CPI Outlines Key Elements of Strategic Growth Plan

Highlights Accomplishments of Current Board and Management Since 2004 


ST. LOUIS, June 24  /PRNewswire-FirstCall/ -- CPI Corp. (NYSE:CPY) today outlined key elements of the strategic growth plan that is being executed by CPI's board of directors and management team.

The Company's strategic plan is addressing industry and economic challenges through a focus on operational efficiency, customer service, and cash generation while developing new avenues for profitable growth.  The plan includes:

  --  Upgrading the store environment, visual merchandising, and in-store
      promotion;
  --  Driving additional gains in studio sales and labor productivity and
      the key customer indicators; and
  --  Pursuing avenues for profitable growth that leverage existing
      resources to tap new demographic and service categories, including:
      --  Mobile initiative
      --  Online marketing / eCommerce
      --  Digital fulfillment for third parties



Since 2004, CPI's board and management team have implemented a two-phased program to successfully navigate a range of industry and company-specific challenges and position the business for success.  As a result, CPI today is the category leader with unparalleled geographic coverage, digital capabilities and economies of scale.  CPI is also experiencing expanding margins, improved earnings and cash flow, and there is strong momentum on key customer indicators.

  Key successes of the board's two-phased program include:

  Phase 1:  Successful Turnaround of Sears Portrait Studio (2004-2006)
  --  Developed and executed a groundbreaking digital transition strategy;
  --  Jettisoned diversionary and loss-making ventures and sharpened focus
      on the core Sears business;
  --  Upgraded the range of products and services offered and improved value
      proposition;
  --  Established a more accountable, performance-oriented culture with a
      closer alignment of interests of employees with those of shareholders;
  --  Instituted new performance-management and selling systems across the
      organization; and

  --  Overhauled marketing programs - introduced analytical customer
      segmentation and offer cadence strategies.



As a result of these Phase 1 actions, the company reversed severe sales declines and drove large gains in operating margins, earnings and cash flow.

Phase 2:  Transition of PictureMe Portrait Studios and Implementation of System-Wide Performance Improvements (2007-2009)

  --  Completed acquisition of PictureMe Portrait Studio(R) operations out
      of bankruptcy in June 2007;
  --  Successfully integrated and digitally converted approximately 2,000
      studios in the U.S., Canada and Mexico;
  --  Extended CPI's cost leadership through the generation of $30 million
      in annualized cost savings;
  --  Upgraded product and service offerings and improved selling
      capabilities driving significant increases in average sale;
  --  Drove significant improvement in a range of customer indicators
      (including average sale, satisfaction and loyalty);
  --  Improved our performance management systems and expanded our
      organizational capabilities in key areas including field management;
      and

  --  Strengthened relationships with CPI's retail hosts, Sears and Walmart,
      and executed a new six year agreement with Sears.



As a result of these Phase 2 actions, the Company increased average sale by approximately 33% in PictureMe Portrait Studios and realized $30 million in annualized cost savings for fiscal 2009.

CPI will hold its 2009 Annual Meeting of Stockholders to be held on July 8, 2009.  CPI's board of directors recommends that stockholders vote FOR the Company's highly-qualified, experienced nominees - James Abel, Paul Finkelstein, Michael Glazer, Michael Koeneke, David Meyer and Turner White - by telephone, Internet or by signing, dating and returning the WHITE proxy card today.

Earlier today, the Company filed an investor presentation with the Securities and Exchange Commission ("SEC").  The presentation is also available under the "investor" section of the Company's website at: http://www.cpicorp.com/ and at the SEC's website at http://www.sec.gov/.

If you have any questions, require assistance with voting your WHITE proxy card, or need additional copies of the proxy materials, please contact:

                            MacKenzie Partners, Inc.
                               105 Madison Avenue
                               New York, NY 10016

                          

                         [phone] (Call Collect)
                                      Or
                           TOLL-FREE [phone]

  Important Information


CPI Corp. has filed a definitive Proxy Statement with the Securities and Exchange Commission ("SEC") and has furnished to its stockholders a Proxy Statement in connection with the solicitation of proxies for the 2009 Annual Meeting of Stockholders. The Company advises its stockholders to read the Proxy Statement relating to the 2009 Annual Meeting because it contains important information. Stockholders may obtain a free copy of the Proxy Statement and other documents that CPI files with the SEC at the SEC's website at http://www.sec.gov/. The Proxy Statement and these other documents may also be obtained for free from CPI by directing a request to CPI Corp., 1706 Washington Avenue, St. Louis, Missouri 63103-1717, Attn: Corporate Secretary, calling [phone], or by contacting MacKenzie Partners, Inc., by toll-free telephone at 800-322-2885 or by e-mail at .

Certain Information Concerning Participants

CPI Corp. and its directors and executive officers (other than Peter Feld) may be deemed to be participants in the solicitation of proxies from stockholders in connection with the Company's 2009 Annual Meeting. Information concerning persons who may be considered participants in the solicitation of the Company's stockholders under the rules of the SEC is set forth in public filings by the Company with the SEC, including the proxy statement relating to the 2009 Annual Meeting of Stockholders.

Forward-Looking Statements

The statements contained herein that are not historical facts are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, and involve risks and uncertainties. The Company identifies forward-looking statements by using words such as "preliminary," "plan," "expect," "looking ahead," "anticipate," "estimate," "believe," "should," "intend" and other similar expressions. Management wishes to caution the reader that these forward-looking statements, such as the Company's outlook for portrait studios, net income, future cash requirements, cost savings, compliance with debt covenants, valuation allowances, reserves for charges and impairments and capital expenditures, are only predictions or expectations; actual events or results may differ materially as a result of risks facing the Company. Such risks include, but are not limited to: the Company's dependence on Sears and Walmart, the approval of the Company's business practices and operations by Sears and Walmart, the termination, breach, limitation or increase of the Company's expenses by Sears under the license agreements, or Walmart under the lease and license agreements, customer demand for the Company's products and services, the economic recession and resulting decrease in consumer spending, compliance with the NYSE listing requirements, manufacturing interruptions, dependence on certain suppliers, competition, dependence on key personnel, fluctuations in operating results, a significant increase in piracy of the Company's photographs, widespread equipment failure, compliance with debt covenants, high level of indebtedness, implementation of marketing and operating strategies, outcome of litigation and other claims, impact of declines in global equity markets to pension plans and impact of foreign currency translation. The risks described above do not include events that the Company does not currently anticipate or that it currently deems immaterial, which may also affect its results of operations and financial condition. The Company undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

About CPI Corp.

CPI Corp. has been dedicated to helping families conveniently create cherished photography portrait keepsakes that capture a lifetime of memories for more than 60 years. CPI Corp. provides portrait photography services in approximately 3,000 locations, principally in Sears and Walmart stores. As the first in the category to convert to a fully digital format, CPI Corp. studios offer unique posing options, creative photography selections, a wide variety of sizes and an unparalleled assortment of enhancements to customize each portrait - all for an affordable price. CPI Corp. is based in St. Louis and traded on the New York Stock Exchange (ticker: CPY).

  Contact:
  Matthew Sherman / Eric Brielmann
  Joele Frank, Wilkinson Brimmer Katcher
  [phone]


DATASOURCE: CPI Corp.



CONTACT:  Matthew Sherman or Eric Brielmann, Joele Frank, Wilkinson

Brimmer Katcher, [phone], for CPI Corp.



Web Site:  http://www.cpicorp.com/ 

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