,735 |   |

| 2. | The                Board of Directors’ appointment of KPMG LLP to audit the Company’s                financial statements for the 2007 fiscal                year: |
|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| For    |      | Against |   | Abstain |
|--------|-----------|---------|--------|---------|
|   | 5,183,776 |    |   |    | 407 |   |   |   |  1,140 |   |

*Item      5.                 Other      Information*

*United      States*

*Canada*

*Mexico*

*Item      6.                 Exhibits*

**CPI      CORP.**

**SIGNATURES**

| CPI                Corp.(Registrant) |
|--------------------------------------|

| By:    |   | /s/                Gary W. Douglass                                                                                                    |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------|
|   |   | Gary                W. Douglass                                                                                                        |
|   |   | Executive                Vice President, Finance andChief                Financial Officer(Principal                Financial Officer) |

| By:    |   | /s/                Dale Heins                                                                    |
|--------|--------|--------------------------------------------------------------------------------------------------|
|   |   | Dale                Heins                                                                        |
|   |   | Vice                President, Corporate Controller(Principal                Accounting Officer) |

**CPI      CORP.**

**E-1**

**EXHIBIT      INDEX**

| 3.2    |   | Amended                and Restated By-laws of the Company, incorporated by reference to                CPI                Corp.’sForm                8-K, Exhibit 3.2, filed June 5, 2007.                                                                                                                                                                                                                                                                                                                                                                                                                  |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 2.1    |   | Purchase                and Sale Agreement dated as of May 1, 2007, by and among Portrait                Corporation of America, PCA LLC, American Studios, Inc., PCA Photo                Corporation of Canada, PCA National LLC, PCA Finance Corp. Inc.,                Photo                Corporation of America, Inc. (each, a “Seller”) and CPI Corp.,                incorporated by reference to CPI Corp.’s Form 8-K, Exhibit 2.1, filed May                3, 2007.                                                                                                                  |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 2.2    |   | Amendment                No. 1 to the Purchase and Sale Agreement dated as of May 1, 2007,                by and                among Portrait Corporation of America, PCA LLC, American Studios,                Inc.,                PCA Photo Corporation of Canada, PCA National LLC, PCA Finance Corp.                Inc.,                Photo Corporation of America, Inc. (each, a “Seller”) and CPI Corp, such                amendment effective as of May 21, 2007, incorporated by reference                to CPI                Corp.’s Form 8-K, Exhibit 2.1, filed May 25, 2007. |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 2.3    |   | Amendment                No. 2 to the Purchase and Sale Agreement, such amendment dated as                of June                8, 2007, by and among Portrait Corporation of America, PCA LLC, American                Studios, Inc., PCA Photo Corporation of Canada, PCA National LLC,                PCA                Finance Corp. Inc., Photo Corporation of America, Inc. and CPI Corp.,                incorporated herein by reference to  CPI Corp.’s Form 8-K,                Exhibit 2.3, filed  June 24, 2007.                                                           |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 10.58  |   | Second                Amended and Restated Credit Agreement dated as of June 8, 2007 among                the                Company, the financial institutions that are or may from time to                time                become parties thereto and LaSalle Bank National Association, as                administrative agent and arranger for the lenders, incorporated herein                by                reference to CPI Corp.’s Form 8-K, Exhibit 10.1, filed June 14,                2007.                                                                                                |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 10.59* |   | Master                Lease Agreement between Wal-Mart Stores East, LP, Wal-Mart Stores,                Inc.,                Wal-Mart Louisiana, LLC, Wal-Mart Stores Texas, LP and Portrait                Corporation of America, Inc., effective June 8, 2007.                                                                                                                                                                                                                                                                                                                                                  |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 11.1   |   | Computation                of Per Share Earnings (Loss) – Diluted – for the 12 and 24 weeks ended                July                21, 2007 and July 22, 2006.                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 11.2   |   | Computation                of Per Share Earnings (Loss) – Basic – for the 12 and 24 weeks ended                July                21, 2007 and July 22, 2006.                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 31.1   |   | Certification                Pursuant to Rule 13a-14(a) Under the Securities and Exchange Act                of 1934                by the Chief Executive Officer.                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 31.2   |   | Certification                Pursuant to Rule 13a-14(a) Under the Securities and Exchange Act                of 1934                by the Chief Financial Officer.                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 32.0   |   | Certification                Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section                906 of                the Sarbanes-Oxley Act of 2002 by the Chief Executive Officer and                the                Chief Financial Officer.                                                                                                                                                                                                                                                                                                                                                  |