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

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

                   For the quarterly period ended July 1, 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 (as defined in Rule 12b-2 of the
Exchange Act).

       Large Accelerated        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 July 31 2006, 15,791,003 common shares were outstanding.


<PAGE>



                          CACHE, INC. AND SUBSIDIARIES

                                      INDEX

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

 PART I. FINANCIAL INFORMATION

   Item 1.           Condensed Consolidated Financial Statements (unaudited)
                     Condensed Consolidated Balance Sheets as of July 1, 2006,
                     December 31, 2005 and July 2, 2005                                            3
                     Condensed Consolidated Statements of Income for the twenty-six and
                     thirteen weeks ended July 1, 2006 and July 2, 2005                            4
                     Condensed Consolidated Statements of Cash Flows for the twenty-six
                     weeks ended July 1, 2006 and July 2, 2005                                     6
                     Notes to the Condensed Consolidated Financial Statements                      7
   Item 2.           Management's Discussion and Analysis of Financial Condition and Results
                     of Operations                                                                12
   Item 3.           Quantitative and Qualitative Disclosures About Market Risk                   17
   Item 4.           Controls and Procedures                                                      18


 PART II. OTHER INFORMATION

   Item 5.           Other Information                                                            18
   Item 6.           Exhibits and Reports on Form 8-K                                             18


 SIGNATURES                                                                                       19


                                                         2

</TABLE>

<PAGE>


<TABLE>
<CAPTION>


ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)

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

<S>                                                                  <C>                 <C>                 <C>
                                                                          July 1,           December 31,          July 2,
  ASSETS                                                                   2006                2005                2005
                                                                     ----------------    ----------------    ----------------
  Current assets:
      Cash and cash equivalents                                      $     35,578,000    $     16,753,000    $     17,166,000
      Marketable securities                                                20,426,000          36,520,000          25,964,000
      Receivables, net                                                      3,176,000           5,734,000           3,511,000
      Inventories                                                          30,147,000          32,785,000          30,165,000
      Deferred income taxes, net                                              720,000             691,000             662,000
      Prepaid expenses and other current assets                             5,850,000           4,777,000           1,141,000
                                                                     ----------------    ----------------    ----------------
              Total current assets                                         95,897,000          97,260,000          78,609,000


  Equipment and leasehold improvements, net                                50,781,000          52,760,000          49,502,000
  Other assets                                                                434,000             864,000             856,000
                                                                     ----------------    ----------------    ----------------

              Total assets                                           $    147,112,000    $    150,884,000    $    128,967,000
                                                                     ================    ================    ================

  LIABILITIES AND STOCKHOLDERS' EQUITY

  Current liabilities:
      Accounts payable                                               $     11,569,000    $     18,404,000    $     11,370,000
      Accrued compensation                                                  1,542,000           2,624,000           1,427,000
      Accrued liabilities                                                  13,420,000          12,446,000           9,487,000
                                                                     ----------------    ----------------    ----------------
                   Total current liabilities                               26,531,000          33,474,000          22,284,000

  Other liabilities                                                        15,450,000          16,309,000          14,557,000
  Deferred income taxes, net                                                1,926,000           2,105,000           2,246,000

  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                                           36,278,000          35,455,000          34,988,000
      Retained earnings                                                    66,769,000          63,383,000          54,735,000
                                                                     ----------------    ----------------    ----------------
              Total stockholders' equity
                                                                          103,205,000          98,996,000          89,880,000
                                                                     ----------------    ----------------    ----------------

              Total liabilities and stockholders' equity

                                                                      $   147,112,000    $    150,884,000    $    128,967,000
                                                                     ================    ================    ================



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


                                                                  3
</TABLE>


<PAGE>



<TABLE>
<CAPTION>


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

<S>                                                        <C>                          <C>
                                                                July 1,                       July 2,
                                                                  2006                          2005
                                                           ----------------              ----------------

  Net sales                                                $    135,503,000              $    129,763,000

  Cost of sales, including occupancy and buying
  costs                                                          71,024,000                    72,264,000
                                                           ----------------              ----------------

  Gross profit                                                   64,479,000                    57,499,000
                                                           ----------------              ----------------

  Expenses
      Store operating expenses                                   44,725,000                    41,871,000
      General and administrative expenses                         9,734,000                     8,160,000
      Lillie Rubin exit costs                                     5,662,000                     ---
                                                           ----------------              ----------------
           Total expenses                                        60,121,000                    50,031,000
                                                           ----------------              ----------------

  Operating income                                                4,358,000                     7,468,000

  Interest income                                                 1,193,000                       400,000
                                                           ----------------              ----------------

  Income before income taxes                                      5,551,000                     7,868,000

  Income taxes                                                    2,165,000                     3,111,000
                                                           ----------------              ----------------


  Net income                                               $      3,386,000              $      4,757,000
                                                           ================              ================


  Basic earnings per share                                            $0.21                         $0.30
                                                           ================              ================

  Diluted earnings per share                                          $0.21                         $0.30
                                                           ================              ================



  Basic weighted average shares outstanding                      15,781,000                    15,700,000
                                                           ================              ================

  Diluted weighted average shares outstanding                    16,151,000                    15,830,000
                                                           ================              ================



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


                                                       4

</TABLE>


<PAGE>


<TABLE>
<CAPTION>

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

<S>                                                        <C>                          <C>
                                                                July 1,                       July 2,
                                                                  2006                          2005
                                                           ----------------              ----------------

  Net sales                                                $     71,682,000              $     66,970,000

  Cost of sales, including occupancy and buying
  costs                                                          36,385,000                    36,604,000
                                                           ----------------              ----------------

  Gross profit                                                   35,297,000                    30,366,000
                                                           ----------------              ----------------

  Expenses
      Store operating expenses                                   22,671,000                    21,278,000
      General and administrative expenses                         4,910,000                     4,371,000
      Lillie Rubin exit costs                                     5,662,000                     ---
                                                           ----------------              ----------------

Total expenses                                                   33,243,000                    25,649,000
                                                           ----------------              ----------------

  Operating income                                                2,054,000                     4,717,000

  Interest income                                                   664,000                       243,000
                                                           ----------------              ----------------

  Income before income taxes                                      2,718,000                     4,960,000

  Income taxes                                                    1,060,000                     1,960,000
                                                           ----------------              ----------------


  Net income                                               $      1,658,000              $      3,000,000
                                                           ================              ================


  Basic earnings per share                                            $0.11                         $0.19
                                                           ================              ================

  Diluted earnings per share                                          $0.10                         $0.19
                                                           ================              ================



  Basic weighted average shares outstanding                      15,785,000                    15,712,000
                                                           ================              ================

  Diluted weighted average shares outstanding                    16,168,000                    15,950,000
                                                           ================              ================



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



                                                        5

</TABLE>

<PAGE>

<TABLE>
<CAPTION>

                                    CACHE, INC. AND SUBSIDIARIES
                           CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   FOR THE TWENTY-SIX WEEKS ENDED
                                             (UNAUDITED)

<S>                                                        <C>                  <C>
                                                                July 1,              July 2,
                                                                 2006                 2005
                                                            ---------------     -----------------

 CASH FLOWS FROM OPERATING ACTIVITIES:

 Net income                                                 $     3,386,000     $       4,757,000
 Adjustments to reconcile net income to net cash
     provided by operating activities:

       Depreciation and amortization                              5,408,000             4,606,000
       Decrease in deferred income taxes                           (208,000)             (872,000)
        Amortization of deferred rent                              (634,000)             (599,000)
       Other, net                                                   (24,000)              (24,000)
        Stock-based compensation                                    602,000                   ---
        Lillie Rubin exit costs                                   3,653,000                   ---


 Change in assets and liabilities:
 Decrease in receivables                                          2,558,000             3,034,000
 Decrease in inventories                                          2,363,000             2,131,000
 Decrease (increase) in prepaid expenses and other
 current  assets                                                 (1,073,000)              807,000
 Decrease  in accounts payable                                   (6,835,000)           (5,685,000)
 Excess tax benefits from stock options                             (29,000)                  ---
 Decrease (increase) in accrued liabilities
     and accrued compensation                                       149,000            (1,057,000)
                                                            ---------------     -----------------

 Net cash provided by operating activities                        9,316,000             7,098,000
                                                            ---------------     -----------------


 CASH FLOWS FROM INVESTING ACTIVITIES:

 Maturities of marketable securities                             48,098,000            15,971,000
 Purchases of marketable securities                             (32,004,000)          (16,061,000)
 Payments for equipment and leasehold
 improvements                                                    (6,835,000)           (6,973,000)
                                                            ---------------     -----------------

 Net cash provided by (used in) investing
 activities                                                       9,259,000            (7,063,000)
                                                            ---------------     -----------------

 CASH FLOWS FROM FINANCING ACTIVITIES:

 Proceeds from the exercise of stock options                        221,000               283,000
 Excess tax benefits from stock options                              29,000                   ---
                                                            ---------------     -----------------

 Net cash provided by financing activities                          250,000               283,000
                                                            ---------------     -----------------

 Net increase in cash and equivalents                            18,825,000               318,000
 Cash and equivalents, at beginning of period                    16,753,000            16,848,000
                                                            ---------------     -----------------
 Cash and equivalents, at end of period                     $    35,578,000     $      17,166,000
                                                            ===============     =================

 Supplemental disclosure of cash flow information:
 Income taxes paid                                          $     3,839,000     $       3,410,000
 Accrued equipment and leasehold improvements               $     1,869,000     $         945,000



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


                                                 6

</TABLE>

<PAGE>

                                   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 operate two chains of women's apparel specialty
stores of which 272 stores are  operated  under the trade  name  "Cache"  and 37
stores are operated under the trade name "Lillie Rubin", as of July 1, 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.

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 July 1, 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 July 1, 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.


                                       7

<PAGE>


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
July 1, 2006,  there was $1.5 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 1.5 years.  The total  intrinsic
value of options  exercised during the 26 and 13 week periods ended July 1, 2006
was approximately $146,000 and $81,000.

A summary of the changes in stock options  outstanding during the 26 week period
ended July 1, 2006 is presented below:

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

                                           TOTAL OUTSTANDING                                    CURRENTLY EXERCISABLE
                       ----------------------------------------------------------     --------------------------------------
                          NUMBER                                       AGGREGATE       NUMBER
                           OF             AVERAGE       AVERAGE        INTRINSIC         OF           AVERAGE      AVERAGE
                         OPTIONS         PRICE (1)      LIFE (2)       VALUE (3)       OPTIONS       PRICE (1)     LIFE (2)
                        ----------      ----------     ----------     -----------     ---------     -----------    ---------

December 31, 2005       1,481,500         $10.85          7.45        $9,579,495       742,250         $8.80         6.92
Granted                       ---            ---                                           ---           ---
Canceled/forfeited         (9,000)         12.65                                           ---           ---
Exercised                 (20,450)         10.72                                       (20,450)        10.72
                        ----------      ----------                                    ---------     -----------
July 1, 2006            1,452,050         $10.84          6.95        $9,431,555       721,800         $8.74         6.41
                        ==========      ==========     ==========     ===========     =========     ===========    =========
</TABLE>

       (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 July 1, 2006, which was $17.32
             and $17.34, respectively.

A summary of the activity  for the  non-vested  share awards  during the 26 week
period ended July 1, 2006 is presented below:

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

Non-vested--December 31, 2005            739,250               $12.92
Granted                                      ---                  ---
Vested                                       ---                  ---
Cancelled/forfeited                       (9,000)              $12.65
                                      -------------         ------------
Non-vested--July 1, 2006                 730,250               $12.92
                                      =============         ============

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 26 and 13 week periods ended July 1, 2006,  there
was $29,000 of excess tax benefits realized from the exercise of stock options.

During the 26 and 13 week  periods  ended July 1, 2006,  the Company  recognized
approximately  $602,000  ($367,000  after tax or $0.02 per  diluted  share)  and
$272,000  ($166,000  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

                                       8

<PAGE>


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. 123R,  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>
                                                                  Twenty-six             Thirteen
                                                                 Weeks Ended            Weeks Ended
                                                                   July 2,                July 2,
                                                                     2005                   2005
                                                                -------------          -------------

Net earnings as reported:                                         $4,757,000            $3,000,000
Add share-based employee compensation expense included                   ---                   ---
in reported net income, net of taxes
Deduct employee compensation expense determined under a             (504,000)             (249,000)
fair value based method, net of related tax effects
Pro forma net earnings                                            $4,253,000            $2,751,000

Basic earnings per share:
As reported                                                          $0.30                  $0.19
Pro forma                                                            $0.27                  $0.18

Diluted earnings per share:
As reported                                                          $0.30                  $0.19
Pro forma                                                            $0.27                  $0.17

</TABLE>


There were no options  granted  during the 26 and 13 week periods  ended July 1,
2006. There were 105,000 options granted during the 26 and 13 week periods ended
July 2, 2005.

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                       26 Weeks Ended
                                        ----------------------------         ----------------------------
                                         July 1,           July 2,            July 1,           July 2,
                                          2006              2005               2006              2005
                                        ----------        ----------         ----------        ----------

Net income                              $1,658,000        $3,000,000         $3,386,000        $4,757,000
Basic weighted number of average
   shares outstanding                   15,785,000        15,712,000         15,781,000        15,700,000
Incremental shares from assumed
   issuances of stock options              383,000           238,000            370,000           130,000
Diluted weighted average number of
   shares outstanding                   16,168,000        15,950,000         16,151,000        15,830,000

Net income per share - Basic                 $0.11             $0.19              $0.21             $0.30
                     - Diluted               $0.10             $0.19              $0.21             $0.30


                                                      9


</TABLE>

<PAGE>


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 26 week periods in fiscal 2005 and 2006,  because the exercise  price was
greater than the market price.

4.   RECENT ACCOUNTING PRONOUNCEMENTS

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  $500,000 for the
fiscal year ended  December  30,  2006.  During the 26 week period ended July 1,
2006, the Company incurred $121,000 of such costs.

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.

In July,  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.

5.   EQUIPMENT AND LEASEHOLD IMPROVEMENTS

<TABLE>
<CAPTION>
<S>                                              <C>               <C>                <C>
                                                     July 1,         December 31,        July 2,
                                                      2006              2005              2005
                                                  --------------    --------------    --------------


 Leasehold improvements                           $   54,650,000    $   51,827,000    $   48,553,000
 Furniture, fixtures and equipment                    55,009,000        51,715,000        48,144,000
                                                  --------------    --------------    --------------
                                                     109,659,000       103,542,000        96,697,000
Less: accumulated depreciation
    and amortization                                 (58,878,000)      (50,782,000)      (47,195,000)
                                                  --------------    --------------    --------------

                                                  $   50,781,000    $   52,760,000    $   49,502,000
                                                  ==============    ==============    ==============


                                              10

</TABLE>

<PAGE>


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

6. ACCRUED LIABILITIES
                                                     July 1,         December 31,        July 2,
                                                       2006              2005              2005
                                                  --------------    --------------    --------------

 Operating expenses                               $    4,408,000    $    2,894,000    $    2,733,000
 Other taxes                                           1,714,000         2,540,000         1,124,000
 Group insurance                                         654,000           598,000           558,000
 Sales return reserve                                    415,000           803,000           443,000
 Leasehold additions                                   1,869,000           859,000           945,000
 Other customer deposits and credits                   4,360,000         4,752,000         3,684,000
                                                  --------------    --------------    --------------
                                                  $   13,420,000    $   12,446,000    $    9,487,000
                                                  ==============    ==============    ==============
</TABLE>

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 July 31, 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 $2.6  million,  $1.0
million and $3.0 million,  pursuant to the Revolving Credit Facility, at July 1,
2006, December 31, 2005 and July 2, 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 is 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.  The
Company  does not  expect to incur  significant  additional  exit costs upon the
closing of these properties during the third quarter.  The Company has closed 11
of the stores as of August 8, 2006 and  anticipates the closing of the remaining
stores by the end of September.

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

<TABLE>
<CAPTION>
<S>                                 <C>                 <C>             <C>                <C>
                                         BALANCE            CHARGES       CASH PAYMENTS      BALANCE END OF
                                    BEGINNING OF YEAR                                            PERIOD
                                    -----------------    -------------   ---------------    ----------------

Contractual termination costs            $ ---             $1,624,000         $90,000           $1,534,000

Severance                                  ---                384,000          81,000              301,000

Impairment of long lived assets
and supplies                               ---              4,830,000

Reversal of deferred rent liability        ---             (1,176,000)

</TABLE>
                                                     11

<PAGE>


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 26 and 13 week  periods  ended  July 1,
2006.

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

On May  15,  2006,  we  announced  plans  to exit  the  Lillie  Rubin  business,
consisting  of 39 stores at July 1,2006,  and to introduce a new concept,  Cache
Luxe.  The Company  intends to convert 20 Lillie  Rubin  locations to Cache Luxe
stores and 1 Lillie Rubin location to Cache stores.  The Company closed 9 stores
in July and will close 9 stores in August and September. The Company anticipates
converting  the  remaining  20 Lillie  Rubin  stores to Cache Luxe by the end of
September.

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

RESULTS OF OPERATIONS

The following  table sets forth our results of operations for the 13 and 26 week
periods  ended July 1, 2006 and July 2, 2005,  expressed as a percentage  of net
sales.

<TABLE>
<CAPTION>
<S>                               <C>                <C>              <C>                <C>
                                          13 Weeks Ended                      26 Weeks Ended
                                  --------------------------------     ------------------------------
                                     July 1,           July 2,            July 1,          July 2,
                                      2006               2005              2006             2005
                                  --------------     -------------     -------------    -------------

Sales                                100.0%             100.0%            100.0%           100.0%
Cost of sales                         50.8               54.7              52.4             55.7
Gross profit                          49.2               45.3              47.6             44.3
Store operating expenses              31.6               31.8              33.0             32.3
General and administrative
expenses                               6.8                6.5               7.2              6.3
Lillie Rubin exit costs                7.9                0.0               4.2              0.0
Operating income                       2.9                7.0               3.2              5.8
Other income                           0.9                0.4               0.9              0.3
Income before income taxes             3.8                7.4               4.1              6.1
Income taxes                           1.5                2.9               1.6              2.4
Net income                             2.3                4.5               2.5              3.7

</TABLE>

                                                        12


<PAGE>


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:


<TABLE>
<CAPTION>
<S>                                     <C>            <C>               <C>          <C>
                                               13 Weeks Ended                  26 Weeks Ended
                                        ----------------------------     -------------------------
                                           July 1,         July 2,         July 1,       July 2,
                                            2006            2005            2006          2005
                                        ------------     -----------     ----------    -----------

Total store count at end of period           309              297            309             297
Net sales growth                             7.0%             7.9%           4.4%            8.8%
Comparable store sales growth                6.0%             5.0%           4.0%            3.0%
Average sales per transaction growth         1.1%             7.0%           3.8%            3.3%
Average number of transactions growth        4.9%            (2.4%)         (1.1%)          (0.5%)
Net sales per average square foot           $117             $114           $224            $222
Total square footage (in thousands)          611              600            611             600

</TABLE>

NET SALES

Net sales increased to $135.5 million from $129.8  million,  an increase of $5.7
million or 4.4%, over the prior year 26 week period.  Comparable  store sales at
Cache stores  (sales for stores open at least one year or more)  increased  $6.5
million or 6%, during the 26 week period. Comparable store sales at Lillie Rubin
stores decreased $2.2 million or 20%, during the 26 week period.  Net sales from
non-comparable stores increased $1.4 million, during the current 26 week period.
The increase in net sales in FY 2006 at Cache stores  reflected a 5% increase in
average dollars per transaction, as well as a 1% increase in sales transactions.
Dress sales helped to increase sales above FY 2005 levels.

Net sales  increased to $71.7  million from $67.0  million,  an increase of $4.7
million,  or 7.0%,  over the same 13 week period last year.  This  reflects $4.4
million of additional  net sales as a result of 8% increase in comparable  store
sales at Cache stores.  Net sales at Lillie Rubin stores  decreased $0.8 million
or 16.6%,  during the 13 week period.  Net sales  increased  $1.1 million,  as a
result of additional  sales from  non-comparable  stores,  during the current 13
week period. The increase in net sales in FY 2006 at Cache stores reflected a 2%
increase in average dollars per  transaction,  as well as a 5% increase in sales
transactions.  Dress sales  helped to increase  sales above FY 2005  levels,  as
Easter  shifted  into the  Company's  second  quarter  in FY 2006 from the first
quarter in FY 2005.

GROSS PROFIT

Gross profit increased to $64.5 million from $57.5 million,  an increase of $7.0
million  or  12.2%,  over the  prior  year 26 week  period.  This  increase  was
primarily due to higher net sales.  As a percentage  of net sales,  gross profit
increased to 47.6% from 44.3%.  The increase in gross profit as a percentage  of
net sales was primarily  due to lower  promotional  activity,  as well as higher
initial  markup.  The  Company  expects  gross  margins  to  improve  during the
remainder  of Fiscal 2006 and beyond,  due to the  establishment  of an internal
production and sourcing department.

Gross profit increased to $35.3 million from $30.4 million,  an increase of $4.9
million,  or 16.2%,  over the same 13 week period last year.  This  increase was
primarily due to higher net sales.  As a percentage  of net sales,  gross profit
increased to 49.2% from 45.3%.  The increase in gross profit as a percentage  of
net sales was primarily due to the same factors as for the 26 week period.


                                       13

<PAGE>


STORE OPERATING EXPENSES

Store  operating  expenses  increased to $44.7  million from $41.9  million,  an
increase  of $2.8  million  or 6.7%,  over the prior year 26 week  period.  This
increase is primarily attributable to the increase in the number of stores open.
As a percentage of net sales,  store operating  expenses increased to 33.0% from
32.3% for the 26 week period,  primarily  due to higher  payroll,  depreciation,
property taxes and advertising  expenses.  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 the higher payroll ($621,000),  higher  depreciation  expense
($790,000), higher property taxes ($274,000) and advertising expenses ($255,000)
in FY 2006 as compared to FY 2005, primarily due to the increase in stores open.

Store  operating  expenses  increased to $22.7  million from $21.3  million,  an
increase of $1.4  million or 6.5% over the same 13 week  period last year.  This
increase is  primarily  due to an increase  in the number of stores  open.  As a
percentage  of sales,  store  operating  expenses  decreased to 31.6% from 31.8%
primarily due to the increase in sales volume.

GENERAL AND ADMINISTRATIVE EXPENSES

General and administrative expenses increased to $9.7 million from $8.2 million,
an increase of $1.5 million or 19.3%, over the same 26 week period last year. As
a percentage of net sales, general and administrative expenses increased to 7.2%
from 6.3%,  primarily  due to higher travel  ($238,000)  and  professional  fees
($122,000),  as compared to last year, as well as due to higher payroll  expense
which  included  compensation  from  stock  options of  $602,000  related to the
adoption of FAS No. 123R.

General and administrative expenses increased to $4.9 million from $4.4 million,
an increase of $539,000 or 12.3%,  above the same 13 week period last year. As a
percentage of net sales,  general and administrative  expenses increased to 6.8%
from 6.5% for the 13 week period,  primarily  due to the same factors as for the
26 week period.

LILLIE RUBIN EXIT COSTS

During the quarter ended July 1, 2006 the Company  recorded a pre-tax  charge of
$5.7 million for the exit of the Lillie Rubin business.  The charge is comprised
of leasehold  improvement,  furniture  and fixtures  write down of $4.1 million,
write down of  intangibles  of  $455,000,  write down of supplies  of  $275,000,
severance  charges  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. As a
percent of sales,  Lillie Rubin exit costs were 7.9% and 4.2%, for the 13 and 26
week periods in Fiscal 2006.

INTEREST INCOME

Interest income increased to $1.2 million from $400,000, an increase of $800,000
over the prior period, primarily due to higher average cash balances, as well as
higher interest rates.

Interest  income  increased to $664,000 from $243,000 in the same 13 week period
last year.

INCOME TAXES

Income taxes decreased to $2.2 million from $3.1 million,  as compared to the 26
week period last year. The decrease was primarily  attributable to lower taxable
income in fiscal 2006. The estimated  effective tax rate for the 26 week periods
in fiscal 2006 and fiscal 2005 were 39.0% and 39.5%, respectively.

Income taxes  decreased to $1.1  million from $2.0  million,  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 were 39.0% and 39.5%, respectively.


                                       14

<PAGE>


NET INCOME

As a result of the factors discussed above, net income decreased to $3.4 million
from $4.8 million for the prior year 26 week period.

Net income  decreased to $1.7  million from $3.0 million  below the same 13 week
period last year.

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 26 week period ended July 1, 2006, we
generated $9.3 million of cash flow from  operations as compared to $7.1 million
generated in the same period in Fiscal  2005.  We expect to continue to meet our
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 July 1, 2006, we had working  capital of $69.4
million, cash and marketable securities of $56.0 million and no third party debt
outstanding.

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

                                             ----------------------------
                                                Twenty-six weeks ended
                                             ----------------------------
                                                July 1,          July 2,
                                                 2006             2005
                                             -----------      -----------
Net cash from operating activities........    $9,316,000       $7,098,000
Net cash from investing activities........     9,259,000       (7,063,000)
Net cash from financing activities........       250,000          283,000
                                             -----------      -----------

Net increase in cash and cash equivalents.   $18,825,000         $318,000
                                             ===========      ===========


During the 26 week period  ended July 1, 2006,  we  increased  our cash and cash
equivalents by $18.8 million,  primarily due to net matured investments of $16.1
million, net income of $3.4 million (which includes depreciation expense of $5.4
million),  a reduction in  inventories  of $2.4 million and  receivables of $2.6
million,  partially  offset by  prepaid  expense  increase  of $1.1  million,  a
reduction in accounts payable of $6.8 million and expenditures for our new store
expansion and remodeling  program totaling $6.8 million.  The Company recorded a
charge of $5.7  million  for the exit of the  Lillie  Rubin  business,  which is
comprised of $3.7 million of non-cash  charges and $2.0 million of cash charges.
The cash charges will be paid out in the third quarter. The exit of Lillie Rubin
should be finalized by the end of the third quarter.

We plan to open  approximately  18 to 20 new stores during Fiscal 2006.  Ten new
stores were opened in the second  quarter and two new stores opened in the first
quarter of Fiscal 2006. We anticipate  opening an additional 7 new stores during
the  remainder of the year.  We renovated 8 existing  stores in Fiscal 2006.  We
spent $6.8  million  through July 1, 2006 and expect to spend an  additional  $7
million  to  $8  million  in  2006,  for  both  new  store  and  existing  store
construction and remodeling.

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.


                                       15
<PAGE>
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.

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  predicates  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  markon,  markups,  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 quarter ended July 1, 2006, the Company
recorded a charge of $5.7 million related to the

                                       16
<PAGE>

exit of the Lillie Rubin store chain. $4.1 million of this charge relates to the
impairment of fixed assets. No impairment  charges were incurred in Fiscal 2003,
2004 and 2005, respectively.

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.

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,  $325,000
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).

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 July 1,  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.

                                       17
<PAGE>


ITEM 4. CONTROLS AND PROCEDURES

We  maintain   disclosure  controls  and  procedures  designed  to  ensure  that
information  required  to be  disclosed  by us in our  Exchange  Act  reports is
recorded,  processed,  summarized  and  reported on a timely basis and that such
information is accumulated and  communicated  to our  management,  including the
Chief  Executive  Officer ("CEO") and the Chief Financial  Officer  ("CFO"),  as
appropriate,  to allow timely decisions regarding the required disclosure. As of
the end of the period  covered by this Form 10-Q,  an  evaluation  was performed
under the supervision and with the  participation  of our management,  including
the CEO and the CFO, of the  effectiveness  of the design and operation of these
disclosure  controls and procedures.  Based on that evaluation,  the CEO and the
CFO concluded that our disclosure controls and procedures were effective.

In  connection  with the  preparation  of the Annual  Report on Form 10-K, as of
December 31, 2005, an evaluation was performed  under the  supervision  and with
the participation of the Company's management, including the CEO and CFO, of the
effectiveness  of the  design  and  operation  of our  disclosure  controls  and
procedures (as defined in Rule 13a-15(e)  under the Exchange Act). In performing
this assessment, management reviewed the lack of resources in the accounting and
finance department.  As a result of this review,  management  concluded that the
lack of resources resulted in an ineffective review,  monitoring and analysis of
schedules,  reconciliations  and financial statement  disclosures,  resulting in
several adjustments to the current financial statements, which caused a material
weakness as of December 31, 2005.

We have  subsequently  implemented a more thorough  review process to ensure the
accuracy of  accounting  calculations  supporting  the amounts  reflected in our
financial  statements  and also to  ensure  that all  significant  accounts  are
properly  reconciled on a frequent and timely basis.  The remaining  remediation
steps will be completed during the third quarter.

There have not been any changes in the Company's internal control over financial
reporting (as such term is defined in Rules  13a-15(f)  and 15d-15(f)  under the
Exchange Act),  during the fiscal quarter to which this report relates that have
materially  affected,  or  are  reasonably  likely  to  materially  affect,  the
Company's internal control over financial reporting.

PART II - OTHER INFORMATION

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.


                                       18


<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: August 10, 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)



                                       19

<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 second
               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.

               August 10, 2006              By: /s/ Brian Woolf
                                                --------------------------------
                                                Brian Woolf
                                                Chairman and Chief
                                                Executive Officer
                                                (Principal Executive
                                                Officer)
                                       20
<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 second
               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.

               August 10, 2006              By: /s/ Margaret Feeney
                                                --------------------------------
                                                Margaret Feeney
                                                Executive Vice President and
                                                Chief Financial Officer
                                                (Principal  Financial and
                                                Accounting Officer)
                                       21
<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
          July 1, 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.



          August 10, 2006                   BY: /s/ Brian Woolf
                                                --------------------------------
                                                Brian Woolf
                                                Chairman and Chief
                                                Executive Officer
                                                (Principal Executive
                                                Officer)


          August 10, 2006                   By: /s/ Margaret Feeney
                                                --------------------------------
                                                Margaret Feeney
                                                Executive Vice President and
                                                Chief Financial Officer
                                                (Principal  Financial and
                                                Accounting Officer)



                                       22