UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                    FORM 10-Q
                                   (Mark One)

           [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                For the quarterly period ended September 30, 2006
                                       OR
          [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

     For the transition period from................to......................
                         COMMISSION FILE NUMBER: 0-10345

                                   CACHE, INC.

             (Exact name of registrant as specified in its Charter)

           FLORIDA                                      59-1588181
 ------------------------------               ------------------------------
(State or other jurisdiction of               (IRS Employer Identification No.)
incorporation or organization)

                     1440 BROADWAY, NEW YORK, NEW YORK 10018
                     --------------------------------- -----
               (Address of principal executive offices) (zip code)

                                  212-575-3200
                                  ------------
              (Registrant's telephone number, including area code)

--------------------------------------------------------------------------------
   (Former name, address and former fiscal year, if changed since last report)

     Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
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.

   Large Accelerated Filer      Accelerated Filer      Non-Accelerated Filer
     | |                        |X|                    | |

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

      As of October 31 2006, 15,811,003 common shares were outstanding.

<PAGE>

                          CACHE, INC. AND SUBSIDIARIES

                                      INDEX


 PART I. FINANCIAL INFORMATION

   Item 1.   Condensed Consolidated Financial Statements (unaudited)
             Condensed Consolidated Balance Sheets as of September 30,
             2006, December 31, 2005 and October 1, 2005                       3
             Condensed Consolidated Statements of Income for the thirty-
             nine and thirteen weeks ended September 30, 2006 and
             October 1, 2005                                                   4
             Condensed Consolidated Statements of Cash Flows for the
             thirty-nine weeks ended September 30, 2006 and
             October 1, 2005                                                   6
             Notes to the Condensed Consolidated Financial Statements          7
   Item 2.   Management's Discussion and Analysis of Financial Condition
             and Results of Operations                                        13
   Item 3.   Quantitative and Qualitative Disclosures About Market Risk       19
   Item 4.   Controls and Procedures                                          19


 PART II. OTHER INFORMATION

   Item 1A.  Risk Factors                                                     20
   Item 6.   Exhibits                                                         25




 SIGNATURES                                                                   26

                                       2

<PAGE>

ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)

                          CACHE, INC. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
<S>                                                                      <C>                    <C>                     <C>

   ASSETS                                                          September 30,           December 31,             October 1,
                                                                      2006                    2005                    2005
                                                                      ----                    ----                    ----
   Current assets:
           Cash and cash equivalents                          $         33,214,000    $         16,753,000     $        22,263,000
           Marketable securities                                        20,315,000              36,520,000              25,023,000
           Receivables, net                                              4,399,000               5,734,000               5,039,000
           Inventories                                                  37,074,000              32,785,000              35,604,000
           Deferred income taxes, net                                      718,000                 691,000                 541,000
           Prepaid expenses and other current assets                     4,854,000               4,777,000               1,668,000
                                                              ---------------------   ---------------------    --------------------
                       Total current assets                            100,574,000              97,260,000              90,138,000


   Equipment and leasehold improvements, net                            50,788,000              52,760,000              51,139,000
   Other assets                                                            440,000                 864,000                 863,000
                                                              ---------------------   ---------------------    --------------------

                       Total assets                           $        151,802,000    $        150,884,000     $       142,140,000
                                                              =====================   =====================    ====================

   LIABILITIES AND STOCKHOLDERS' EQUITY

   Current liabilities:
           Accounts payable                                   $         15,648,000    $         18,404,000     $        21,176,000
           Accrued compensation                                          2,522,000               2,624,000               2,533,000
           Accrued liabilities                                          12,132,000              12,446,000              10,219,000
                                                              ---------------------   ---------------------    --------------------
                       Total current liabilities                        30,302,000              33,474,000              33,928,000

   Other liabilities                                                    15,161,000              16,309,000              15,415,000
   Deferred income taxes, net                                            2,197,000               2,105,000               1,455,000

   Commitments and contingencies

   STOCKHOLDERS' EQUITY
          Common stock, par value $.01; authorized, 20,000,000 shares;
          15,791,003, 15,770,553 and 15,726,553 shares issued
          and outstanding                                                  158,000                 158,000                 157,000
          Additional paid-in capital                                    36,525,000              35,455,000              35,343,000
          Retained earnings                                             67,459,000              63,383,000              55,842,000
                                                              ---------------------   ---------------------    --------------------
                       Total stockholders' equity
                                                                       104,142,000              98,996,000              91,342,000
                                                              ---------------------   ---------------------    --------------------

                       Total liabilities and stockholders'
                       equity                                  $       151,802,000    $        150,884,000     $       142,140,000
                                                              =====================   =====================    ====================


The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these financial statements.

</TABLE>

                                       3

<PAGE>

                          CACHE, INC. AND SUBSIDIARIES
                   CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                         FOR THE THIRTY-NINE WEEKS ENDED
                                   (UNAUDITED)

<TABLE>
<CAPTION>
<S>                                                                      <C>                    <C>


                                                                   September 30,            October 1,
                                                                       2006                    2005
                                                              ---------------------    --------------------

   Net sales                                                  $        195,438,000     $       187,025,000

   Cost of sales, including occupancy and buying costs                 102,693,000             103,413,000
                                                              ---------------------    --------------------

   Gross profit                                                         92,745,000              83,612,000
                                                              ---------------------    --------------------

   Expenses
       Store operating expenses                                         67,055,000              62,379,000
       General and administrative expenses                              15,340,000              12,224,000
       Lillie Rubin exit costs                                           5,518,000              ---
                                                              ---------------------    --------------------
            Total expenses                                              87,913,000              74,603,000
                                                              ---------------------    --------------------

   Operating income                                                      4,832,000               9,009,000

   Interest income                                                       1,850,000                 677,000
   Other income                                                                ---                   2,000
                                                              ---------------------    --------------------

   Income before income taxes                                            6,682,000               9,688,000

   Income taxes                                                          2,606,000               3,824,000
                                                              ---------------------    --------------------


   Net income                                                 $          4,076,000     $         5,864,000
                                                              =====================    ====================


   Basic earnings per share                                                  $0.26                   $0.37
                                                                 ==================      ==================

   Diluted earnings per share                                                $0.25                   $0.37
                                                                 ==================      ==================



   Basic weighted average shares outstanding                            15,784,000              15,714,000
                                                                 ==================      ==================

   Diluted weighted average shares outstanding                          16,160,000              16,017,000
                                                                 ==================      ==================



The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these financial statements.

</TABLE>

                                       4

<PAGE>

                          CACHE, INC. AND SUBSIDIARIES
                   CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                          FOR THE THIRTEEN WEEKS ENDED
                                   (UNAUDITED)

<TABLE>
<CAPTION>
<S>                                                                      <C>                    <C>

                                                                   September 30,            October 1,
                                                                       2006                    2005
                                                              ---------------------    --------------------

   Net sales                                                  $         59,935,000     $        57,262,000

   Cost of sales, including occupancy and buying costs                  31,669,000              31,149,000
                                                              ---------------------    --------------------

   Gross profit                                                         28,266,000              26,113,000
                                                              ---------------------    --------------------

   Expenses
       Store operating expenses                                         22,330,000              20,508,000
       General and administrative expenses                               5,606,000               4,064,000
       Lillie Rubin exit costs                                            (144,000)              ---
                                                              ---------------------    --------------------
            Total expenses                                              27,792,000              24,572,000
                                                              ---------------------    --------------------

   Operating income                                                        474,000               1,541,000

   Interest income                                                         657,000                 277,000
   Other income                                                                ---                   2,000
                                                              ---------------------    --------------------

   Income before income taxes                                            1,131,000               1,820,000

   Income taxes                                                            441,000                 713,000
                                                              ---------------------    --------------------


   Net income                                                 $            690,000     $         1,107,000
                                                              =====================    ====================


   Basic earnings per share                                                  $0.04                   $0.07
                                                                 ==================      ==================

   Diluted earnings per share                                                $0.04                   $0.07
                                                                 ==================      ==================



   Basic weighted average shares outstanding                            15,791,000              15,743,000
                                                                 ==================      ==================

   Diluted weighted average shares outstanding                          16,165,000              16,085,000
                                                                 ==================      ==================

The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these financial statements.

</TABLE>

                                       5

<PAGE>

<TABLE>
<CAPTION>
                                               CACHE, INC. AND SUBSIDIARIES
                                     CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                             FOR THE THIRTY-NINE WEEKS ENDED
                                                       (UNAUDITED)

<S>                                                                  <C>                    <C>

                                                                 September 30,              October 1,
                                                                     2006                      2005
                                                             --------------------     ----------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income                                                     $       4,076,000        $         5,864,000
Adjustments to reconcile net income to net cash
    provided by operating activities:
      Depreciation and amortization                                    7,914,000                  7,136,000
      Increase (decrease) in deferred income taxes                        65,000                 (1,457,000)
      Amortization of deferred rent                                   (1,002,000)                  (892,000)
      Gift card breakage                                              (2,425,000)               ---
      Other, net                                                         (30,000)                   (31,000)
      Stock-based compensation                                           849,000               ---
      Lillie Rubin exit costs                                          3,827,000               ---

Change in assets and liabilities:
Decrease in receivables                                                1,335,000                  1,506,000
Increase in inventories                                               (4,564,000)                (3,308,000)
Decrease  (increase) in prepaid expenses and other current assets        (77,000)                   280,000
Increase  (decrease)  in accounts payable                             (2,756,000)                 4,121,000
Excess tax benefits from stock options                                   (29,000)               ---
Increase  in accrued liabilities
    and accrued compensation                                           1,883,000                  1,959,000
                                                               ----------------------   ------------------------

Net cash provided by operating activities                              9,066,000                 15,178,000
                                                               ----------------------   ------------------------

CASH FLOWS FROM INVESTING ACTIVITIES:
Maturities of marketable securities                                   60,736,000                 24,582,000
Purchases of marketable securities                                   (44,531,000)               (23,731,000)
Payments for equipment and leasehold improvements                     (9,060,000)               (11,167,000)
                                                               ----------------------   ------------------------

Net cash provided by (used in) investing activities                    7,145,000               (10,316,000)
                                                               ----------------------   ------------------------

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from the exercise of stock options                              221,000                    553,000
EXCESS TAX BENEFITS FROM STOCK OPTIONS                                    29,000               ---
                                                               ----------------------   ------------------------

Net cash provided by financing activities                                250,000                    553,000
                                                               ----------------------   ------------------------

Net increase in cash and equivalents                                  16,461,000                  5,415,000
Cash and equivalents, at beginning of period                          16,753,000                 16,848,000
                                                               ----------------------   ------------------------
Cash and equivalents, at end of period                         $      33,214,000        $        22,263,000
                                                               ======================   ========================
</TABLE>

                                       6

<PAGE>

<TABLE>
<CAPTION>
<S>                                                                  <C>                    <C>

Supplemental disclosure of cash flow information:
Income taxes paid                                              $       5,175,000        $         4,643,000
Accrued equipment and leasehold improvements                   $       2,416,000        $           918,000

The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these financial statements.

</TABLE>

                                   CACHE, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


1. BASIS OF PRESENTATION


References to the "Company,"  "we," "us," or "our" means Cache,  Inc.,  together
with its wholly-owned subsidiaries,  except as expressly indicated or unless the
context otherwise requires. We currently operate three chains of women's apparel
specialty  stores of which 273 stores are operated under the trade name "Cache",
16 stores are  operated  under the trade name  "Luxe" and 5 stores are  operated
under the trade name "Lillie Rubin",  as of September 30, 2006.

The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance  with Rule 10-01 of Regulation S-X and do not include all
of the information  and footnotes  required by accounting  principles  generally
accepted in the United States.  However,  in the opinion of our management,  all
known  adjustments  necessary  for a fair  presentation  of the  results  of the
interim periods have been made. These  adjustments  consist  primarily of normal
recurring  accruals and estimates  that impact the carrying  value of assets and
liabilities.  Actual results may materially  differ from these estimates.

These condensed  consolidated financial statements should be read in conjunction
with the Company's audited consolidated  financial statements for the year ended
December 31, 2005,  which are included in the  Company's  Annual  Report on Form
10-K  with  respect  to such  period  filed  with the  Securities  and  Exchange
Commission.  All significant  intercompany  accounts and transactions  have been
eliminated.  The December 31, 2005 condensed  consolidated balance sheet amounts
are derived from the Company's audited consolidated  financial  statements.

The  Company's  Fiscal Year ("Fiscal  Year" or "Fiscal")  refers to the 52 or 53
weeks,  as  applicable,  ending the  Saturday  nearest to December 31. The years
ended  December 30, 2006 ("Fiscal  2006") and December 31, 2005 ("Fiscal  2005")
are each 52-week  years as compared to the year ended  January 1, 2005  ("Fiscal
2004"), that was a 53-week year.

Gift Cards,  Gift Certificates and Merchandise  Credits.  The Company sells gift
cards and gift certificates and issues credits to its customers when merchandise
is returned (collectively, "Gift Cards"). The Company recognizes sales from Gift
Cards when they are redeemed by the customer.

During the third quarter of 2006,  the Company formed a new subsidiary to handle
all Gift Card sales and  maintain  the  liability  related to Gift  Cards.  As a
result of transferring all existing  obligations to the newly formed subsidiary,
the Company recognized $2.4 million of breakage income, within net sales, in the
third quarter related to Gift Cards  sold/issued since the inception of the Gift
Card program. There was no breakage income recognized for the same period in the
prior year.

As of the third quarter,  the Company will recognize  income when the likelihood
of the Gift Card being  redeemed by the customer is remote (Gift Card  breakage)
and the Company determines that it does not have a legal obligation to remit the
value  of  unredeemed  Gift  Cards to the  relevant  jurisdiction  as  abandoned
property.

The  Company   determines  Gift  Card  breakage  income  based  upon  historical
redemption  patterns.  Breakage income  represents the balance of Gift Cards for
which the Company  believes  the  likelihood  of  redemption  by the customer is
remote.  At that time,  the  Company  will  recognize  breakage  income over the
performance period for those Gift Cards.

                                       7
<PAGE>

2. STOCK BASED COMPENSATION

Effective  January 1, 2006,  the Company began  recording  compensation  expense
associated  with  stock  options  in  accordance  with  Statement  of  Financial
Accounting  Standards ("SFAS") No. 123R,  Share-Based Payment, as interpreted by
SEC Staff  Accounting  Bulletin  No.  107.  Prior to  January  1,  2006,  we had
accounted for stock options according to the provisions of Accounting Principles
Board ("APB")  Opinion No. 25,  Accounting  for Stock Issued to  Employees,  and
related  interpretations,  and  therefore  no related  compensation  expense was
recorded for awards  granted with no  intrinsic  value.  We adopted the modified
prospective   transition   method   provided  for  under  SFAS  No.  123R,  and,
consequently,  have not retroactively adjusted results from prior periods. Under
this  transition  method,   compensation  cost  associated  with  stock  options
recognized in Fiscal 2006  includes:  1) quarterly  amortization  related to the
remaining  unvested  portion of all stock option awards granted prior to January
1, 2006,  based on the grant date fair value  estimated in  accordance  with the
original  provisions of SFAS No. 123; and 2) quarterly  amortization  related to
all stock option awards  granted  subsequent  to January 1, 2006,  when granted,
based on the grant-date  fair value  estimated in accordance with the provisions
of SFAS No. 123R.

The  Company's  2000 Stock  Option  Plan  provides  for the  granting  of either
incentive  stock options  ("ISO's") or  non-qualified  options to purchase up to
825,000  shares of common  stock.  As of September  30, 2006,  there were 67,032
shares under the 2000 plan available for future grant.  The Company's 2003 Stock
Option Plan provides for the granting of either ISO's or  non-qualified  options
to purchase up to 1,350,000  shares of common  stock.  As of September 30, 2006,
there were 152,500 shares under the 2003 plan available for future grant. All of
the  Company's  prior stock option plans have expired as to the ability to grant
new options.

Stock awards  outstanding  under the Company's current plans have generally been
granted at prices  which are equal to the market  value of our stock on the date
of grant,  generally  vest over four  years and  expire no later  than ten years
after the grant  date.  Effective  January 1, 2006,  we  recognize  compensation
expense ratably over the vesting  period,  net of estimated  forfeitures.  As of
September 30, 2006,  there was $1.2 million of total  unrecognized  compensation
cost related to non-vested  options,  which is expected to be recognized  over a
remaining  weighted-average  vesting period of 1.37 years.  The total  intrinsic
value of options exercised during the 39 and 13-week periods ended September 30,
2006 was approximately $146,000 and $0.

A summary of the changes in stock options  outstanding during the 39-week period
ended September 30, 2006 is presented below:

<TABLE>
<CAPTION>
<S>                       <C>       <C>      <C>       <C>             <C>      <C>        <C>        <C>
                                  TOTAL OUTSTANDING                           CURRENTLY EXERCISABLE
                       --------------------------------------       --------------------------------------
                        NUMBER                       AGGREGATE       NUMBER                       AGGREGATE
                         OF      AVERAGE   AVERAGE   INTRINSIC         OF      AVERAGE   AVERAGE  INTRINSIC
                       OPTIONS   PRICE(1)  LIFE(2)   VALUE (3)       OPTIONS   PRICE(1)  LIFE(2)  VALUE (3)
                       --------------------------------------       --------------------------------------

December 31, 2005     1,481,500  $10.85     7.45  $9,579,495        742,250     $8.80     6.92  $6,324,778
Granted                  --         --                                 --       --
Vested                                                              239,375
Canceled/forfeited       (9,000)  12.65                                --       --
Exercised               (20,450)  10.72                             (20,450)    10.72
                        --------  -----                             --------    -----

September 30, 2006    1,452,050  $10.84     6.70 $10,230,182        961,175     $9.76     6.36  $7,818,015
                      =========  ======    ===== ===========        =========  ======    ===== ===========

    (1) - Weighted-average exercise price.
    (2) - Weighted-average contractual life remaining in years.
    (3) - The aggregate intrinsic values in the table above are based on the Company's closing stock price as of
          the last  business day of the periods ended  December 31, 2005 and  September 30, 2006,  which was $17.32 and $17.89,
          respectively.

</TABLE>

                                       8

<PAGE>

A summary of the activity for the non-vested share awards during the 39-week
period ended September 30, 2006 is presented below:


                                      COMMON            FAIR VALUE
                                      STOCK              AT GRANT
                                      OPTIONS               DATE
                                    ----------          ----------

Non-vested--December 31, 2005         739,250             $12.92
Granted                                 ---                 ---
Vested                               (239,375)            $12.65
Cancelled/forfeited                    (9,000)            $12.65
                                    ----------          ----------
Non-vested--September 30, 2006        490,875             $12.98
                                    =========           ==========

Prior to the adoption of SFAS No. 123R, we presented all tax benefits  resulting
from the  exercise of stock  options as  operating  cash flows in the  Condensed
Consolidated  Statement of Cash Flows.  SFAS No. 123R  requires  that cash flows
resulting  from tax  deductions in excess of the  cumulative  compensation  cost
recognized  for options  exercised  ("excess tax  benefits")  be  classified  as
financing cash flows.  For the 39 and 13-week  periods ended September 30, 2006,
there was $29,000 of excess tax  benefits  realized  from the  exercise of stock
options.


During  the 39 and  13-week  periods  ended  September  30,  2006,  the  Company
recognized  approximately  $849,000  ($681,000  after tax or $0.04  per  diluted
share)  and  $247,000  ($131,000  after  tax or  $0.01  per  diluted  share)  in
share-based  compensation expense. The grant date fair value is calculated using
the Black Scholes option  valuation  model. No compensation  cost was recognized
prior to January 1, 2006. Had compensation cost for our share-based compensation
plans been determined consistent with SFAS No. 123, the Company's net income and
earnings per share would have been reduced to the  following  pro forma  amounts
(in thousands, except per share data):

<TABLE>
<CAPTION>

<S>                                                                         <C>             <C>
                                                                    39 Weeks Ended  13 Weeks Ended
                                                                      October 1,      October 1,
                                                                         2005            2005
                                                                         ----            ----

Net earnings as reported:                                             $5,864,000      $1,107,000
Add share-based employee compensation expense included in reported           ---             ---
net income, net of taxes
Deduct employee compensation expense determined under a fair value     (531,000)       (177,000)
based method, net of related tax effects
Pro forma net earnings                                                $5,333,000        $930,000

Basic earnings per share:
As reported                                                             $0.37           $0.07
Pro forma                                                               $0.34           $0.06

Diluted earnings per share:
As reported                                                             $0.37           $0.07
Pro forma                                                               $0.33           $0.06

There were no options granted during the 39 and 13-week periods ended September 30, 2006. There were 140,000 and 35,000 options
granted during the 39 and 13-week periods ended October 1, 2005, respectively.


</TABLE>

                                       9

<PAGE>

3. BASIC AND DILUTED EARNINGS

In accordance with SFAS No. 128, "Earnings Per Share", basic earnings per share
has been computed based upon the weighted average of common shares outstanding.
Diluted earnings per share gives effect to outstanding stock options.

Earnings per common share has been computed as follows:

<TABLE>
<CAPTION>
<S>                                                   <C>                   <C>             <C>                  <C>

                                                          13-Weeks Ended                         39-Weeks Ended
                                                 ----------------------------------     ----------------------------------
                                                 September 30,          October 1,       September 30,         October 1,
                                                    2006                  2005             2006                  2005
                                                 ------------          ------------     ------------          ------------
Net income                                          $690,000            $1,107,000       $4,076,000            $5,864,000
Basic weighted number of average
   shares outstanding                             15,791,000            15,743,000       15,784,000            15,714,000
Incremental shares from assumed issuances
   of stock options                                  374,000               342,000          376,000               303,000
Diluted weighted average number of
shares outstanding                                16,165,000            16,085,000       16,160,000            16,017,000

Net income per share - Basic                           $0.04                 $0.07            $0.26                 $0.37
                     - Diluted                         $0.04                 $0.07            $0.25                 $0.37


Options to purchase 10,000 common shares with an exercise price of $18.30 per share were excluded from the computation of diluted
earnings per share, for the 13 and 39-week periods in fiscal 2005 and 2006, because the exercise price was greater than the market
price.

</TABLE>


4. RECENT ACCOUNTING PRONOUNCEMENTS

In May  2005,  the FASB  issued  SFAS No.  154,  "Accounting  Changes  and Error
Corrections  - a  replacement  of APB  Opinion  No.  20 and  SFAS No.  3".  This
statement  changes the  requirements  for the  accounting for and reporting of a
change in accounting principle. Previously, most voluntary changes in accounting
principles  required  recognition  through a  cumulative  adjustment  within net
income in the  period  of the  change.  This  statement  requires  retrospective
application to prior periods' financial statements unless it is impracticable to
determine the period-specific effects or the cumulative effect of the change and
is effective for  accounting  changes and  corrections  of errors made in fiscal
years  beginning  after December 15, 2005. We do not expect that the adoption of
SFAS  No.  154  will  have  a  material  impact  on our  consolidated  financial
statements.

On October 6, 2005,  the FASB  issued FASB Staff  Position  ("FSP") No. FAS 13-1
"Accounting  for Rental Costs Incurred  during a Construction  Period." The FASB
has concluded that rental costs incurred during and after a construction  period
are for the right to control the use of a leased asset and must be recognized as
rental expense. Such costs were previously capitalized as construction costs, if
the company had a policy to do so. The FSP is effective  for  reporting  periods
beginning after December 15, 2005. The Company  expects that the  implementation
of FSP No. FAS 13-1 will decrease net income by  approximately  $175,000 for the
fiscal year ending  December  30, 2006.  During the 39-week and 13-week  periods
ended  September 30, 2006,  the Company  incurred  $85,000 and ($36,000) of such
costs.  The  reversal  in the current  13-week  period is  primarily  due to the
over-accrual of construction rents, related to the April Cornell leases acquired
in the second quarter.

                                       10

<PAGE>

On November 3, 2005, FASB issued FSP Nos. FAS 115-1 and FAS 124-1, "The Meaning
of Other-Than-Temporary Impairment and Its Application to Certain Investments."
This FSP addresses the determination as to when an investment is considered
impaired, whether that impairment is other than temporary, and the timing and
measurement of an impairment loss. The FSP is required to be applied to
reporting periods beginning after December 15, 2005 and was adopted by the
Company in the first quarter of fiscal 2006. The impact of the adoption of this
FSP did not have a material impact on its consolidated financial statements.

On July 13, 2006, FASB issued Interpretation No. 48 ("FIN 48"),  "Accounting for
Uncertainty in Income Taxes," which  clarifies the accounting for uncertainty in
income taxes recognized in the financial  statements in accordance with FASB No.
109,  ACCOUNTING  FOR INCOME  TAXES.  FIN 48 provides  guidance on the financial
statement  recognition and measurement of a tax position taken or expected to be
taken  in a  tax  return.  FIN  48  also  provides  guidance  on  derecognition,
classification,   interest  and  penalties,   accounting  in  interim   periods,
disclosures and transition. FIN 48 is effective for fiscal years beginning after
December 15, 2006.  We are currently  evaluating  the impact of this standard on
our consolidated financial statements.

In September  2006, the Securities  and Exchange  Commission  (SEC) issued Staff
Accounting  Bulletin  (SAB) No.  108,  CONSIDERING  THE  EFFECTS  OF PRIOR  YEAR
MISSTATEMENTS   WHEN   QUANTIFYING   MISSTATEMENTS  IN  CURRENT  YEAR  FINANCIAL
STATEMENTS,  which provides  interpretive  guidance on the  consideration of the
effects of prior year  misstatements in quantifying  current year  misstatements
for the purpose of a materiality assessment. SAB No. 108 is effective for fiscal
years ending after November 15, 2006. Early  application is encouraged,  but not
required.  We are  required  to adopt SAB No.  108 for our  fiscal  year  ending
December 30, 2006. We are currently  assessing the impact,  if any, the adoption
of SAB No. 108 will have on our operating income or net earnings. The cumulative
effect, if any, of applying the provisions of SAB No. 108 will be reported as an
adjustment to beginning-of-year retained earnings.


5. EQUIPMENT AND LEASEHOLD IMPROVEMENTS
<TABLE>
<CAPTION>
<S>                                                                 <C>                    <C>                   <C>

                                                               September 30,         December 31,           October 1,
                                                                   2006                  2005                  2005
                                                             ------------------    ------------------    ------------------

 Leasehold improvements                                    $        50,558,000   $        51,827,000   $        50,689,000
 Furniture, fixtures and equipment                                  54,302,000            51,715,000            50,175,000
                                                             ------------------    ------------------    ------------------
                                                                   104,860,000           103,542,000           100,864,000
Less: accumulated depreciation
    and amortization                                               (54,072,000)          (50,782,000)          (49,725,000)
                                                             ------------------    ------------------    ------------------
                                                           $        50,788,000   $        52,760,000   $        51,139,000
                                                             ==================    ==================    ==================

6. ACCRUED LIABILITIES
                                                               September 30,         December 31,           October 1,
                                                                   2006                  2005                  2005
                                                             ------------------    ------------------    ------------------

 Operating expenses                                        $         4,379,000   $         2,894,000   $         2,839,000
 Other taxes                                                         2,125,000             2,540,000             1,483,000
 Group insurance                                                       711,000               598,000               693,000
 Sales return reserve                                                  657,000               803,000               675,000
 Leasehold additions                                                 2,416,000               859,000               918,000
 Other customer deposits and credits                                 1,844,000             4,752,000             3,611,000
                                                             ------------------    ------------------    ------------------
                                                           $        12,132,000   $        12,446,000   $        10,219,000
                                                             ==================    ==================    ==================

</TABLE>

                                       11

<PAGE>

7. BANK DEBT

During  November 2005, the Company  reached an agreement with its bank to extend
the maturity of the Amended  Revolving  Credit Facility until November 30, 2008.
Pursuant  to  the  newly  Amended  Revolving  Credit  Facility,  $17,500,000  is
available until expiration at November 30, 2008. The amounts  outstanding  under
the  credit  facility  bear  interest  at a maximum  per annum rate equal to the
bank's prime rate,  currently  8.25% at  September  30,  2006,  less 0.25%.  The
agreement  contains selected  financial and other covenants.  Effective upon the
occurrence of an Event of Default under the Amended  Revolving  Credit Facility,
the Company  grants to the bank a security  interest in the Company's  inventory
and certain  receivables.  The Company has at all times been in compliance  with
all loan covenants.

There have been no borrowings  against the line of credit during fiscal 2006 and
fiscal 2005.  There were  outstanding  letters of credit of $2.7  million,  $1.0
million and $3.0 million,  pursuant to the Amended Revolving Credit Facility, at
September 30, 2006, December 31, 2005 and October 1, 2005, respectively.

8. LILLIE RUBIN EXIT COSTS

During the quarter ended July 1, 2006, the Company  recorded a pre-tax charge of
$5.7 million for asset  impairment  and store  closing costs for the exit of the
Lillie Rubin business.  Included in the exit costs was a write down of leasehold
improvements, furniture and fixtures on 19 stores in the amount of $4.1 million,
write down of  intangibles  of  $455,000,  write down of supplies  of  $275,000,
severance  accrual  of  $384,000,  as well as an  accrual  of $1.6  million  for
contractual termination costs negotiated prior to July 1, 2006. These costs were
partially  offset by the  reversal of $1.2  million of deferred  rent  accruals.
During the quarter ended  September 30, 2006, the Company  reversed  $144,000 of
the store closing costs based upon updated information. The Company closed 15 of
the stores as of September 30, 2006 and anticipates the closing of the remaining
5 stores by the end of the first  fiscal  quarter of 2007.  The Company does not
expect to incur  significant  additional  exit costs  upon the  closing of these
properties during the fourth quarter.


The following is a summary of the activity in the reserve for exit costs:

<TABLE>
<CAPTION>
<S>                                             <C>                   <C>                <C>                      <C>

---------------------------------------- --------------------- ---------------- ----------------------- -----------------------
                                          BALANCE BEGINNING        CHARGES          CASH PAYMENTS       BALANCE END OF PERIOD
                                               OF PERIOD
---------------------------------------- --------------------- ---------------- ----------------------- -----------------------
Contractual termination costs                           $ ---       $1,437,000              $1,153,000                $284,000
---------------------------------------- --------------------- ---------------- ----------------------- -----------------------
Severance                                                 ---          253,000                 208,000                  45,000
---------------------------------------- --------------------- ---------------- ----------------------- -----------------------
Impairment of long lived assets and                       ---
supplies                                                             5,089,000
---------------------------------------- --------------------- ---------------- ----------------------- -----------------------
Reversal of deferred rent liability                       ---      (1,261,000)
---------------------------------------- --------------------- ---------------- ----------------------- -----------------------

</TABLE>

9. CONTINGENCIES

The Company is exposed to a number of asserted and unasserted  potential claims.
Management  does not believe it is reasonably  possible that resolution of these
matters  will result in a material  loss.  We have not  provided any third party
financial  guarantees as of and for the 39 and 13-week  periods ended  September
30, 2006.

                                       12

<PAGE>

ITEM 2. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

Except for the historical  information and current statements  contained in this
Form 10-Q,  certain matters discussed  herein,  including,  without  limitation,
"Management's  Discussion  and  Analysis of Financial  Condition  and Results of
Operations" are forward-looking statements that involve risks and uncertainties,
including,  without limitation, the effect of economic and market conditions and
competition,  the  ability to open new stores and expand into new  markets,  and
risks relating to foreign importing operations, which could cause actual results
to differ materially.

RECENT DEVELOPMENTS

In May 2006, we announced plans to introduce a new concept, Cache Luxe, and exit
our Lillie Rubin business. During the third fiscal quarter of 2006, we converted
16 Lillie Rubin locations to Cache Luxe stores.  In addition,  we expanded three
Cache stores by combining them into three adjacent Lillie Rubin stores and added
Cache Luxe  merchandise to Cache stores.  Our five remaining  Lillie Rubin store
locations  are expected to be closed by the end of the first  fiscal  quarter of
2007.

The Cache Luxe concept primarily focuses on our daytime and evening merchandise.
This  concept is  expected to broaden our  customer  base,  enable us to offer a
larger  selection of evening apparel and accessories at highter price points and
allow us to leverage our  marketing  under a single  Cache  brand.  In addition,
Cache  stores  located in malls  containing  a Cache  Luxe store have  increased
capacity to offer an expanded casual assortment. Almost all of our current Cache
Luxe stores are in malls that also contain a Cache store.

RESULTS OF OPERATIONS

The following  tables set forth our results of operations for the 13 and 39-week
periods ended September 30, 2006 and October 1, 2005,  expressed as a percentage
of net sales.  Amounts in both tables include the combined results of our Cache,
Cache Luxe and Lillie Rubin stores.

<TABLE>
<CAPTION>
<S>                                           <C>                     <C>                     <C>                <C>

                                                     13-Weeks Ended                              39-Weeks Ended
                                         ----------------------------------------     -------------------------------------
                                           September 30,           October 1,          September 30,          October 1,
                                               2006                   2005                 2006                 2005
                                         ------------------     -----------------     ----------------     ----------------
Sales                                         100.0%                 100.0%               100.0%               100.0%
Cost of sales                                  52.8                   54.4                 52.5                 55.3
Gross profit                                   47.2                   45.6                 47.5                 44.7
Store operating expenses                       37.3                   35.8                 34.3                 33.4
General and administrative expenses             9.4                    7.1                  7.8                  6.5
Lillie Rubin exit costs                        (0.2)                   0.0                  2.8                  0.0
Operating income                                0.8                    2.7                  2.5                  4.8
Interest income                                 1.1                    0.5                  0.9                  0.4
Income before income taxes                      1.9                    3.2                  3.4                  5.2
Income taxes                                    0.7                    1.2                  1.3                  2.0
Net income                                      1.2                    1.9                  2.1                  3.1


We use a number of key indicators of financial condition and operating performance to evaluate the performance of our business, some
of which are set forth in the following table:

                                                     13-Weeks Ended                              39-Weeks Ended
                                         ----------------------------------------     -------------------------------------
                                           September 30,           October 1,          September 30,          October 1,
                                               2006                   2005                 2006                 2005
                                         ------------------     -----------------     ----------------     ----------------
Total store count at end of period              294                   301                   294                  301
Net sales growth                               4.7%                  16.0%                 4.5%                 10.8%
Comparable store sales growth                  1.0%                   8.0%                 3.0%                 5.0%
Average sales per transaction growth           4.0%                   8.0%                 4.0%                 6.0%
Average number of transactions growth         (3.0%)                   --                 (1.0%)               (1.0%)
Net sales per average square foot               $99                   $96                  $319                 $318
Total square footage (in thousands)             589                   609                   589                  609

</TABLE>

                                       13

<PAGE>

NET SALES

Net sales increased to $195.4 million from $187.0  million,  an increase of $8.4
million or 4.5%,  over the prior year  39-week  period.  The  increase  included
breakage  income  of  $2.4  million,  as a  result  of  the  formation  of a new
subsidiary to handle all Gift Card sales and maintain the  liability  related to
Gift Cards.  Comparable  store sales at Cache  stores  (sales for stores open at
least one year or more) increased $7.0 million or 4%, during the 39-week period.
Comparable  store sales at Lillie  Rubin stores  decreased  $2.4 million or 18%,
during the 39-week period. Net sales from  non-comparable  stores increased $1.5
million, which reflects the net impact of store openings and closings during the
current 39-week period. The increase in net sales in Fiscal 2006 at Cache stores
reflected  a 4% increase in average  dollars  per  transaction,  as well as a 1%
decrease  in sales  transactions.  Higher  levels of dress  sales also helped to
increase sales above Fiscal 2005 levels.

Net sales  increased to $59.9  million from $57.3  million,  an increase of $2.6
million,  or 4.7%, over the same 13-week period last year. The increase included
breakage  income  of  $2.4  million,  as a  result  of  the  formation  of a new
subsidiary to handle all Gift Card sales and maintain the  liability  related to
Gift Cards.  This reflects  $496,000 of  additional  net sales as a result of 1%
increase in comparable  store sales at Cache  stores.  Net sales at Lillie Rubin
stores  decreased  $208,000  or 9.1%,  during  the  13-week  period.  Net  sales
decreased  $39,000,  as a result of sales at non-comparable  stores,  during the
current 13-week period. The increase in net sales in Fiscal 2006 at Cache stores
reflected  a 4% increase in average  dollars  per  transaction,  as well as a 3%
decrease in sales transactions.

GROSS PROFIT

Gross profit increased to $92.7 million from $83.6 million,  an increase of $9.1
million  or  10.9%,  over the prior  year  39-week  period.  This  increase  was
primarily  due to higher  net sales  and  recognition  of  breakage  income,  as
mentioned  above. As a percentage of net sales,  gross profit increased to 47.5%
from  44.7%.  The  increase  in gross  profit as a  percentage  of net sales was
primarily  due to the  recognition  of  breakage  income  and lower  promotional
activity,  as well as higher initial markup,  offset by higher  markdowns due to
the exit of our Lillie Rubin  business.  The Company  expects  gross  margins to
improve during the remainder of Fiscal 2006 and in Fiscal 2007, primarily due to
the establishment of an internal production and sourcing department.

Gross profit increased to $28.3 million from $26.1 million,  an increase of $2.2
million,  or 8.4%,  over the same 13-week  period last year.  This  increase was
primarily  due to higher  net sales  and  recognition  of  breakage  income,  as
mentioned  above. As a percentage of net sales,  gross profit increased to 47.2%
from 45.6%.  The increase in gross  profit,  as a percentage  of net sales,  was
primarily  due to the  same  factors  as for the  39-week  period.  The  Company
incurred higher markdowns during the quarter,  as we liquidated the Lillie Rubin
inventories related to our decision to exit the Lillie Rubin business.


STORE OPERATING EXPENSES

Store  operating  expenses  increased to $67.1  million from $62.4  million,  an
increase  of $4.7  million or 7.5%,  over the prior year  39-week  period.  As a
percentage of net sales,  store operating expenses increased to 34.3% from 33.4%
for the 39-week period. This increase reflects the impact of newer stores, which
have not achieved a mature sales volume level as compared to the existing  store
base. The increase in store  operating  expenses was  principally  due to higher
payroll expense ($1.2 million),  higher depreciation expense ($758,000),  higher
property taxes ($379,000) and advertising expenses ($1.0 million) in Fiscal 2006
as compared to Fiscal  2005,  primarily  due to the  increase in stores open for
most of the period.

Store  operating  expenses  increased to $22.3  million from $20.5  million,  an
increase of $1.8  million or 8.8% over the same 13-week  period last year.  As a
percentage of sales, store operating expenses increased to 37.3% from 35.8%. The
increase in store  operating  expenses  was  principally  due to higher  payroll
expense ($543,000),  which includes training time for employees for the upgraded
POS system; as well as higher group insurance expense ($294,000) and advertising
expenses ($735,000) in the third quarter as compared to Fiscal 2005.

                                       14
<PAGE>

GENERAL AND ADMINISTRATIVE EXPENSES

General  and  administrative  expenses  increased  to $15.3  million  from $12.2
million, an increase of $3.1 million or 25.4%, over the same 39-week period last
year.  As a  percentage  of  net  sales,  general  and  administrative  expenses
increased  to  7.8%  from  6.5%,  primarily  due to  higher  travel  ($362,000),
telephone expense  ($194,000) and professional  fees ($860,000),  as compared to
last  year,  as well as due to higher  payroll  expense  ($1.5  million),  which
included  compensation from stock options  ($849,000) related to the adoption of
FAS No. 123R.

General and administrative expenses increased to $5.6 million from $4.1 million,
an increase of $1.5 million or 36.6%,  above the same 13-week  period last year.
As a percentage of net sales,  general and administrative  expenses increased to
9.4%  from  7.1%  for  the  13-week  period,  primarily  due  to  higher  travel
($125,000),  telephone expense  ($165,000) and professional fees ($739,000),  as
compared to last year, as well as due to higher  payroll  expense of ($331,000),
which included compensation from stock options ($247,000).  The Company spent an
additional  $200,000 in  administrative  support for the POS upgrade  during the
current period.


LILLIE RUBIN EXIT COSTS

During the 39-week period ended,  the Company  recorded a pre-tax charge of $5.5
million for the exit of the Lillie  Rubin  business.  The charge is comprised of
leasehold  improvement,   furniture  and  fixtures  write-down  ($4.4  million),
write-down  of  intangibles  ($455,000),   write-down  of  supplies  ($275,000),
severance  charges  ($253,000),  as  well  as  an  accrual  ($1.4  million)  for
contractual termination costs negotiated prior to July 1, 2006. These costs were
partially offset by the reversal ($1.3 million) of deferred rent accruals.

INTEREST INCOME

Interest  income  increased to $1.9 million from  $677,000,  an increase of $1.2
million  over the  prior  year  period,  primarily  due to higher  average  cash
balances, as well as higher interest rates.

Interest  income  increased to $657,000 from $277,000 in the same 13-week period
last year.

INCOME TAXES

Income taxes  decreased to $2.6  million from $3.8  million,  as compared to the
39-week  period last year.  The decrease  was  primarily  attributable  to lower
taxable income in fiscal 2006. The estimated  effective tax rate for the 39-week
periods in fiscal 2006 and fiscal 2005 was 39.0% and 39.5%, respectively.


Income  taxes  decreased  to  $441,000  from  $713,000,  as compared to the same
13-week  period  last year.  The  estimated  effective  tax rate for the 13-week
periods in fiscal 2006 and fiscal 2005 was 39.0% and 39.5%, respectively.

NET INCOME

As a result of the factors discussed above, net income decreased to $4.1 million
from $5.9 million for the prior year 39-week period.

Net income  decreased to $690,000 from $1.1 million for the same 13-week  period
last year.

                                       15

<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

Our cash requirements are primarily for working capital, the construction of new
stores,  the  remodeling  of  existing  stores,  and to improve  and enhance our
information  technology  systems.  During the 39-week period ended September 30,
2006,  we  generated  $9.1 million of cash flow from  operations  as compared to
$15.2 million generated in the same period in Fiscal 2005. We expect to continue
to meet our  operating  cash  requirements  primarily  through  cash  flows from
operating  activities,  existing  cash  and  cash  equivalents,  and  short-term
investments.  In addition,  we have available a $17.5 million  revolving  credit
facility (the "credit  facility")  with Bank of America  Retail  Finance,  under
which we have not had outstanding borrowings for several years. At September 30,
2006, we had working capital of $70.3 million, cash and marketable securities of
$53.5 million and no third party debt outstanding.

The following table sets forth our cash flows for the period indicated:

<TABLE>
<CAPTION>
<S>                                                                                          <C>                <C>
                                                                                       ------------------------------
                                                                                               39-Weeks ended
                                                                                        ------------------------------
                                                                                         September        October 1,
                                                                                            30,
                                                                                            2006             2005
                                                                                        -------------    -------------
Net cash from operating activities...............................................        $9,066,000       15,178,000
Net cash from investing activities...............................................         7,145,000      (10,316,000)
Net cash from financing activities...............................................           250,000          553,000
                                                                                        -------------    -------------

Net increase in cash and cash equivalents........................................       $16,461,000        $5,415,000
                                                                                        =============    =============
</TABLE>

During the 39-week  period ended  September  30, 2006, we increased our cash and
cash  equivalents  by $16.5  million,  primarily due to net matured  investments
($16.2 million), net income ($4.1 million),  which includes depreciation expense
($7.9  million),  a reduction in  receivables  ($1.3 million) and an increase in
accrued liabilities ($1.9 million), which was partially offset by an increase in
inventories  ($4.6 million),  a reduction in accounts payable ($2.8 million) and
expenditures  for our new store expansion and remodeling  program  totaling $9.1
million.  The  Company  recorded  a charge of $5.5  million  for the exit of the
Lillie Rubin  business,  which is comprised of $3.8 million of non-cash  charges
and $1.7 million of cash charges.  Cash charges  totaling $1.4 million were paid
out in the third  quarter.  The exit of Lillie  Rubin should be finalized by the
end of the first fiscal quarter of 2007.

We plan to open  approximately  20 new stores  during  Fiscal 2006.  The Company
opened  one new Cache  store in the third  quarter,  10 new stores in the second
quarter and one new store in the first  quarter of Fiscal  2006.  We  anticipate
opening an  additional 7 new stores during the fourth  quarter.  We renovated 12
existing stores in Fiscal 2006. We spent $9.1 million through September 30, 2006
and expect to spend an additional $4-5 million in the fourth  quarter,  for both
new store and existing  store  construction  and  remodeling,  as well as for an
upgrade of the existing POS computer system.

There have been no borrowings  against the line of credit during fiscal 2006 and
fiscal 2005.  There were  outstanding  letters of credit of $2.7  million,  $1.0
million and $3.0  million,  pursuant to the credit  facility,  at September  30,
2006, December 31, 2005 and October 1, 2005, respectively.

INFLATION

We do not  believe  that our  sales  revenue  or  operating  results  have  been
materially  impacted by inflation during the past three fiscal years.  There can
be no assurance,  however,  that our sales revenue or operating results will not
be impacted by inflation in the future.

OFF-BALANCE SHEET ARRANGEMENTS

We  do  not  have  any  off-balance  sheet  arrangements  or  transactions  with
unconsolidated,  limited purpose entities. In the normal course of its business,
we enter into operating leases for store locations and utilize letters of credit
principally for the  importation of merchandise.  We do not have any undisclosed
material transactions or commitments involving related persons or entities.

                                       16

<PAGE>

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Our  accounting  policies  are  more  fully  described  in  Note 1 of  Notes  to
Consolidated  Financial Statements in our Fiscal 2005 10-K. As disclosed in Note
1 of Notes to Consolidated  Financial  Statements,  the preparation of financial
statements in conformity with accounting  principles  generally  accepted in the
United States of America  ("GAAP")  requires  management  to make  estimates and
assumptions  about  future  events  that  affect  the  amounts  reported  in the
consolidated  financial  statements and accompanying  notes. Since future events
and their effects cannot be determined with absolute  certainty,  actual results
will differ from those estimates.  We evaluate our estimates and judgments on an
ongoing  basis  and  predicate  those  estimates  and  judgments  on  historical
experience and on various other factors that are believed to be reasonable under
the  circumstances.  Actual  results  will  differ  from these  under  different
assumptions or conditions.

Our  management  believes the  following  critical  accounting  policies,  among
others,  affect its more significant judgments and estimates used in preparation
of the Consolidated Financial Statements.

INVENTORIES.  Our  inventories  are valued at lower of cost or market  using the
retail  inventory  method.  Under  the  retail  inventory  method  ("RIM"),  the
valuation of inventories at cost and the resulting  gross margins are calculated
by  applying  a  calculated  cost  to  retail  ratio  to  the  retail  value  of
inventories.  RIM is an averaging method that has been widely used in the retail
industry due to its practicality. Additionally, it is recognized that the use of
RIM will  result  in  valuing  inventories  at the  lower of cost or  market  if
markdowns are currently taken as a reduction of the retail value of inventories.
Inherent in the RIM calculation  are certain  significant  management  judgments
including,  among others,  merchandise mark-on,  mark-ups, and markdowns,  which
significantly  impact  the  ending  inventory  valuation  at cost as well as the
resulting gross margins.  We take markdowns due to changes in fashion and style,
based on the following factors: (i) supply on hand, and (ii) our expectations as
to future sales.  We do not  anticipate any  significant  change in our markdown
strategy  that would  cause a change in our  earnings.  We believe  that our RIM
provides an inventory valuation,  which results in a carrying value at the lower
of cost or market.

FINITE-LONG  LIVED  ASSETS.  The Company's  judgment  regarding the existence of
impairment indicators is based on market and operational performance.  We assess
the impairment of long-lived assets,  primarily fixed assets, whenever events or
changes  in   circumstances   indicate  that  the  carrying  value  may  not  be
recoverable.  Factors we consider  important  which could  trigger an impairment
review include the following:

     o  significant changes in the manner of our use of assets or the strategy
        for our overall business;

     o  significant negative industry or economic trends;

     o  store closings;

     o  underperforming stores; or

     o  underperforming business trends.

    In  the  evaluation  of  the  fair  value  and  future  benefits  of  finite
long-lived   assets,  we  perform  an  analysis  by  store  of  the  anticipated
undiscounted  future net cash flows of the related finite long-lived  assets. If
the carrying value of the related asset exceeds the undiscounted cash flows, the
carrying value is reduced to its fair value.  Various factors  including  future
sales  growth and profit  margins are included in this  analysis.  To the extent
these  future  projections  or  strategies  change,  the  conclusion   regarding
impairment  may differ from the  current  estimates.  During the 39-week  period
ended September 30, 2006, the Company  recorded a charge of $5.5 million related
to the exit of the Lillie Rubin store chain. $3.8 million of this charge relates
to the impairment of fixed assets. No impairment charges were incurred in Fiscal
2003, 2004 and 2005, respectively.
                                       17

<PAGE>
SELF INSURANCE. We are self-insured for losses and liabilities related primarily
to  employee  health  and  welfare  claims.  Losses are  accrued  based upon our
estimates of the aggregate liability for claims incurred using certain actuarial
assumptions  followed in the insurance industry and based on Company experience.
Adjustments to earnings  resulting  from changes in historical  loss trends have
been insignificant for fiscal 2003, 2004 and 2005. Further, we do not anticipate
any  significant  change in loss trends,  settlements  or other costs that would
cause a significant change in our earnings.

GIFT CARDS, GIFT CERTIFICATES AND CREDITS. The Company sells gift cards and gift
certificates  and issues credits to its customers when  merchandise is returned.
The  Company  recognizes  sales from Gift Cards  when they are  redeemed  by the
customer and income when the  likelihood of the Gift Card being  redeemed by the
customer is remote (Gift Card breakage) and the Company  determines that it does
not have a legal  obligation to remit the value of unredeemed  Gift Cards to the
relevant  jurisdiction as abandoned  property.  The Company determines Gift Card
breakage  income based upon  historical  redemption  patterns.  Breakage  income
represents  the  balance  of Gift  Cards,  for which the  Company  believes  the
likelihood of redemption  by the customer is remote.  At that time,  the Company
will recognize breakage income for those Gift Cards.

During the third quarter of fiscal 2006,  the Company formed a new subsidiary to
handle all sales and maintain the liability  related to Gift Cards.  As a result
of transferring  all existing  obligations to the newly formed  subsidiary,  the
Company  recognized  $2.4 million of breakage  income,  within net sales, in the
second quarter related to Gift Cards sold/issued since the inception of the Gift
Card program. There was no breakage income recognized for the same period in the
prior year.

REVENUE  RECOGNITION.  Sales are recognized at the "point of sale," which occurs
when merchandise is sold in an "over-the-counter" transaction or upon receipt by
a customer.  Sales of merchandise via our website are recognized at the expected
time of  delivery  to the  customer.  Our  customers  have the  right to  return
merchandise. Sales are reported net of actual and estimated returns. We maintain
a reserve for potential  product returns and record,  as a reduction to sales, a
provision for estimated product returns, which is determined based on historical
experience. Charges or credits to earnings resulting from revisions to estimates
on our sales return provision were approximately $66,000,  $20,000 and $(29,000)
for Fiscal 2003,  2004 and 2005,  respectively.  Amounts billed to customers for
shipping  and  handling  fees are included in net sales at the time of shipment.
Costs incurred for shipping and handling are included in cost of sales.

INCOME TAXES.  The Company accounts for income taxes in accordance with SFAS No.
109,  "Accounting  for Income  Taxes."  This  statement  requires the Company to
recognize  deferred  tax  liabilities  and  assets for the  expected  future tax
consequences  of events that have been  recognized  in the  Company's  financial
statements  or tax returns.  Under this method,  deferred  tax  liabilities  and
assets are determined  based on the difference  between the financial  statement
carrying amounts and tax bases of assets and  liabilities,  using applicable tax
rates  for the years in which the  differences  are  expected  to  reverse.  The
Company reserves for tax contingencies  when it is probable that a liability has
been incurred and the contingent amount is reasonably estimable.  These reserves
are  based  upon  the  Company's  best  estimation  of the  potential  exposures
associated  with the  timing  and amount of  deductions  as well as various  tax
filing positions.  Due to the complexity of these examination  issues,  $301,000
has been accrued to date.

SEASONALITY.  We experience seasonal and quarterly fluctuations in net sales and
operating income. Quarterly results of operations may fluctuate significantly as
a result of a variety of factors,  including  the timing of new store  openings,
fashion trends and shifts in timing of certain holidays. Our business is subject
to seasonal influences, characterized by highest sales during the fourth quarter
(October,  November and  December)  and lowest  sales  during the third  quarter
(July, August and September).


                                       18
<PAGE>

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are  exposed  to the  following  types  of  market  risk-fluctuations  in the
purchase price of merchandise, as well as other goods and services: the value of
foreign  currencies  in  relation  to the U.S.  dollar;  and changes in interest
rates. Due to our inventory turn rate and its historical ability to pass through
the impact of any generalized changes in its cost of goods sold to its customers
through pricing adjustments,  commodity and other product risks are not expected
to be material. We purchase substantially all merchandise in U.S. dollars.

Our exposure to market risk for changes in interest rates relates to cash,  cash
equivalents and marketable securities.  As of September 30, 2006, our cash, cash
equivalents and marketable  securities  consisted primarily of funds invested in
money market accounts,  which bear interest at a variable rate and U.S. treasury
instruments,  which bear interest at a fixed rate.  Due to the average  maturity
and the  conservative  nature of our investment  portfolio,  we believe a sudden
change in interest  rates  would not have a material  effect on the value of our
investment  portfolio.  As the interest rates on a material portion of our cash,
cash  equivalents and marketable  securities are variable,  a change in interest
rates earned on our investment portfolio would impact interest income along with
cash flows, but would not materially impact the fair market value of the related
underlying instruments.

ITEM 4. CONTROLS AND PROCEDURES

The Company  maintains  disclosure  controls and procedures that are designed to
ensure that information required to be disclosed in the reports that the Company
files or submits under the Securities  and Exchange Act is recorded,  processed,
summarized,  and reported  within the time periods  specified in the SEC's rules
and forms,  and that such  information is accumulated  and  communicated  to the
Company's management,  including its Chief Executive Officer and Chief Financial
Officer,   as  appropriate,   to  allow  timely  decisions   regarding  required
disclosures.

As of September 30, 2006, we carried out an  evaluation,  under the  supervision
and with the  participation  of our  management,  including the Chief  Executive
Officer and Chief  Financial  Officer,  of the  effectiveness  of the design and
operation of our disclosure  controls and procedures  pursuant to the Securities
and  Exchange  Act Rule  13(a)-15(b).  Our  Chief  Executive  Officer  and Chief
Financial Officer concluded that our disclosure controls and procedures were not
effective as of September 30, 2006 due to the material  weakness in our internal
control  over  financial  reporting,  as a  result  of  the  lack  of  resources
identified  during the Company's  assessment of internal  control over financial
reporting as of January 1, 2006 and reported in our Fiscal 2005 Annual Report on
Form 10-K. We continue our efforts to remediate this material  weakness  through
ongoing process  improvements and the  implementation  of enhanced  policies and
hiring additional  personnel,  engaging third-party tax, financial and financial
systems  consultants,   improving  quality  control  standards,   and  providing
additional  training and  education to our financial  reporting  and  accounting
personnel.  Accordingly,  this material weakness is not yet fully remediated. No
material weaknesses will be considered  remediated until the remedial procedures
have operated for an appropriate  period,  have been tested,  and management has
concluded that they are operating effectively.

To compensate for this material  weaknesses,  the Company  performed  additional
analysis  and other  procedures  in order to  prepare  the  unaudited  quarterly
consolidated   financial   statements  in  accordance  with  generally  accepted
accounting principles in the United States of America.  Accordingly,  management
believes that the consolidated  financial  statements included in this Quarterly
Report on Form 10-Q fairly  present,  in all material  respects,  our  financial
condition, results of operations and cash flows for the periods presented.

There were no changes during the quarter that have materially  affected,  or are
reasonably  likely to materially  affect,  our internal  control over  financial
reporting.

                                       19

<PAGE>

PART II - OTHER INFORMATION

ITEM 1A. RISK FACTORS

                         RISKS RELATED TO OUR BUSINESS

OUR EXPANSION INTO NEW MARKETS COULD ADVERSELY AFFECT OUR FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.

     Some of our new  stores  will be  opened in areas of the  United  States in
which we currently  have few or no stores.  The  expansion  into new markets may
present  competitive,  merchandising  and  administrative  challenges  that  are
different from those currently encountered in our existing markets. Any of these
challenges could adversely affect our business,  financial condition and results
of operations.  To the extent our new store openings are in existing markets, we
may experience reduced net sales volumes in existing stores in those markets.

OUR NEW CACHE LUXE CONCEPT MAY NOT BE SUCCESSFUL,  WHICH COULD ADVERSELY  AFFECT
OUR FINANCIAL  CONDITION AND RESULTS OF OPERATIONS AND DIVERT  MANAGEMENT'S TIME
AND ATTENTION FROM OUR CORE CACHE STORE BUSINESS.

In the third fiscal quarter of 2006, we opened 16 Cache Luxe stores.  Almost all
of our Cache Luxe stores are located in malls that also  contain a Cache  store.
As a new  concept,  Cache Luxe may not be  successful.  It may detract  from our
existing  Cache brand  and/or  result in reduced  sales at Cache stores that are
located in the same mall as a Cache Luxe store. The continued implementation and
expansion  of the Cache Luxe  concept  could  divert our  management's  time and
resources  from our core Cache store  business.  If the results of operations of
our Cache Luxe stores are not significantly  better than the Lillie Rubin stores
they  replaced,  there  could be a  material  adverse  effect  on our  business,
financial condition and results of operations.

OUR  MANUFACTURERS MAY BE UNABLE TO MANUFACTURE AND DELIVER PRODUCTS IN A TIMELY
MANNER  OR MEET  OUR  QUALITY  STANDARDS,  WHICH  COULD  RESULT  IN LOST  SALES,
CANCELLATION CHARGES OR EXCESSIVE MARKDOWNS.

     We purchase  apparel and  accessories  from  importers  and  directly  from
third-party  manufacturers.  Similar to most other specialty retailers,  we have
short selling seasons for much of our inventory. Factors outside of our control,
such as  manufacturing  or shipping  delays or quality  problems,  could disrupt
merchandise  deliveries  and  result  in lost  sales,  cancellation  charges  or
excessive  markdowns,  all of which could have a material  adverse effect on our
financial  condition  and  results  of  operations.

SUBSTANTIALLY  ALL OF OUR  MERCHANDISE IS PRODUCED IN FOREIGN  FACILITIES.  THIS
SUBJECTS  US TO THE  RISKS OF  INTERNATIONAL  TRADE AND  OTHER  RISKS  GENERALLY
ASSOCIATED WITH DOING BUSINESS IN FOREIGN MARKETS.

     Substantially  all of our vendors utilize overseas  production  facilities.
The failure of foreign  manufacturers  to ship products to us in a timely manner
could  result in our  stores  lacking  needed  inventory.  Any  event  causing a
disruption of imports,  including financial or political  instability,  currency
fluctuations,  terrorism or heightened security,  trade restrictions in the form
of tariffs or quotas or both,  political  or  military  conflict  involving  the
United States,  or the migration of  manufacturers,  could negatively affect our
business,  financial  condition or results of operations.  These adverse impacts
may include an increased cost to us,  reductions in the supply of merchandise or
delays in our manufacturing lead time.

                                       20

<PAGE>

WE RELY ON OUR MANUFACTURERS TO USE ACCEPTABLE ETHICAL BUSINESS  PRACTICES,  AND
IF THEY FAIL TO DO SO, THE CACHE BRAND NAME COULD SUFFER  REPUTATIONAL  HARM AND
OUR SALES COULD DECLINE OR OUR INVENTORY SUPPLY COULD BE INTERRUPTED.

     We do not  control  our  manufacturers  or their  labor and other  business
practices.  If one  of  our  manufacturers  violates  labor  or  other  laws  or
implements  labor or other  business  practices  that are generally  regarded as
unethical in the United States, the shipment of finished products to us could be
interrupted, orders could be canceled, relationships could be terminated and our
reputation  could be damaged.  Any of these events could have a material adverse
effect on our revenues and, consequently,  our results of operations.

OUR PLANS TO INCREASE OUR  DIRECT-SOURCING  OF PRODUCTS  SOLD IN OUR STORES FROM
INTERNATIONAL  VENDORS MAY NOT BE  SUCCESSFUL,  WHICH COULD RESULT IN ADDITIONAL
COSTS AND MANUFACTURING DELAYS. TO THE EXTENT THAT WE INCREASE  DIRECT-SOURCING,
INTERRUPTIONS IN OUR  DIRECT-SOURCING  OPERATIONS COULD RESULT IN LOST SALES AND
INCREASED COSTS.

     We have limited experience with direct-sourcing from international  vendors
that  can  supply  us   merchandise   at  lower  costs.   In  fiscal  2005,   we
directly-sourced  approximately  8% of our  merchandise.  By the second  half of
fiscal 2007, we expect to increase direct-sourcing to approximately 20 to 25% of
our  merchandise,  and we believe  that we can increase  the  percentage  of our
merchandise  that  is  directly-sourced  to  approximately  40  to  50%  in  the
long-term.  We cannot  assure you that  direct-sourcing  will result in the cost
saving we anticipate.  Furthermore,  we may not be able to effectively cultivate
and manage these direct relationships with manufacturers,  which could result in
additional costs and manufacturing delays.

     To  the  extent  that  we  are  successful  in   significantly   increasing
direct-sourcing,  we will be  further  subject  to risks  associated  with doing
business in foreign  markets.  Interruptions in our  direct-sourcing  operations
could disrupt manufacturing, shipment or receipt of our merchandise, which could
result in lost sales and  increase  our costs.  Increasing  our  direct-sourcing
could adversely affect our relationship with our domestic vendors.

THE RAW MATERIALS  USED TO  MANUFACTURE  OUR PRODUCTS AND OUR  DISTRIBUTION  AND
LABOR COSTS ARE SUBJECT TO AVAILABILITY CONSTRAINTS AND PRICE VOLATILITY,  WHICH
COULD RESULT IN INCREASED COSTS.

     The  raw  materials  used  to  manufacture  our  products  are  subject  to
availability  constraints  and  price  volatility  caused  by  high  demand  for
petroleum-based  synthetic fabrics,  weather,  supply  conditions,  regulations,
economic   climate  and  other   unpredictable   factors.   In   addition,   our
transportation  and labor  costs are subject to price  volatility  caused by the
price  of  oil,  supply  of  labor,  regulations,  economic  climate  and  other
unpredictable factors.  Increases in demand for, or the price of, raw materials,
distribution  services  and labor  could have a material  adverse  effect on our
business,  financial  condition and results of operations.

BECAUSE OUR CACHE BRAND IS ASSOCIATED WITH ALL OF OUR  MERCHANDISE,  OUR SUCCESS
DEPENDS HEAVILY ON THE VALUE  ASSOCIATED WITH OUR BRAND. IF THE VALUE ASSOCIATED
WITH OUR BRAND WERE TO DIMINISH,  OUR SALES COULD  DECREASE,  CAUSING  LOSSES OR
LOWER PROFITS.

     Our  success  depends on our Cache  brand and its value.  The Cache name is
integral to our business, as well as to the implementation of our new Cache Luxe
concept.  The Cache brand  could be  adversely  affected if our public  image or
reputation were to be tarnished, which could result in a material adverse effect
on our business.

                                       21

<PAGE>

ANY MATERIAL  DISRUPTION OF OUR  INFORMATION  SYSTEMS COULD DISRUPT OUR BUSINESS
AND REDUCE OUR SALES.

     Our  information  systems  integrate  all  major  aspects of our  business,
including  sales,  finance,  distribution,  purchasing,  inventory  control  and
merchandise  planning.  We have  substantially  completed  the  rollout of a new
point-of-sale,  POS, system to all of our stores and installation of a wide area
network that allows us to add  functionality  to our POS system,  including  the
ability to process debit card  transactions  at lower rates,  centralize  credit
authorizations,  enhance labor  scheduling,  centralize  our customer  database,
introduce our customer loyalty program,  speed up customer  transaction time and
analyze real-time sales data. We are increasingly dependent on these information
systems for the efficient operation of our business, including our web site, and
to facilitate the enhancement of our marketing efforts.

     We may experience  operational  problems with our information  systems as a
result of system  failures,  viruses,  computer  "hackers" or other causes.  Any
material  disruption  or  slowdown  of our systems, including  a  disruption  or
slowdown caused by any failure on our part to  successfully  maintain or perform
additional upgrades to our systems,  could cause information to be lost or delay
our ability to process and make use of that  information in our business,  which
may lead to declines in sales.  In  addition,  if future  changes in  technology
cause our information systems to become obsolete,  or if our current information
systems prove to be inadequate to support our growth, we could lose customers.

OUR  MARKETING  EFFORTS  RELY UPON THE  EFFECTIVE  USE OF CUSTOMER  INFORMATION.
RESTRICTIONS ON THE AVAILABILITY OR USE OF CUSTOMER  INFORMATION COULD ADVERSELY
AFFECT OUR MARKETING PROGRAM, WHICH COULD RESULT IN LOST SALES AND A DECREASE IN
PROFITS.

     We use our  customer  database  to  market to our  customers.  We intend to
expand use of our  customer  database  when we implement  our  customer  loyalty
program,  which is  expected  to occur in the  first  half of fiscal  2007.  Any
limitations imposed on the use of such consumer data, whether imposed by federal
or state governments or business  partners,  could have an adverse effect on our
future marketing  activity.  In addition,  to the extent our security procedures
and protection of customer  information  prove to be insufficient or inadequate,
we may become  subject to  litigation,  which could expose us to  liability  and
cause damage to our reputation or brand.

WE ARE SUBJECT TO NUMEROUS REGULATIONS THAT COULD AFFECT OUR OPERATIONS. CHANGES
IN SUCH  REGULATIONS  COULD IMPACT THE OPERATION OF OUR BUSINESS THROUGH DELAYED
SHIPMENTS OF OUR GOODS,  FINES OR PENALTIES THAT COULD AFFECT OUR PROFITABILITY.

     We are subject to customs, truth-in-advertising, truth-in-lending and other
laws,  including  consumer  protection  regulations  and  zoning  and  occupancy
ordinances,  that regulate  retailers  generally  and/or govern the importation,
promotion and sale of merchandise,  the use of proprietary  credit cards and the
operation of retail  stores and warehouse  facilities.  Although we undertake to
monitor  changes in these laws, if these laws change without our  knowledge,  or
are  violated by our  employees,  importers,  buying  agents,  manufacturers  or
distributors, we could experience delays in shipments and receipt of goods or be
subject to fines or other penalties under the  controlling  regulations,  any of
which could have a material adverse effect on our business,  financial condition
and  results of  operations.

                                       22

<PAGE>


WE REPORTED A MATERIAL WEAKNESS IN OUR INTERNAL CONTROL OVER FINANCIAL REPORTING
AND, IF WE ARE UNABLE TO IMPROVE OUR INTERNAL  CONTROLS,  OUR FINANCIAL  RESULTS
MAY NOT BE ACCURATELY REPORTED.

     In connection  with the  preparation  of our Annual Report on Form 10-K for
fiscal 2005, management  identified a material weakness,  due to an insufficient
number of resources in the  accounting and finance  department,  resulting in an
ineffective  review,  monitoring and analysis of schedules,  reconciliations and
financial  statement  disclosures and several audit adjustments to the financial
statements for the quarter and year ended December 31, 2005. As a result of this
material weakness, we concluded that our disclosure controls and procedures were
not effective as of December 31, 2005.  Due to the pervasive  effect of the lack
of  resources  and  the  potential  impact  on  the  financial   statements  and
disclosures and the importance of the annual and interim  financial  closing and
reporting process,  in the aggregate there is more than a remote likelihood that
a material  misstatement of the annual financial  statements would not have been
prevented or detected.

     We continue our efforts to remediate this material weakness through ongoing
process  improvements and the  implementation of enhanced policies and hiring of
additional  personnel,  engaging third-party tax, financial and financial system
consultants,  improving  quality  control  standards  and  providing  additional
training and education to our  financial  reporting  and  accounting  personnel.
Accordingly,  this material  weakness is not yet fully  remediated.  No material
weaknesses will be considered  remediated  until the remediated  procedures have
operated  for an  appropriate  period,  have been  tested,  and  management  has
concluded that they are operating  effectively.  We cannot be certain that these
measures will ensure that we implement and maintain  adequate  controls over our
financial  reporting processes and that we will remediate the material weakness.
Any failure to implement  required new or improved  controls or to remediate the
material weakness, or difficulties  encountered in their  implementation,  could
prevent us from accurately  reporting our financial results,  result in material
misstatements  in our  financial  statements  or  cause  us to fail to meet  our
reporting obligations. In addition, we cannot assure you that we will not in the
future  identify  further  material  weaknesses  in our  internal  control  over
financial  reporting that we have not  discovered to date,  which may impact the
reliability of our financial  reporting and financial  statements.  Insufficient
internal  controls could also cause investors to lose confidence in our reported
financial information.

                          RISKS RELATED TO OUR INDUSTRY

IF NEW  LEGISLATION  RESTRICTING  THE  IMPORTATION  OR  INCREASING  THE  COST OF
TEXTILES AND APPAREL PRODUCED ABROAD IS ENACTED, OUR BUSINESS COULD BE ADVERSELY
AFFECTED.

     Legislation  that would  restrict the  importation  or increase the cost of
textiles  and  apparel  produced  abroad  has been  periodically  introduced  in
Congress. The enactment of new legislation or international trade regulation, or
executive  action affecting  international  textile or trade  agreements,  could
adversely affect our business.  International  trade agreements that can provide
for tariffs  and/or quotas can increase the cost and limit the amount of product
that can be imported.

                                       23

<PAGE>

     The quota system established by the World Trade Organization was eliminated
on  December  31,  2004.  We  cannot be  certain  of the full  impact  that this
elimination will have on international trade in general and the apparel industry
in particular.  We also cannot be certain of the impact of quota  elimination on
our  business,  including  increased  competition  that  could  result  from the
importation  of an  increasing  amount of lower  priced  apparel into the United
States.  Notwithstanding  quota  elimination,  China's  accession  agreement for
membership in the WTO provides that WTO member  countries,  including the United
States, may re-impose  safeguard quotas on specific  products.  In May 2005, the
United States imposed unilateral quotas on several product categories,  limiting
growth in imports of these  categories to 7.5% a year.  The safeguard  quotas in
several  categories have been extended by the United States  government and will
likely continue  through 2008.  These  limitations  apply to a limited number of
products  imported by us from China.  We are unable to assess the  potential for
additional action by the United States government with respect to these or other
product   categories  in  the  event  that  the  quantity  of  imported  apparel
significantly  disrupts  the  apparel  market in the United  States.  Additional
action by the United States in response to a disruption  in its apparel  markets
could limit our ability to import apparel and increase our costs.

                        RISKS RELATED TO OUR COMMON STOCK

OUR SHARE PRICE HAS  FLUCTUATED  SIGNIFICANTLY  AND COULD  CONTINUE TO FLUCTUATE
SIGNIFICANTLY.

     Between  January  1, 2004 and  November  7, 2006,  the market  price of our
common  stock has ranged from $10.90 to $23.63 per share.  The stock market has,
from time to time, experienced extreme price and volume fluctuations. The market
price for our  common  stock may change  significantly  in  response  to various
factors, including:

        o   Periodic  variations  in the actual or anticipated financial results
            of our business or other companies in the retail industry;

        o   A  shortfall  in  net sales  or net  income  from that  expected  in
            securities  analysts' estimates or from that expected by investors;

        o   The timing  of  new store  openings and net sales contributed by new
            stores;

        o   Material announcements by us or our competitors;

        o   Public sales of a substantial number of common shares following this
            offering; and

        o   Adverse  changes  in  general  market conditions or economic trends.


                                       24

<PAGE>

In the past,  companies that have experienced  volatility in the market price of
their shares have been the subject of securities class action litigation.  If we
become involved in a securities class action  litigation in the future, it could
result in  substantial  costs and  diversion of our  management's  attention and
resources, thus harming our business.

PROVISIONS  OF  OUR  GOVERNING   DOCUMENTS  AND  FLORIDA  LAW  COULD  DISCOURAGE
ACQUISITION  PROPOSALS OR DELAY A CHANGE IN OUR CONTROL,  AND THIS MAY ADVERSELY
AFFECT THE MARKET PRICE OF OUR COMMON STOCK OR DENY OUR STOCKHOLDERS A CHANCE TO
REALIZE A PREMIUM ON THEIR SHARES.

     Our articles of incorporation and by-laws contain anti-takeover provisions,
including  those listed  below,  that could make it more  difficult  for a third
party  to  acquire  control  of us,  even if that  change  in  control  would be
beneficial to our stockholders:

        o   our  board of  directors has the authority to issue common stock and
            preferred stock  and to determine  the price, rights and preferences
            of any new series of  preferred  stock  without  further stockholder
            approval and

        o   there  are   limitations   on  who  can  call  special  meetings  of
            stockholders.

     In addition,  provisions of Florida law and our stock option plans may also
discourage,  delay or prevent a change in control of our company or  unsolicited
acquisition proposals.


ITEM 6. EXHIBITS

        31.1     Certification Pursuant to Section 302 of the Sarbanes-Oxley Act
                 of 2002.
        31.2     Certification Pursuant to Section 302 of the Sarbanes-Oxley Act
                 of 2002.
        32.1     Certification Pursuant to Section 906 of the Sarbanes-Oxley Act
                 of 2002.

                                       25

<PAGE>

                                   SIGNATURES

          Pursuant to the  requirement of Section 13 or 15 (d) of the Securities
and  Exchange  Act of 1934,  the  Registrant  has duly  caused this report to be
signed on its behalf by the undersigned thereunto duly authorized.



                                           Dated:   November 7, 2006

                                           CACHE, INC.




                                           BY:  /s/ Brian Woolf
                                                ------------------------
                                                Brian Woolf
                                                Chairman and Chief
                                                Executive Officer
                                                (Principal Executive Officer)


                                           BY:  /s/ Margaret Feeney
                                                ------------------------
                                                Margaret Feeney
                                                Executive Vice President and
                                                Chief Financial Officer
                                                (Principal Financial and
                                                Accounting Officer)

                                       26

<PAGE>

                                  EXHIBIT 31.1
                                  CERTIFICATION

I, Brian Woolf, certify that:

     1. I have reviewed this quarterly report on Form 10-Q of Cache, Inc.
        (Cache);

     2. Based on my knowledge, this quarterly report does not contain any untrue
        statement of a material fact or  omit to state a material fact necessary
        to make the  statements made, in light  of the circumstances under which
        such statements were  made, not  misleading with  respect to the  period
        covered by this quarterly report;

     3. Based on my  knowledge, the  financial  statements, and  other financial
        information  included in  this quarterly  report, fairly  present in all
        material respects  the financial  condition, results of  operations  and
        cash flows  of Cache  as of,  and  for, the  periods presented  in  this
        quarterly report;

     4. Cache's other certifying officer and  I are responsible for establishing
        and  maintaining  disclosure  controls  and  procedures (as  defined  in
        Exchange Act  Rules 13a-15(e) and  15d-15(e)) and internal controls over
        financial  reporting (as defined  in  Exchange Act  Rules 13a-15(f)  and
        15d-15(f)) for the registrant and have:

            a) designed such disclosure controls and procedures,  or caused such
               disclosure  controls  and  procedures  to be  designed  under our
               supervision,  to ensure  that  material  information  relating to
               Cache, including its consolidated subsidiaries,  is made known to
               us by others  within  those  entities,  particularly  during  the
               period which this quarterly report is being prepared;

            b) designed  such  internal  control over  financial  reporting,  or
               caused such  internal  control  over  financial  reporting  to be
               designed under our supervision,  to provide reasonable  assurance
               regarding  the   reliability  of  financial   reporting  and  the
               preparation  of financial  statements  for  external  purposes in
               accordance with generally accepted accounting principles;

            c) evaluated the  effectiveness of Cache's  disclosure  controls and
               procedures and presented in this quarterly report our conclusions
               about the effectiveness of the disclosure controls and procedures
               as of the end of the  period  covered  by this  quarterly  report
               based on such evaluation;

            d) disclosed in this report any changes in Cache's  internal control
               over  financial  reporting  that  occurred  during  Cache's third
               quarter that has materially affected,  or is reasonably likely to
               materially  affect,   the  registrant's   internal  control  over
               financial reporting; and

     5. Cache's other  certifying  officer and I have  disclosed,  based on our
        most recent evaluation of internal control over financial reporting, to
        Cache's auditors and the audit committee of Cache's Board of Directors;

            a) all  significant  deficiencies  and  material  weaknesses  in the
               design or operation of internal controls over financial reporting
               which are reasonably  likely to adversely  affect Cache's ability
               to record,  process,  summarize and report financial information;
               and

            b) any fraud,  whether or not material,  that involves management or
               other employees who have a significant  role in Cache's  internal
               controls over financial reporting.


              November 7, 2006            By:   /s/ Brian Woolf
                                                 ------------------
                                                 Brian Woolf
                                           Chairman and Chief Executive Officer
                                           (Principal Executive Officer)
                                       27

<PAGE>
                                  EXHIBIT 31.2
                                  CERTIFICATION

I, Margaret Feeney, certify that:

      1. I have  reviewed  this  quarterly  report on Form  10-Q of Cache,  Inc.
         (Cache);

      2. Based on my  knowledge,  this  quarterly  report  does not  contain any
         untrue  statement of a material  fact or omit to state a material  fact
         necessary to make the  statements  made, in light of the  circumstances
         under which such  statements  were made, not misleading with respect to
         the period covered by this quarterly report;

      3. Based on my knowledge,  the financial  statements,  and other financial
         information  included in this quarterly  report,  fairly present in all
         material  respects the financial  condition,  results of operations and
         cash  flows of Cache as of,  and for,  the  periods  presented  in this
         quarterly report;

      4. Cache's other certifying officer and I are responsible for establishing
         and  maintaining  disclosure  controls  and  procedures  (as defined in
         Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal  controls over
         financial  reporting  (as defined in Exchange Act Rules  13a-15(f)  and
         15d-15(f)) for the registrant and have:

            a) designed such disclosure controls and procedures,  or caused such
               disclosure  controls  and  procedures  to be  designed  under our
               supervision,  to ensure  that  material  information  relating to
               Cache, including its consolidated subsidiaries,  is made known to
               us by others  within  those  entities,  particularly  during  the
               period which this quarterly report is being prepared;

            b) designed  such  internal  control over  financial  reporting,  or
               caused such  internal  control  over  financial  reporting  to be
               designed under our supervision,  to provide reasonable  assurance
               regarding  the   reliability  of  financial   reporting  and  the
               preparation  of financial  statements  for  external  purposes in
               accordance with generally accepted accounting principles;

            c) evaluated the  effectiveness of Cache's  disclosure  controls and
               procedures and presented in this quarterly report our conclusions
               about the effectiveness of the disclosure controls and procedures
               as of the end of the  period  covered  by this  quarterly  report
               based on such evaluation;

            d) disclosed in this report any changes in Cache's  internal control
               over  financial  reporting  that  occurred  during  Cache's third
               quarter that has materially affected,  or is reasonably likely to
               materially  affect,   the  registrant's   internal  control  over
               financial reporting; and

      5. Cache's other  certifying  officer and I have  disclosed,  based on our
         most recent evaluation of internal control over financial reporting, to
         Cache's auditors and the audit committee of Cache's Board of Directors;

            a) all  significant  deficiencies  and  material  weaknesses  in the
               design or operation of internal controls over financial reporting
               which are reasonably  likely to adversely  affect Cache's ability
               to record,  process,  summarize and report financial information;
               and

            b) any fraud,  whether or not material,  that involves management or
               other employees who have a significant  role in Cache's  internal
               controls over financial reporting.

              November 7, 2006            By:   /s/ Margaret Feeney
                                                 ------------------
                                                Margaret Feeney
                                           Executive Vice President and
                                           Chief Financial Officer
                                           (Principal Financial and
                                           Accounting Officer)
                                       28

<PAGE>

                                  EXHIBIT 32.1
                            CERTIFICATION PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002


Pursuant to, and solely for the purposes of, 18 U.S.C. Section 1350 (Section 906
of the Sarbanes-Oxley Act of 2002), each of the undersigned hereby certifies in
the capacity and on the date indicated below that:

      1. The Quarterly Report of Cache,  Inc. on Form 10-Q for the period ending
         September 30, 2006 as filed with the Securities and Exchange Commission
         on the date hereof (the "Report") fully complies with the  requirements
         of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

      2. The  information  contained  in  the  Report  fairly  presents,  in all
         material respects, the financial condition and results of operations of
         Cache, Inc.




               November 7, 2006           BY:  /s/ Brian Woolf
                                                ------------------------
                                                Brian Woolf
                                                Chairman and Chief
                                                Executive Officer
                                                (Principal Executive Officer)


               November 7, 2006           BY:  /s/ Margaret Feeney
                                                ------------------------
                                                Margaret Feeney
                                                Executive Vice President and
                                                Chief Financial Officer
                                                (Principal Financial and
                                                Accounting Officer)




                                       29